q3 2009 earning report of ruby tuesday inc

FORM 10-QRUBY TUESDAY INC - RTFiled: October 13, 2009 (period: September 01, 2009)

Quarterly report which provides a continuing view of a company's financial position

Table of Contents

10-Q - 1ST QTR FY10 10-Q

PART I

ITEM 1. FINANCIAL STATEMENTS ITEM 2. ITEM 3. ITEM 4. PART II

ITEM 1. ITEM 1A. ITEM 2. ITEM 6. SIGNATURES

EX-10 (10-1 AMENDED AND RESTATED REVOLVING CREDIT AGMT DATEDFEB. 27)

EX-10 (10-2 AMENDED AND RESTATED LOAN FACILITY AGRMT ANDGUARANTY DATED NOV. 19)

EX-10 (10-3 4TH AMENDMENT TO AMENDED AND RESTATED LOAN FACILITYAGMT AND GUARANTY)

EX-31 (31-1 CEO CERTIFICATION)

EX-31 (31-2 CFO CERTIFICATION)

EX-32 (32-1 CEO CERTIFICATION)

EX-32 (32-2 CFO CERTIFICATION)

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACTOF 1934

For the Quarterly Period Ended: September 1, 2009

OR

� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACTOF 1934

For the transition period from __________ to _________

Commission file number 1-12454

RUBY TUESDAY, INC.(Exact name of registrant as specified in charter)

GEORGIA 63-0475239(State of incorporation or organization) (I.R.S. Employer identification no.)

150 West Church Avenue, Maryville, Tennessee 37801(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (865) 379-5700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements forthe past 90 days. Yes ⌧ No � Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files). Yes � No � Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer � Accelerated filer ⌧ Non-accelerated filer � Smaller reporting company � Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes � No ⌧

64,493,845

(Number of shares of common stock, $0.01 par value, outstanding as of October 7, 2009)

Source: RUBY TUESDAY INC, 10-Q, October 13, 2009

RUBY TUESDAY, INC.

INDEX

PagePART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF

SEPTEMBER 1, 2009 AND JUNE 2, 2009 4

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 1, 2009 AND SEPTEMBER 2, 2008 5

CONDENSED CONSOLIDATED STATEMENTS OF CASH

FLOWS FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 1, 2009 AND SEPTEMBER 2, 2008 6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS 7-22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23-37

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

MARKET RISK 37

ITEM 4. CONTROLS AND PROCEDURES 37

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS 38ITEM 1A. RISK FACTORS 38ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 38ITEM 6. EXHIBITS 39SIGNATURES 40

2


Special Note Regarding Forward-Looking InformationThis Quarterly Report on Form 10-Q contains various forward-looking statements, which represent our expectations or beliefs concerning future events,including one or more of the following: future financial performance and restaurant growth (both Company-owned and franchised), future capital expenditures,future borrowings and repayments of debt, availability of debt financing on terms attractive to the Company, payment of dividends, stock repurchases, andrestaurant and franchise acquisitions and refranchises. We caution the reader that a number of important factors and uncertainties could, individually or in theaggregate, cause our actual results to differ materially from those included in the forward-looking statements (such statements include, but are not limited to,statements relating to cost savings that we estimate may result from any programs we implement, our estimates of future capital spending and free cash flow, ourtargets for annual growth in same-restaurant sales and average annual sales per restaurant, and our strategy to obtain the equivalent of an investment-grade bondrating), including, without limitation, the following:

• general economic conditions;

• changes in promotional, couponing and advertising strategies;

• guests’ acceptance of changes in menu items;

• guests’ acceptance of our development prototypes and remodeled restaurants;

• changes in our guests’ disposable income;

• consumer spending trends and habits;

• mall-traffic trends;

• increased competition in the restaurant market;

• weather conditions in the regions in which Company-owned and franchised restaurants are operated;

• laws and regulations affecting labor and employee benefit costs, including further potential increases in state and federally mandated minimumwages;

• costs and availability of food and beverage inventory;

• our ability to attract qualified managers, franchisees and team members;

• changes in the availability and cost of capital;

• impact of adoption of new accounting standards;

• impact of food-borne illnesses resulting from an outbreak at either Ruby Tuesday or other restaurant concepts;

• effects of actual or threatened future terrorist attacks in the United States; and

• significant fluctuations in energy prices.

3


PART I — FINANCIAL INFORMATIONITEM 1.

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

SEPTEMBER 1, JUNE 2, 2009 2009 Assets (NOTE A) Current assets:

Cash and short-term investments $ 5,822 $ 9,760 Accounts and notes receivable, net 8,481 8,095 Inventories:

Merchandise 12,297 12,838 China, silver and supplies 8,248 8,187

Income tax receivable 17,548 8,632 Deferred income taxes 15,796 15,918 Prepaid rent and other expenses 13,143 13,423

Assets held for sale 10,898 16,120 Total current assets 92,233 92,973

Property and equipment, net 975,266 985,099 Notes receivable, net 572 713 Other assets 45,749 45,411

Total assets $ 1,113,820 $ 1,124,196

Liabilities & shareholders’ equity

Current liabilities: Accounts payable $ 21,884 $ 21,859 Accrued liabilities:

Taxes, other than income taxes 18,835 19,120 Payroll and related costs 14,249 12,688 Insurance 8,599 8,369 Deferred revenue – gift cards 7,400 8,046 Rent and other 30,183 27,076

Current portion of long-term debt, including capital leases 14,280 16,841 Total current liabilities 115,430 113,999

Long-term debt and capital leases, less current maturities 372,090 476,566 Deferred income taxes 30,716 20,706 Deferred escalating minimum rent 41,379 41,010 Other deferred liabilities 54,026 55,549

Total liabilities 613,641 707,830 Commitments and contingencies Shareholders’ equity:

Common stock, $0.01 par value; (authorized: 100,000 shares; issued: 64,397 shares at 9/01/09; 52,806 shares at 6/02/09) 644 528

Capital in excess of par value 98,089 20,804 Retained earnings 413,095 406,951 Deferred compensation liability payable in

Company stock 2,101 2,200 Company stock held by Deferred Compensation Plan (2,101) (2,200)Accumulated other comprehensive loss (11,649) (11,917)

500,179 416,366

Total liabilities & shareholders’ equity $ 1,113,820 $ 1,124,196 The accompanying notes are an integral part of the condensed consolidated financial statements.

4


RUBY TUESDAY, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

THIRTEEN WEEKS ENDED SEPTEMBER 1,

2009 SEPTEMBER 2, 2008

(NOTE A) Revenue:

Restaurant sales and operating revenue $ 299,301 $ 321,216 Franchise revenue 1,311 2,785

300,612 324,001 Operating costs and expenses:

Cost of merchandise 90,327 87,631 Payroll and related costs 100,459 109,798 Other restaurant operating costs 60,877 68,611 Depreciation and amortization 16,281 20,129 Selling, general and administrative, net of support service

fee income totaling $1,229 in 2009 and $1,772 in 2008 19,020 26,260 Closures and impairments 590 1,909 Equity in losses/(earnings) of unconsolidated franchises 228 (499) Interest expense, net 5,388 9,800

293,170 323,639 Income before income taxes 7,442 362 Provision for income taxes 1,298 77 Net income $ 6,144 $ 285

Earnings per share:

Basic $ 0.11 $ 0.01

Diluted $ 0.11 $ 0.01

Weighted average shares:

Basic 56,127 51,381

Diluted 56,295 51,439

Cash dividends declared per share $ – $ – The accompanying notes are an integral part of the condensed consolidated financial statements.

5


RUBY TUESDAY, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

THIRTEEN WEEKS ENDED SEPTEMBER 1,

2009 SEPTEMBER 2,

2008

(NOTE A) Operating activities: Net income $ 6,144 $ 285 Adjustments to reconcile net income to net cash

provided by operating activities: Depreciation and amortization 16,281 20,129 Amortization of intangibles 167 195 Provision for bad debts 223 324 Deferred income taxes 9,770 843 (Gain)/loss on impairments, including disposition of assets (204) 1,585 Equity in losses/(earnings) of unconsolidated franchises 228 (499)Share-based compensation expense 4,495 2,920 Other 469 467 Changes in operating assets and liabilities:

Receivables (396) 2,092 Inventories 480 160 Income taxes (8,916) 4,175 Prepaid and other assets (264) 1,606 Accounts payable, accrued and other liabilities 3,243 4,181

Net cash provided by operating activities 31,720 38,463 Investing activities: Purchases of property and equipment (3,846) (6,194)Proceeds from disposal of assets 2,826 1,623 Reductions in Deferred Compensation Plan assets 139 199 Other, net (871) (1,133)

Net cash used by investing activities (1,752) (5,505) Financing activities: Net payments on revolving credit facility (100,300) (35,800)Principal payments on other long-term debt (6,737) (4,431)Proceeds from issuance of stock, net of fees 73,131

Net cash used by financing activities (33,906) (40,231) Decrease in cash and short-term investments (3,938) (7,273)Cash and short-term investments:

Beginning of year 9,760 16,032 End of year $ 5,822 $ 8,759

Supplemental disclosure of cash flow information:

Cash paid/(received) for: Interest, net of amount capitalized $ 3,181 $ 7,129 Income taxes, net $ 674 $ (4,996)

Significant non-cash investing and financing activities: Retirement of fully depreciated assets $ 2,744 $ 8,324 Reclassification of properties to assets held for sale or receivables $ (3,130) $ 3,440

The accompanying notes are an integral part of the condensed consolidated financial statements.

6


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A – BASIS OF PRESENTATION

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” “we” or the “Company”), owns and operates Ruby Tuesday® casual dining restaurants andtwo Wok Hay restaurants. We also franchise the Ruby Tuesday concept in select domestic and international markets. The accompanying unaudited condensedconsolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly,they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In theopinion of management, all adjustments (consisting only of normal recurring entries) considered necessary for a fair presentation have been included. Thepreparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptionsthat affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the13-week period ended September 1, 2009 are not necessarily indicative of results that may be expected for the year ending June 1, 2010.

The condensed consolidated balance sheet at June 2, 2009 has been derived from the audited consolidated financial statements at that date but does not includeall of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

We have performed an evaluation of events that occurred after September 1, 2009, the balance sheet date, but before October 13, 2009, the date the CondensedConsolidated Financial Statements were issued.

For further information, refer to the consolidated financial statements and footnotes thereto included in RTI’s Annual Report on Form 10-K for the fiscal yearended June 2, 2009.

NOTE B – COMMON STOCK AND EARNINGS PER SHARE

On July 28, 2009, we closed an underwritten public offering of 11.5 million shares of Ruby Tuesday, Inc. common stock at $6.75 per share, less underwritingdiscounts. The amount sold included 1.5 million shares sold in connection with the exercise of an over-allotment option granted to the underwriters. The sharessold were issued pursuant to a shelf registration statement on Form S-3, which was filed with the SEC on June 25, 2009. We received approximately $73.1million in net proceeds from the sale of the shares, after deducting underwriting discounts and offering expenses. Wells Fargo Securities and BofA Merrill Lynchacted as joint book-running managers for the offering and SunTrust Robinson Humphrey, Inc. and Morgan Keegan & Company, Inc. were co-managers of theoffering. The net proceeds were used to repay indebtedness under our Credit Facility.

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during each period presented.Diluted earnings per share gives effect to restricted stock and options outstanding during the applicable periods. The stock options and restricted shares includedin the diluted weighted average shares outstanding totaled 0.2 million and 0.1 million for the 13 weeks ended September 1, 2009 and September 2, 2008,respectively.

Stock options with an exercise price greater than the average market price of our common stock and certain options with unrecognized compensation expense donot impact the computation of diluted earnings per share because the effect would be anti-dilutive. For the 13 weeks ended September 1, 2009 and September 1,2008, there were 5.1 million and 6.8 million unexercised options, respectively, that did not impact the computation of diluted earnings per share because theirinclusion would have had an anti-dilutive effect. Further, 0.9 million and 1.3 million restricted shares were excluded from these calculations for the 13 weeksended September 1, 2009 and September 2, 2008, respectively.

NOTE C – FRANCHISE PROGRAMS

As of September 1, 2009, we held a 50% equity interest in each of six franchise partnerships which collectively operate 70 Ruby Tuesday restaurants. We applythe equity method of accounting to all 50%-owned franchise partnerships. Also, as of September 1, 2009, we held a 1% equity interest in each of seven

7


franchise partnerships, which collectively operate 48 restaurants, and no equity interest in various traditional domestic and international franchises, whichcollectively operate 108 restaurants.

Beginning in May 2005, under the terms of the franchise operating agreements, we required all domestic franchisees to contribute a percentage, currently 0.5%,of monthly gross sales to a national advertising fund formed to cover their pro rata portion of the production and airing costs associated with our nationaladvertising campaign. Under the terms of those agreements, we can charge up to 3.0% of monthly gross sales for this national advertising fund.

Advertising amounts received from domestic franchisees are considered by RTI to be reimbursements, recorded on an accrual basis as earned, and have beennetted against selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

See Note L to the Condensed Consolidated Financial Statements for a discussion of our franchise partnership working capital credit facility and our relatedguarantees.

NOTE D – ACCOUNTS AND NOTES RECEIVABLE

Accounts and notes receivable – current consist of the following (in thousands):

September 1, 2009 June 2, 2009 Rebates receivable $ 660 $ 590Amounts due from franchisees 4,603 3,797Other receivables 2,069 1,822Current portion of notes receivable 4,879 6,434 12,211 12,643Less allowances for doubtful notes and equity

method losses 3,730 4,548 $ 8,481 $ 8,095

We negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of us and our franchise system. We receive variousvolume discounts and rebates based on purchases for our Company-owned restaurants from numerous suppliers.

Amounts due from franchisees consist of royalties, license and other miscellaneous fees, a substantial portion of which represent prior month's billings. Alsoincluded in amounts due from franchisees is the current portion of the straight-lined rent receivable from franchise sublessees and the amount to be collected inexchange for our guarantees of certain franchise partnership debt.

We defer recognition of franchise fee revenue for any franchise partnership with negative cash flows at times when the negative cash flows are deemed to beanything other than temporary and the franchise has either borrowed directly from us or through a facility for which we provide a guarantee. We also do notrecognize franchise fee revenue from franchises with fees in excess of 60 days past due. Accordingly, we have deferred recognition of a portion of franchiserevenue from certain franchisees. Unearned income for franchise fees was $2.6 million and $1.2 million as of September 1, 2009 and June 2, 2009, respectively,which are included in Other deferred liabilities and/or Accrued liabilities – rent and other in the Condensed Consolidated Balance Sheets. The increase inunearned income is primarily due to an increase in unearned fees due from a traditional franchise ($1.1 million), for whom we agreed to defer fees for a limitedperiod of time while the franchise negotiated with its lenders for extended terms. As of September 1, 2009, other receivables consisted primarily of amounts due for third party gift card sales and expected proceeds associated with twocompany-owned life insurance policy claims. Included in other receivables at June 2, 2009 are amounts due for third party gift card sales and amounts due fromvarious landlords.

8


Notes receivable consist of the following (in thousands):

September 1, 2009 June 2, 2009 Notes receivable from domestic franchisees $ 7,834 $ 9,644Less current maturities (included in accounts and

notes receivable) 4,879 6,434 2,955 3,210Less allowances for doubtful notes and equity

method losses, noncurrent 2,383 2,497Total notes receivable, net - noncurrent $ 572 $ 713 Notes receivable from domestic franchisees generally arose between fiscal 1997 and fiscal 2002 when Company-owned restaurants were sold to new franchisepartnerships (“refranchised”). These notes, when issued at the time of commencement of the franchise partnership’s operations, generally allowed for deferral ofinterest during the first one to three years and required only the payment of interest for up to six years from the inception of the note. Twelve current franchisees received acquisition financing from RTI as part of refranchising transactions in prior periods. The amounts financed by RTIapproximated 36% of the original purchase prices. Eight of these twelve franchisees have paid their acquisition notes in full as of September 1, 2009.

Notes receivable from domestic franchisees also include amounts advanced to certain of our franchise partnerships under short-term line of credit arrangementsin order to assist the franchises with operating cash flow needs during the current economic downturn. These arrangements are not required by our franchiseoperating agreements and may be discontinued in the future.

While certain of our domestic franchisees are a few months behind in their franchise fees as previously discussed, as of September 1, 2009, all the domesticfranchisees were making interest and/or principal payments on a monthly basis in accordance with the current terms of their notes. All of the refranchising notesaccrue interest at 10.0% per annum.

The allowance for doubtful notes represents our best estimate of losses inherent in the notes receivable at the balance sheet date. During the 13 weeks endedSeptember 1, 2009 and September 2, 2008, we recorded bad debt expense of $0.2 million and $0.3 million, respectively, based on our estimate of the extent ofthose losses. On September 1, 2009, we forgave a $1.3 million note owed by our Utah franchise, for which we had a reserve of $1.2 million recorded in ourallowance for doubtful notes prior to the forgiveness.

Also included in the allowance for doubtful notes at September 1, 2009 and September 2, 2008 are $1.1 million and $0.9 million, respectively, which representsour portion of the equity method losses of certain of our 50%-owned franchise partnerships and was in excess of our recorded investment in those partnerships.

NOTE E – ASSETS HELD FOR SALE, PROPERTY, EQUIPMENT, AND OPERATING LEASES

Amounts included in assets held for sale at September 1, 2009 totaled $10.9 million, primarily consisting of parcels of land upon which we have no intention tobuild restaurants, land and buildings of closed restaurants, and various liquor licenses. During the 13 weeks ended September 1, 2009, we sold three surplusproperties and a liquor license at a net gain of $0.8 million. Cash proceeds from these sales totaled $2.8 million.

9


Property and equipment, net, is comprised of the following (in thousands):

September 1, 2009 June 2, 2009

Land $ 218,416 $ 218,452

Buildings 459,904 459,335

Improvements 408,016 407,962

Restaurant equipment 275,421 274,922

Other equipment 90,879 90,684

Construction in progress * 24,019 20,164

1,476,655 1,471,519

Less accumulated depreciation and amortization 501,389 486,420

$ 975,266 $ 985,099

* Included in Construction in progress as of September 1, 2009 and June 2, 2009 are $20.7 million and $17.6 million, respectively, of assets held for sale that arenot classified as such in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.

Approximately 52% of our 670 restaurants are located on leased properties. Of these, approximately 62% are land leases only; the other 38% are for both landand building. The initial terms of these leases expire at various dates over the next 20 years. These leases may also contain required increases in minimum rent atvarying times during the lease term and have options to extend the terms of the leases at a rate that is included in the original lease agreement. Most of our leasesrequire the payment of additional (contingent) rent that is based upon a percentage of restaurant sales above agreed upon sales levels for the year. These saleslevels vary for each restaurant and are established in the lease agreements. We recognize contingent rental expense (in annual as well as interim periods) prior tothe achievement of the specified target that triggers the contingent rental expense, provided that achievement of that target is considered probable.

NOTE F – LONG-TERM DEBT AND CAPITAL LEASES

Long-term debt and capital lease obligations consist of the following (in thousands):

September 1, 2009 June 2, 2009 Revolving credit facility $ 218,800 $ 319,100Senior notes:

Series A, due April 2010 73,866 77,146Series B, due April 2013 53,280 55,646

Mortgage loan obligations 40,226 41,326Capital lease obligations 198 189 386,370 493,407Less current maturities 14,280 16,841 $ 372,090 $ 476,566 On November 19, 2004, we entered into a five-year revolving credit agreement (the “Credit Facility”) to provide capital for general corporate purposes. OnFebruary 28, 2007, we amended and restated our Credit Facility such that the aggregate amount we may borrow increased to $500.0 million. This amountincluded a $50.0 million subcommitment for the issuance of standby letters of credit and a $50.0 million subcommitment for swingline loans. Due to concernsthat at some point in the future we might not be in compliance with certain of our debt covenants, we entered into an additional amendment of the amended andrestated Credit Facility on May 21, 2008.

The May 21, 2008 amendment to the Credit Facility, as well as a similarly-dated amendment and restatement of the notes issued in the Private Placement asdiscussed below, eased financial covenants regarding minimum fixed charge coverage ratio and maximum funded debt ratio. We are currently in compliancewith our debt covenants. In exchange for the new covenant requirements, in addition to higher

10


interest rate spreads and mandatory reductions in capacity and/or prepayments of principal, the amendments also imposed restrictions on future capitalexpenditures and require us to achieve certain leverage thresholds for two consecutive fiscal quarters before we may pay dividends or repurchase any of ourstock.

Following the May 21, 2008 amendment to the Credit Facility, through a series of scheduled quarterly and other required reductions, our original $500.0 millioncapacity has been reduced, as of September 1, 2009, to $428.0 million. We expect the capacity of the Credit Facility will be reduced by $24.7 million during theremainder of fiscal 2010. Under the Credit Facility, interest rates charged on borrowings can vary depending on the interest rate option we choose to utilize. Our options for the rate are theBase Rate or an adjusted LIBO Rate plus an applicable margin. The Base Rate is defined to be the higher of the issuing bank’s prime lending rate or the FederalFunds rate plus 0.5%. The applicable margin is zero to 2.5% for the Base Rate loans and a percentage ranging from 1.0% to 3.5% for the LIBO Rate-basedoption. We pay commitment fees quarterly ranging from 0.2% to 0.5% on the unused portion of the Credit Facility. As further discussed in Note B to the Condensed Consolidated Financial Statements, on July 28, 2009, we closed an underwritten public offering of 11.5 millionshares of Ruby Tuesday, Inc. common stock at $6.75 per share, less underwriting discounts. We received approximately $73.1 million in net proceeds from thesale of the shares, after deducting underwriting discounts and offering expenses. The net proceeds were used to repay indebtedness under our Credit Facility.

Under the terms of the Credit Facility, we had borrowings of $218.8 million with an associated floating rate of interest of 2.90% at September 1, 2009, whichwas determined by adding a margin of 2.5% to the appropriate adjusted LIBO Rate. As of June 2, 2009, we had $319.1 million outstanding with an associatedfloating rate of interest of 2.96%. After consideration of letters of credit outstanding, we had $195.2 million available under the Credit Facility as of September 1,2009. The Credit Facility will mature on February 23, 2012.

On April 3, 2003, we issued notes totaling $150.0 million through a private placement of debt (the “Private Placement”). On May 21, 2008, given similarcircumstances as those with the Credit Facility discussed above, we amended and restated the notes issued in the Private Placement. The May 21, 2008amendment requires us to offer quarterly and other prepayments, which predominantly consist of semi-annual prepayments to be determined based upon excesscash flows as defined in the Private Placement. At September 1, 2009, the Private Placement consisted of $73.9 million in notes with an interest rate of 8.19% (the “Series A Notes”) and $53.3 million in noteswith an interest rate of 8.92% (the “Series B Notes”). The Series A Notes and Series B Notes mature on April 1, 2010 and April 1, 2013, respectively. During the13 weeks ended September 1, 2009, we offered, and our noteholders accepted, principal prepayments of $3.3 million and $2.4 million on the Series A and BNotes, respectively. We estimate that we will offer prepayments totaling $9.8 million during the next twelve months. Accordingly, we have classified $9.8million as current as of September 1, 2009. This amount includes four quarterly offers of $2.0 million each and additional amounts to be determined based uponexcess cash flows and sales of surplus properties. We currently project that $70.5 million of our Series A Notes will be outstanding on April 1, 2010, their maturity date. In accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 6, “Classification of Short-Term Obligations Expected to be Refinanced,” because of our ability and intent to refinance thebalance on a long-term basis by utilizing the capacity on our Credit Facility, we have classified this amount as non-current in our September 1, 2009 CondensedConsolidated Balance Sheet. Simultaneous with the other May 21, 2008 amendments, we entered into a pledge agreement with our Credit Facility and Private Placement creditors, as well asthose creditors associated with our Franchise Facility (discussed in Note L to the Condensed Consolidated Financial Statements), whereby we pledged certainsubsidiary equity interests as security for the repayment of our obligations under these agreements.

11


NOTE G – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairment expenses include the following for the thirteen weeks ended September 1, 2009 and September 2, 2008 (in thousands):

September 1, 2009 September 2, 2008 Impairments for:

Restaurants closed during the current fiscal year $ – $ 581Open restaurants 465 821Surplus properties 154 256

619 1,658Dead site costs 108 45Closed restaurant lease reserves 652 328Other closing costs (9) (28)Gain on sale of surplus properties (780) (94)

$ 590 $ 1,909

A negligible amount of adjustments to lease reserves for the 13-week period ended September 2, 2008 previously classified as Loss from Specialty RestaurantGroup, LLC (“SRG”) bankruptcy were reclassified to Closures and Impairments in the current Condensed Consolidated Statements of Income to ensureconsistency with the current presentation. These reclassifications had no impact on previously reported net income. See Note L to the Condensed ConsolidatedFinancial Statements for further discussion of the SRG bankruptcy.

A rollforward of our future lease obligations associated with closed properties is as follows (in thousands):

Lease ObligationsBalance at June 2, 2009 $ 9,945Transfer of Specialty Restaurant Group, LLC lease reserve balance 1,183Closing expense including rent and other lease charges 652Payments (1,760)Balance at September 1, 2009 $ 10,020

For the remainder of fiscal 2010 and beyond, our focus will be on obtaining settlements on as many of these leases as is possible and these settlements could behigher or lower than the amounts recorded. The actual amount of any cash payments made by the Company for lease contract termination costs will be dependentupon ongoing negotiations with the landlords of the leased restaurant properties.

At September 1, 2009, we had 33 restaurants that had been open more than one year with rolling 12 month negative cash flows of which 17 have been impairedto salvage value. Of the 16 which remained, we reviewed the plans to improve cash flows at each of the restaurants and determined that no impairment wasnecessary. The remaining net book value of these 16 restaurants was $15.8 million at September 1, 2009.

Should sales at these restaurants not improve within a reasonable period of time, further impairment charges are possible. Considerable management judgment isnecessary to estimate future cash flows, including cash flows from continuing use, terminal value, closure costs, salvage value, and sublease income.Accordingly, actual results could vary significantly from our estimates.

NOTE H – RETIREMENT BENEFITS

We sponsor three defined benefit pension plans for active employees and offer certain postretirement benefits for retirees. A summary of each of these ispresented below.

Retirement PlanRTI sponsors the Morrison Restaurants Inc. Retirement Plan (the “Retirement Plan”). Effective December 31, 1987, the Retirement Plan was amended so that noadditional benefits would accrue and no new

12


participants may enter the Retirement Plan after that date. Participants receive benefits based upon salary and length of service.

Minimum funding for the Retirement Plan is determined in accordance with the guidelines set forth in employee benefit and tax laws. From time to time we maycontribute additional amounts as we deem appropriate. We estimate that we will not be required to make any contributions to the Retirement Plan in fiscal 2010.

Executive Supplemental Pension Plan and Management Retirement PlanUnder these unfunded defined benefit pension plans, eligible employees earn supplemental retirement income based upon salary and length of service, reducedby social security benefits and amounts otherwise receivable under other specified Company retirement plans. Effective June 1, 2001, the ManagementRetirement Plan was amended so that no additional benefits would accrue and no new participants may enter the plan after that date. We share with Morrison Health Care, Inc. (“MHC”), a formerly-related company, the liability for retirement benefits accrued through March 1996 underpreviously-established non-qualified plans by the participants of a second formerly-related company, Morrison Fresh Cooking, Inc. (“MFC”). These previousnon-qualified plans were similar to the Executive Supplemental Pension Plan and the Management Retirement Plan. See Note L to the Condensed ConsolidatedFinancial Statements for more information on our guarantees and shared liabilities. Postretirement Medical and Life BenefitsOur Postretirement Medical and Life Benefits plans provide medical and life insurance benefits to certain retirees. The medical plan requires retiree cost sharingprovisions that are more substantial for employees who retire after January 1, 1990.

The following tables detail the components of net periodic benefit costs and the amounts recognized in our Condensed Consolidated Financial Statements for theRetirement Plan, Management Retirement Plan, and the Executive Supplemental Pension Plan (collectively, the “Pension Plans”) and the Postretirement Medicaland Life Benefits plans (in thousands):

Pension Benefits

Thirteen weeks ended September 1, 2009 September 2, 2008

Service cost $ 113 $ 102

Interest cost 623 603

Expected return on plan assets (106) (168)

Amortization of prior service cost 82 82

Recognized actuarial loss 346 242

Net periodic benefit cost $ 1,058 $ 861

Postretirement Medical and Life Benefits

Thirteen weeks ended September 1, 2009 September 2, 2008

Service cost $ 3 $ 2

Interest cost 21 21

Amortization of prior service cost (16) (16)

Recognized actuarial loss 25 27

Net periodic benefit cost $ 33 $ 34

We also sponsor two defined contribution retirement savings plans. Information regarding these plans is included in our Annual Report on Form 10-K for thefiscal year ended June 2, 2009.

13


NOTE I – INCOME TAXES

We had a liability for unrecognized tax benefits of $4.2 million and $4.5 million as of September 1, 2009 and June 2, 2009, respectively. As of September 1,2009 and June 2, 2009, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $2.7 million and $2.9 million,respectively. We do not expect that the amounts of unrecognized tax benefits will change significantly within the next twelve months. Interest and penalties related to unrecognized tax benefits are recognized as components of income tax expense. As of September 1, 2009 and June 2, 2009, wehad accrued $1.8 million and $1.6 million, respectively, for the payment of interest and penalties. During the first quarter of fiscal 2010, accrued interest andpenalties increased by $0.2 million, of which $0.1 million affected the effective tax rate for the quarter ended September 1, 2009. The effective tax rate for the current quarter was 17.4% compared to 21.3% for the same period of the prior year. The change in the effective tax rate resultedprimarily from the impact of pre-tax income which increased as compared to the same period of the prior year without a corresponding increase in the charge forunrecognized tax benefits. At September 1, 2009, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2007, and with few exceptions,state and local examinations by tax authorities prior to fiscal year 2006.

NOTE J – COMPREHENSIVE INCOME

SFAS No. 130, “Reporting Comprehensive Income” (“SFAS 130”), requires the disclosure of certain revenue, expenses, gains and losses that are excluded fromnet income in accordance with U.S. generally accepted accounting principles. Items that currently impact our other comprehensive income are the pensionliability adjustments and payments received in settlement of the Piccadilly divestiture guarantee. See Note L to the Condensed Consolidated Financial Statementsfor further information on the Piccadilly settlement. Amounts shown in the table below are in thousands.

Thirteen weeks ended

September 1, September 2,

2009 2008

Net income $ 6,144 $ 285

Pension liability reclassification, net of tax 264 202

Piccadilly settlement, net of tax 4 –

Comprehensive income $ 6,412 $ 487

NOTE K – SHARE-BASED EMPLOYEE COMPENSATION

We compensate our employees and Directors using share-based compensation through the following plans: The Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for DirectorsUnder the Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for Directors (the “Directors’ Plan”), non-employee directors are eligible forawards of share-based incentives. Restricted shares granted under the Directors’ Plan vest in equal amounts after one, two, and three years provided the Directorcontinually serves on the Board. Options issued under the Plan become vested after thirty months and are exercisable until five years after the grant date. Stockoption exercises are settled with the issuance of new shares. All options awarded under the Directors’ Plan have been at the fair market value at the time of grant. A Committee, appointed by the Board, administers theDirectors’ Plan. At September 1, 2009, we had reserved 392,000 shares of common stock under this Plan, 253,000 of which were subject to options outstanding,for a net of 139,000 shares of common stock currently available for issuance under the Directors’ Plan.

14


The Ruby Tuesday, Inc. 2003 Stock Incentive Plan and the Ruby Tuesday, Inc. 1996 Stock Incentive PlanA Committee, appointed by the Board, administers the Ruby Tuesday, Inc. 2003 Stock Incentive Plan (“2003 SIP”) and the Ruby Tuesday, Inc. 1996 StockIncentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees and officers to whom share-based incentives are granted andthe terms and provisions of share-based incentives. Option grants under the 2003 SIP and 1996 SIP can have varying vesting provisions and exercise periods asdetermined by such Committee. Options granted under the 2003 SIP and 1996 SIP vest in periods ranging from immediate to fiscal 2012, with the majorityvesting 24 or 30 months following the date of grant, and the majority expiring five or seven (but some up to ten) years after grant. The majority of restrictedshares granted under the 2003 SIP and 1996 SIP in fiscal 2010, 2009, and 2008 are performance-based. The 2003 SIP and 1996 SIP permit the Committee tomake awards of shares of common stock, awards of stock options or other derivative securities related to the value of the common stock, and certain cash awardsto eligible persons. These discretionary awards may be made on an individual basis or for the benefit of a group of eligible persons. All options awarded underthe 2003 SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

At September 1, 2009, we had reserved a total of 5,562,000 and 1,666,000 shares of common stock for the 2003 SIP and 1996 SIP, respectively. Of the reservedshares at September 1, 2009, 3,957,000 and 1,170,000 were subject to options outstanding for the 2003 SIP and 1996 SIP, respectively. Stock option exercisesare settled with the issuance of new shares.

Stock OptionsThe following table summarizes the activity in options for the 13 weeks ended September 1, 2009 under these stock option plans (in thousands, except per-sharedata):

Weighted-

Average

Options Exercise Price

Balance at June 2, 2009 4,802 $ 23.06

Granted 622 6.58

Exercised – –

Forfeited (44) 27.37

Balance at September 1, 2009 5,380 $ 21.12

Exercisable at September 1, 2009 2,946 $ 27.61

Included in the outstanding balance shown above are approximately 4,485,000 of out-of-the money options. Many are expected to expire out-of-the money in thenext three fiscal years.

At September 1, 2009, there was approximately $1.7 million of unrecognized pre-tax compensation expense related to non-vested stock options. This cost isexpected to be recognized over a weighted-average period of 1.5 years.

During the first quarter of fiscal 2010, we granted approximately 622,000 stock options to certain employees under the terms of the 2003 SIP and 1996 SIP.These stock options vest in equal annual installments over a three year period following grant of the award, and have a maximum life of seven years. These stockoptions do provide for immediate vesting if the optionee retires during the option period as well as if certain other events occur. For employees meeting thiscriterion at the time of grant, the accelerated vesting provision renders the requisite service condition non-substantive under Statement of Financial AccountingStandards No. 123 (Revised 2004), “Share-Based Payment,” and we therefore fully expense the fair value of stock options awarded to retirement eligibleemployees on the date of grant. As a result, we recorded during the first quarter of fiscal 2010 an expense of $1.2 million related to stock options awarded on July7, 2009 to our Chief Executive Officer (“CEO”).

15


Restricted StockThe following table summarizes our restricted stock activity for the 13 weeks ended September 1, 2009 (in thousands, except per-share data):

Weighted-Average

Restricted Grant-Date

Performance-based vesting: Stock Fair Value

Non-vested at June 2, 2009 1,195 $ 7.64

Granted 348 6.58

Vested (186) 7.64

Forfeited (636) 7.64

Non-vested at September 1, 2009 721 $ 7.13

Weighted-Average

Restricted Grant-Date

Time-based vesting: Stock Fair Value

Non-vested at June 2, 2009 208 $ 8.97

Granted 201 6.58

Vested (16) 7.63

Forfeited – –

Non-vested at September 1, 2009 393 $ 7.80

The fair values of the restricted share awards reflected above were based on the fair market value of our common stock at the time of grant. At September 1,2009, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $3.3 million and will be recognized over aweighted average vesting period of approximately 1.7 years.

During the first quarter of fiscal 2010, we granted approximately 201,000 time-based restricted shares of common stock and 348,000 performance-basedrestricted shares of common stock under the terms of the 2003 SIP and 1996 SIP. Vesting of the performance-based restricted shares, including 177,000 sharesthat were awarded to our CEO, is also contingent upon the Company’s achievement of certain performance conditions related to fiscal 2010 performance, whichwill be measured in the first quarter of fiscal 2011. However, for the same reason as mentioned above in regards to our stock options, we recorded during the firstquarter of fiscal 2010 an expense of $1.2 million related to the performance-based restricted shares awarded on July 7, 2009 to our CEO. Should our CEO retireprior to the end of the performance period, the number of restricted shares he would receive would not be determinable until the completion of the performanceperiod. The expense we recorded for this award was determined using a model that assumes all of the performance-based shares will be earned. Also during thefirst quarter of fiscal 2010, we awarded approximately 177,000 shares of common stock to our CEO and recognized an expense of $1.2 million on the grant date.

During the first quarter of fiscal 2010, the Executive Compensation and Human Resources Committee of the Board of Directors determined achievement of theperformance condition for approximately 559,000 performance-based restricted shares awarded in the fourth quarter of fiscal 2008 and the first quarter of fiscal2009. As a result, approximately 636,000 restricted shares from the fiscal 2008 and fiscal 2009 awards were forfeited and returned to the pool of shares availablefor grant under the 2003 SIP and 1996 SIP.

NOTE L – COMMITMENTS AND CONTINGENCIES

Guarantees

At September 1, 2009, we had certain third-party guarantees, which primarily arose in connection with our franchising and divestiture activities. The majority ofthese guarantees expire at various dates ending in fiscal 2013. Generally, we are required to perform under these guarantees in the event that a third-party fails tomake contractual payments.

16


Franchise Partnership GuaranteesAs part of the franchise partnership program, we have negotiated with various lenders a $48 million credit facility to assist the franchise partnerships withworking capital needs and cash flows for operations (the “Franchise Facility”). As sponsor of the Franchise Facility, we serve as partial guarantor, and in certaincircumstances full guarantor, of the draws made by the franchise partnerships on the Franchise Facility. Although the Franchise Facility allows for individualfranchise partnership loan commitments to the end of the Franchise Facility term, all current commitments are for 12 months. On September 8, 2006, we enteredinto an amendment of the Franchise Facility which extended the term for an additional five years to October 5, 2011.

Prior to July 1, 2007, we had arrangements with two third-party lenders whereby we provided partial guarantees for specific loans for new franchisee restaurantdevelopment (the “Cancelled Facilities”). Should payments be required under the Cancelled Facilities, we have certain rights to acquire the operating restaurantsafter the third-party debt is paid. We have terminated the Cancelled Facilities and notified the third-party lenders that we would no longer enter into additionalguarantee arrangements.

As of September 1, 2009, the amounts guaranteed under the Franchise Facility and the Cancelled Facilities were $47.2 million and $4.6 million, respectively. Theguarantees associated with one of the Cancelled Facilities are collateralized by a $3.9 million letter of credit. As of June 2, 2009, the amounts guaranteed underthe Franchise Facility and the Cancelled Facilities were $47.5 million and $4.7 million, respectively. Unless extended, guarantees under these programs willexpire at various dates from November 2009 through February 2013. To our knowledge, despite certain of these franchises having reported coverage ratios belowthe required levels, all of the franchise partnerships are current in the payment of their obligations due under these credit facilities. At those times when franchisepartnerships report coverage ratios below the requirements, RTI, as sponsor, has the ability to cure the default by increasing our guaranty from 50% to 100%. Wehave done so for each such situation as of September 1, 2009 and June 2, 2009 and thus the amounts owed by our franchises under the Franchise Facility are notsubject to acceleration. Furthermore, no events have occurred which would allow for a wind-down of the Franchise Facility itself or necessitate guarantypayments on behalf of the franchise partnerships.

We have recorded liabilities totaling $0.6 million and $1.0 million as of September 1, 2009 and June 2, 2009, respectively, related to these guarantees. Theseamounts were determined based on amounts to be received from the franchise partnerships as consideration for the guarantees. We believe these amountsapproximate the fair value of the guarantees.

Divestiture GuaranteesOn November 20, 2000, we completed the sale of all 69 of our American Cafe (including L&N Seafood) and Tia’s restaurants to SRG. A number of theserestaurants were located on leased properties. We remain primarily liable on certain American Cafe and Tia’s leases that were subleased to SRG and contingentlyliable on others. SRG, on December 10, 2003, sold its 28 Tia’s restaurants to an unrelated entity and, as part of the transaction, further subleased certain Tia’sproperties. During the second quarter of fiscal 2007, the third party owner to whom SRG had sold the Tia’s restaurants declared Chapter 7 bankruptcy. This declaration leftus and/or SRG either primarily or indirectly liable for certain of the older Tia’s leases. SRG filed for Chapter 11 bankruptcy during the third quarter of fiscal2007. As of September 1, 2009, we have settled almost all of the Tia’s leases. Future payments to the remaining landlords are expected to be insignificant. As of September 1, 2009, we remain primarily liable for three SRG leases which cover closed restaurants. Scheduled cash payments for rent remaining on thesethree leases at September 1, 2009 totaled $0.5 million. Because these restaurants were located in malls, we may be liable for other charges such as common areamaintenance and property taxes. In addition to the scheduled remaining payments, we believe an additional $0.7 million for previously scheduled rent and relatedpayments on these leases had not been paid as of September 1, 2009. As of September 1, 2009, we had recorded an estimated liability of $0.9 million based onthe three SRG unsettled claims to date. We made payments of $0.1 million on the currently unresolved leases during the 13 weeks ended September 1, 2009.

17


During fiscal 1996, our shareholders approved the distribution (the “Distribution”) of our family dining restaurant business (MFC) and our health care food andnutrition services business (MHC). Subsequently, Piccadilly Cafeterias, Inc. (“Piccadilly”) acquired MFC and Compass Group, PLC (“Compass”) acquiredMHC. Prior to the Distribution, we entered into various guarantee agreements with both MFC and MHC, most of which have expired. As agreed upon at the timeof the Distribution, we have been contingently liable for (1) payments to MFC and MHC employees retiring under (a) MFC’s and MHC’s versions of theManagement Retirement Plan and the Executive Supplemental Pension Plan (the two non-qualified defined benefit plans) for the accrued benefits earned bythose participants as of March 1996, and (b) funding obligations under the Retirement Plan maintained by MFC and MHC following the Distribution (thequalified plan) until 2006, and (2) payments due on certain workers’ compensation claims (the “Piccadilly Liabilities”).

On October 29, 2003, Piccadilly filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court in Fort Lauderdale, Florida. Following this, wehave recorded, and begun to pay, our pro rata share of the Piccadilly Liabilities for which we have provided guarantees, including those for MFC employeebenefit plans. Our estimates of these liabilities were included within our petition before the bankruptcy court.

During the 13 weeks ended September 1, 2009, we received our sixth, and final, check in settlement of the Piccadilly bankruptcy. Including this final check, wereceived $2.0 million in settlement of our claim.

We estimated our divestiture guarantees related to MHC at September 1, 2009 to be $3.3 million for employee benefit plans. In addition, we remain contingentlyliable for MHC’s portion (estimated to be $2.4 million) of the MFC employee benefit plan liability for which MHC is currently responsible under the divestitureguarantee agreements. We believe the likelihood of being required to make payments for MHC’s portion to be remote due to the size and financial strength ofMHC and Compass.

Litigation

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business. We provide reserves for such claimswhen payment is probable and estimable in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 5, “Accounting for Contingencies.”At this time, in the opinion of management, the ultimate resolution of pending legal proceedings, including the matter referred to below, will not have a materialadverse effect on our operations, financial position or cash flows. On August 28, 2009, a jury in the civil action Dan Maddy v. Ruby Tuesday, Inc. , in the Rutherford County, Tennessee Circuit Court, Case No. 53641, rendered averdict in favor of the plaintiff awarding damages in the amount of $10,035,000. The plaintiff in this matter alleged claims relating to injury caused by anintoxicated person who was served alcoholic beverages at one of our restaurants. The judgment is not yet final and is subject to post-trial motions and appeal. Webelieve that any judgment entered will be for an amount less than the verdict. We maintain insurance to cover these types of claims under our primary insurancecarrier for amounts up to $1,000,000, subject to a self-insured retention of $500,000, and under a secondary insurance carrier for amounts in excess of $1,000,000up to an amount in excess of the amount of the verdict. Our secondary insurance carrier has asserted a reservation of rights, claiming that it did not receive timelynotice of this matter from our third party claims administrator in accordance with the terms of the policy. Our service agreement with our third party claimsadministrator provides that it will indemnify us against any liabilities, loss or damage that we may suffer as a result of any claim, cost or judgment against usarising out of the third party claims administrator’s negligence or willful misconduct. Based on the information currently available, and acknowledging theuncertainty of litigation, our September 1, 2009 Condensed Consolidated Balance Sheet reflects the amount of any expected recovery by the plaintiff. Suchamount is included in Insurance within the Accrued liabilities caption in our Condensed Consolidated Balance Sheet. We intend to appeal the judgment oncefinalized in the event we are not successful in invalidating the judgment through our post-trial motions, and we believe that we have valid coverage under ourinsurance policies for any amounts in excess of our self-insured retention. There can be no assurance, however, that we will be successful in our post-trialmotions or appeal of the judgment or, in the event we are not successful, that we will prevail in any dispute with our insurance carrier regarding the validity ofour coverage. Thus, while management believes that this matter will not have a material adverse effect on our operations, financial position or cash flows, therecan be no assurance that this matter will not have such a material adverse effect.

18


NOTE M – FAIR VALUE MEASUREMENTS We adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) for our financial assets and liabilities, as well as any other assets and liabilities that arecarried at fair value on a recurring basis in financial statements, in fiscal 2009. In the first quarter of fiscal 2010 we adopted the related FASB Staff Position(“FSP”) No. 157-2, “Effective Date of FASB Statement No. 157” for non-financial assets and liabilities. The adoption had no significant impact on the Companyduring the thirteen weeks ended September 1, 2009. SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generallyaccepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that requireor permit fair value measurements. SFAS 157 does not require any new fair value measurements. Also during the first quarter of fiscal 2010, we adopted FASB Staff Position FAS No. 107-1 and Accounting Principles Board (“APB”) No. 28-1, “InterimDisclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB No. 28-1”). FSP FAS 107-1 and APB No. 28-1 amends SFAS No. 107,“Disclosures about Fair Value of Financial Instruments,” to require disclosures about the fair values of financial instruments for annual and interim reportingperiods of publicly traded companies and amends APB No. 28, “Interim Financial Reporting,” to require those disclosures in summarized financial informationat interim reporting periods. The adoption of these accounting pronouncements did not have a significant impact on our condensed consolidated financialstatements. SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or mostadvantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 also establishes athree-level fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuringfair value. The following table presents the fair values of our financial assets and liabilities measured at fair value on a recurring basis as of September 1, 2009 (inthousands):

Fair Value Measurements

CarryingValue at

September 1,2009

QuotedPrices inActive

Markets forIdenticalAssets

(Level 1)

SignificantOther

ObservableInputs

(Level 2)

SignificantUnobservable

Inputs(Level 3)

Deferred compensation plan -

assets $ 7,594 $ 7,594 $ – $ – Deferred compensation plan -

liabilities (7,594) (7,594) – –

Total $ – $ – $ – $ –

The Ruby Tuesday, Inc. 2005 Deferred Compensation Plan (the “Deferred Compensation Plan”) and the Ruby Tuesday, Inc. Restated Deferred CompensationPlan (the “Predecessor Plan”) are unfunded, non-qualified deferred compensation plans for eligible employees. Assets earmarked to pay benefits under theDeferred Compensation Plan and Predecessor Plan are held by a rabbi trust. We report the accounts of the rabbi trust in our Condensed Consolidated FinancialStatements. With the exception of the investment in RTI common stock, the investments held by these plans are considered trading securities and are reported atfair value based on third-party broker statements. The realized and unrealized holding gains and losses related to these investments, as well as the offsettingcompensation expense, is recorded in Selling, general and administrative expense in the Condensed Consolidated Financial Statements. The investment in RTI common stock and related liability payable in RTI common stock, which are reflected in Shareholders’ Equity in the CondensedConsolidated Balance Sheets, are excluded from the fair value table above as these are considered treasury shares and reported at cost.

19


The following table presents the fair values for those assets and liabilities measured on a non-recurring basis and remaining on our Condensed ConsolidatedBalance Sheet as of September 1, 2009 and the losses recognized from all such measurements during the thirteen weeks ended September 1, 2009 (in thousands):

Fair Value Measurements

CarryingValue at

September 1,2009

QuotedPrices inActive

Markets forIdenticalAssets

(Level 1)

SignificantOther

ObservableInputs

(Level 2)

SignificantUnobservable

Inputs(Level 3)

Losses/(Gains)

Long-lived assets held for sale * $ 31,638 $ – $ 31,638 $ – $ 154Long-lived assets held for use 4,042 – 4,042 – 465

Total $ 35,680 $ – $ 35,680 $ – $ 619

* Included in the carrying value of long-lived assets held for sale are $20.7 million of assets included in Construction in progress in the Condensed ConsolidatedBalance Sheet as we do not expect to sell these assets within the next 12 months. Long-lived assets held for sale are valued using Level 2 inputs, primarily information obtained through broker listings and sales agreements. Costs to marketand/or sell the assets are factored into the estimates of fair value. During the 13 weeks ended September 1, 2009, long-lived assets held for sale with a carryingamount of $11.1 million were written down to their fair value of $10.9 million, resulting in a loss $0.2 million, which is included in Closures and impairments inour Condensed Consolidated Statement of Income. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), we review our long-lived assets (primarilyproperty, equipment and, as appropriate, reacquired franchise rights) related to each restaurant to be held and used in the business, whenever events or changes incircumstances indicate that the carrying amount of a restaurant may not be recoverable. We evaluate restaurants based upon cash flows as our primary indicatorof impairment. Based on the best information available, we write down an impaired restaurant to its estimated fair market value, which becomes its new costbasis. Fair value is determined through broker listings or by discounting the estimated future cash flows including salvage value, if any. The discount rate is ourestimate of the required rate of return that a third-party buyer would expect to receive when purchasing a restaurant and its related long-lived assets. Long-lived assets held for use presented in the table above include our company airplane and restaurants or groups of restaurants that were impaired as a result ofour quarterly impairment review. From time to time, the table will also include closed restaurants or surplus sites not meeting held for sale criteria that have beenoffered for sale at a price less than their carrying value. During the 13 weeks ended September 1, 2009, we recorded $0.5 million of impairments on our long-lived assets held for use, which is included with Closuresand impairments expense in our Condensed Consolidated Statements of Income. The Level 2 fair values of our long-lived assets held for use are based on brokerestimates of the value of the land, building, leasehold improvements, and other residual assets.

Our financial instruments at September 1, 2009 and June 2, 2009 consisted of cash and short-term investments, accounts receivable and payable, notesreceivable, long-term debt, franchise partnership guarantees, letters of credit, and, as previously discussed, deferred compensation plan investments. The fairvalues of cash and short-term investments and accounts receivable and payable approximated carrying value because of the short-term nature of theseinstruments. The carrying amounts and fair values of our other financial instruments not measured on a recurring basis using fair value, however subject to fairvalue disclosures are as follows (in thousands):

20


September 1, 2009 June 2, 2009

CarryingAmount

FairValue

CarryingAmount

FairValue

Deferred Compensation Plan

investment in RTI common stock $ 2,101 $ 1,259 $ 2,200 $ 1,318

Notes receivable, gross 7,834 8,215 9,644 10,100

Long-term debt and capital leases 386,370 393,808 493,407 491,575

Franchise partnership guarantees 609 651 1,034 1,057

Letters of credit – 370 – 370

We estimated the fair value of notes receivable, debt, franchise partnership guarantees, and letters of credit using market quotes and present value calculationsbased on market rates.

NOTE N – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted in Fiscal 2010As discussed in Note M to the Condensed Consolidated Financial Statements, in the first quarter of fiscal 2010 we adopted FSP No. 157-2, “Effective Date ofFASB Statement No. 157” for non-financial assets and liabilities. The adoption had no significant impact on the Company during the thirteen weeks endedSeptember 1, 2009. In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes the principles andrequirements for how an acquirer: 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and anynoncontrolling interest in the acquiree; 2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and 3)determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS141R is to be applied prospectively to business combinations consummated on or after the beginning of the first annual reporting period on or after December 15,2008 (fiscal 2010 for RTI). The adoption of SFAS 141R had no impact on our Condensed Consolidated Financial Statements. In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”(“SFAS 160”). SFAS 160 establishes accounting and reporting standards that require: 1) noncontrolling interests to be reported as a component of equity; 2)changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions; and 3) any retained noncontrollingequity investment upon the deconsolidation of a subsidiary be initially measured at fair value. SFAS 160 is to be applied prospectively to business combinationsconsummated on or after the beginning of the first annual reporting period on or after December 15, 2008 (fiscal 2010 for RTI). The adoption of SFAS 160 hadno impact on our Condensed Consolidated Financial Statements.

In April 2009, the FASB issued Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS107-1”). FSP FAS 107-1 requires fair value disclosures on an interim basis for financial instruments that are not reflected in the consolidated balance sheets atfair value. Prior to the issuance of FSP FAS 107-1, the fair values of those financial instruments were only disclosed on an annual basis. FSP FAS 107-1 iseffective for interim reporting periods that end after June 15, 2009 (our fiscal 2010 first quarter). See Note M to our Condensed Consolidated FinancialStatements for further information about the fair value of our financial instruments.

In May 2009, the FASB issued Statement No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosureof events that occur after the balance sheet date but before financial statements are issued or available to be issued. SFAS 165 is effective for interim or annualreporting periods ending after June 15, 2009 (our fiscal 2010 first quarter). The adoption of SFAS 165 had no impact on our Condensed Consolidated FinancialStatements. Accounting Pronouncements Not Yet AdoptedIn December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FAS132(R)-1 expands the disclosure requirements about plan assets for defined benefit pension plans and postretirement plans. FSP FAS

21


132(R)-1 is effective for fiscal years ending after December 15, 2009, and will impact our financial statement disclosures beginning with the year ending June 1,2010 (our current fiscal year). In June 2009, the FASB issued Statement No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 eliminates FIN 46(R)’sexceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency ofrequired reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also contains a new requirement thatany term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variableinterest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in applying FIN 46(R)’s provisions.SFAS 167 is effective for fiscal years beginning after November 15, 2009 (fiscal 2011 for RTI). We are currently evaluating the impact of SFAS 167 on ourCondensed Consolidated Financial Statements. In June 2009, the FASB issued Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted AccountingPrinciples – a replacement of FASB Statement No. 162” (“SFAS 168”). SFAS 168 provides for the FASB Accounting Standards Codification (the“Codification”) to become the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (“GAAP”). TheCodification was not intended to change GAAP but reorganizes the literature. The Codification will be effective for interim or annual periods ending afterSeptember 15, 2009, and will impact how we reference authoritative accounting literature referenced within our financial statements beginning with the quarterending December 1, 2009.

22


ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

General:

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” the “Company,” “we” and/or “our”), owns and operates Ruby Tuesday® casual diningrestaurants and two Wok Hay restaurants. We also franchise the Ruby Tuesday concept in selected domestic and international markets. As of September 1, 2009we owned and operated 670, and franchised 226, Ruby Tuesday restaurants. Ruby Tuesday restaurants can now be found in 46 states, the District of Columbia,13 foreign countries, and Guam.

Overview and Strategies Casual dining, the segment of the industry in which we operate, is intensely competitive with respect to prices, services, convenience, locations, and the typesand quality of food. We compete with other food service operations, including locally-owned restaurants, and other national and regional restaurant chains thatoffer the same or similar types of services and products as we do. In 2005, our analysis of the bar and grill segment within casual dining indicated that manyconcepts, including Ruby Tuesday, were not clearly differentiated. We believed that as the segment continued to mature, the lack of differentiation would makeit increasingly difficult to attract new guests. Consequently, we created brand reimaging initiatives to implement our strategy of clearly differentiating RubyTuesday from our competitors. We implemented our strategy in stages, first focusing on food, then service, and in 2007, we embarked on the most capitalintensive aspect of our reimaging program – the creation of a fresh new look for our restaurants. Offering compelling value, our fourth initiative, is especiallyimportant in a difficult economy such as we are currently experiencing. We believe that Ruby Tuesday, as a result of these initiatives, is well positioned for thefuture. While we were in the process of implementing our brand reimaging, consumer spending came under pressure for a variety of reasons, and further weakened inthe fourth quarter of calendar 2008. As the economic environment deteriorated, operating results for other casual dining concepts, as well as our operating results,declined significantly. In response, in the second half of fiscal 2009, we implemented several initiatives intended to enhance our sales, reduce costs and improvecash flow, including the following:

• Sales initiatives. Our sales initiatives aim to increase guest traffic by focusing primarily on two areas, menu and marketing. The menu emphasizeshigh quality and compelling value. For example, our burgers now include “endless fries,” the majority of our Specialties and Premium Seafooditems offer a complete meal for typically less than $12 and we offer 40 meals for under $10. Through independently conducted studies, weregularly measure our guests’ perception of our menu offerings and will make item modifications to enhance their value proposition if necessary.Our new brand image allows us to credibly offer higher end limited time menu items, such as lobster tails, which we believe allow us to betterleverage our fixed costs and further differentiate our brand from our traditional competitors.

We shifted our marketing strategy to more effectively communicate our brand and value message. We broadened our strategy to encompass fourpillars: traditional media, print promotion, internet activities, and community-based programs. Part of our emphasis is greater promotional activity,with a local market focus, that is intended to address the current importance of price in consumers’ perception of value. We are also evaluatingprograms to increase sales during off-peak times.

• Cost savings. In the second half of fiscal 2009, we implemented initiatives designed to result in substantial cost savings. These cost savings are aresult of: labor initiatives, including new scheduling systems and the realignment of field supervisors, which are expected to account forapproximately one-half of the savings, while disciplined food cost management, improved operating efficiencies and the closing of theunderperforming restaurants are expected to account for the remainder. We estimate that these initiatives resulted in cost savings of approximately$20.0 million in the second half of fiscal 2009 and have further benefitted us in the first quarter of fiscal 2010.

23


• Restaurant closings. During our second quarter of fiscal 2009 we conducted an analysis of all our Company-operated restaurants based onprofitability, brand image, location, and other factors and identified 73 restaurants to close, 43 of which we closed in the third quarter of fiscal2009. Two additional restaurants closed in the first quarter of fiscal 2010 upon their lease expirations.

• Generate free cash flow and improve our balance sheet. Because of our leverage, we are highly focused on maximizing our cash flow andpaying down our debt. If we are successful in stabilizing same-restaurant sales and maintaining or lowering our costs, we have the opportunity tomaintain substantial levels of free cash flow. Furthermore, our near-term capital requirements are relatively modest as we don’t anticipate openingany new Ruby Tuesday restaurants during the remainder of fiscal 2010, and our maintenance capital spending needs are low because we haveremodeled virtually all the Company-owned restaurants within the last two years. We define “free cash flow” to be the net amount remaining whenpurchases of property and equipment are subtracted from net cash provided by operating activities.

We generated $27.9 million of free cash flow in the first quarter of fiscal 2010, all of which was dedicated to the reduction of debt. We anticipatetotal capital spending in fiscal 2010 to be $18.0 to $20.0 million. We also estimate we will generate $60.0 million to $65.0 million of free cash flowduring the remainder of fiscal 2010, a substantial portion of which will be dedicated to the reduction of debt. Similarly, we intend to use free cashflow generated in the next couple of years following fiscal 2010 to reduce debt. Our objective is to reduce debt as quickly as possible to strengthenour balance sheet and reduce the financial risk related to our leverage. As another means of reducing our bank debt and strengthening our balancesheet, on July 28, 2009, we closed an underwritten public offering of 11.5 million shares of Ruby Tuesday, Inc. common stock. The $73.1 millionnet proceeds raised in the equity offering was also used to reduce our outstanding debt. See further discussion in the Financing Activities section ofthis Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).

Results of Operations:

The following is an overview of our results of operations for the 13-week period ended September 1, 2009:

Net income increased to $6.1 million for the 13 weeks ended September 1, 2009 compared to $0.3 million for the same quarter of the previous year. Dilutedearnings per share for the fiscal quarter ended September 1, 2009 increased to $0.11 compared to $0.01 for the corresponding period of the prior year as a resultof the increase in net income as discussed below.

During the 13 weeks ended September 1, 2009:

● No restaurants were opened by either the Company or our franchisees; ● Two Company-owned Ruby Tuesday restaurants were closed; ● Three franchise restaurants were closed; ● Same-restaurant sales* at Company-owned restaurants decreased 3.1%, while same-restaurant sales at domestic franchise Ruby Tuesday

restaurants decreased 6.5%; and ● We closed an underwritten public offering of 11.5 million shares of Ruby Tuesday, Inc. common stock, receiving approximately $73.1 million in

net proceeds from the sale of the shares, after deducting underwriting discounts and offering expenses.

* We define same-restaurant sales as a year-over-year comparison of sales volumes for restaurants that, in the current year have been open at least 18 months, inorder to remove the impact of new openings in comparing the operations of existing restaurants.

24


The following table sets forth selected restaurant operating data as a percentage of total revenue, except where otherwise noted, for the periods indicated. Allinformation is derived from our Condensed Consolidated Financial Statements included in this Form 10-Q.

Thirteen weeks ended September 1,

2009 September 2,

2008Revenue:

Restaurant sales and operating revenue 99.6% 99.1%Franchise revenue 0.4 0.9

Total revenue 100.0 100.0Operating costs and expenses:

Cost of merchandise (1) 30.2 27.3Payroll and related costs (1) 33.6 34.2Other restaurant operating costs (1) 20.3 21.4Depreciation and amortization (1) 5.4 6.3Selling, general and administrative, net 6.3 8.1Closures and impairments 0.2 0.6Equity in losses/(earnings) of unconsolidated franchises 0.1 (0.2)Interest expense, net 1.8 3.0

Income before income taxes 2.5 0.1Provision for income taxes 0.4 0.0 Net income 2.0% 0.1% (1) As a percentage of restaurant sales and operating revenue.

The following table shows year-to-date Company-owned and franchised Ruby Tuesday concept restaurant openings and closings, and total Ruby Tuesdayconcept restaurants as of the end of the first quarter in each of fiscal 2010 and 2009.


September 1, 2009 September 2, 2008

Company –owned:

Beginning of quarter 672 721

Opened – 2

Closed (2) (8)

End of quarter 670 * 715 *

Franchise:

Beginning of quarter 229 224

Opened – 4

Closed (3) (2)

End of quarter 226 226

* The September 1, 2009 and September 2, 2008 amounts exclude two and one Wok Hay restaurants, respectively.

We expect our domestic and international franchisees to open approximately three to six additional Ruby Tuesday restaurants during the remainder of fiscal2010.

Revenue

RTI’s restaurant sales and operating revenue for the 13 weeks ended September 1, 2009 decreased 6.8% to $299.3 million compared to the same period of theprior year. This decrease primarily resulted from the closing of 54 restaurants in fiscal 2009, 46 of which closed after the end of fiscal 2009’s first quarter, and a3.1% decrease in same-restaurant sales. The 54 restaurants closed in fiscal 2009 produced $13.9 million of restaurant sales in the first quarter of the prior year.

25


The decrease in same-restaurant sales is attributable to an approximate 6.2% decline in average net check as we have maintained our value positioning and printincentive strategy to motivate new guests to visit our restaurants to experience the reimaged Ruby Tuesday brand. This strategy has contributed to anapproximate 3.1% increase in guest counts, partially offsetting the reduction in average net check.

Franchise revenue for the 13 weeks ended September 1, 2009 decreased 52.9% to $1.3 million compared to the same period of the prior year. Franchise revenueis predominately comprised of domestic and international royalties, which totaled $1.3 million and $2.6 million for the 13-week periods ended September 1,2009 and September 2, 2008, respectively. This decrease is due to a decline in royalties from domestic franchisees as a result of temporarily reduced or deferredroyalties for certain franchisees and a decrease in same-restaurant sales for domestic franchise Ruby Tuesday restaurants of 6.5% in the first quarter of fiscal2010.

Under our accounting policy, we do not recognize franchise fee revenue for any franchise with negative cash flows at times when the negative cash flows aredeemed to be anything other than temporary and the franchise has either borrowed directly from us or through a facility for which we provide a guarantee. Wealso do not recognize additional franchise fee revenue from franchisees with fees in excess of 60 days past due. Accordingly, we have deferred recognition of aportion of franchise revenue from certain franchises. Unearned income for franchise fees was $2.6 million and $1.2 million as of September 1, 2009 and June 2,2009, respectively, which are included in other deferred liabilities and/or accrued liabilities – rent and other in the Condensed Consolidated Balance Sheets. Theincrease in unearned income is primarily due to an increase in unearned fees due from a traditional franchise ($1.1 million), for whom we agreed to defer fees fora limited period of time while the franchise negotiated with its lenders for extended terms.

Pre-tax Income

Pre-tax income increased to $7.4 million for the 13 weeks ended September 1, 2009, over the corresponding period of the prior year. The increase included theelimination of $2.8 million in pre-tax losses recorded in the first quarter of fiscal 2009 on the 54 restaurants closed during fiscal 2009. This increase is also due tolower payroll and related costs, other restaurant operating costs, depreciation, selling, general and administrative expense, net, closures and impairments, andinterest expense, net. These lower costs were partially offset by a decline of 3.1% in same-restaurant sales at Company-owned restaurants, lower franchiserevenue, and higher cost of merchandise and equity in losses of unconsolidated franchises.

In the paragraphs that follow, we discuss in more detail the components of the increase in pre-tax income for the 13-week period ended September 1, 2009, ascompared to the comparable period in the prior year. Because a significant portion of the costs recorded in the Cost of merchandise, Payroll and related costs,Other restaurant operating costs, and Depreciation and amortization categories are either variable or highly correlate with the number of restaurants we operate,we evaluate our trends by comparing the costs as a percentage of restaurant sales and operating revenue, as well as the absolute dollar change, to the comparableprior year period.

2009 Restaurant Closings

Operating results for the first quarter of fiscal 2009 for the 54 restaurants closed in fiscal 2009 were as follows (in thousands):

Thirteen Weeks Ended

September 2, 2008 Total revenue $ 13,870 Cost of merchandise 3,992 Payroll and related costs 6,271 Other restaurant operating costs 4,412 Depreciation and amortization 1,014

Selling, general and administrative 974 16,663

Net loss $ (2,793 )

26


Cost of Merchandise

Cost of merchandise increased $2.7 million (3.1%) to $90.3 million for the 13 weeks ended September 1, 2009, over the corresponding period of the prior year.As a percentage of restaurant sales and operating revenue, cost of merchandise increased from 27.3% to 30.2% for the 13 weeks ended September 1, 2009.Excluding the $4.0 million decrease from the elimination of 54 restaurants closed in fiscal 2009, cost of merchandise increased $6.7 million.

The absolute dollar increase in fiscal 2010 for the 13-week period is a result of an approximate 3.1% increase in guest counts, as well as a shift in menu mixcorresponding to our value promotions such that our guests are ordering higher cost menu items, the introduction of lobster tails, which have a high food cost, toour menu in late fiscal 2009, and value-enhancing programs such as offering endless fries with burgers.

As a percentage of restaurant sales and operating revenue the increase is also due to several promotions offered in the current quarter including freestandinginsert coupons in all markets with Company-owned restaurants, direct address label mail pieces, and a value promotion for our So Connected guests offering abuy one get one free on our Specialties, Fork-Tender Ribs, and Handcrafted Steaks. These value offerings had the impact in the current quarter of reducingaverage net check approximately 6.2% for restaurants in our same-restaurant groupings, which increased the related food cost as a percentage of restaurants salesand operating revenue.

Payroll and Related Costs

Payroll and related costs decreased $9.3 million (8.5%) to $100.5 million for the 13 weeks ended September 1, 2009, as compared to the corresponding period inthe prior year. This amount includes $6.3 million of payroll and related costs spent in fiscal 2009 at the 54 restaurants closed in the prior year. As a percentage ofrestaurant sales and operating revenue, payroll and related costs decreased from 34.2% to 33.6%.

The remaining $3.0 million decrease not attributable to closings is primarily due to decreases in hourly labor as a result of new staffing guidelines for certainpositions in our restaurants and the elimination of the dedicated To Go positions in our mall restaurants and certain other locations since the first quarter of theprior year.

As a percentage of restaurant sales and operating revenue, the decrease in payroll and related costs is attributable to the impact of closing 54 restaurants in fiscal2009, which ran higher than system average labor, and the hourly labor cost savings initiatives discussed in the prior paragraph. Offsetting these savings was theimpact on the ratio of the value offerings discussed in the Cost of Merchandise section above that contributed to the increase in guest counts of approximately3.1% for the restaurants in our same-restaurant grouping and the decrease in our average net check of approximately 6.2%.

Other Restaurant Operating Costs

Other restaurant operating costs decreased $7.7 million (11.3%) to $60.9 million for the 13-week period ended September 1, 2009, as compared to thecorresponding period in the prior year. This decrease includes $4.4 million of costs incurred on the 54 restaurants closed in fiscal 2009. As a percentage ofrestaurant sales and operating revenue, these costs decreased from 21.4% to 20.3%.

For the thirteen weeks ended September 1, 2009, the remaining $3.3 million in reductions not attributable to closings related to the following (in thousands):

Utilities $ 1,367 Repairs 909 Other 1,045 $ 3,321

In both absolute dollars and as a percentage of restaurant sales and operating revenue for the 13-week period, the decrease is primarily due to decreases inutilities resulting from reductions in overall electric

27


usage and changing natural gas and fuel vendors at certain of our restaurants which resulted in more favorable rates and decreases in repairs expenses as a resultof recently implemented cost savings programs in these areas.

Depreciation and Amortization

Depreciation and amortization expense decreased $3.8 million (19.1%) to $16.3 million for the 13-week period ended September 1, 2009, as compared to thecorresponding period in the prior year. As a percentage of restaurant sales and operating revenue, this expense decreased from 6.3% to 5.4%.

In terms of both absolute dollars and as a percentage of restaurant sales and operating revenue, the decrease for the 13-week period is primarily due to reduceddepreciation for assets that became fully depreciated since the first quarter of the prior year (a $2.2 million reduction), restaurant closures ($1.0 milliondepreciation in the prior year), and other assets previously impaired (a $0.4 million reduction).

Selling, General and Administrative Expenses, Net

Selling, general and administrative expenses, net of support service fee income, decreased $7.2 million (27.6%) to $19.0 million for the 13-week period endedSeptember 1, 2009, as compared to the corresponding period in the prior year.

The decrease for the 13-week period is primarily due to a reduction in advertising ($7.1 million) as a result of eight weeks of national cable television advertisingduring the prior year quarter as compared to none in the current year, reflecting a shift in our marketing strategy to one based more on offering guests incentivesthrough print media rather than through television and a decrease in media sponsorship expenses relating to sponsorship of a racecar.

Closures and Impairments

Closures and impairments decreased $1.3 million to $0.6 million for the 13-week period ended September 1, 2009, as compared to the corresponding period ofthe prior year. The decrease for the 13-week period is due primarily to a reduction in restaurant impairment charges ($1.0 million) coupled with higher gainsduring the current quarter on the sale of surplus properties ($0.7 million) offset by higher closed restaurant lease reserve expense ($0.3 million) compared withthe same period of the prior year. See Note G to our Condensed Consolidated Financial Statements for further information on our closures and impairmentcharges recorded during the first quarters of fiscal 2010 and 2009.

Equity in Losses/(Earnings) of Unconsolidated Franchises

Our equity in the losses of unconsolidated franchises was $0.2 million for the 13 weeks ended September 1, 2009 compared with equity in earnings of ($0.5)million for the 13 weeks ended September 2, 2008. The change is attributable to losses from investments in five of our six 50%-owned franchise partnerships,which all had income in the first quarter of the prior year. The increase in losses was due in part to same restaurant sales declines in the current year and feerebates in the prior year, offset by lower advertising charges in the current year.

As of September 1, 2009, we held 50% equity investments in each of six franchise partnerships, which collectively operate 70 Ruby Tuesday restaurants. As ofSeptember 2, 2008, we held 50% equity investments in each of six franchise partnerships which then collectively operated 72 Ruby Tuesday restaurants.

Interest Expense, Net

Net interest expense decreased $4.4 million for the 13 weeks ended September 1, 2009, as compared to the corresponding period in the prior year, primarily dueto lower average debt outstanding on the revolving credit agreement (the “Credit Facility”), lower interest rates on the Credit Facility, and other debt paymentsmade since the same period of the prior year.

28


Provision for Income Taxes The effective tax rate for the current quarter was 17.4% compared to 21.3% for the same period of the prior year. The change in the effective tax rate resultedprimarily from the impact of pre-tax income which increased as compared to the same period of the prior year without a corresponding increase in the charge forunrecognized tax benefits.

Critical Accounting Policies:

Our MD&A is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generallyaccepted in the United States of America. The preparation of these financial statements requires us to make subjective or complex judgments that may affect thereported financial condition and results of operations. We base our estimates on historical experience and other assumptions that we believe to be reasonable inthe circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from othersources. Actual results may differ from these estimates under different assumptions or conditions. We continually evaluate the information used to make theseestimates as our business and the economic environment changes.

In our Annual Report on Form 10-K for the year ended June 2, 2009, we identified our critical accounting policies related to share-based employeecompensation, impairment of long-lived assets, franchise accounting, lease obligations, estimated liability for self-insurance, and income tax valuationallowances and tax accruals. During the first 13 weeks of fiscal 2010, there have been no changes in our critical accounting policies.

Liquidity and Capital Resources:

Cash and cash equivalents decreased by $3.9 million and $7.3 million during the first 13 weeks of fiscal 2010 and 2009, respectively. The change in cash andcash equivalents is as follows (in thousands):


September 1, September 2,

2009 2008

Cash provided by operating activities $ 31,720 $ 38,463

Cash used by investing activities (1,752) (5,505)

Cash used by financing activities (33,906) (40,231)

Decrease in cash and cash equivalents $ (3,938) $ (7,273)

Operating Activities

Cash provided by operating activities for the first 13 weeks of fiscal 2010 decreased 17.5% to $31.7 million due to changes in operating assets and liabilities,which collectively produced $18.1 million less cash flow during the first quarter of fiscal 2010 compared with the same period of the prior year primarily as aresult of a reduction in the source of cash from income taxes of $13.1 million. Also contributing to the decrease were reductions in non-cash charges fordepreciation expense of $3.8 million and (gain)/loss on impairments of $1.8 million. Partially offsetting these were increases in net income of $5.9 million,deferred taxes of $8.9 million, and share-based compensation of $1.6 million.

Our working capital deficiency and current ratio as of September 1, 2009 were $23.2 million and 0.8:1, respectively. As is common in the restaurant industry, wecarry current liabilities in excess of current assets because cash (a current asset) generated from operating activities is reinvested in capital expenditures (along-term asset) or reduction of debt (a long-term liability) and receivable and inventory levels are generally not significant.

29


Investing Activities

We require capital principally for the maintenance and upkeep of our existing restaurants, limited new restaurant construction, investments in technology,equipment, remodeling of existing restaurants, and on occasion for the acquisition of franchisees or other restaurant concepts. Property and equipmentexpenditures for the 13 weeks ended September 1, 2009 were $3.8 million, which is $2.3 million less than property and equipment expenditures during the sameperiod of the prior year due to no openings in the current year.

Capital expenditures for the remainder of the fiscal year are budgeted to be approximately $14 million to $16 million based on our planned improvements forexisting restaurants. We intend to fund capital expenditures for Company-owned restaurants with cash provided by operations.

Financing Activities

Historically, our primary sources of cash have been operating activities and proceeds from stock option exercises and refranchising transactions. When thesealone have not provided sufficient funds for both our capital and other needs, we have obtained funds through the issuance of indebtedness or, more recently,through the issuance of additional shares of common stock. Our current borrowings and credit facilities and our recent common stock offering are describedbelow.

On July 28, 2009, we closed an underwritten public offering of 11.5 million shares of Ruby Tuesday, Inc. common stock at $6.75 per share, less underwritingdiscounts, as further discussed in Note B to the Condensed Consolidated Financial Statements. We received approximately $73.1 million in net proceeds from thesale of the shares, after deducting underwriting discounts and offering expenses. The net proceeds were used to repay indebtedness under our five-year revolvingcredit agreement (the “Credit Facility”). On November 19, 2004, we entered into the Credit Facility to provide capital for general corporate purposes. On February 28, 2007, we amended and restatedour Credit Facility such that the aggregate amount we may borrow increased to $500.0 million. This amount included a $50.0 million subcommitment for theissuance of standby letters of credit and a $50.0 million subcommitment for swingline loans. Due to concerns that at some point in the future we might not be incompliance with certain of our debt covenants, we entered into an additional amendment of the amended and restated Credit Facility on May 21, 2008.

The May 21, 2008 amendment to the Credit Facility, as well as a similarly-dated amendment and restatement of the notes issued in the Private Placement asdiscussed below, eased financial covenants regarding minimum fixed charge coverage ratio and maximum funded debt ratio. We are currently in compliancewith our debt covenants. In exchange for the new covenant requirements, in addition to higher interest rate spreads and mandatory reductions in capacity and/orprepayments of principal, the amendments also imposed restrictions on future capital expenditures and require us to achieve certain leverage thresholds for twoconsecutive fiscal quarters before we may pay dividends or repurchase any of our stock.

Following the May 21, 2008 amendment to the Credit Facility, through a series of scheduled quarterly and other required reductions, our original $500.0 millioncapacity has been reduced, as of September 1, 2009, to $428.0 million. We expect the capacity of the Credit Facility will be reduced by $24.0 to $25.0 millionduring the remainder of fiscal 2010. Under the Credit Facility, interest rates charged on borrowings can vary depending on the interest rate option we choose to utilize. Our options for the rate are theBase Rate or an adjusted LIBO Rate plus an applicable margin. The Base Rate is defined to be the higher of the issuing bank’s prime lending rate or the FederalFunds rate plus 0.5%. The applicable margin is zero to 2.5% for the Base Rate loans and a percentage ranging from 1.0% to 3.5% for the LIBO Rate-basedoption. We pay commitment fees quarterly ranging from 0.2% to 0.5% on the unused portion of the Credit Facility.

Under the terms of the Credit Facility, we had borrowings of $218.8 million with an associated floating rate of interest of 2.90% at September 1, 2009, whichwas determined by adding a margin of 2.5% to the appropriate adjusted LIBO Rate. As of June 2, 2009, we had $319.1 million outstanding with an associated

30


floating rate of interest of 2.96%. After consideration of letters of credit outstanding, we had $195.2 million available under the Credit Facility as of September 1,2009. The Credit Facility will mature on February 23, 2012.

On April 3, 2003, we issued notes totaling $150.0 million through a private placement of debt (the “Private Placement”). On May 21, 2008, given similarcircumstances as those with the Credit Facility discussed above, we amended and restated the notes issued in the Private Placement. The May 21, 2008amendment requires us to offer quarterly and other prepayments, which predominantly consist of semi-annual prepayments to be determined based upon excesscash flows as defined in the Private Placement. At September 1, 2009, the Private Placement consisted of $73.9 million in notes with an interest rate of 8.19% (the “Series A Notes”) and $53.3 million in noteswith an interest rate of 8.92% (the “Series B Notes”). The Series A Notes and Series B Notes mature on April 1, 2010 and April 1, 2013, respectively. During the13 weeks ended September 1, 2009, we offered, and our noteholders accepted, principal prepayments of $3.3 million and $2.4 million on the Series A and BNotes, respectively. We estimate that we will offer prepayments totaling $9.8 million during the next twelve months. Accordingly, we have classified $9.8million as current as of September 1, 2009. This amount includes four quarterly offers of $2.0 million each and additional amounts to be determined based uponexcess cash flows and sales of surplus properties. We currently project that $70.5 million will be outstanding on April 1, 2010, the maturity date of our Series A Notes. In accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 6, “Classification of Short-Term Obligations Expected to be Refinanced,” because of our ability and intent to refinance thebalance on a long-term basis by utilizing the capacity on our Credit Facility, we have classified this amount as non-current in our September 1, 2009 CondensedConsolidated Balance Sheet. Simultaneous with the other May 21, 2008 amendments, we entered into a pledge agreement with our Credit Facility and Private Placement creditors, as well asthose creditors associated with our Franchise Facility (discussed in Note L to the Condensed Consolidated Financial Statements), whereby we pledged certainsubsidiary equity interests as security for the repayment of our obligations under these agreements.

During the remainder of fiscal 2010, we expect to fund operations, capital expansion, and any other investments, from operating cash flows, our Credit Facility,and operating leases.

Covenant Compliance

Under the terms of the Credit Facility and the notes issued in the Private Placement, we are required to satisfy and maintain specified financial ratios and otherfinancial condition tests and covenants. The financial ratios include maximum funded debt, minimum fixed charge coverage and minimum net worth covenants.Our continued ability to meet those financial ratios, tests and covenants can be affected by events beyond our control, and we cannot assure you that we will meetthose ratios, tests and covenants.

Maximum Funded Debt CovenantOur maximum funded debt covenant is an Adjusted Total Debt to Consolidated EBITDAR ratio. Adjusted Total Debt, as defined in our covenants, includesitems both on-balance sheet (debt and capital lease obligations) and off-balance sheet (such as the present value of leases, letters of credit and guarantees).Consolidated EBITDAR is consolidated net income (for the Company and its majority-owned subsidiaries) plus interest charges, income tax, depreciation,amortization, rent and other non-cash charges. Among other charges, we have reflected share-based compensation, asset impairment and bad debt expense, asnon-cash. Until the end of the quarter ended March 3, 2009, we were allowed to add back the costs (up to $10.0 million) incurred in connection with the closingof restaurants recorded in accordance with generally accepted accounting principles (“GAAP”).

Consolidated EBITDAR and Adjusted Total Debt are not presentations made in accordance with GAAP, and, as such, should not be considered a measure offinancial performance or condition, liquidity or profitability. They also should not be considered alternatives to GAAP-based net income or balance sheetamounts or operating cash flows or indicators of the amount of free cash flow available for discretionary use by management, as Consolidated EBITDAR doesnot consider certain cash requirements such as interest payments, tax payments or debt service requirements and Adjusted Total Debt includes certain off-balancesheet items. Further, because not all companies use identical calculations, amounts reflected by

31


RTI as Consolidated EBITDAR or Adjusted Total Debt may not be comparable to similarly titled measures of other companies. We believe that the informationshown below is relevant as it presents the amounts used to calculate covenants which are provided to our lenders. Non-compliance with our debt covenants couldresult in the requirement to immediately repay all amounts outstanding under such agreements.

The following is a reconciliation of our total long-term debt and capital leases, which are GAAP-based, to Adjusted Total Debt as defined in our bank covenants(in thousands):

September 1, 2009 Current portion of long-term debt,

including capital leases $ 14,280 Long-term debt and capital leases,

less current maturities 372,090

Total long-term debt and capital leases 386,370 Present value of operating leases* 193,749 Letters of credit* 13,981

Guarantees* 47,944

Adjusted Total Debt $ 642,044

* Non-GAAP measure. See below for discussion regarding reconciliation to GAAP-based amounts.

The following is a reconciliation of net income, which is a GAAP-based measure of our operating results, to Consolidated EBITDAR as defined in our bankcovenants (in thousands):

Twelve Months Ended

September 1, 2009 Net loss $ (12,059)Interest expense 30,627 Benefit for income taxes (23,727)Depreciation 71,125 Amortization of intangibles 698 Rent expense 51,882 Share-based compensation expense 7,582 Goodwill impairment 18,957 Asset impairments 40,104 Equity in losses of subsidiaries 713 Bad debt expense 3,589 Dead site write-offs 2,222 Amortization of debt issuance costs 1,872 Restaurant closing costs 3,924

Other 83

Consolidated EBITDAR $ 197,592

Adjusted Total Debt to Consolidated EBITDAR – Actual 3.25xMaximum allowed per covenant (1) 4.25x

(1) The Credit Facility and notes issued in the Private Placement require us to maintain a maximum funded debt ratio, defined as Adjusted Total Debt toConsolidated EBITDAR, of 4.25x from December 3, 2008 to September 1, 2009, 4.00x from September 2, 2009 to March 2, 2010, 3.75x from March 3, 2010 toMarch 1, 2011, 3.50x from March 2, 2011 to March 1, 2012, and, for the notes issued in the Private Placement only, 3.25x thereafter.

We expect to generate free cash flow of $60.0 to $65.0 million during the remainder of fiscal 2010, a substantial portion of which will be dedicated to thereduction of debt.

32


Minimum Fixed Charge CoverageOur fixed charge coverage ratio compares Consolidated EBITDAR (as discussed above) to interest and cash-based rents.

The following shows our computation of our fixed charge coverage ratio (in thousands):

Twelve Months Ended

September 1, 2009 Consolidated EBITDAR $ 197,592

Interest expense $ 30,627

Cash rents* 42,678

Total $ 73,305

* Non-GAAP measure. See below for discussion regarding reconciliation to GAAP-based amounts.

Fixed Charge Covenant – Actual 2.70xMinimum allowed per covenant (2) 2.25x

(2) The Credit Facility and notes issued in the Private Placement require us to maintain a minimum fixed charge coverage ratio of 2.25x through March 1, 2011,2.50x from March 2, 2011 to March 1, 2012, and, for the notes issued in conjunction with the Private Placement, 2.75x thereafter.

Minimum Consolidated Net Worth CovenantOur minimum Consolidated Net Worth covenant requires us to maintain a net worth, primarily comprised of the par value of our common stock, plus additionalpaid in capital and retained earnings, of $300,000,000 plus 25% of our consolidated net income for each completed fiscal year ending after June 4, 2003. Forpurposes of this requirement, we are allowed to exclude from retained earnings charges recorded for the impairment of goodwill or other intangible assets.During fiscal 2009, we recorded impairment charges of $19.0 million and $0.5 million relating to impairments of goodwill and other intangible assets,respectively.

Since 2004, and exclusive of fiscal 2009 (the year in which we reported a net loss), we reported cumulative net income of $437.3 million, thus requiring aconsolidated net worth, as defined, of $409.3 million. Excluding the impact of the goodwill impairment ($14.0 million, net of tax) and other intangible assetimpairments ($0.3 million, net of tax), the sum of the par value of our common stock, additional paid in capital and retained earnings as of September 1, 2009was $526.1 million.

Non-GAAP Amounts Used in Debt Covenant CalculationsAs previously discussed, we use various non-GAAP amounts in our Adjusted Total Debt, Consolidated EBITDAR, and Fixed Charge covenant calculations. Twoof the amounts presented in the Adjusted Total Debt calculation, the present value of operating leases and letters of credit, are off-balance sheet and there is nocorresponding amount presented in our Condensed Consolidated Balance Sheets. We do have a $0.6 million liability for guarantees recorded in our CondensedConsolidated Balance Sheet. The amount on the balance sheet is the fair value of our guarantee, which is $47.3 million lower than the amount presented in ourdebt covenant calculations ($47.9 million, the full amount of the guarantee).

Our Minimum Fixed Charge Coverage ratio allows for recurring cash rents to be included in the denominator. Cash rents ($42.7 million on a rolling 12 monthbasis) differ from rents determined in accordance with GAAP ($51.9 million) by the following (amounts in thousands):

Cash rents $ 42,678 Change in rent accruals 4,755

Rent settlements 4,449

GAAP-based rent expense $ 51,882

33


Significant Contractual Obligations and Commercial Commitments

Long-term financial obligations were as follows as of September 1, 2009 (in thousands):

Payments Due By Period Less than 1-3 3-5 More than 5 Total 1 year years years yearsNotes payable and other

long-term debt, including

current maturities (a) $ 40,423 $ 4,525 $ 10,335 $ 8,400 $ 17,163Revolving credit facility (a) 218,800 – 218,800 – –Unsecured senior notes

(Series A and B) (a) 127,147 80,278 23,773 23,096 –Interest (b) 39,867 14,292 13,356 5,921 6,298Operating leases (c) 358,156 39,058 71,361 61,480 186,257Purchase obligations (d) 153,296 74,688 40,693 21,571 16,344Pension obligations (e) 33,553 3,952 12,238 5,310 12,053

Total (f) $ 971,242 $ 216,793 $ 390,556 $ 125,778 $ 238,115

(a) See Note F to the Condensed Consolidated Financial Statements for more information.(b) Amounts represent contractual interest payments on our fixed-rate debt instruments. Interest payments on our variable-rate revolving credit

facility and variable-rate notes payable with balances of $218.8 million and $2.7 million, respectively, as of September 1, 2009 have beenexcluded from the amounts shown above, primarily because the balance outstanding under the Credit Facility, described further in Note F of theCondensed Consolidated Financial Statements, fluctuates daily. Additionally, the amounts shown above include interest payments on the Series Aand B Notes at the current interest rates of 8.19% and 8.92%, respectively. These rates could be different in the future based upon certain leverageratios.

(c) This amount includes operating leases totaling $20.4 million for which sublease income of $20.4 million from franchisees or others is expected.Certain of these leases obligate us to pay maintenance costs, utilities, real estate taxes, and insurance, which are excluded from the amounts shownabove. See Note E to the Condensed Consolidated Financial Statements for more information.

(d) The amounts for purchase obligations include commitments for food items and supplies, telephone, utility, and other miscellaneous commitments.(e) See Note H to the Condensed Consolidated Financial Statements for more information.(f) This amount excludes $4.2 million of unrecognized tax benefits under Financial Accounting Standards Board (“FASB”) Interpretation No. 48,

“Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” due to the uncertainty regarding the timing offuture cash outflows associated with such obligations.

Commercial Commitments (in thousands):

Payments Due By Period Less than 1-3 3-5 More than 5 Total 1 year years years Years

Letters of credit (a) $ 13,981 $ 13,981 $ – $ – $ – Franchisee loan guarantees (a) 47,944 47,201 743 – –

Divestiture guarantees 6,841 477 970 996 4,398

Total $ 68,766 $ 61,659 $ 1,713 $ 996 $ 4,398 (a) Includes a $3.9 million letter of credit which secures franchisees’ borrowings for construction of restaurants being financed under a franchise loan

facility. The franchise loan guarantee of $47.9 million also shown in the table excludes the guarantee of $3.9 million for construction on therestaurants being financed under the facility.

See Note L to the Condensed Consolidated Financial Statements for more information.

34


Off-Balance Sheet Arrangements

See Note L to the Condensed Consolidated Financial Statements for information regarding our franchise partnership and divestiture guarantees.

Accounting Pronouncements Adopted in Fiscal 2010We adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) for our financial assets and liabilities, as well as any other assets and liabilities that arecarried at fair value on a recurring basis in financial statements, in fiscal 2009. In the first quarter of fiscal 2010 we adopted the related FASB Staff Position(“FSP”) No. 157-2, “Effective Date of FASB Statement No. 157” for non-financial assets and liabilities. The adoption had no significant impact on the Companyduring the thirteen weeks ended September 1, 2009. SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generallyaccepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that requireor permit fair value measurements. SFAS 157 does not require any new fair value measurements. In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes the principles andrequirements for how an acquirer: 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and anynoncontrolling interest in the acquiree; 2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and 3)determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS141R is to be applied prospectively to business combinations consummated on or after the beginning of the first annual reporting period on or after December 15,2008 (fiscal 2010 for RTI). The adoption of SFAS 141R had no impact on our Condensed Consolidated Financial Statements. In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”(“SFAS 160”). SFAS 160 establishes accounting and reporting standards that require: 1) noncontrolling interests to be reported as a component of equity; 2)changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions; and 3) any retained noncontrollingequity investment upon the deconsolidation of a subsidiary be initially measured at fair value. SFAS 160 is to be applied prospectively to business combinationsconsummated on or after the beginning of the first annual reporting period on or after December 15, 2008 (fiscal 2010 for RTI). The adoption of SFAS 160 hadno impact on our Condensed Consolidated Financial Statements.

In April 2009, the FASB issued Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS107-1”). FSP FAS 107-1 requires fair value disclosures on an interim basis for financial instruments that are not reflected in the consolidated balance sheets atfair value. Prior to the issuance of FSP FAS 107-1, the fair values of those financial instruments were only disclosed on an annual basis. FSP FAS 107-1 iseffective for interim reporting periods that end after June 15, 2009 (our fiscal 2010 first quarter). See Note M to our Condensed Consolidated FinancialStatements for further information about the fair value of our financial instruments.

In May 2009, the FASB issued Statement No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosureof events that occur after the balance sheet date but before financial statements are issued or available to be issued. SFAS 165 is effective for interim or annualreporting periods ending after June 15, 2009 (our fiscal 2010 first quarter). The adoption of SFAS 165 had no impact on our Condensed Consolidated FinancialStatements. Accounting Pronouncements Not Yet AdoptedIn December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FAS132(R)-1 expands the disclosure requirements about plan assets for defined benefit pension plans and postretirement plans. FSP FAS 132(R)-1 is effective forfiscal years ending after December 15, 2009, and will impact our financial statement disclosures beginning with the year ending June 1, 2010 (our current fiscalyear). In June 2009, the FASB issued Statement No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 eliminates FIN 46(R)’sexceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of

35


required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also contains a new requirement thatany term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variableinterest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in applying FIN 46(R)’s provisions.SFAS 167 is effective for fiscal years beginning after November 15, 2009 (fiscal 2011 for RTI). We are currently evaluating the impact of SFAS 167 on ourCondensed Consolidated Financial Statements. In June 2009, the FASB issued Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted AccountingPrinciples – a replacement of FASB Statement No. 162” (“SFAS 168”). SFAS 168 provides for the FASB Accounting Standards Codification (the“Codification”) to become the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (“GAAP”). TheCodification was not intended to change GAAP but reorganizes the literature. The Codification will be effective for interim or annual periods ending afterSeptember 15, 2009, and will impact how we reference authoritative accounting literature referenced within our financial statements beginning with the quarterending December 1, 2009.

Known Events, Uncertainties and Trends:

Financial Strategy and Stock Repurchase Plan

Our financial strategy is to utilize a prudent amount of debt, including operating leases, letters of credit, and any guarantees, to minimize the weighted averagecost of capital while allowing financial flexibility and maintaining the equivalent of an investment-grade bond rating. This strategy has periodically allowed us torepurchase RTI common stock. During the 13 weeks ended September 1, 2009, we repurchased no shares of RTI common stock. Although 7.9 million sharesremained available for purchase under existing programs at September 1, 2009, our loan agreements, as amended in fiscal 2008, prohibit the repurchase of ourcommon stock until we achieve certain leverage thresholds for two consecutive fiscal quarters. Were we to achieve these leverage thresholds, the repurchase ofshares in any particular future period and the actual amount thereof remain, however, at the discretion of the Board of Directors, and no assurance can be giventhat shares will be repurchased in the future. Dividends During fiscal 1997, our Board of Directors approved a dividend policy as an additional means of returning capital to our shareholders. As noted above, followingthe amendment to the Credit Facility and the amendment and restatement of the notes issued in the Private Placement we may not pay a dividend until weachieve certain leverage thresholds for two consecutive fiscal quarters. Were we to achieve these leverage thresholds, the payment of a dividend in any particularfuture period and the actual amount thereof remain, however, at the discretion of the Board of Directors and no assurance can be given that dividends will be paidin the future. Franchising and Development Agreements Our agreements with franchise partnerships allow us to purchase an additional 49% equity interest for a specified price. We have chosen to exercise that option insituations in which we expect to earn a return similar to or better than that which we expect when we invest in new restaurants. During the 13 weeks endedSeptember 1, 2009, we did not exercise our right to acquire an additional 49% equity interest in any franchise partnerships. We currently have a 1% ownership inseven of our 13 franchise partnerships, which collectively operated 48 Ruby Tuesday restaurants at September 1, 2009. Our franchise agreements with the franchise partnerships allow us to purchase all remaining equity interests beyond the 1% or 50% we already own, for anamount to be calculated based upon a predetermined valuation formula. During the 13 weeks ended September 1, 2009, we did not exercise our right to acquirethe remaining equity interests of any of our franchise partnerships. We currently have a 50% ownership in six of our 13 franchise partnerships which collectivelyoperated 70 Ruby Tuesday restaurants at September 1, 2009.

36


To the extent allowable under our debt facilities, we may choose to sell existing restaurants or exercise our rights to acquire an additional equity interest infranchise partnerships during the remainder of fiscal 2010 and beyond.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosures about Market Risk

We are exposed to market risk from fluctuations in interest rates and changes in commodity prices. The interest rate charged on our Credit Facility can varybased on the interest rate option we choose to utilize. Our options for the rate are the Base Rate or LIBO Rate plus an applicable margin. The Base Rate isdefined to be the higher of the issuing bank’s prime lending rate or the Federal Funds rate plus 0.5%. The applicable margin is zero to 2.5% for the Base Rateloans and a percentage ranging from 1.0% to 3.5% for the LIBO Rate-based option. As of September 1, 2009, the total amount of outstanding debt subject tointerest rate fluctuations was $221.5 million. A hypothetical 100 basis point change in short-term interest rates would result in an increase or decrease in interestexpense of $2.2 million per year, assuming a consistent capital structure.

Many of the ingredients used in the products we sell in our restaurants are commodities that are subject to unpredictable price volatility. This volatility may bedue to factors outside our control such as weather and seasonality. We attempt to minimize the effect of price volatility by negotiating fixed price contracts forthe supply of key ingredients. Historically, and subject to competitive market conditions, we have been able to mitigate the negative impact of price volatilitythrough adjustments to average check or menu mix.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and under the supervision of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of thedesign and operation of our disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures,”as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended, means controls and other procedures of a company that are designed toensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarizedand reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls andprocedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act isaccumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timelydecisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possiblecontrols and procedures. Based on the evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls andprocedures were effective as of September 1, 2009.

Changes in Internal Controls

During the fiscal quarter ended September 1, 2009, there were no changes in our internal control over financial reporting (as defined in Rule 13a – 15(f) underthe Securities Exchange Act of 1934, as amended) that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting.

37


PART II — OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business. We provide reserves for such claimswhen payment is probable and estimable in accordance with Financial Accounting Standards Board Statement No. 5, “Accounting for Contingencies.” At thistime, in the opinion of management, the ultimate resolution of pending legal proceedings will not have a material adverse effect on our operations, financialposition, or cash flows. See Note L to the Condensed Consolidated Financial Statements for further information about our legal proceedings as of September 1,2009.

ITEM 1A.

RISK FACTORS

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended June 2, 2009 in Part I, Item 1A. Risk Factors. There have beenno material changes from the risk factors previously disclosed in our Form 10-K.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

From time to time our Board of Directors has authorized the repurchase of shares of our common stock as a means to return excess capital to our shareholders.The timing, price, quantity and manner of the purchases have been made at the discretion of management, depending upon market conditions and the restrictionscontained in our loan agreements. Although 7.9 million shares remained available for purchase under existing programs at September 1, 2009, our loanagreements, as amended in fiscal 2008, prohibit the repurchase of our common stock until we achieve certain leverage thresholds for two consecutive fiscalquarters. These thresholds were not achieved during the first quarter of fiscal 2010 and thus we did not repurchase any shares of RTI common stock. Were we toachieve these leverage thresholds, the repurchase of shares in any particular future period and the actual amount thereof remain at the discretion of the Board ofDirectors, and no assurance can be given that shares will be repurchased in the future.

38


ITEM 6.

EXHIBITS

The following exhibits are filed as part of this report:

Exhibit No.

10.1 Amended and Restated Revolving Credit Agreement, dated as of February 28, 2007, by and among Ruby Tuesday, Inc., the Lenders, and Bank of America, N.A., as Administrative Agent, Issuing Bank and Swingline Lender.

10.2 Amended and Restated Loan Facility Agreement and Guaranty by and among Ruby Tuesday, Inc., Bank of America, N.A., as Servicer, Amsouth Bank, as Documentation Agent, SunTrust Bank, as Co- Syndication Agent, Wachovia Bank N.A., as Co-Syndication Agent, and each of the participants party hereto dated as of November 19, 2004, Banc of America Securities LLC as Lead Arranger.

10.3 Fourth Amendment to Amended and Restated Loan Facility Agreement and Guaranty, dated as of May 21, 2008, by and among Ruby Tuesday, Inc., the Participants, and Bank of America, N.A., as Servicer and Agent for the Participants.

31.1 Certification of Samuel E. Beall, III, Chairman of the Board, President, and Chief Executive Officer.

31.2 Certification of Marguerite N. Duffy, Senior Vice President, Chief Financial Officer.

32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

39


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

RUBY TUESDAY, INC.(Registrant)

Date: October 13, 2009 BY: /s/ MARGUERITE N. DUFFY——————————————Marguerite N. DuffySenior Vice President andChief Financial Officer and Principal Accounting Officer

40


AMENDED AND RESTATED

REVOLVING CREDIT AGREEMENT

dated as of February 28, 2007

among

RUBY TUESDAY, INC.,as Borrower,

THE LENDERS FROM TIME TO TIME PARTY HERETO

BANK OF AMERICA, N.A.,as Administrative Agent, Issuing Bank and

Swingline Lender,

WACHOVIA BANK, NATIONAL ASSOCIATION,as Syndication Agent,

and

CITIBANK, N.A.,as Documentation Agent

BANC OF AMERICA SECURITIES LLC

as Sole Lead Arranger and Sole Book Manager

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS; CONSTRUCTION. 1 Section 1.1 Definitions. 1 Section 1.2 Classifications of Loans and Borrowings. 22 Section 1.3 Accounting Terms and Determination. 22 Section 1.4 Terms Generally. 23 Section 1.5 Letter of Credit Amounts. 23 Section 1.6 Times of Day. 24

ARTICLE II AMOUNT AND TERMS OF THE COMMITMENTS. 24 Section 2.1 General Description of Facilities. 24 Section 2.2 Revolving Loans. 24 Section 2.3 Procedure for Revolving Borrowings. 24 Section 2.5 Swingline Commitment. 26 Section 2.6 Procedure for Swingline Borrowing; Etc. 26 Section 2.7 Funding of Borrowings. 28 Section 2.8 Interest Elections. 28 Section 2.9 Optional Reduction and Termination of Commitments. 29 Section 2.10 Repayment of Loans. 30 Section 2.11 Evidence of Indebtedness. 30 Section 2.12 Prepayments. 30 Section 2.13 Interest on Loans. 31 Section 2.14 Fees. 32 Section 2.15 Computation of Interest and Fees. 33 Section 2.16 Inability to Determine Interest Rates. 33 Section 2.17 Illegality. 33 Section 2.18 Increased Costs. 34


Section 2.19 Funding Indemnity. 35 Section 2.20 Taxes. 35 Section 2.21 Payments Generally; Pro Rata Treatment; Sharing of Set-offs. 37 Section 2.22 Mitigation of Obligations; Replacement of Lenders. 38 Section 2.23 Letters of Credit. 39

ARTICLE IIICONDITIONS PRECEDENT TO LOANS AND LETTERS OFCREDIT. 45

Section 3.1 Conditions To Effectiveness. 45 Section 3.2 Each Credit Event. 46 Section 3.3 Delivery of Documents. 47

ARTICLE IV REPRESENTATIONS AND WARRANTIES. 47 Section 4.1 Existence; Power. 47 Section 4.2 Organizational Power; Authorization. 47 Section 4.3 Governmental Approvals; No Conflicts. 48

iCHAR1\935816v6


Section 4.4 Financial Statements. 48 Section 4.5 Litigation and Environmental Matters. 48 Section 4.6 Compliance with Laws and Agreements. 49 Section 4.7 Investment Company Act, Etc. 49 Section 4.8 Taxes. 49 Section 4.9 Margin Regulations. 49 Section 4.10 ERISA. 49 Section 4.11 Ownership of Property. 50 Section 4.12 Disclosure. 50 Section 4.13 Labor Relations. 50 Section 4.14 Subsidiaries. 51 Section 4.15 Solvency. 51

ARTICLE V AFFIRMATIVE COVENANTS. 51 Section 5.1 Financial Statements and Other Information. 51 Section 5.2 Notices of Material Events. 53 Section 5.3 Existence; Conduct of Business. 53 Section 5.4 Compliance with Laws, Etc. 54 Section 5.5 Payment of Obligations. 54 Section 5.6 Books and Records. 54 Section 5.7 Visitation, Inspection, Etc. 54 Section 5.8 Maintenance of Properties; Insurance. 54 Section 5.9 Use of Proceeds and Letters of Credit. 55 Section 5.10 Additional Subsidiaries. 55 Section 5.11 Additional Guaranties. 55

ARTICLE VI FINANCIAL COVENANTS 56 Section 6.1 Minimum Fixed Charge Coverage Ratio. 56 Section 6.2 Maximum Adjusted Total Debt to EBITDAR Ratio. 56 Section 6.3 Minimum Consolidated Net Worth. 56

ARTICLE VII NEGATIVE COVENANTS 57 Section 7.1 Negative Pledge. 57 Section 7.2 Fundamental Changes. 57 Section 7.3 Investments, Loans, Etc. 58 Section 7.4 Restricted Payments. 59 Section 7.5 Sale of Assets. 60 Section 7.6 Transactions with Affiliates. 61 Section 7.7 Restrictive Agreements. 61 Section 7.8 Hedging Agreements. 61 Section 7.9 Amendment to Material Documents. 61 Section 7.10 Accounting Changes. 62 Section 7.11 ERISA. 62

ARTICLE VIII EVENTS OF DEFAULT 62 Section 8.1 Events of Default. 62

iiCHAR1\935816v6


ARTICLE IX THE ADMINISTRATIVE AGENT 65 Section 9.1 Appointment and Authority. 65 Section 9.2 Rights as a Lender. 65 Section 9.3 Exculpatory Provisions. 65 Section 9.4 Reliance by Administrative Agent. 66 Section 9.5 Delegation of Duties. 67 Section 9.6 Resignation of Administrative Agent. 67 Section 9.7 Non-Reliance on Administrative Agent and Other Lenders. 68 Section 9.8 Administrative Agent May File Proofs of Claim. 68 Section 9.9 Guaranty Matters. 69 Section 9.10 No Other Duties, Etc. 69

ARTICLE X MISCELLANEOUS 69 Section 10.1 Notices. 69 Section 10.2 Waiver; Amendments. 71 Section 10.3 Expenses; Indemnification. 72 Section 10.4 Successors and Assigns. 73 Section 10.5 Governing Law; Jurisdiction; Consent to Service of Process. 77 Section 10.6 WAIVER OF JURY TRIAL. 78 Section 10.7 Right of Setoff. 78 Section 10.8 Counterparts; Integration. 79 Section 10.9 Survival. 79 Section 10.10 Severability. 80 Section 10.11 Confidentiality. 80 Section 10.12 Interest Rate Limitation. 80 Section 10.13 Payments Set Aside. 81 Section 10.14 Patriot Act Notice. 81 Section 10.15 No Advisory or Fiduciary Responsibility. 81 Section 10.16 Waiver of Notice of Termination. 82

iiiCHAR1\935816v6


Schedules

Schedule 1.1(a) - Applicable Margin and Applicable Commitment Fee PercentageSchedule 1.1(b) - Existing Letters of CreditSchedule 1.2 - Revolving CommitmentsSchedule 4.14 - SubsidiariesSchedule 7.1 - Existing LiensSchedule 7.3 - Existing InvestmentsSchedule 7.7 - Restrictive Agreements

Exhibits

Exhibit A - Revolving Credit NoteExhibit B - Swingline NoteExhibit C - Form of Assignment and AcceptanceExhibit D - Form of Subsidiary Guaranty Agreement

Exhibit 2.3 - Notice of Revolving BorrowingExhibit 2.6 - Notice of Swingline BorrowingExhibit 2.8 - Form of Continuation/ConversionExhibit3.1(b)(iv) - Form of Secretary's Certificate of Ruby Tuesday, Inc.Exhibit3.1(b)(vi) - Form of General Counsel Legal OpinionExhibit3.1(b)(vii) - Form of Officer's Certificate

ivCHAR1\935816v6


AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this “ Agreement”) is made and entered into

as of February 28, 2007, by and among RUBY TUESDAY, INC., a Georgia corporation (the “ Borrower”), the several banks and otherfinancial institutions from time to time party hereto (the “Lenders”) and BANK OF AMERICA, N.A., in its capacity asAdministrative Agent for the Lenders (the “Administrative Agent”), as Issuing Bank (the “Issuing Bank”), and as Swingline Lender(the “Swingline Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower, the lenders party thereto and Bank of America, N.A., as agent, are parties to that certain

Amended and Restated Revolving Credit Agreement dated as of November 19, 2004 (as amended and modified, the “Existing CreditAgreement”);

WHEREAS, the Lenders have agreed to amend and restate the Existing Credit Agreement on the terms and conditionshereinafter set forth;

WHEREAS, in connection with the refinancing of the Existing Credit Agreement in accordance with the terms hereof, the

Borrower has requested that the Lenders establish a $500,000,000 revolving credit facility (which shall include a $50,000,000swingline subcommitment and a $50,000,000 letter of credit subcommitment);

WHEREAS, subject to the terms and conditions of this Agreement, the Lenders severally, to the extent of their respective

Commitments as defined herein, are willing to severally establish the requested revolving credit facility; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Borrower, the

Lenders, the Administrative Agent, the Issuing Bank and the Swingline Lender agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

Section 1.1 Definitions.

In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (to beequally applicable to both the singular and plural forms of the terms defined):

“Acquisition” means any transaction, or any series of related transactions, consummated on or after the date of this

Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets ofany Person, or division

1CHAR1\935816v6


thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as themost recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which haveordinary voting power for the election of directors (other than securities having such power only by reason of the happening of acontingency) or a majority (by percentage of voting power) of the outstanding ownership interests of a partnership or limited liabilitycompany.

“Additional Loan” shall have the meaning provided in Section 2.4. “Adjusted LIBO Rate” shall mean, with respect to each Interest Period for a Eurodollar Borrowing, the rate per annum

obtained by dividing (i) LIBOR for such Interest Period by (ii) a percentage equal to 1.00 minus the Eurodollar Reserve Percentage. “Adjusted Total Debt” shall mean, as of any date of determination, (i) all Indebtedness of the Borrower and its Subsidiaries

on a consolidated basis, including without limitation all Loans and LC Exposure, but excluding all Indebtedness of the type describedin subsection (xi) of the definition of Indebtedness and excluding any Synthetic Lease Obligations to the extent that such SyntheticLease Obligations are included in clause (ii) below, plus (ii) to the extent not included in clause (i), the present value of all leaseobligations arising under operating leases of Borrower and its Subsidiaries as determined in accordance with GAAP, applying adiscount rate of ten percent (10%).

“Adjusted Total Debt to EBITDAR Ratio” shall mean, as of any date of determination, the ratio of (i) Adjusted Total Debt

as of such date to (ii) Consolidated EBITDAR as of such date, measured for the four Fiscal Quarter period ending on such date. “Administrative Agent” shall have the meaning assigned to such term in the opening paragraph hereof. “Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth in

Section 10.1 or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders. “Administrative Questionnaire” shall mean, with respect to each Lender, an administrative questionnaire in the form

prepared by the Administrative Agent and submitted to the Administrative Agent duly completed by such Lender. “Affiliate” shall mean, as to any Person, any other Person that directly, or indirectly through one or more intermediaries,

Controls, is Controlled by, or is under common Control with, such Person. “Aggregate Revolving Commitment Amount” shall mean the aggregate principal amount of the Revolving Commitments,

including any Incremental Facility if and to the extent made pursuant to Section 2.4 of this Agreement, of all Lenders from time totime. On the Closing Date, the Aggregate Revolving Commitment Amount equals $500,000,000.

2

CHAR1\935816v6


“Aggregate Revolving Commitments” shall mean, collectively, all Revolving Commitments of all Lenders plus allIncremental Facility amounts of any of the Lenders at any time outstanding.

“Applicable Commitment Fee Percentage” shall mean, as of any date, the percentage per annum determined by reference to

the applicable Adjusted Total Debt to EBITDAR Ratio in effect on such date as set forth on Schedule 1.1(a) attached hereto;provided, that a change in the Applicable Commitment Fee Percentage resulting from a change in the Adjusted Total Debt toEBITDAR Ratio shall be effective on the second Business Day after the date the Borrower is required to deliver the financialstatements required by Section 5.1(a) or (b) and the compliance certificate required by Section 5.1(c); provided, further, that if at anytime the Borrower shall have failed to deliver such financial statements and such certificate, the Applicable Commitment FeePercentage shall be at Level IV until such time as such financial statements and certificate are delivered, at which time the ApplicableCommitment Fee Percentage shall be determined as provided above. Notwithstanding the foregoing, the Applicable Commitment FeePercentage from the Closing Date until the first financial statements and compliance certificate are required to be delivered shall be atLevel II.

“Applicable Lending Office” shall mean, for each Lender and for each Type of Loan, the “Lending Office” of such Lender

(or an Affiliate of such Lender) designated for such Type of Loan in the Administrative Questionnaire submitted by such Lender orsuch other office of such Lender (or an Affiliate of such Lender) as such Lender may from time to time specify to the AdministrativeAgent and the Borrower as the office by which its Loans of such Type are to be made and maintained.

“Applicable Margin” shall mean, as of any date, the percentage per annum determined by reference to the applicable

Adjusted Total Debt to EBITDAR Ratio in effect on such date as set forth on Schedule 1.1(a) attached hereto; provided, that a changein the Applicable Margin resulting from a change in such ratio shall be effective on the second Business Day after which the Borroweris required to deliver the financial statements required by Section 5.1(a) or (b) and the compliance certificate required bySection 5.1(c); provided, further, that if at any time the Borrower shall have failed to deliver such financial statements and suchcertificate, the Applicable Margin shall be at Level IV until such time as such financial statements and certificate are delivered, atwhich time the Applicable Margin shall be determined as provided above. Notwithstanding the foregoing, the Applicable Marginfrom the Closing Date until the first financial statements and compliance certificate are required to be delivered shall be at Level II.

“Approved Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing,

holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business and that isadministered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers ormanages a Lender.

“Arranger” shall mean Banc of America Securities LLC.

3CHAR1\935816v6


“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Fundsmanaged by the same investment advisor.

“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee

(with the consent of any party whose consent is required by Section 10.4(b)) and accepted by the Administrative Agent, in the form ofExhibit C attached hereto or any other form approved by the Administrative Agent.

“Availability Period” shall mean the period from the Closing Date to the Revolving Commitment Termination Date. “Bank of America” means Bank of America, N.A. and its successors. “BAS” shall mean Banc of America Securities LLC. “Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1%

and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The“prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return,general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above,or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business onthe day specified in the public announcement of such change.

“Borrower” shall have the meaning in the introductory paragraph hereof. “Borrowing” shall mean a borrowing consisting of (i) Loans of the same Class and Type, made, converted or continued on

the same date and in case of Eurodollar Loans, as to which a single Interest Period is in effect, or (ii) a Swingline Loan. “Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on which commercial banks in Charlotte,

North Carolina are authorized or required by law to close and (ii) if such day relates to a Borrowing of, a payment or prepayment ofprincipal or interest on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice with respect to any of theforegoing, any day on which dealings in Dollars are carried on in the London interbank market.

“Capital Lease Obligations” of any Person shall mean all obligations of such Person to pay rent or other amounts under anylease (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations arerequired to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of suchobligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Change in Control” shall mean the occurrence of one or more of the following events: (a) any sale, lease, exchange or

other transfer (in a single transaction or a series of related

4CHAR1\935816v6


transactions) of all or substantially all of the assets of the Borrower to any Person or “group” (within the meaning of the SecuritiesExchange Act of 1934 and the rules of the SEC thereunder in effect on the date hereof), (b) the acquisition of ownership, directly orindirectly, beneficially or of record, by any Person or “group” (within the meaning of the Securities Exchange Act of 1934 and therules of the SEC thereunder as in effect on the date hereof) of 30% or more of the outstanding shares of the voting stock of theBorrower; or (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Personswho were neither (i) nominated by the current board of directors nor (ii) appointed by directors so nominated.

“Change in Law” shall mean (i) the adoption of any applicable law, rule or regulation after the date of this Agreement, (ii)

any change in any applicable law, rule or regulation, or any change in the interpretation or application thereof, by any GovernmentalAuthority after the date of this Agreement, or (iii) the making or issuance by any Governmental Authority after the date of thisAgreement of any request, guideline or directive (whether or not having the force of law) requiring compliance by any Lender (or itsApplicable Lending Office) or the Issuing Bank (or for purposes of Section 2.18(b), by such Lender’s or the Issuing Bank’s holdingcompany, if applicable).

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such

Borrowing, are Revolving Loans or Swingline Loans and when used in reference to any Commitment, refers to whether suchCommitment is a Revolving Commitment, a Swingline Commitment or a LC Commitment.

“Closing Date” shall mean February 28, 2007. “Code” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time. “Commitment” shall mean a Revolving Commitment, a Swingline Commitment or a LC Commitment or any combination

thereof (as the context shall permit or require). “Consolidated Assets” shall mean, as of any date, the total assets of the Borrower and its Subsidiaries that would be

reflected on the Borrower’s consolidated balance sheet as of such date prepared in accordance with GAAP.

“Consolidated Companies” shall mean, collectively, the Borrower and any of its Subsidiaries, and “Consolidated Company”shall mean, individually, the Borrower or any of its Subsidiaries.

“Consolidated EBITDA” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (a)

Consolidated Net Income for such period plus (b) to the extent deducted in determining Consolidated Net Income for such period, (i)Consolidated Interest Expense, (ii) income tax expense determined on a consolidated basis in accordance with GAAP, (iii)depreciation and amortization determined on a consolidated basis in accordance with

5CHAR1\935816v6


GAAP and (iv) all other non-cash charges determined on a consolidated basis in accordance with GAAP, in each case for such period. “Consolidated EBITDAR” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of

(a) Consolidated EBITDA plus (b) Consolidated Lease Expense, in each case for such period. “Consolidated EBITR” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (a)

Consolidated Net Income for such period plus (b) to the extent deducted in determining Consolidated Net Income for such period, (i)Consolidated Interest Expense, (ii) income tax expense determined on a consolidated basis in accordance with GAAP, (iii) all othernon-cash charges, determined on a consolidated basis in accordance with GAAP, and (iv) Consolidated Lease Expense, in each casefor such period.

“Consolidated Fixed Charges” shall mean, for the Borrower and its Subsidiaries for any period, the sum (without

duplication) of (a) Consolidated Interest Expense for such period and (b) Consolidated Lease Expense for such period. “Consolidated Interest Expense” shall mean, for the Borrower and its Subsidiaries for any period determined on a

consolidated basis in accordance with GAAP, the sum of (i) total interest expense, including without limitation the interest componentof any payments in respect of Capital Leases Obligations capitalized or expensed during such period (whether or not actually paidduring such period) plus (ii) the net amount payable (or minus the net amount receivable) under Hedging Agreements during suchperiod (whether or not actually paid or received during such period).

“Consolidated Lease Expense” shall mean, for any period, the aggregate amount of fixed and contingent rental and

operating lease expense payable by the Borrower and its Subsidiaries with respect to leases of real and personal property (excludingCapital Lease Obligations) determined on a consolidated basis in accordance with GAAP for such period.

“Consolidated Net Income” shall mean, for any period, the net income (or loss) of the Borrower and its Subsidiaries for

such period determined on a consolidated basis in accordance with GAAP, but excluding therefrom (to the extent otherwise includedtherein) (i) any extraordinary gains or losses, (ii) any gains attributable to write-ups of assets, (iii) any equity interest of the Borroweror any Subsidiary of the Borrower in the unremitted earnings of any Person that is not a Subsidiary and (iv) any income (or loss) ofany Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary onthe date that such Person’s assets are acquired by the Borrower or any Subsidiary.

“Consolidated Net Worth” shall mean, as of any date, (i) the total assets of the Borrower and its Subsidiaries that would be

reflected on the Borrower’s consolidated balance sheet as of such date prepared in accordance with GAAP, after eliminating allamounts properly attributable to minority interests, if any, in the stock and surplus of Subsidiaries, minus the sum of (i) the totalliabilities of the Borrower and its Subsidiaries that would be reflected on the Borrower’s consolidated balance sheet as of such dateprepared in accordance with GAAP and (ii) the

6CHAR1\935816v6


amount of any write-up in the book value of any assets resulting from a revaluation thereof or any write-up in excess of the cost ofsuch assets acquired reflected on the consolidated balance sheet of the Borrower as of such date prepared in accordance with GAAP.

“Consolidated Restaurant Revenues” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to

the restaurant sales and operating revenue generated at the restaurant level determined on a consolidated basis in accordance withGAAP, but excluding therefrom (to the extent otherwise included therein) any franchise royalty revenues or fees.

“Contractual Obligation” of any Person shall mean any provision of any security issued by such Person or of any

agreement, instrument or undertaking under which such Person is obligated or by which it or any of the property in which it has aninterest is bound.

“Control” shall mean the power, directly or indirectly, either to (i) vote 5% or more of securities having ordinary voting

power for the election of directors (or persons performing similar functions) of a Person or (ii) direct or cause the direction of themanagement and policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. The terms“Controlling”, “Controlled by”, and “under common Control with” have meanings correlative thereto.

“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States, and all other liquidation, conservatorship,

bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similardebtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditorsgenerally.

“Default” shall mean any condition or event that, with the giving of notice or the lapse of time or both, would constitute an

Event of Default. “Default Interest” shall have the meaning set forth in Section 2.13(c).

“Disposition” shall mean the sale, transfer, license, lease or other disposition of any property by the Borrower or any

Subsidiary, but excluding any sale, lease, license, transfer or other disposition permitted by Section 7.5 (a), (b), (c), (d) or (e). “Dollar(s)” and the sign “$” shall mean lawful money of the United States of America. “Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.4(b)(ii), (iv) and (v)

(subject to such consents, if any, as may be required under Section 10.4(b)(ii)).

“Employee Benefit Plans” shall mean, collectively, Borrower’s Employee Stock Purchase Plan, the Morrison IncorporatedLong Term Incentive Plan, the 1984 Morrison Incorporated Long Term Incentive Plan, the 1987 Stock Bonus and Non-QualifiedStock Option Plan, the 1989 Non-Qualified Stock Incentive Plan, the Ruby Tuesday, Inc. 1996 Stock Incentive Plan, the RubyTuesday, Inc. 1996 Non-Executive Stock Incentive Plan, the Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan forDirectors, the Ruby

7CHAR1\935816v6


Tuesday, Inc. Salary Deferral Plan, the Ruby Tuesday, Inc. Deferred Compensation Plan and any salary deferral or deferredcompensation plan of any Subsidiary or franchisee of Borrower pursuant to which the equity securities of Borrower or any Subsidiaryare the subject of rights to acquire such equity securities, an investment option under such plan or a matching contribution under suchplan; in each case as any such plan may be amended, modified or replaced by successor plan thereto.

“Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions,

notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to theenvironment, preservation or reclamation of natural resources, the management, Release or threatened Release of any HazardousMaterial.

“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of

environmental investigation and remediation, costs of administrative oversight, fines, natural resource damages, penalties orindemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) any actual or alleged violationof any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any HazardousMaterials, (c) any actual or alleged exposure to any Hazardous Materials, (d) the Release or threatened Release of any HazardousMaterials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed withrespect to any of the foregoing.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any

successor statute. “ERISA Affiliate” shall mean any trade or business (whether or not incorporated), which, together with the Borrower, is

treated as a single employer under Section 414(b) or (c) of the Code or, solely for the purposes of Section 302 of ERISA andSection 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued

thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect toany Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or notwaived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of theminimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liabilityunder Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from thePBGC or a plan administrator appointed by the PBGC of any notice relating to an intention to terminate any Plan or Plans or toappoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respectto the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISAAffiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerningthe

8CHAR1\935816v6


imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or inreorganization, within the meaning of Title IV of ERISA.

“Eurodollar” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such

Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate. “Eurodollar Reserve Percentage” shall mean the aggregate of the maximum reserve percentages (including, without

limitation, any emergency, supplemental, special or other marginal reserves) expressed as a decimal (rounded upwards to the next1/100th of 1%) in effect on any day to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate pursuant toregulations issued by the Board of Governors of the Federal Reserve System (or any Governmental Authority succeeding to any of itsprincipal functions) with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities” under Regulation D).Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit ofor credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D. TheEurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Event of Default” shall have the meaning provided in Article VIII. “Excluded Taxes” shall mean with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient

of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on(or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient isorganized or in which its principal office is located or, in the case of any Lender, in which its Applicable Lending Office is located, (b)any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which anyLender is located and (c) in the case of a Foreign Lender, any withholding tax that (i) is imposed on amounts payable to such ForeignLender at the time such Foreign Lender becomes a party to this Agreement, (ii) is imposed on amounts payable to such ForeignLender at any time that such Foreign Lender designates a new Applicable Lending Office, other than taxes that have accrued prior tothe designation of such lending office that are otherwise not Excluded Taxes, and (iii) is attributable to such Foreign Lender’s failureto comply with Section 2.20(e).

“Existing Credit Agreement” shall have the meaning given to such term in the first WHEREAS paragraph. “Existing Letters of Credit” means the letters of credit described by date of issuance, letter of credit number, undrawn

amount, name of beneficiary and date of expiry on Schedule 1.1(b) attached hereto. “Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100th of

1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal ReserveSystem arranged by

9CHAR1\935816v6


Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding Business Day or if such rate isnot so published for any Business Day, the Federal Funds Rate for such day shall be the average rounded upwards, if necessary, to thenext 1/100th of 1% of the quotations for such day on such transactions received by the Administrative Agent from three Federal fundsbrokers of recognized standing selected by the Administrative Agent.

“Fee Letter” shall mean that certain fee letter, dated January 22, 2007, executed by Bank of America and Banc of America

Securities LLC and accepted by Borrower. “Fiscal Quarter” shall mean any fiscal quarter of the Borrower or the Consolidated Companies, as applicable. “Fixed Charge Coverage Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated EBITR to (b)

Consolidated Fixed Charges, in each case measured for the four Fiscal Quarter period ending on such date. “Foreign Lender” shall mean any Lender that is not a United States person under Section 7701(a)(3) of the Code. “Foreign Subsidiary” shall mean any Subsidiary that is organized under the laws of a jurisdiction other than one of the fifty

states of the United States or the District of Columbia. "Franchise Facility Credit Agreement" means that certain Amended and Restated Loan Facility Agreement and Guaranty,

dated as of November 19, 2004, among the Borrower, Bank of America, as servicer, and a syndicate of lenders, as amended, extended,replaced or refinanced from time to time.

"Franchise Facility" means that certain credit facility in the amount of up to $48,000,000 extended by Bank of America, as

servicer, to certain franchisees of the Borrower, as guaranteed by the Borrower and certain of its Subsidiaries, all pursuant to theFranchise Facility Credit Agreement, with an option of the Borrower to increase such facility by $25,000,000 up to a total amount of$73,000,000.

“Franchise Partner” means, collectively, a limited liability company or limited partnership in which the Borrower owns an

equity interest pursuant to the Franchise Partner Program. “Franchise Partner Program” shall mean the optional financing and business structuring program offered by the Borrower to

a limited number of qualified restaurant operators, such operators to be determined by the Borrower in its sole discretion, whichprovides such restaurant operators a business structure for organizing, owning and funding the establishment and operation ofrestaurants doing business under operating concepts owned by the Borrower.

“GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis and subject

to the terms of Section 1.3.

10CHAR1\935816v6


“Governmental Authority” shall mean the government of the United States of America, any other nation or any politicalsubdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or otherentity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining togovernment.

“Guarantor” shall mean each Subsidiary Loan Party now or hereafter a party to the Subsidiary Guaranty Agreement or any

Subsidiary that becomes a party to the Subsidiary Guaranty Agreement pursuant to Section 5.11, and their respective successors andpermitted assigns.

“Guaranty” of or by any Person (the “guarantor”) shall mean any obligation, contingent or otherwise, of the guarantor

guaranteeing or having the economic effect of Guaranteeing any Indebtedness or other obligation of any other Person (the “primaryobligor “) in any manner, whether directly or indirectly and including any obligation, direct or indirect, of the guarantor (a) topurchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (orto advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities orservices for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintainworking capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primaryobligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guarantyissued in support of such Indebtedness or obligation; provided, that the term “Guaranty” shall not include endorsements for collectionor deposits in the ordinary course of business. The amount of any Guaranty shall be deemed to be an amount equal to the stated ordeterminable amount of the primary obligation in respect of which Guaranty is made or, if not so stated or determinable, the maximumreasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by suchPerson in good faith. The term “Guarantee” used as a verb has a corresponding meaning.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances,

wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinatedbiphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to anyEnvironmental Law.

“Hedging Agreements” shall mean interest rate swap, cap or collar agreements, interest rate future or option contracts,

currency swap agreements, currency future or option contracts, commodity agreements and other similar agreements or arrangementsdesigned to protect against fluctuations in interest rates, currency values or commodity values, in each case to which any Borrower orany Subsidiary is a party.

“Hostile Acquisition” shall mean any Investment resulting in control of a Person involving a tender offer or proxy contest

that has not been recommended or approved by the board of directors of the Person that is the subject of the Investment prior to thefirst public announcement or disclosure relating to such Investment.

11CHAR1\935816v6


“Incremental Facility” shall have the meaning provided in Section 2.4. “Indebtedness” of any Person shall mean, without duplication (i) all obligations of such Person for borrowed money, (ii) all

obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person inrespect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business;provided, that for purposes of Section 8.1(f), trade payables overdue by more than 120 days shall be included in this definition exceptto the extent that any of such trade payables are being disputed in good faith and by appropriate measures), (iv) all obligations of suchPerson under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (v) all CapitalLease Obligations of such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of letters of credit,acceptances or similar extensions of credit, (vii) all Guarantees of such Person of the type of Indebtedness described in clauses (i)through (vi) above, (viii) all Indebtedness of a third party secured by any Lien on property owned by such Person, whether or not suchIndebtedness has been assumed by such Person, (ix) all obligations of such Person, contingent or otherwise, to purchase, redeem,retire or otherwise acquire for value any capital stock of such Person, (x) Off-Balance Sheet Liabilities and (xi) all obligations underHedging Agreements. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which suchPerson is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is notliable therefor.

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes. “Information Memorandum” shall mean the Confidential Information Memorandum dated February 2007 relating to the

Borrower and the transactions contemplated by this Agreement and the other Loan Documents. “Interest Period” shall mean (i) with respect to any Eurodollar Borrowing, a period of one, two, three or six months, and

(ii) with respect to a Swingline Loan, a period of such duration not to exceed 10 days, as the Borrower may request and the SwinglineLender may agree in accordance with Section 2.6; provided, that:

(i) the initial Interest Period for such Borrowing shall commence on the date of such Borrowing (including

the date of any conversion from a Borrowing of another Type), and each Interest Period occurring thereafter in respect ofsuch Borrowing shall commence on the day on which the next preceding Interest Period expires;

(ii) if any Interest Period would otherwise end on a day other than a Business Day, such Interest Periodshall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in whichcase such Interest Period would end on the next preceding Business Day;

(iii) any Interest Period which begins on the last Business Day of a calendar month or on a day for whichthere is no numerically corresponding day in the calendar

12CHAR1\935816v6


month at the end of such Interest Period shall end on the last Business Day of the calendar month in which such InterestPeriod ends; and

(iv) no Interest Period may extend beyond the Revolving Commitment Termination Date. “ISP” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute

of International Banking Laws Practice (or such later version thereof as may be in effect at the time of issuance). “Issuing Bank” shall mean SunTrust Bank with respect to the SunTrust Letter of Credit, and Bank of America with respect

to all other Letters of Credit. “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations,

ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by anyGovernmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrativeorders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in eachcase whether or not having the force of law.

“LC Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been

reimbursed or refinanced as a Loan on the Business Day of such drawing. “LC Commitment” shall mean that portion of the Aggregate Revolving Commitment Amount that may be used by the

Borrower for the issuance of Letters of Credit in an aggregate face amount not to exceed $50,000,000. “LC Disbursement” shall mean a payment made by the Issuing Bank pursuant to a Letter of Credit. “LC Documents” shall mean the Letters of Credit and all applications, agreements and instruments relating to the Letters of

Credit. “LC Exposure” shall mean, as at any date of determination, the aggregate amount available to be drawn under all

outstanding Letters of Credit plus the aggregate of all unreimbursed drawings under Letters of Credit, including all L/C Borrowings.For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall bedetermined in accordance with Section 1.5. For all purposes of this Agreement, if on any date of determination a Letter of Credit hasexpired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter ofCredit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. The LC Exposure of any Lender shallbe its Pro Rata Share of the total LC Exposure at such time.

13

CHAR1\935816v6


“Lenders” shall have the meaning assigned to such term in the opening paragraph of this Agreement and shall include,where appropriate, the Swingline Lender.

“Letter of Credit” shall mean (a) the SunTrust Letter of Credit, (b) any letter of credit issued pursuant to Section 2.23 by

Bank of America for the account of the Borrower pursuant to the LC Commitment and (c) any Existing Letter of Credit. “LIBOR” shall mean, for any Interest Period (rounded upwards, as necessary, to the nearest 1/100 of 1%) the rate per

annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commerciallyavailable source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery onthe first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for anyreason, then the “Eurodollar Base Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agentto be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximateamount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to suchInterest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market attheir request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

“Lien” shall mean any mortgage, pledge, security interest, lien (statutory or otherwise), charge, encumbrance,

hypothecation, assignment, deposit arrangement, or other arrangement having the practical effect of the foregoing or any preference,priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale orother title retention agreement and any capital lease having the same economic effect as any of the foregoing).

“Loan Documents” shall mean, collectively, this Agreement, the Notes (if any), the LC Documents, the Fee Letter, all

Notices of Borrowing, the Subsidiary Guaranty Agreement, all Notices of Conversion/Continuation and any and all other instruments,agreements, documents and writings executed in connection with any of the foregoing.

“Loan Parties” shall mean the Borrower and the Subsidiary Loan Parties. “Loans” shall mean all Revolving Loans and Swingline Loans in the aggregate or any of them, as the context shall require. “Margin Regulations” shall mean Regulation T, Regulation U and Regulation X of the Board of Governors of the Federal

Reserve System, as the same may be in effect from time to time. “Material Adverse Effect” shall mean, with respect to any event, act, condition or occurrence of whatever nature (including

any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or inconjunction with any

14CHAR1\935816v6


other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, a material adverse changein, or a material adverse effect on, (i) the business, results of operations, financial condition, assets or liabilities of the Borrower andits Subsidiaries taken as a whole, (ii) the ability of the Loan Parties to perform any of their respective obligations under the LoanDocuments, (iii) the rights and remedies of the Administrative Agent, the Issuing Bank, Swingline Lender, and the Lenders under anyof the Loan Documents or (iv) the legality, validity or enforceability of any of the Loan Documents.

“Material Indebtedness” shall mean Indebtedness (other than the Loans and Letters of Credit) or obligations in respect of

one or more Hedging Agreements, of any one or more of the Borrower and the Subsidiaries in an aggregate principal amountexceeding $25,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borroweror any Subsidiary in respect to any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to anynetting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated atsuch time.

“Material Subsidiary” shall mean (i) each Loan Party other than the Borrower, and (ii) each other Subsidiary of the

Borrower, now existing or hereafter established or acquired, that at any time prior to the Revolving Commitment Termination Date,has or acquires total assets in excess of $5,000,000, or that accounted for or produced more than 5% of the Consolidated Net Income(Loss) of the Borrower on a consolidated basis during any of the three most recently completed fiscal years of the Borrower, or that isotherwise material to the operations or business of the Borrower or another Material Subsidiary.

“Moody’s” shall mean Moody’s Investors Service, Inc. “Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA. “Notes” shall mean, collectively, the Revolving Credit Notes and the Swingline Note. “Notices of Borrowing” shall mean, collectively, the Notices of Revolving Borrowing and the Notices of Swingline

Borrowing. “Notice of Conversion/Continuation” shall mean the notice given by the Borrower to the Administrative Agent in respect of

the conversion or continuation of an outstanding Borrowing as provided in Section 2.8(b) hereof. “Notice of Revolving Borrowing” shall have the meaning as set forth in Section 2.3(a). “Notice of Swingline Borrowing” shall have the meaning as set forth in Section 2.6(a). “Obligations” shall mean all amounts owing by the Borrower to the Administrative Agent, the Issuing Bank or any Lender

(including the Swingline Lender) pursuant to or in connection with this Agreement or any other Loan Document, including withoutlimitation, all principal, interest (including any interest accruing after the filing of any petition in bankruptcy or the commencement ofany insolvency, reorganization or like proceeding relating to the

15CHAR1\935816v6


Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), all reimbursement obligations,fees, expenses, indemnification and reimbursement payments, costs and expenses (including all fees and expenses of counsel to theAdministrative Agent and any Lender (including the Swingline Lender) incurred pursuant to this Agreement or any other LoanDocument), whether direct or indirect, absolute or contingent, liquidated or unliquidated, now existing or hereafter arising hereunderor thereunder, and all obligations arising under Hedging Agreements relating to the foregoing to the extent permitted hereunder, andall obligations and liabilities incurred in connection with collecting and enforcing the foregoing, together with all renewals,extensions, modifications or refinancings thereof.

“Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation or liability of such Person withrespect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactionswhich do not create a liability on the balance sheet of such Person, (iii) any Synthetic Lease Obligation or (iv) any obligation arisingwith respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does notconstitute a liability on the balance sheet of such Person in accordance with GAAP.

“OSHA” shall mean the Occupational Safety and Health Act of 1970, as amended from time to time, and any successor

statute. “Other Taxes” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes,

charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwisewith respect to, this Agreement or any other Loan Document.

“Participant” shall have the meaning set forth in Section 10.4(d). “Payment Office” shall mean the office of the Administrative Agent for borrowings and paydowns as set forth in Section

10.1, or such other location as to which the Administrative Agent shall have given written notice to the Borrower and the otherLenders.

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA, and any successor entity

performing similar functions. “Permitted Acquisition” shall have the meaning set forth in Section 7.3(j). “Permitted Encumbrances” shall mean

(i) Liens imposed by law for taxes not yet due or which are being contested in good faith by appropriateproceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

(ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and otherLiens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested ingood faith by

16CHAR1\935816v6


appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

(iii) pledges and deposits made in the ordinary course of business in compliance with workers’compensation, unemployment insurance and other social security laws or regulations;

(iv) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety andappeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(v) judgment and attachment liens not giving rise to an Event of Default or Liens created by or existing fromany litigation or legal proceeding that are currently being contested in good faith by appropriate proceedings and withrespect to which adequate reserves are being maintained in accordance with GAAP; and

(vi) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by lawor arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract fromthe value of the affected property or materially interfere with the ordinary conduct of business of the Borrower and itsSubsidiaries taken as a whole; provided, that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness. “Permitted Investments” shall mean:

(i) direct obligations of, or obligations the principal of and interest on which are unconditionallyGuaranteed by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith andcredit of the United States), in each case maturing within one year from the date of acquisition thereof;

(ii) commercial paper having the highest rating, at the time of acquisition thereof, of S&P or Moody’s andin either case maturing within six months from the date of acquisition thereof;

(iii) certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days of the date ofacquisition thereof issued or Guaranteed by or placed with, and money market deposit accounts issued or offered by, anydomestic office of any commercial bank organized under the laws of the United States or any state thereof which has acombined capital and surplus and undivided profits of not less than $500,000,000;

(iv) fully collateralized repurchase agreements with a term of not more than 30 days for securities describedin clause (i) above and entered into with a financial institution satisfying the criteria described in clause (iii) above; and

17CHAR1\935816v6


(v) mutual funds investing solely in any one or more of the Permitted Investments described in clauses (i)through (iv) above. “Permitted Liens” means all Liens permitted under Section 7.1. “Person” shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company,

trust or other entity, or any Governmental Authority. “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of

ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, ifsuch plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pro Forma Basis” means, for purposes of calculating the financial covenants set forth in Article VI (including for

purposes of determining the Applicable Margin), that any Disposition, Acquisition or Restricted Payment shall be deemed to haveoccurred as of the first day of the most recent four fiscal quarter period preceding the date of such transaction for which the Borrowerwas required to deliver financial statements pursuant to Section 5.1(a) or (b). In connection with the foregoing, (a) with respect to anyDisposition, income statement and cash flow statement items (whether positive or negative) attributable to the property disposed ofshall be excluded to the extent relating to any period occurring prior to the date of such transaction and (b) with respect to anyAcquisition, income statement items attributable to the Person or property acquired shall be included to the extent relating to anyperiod applicable in such calculations to the extent (A) such items are not otherwise included in such income statement items for theBorrower and its Subsidiaries in accordance with GAAP or in accordance with any defined terms set forth in Section 1.1 and (B) suchitems are supported by financial statements or other information reasonably satisfactory to the Administrative Agent and (ii) anyIndebtedness incurred or assumed by the Borrower or any Subsidiary (including the Person or property acquired) in connection withsuch transaction (A) shall be deemed to have been incurred as of the first day of the applicable period and (B) if such Indebtedness hasa floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined byutilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination.

“Pro Rata Share” shall mean (i) with respect to any Commitment of any Lender at any time, a percentage, the numerator ofwhich shall be such Lender’s Commitment (or if such Commitments have been terminated or expired or the Loans have been declaredto be due and payable, such Lender’s Loan funded under such Commitment), and the denominator of which shall be the sum of suchCommitments of all Lenders (or if such Commitments have been terminated or expired or the Loans have been declared to be due andpayable, all Loans of all Lenders funded under such Commitments) and (ii) with respect to all Commitments of any Lender at anytime, the numerator of which shall be the sum of such Lender’s Revolving Commitment (or if the Revolving Commitments have beenterminated or expired or the Loans have been declared to be due and payable, such Lender’s Revolving Loan) and the denominator ofwhich shall be the sum of all Lenders’ Revolving Commitments (or if the Revolving

18CHAR1\935816v6


Commitments have been terminated or expired or the Loans have been declared to be due and payable, all Revolving Loans). “Register” has the meaning provided in Section 10.4(c). “Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in

effect from time to time, and any successor regulations. “Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors,

officers, employees, agents and advisors of such Person and such Person’s Affiliates. “Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal,

leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) orwithin any building, structure, facility or fixture.

“Required Lenders” shall mean, at any time, Lenders holding at least 50.1% of the aggregate outstanding Revolving

Commitments at such time or, if the Commitments are no longer in effect, Lenders holding at least 50.1% of the aggregate outstandingLoans.

“Requirement of Law” for any Person shall mean the articles or certificate of incorporation and bylaws or other

organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of a GovernmentalAuthority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its propertyis subject.

“Responsible Officer” shall mean any of the president, the chief executive officer, the chief operating officer, the chief

financial officer, the treasurer or a vice president of the Borrower or such other representative of the Borrower as may be designated inwriting by any one of the foregoing with the consent of the Administrative Agent; and, with respect to the financial covenants only,the chief financial officer or the treasurer of the Borrower.

“Restricted Payment” shall have the meaning set forth in Section 7.4. “Revolving Commitment” shall mean, with respect to each Lender, the obligation of such Lender to make Revolving Loans

to the Borrower and to participate in Letters of Credit (subject to the terms herein) and Swingline Loans in an aggregate principalamount not exceeding the amount set forth with respect to such Lender on Schedule 1.2, or in the case of a Person becoming a Lenderafter the Closing Date, the amount of the assigned “Revolving Commitment” as provided in the Assignment and AcceptanceAgreement executed by such Person as an assignee, as the same may be changed pursuant to terms hereof.

“Revolving Commitment Termination Date” shall mean the earlier of (i) February 23, 2012, or (ii) the date on which all

amounts outstanding under this Agreement have been declared or have automatically become due and payable (whether byacceleration or otherwise).

19CHAR1\935816v6


“Revolving Credit Exposure” shall mean, with respect to any Lender at any time, the sum of the outstanding principalamount of such Lender’s Revolving Loans, such Lender’s LC Exposure and such Lender’s Swingline Exposure.

“Revolving Credit Note” shall mean a promissory note of the Borrower payable to the order of a requesting Lender in the

principal amount of such Lender’s Revolving Commitment, in substantially the form of Exhibit A. “Revolving Lenders” shall mean, at any time, Lenders holding outstanding Revolving Loans and unused Revolving

Commitments at such time or if the Lenders have no Revolving Loans outstanding, then Lenders holding the RevolvingCommitments.

“Revolving Loan” shall mean a loan made by a Lender (other than the Swingline Lender) to the Borrower under its

Revolving Commitment, which may either be a Base Rate Loan or a Eurodollar Loan. “S&P” shall mean Standard & Poor’s. “SEC” shall mean the Securities and Exchange Commission, or any Governmental Authority succeeding to its principal

functions. “Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the

applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or thePublic Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable datehereunder.

“Senior Note Purchase Agreement” means that certain Note Purchase Agreement dated as of April 1, 2003 among the

Borrower and the purchasers party thereto, as amended or modified from time to time. “Solvent” or “Solvency” means, with respect to any Person as of a particular date, that on such date (a) such Person is able

to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the ordinary course of business,(b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay assuch debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a business or a transaction, and is not aboutto engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving dueconsideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair value of theproperty of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of suchPerson and (e) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay theprobable liability of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilitiesat any time, it is intended that such liabilities will be computed at the amount which, in

20CHAR1\935816v6


light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become anactual or matured liability.

“Subsidiary” shall mean, with respect to any Person (the “parent”), any corporation, partnership, joint venture, limitedliability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’sconsolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as anyother corporation, partnership, joint venture, limited liability company, association or other entity of which securities or otherownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power, or in the case of apartnership, more than 50% of the general partnership interests are, as of such date, are directly or indirectly owned, controlled(intentionally lowercase) or held by the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean aSubsidiary of the Borrower.

“Subsidiary Guaranty Agreement” shall mean the Subsidiary Guaranty Agreement as amended, restated, supplemented or

otherwise modified from time to time, substantially in the form of Exhibit D, made by the Subsidiary Loan Parties in favor of theAdministrative Agent for the benefit of the Lenders.

“Subordinated Debt” shall mean all Indebtedness of Borrower subordinated to all obligations of Borrower or any other Loan

Party arising under this Agreement, the Notes, and the Guaranty Agreement, created, incurred or assumed on terms and conditionssatisfactory in all respects to the Administrative Agent and the Required Lenders, including without limitation, with respect to interestrates, payment terms, maturities, amortization schedules, covenants, defaults, remedies, and subordination provisions, as evidenced bythe written approval of the Administrative Agent and Required Lenders.

“Subsidiary Loan Party” shall mean any Material Subsidiary that is not a Foreign Subsidiary.

“SunTrust Letter of Credit” shall mean the letter of credit issued by SunTrust Bank on October 19, 1995, Letter of Credit

No. F501115, in favor of Director, Division of SELF, in the face amount of $300,000. “Swingline Commitment” shall mean the commitment of the Swingline Lender to make Swingline Loans in an aggregate

principal amount at any time outstanding not to exceed $50,000,000.

“Swingline Exposure” shall mean, with respect to each Lender, the principal amount of the Swingline Loans in whichsuch Lender is legally obligated either to make a Base Rate Loan or to purchase a participation in accordance with Section 2.6, whichshall equal such Lender’s Pro Rata Share of all outstanding Swingline Loans.

“Swingline Lender” shall mean Bank of America and its successors.

21CHAR1\935816v6


“Swingline Loan” shall mean a loan made to the Borrower by the Swingline Lender under the Swingline Commitment. “Swingline Note” shall mean the promissory note of the Borrower payable to the order of the Swingline Lender in the

principal amount of the Swingline Commitment, substantially the form of Exhibit B. “Swingline Rate” shall have the meaning assigned to such term in Section 2.6. “Synthetic Lease” means a lease transaction under which the parties intend that (i) the lease will be treated as an “operating

lease” by the lessee pursuant to Statement of Financial Accounting Standards No. 13, as amended and (ii) the lessee will be entitled tovarious tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

“Synthetic Lease Obligations” shall mean, with respect to any Person, the sum of (i) all remaining rental obligations of such

Person as lessee under Synthetic Leases which are attributable to principal and, without duplication, (ii) all rental and purchase pricepayment obligations of such Person under such Synthetic Leases assuming such Person exercises the option to purchase the leaseproperty at the end of the lease term.

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed

by any Governmental Authority. “Traditional Franchisee” means, collectively, a franchisee of the Borrower that (i) is not a Franchise Partner and (ii) is not

operating under the Franchise Partner Program.

“Type”, when used in reference to a Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loanscomprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Base Rate.

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from

such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.2 Classifications of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g. a “Revolving Loan” or “Swingline

Loan”) or by Type (e.g. a “Eurodollar Loan” or “Base Rate Loan”) or by Class and Type (e.g. “Revolving Eurodollar Loan”).Borrowings also may be classified and referred to by Class (e.g. “Revolving Borrowing”) or by Type (e.g. “Eurodollar Borrowing”) orby Class and Type (e.g. “ Revolving Eurodollar Borrowing”).

Section 1.3 Accounting Terms and Determination. (a) Unless otherwise defined or specified herein, all accounting terms used herein shall be interpreted, all accounting

determinations hereunder shall be made, and all financial

22CHAR1\935816v6


statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied on abasis consistent (except for such changes approved by the Borrower’s independent public accountants) with the most recent auditedconsolidated financial statement of the Borrower delivered pursuant to Section 5.1(a); provided, that if the Borrower notifies theAdministrative Agent that the Borrower wishes to amend any covenant in Article VI to eliminate the effect of any change in GAAP onthe operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amendArticle VI for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effectimmediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amendedin a manner satisfactory to the Borrower and the Required Lenders; provided, further, that if the Borrower notifies the AdministrativeAgent that the Borrower wishes to change its fiscal year end in accordance with Section 7.10 and such change effects any covenant inArticle VI, then the Borrower’s compliance with such covenant shall be determined on the basis of the fiscal year end in effectimmediately before such requested change in fiscal year end became effective, until such covenant is amended in a mannersatisfactory to the Borrower and the Required Lenders.

(b) Notwithstanding the above, the parties hereto acknowledge and agree that all calculations of the financial

covenants in Article VI (including for purposes of determining the Applicable Margin) shall be made on a Pro Forma Basis.

Section 1.4 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the

context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”,“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed tohave the same meaning and effect as the word “shall”. In the computation of periods of time from a specified date to a later specifieddate, the word “from” means “from and including” and the word “to” means “to but excluding”. Unless the context requires otherwise(i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to suchagreement, instrument or other document as it was originally executed or as it may from time to time be amended, supplemented orotherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any referenceherein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) the words “hereof”, “herein”and “hereunder” and words of similar import shall be construed to refer to this Agreement as a whole and not to any particularprovision hereof, (iv) all references to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles, Sections,Exhibits and Schedules to this Agreement and (v) all references to a specific time shall be construed to refer to the time in the city andstate of the Administrative Agent’s principal office, unless otherwise indicated.

Section 1.5 Letter of Credit Amounts.

Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount ofsuch Letter of Credit in effect at such time; provided,

23CHAR1\935816v6


however, that with respect to any Letter of Credit that, by its terms or the terms of any LC Document related thereto, provides for oneor more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximumstated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effectat such time.

Section 1.6 Times of Day.

Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, asapplicable).

ARTICLE II

AMOUNT AND TERMS OF THE COMMITMENTS

Section 2.1 General Description of Facilities. Subject to and upon the terms and conditions herein set forth, (i) the Revolving Lenders hereby establish in favor of the

Borrower a revolving credit facility pursuant to which the Revolving Lenders severally agree (to the extent of such Lender’sRevolving Commitment) to make Revolving Loans to the Borrower in accordance with Section 2.2, (ii) the Issuing Bank agrees toissue Letters of Credit in accordance with Section 2.23, (iii) the Swingline Lender agrees to make Swingline Loans in accordance withSection 2.5 and (iv) each Revolving Lender agrees to purchase a participation interest in the Letters of Credit and the Swingline Loanspursuant to the terms and conditions hereof; provided, that in no event shall the aggregate principal amount of all outstandingRevolving Loans, Swingline Loans and outstanding LC Exposure exceed at any time the Aggregate Revolving Commitment Amountfrom time to time in effect.

Section 2.2 Revolving Loans.

Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make Revolving Loans tothe Borrower, from time to time during the Availability Period, in an aggregate principal amount outstanding at any time that will notresult in (i) such Revolving Lender’s Revolving Credit Exposure exceeding such Revolving Lender’s Revolving Commitment or (ii)the aggregate Revolving Credit Exposures of all Revolving Lenders exceeding the Aggregate Revolving Commitment Amount.During the Availability Period, the Borrower shall be entitled to borrow, prepay and reborrow Revolving Loans in accordance with theterms and conditions of this Agreement; provided, that the Borrower may not borrow or reborrow should there exist a Default or Eventof Default.

Section 2.3 Procedure for Revolving Borrowings.

The Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) ofeach Revolving Borrowing substantially in the form of

24CHAR1\935816v6


Exhibit 2.3 attached hereto (a “Notice of Revolving Borrowing”) (x) prior to noon on the Business Day of the requested date of eachBase Rate Borrowing and (y) prior to 2:00 p.m. three (3) Business Days prior to the requested date of each Eurodollar Borrowing.Each Notice of Revolving Borrowing shall be irrevocable and shall specify: (i) the aggregate principal amount of such Borrowing,(ii) the date of such Borrowing (which shall be a Business Day), (iii) the Type of such Revolving Loan comprising such Borrowingand (iv) in the case of a Eurodollar Borrowing, the duration of the initial Interest Period applicable thereto (subject to the provisions ofthe definition of Interest Period). Each Revolving Borrowing shall consist entirely of Base Rate Loans or Eurodollar Loans, as theBorrower may request. The aggregate principal amount of each Eurodollar Borrowing shall be not less than $5,000,000 or a largermultiple of $1,000,000, and the aggregate principal amount of each Base Rate Borrowing shall not be less than $1,000,000 or a largermultiple of $100,000; provided, that Base Rate Loans made pursuant to Section 2.6 or Section 2.23 may be made in lesser amounts asprovided therein. At no time shall the total number of Eurodollar Borrowings outstanding at any time exceed eight. Promptlyfollowing the receipt of a Notice of Revolving Borrowing in accordance herewith, the Administrative Agent shall advise eachRevolving Lender of the details thereof and the amount of such Lender’s Revolving Loan to be made as part of the requestedRevolving Borrowing.

Section 2.4 Incremental Facility.

Subject to the terms and conditions set forth herein, the Borrower shall have the right, at any time and from time to time(but not to exceed four (4) increases in the aggregate) prior to the date that is ninety (90) days prior to the Revolving CommitmentTermination Date, to incur additional Indebtedness under this Agreement in the form of an increase to the Aggregate RevolvingCommitted Amount (each an “Incremental Facility”) by an aggregate amount of up to $100,000,000. The following terms andconditions shall apply to each Incremental Facility: (a) the loans made under any such Incremental Facility (each an “AdditionalLoan”) shall constitute Obligations and will be guaranteed with the other Obligations on a pari passu basis, (b) any such IncrementalFacility shall have the same terms (including interest rate and maturity date) as the existing Revolving Loans, (c) any such IncrementalFacility shall be entitled to the same voting rights as the existing Revolving Loans and shall be entitled to receive proceeds ofprepayments on the same basis as the existing Revolving Loans, (d) any such Incremental Facility shall be obtained from existingLenders or from other banks, financial institutions or investment funds, in each case in accordance with the terms set forth below, (e)any such Incremental Facility shall be in a minimum principal amount of $10,000,000 and integral multiples of $10,000,000 in excessthereof, (f) the proceeds of any Additional Loan will be used for the purposes set forth in Section 5.9, (g) the Borrower shall execute aRevolving Credit Note in favor of any new Lender, if requested by such Lender, (h) the conditions to Extensions of Credit in Section3.2 shall have been satisfied and (i) the Administrative Agent shall have received from the Borrower updated financial projections andan officer’s certificate, in each case in form and substance reasonably satisfactory to the Administrative Agent, demonstrating that,after giving effect to any such Incremental Facility on a Pro Forma Basis, the Borrower will be in compliance with the financialcovenants set forth in Article VI. Participation in the Incremental Facility shall be offered first to each of the existing Lenders, but noLender shall have any obligation to provide all or any portion of the Incremental Facility. If the amount of the Incremental Facilityrequested by the Borrower shall exceed the commitments which the existing Lenders are willing to provide with respect to suchIncremental Facility, then the Borrower may invite other banks, financial

25CHAR1\935816v6


institutions and investment funds reasonably acceptable to the Administrative Agent to join this Agreement as Lenders hereunder forthe portion of such Incremental Facility not taken by existing Lenders, provided that such other banks, financial institutions andinvestment funds shall enter into such joinder agreements to give effect thereto as the Administrative Agent and the Borrower mayreasonably request. If the commitments received for any Incremental Facility exceed the amount of such Incremental Facility, theBorrower and the Administrative Agent shall have the right to decide how such commitments are allocated. If commitments for thetotal amount of the Incremental Facility requested by the Borrower are not obtained, the Borrower shall have the right to accept thecommitments which are obtained and accept an Incremental Facility in an amount less than requested so long as such acceptedIncremental Facility exceeds the minimum amount set forth above. The Borrower shall have the right to decline any IncrementalFacility if the Pro Rata Share of any existing Lender immediately prior to the implementation of the Incremental Facility would bedifferent immediately thereafter. The Administrative Agent is authorized to enter into, on behalf of the Lenders, any amendment tothis Agreement or any other Loan Document as may be necessary to incorporate the terms of any new Incremental Facility therein.

Section 2.5 Swingline Commitment.

Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrowerduring the Availability Period in an aggregate principal amount outstanding at any time not to exceed the lesser of (i) the SwinglineCommitment then in effect and (ii) the difference between the Aggregate Revolving Commitment Amount and the aggregateRevolving Credit Exposures of all Lenders; provided that the Swingline Lender shall not be required to make a Swingline Loan torefinance an outstanding Swingline Loan. The Borrower shall be entitled to borrow, repay and reborrow Swingline Loans inaccordance with the terms and conditions of this Agreement.

Section 2.6 Procedure for Swingline Borrowing; Etc.

(a) The Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed inwriting) of each Swingline Borrowing substantially in the form of Exhibit 2.6 attached hereto (“Notice of Swingline Borrowing”)prior to 2:00 p.m. on the requested date of each Swingline Borrowing. Each Notice of Swingline Borrowing shall be irrevocable andshall specify: (i) the principal amount of such Swingline Loan, (ii) the date of such Swingline Loan (which shall be a Business Day)and (iii) the account of the Borrower to which the proceeds of such Swingline Loan should be credited. The Administrative Agent willpromptly advise the Swingline Lender of each Notice of Swingline Borrowing. Each Swingline Loan shall accrue interest at the BaseRate or any other interest rate as agreed between the Borrower and the Swingline Lender (the “Swingline Rate”) and shall have anInterest Period (subject to the definition thereof) as agreed between the Borrower and the Lender. The aggregate principal amount ofeach Swingline Loan shall be not less than $100,000 or a larger multiple of $50,000, or such other minimum amounts agreed to by theSwingline Lender and the Borrower. The Swingline Lender will make the proceeds of each Swingline Loan available to the Borrowerin Dollars in immediately available funds at the account specified by the Borrower

26CHAR1\935816v6


in the applicable Notice of Swingline Borrowing not later than 3:00 p.m. on the requested date of such Swingline Loan. (b) The Swingline Lender, at any time and from time to time in its sole discretion, may, on behalf of the Borrower

(which hereby irrevocably authorizes and directs the Swingline Lender to act on its behalf), give a Notice of Revolving Borrowing tothe Administrative Agent requesting the Revolving Lenders (including the Swingline Lender) to make a Base Rate Loan in an amountequal to the unpaid principal amount of any Swingline Loan. Each Revolving Lender will make the proceeds of its Base Rate Loanincluded in such Borrowing available to the Administrative Agent for the account of the Swingline Lender in accordance withSection 2.7, which will be used solely for the repayment of such Swingline Loan.

(c) If for any reason a Base Rate Borrowing may not be (as determined in the sole discretion of the Administrative

Agent), or is not, made in accordance with the foregoing provisions, then each Revolving Lender (other than the Swingline Lender)shall purchase an undivided participating interest in such Swingline Loan in an amount equal to its Pro Rata Share thereof on the datethat such Base Rate Borrowing should have occurred. On the date of such required purchase, each Revolving Lender shall promptlytransfer, in immediately available funds, the amount of its participating interest to the Administrative Agent for the account of theSwingline Lender. If such Swingline Loan bears interest at a rate other than the Base Rate, such Swingline Loan shall automaticallybecome a Base Rate Loan on the effective date of any such participation and interest shall become payable on demand.

(d) Each Revolving Lender’s obligation to make a Base Rate Loan pursuant to Section 2.6(b) or to purchase the

participating interests pursuant to Section 2.6(c) shall be absolute and unconditional and shall not be affected by any circumstance,including without limitation (i) any setoff, counterclaim, recoupment, defense or other right that such Lender or any other Person mayhave or claim against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (ii) the existence of aDefault or an Event of Default or the termination of any Lender’s Revolving Commitment, (iii) the existence (or alleged existence) ofany event or condition which has had or could reasonably be expected to have a Material Adverse Effect, (iv) any breach of thisAgreement or any other Loan Document by the Borrower, the Administrative Agent or any Lender or (v) any other circumstance,happening or event whatsoever, whether or not similar to any of the foregoing. If such amount is not in fact made available to theSwingline Lender by any Revolving Lender, the Swingline Lender shall be entitled to recover such amount on demand from suchLender, together with accrued interest thereon for each day from the date of demand thereof at the Federal Funds Rate. Until such timeas such Lender makes its required payment, the Swingline Lender shall be deemed to continue to have outstanding Swingline Loans inthe amount of the unpaid participation for all purposes of the Loan Documents. In addition, such Lender shall be deemed to haveassigned any and all payments made of principal and interest on its Loans and any other amounts due to it hereunder, to the SwinglineLender to fund the amount of such Lender’s participation interest in such Swingline Loans that such Lender failed to fund pursuant tothis Section, until such amount has been purchased in full.

27

CHAR1\935816v6


Section 2.7 Funding of Borrowings.

(a) Each Lender will make available each Loan to be made by it hereunder on the proposed date thereof by wiretransfer in immediately available funds by 11:00 a.m. to the Administrative Agent at the Payment Office (or 3:00 p.m. in the case ofBase Rate Borrowings); provided that the Swingline Loans will be made as set forth in Section 2.6. The Administrative Agent willmake such Loans available to the Borrower by promptly crediting the amounts that it receives, in like funds by the close of businesson such proposed date, to an account maintained by the Borrower with the Administrative Agent or at the Borrower’s option, byeffecting a wire transfer of such amounts to an account designated by the Borrower to the Administrative Agent.

(b) Unless the Administrative Agent shall have been notified by any Lender prior to 5 p.m. one (1) Business Day

prior to the date of a Borrowing in which such Lender is participating that such Lender will not make available to the AdministrativeAgent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such amountavailable to the Administrative Agent on such date, and the Administrative Agent, in reliance on such assumption, may make availableto the Borrower on such date a corresponding amount. If such corresponding amount is not in fact made available to theAdministrative Agent by such Lender on the date of such Borrowing, the Administrative Agent shall be entitled to recover suchcorresponding amount on demand from such Lender together with interest at the Federal Funds Rate for up to two (2) days andthereafter at the rate specified for such Borrowing. If such Lender does not pay such corresponding amount forthwith upon theAdministrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shallimmediately pay such corresponding amount to the Administrative Agent together with interest at the rate specified for suchBorrowing. Nothing in this subsection shall be deemed to relieve any Lender from its obligation to fund its Pro Rata Share of anyBorrowing hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any default by suchLender hereunder.

(c) All Borrowings shall be made by the Lenders on the basis of their respective Pro Rata Shares. No Lender shall be

responsible for any default by any other Lender in its obligations hereunder, and each Lender shall be obligated to make its Loansprovided to be made by it hereunder, regardless of the failure of any other Lender to make its Loans hereunder.

Section 2.8 Interest Elections.

(a) Each Borrowing initially shall be of the Type specified in the applicable Notice of Borrowing, and in the case of aEurodollar Borrowing, shall have an initial Interest Period as specified in such Notice of Borrowing. Thereafter, the Borrower mayelect to convert such Borrowing into a different Type or to continue such Borrowing, and in the case of a Eurodollar Borrowing, mayelect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to differentportions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding Loanscomprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shallNOT apply to Swingline Borrowings, which may not be converted or continued.

28CHAR1\935816v6


(b) To make an election pursuant to this Section, the Borrower shall give the Administrative Agent prior writtennotice (or telephonic notice promptly confirmed in writing) of each Borrowing substantially in the form of Exhibit 2.8 hereto (a“Notice of Conversion/Continuation”) that is to be converted or continued, as the case may be, (x) prior to noon on the Business of therequested date of a conversion into a Base Rate Borrowing and (y) prior to 2:00 p.m. three (3) Business Days prior to a continuation ofor conversion into a Eurodollar Borrowing. Each such Notice of Conversion/Continuation shall be irrevocable and shall specify (i) theBorrowing to which such Notice of Continuation/Conversion applies and if different options are being elected with respect to differentportions thereof, the portions thereof that are to be allocated to each resulting Borrowing (in which case the information to be specifiedpursuant to clauses (iii) and (iv) shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuantto such Notice of Continuation/Conversion, which shall be a Business Day, (iii) whether the resulting Borrowing is to be a Base RateBorrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Periodapplicable thereto after giving effect to such election, which shall be a period contemplated by the definition of “Interest Period”. Ifany such Notice of Continuation/Conversion requests a Eurodollar Borrowing but does not specify an Interest Period, the Borrowershall be deemed to have selected an Interest Period of one month. The principal amount of any resulting Borrowing shall satisfy theminimum borrowing amount for Eurodollar Borrowings and Base Rate Borrowings set forth in Section 2.3.

(c) If, on the expiration of any Interest Period in respect of any Eurodollar Borrowing, the Borrower shall have failed

to deliver a Notice of Conversion/ Continuation, then, unless such Borrowing is repaid as provided herein, the Borrower shall bedeemed to have elected to convert such Borrowing to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, aEurodollar Borrowing if a Default or an Event of Default exists, unless the Administrative Agent and each of the Lenders shall haveotherwise consented in writing. No conversion of any Eurodollar Loans shall be permitted except on the last day of the Interest Periodin respect thereof.

(d) Upon receipt of any Notice of Conversion/Continuation, the Administrative Agent shall promptly notify each

Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

Section 2.9 Optional Reduction and Termination of Commitments.

(a) Unless previously terminated, all Revolving Commitments shall terminate on the Revolving CommitmentTermination Date.

(b) Upon at least three (3) Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) to

the Administrative Agent (which notice shall be irrevocable), the Borrower may reduce the Aggregate Revolving Commitments inpart or terminate the Aggregate Revolving Commitments in whole; provided, however, that (i) any partial reduction shall apply toreduce proportionately and permanently the Revolving Commitment of each Revolving Lender, (ii) any partial reduction pursuant tothis Section 2.9 shall be in an amount of

29CHAR1\935816v6


at least $5,000,000 and any larger multiple of $1,000,000, and (iii) no such reduction shall be permitted which would reduce theAggregate Revolving Commitments to an amount less than the outstanding Revolving Credit Exposures of all Lenders. Any suchreduction in the Aggregate Revolving Commitments shall result in a proportionate reduction (rounded to the next lowest integralmultiple of $100,000) in the Swingline Commitment and the LC Commitment.

Section 2.10 Repayment of Loans.

(a) The outstanding principal amount of all Revolving Loans shall be due and payable (together with accrued andunpaid interest thereon) on the Revolving Commitment Termination Date.

(b) The principal amount of each Swingline Borrowing shall be due and payable (together with accrued and unpaid

interest thereon) on the earlier of (i) the last day of the Interest Period applicable to such Borrowing and (ii) the RevolvingCommitment Termination Date.

Section 2.11 Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice appropriate records evidencing the indebtednessof the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principaland interest payable thereon and paid to such Lender from time to time under this Agreement. The Administrative Agent shallmaintain appropriate records in which shall be recorded (i) the Revolving Commitment of each Lender, (ii) the amount of each Loanmade hereunder by each Lender, the Class and Type thereof and the Interest Period applicable thereto, (iii) the date of eachcontinuation thereof pursuant to Section 2.8, (iv) the date of each conversion of all or a portion thereof to another Type pursuant toSection 2.8, (v) the date and amount of any principal or interest due and payable or to become due and payable from the Borrower toeach Lender hereunder in respect of such Loans and (vi) both the date and amount of any sum received by the Administrative Agenthereunder from the Borrower in respect of the Loans and each Lender’s Pro Rata Share thereof. The entries made in such records shallbe prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that thefailure or delay of any Lender or the Administrative Agent in maintaining or making entries into any such record or any error thereinshall not in any manner affect the obligation of the Borrower to repay the Loans (both principal and unpaid accrued interest) of suchLender in accordance with the terms of this Agreement.

(b) At the request of any Lender (including the Swingline Lender) at any time, the Borrower agrees that it will

execute and deliver to such Lender a Revolving Credit Note and, in the case of the Swingline Lender only, a Swingline Note, payableto the order of such Lender.

Section 2.12 Prepayments.

The Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, withoutpremium or penalty, by giving irrevocable written notice (or telephonic notice promptly confirmed in writing) to the AdministrativeAgent no later than (i)

30CHAR1\935816v6


in the case of prepayment of any Eurodollar Borrowing, 12:00 noon not less than three (3) Business Days prior to any suchprepayment, (ii) in the case of any prepayment of any Base Rate Borrowing, not less than one Business Day prior to the date of suchprepayment, and (iii) in the case of Swingline Borrowings, prior to 12:00 noon on the date of such prepayment. Each such notice shallbe irrevocable and shall specify the proposed date of such prepayment and the principal amount of each Borrowing or portion thereofto be prepaid. Upon receipt of any such notice, the Administrative Agent shall promptly notify each Lender of the contents thereof andof such Lender’s Pro Rata Share of any such prepayment. If such notice is given, the aggregate amount specified in such notice shallbe due and payable on the date designated in such notice, together with accrued interest to such date on the amount so prepaid;provided, that if a Eurodollar Borrowing is prepaid on a date other than the last day of an Interest Period applicable thereto, theBorrower shall also pay all amounts required pursuant to Section 2.19. Each partial prepayment of any Revolving Loan (other than aSwingline Loan) shall be in a minimum amount of $5,000,000 and in integral multiples of $1,000,000, and each partial prepayment ofany Swingline Loan shall be in a minimum amount of $100,000 and integral multiples of $50,000. Each prepayment of a Borrowingshall be applied ratably to the Loans comprising such Borrowing.

Section 2.13 Interest on Loans.

(a) The Borrower shall pay interest on each Base Rate Loan at the Base Rate in effect from time to time plus theApplicable Margin in effect from time to time, and the Borrower shall pay interest on each Eurodollar Loan at the Adjusted LIBORate for the applicable Interest Period in effect for such Loan, plus the Applicable Margin in effect from time to time.

(b) The Borrower shall pay interest on each Swingline Loan at the Swingline Rate.

(c) If an Event of Default has occurred or is continuing, and at any time after acceleration of the Loans pursuant to thelast paragraph of Section 8.1, the Borrower shall pay interest (“Default Interest”) with respect to all Eurodollar Loans at the rateotherwise applicable for the then-current Interest Period plus an additional 2% per annum until the last day of such Interest Period, andthereafter, and with respect to all Base Rate Loans (including all Swingline Loans) and all other Obligations hereunder (other thanLoans), at an all-in rate in effect for Base Rate Loans, plus an additional 2% per annum.

(d) Interest on the principal amount of all Loans shall accrue from and including the date such Loans are made to butexcluding the date of any repayment thereof. Interest on all outstanding Base Rate Loans shall be payable quarterly in arrears on thelast day of each Fiscal Quarter and on the Revolving Commitment Termination Date. Interest on all outstanding Eurodollar Loansshall be payable on the last day of each Interest Period applicable thereto, and, in the case of any Eurodollar Loans having an InterestPeriod in excess of three months or 90 days, respectively, on each day which occurs every three months or 90 days, as the case maybe, after the initial date of such Interest Period, and on the Revolving Commitment Termination Date. Interest on each SwinglineLoans shall be payable quarterly in arrears on the last day of each Fiscal Quarter, and on the Revolving Commitment TerminationDate. Interest on any Loan which is converted into a Loan of another Type or which is repaid or prepaid shall be payable on

31

CHAR1\935816v6


the date of such conversion or on the date of any such repayment or prepayment (on the amount repaid or prepaid) thereof. All DefaultInterest shall be payable on demand.

(e) The Administrative Agent shall determine each interest rate applicable to the Loans hereunder and shall promptlynotify the Borrower and the Lenders of such rate in writing (or by telephone, promptly confirmed in writing). Any such determinationshall be conclusive and binding for all purposes, absent manifest error.

Section 2.14 Fees.

(a) The Borrower shall pay to the Administrative Agent for its own account fees in the amounts and at the timespreviously agreed upon by the Borrower and the Administrative Agent in the Fee Letter.

(b) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment

fee, which shall accrue at the Applicable Commitment Fee Percentage (determined daily in accordance with Schedule 1.1) on thedaily amount of the unused Revolving Commitment of such Lender during the Availability Period. Accrued commitment fees shall bepayable in arrears on the last day of each Fiscal Quarter and on the Revolving Commitment Termination Date, commencing on thefirst such date after the Closing Date; provided, further, however, that any commitment fees accruing after the Revolving CommitmentTermination Date shall be payable on demand. For purposes of computing commitment fees with respect to the RevolvingCommitments, the Revolving Commitment of each Revolving Lender shall be deemed used to the extent of the outstanding RevolvingLoans and LC Exposure, but not Swingline Exposure, of such Lender.

(c) The Borrower agrees to pay (i) to the Administrative Agent, for the account of each Revolving Lender, a letter of

credit fee with respect to such Lender’s participation in each Letter of Credit, which shall accrue at the Applicable Margin forEurodollar Loans then in effect on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributableto unreimbursed LC Disbursements) attributable to such Letter of Credit during the period from and including the date of issuance ofsuch Letter of Credit to but excluding the date on which such Letter of Credit expires or is drawn in full (including without limitationany LC Exposure that remains outstanding after the Revolving Commitment Termination Date) and (ii) to the Issuing Bank for its ownaccount a fronting fee, which shall accrue at the rate set forth in the Fee Letter on the daily amount of the LC Exposure (excluding anyportion thereof attributable to unreimbursed LC Disbursements) during the Availability Period (or until the date that such Letter ofCredit is irrevocably cancelled, whichever is later), as well as the Issuing Bank’s standard fees with respect to issuance, amendment,renewal or extension of any Letter of Credit or processing of drawings thereunder. Accrued letter of credit fees and fronting fees shallbe due and payable quarterly in arrears on the last day of each Fiscal Quarter, commencing with the last day of the Fiscal Quarter inwhich the first Letter of Credit is issued, and ending on the Revolving Commitment Termination Date, and thereafter accrued letter ofcredit fees and fronting fees shall be payable on demand.

32

CHAR1\935816v6


Section 2.15 Computation of Interest and Fees.

Other than calculations in respect of the Base Rate (which shall be made on the basis of actual number of days elapsed in a365/366 day year), all computations of interest and fees hereunder shall be made on the basis of a year of 360 days for the actualnumber of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable(to the extent computed on the basis of days elapsed). Each determination by the Administrative Agent of an interest amount or feehereunder shall be made in good faith and, except for manifest error, shall be final, conclusive and binding for all purposes.

Section 2.16 Inability to Determine Interest Rates.

If prior to the commencement of any Interest Period for any Eurodollar Borrowing,

(i) the Administrative Agent shall have determined (which determination shall be conclusive and bindingupon the Borrower absent manifest error) that, by reason of circumstances affecting the relevant interbank market, adequatemeans do not exist for ascertaining LIBOR for such Interest Period, or

(ii) the Administrative Agent shall have received notice from the Required Lenders that the Adjusted LIBO

Rate does not adequately and fairly reflect the cost to such Lenders (or Lender, as the case may be) of making, funding ormaintaining their (or its, as the case may be) Eurodollar Loans for such Interest Period,

the Administrative Agent shall give written notice (or telephonic notice, promptly confirmed in writing) to the Borrower and to theLenders as soon as practicable thereafter. In the case of Eurodollar Loans, until the Administrative Agent shall notify the Borrowerand the Lenders that the circumstances giving rise to such notice no longer exist, (i) the obligations of the Lenders to make EurodollarLoans or to continue or convert outstanding Loans as or into Eurodollar Loans shall be suspended and (ii) all such affected Loans shallbe converted into Base Rate Loans on the last day of the then current Interest Period applicable thereto unless the Borrower prepayssuch Loans in accordance with this Agreement. Unless the Borrower notifies the Administrative Agent at least one Business Daybefore the date of any Eurodollar Revolving Borrowing for which a Notice of Revolving Borrowing has previously been given that itelects not to borrow on such date, then such Revolving Borrowing shall be made as a Base Rate Borrowing.

Section 2.17 Illegality.

If any Change in Law shall make it unlawful or impossible for any Lender to make, maintain or fund any Eurodollar Loanand such Lender shall so notify the Administrative Agent, the Administrative Agent shall promptly give notice thereof to the Borrowerand the other Lenders, whereupon until such Lender notifies the Administrative Agent and the Borrower that the circumstances givingrise to such suspension no longer exist, the obligation of such Lender to make Eurodollar Loans, or to continue or convert outstandingLoans as or into Eurodollar Loans, shall be suspended. In the case of the making of a Eurodollar Revolving Borrowing, such Lender’sRevolving Loan shall be made as a Base Rate Loan as part of the same Revolving

33CHAR1\935816v6


Borrowing for the same Interest Period and if the affected Eurodollar Loan is then outstanding, such Loan shall be converted to a BaseRate Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Loan if such Lender may lawfullycontinue to maintain such Loan to such date or (ii) immediately if such Lender shall determine that it may not lawfully continue tomaintain such Eurodollar Loan to such date. Notwithstanding the foregoing, the affected Lender shall, prior to giving such notice tothe Administrative Agent, designate a different Applicable Lending Office if such designation would avoid the need for giving suchnotice and if such designation would not otherwise be disadvantageous to such Lender in the good faith exercise of its discretion.

Section 2.18 Increased Costs.

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement that is nototherwise included in the determination of the Adjusted LIBO Rate hereunder against assets of, deposits with or for theaccount of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) orthe Issuing Bank;

(ii) impose on any Lender or on the Issuing Bank or the eurodollar interbank market any other condition

affecting this Agreement or any Eurodollar Loans made by such Lender or any Letter of Credit or any participation therein;or

(iii) change the basis of taxation of the overall net income or overall gross income by the United States orany foreign jurisdiction or any political subdivision of either thereof under the laws of which any Lender is organized or hasits lending office;

and the result of the foregoing is to increase the cost to such Lender of making, converting into, continuing or maintaining aEurodollar Loan or to increase the cost to such Lender or the Issuing Bank of participating in or issuing any Letter of Credit or toreduce the amount received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or any otheramount), then the Borrower shall promptly pay, upon written notice from and demand by such Lender on the Borrower (with a copy ofsuch notice and demand to the Administrative Agent), to the Administrative Agent for the account of such Lender, within ten (10)days after the date of such notice and demand, additional amount or amounts sufficient to compensate such Lender or the IssuingBank, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank shall have determined that on or after the date of this Agreement any Change inLaw regarding capital requirements has the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital (or onthe capital of such Lender’s or the Issuing Bank’s parent corporation) as a consequence of its obligations hereunder or under or inrespect of any Letter of Credit to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’sparent corporation could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’spolicies or the policies of such Lender’s or the Issuing Bank’s parent corporation with respect to capital

34CHAR1\935816v6


adequacy) then, from time to time, within ten (10) days after receipt by the Borrower of written demand by such Lender (with a copythereof to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lenderor the Issuing Bank or such Lender’s or the Issuing Bank’s parent corporation for any such reduction suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such

Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s parent corporation, as the case may be, specified in paragraph (a)or (b) of this Section shall be delivered to the Borrower (with a copy to the Administrative Agent) and shall be conclusive, absentmanifest error. The Borrower shall pay any such Lender or the Issuing Bank, as the case may be, such amount or amounts withinten (10) days after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this

Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation.

Section 2.19 Funding Indemnity.

In the event of (a) the payment of any principal of a Eurodollar Loan other than on the last day of the Interest Periodapplicable thereto (including as a result of an Event of Default), (b) the conversion or continuation of a Eurodollar Loan other than onthe last day of the Interest Period applicable thereto, or (c) the failure by the Borrower to borrow, prepay, convert or continue anyEurodollar Loan on the date specified in any applicable notice (regardless of whether such notice is withdrawn or revoked) then, inany such event, the Borrower shall compensate each Lender, within ten (10) days after written demand from such Lender, for any loss,cost or expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense shall be deemed to include anamount determined by such Lender to be the excess, if any, of (A) the amount of interest that would have accrued on the principalamount of such Eurodollar Loan if such event had not occurred at the Adjusted LIBO Rate applicable to such Eurodollar Loan for theperiod from the date of such event to the last day of the then current Interest Period therefor (or in the case of a failure to borrow,convert or continue, for the period that would have been the Interest Period for such Eurodollar Loan) over (B) the amount of interestthat would accrue on the principal amount of such Eurodollar Loan for the same period if the Adjusted LIBO Rate were set on the datesuch Eurodollar Loan was prepaid or converted or the date on which the Borrower failed to borrow, convert or continue suchEurodollar Loan. A certificate as to any additional amount payable under this Section 2.19 submitted to the Borrower by any Lender(with a copy to the Administrative Agent) shall be conclusive, absent manifest error.

Section 2.20 Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clearof and without deduction for any Indemnified Taxes or Other Taxes; provided, however, that if the Borrower shall be required todeduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so thatafter making all required deductions (including deductions

35CHAR1\935816v6


applicable to additional sums payable under this Section) the Administrative Agent, any Lender or the Issuing Bank (as the case maybe) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall makesuch deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance withapplicable law.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with

applicable law.

(c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within ten (10) daysafter written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, suchLender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrowerhereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section)and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxesor Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount ofsuch payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalfor on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a

Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued bysuch Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of suchpayment reasonably satisfactory to the Administrative Agent.

(e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the Code or any

treaty to which the United States is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copyto the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentationprescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholdingor at a reduced rate. Without limiting the generality of the foregoing, each Foreign Lender agrees that it will deliver to theAdministrative Agent and the Borrower (or in the case of a Participant, to the Lender from which the related participation shall havebeen purchased), as appropriate, two (2) duly completed copies of (i) Internal Revenue Service Form W-8 ECI, or any successor formthereto, certifying that the payments received from the Borrower hereunder are effectively connected with such Foreign Lender’sconduct of a trade or business in the United States; or (ii) Internal Revenue Service Form W-8 BEN, or any successor form thereto,certifying that such Foreign Lender is entitled to benefits under an income tax treaty to which the United States is a party whichreduces the rate of withholding tax on payments of interest; or (iii) Internal Revenue Service Form W-8 BEN, or any successor formprescribed by the Internal Revenue Service, together with a certificate (A) establishing that the payment to the Foreign Lenderqualifies as “portfolio interest” exempt from U.S. withholding tax under Code section 871(h) or 881(c), and (B) stating that (1) theForeign Lender is not a bank for purposes of Code section 881(c)(3)(A), or the obligation of the Borrower hereunder is not, withrespect to such Foreign Lender, a loan

36CHAR1\935816v6


agreement entered into in the ordinary course of its trade or business, within the meaning of that section; (2) the Foreign Lender is nota 10% shareholder of the Borrower within the meaning of Code section 871(h)(3) or 881(c)(3)(B); and (3) the Foreign Lender is not acontrolled foreign corporation that is related to the Borrower within the meaning of Code section 881(c)(3)(C); or (iv) such otherInternal Revenue Service forms as may be applicable to the Foreign Lender, including Forms W-8 IMY or W-8 EXP. Each suchForeign Lender shall deliver to the Borrower and the Administrative Agent such forms on or before the date that it becomes a party tothis Agreement (or in the case of a Participant, on or before the date such Participant purchases the related participation). In addition,each such Foreign Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered bysuch Foreign Lender. Each such Foreign Lender shall promptly notify the Borrower and the Administrative Agent at any time that itdetermines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form ofcertification adopted by the Internal Revenue Service for such purpose).

Section 2.21 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or

reimbursement of LC Disbursements, or of amounts payable under Section 2.18, 2.19 or 2.20, or otherwise) prior to 12:00 noon, onthe date when due, in immediately available funds, free and clear of any defenses, rights of set-off, counterclaim, or withholding ordeduction of taxes. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemedto have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall bemade to the Administrative Agent at the Payment Office, except payments to be made directly to the Issuing Bank or SwinglineLender as expressly provided herein and except that payments pursuant to Sections 2.18, 2.19 and 2.20 and 10.3 may be made directlyto the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any otherPerson to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not aBusiness Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruinginterest, interest thereon shall be made payable for the period of such extension. All payments hereunder shall be made in Dollars.

(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts

of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towardspayment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interestand fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then duehereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursementsthen due to such parties.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of

any principal of or interest on any of its Loans that would result in such Lender receiving payment of a greater proportion of theaggregate amount

37CHAR1\935816v6


of its Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greaterproportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that thebenefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of andaccrued interest on their respective Loans; provided, that (i) if any such participations are purchased and all or any portion of thepayment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of suchrecovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by theBorrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender asconsideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to theBorrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents tothe foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participationpursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to suchparticipation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any

payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will notmake such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordanceherewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount oramounts due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as thecase may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender orIssuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the dateof payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by theAdministrative Agent in accordance with banking industry rules on interbank compensation.

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.6(b), 2.7(b), 2.21(d),

2.23(d), or 10.3(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply anyamounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations undersuch Sections until all such unsatisfied obligations are fully paid.

Section 2.22 Mitigation of Obligations; Replacement of Lenders.

(a) If any Lender requests compensation under Section 2.18, or if the Borrower is required to pay any additionalamount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.20, then such Lender shalluse reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights andobligations hereunder to another of its offices, branches or affiliates, if, in the sole judgment of such Lender, such designation orassignment (i) would eliminate or reduce amounts

38CHAR1\935816v6


payable under Section 2.18 or Section 2.20, as the case may be, in the future and (ii) would not subject such Lender to anyunreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay allcosts and expenses incurred by any Lender in connection with such designation or assignment.

(b) If any Lender requests compensation under Section 2.18, or if the Borrower is required to pay any additional

amount to any Lender or any Governmental Authority of the account of any Lender pursuant to Section 2.20, or if any Lender defaultsin its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and theAdministrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictionsset forth in Section 10.4(b)) all its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume suchobligations (which Eligible Assignee may be another Lender); provided, that (i) the Borrower shall have received the prior writtenconsent of the Administrative Agent, which consent shall not be unreasonably withheld, conditioned or delayed (ii) such Lender shallhave received payment of an amount equal to the outstanding principal amount of all Loans owed to it, accrued interest thereon,accrued fees and all other amounts payable to it hereunder, from the assignee (in the case of such outstanding principal and accruedinterest) and from the Borrower (in the case of all other amounts) and (iii) in the case of a claim for compensation under Section 2.18or payments required to be made pursuant to Section 2.20, such assignment will result in a reduction in future claims for suchcompensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result ofa waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease toapply.

Section 2.23 Letters of Credit.

(a) During the Availability Period, the Issuing Bank, in reliance upon the agreements of the other Revolving Lenderspursuant to Section 2.23(d), agrees to issue, at the request of the Borrower, standby Letters of Credit for the account of the Borroweron the terms and conditions hereinafter set forth; provided, however, that (i) each Letter of Credit shall expire on the earlier of (A) thedate one year after the date of issuance of such Letter of Credit (or in the case of any extension thereof, one year after such extension)and (B) the date that is five (5) Business Days prior to the Revolving Commitment Termination Date; (ii) the Borrower may notrequest any Letter of Credit, if, after giving effect to such issuance (A) the aggregate LC Exposure would exceed the LC Commitmentor (B) the aggregate LC Exposure, plus the aggregate outstanding Revolving Loans and Swingline Loans of all Lenders would exceedthe Aggregate Revolving Commitment Amount; and (iii) the Issuing Bank shall not be under any obligation to issue any Letter ofCredit if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrainthe Issuing Bank from issuing such Letter of Credit, or any Law applicable to the Issuing Bank or any request or directive (whether ornot having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request thatthe Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon theIssuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is nototherwise compensated hereunder) not in effect on the Closing Date, or shall

39CHAR1\935816v6


impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which theIssuing Bank in good faith deems material to it; (B) the issuance of such Letter of Credit would violate one or more policies of theIssuing Bank (provided, however, the Issuing Bank agrees that it will not adopt policies for the sole purpose of preventing the issuanceof Letters of Credit hereunder); (C) except as otherwise agreed by the Administrative Agent and the Issuing Bank, such Letter ofCredit is in an initial stated amount less than $1,000.00; (D) such Letter of Credit is to be denominated in a currency other thanDollars; (E) a default of any Lender’s obligations to fund under Section 2.23(e) exists, unless the Issuing Bank has entered intosatisfactory arrangements with the Borrower or such Lender to eliminate the Issuing Bank’s risk with respect to such Lender (and theIssuing Bank agrees to make reasonable efforts to enter into such satisfactory arrangements). Upon the issuance of each Letter ofCredit and with respect to the SunTrust Letter of Credit, each Revolving Lender shall be deemed to, and hereby irrevocably andunconditionally agrees to, purchase from the Issuing Bank without recourse a participation in such Letter of Credit equal to suchLender’s Pro Rata Share of the aggregate amount available to be drawn under such Letter of Credit. Furthermore, each RevolvingLender acknowledges and confirms that it has a participation interest in the liability of the Issuing Bank under the Existing Letters ofCredit equal to such Revolving Lender’s Pro Rata Share of the Revolving Loans. The Borrower’s reimbursement obligations inrespect of the Existing Letters of Credit, and each Revolving Lender’s obligations in connection therewith, shall be governed by theterms of this Agreement. Each issuance of a Letter of Credit shall be deemed to utilize the Revolving Commitment of each RevolvingLender by an amount equal to the amount of such participation.

(b) To request the issuance of a Letter of Credit (or any amendment or extension of an outstanding Letter of Credit),

the Borrower shall give the Issuing Bank and the Administrative Agent irrevocable written notice at least three (3) Business Daysprior to the requested date of such issuance specifying the date (which shall be a Business Day) such Letter of Credit is to be issued(or amended or extended as the case may be), the expiration date of such Letter of Credit, the amount of such Letter of Credit, thename and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend or extend such Letterof Credit. In addition to the satisfaction of the conditions in Article III, the issuance of such Letter of Credit (or any amendment whichincreases the amount of such Letter of Credit) will be subject to the further conditions that such Letter of Credit shall be in such formand contain such terms as the Issuing Bank shall approve and that the Borrower shall have executed and delivered any additionalapplications, agreements and instruments relating to such Letter of Credit as the Issuing Bank shall reasonably require; provided,however, that in the event of any conflict between such applications, agreements or instruments and this Agreement, the terms of thisAgreement shall control.

(c) At least two Business Days prior to the issuance of any Letter of Credit, the Issuing Bank will confirm with the

Administrative Agent (by telephone or in writing) that the Administrative Agent has received such notice and if not, the Issuing Bankwill provide the Administrative Agent with a copy thereof. Unless the Issuing Bank has received notice from the Administrative Agenton or before the Business Day immediately preceding the date the Issuing Bank is to issue the requested Letter of Credit directing theIssuing Bank not to issue the Letter of Credit because such issuance is not then permitted hereunder because of the limitations set

40CHAR1\935816v6


forth in Section 2.23(a) or that one or more conditions specified in Article III are not then satisfied, then, subject to the terms andconditions hereof, the Issuing Bank shall, on the requested date, issue such Letter of Credit in accordance with the Issuing Bank’susual and customary business practices.

(d) The Issuing Bank shall examine all documents purporting to represent a demand for payment under a Letter of

Credit promptly following its receipt thereof. The Issuing Bank shall notify the Borrower and the Administrative Agent of suchdemand for payment and whether the Issuing Bank has made or will make a LC Disbursement thereunder; provided, however, that anyfailure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and theRevolving Lenders with respect to such LC Disbursement. The Borrower shall be irrevocably and unconditionally obligated toreimburse the Issuing Bank for any LC Disbursements paid by the Issuing Bank in respect of such drawing, without presentment,demand or other formalities of any kind. Unless the Borrower shall have notified the Issuing Bank and the Administrative Agent priorto 11:00 a.m. on the Business Day immediately prior to the date on which such drawing is honored that the Borrower intends toreimburse the Issuing Bank for the amount of such drawing in funds other than from the proceeds of Revolving Loans, the Borrowershall be deemed to have timely given a Notice of Revolving Borrowing to the Administrative Agent requesting the Revolving Lendersto make a Base Rate Borrowing on the date on which such drawing is honored in an exact amount due to the Issuing Bank; provided,however, that for purposes solely of such Borrowing, the conditions precedents set forth in Section 3.2 hereof shall not be applicable.The Administrative Agent shall notify the Revolving Lenders of such Borrowing in accordance with Section 2.3, and each RevolvingLender shall make the proceeds of its Base Rate Loan included in such Borrowing available to the Administrative Agent for theaccount of the Issuing Bank in accordance with Section 2.7. The proceeds of such Borrowing shall be applied directly by theAdministrative Agent to reimburse the Issuing Bank for such LC Disbursement.

(e) If for any reason a Base Rate Borrowing may not be (as determined in the sole discretion of the Administrative

Agent), or is not, made in accordance with the foregoing provisions, then the Administrative Agent shall promptly notify theRevolving Lenders of such unreimbursed LC Disbursement, and each Revolving Lender (other than the Issuing Bank) shall beobligated to fund the participation that such Lender purchased pursuant to subsection (a) in an amount equal to its Pro Rata Share ofsuch LC Disbursement on and as of the date which such Base Rate Borrowing should have occurred. If the Borrower shall fail toreimburse the Issuing Bank as provided above for a LC Disbursement, the unreimbursed amount shall bear interest at a rate equal tothe Base Rate plus the Applicable Margin plus an additional 2% per annum, it being understood and agreed that such interest shall befor the account of each Revolving Lender on a pro forma basis after its funding of its participation of such unreimbursed LCDisbursement as provided below. Each Revolving Lender’s obligation to fund its participation shall be absolute and unconditional andshall not be affected by any circumstance, including without limitation (i) any setoff, counterclaim, recoupment, defense or other rightthat such Lender or any other Person may have against the Issuing Bank or any other Person for any reason whatsoever, (ii) theexistence of a Default or an Event of Default or the termination of the Aggregate Revolving Commitments, (iii) any adverse change inthe condition (financial or otherwise) of the Borrower or any of its Subsidiaries, (iv) any breach of this Agreement by the Borrower orany other

41CHAR1\935816v6


Lender, (v) any amendment, renewal or extension of any Letter of Credit or (vi) any other circumstance, happening or eventwhatsoever, whether or not similar to any of the foregoing. On the date that such participation is required to be funded, eachRevolving Lender shall promptly transfer, in immediately available funds, the amount of its participation to the Administrative Agentfor the account of the Issuing Bank. Whenever, at any time after the Issuing Bank has received from any such Lender the funds for itsparticipation in a LC Disbursement, the Issuing Bank (or the Administrative Agent on its behalf) receives any payment on accountthereof, the Administrative Agent or the Issuing Bank, as the case may be, will distribute to such Lender its Pro Rata Share of suchpayment; provided, however, that if such payment is required to be returned for any reason to the Borrower or to a trustee, receiver,liquidator, custodian or similar official in any bankruptcy proceeding, such Lender will return to the Administrative Agent or theIssuing Bank any portion thereof previously distributed by the Administrative Agent or the Issuing Bank to it.

(f) To the extent that any Revolving Lender shall fail to pay any amount required to be paid pursuant to paragraph (d)of this Section 2.23 on the due date therefor, such Lender shall pay interest to the Issuing Bank (through the Administrative Agent) onsuch amount from such due date to the date such payment is made at a rate per annum equal to the Federal Funds Rate; provided,however, that if such Lender shall fail to make such payment to the Issuing Bank within three (3) Business Days of such due date,then, retroactively to the due date, such Lender shall be obligated to pay interest on such amount at the Default Rate.

(g) If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from

the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrowershall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders,an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided, that the obligationto deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable,without demand or notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described inclause (g) or (h) of Section 8.1. Such deposit shall be held by the Administrative Agent as collateral for the payment and performanceof the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control,including the exclusive right of withdrawal, over such account. Borrower agrees to execute any documents and/or certificates toeffectuate the intent of this paragraph. Other than any interest earned on the investment of such deposits, which investments shall bemade at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall notbear interest. Interest and profits, if any, on such investments shall accumulate in such account. Moneys in such account shall appliedby the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it had not been reimbursed and to theextent so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such timeor, if the maturity of the Loans has been accelerated, with the consent of the Required Lenders, be applied to satisfy other obligationsof the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of theoccurrence of an Event of Default, such amount (to the extent not so

42CHAR1\935816v6


applied as aforesaid) shall be returned to the Borrower within three (3) Business Days after all Events of Default have been cured orwaived.

(h) The Borrower’s obligation to reimburse LC Disbursements hereunder shall be absolute, unconditional and

irrevocable and shall be performed strictly in accordance with the terms of this Agreement under all circumstances whatsoever andirrespective of any of the following circumstances:

(i) Any lack of validity or enforceability of any Letter of Credit or this Agreement; (ii) The existence of any claim, set-off, defense or other right which the Borrower or any Subsidiary or

Affiliate of the Borrower may have at any time against a beneficiary or any transferee of any Letter of Credit (or anyPersons or entities for whom any such beneficiary or transferee may be acting), any Lender (including the Issuing Bank) orany other Person, whether in connection with this Agreement or the Letter of Credit or any document related hereto orthereto or any unrelated transaction;

(iii) Any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or

invalid in any respect or any statement therein being untrue or inaccurate in any respect; (iv) Any payment by the Issuing Bank under such Letter of Credit against presentation of a draft or

certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the Issuing Bankunder such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for thebenefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of suchLetter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;

(v) Any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might,

but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, theBorrower’s obligations hereunder; or

(vi) The existence of a Default or an Event of Default.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in theevent of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify theIssuing Bank. The Borrower shall be conclusively deemed to have waived any such claim against the Issuing Bank and itscorrespondents unless such notice is given as aforesaid. Neither the Administrative Agent, the Issuing Bank, the Lenders nor any Related Party of any of the foregoing shall have any liabilityor responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to makeany payment

43CHAR1\935816v6


thereunder (irrespective of any of the circumstances referred to above), or any error, omission, interruption, loss or delay intransmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any documentrequired to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyondthe control of the Issuing Bank; provided, that the foregoing shall not be construed to excuse the Issuing Bank from liability to theBorrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived bythe Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure toexercise care when determining whether drafts or other documents presented under a Letter of Credit comply with the terms thereof.The parties hereto expressly agree, that in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (asfinally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each suchdetermination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect todocuments presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bankmay, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation,regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documentsare not in strict compliance with the terms of such Letter of Credit.

(i) Unless otherwise expressly agreed by the Issuing Bank and the Borrower when a Letter of Credit is issued, the

rules of ISP shall apply to each standby Letter of Credit and shall, as to matters not governed by the ISP, be governed by andconstrued in accordance with the laws of the State of Georgia so long as the Borrower has requested that Georgia law be applicable insuch circumstances in the letter of credit application executed by the Borrower in connection with such Letter of Credit.

(j) Upon the request of the Administrative Agent, (i) if the Issuing Bank has honored any full or partial drawing

request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, five (5) Business Days prior to theRevolving Commitment Termination Date, any L/C Exposure for any reason remains outstanding, the Borrower shall, in each case,immediately Cash Collateralize the then outstanding amount of all L/C Exposure. For purposes of this Section 2.23(j), “CashCollateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Bank and theLenders, as collateral for the L/C Exposure, cash or deposit account balances pursuant to documentation in form and substancesatisfactory to the Administrative Agent and the Issuing Bank (which documents are hereby consented to by the Lenders). Derivativesof such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the IssuingBank and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing.Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.

44CHAR1\935816v6


ARTICLE III

CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT

Section 3.1 Conditions To Effectiveness.

The obligations of the Lenders (including the Swingline Lender) to make initial Loans hereunder and the obligation of theIssuing Bank to issue any initial Letter of Credit hereunder shall not become effective until the date on which each of the followingconditions is satisfied (or waived in accordance with Section 10.2):

(a) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to

the Closing Date, including reimbursement or payment of all out-of-pocket expenses (including reasonable fees, chargesand disbursements of counsel to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder,under any other Loan Document and under any agreement with the Administrative Agent or BAS, as Lead Arranger.

(b) The Administrative Agent (or its counsel) shall have received the following:

(i) a counterpart of this Agreement signed by or on behalf of each party hereto or written

evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signaturepage of this Agreement) that such party has signed a counterpart of this Agreement;

(ii) if requested by any Lender, the duly executed Notes payable to such Lender;

(iii) the duly executed Subsidiary Guaranty Agreement; (iv) a certificate of the Secretary or Assistant Secretary of each Loan Party, attaching and certifying

copies of its bylaws and of the resolutions of its boards of directors, authorizing the execution, delivery andperformance of the Loan Documents to which it is a party and certifying the name, title and true signature of eachofficer of such Loan Party executing the Loan Documents to which it is a party;

(v) certified copies of the articles of incorporation or other charter documents of each Loan Party,

together with certificates of good standing or existence, as may be available from the Secretary of State of thejurisdiction of incorporation or formation of such Loan Party;

(vi) a favorable written opinion of Hunton & Williams, LLP, counsel to the Loan Parties, and

Scarlett May, General Counsel of the Borrower (in the form of Exhibit 3.1(b)(vi)), addressed to theAdministrative Agent and each of the

45CHAR1\935816v6


Lenders, and covering such matters relating to the Loan Parties, the Loan Documents and the transactionscontemplated therein as the Administrative Agent or the Required Lenders shall reasonably request;

(vii) a certificate, dated the Closing Date and signed by a Responsible Officer, confirming

compliance with the conditions set forth in paragraphs (a) and (b) of Section 3.2;

(viii) duly executed Notices of Borrowing, if applicable; (ix) certified copies of all consents, approvals, authorizations, registrations and filings and orders

required or advisable to be made or obtained under any Requirement of Law, or by any Contractual Obligation ofeach Loan Party, in connection with the execution, delivery, performance, validity and enforceability of the LoanDocuments or any of the transactions contemplated thereby, and such consents, approvals, authorizations,registrations, filings and orders shall be in full force and effect and all applicable waiting periods shall haveexpired;

(x) evidence satisfactory to the Administrative Agent that the Existing Credit Agreement has been

terminated and all interest, fees and principal accrued thereunder through the Closing Date will be paid in fullfrom the initial Revolving Loans under this Agreement; and

(xi) all other documents and information as the Administrative Agent reasonably requests.

Without limiting the generality of the provisions of Section 9.4, for purposes of determining compliance with the conditions

specified in this Section 3.1, each Lender that has signed this Agreement shall be deemed to have consented to, approved or acceptedor to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable orsatisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed ClosingDate specifying its objection thereto.

Section 3.2 Each Credit Event.

The obligation of each Lender to make a Loan on the occasion of any Borrowing and of the Issuing Bank to issue, amend,renew or extend any Letter of Credit is subject to the satisfaction of the following conditions:

(a) at the time of and immediately after giving effect to such Borrowing or the issuance, amendment,

renewal or extension of such Letter of Credit, as applicable, no Default or Event of Default shall exist or would result; (b) all representations and warranties of each Loan Party set forth in the Loan Documents shall be true and

correct in all material respects on and as of the date of such

46CHAR1\935816v6


Borrowing or the date of issuance, amendment, extension or renewal of such Letter of Credit, in each case before and aftergiving effect thereto or, if such representations and warranties relate solely to an earlier date, were true and correct as ofsuch earlier date; and

(c) the Administrative Agent shall have received such other documents, certificates, information or legal

opinions as the Administrative Agent or the Required Lenders may reasonably request, all in form and substance reasonablysatisfactory to the Administrative Agent or the Required Lenders.

Each Borrowing and each issuance, amendment, extension or renewal of any Letter of Credit shall be deemed to

constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a),(b) and (c) of this Section 3.2.

Section 3.3 Delivery of Documents.

All of the Loan Documents, certificates, legal opinions and other documents and papers referred to in this Article III, unlessotherwise specified, shall be delivered to the Administrative Agent for the account of each of the Lenders and, except for the Notes, insufficient counterparts or copies for each of the Lenders and shall be in form and substance satisfactory in all respects to theAdministrative Agent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and each Lender as follows:

Section 4.1 Existence; Power.

The Borrower and each of its Subsidiaries (i) is duly organized, validly existing and in good standing as a corporation orlimited liability company under the laws of the jurisdiction of its organization, (ii) has all requisite power and authority to carry on itsbusiness as now conducted, and (iii) is duly qualified to do business, and is in good standing, in each jurisdiction where suchqualification is required, except where a failure to be so qualified could not reasonably be expected to result in a Material AdverseEffect.

Section 4.2 Organizational Power; Authorization.

The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party are within suchLoan Party’s organizational powers and have been duly authorized by all necessary organizational, and if required, shareholder action.This Agreement has been duly executed and delivered by the Borrower, and constitutes, and each other Loan Document to which anyLoan Party is a party, when executed and delivered by such Loan Party,

47CHAR1\935816v6


will constitute, valid and binding obligations of the Borrower or such Loan Party (as the case may be), enforceable against theBorrower or such Loan Party (as the case may be) in accordance with their respective terms, except as may be limited by applicablebankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and bygeneral principles of equity.

Section 4.3 Governmental Approvals; No Conflicts.

The execution, delivery and performance by the Borrower of this Agreement, and by each Loan Party of the other LoanDocuments to which it is a party (a) do not require any consent or approval of, registration or filing with, or any action by, anyGovernmental Authority, except those as have been obtained or made and are in full force and effect, (b) will not violate anyapplicable law, rule or regulation or the charter, bylaws or other organizational documents of the Borrower or any of its Subsidiariesor any judgment, order or ruling of any Governmental Authority, (c) will not violate or result in a default under any indenture,material agreement or other material instrument binding on the Borrower or any of its Subsidiaries or any of its assets or give rise to aright thereunder to require any payment to be made by the Borrower or any of its Subsidiaries and (d) will not result in the creation orimposition of any Lien on any asset of the Borrower or any of its Subsidiaries, except Liens (if any) created under the LoanDocuments or Permitted Liens.

Section 4.4 Financial Statements.

The Borrower has furnished to each Lender the audited consolidated balance sheet of the Borrower and its Subsidiaries asof June 6, 2006 and the related consolidated statements of income, shareholders’ equity and cash flows for the fiscal year then endedprepared by KPMG L.L.P. Such financial statements fairly present the consolidated financial condition of the Borrower and itsSubsidiaries as of such dates and the consolidated results of operations for such periods in conformity with GAAP consistentlyapplied. Since June 6, 2006, there have been no changes with respect to the Borrower and its Subsidiaries which have had or couldreasonably be expected to have, singly or in the aggregate, a Material Adverse Effect.

Section 4.5 Litigation and Environmental Matters.

(a) No litigation, investigation or proceeding of or before any arbitrators or Governmental Authorities is pendingagainst or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to whichthere is a reasonable possibility of an adverse determination that could reasonably be expected to have, either individually or in theaggregate, a Material Adverse Effect or (ii) which in any manner draws into question the validity or enforceability against theBorrower or any Loan Party of this Agreement or any other Loan Document.

(b) Neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any applicable Environmental Law

or to obtain, maintain or comply with any permit, license or other approval required under any applicable Environmental Law, (ii) hasbecome subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental

48CHAR1\935816v6


Liability or (iv) knows of any basis for any Environmental Liability, except for any failure or Environmental Liability that would nothave a Material Adverse Effect.

Section 4.6 Compliance with Laws and Agreements.

The Borrower and each Subsidiary is in compliance with (a) all applicable laws, rules, regulations, judgments, orders andrulings of any Governmental Authority, and (b) all indentures, agreements or other instruments binding upon it or its properties,except in either case where non-compliance, either singly or in the aggregate, could not reasonably be expected to result in a MaterialAdverse Effect.

Section 4.7 Investment Company Act, Etc.

Neither the Borrower nor any of its Subsidiaries is (a) an “investment company”, or is “controlled” by an “investmentcompany”, as such terms are defined in, or subject to regulation under, the Investment Company Act of 1940, as amended or (b)otherwise subject to any other regulatory scheme limiting its ability to incur debt.

Section 4.8 Taxes.

The Borrower and its Subsidiaries and each other Person for whose taxes the Borrower or any Subsidiary could becomeliable have timely filed or caused to be filed all Federal income tax returns and all other material tax returns that are required to befiled by them, and have paid all taxes shown to be due and payable on such returns or on any assessments made against it or itsproperty and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except (i) to theextent the failure to do so would not have a Material Adverse Effect or (ii) where the same are currently being contested in good faithby appropriate proceedings and for which the Borrower or such Subsidiary, as the case may be, has set aside on its books adequatereserves in accordance with GAAP. As of the Closing Date, the charges, accruals and reserves on the books of the Borrower and itsSubsidiaries in respect of such taxes are adequate, and no tax liabilities that could be materially in excess of the amount so providedare anticipated.

Section 4.9 Margin Regulations.

None of the proceeds of any of the Loans or Letters of Credit will be used for “purchasing” or “carrying” any “marginstock” with the respective meanings of each of such terms under Regulation U as now and from time to time hereafter in effect or forany purpose that violates the provisions of the applicable Margin Regulations.

Section 4.10 ERISA.

No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISAEvents for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. Thepresent value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of

49CHAR1\935816v6


Statement of Financial Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts,exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfundedPlans (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the mostrecent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans.

Section 4.11 Ownership of Property.

(a) As of the Closing Date, each of the Borrower and its Subsidiaries has good title to, or valid leasehold or otherappropriate legal interests in, all of its real and personal property material to the operation of its business free and clear of any Liensexcept Permitted Liens.

(b) Each of the Borrower and its Subsidiaries owns, or is licensed, or otherwise has the right, to use, all patents,

trademarks, service marks, trade names, copyrights, franchises, licenses, and other intellectual property material to its business, andthe use thereof by the Borrower and its Subsidiaries does not infringe on the rights of any other Person, except for any suchinfringements that, individually or in the aggregate, would not have a Material Adverse Effect.

Section 4.12 Disclosure.

The Borrower has disclosed to the Lenders all agreements, instruments, and corporate or other restrictions to which theBorrower or any of its Subsidiaries is subject, and all other matters known to any of them, that, individually or in the aggregate, couldreasonably be expected to result in a Material Adverse Effect. As of the date of delivery to the Administrative Agent, the InformationMemorandum did not contain any material misstatement of fact or omit to state any material fact necessary to make the statementstherein, taken as a whole, in light of the circumstances under which they were made, not misleading. None of the other reports(including without limitation all reports that the Borrower is required to file with the SEC), financial statements, certificates or otherinformation furnished by or on behalf of the Borrower to the Administrative Agent or any Lender or anyone on their behalf inconnection with the negotiation or syndication of this Agreement or any other Loan Document or delivered hereunder or thereunder(as modified or supplemented by any other information so furnished) contain any material misstatement of fact or omits to state anymaterial fact necessary to make the statements therein, taken as a whole, in light of the circumstances under which they were made,not misleading.

Section 4.13 Labor Relations.

There are no strikes, lockouts or other material labor disputes, or grievances against the Borrower or any of its Subsidiaries,or, to the Borrower’s knowledge, threatened against or affecting the Borrower or any of its Subsidiaries, and no significant unfairlabor practice, charges or grievances are pending against the Borrower or any of its Subsidiaries, or to the Borrower’s knowledge,threatened against any of them before any Governmental Authority. All payments due from the Borrower or any of its Subsidiariespursuant to the provisions of any collective

50CHAR1\935816v6


bargaining agreement have been paid or accrued as a liability on the books of the Borrower or any such Subsidiary, except where thefailure to do so could not reasonably be expected to have a Material Adverse Effect.

Section 4.14 Subsidiaries.

As of the Closing Date, Schedule 4.14 sets forth the name of, the ownership interest of the Borrower in, the jurisdiction ofincorporation or organization of, and the type of, each Subsidiary and identifies each Material Subsidiary that is a Subsidiary LoanParty.

Section 4.15 Solvency. The Borrower and its Subsidiaries are Solvent on a consolidated basis.

ARTICLE V

AFFIRMATIVE COVENANTS The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or the principal of and interest

on any Loan or any fee or any LC Disbursement remains unpaid or any Letter of Credit remains outstanding:

Section 5.1 Financial Statements and Other Information.

The Borrower will deliver to the Administrative Agent and each Lender:

(a) as soon as available and in any event upon the earlier of the date that is 90 days after the end of eachfiscal year of Borrower and the date that is 2 days after such information is filed with the SEC, a copy of the annual auditedreport for such fiscal year for the Borrower and its Subsidiaries, containing consolidated balance sheets of the Borrower andits Subsidiaries as of the end of such fiscal year and the related consolidated statements of income, stockholders’ equity andcash flows (together with all footnotes thereto) of the Borrower and its Subsidiaries for such fiscal year, setting forth in eachcase in comparative form the figures for the previous fiscal year, all in reasonable detail and reported on by KPMG L.L.P.or other independent public accountants of nationally recognized standing (without a “going concern” or like qualification,exception or explanation and without any qualification or exception as to scope of such audit) to the effect that suchfinancial statements present fairly in all material respects the financial condition and the results of operations of theBorrower and its Subsidiaries for such fiscal year on a consolidated basis in accordance with GAAP and that theexamination by such accountants in connection with such consolidated financial statements has been made in accordancewith generally accepted auditing standards;

(b) as soon as available and in any event upon the earlier of the date that is 45 days after the end of each of

the first three fiscal quarters of each fiscal year of the Borrower and the date that is 2 days after such information is filedwith the SEC, an

51CHAR1\935816v6


unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal quarter and the relatedunaudited consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal quarter andthe then elapsed portion of such fiscal year, setting forth in each case in comparative form the figures for the correspondingquarter and the corresponding portion of Borrower’s previous fiscal year, all certified by the chief financial officer ortreasurer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of theBorrower and its Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end auditadjustments and the absence of footnotes;

(c) concurrently with the delivery of the financial statements referred to in clauses (a) and (b) above, a

certificate of the chief financial officer or treasurer, (i) certifying as to whether there exists a Default or Event of Default onthe date of such certificate, and if a Default or an Event of Default then exists, specifying the details thereof and the actionwhich the Borrower has taken or proposes to take with respect thereto, (ii) setting forth in reasonable detail calculationsdemonstrating compliance with Article VI, (iii) setting forth whether the Borrower is in compliance with Section 5.11 and(iv) stating whether any change in GAAP or the application thereof has occurred since the date of the Borrower’s mostrecent audited financial statements referred to in Section 4.4 or which have been previously delivered hereunder and, if anychange has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(d) promptly after the same become publicly available, copies of all periodic and other reports, proxy

statements and other materials filed with the SEC, or any Governmental Authority succeeding to any or all functions of saidCommission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as thecase may be; and

(e) promptly following any request therefor, such other information regarding the results of operations,

business affairs and financial condition of the Borrower or any Subsidiary as the Administrative Agent or any Lender mayreasonably request.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make available to the

Lenders and the Issuing Bank materials and/or information provided by or on behalf of the Borrower hereunder (collectively,“Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b)certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information withrespect to the Borrower or its securities) (each, a “Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials thatare to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall meanthat the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” theBorrower shall be deemed to have authorized the Administrative Agent, the Arranger, the Issuing Bank and the Lenders to treat suchBorrower Materials as either publicly available information or not material information (although it may be sensitive and proprietary)with respect to the Borrower or its

52CHAR1\935816v6


securities for purposes of United States Federal and state securities laws; (y) all Borrower Materials marked “PUBLIC” are permittedto be made available through a portion of the Platform designated “Public Investor;” and (z) the Administrative Agent and theArranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on aportion of the Platform not designated “Public Investor.”

Section 5.2 Notices of Material Events.

The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

(a) the occurrence of any Default or Event of Default; (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or

Governmental Authority against or, to the knowledge of the Borrower, affecting the Borrower or any Subsidiary which, ifadversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any event or any other development by which the Borrower or any of its Subsidiaries

(i) fails to comply with any applicable Environmental Law or to obtain, maintain or comply with any permit, license orother approval required under any Environmental Law, (ii) becomes subject to any Environmental Liability, (iii) receivesnotice of any claim with respect to any Environmental Liability, or (iv) becomes aware of any basis for any EnvironmentalLiability, and in each of the preceding clauses, which individually or in the aggregate, could reasonably be expected toresult in a Material Adverse Effect;

(d) the occurrence of any ERISA Event that alone, or together with any other ERISA Events that have

occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amountexceeding $25,000,000; and

(e) any other development that results in, or could reasonably be expected to result in, a Material Adverse

Effect.

Each notice delivered under this Section shall be accompanied by a written statement of a Responsible Officer setting forth the detailsof the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 5.3 Existence; Conduct of Business.

The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renewand maintain in full force and effect its legal existence and its respective rights, licenses, permits, privileges, franchises, patents,copyrights, trademarks and trade names material to the conduct of its business and will continue to engage in the same business aspresently conducted or such other businesses that are reasonably related thereto;

53CHAR1\935816v6


provided, however, that nothing in this Section shall prohibit any merger, consolidation, liquidation or dissolution permitted underSection 7.2.

Section 5.4 Compliance with Laws, Etc.

The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and requirements ofany Governmental Authority applicable to its business and properties, including without limitation, all Environmental Laws, ERISAand OSHA, except where the failure to do so, either individually or in the aggregate, could not reasonably be expected to result in aMaterial Adverse Effect.

Section 5.5 Payment of Obligations.

The Borrower will, and will cause each of its Subsidiaries to, pay and discharge at or before maturity, all of its obligationsand liabilities (including without limitation all tax liabilities and claims that could result in a statutory Lien) before the same shallbecome delinquent or in default, except where (i) (a) the validity or amount thereof is being contested in good faith by appropriateproceedings and (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordancewith GAAP or (ii) the failure to make payment thereof, when aggregated with all other such unpaid obligations and liabilities, couldnot reasonably be expected to result in a Material Adverse Effect or (iii) the failure to make payment thereof could not result in astatutory Lien.

Section 5.6 Books and Records.

The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, trueand correct entries shall be made of all dealings and transactions in relation to its business and activities to the extent necessary toprepare the consolidated financial statements of Borrower in conformity with GAAP.

Section 5.7 Visitation, Inspection, Etc.

The Borrower will, and will cause each of its Subsidiaries to, permit any representative of the Administrative Agent or anyLender, to visit and inspect its properties, to examine its books and records and to make copies and take extracts therefrom, and todiscuss its affairs, finances and accounts with any of its officers and with its independent certified public accountants, all at suchreasonable times and as often as the Administrative Agent or any Lender may reasonably request after reasonable prior notice to theBorrower; provided, however, if an Event of Default has occurred and is continuing, no prior notice shall be required.

Section 5.8 Maintenance of Properties; Insurance.

The Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain good and marketable title to all propertysubject to no Liens except Permitted Liens and keep and maintain all property material to the conduct of its business in good workingorder and condition, ordinary wear and tear excepted, except where the failure to do so, either individually or it the

54CHAR1\935816v6


aggregate, could not reasonably be expected to result in a Material Adverse Effect and (b) maintain with financially sound andreputable insurance companies, insurance with respect to its properties and business, and the properties and business of itsSubsidiaries, against loss or damage of the kinds customarily insured against by companies in the same or similar businesses operatingin the same or similar locations.

Section 5.9 Use of Proceeds and Letters of Credit.

The Borrower will use the proceeds of all Loans to refinance existing Indebtedness on the Closing Date, and, thereafter, tofund future permitted acquisitions, to finance working capital needs, to finance capital expenditures and for other general and/orlawful corporate purposes of the Borrower and its Subsidiaries, including share repurchases permitted hereunder. No part of theproceeds of any Loan will be used, whether directly or indirectly, for any purpose that would violate any rule or regulation of theBoard of Governors of the Federal Reserve System, including Regulations T, U or X. All Letters of Credit will be used for generalcorporate purposes.

Section 5.10 Additional Subsidiaries.

If any additional Material Subsidiary is acquired or formed after the Closing Date or any Subsidiary becomes a MaterialSubsidiary after the Closing Date, the Borrower will, within thirty (30) days after such Material Subsidiary is acquired or formed orsuch Subsidiary becomes a Material Subsidiary, notify the Administrative Agent and the Lenders thereof and will cause such MaterialSubsidiary to become a Loan Party by executing an agreement in the form of Annex I to Exhibit D in form and substance satisfactoryto the Administrative Agent and will cause such Material Subsidiary to deliver simultaneously therewith similar documents applicableto such Material Subsidiary required under Section 3.1 as reasonably requested by the Administrative Agent.

Section 5.11 Additional Guaranties.

If at the end of any Fiscal Quarter of the Borrower:

(a) the total assets of Subsidiaries that are not Guarantors constitute more than ten percent (10%) of the totalassets of the Consolidated Companies, or

(b) the Consolidated Net Income of Subsidiaries that are not Guarantors constitute more than ten

percent (10%) of the Consolidated Net Income of the Consolidated Companies,

then the Borrower shall (i) notify the Administrative Agent thereof in the certificate delivered pursuant to Section 5.1(c) for suchfiscal quarter and (ii) within 15 days thereafter, cause the appropriate number of Subsidiaries to become Guarantors (by execution ofan agreement in the form of Annex I to Exhibit D in form and substance satisfactory to the Administrative Agent and will cause suchSubsidiary to deliver simultaneously therewith similar documents applicable to

55CHAR1\935816v6


such Subsidiary required under Section 3.1 as reasonably requested by the Administrative Agent) such that the statements set forth inclauses (a) and (b) above are not true.

ARTICLE VI

FINANCIAL COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or the principal of or intereston or any Loan remains unpaid or any fee or any LC Disbursement remains unpaid or any Letter of Credit remains outstanding:

Section 6.1 Minimum Fixed Charge Coverage Ratio.

The Consolidated Companies will maintain, as of the last day of each Fiscal Quarter, a Fixed Charge Coverage Ratio of notless than 2.00:1.00.

Section 6.2 Maximum Adjusted Total Debt to EBITDAR Ratio.

The Consolidated Companies will maintain, as of the end of each Fiscal Quarter, an Adjusted Total Debt to EBITDARRatio of not greater than 3.25:1.00.

Section 6.3 Minimum Consolidated Net Worth.

The Consolidated Companies will not, at any time, permit Consolidated Net Worth (as defined in the Senior Note PurchaseAgreement) to be less than the sum of (a) $300,000,000 and (b) an aggregate amount equal to 25% of Consolidated Net Income (asdefined in the Senior Note Purchase Agreement) (but, in each case, only if a positive number) for each completed fiscal year endingafter June 4, 2003. The parties hereto acknowledge and agree that this Section 6.3 shall at all times be identical to Section 10.3 of theSenior Note Purchase Agreement, and, if such Section 10.3 is amended or modified, this Section 6.3 shall be deemed to beautomatically amended or modified in the same manner at the same time. Furthermore, if Section 10.3 of the Senior Note PurchaseAgreement is removed from the Senior Note Purchase Agreement and no longer required to be maintained by the Borrower, theparties hereto agree that this Section 6.3 should also be automatically removed from this Agreement.

56CHAR1\935816v6


ARTICLE VII

NEGATIVE COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or the principal of or intereston any Loan remains unpaid or any fee or any LC Disbursement remains unpaid or any Letter of Credit remains outstanding:

Section 7.1 Negative Pledge.

The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on anyof its assets or property now owned or hereafter acquired or, except:

(a) Permitted Encumbrances; (b) any Liens on any property or asset of the Borrower or any Subsidiary existing on the Closing Date set

forth on Schedule 7.1; provided, that such Lien shall not apply to any other property or asset of the Borrower or anySubsidiary;

(c) other Liens not reflected in paragraphs (a) and (b) above securing Indebtedness or other obligations in

the aggregate at any time not in excess of an amount, at any time the same is to be determined, equal to twenty percent(20%) of Consolidated Net Worth as determined at the end of the then most recently completed fiscal quarter of theBorrower; and

(d) extensions, renewals, or replacements of any Lien referred to in paragraphs (a) through (c) of this

Section; provided, however, that the principal amount of the Indebtedness secured thereby is not increased and that anysuch extension, renewal or replacement is limited to the assets originally encumbered thereby.

Section 7.2 Fundamental Changes.

(a) Except as permitted in Section 7.5, the Borrower will not, and will not permit any Subsidiary to, merge into orconsolidate into any other Person, or permit any other Person to merge into or consolidate with it, or sell, lease, transfer or otherwisedispose of (in a single transaction or a series of transactions) all or substantially all of its assets (in each case, whether now owned orhereafter acquired) or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or hereafteracquired) or liquidate or dissolve; provided, however, that if at the time thereof and immediately after giving effect thereto, no Defaultor Event of Default shall have occurred and be continuing (i) the Borrower or any Subsidiary may merge with a Person if theBorrower (or such Subsidiary if the Borrower is not a party to such merger) is the surviving Person, (ii) any Subsidiary may mergeinto another Subsidiary; provided, however, that if any party to such merger is a Subsidiary Loan Party, the Subsidiary Loan Partyshall be the surviving Person, (iii) any Subsidiary may sell, transfer, lease or

57CHAR1\935816v6


otherwise dispose of all or substantially all of its assets to the Borrower or to a Subsidiary Loan Party and (iv) any Subsidiary mayliquidate or dissolve into a Subsidiary Loan Party or into the Borrower if the Borrower determines in good faith that such liquidationor dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders; provided, however, that anysuch merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unlessalso permitted by Section 7.3.

(b) The Borrower will not, and will not permit any of its Subsidiaries to, engage in any business other than businesses

of the type conducted by the Borrower and its Subsidiaries on the date hereof and businesses reasonably related thereto.

Section 7.3 Investments, Loans, Etc.

The Borrower will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to anymerger with any Person that was not a wholly owned Subsidiary prior to such merger), any common stock, evidence of indebtednessor other securities (including any option, warrant, or other right to acquire any of the foregoing) of, make or permit to exist any loansor advances to, Guaranty any obligations of, or make or permit to exist any investment or any other interest in, any other Person (all ofthe foregoing being collectively called “Investments”), or purchase or otherwise acquire (in one transaction or a series of transactions)any assets of any other Person that constitute a business unit, or create or form any Subsidiary, except:

(a) Investments (other than Permitted Investments) existing on the date hereof and set forth on Schedule 7.3

(including Investments in Subsidiaries);

(b) Permitted Investments;

(c) Guaranties of Indebtedness;

(d) Investments made by any Loan Party in or to any other Loan Party; (e) loans or advances to employees, officers or directors of the Borrower or any Subsidiary in the ordinary

course of business for travel, relocation and related expenses;

(f) Hedging Agreements permitted by Section 7.8; (g) Investments in franchise operators through the Franchise Partner Program; (h) Investments in franchise operators through the Traditional Franchisee program pursuant to the purchase

option agreements entered into with those operators;

(i) Investments received in settlement of Indebtedness created in the ordinary course of business;

58CHAR1\935816v6


(j) Acquisitions meeting the following requirements (each such Acquisition constituting a “PermittedAcquisition”):

(i) as of the date of the consummation of such Acquisition, no Default or Event of Default shall

have occurred and be continuing or would result from such Acquisition, and the representations and warrantiescontained herein shall be true both before and after giving effect to such Acquisition;

(ii) such Acquisition is consummated on a non-hostile basis pursuant to a negotiated acquisitionagreement approved by the board of directors or other applicable governing body of the seller or entity to beacquired, and no material challenge to such Acquisition shall be pending or threatened by any shareholder ordirector of the seller or entity to be acquired;

(iii) the business to be acquired in such Acquisition is similar or related to one or more of thelines of business in which the Borrower and its Subsidiaries are engaged on the Closing Date;

(iv) as of the date of consummation of such Acquisition, all material approvals required inconnection therewith shall have been obtained; and

(v) in the case of any Acquisition where the aggregate consideration exceeds $75,000,000, notless than five (5) days prior to the consummation of such Acquisition, the Borrower shall have delivered to theAdministrative Agent, a pro forma compliance certificate, which shall reflect that, on a Pro Forma Basis, theBorrower would have been in compliance with the financial covenants set forth in Article VI for the four fiscalquarter period reflected in the compliance certificate most recently delivered to the Administrative Agentpursuant to Section 5.1(c) prior to the consummation of such Acquisition (giving effect to such Acquisition andall extensions of credit funded in connection therewith as if made on the first day of such period); and

(k) Investments in common stock of the Borrower to the extent permitted under Section 7.4.

Investments under Section 7.3 shall not be permitted if, before or after giving effect to the making ofsuch Investment, a Default or an Event of Default has occurred and is continuing.

Section 7.4 Restricted Payments.

The Borrower will not, and will not permit its Subsidiaries to, (x) declare or make, or agree to pay or make, directly orindirectly, any dividend on any class of its stock, or (y) make any payment on account of, or set apart assets for a sinking or otheranalogous fund for, the purchase, redemption, retirement, defeasance or other acquisition of, any shares of common stock orIndebtedness subordinated to the Obligations of the Borrower or any options, warrants,

59CHAR1\935816v6


or other rights to purchase such common stock or such Indebtedness, whether now or hereafter outstanding (each, a “RestrictedPayment”), except for (i) dividends payable by the Borrower solely in shares of any class of its common stock, (ii) RestrictedPayments made by any Subsidiary to the Borrower or to another Loan Party and (iii) cash dividends paid on, and cash redemptions of,the common stock of the Borrower; provided, however, that no Default or Event of Default has occurred and is continuing before orafter giving effect to the payment of such dividend or redemption.

Section 7.5 Sale of Assets.

The Borrower will not, and will not permit any of its Subsidiaries to, convey, sell, lease, assign, transfer or otherwisedispose of, any of its assets, business or property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue orsell any shares of such Subsidiary’s common stock to any Person other than the Borrower or any wholly owned Subsidiary of theBorrower or a Subsidiary Loan Party (or to qualify directors if required by applicable law), except:

(a) the sale or other disposition for fair market value of obsolete or worn out property or other property not

necessary for operations, disposed of in the ordinary course of business; (b) the sale of inventory and Permitted Investments in the ordinary course of business; (c) the sale, lease or transfer of assets of any Subsidiary to the Borrower or any other Loan Party; (d) the sale of any assets pertaining to Ruby Tuesday units pursuant to the Borrower’s Franchise Partner

Program; (e) the sale of any assets pertaining to Ruby Tuesday units pursuant to the Borrower’s Traditional Franchise

program, provided that the aggregate units sold to Traditional Franchisees subsequent to the Closing Date shall not exceedthe lesser of: (i) forty (40) units or (ii) units whose Consolidated Restaurant Revenues represent more than 5% of theConsolidated Restaurant Revenues of the Borrower for the four Fiscal Quarter period ending with the most recent FiscalQuarter ended; provided, however, that no Default or Event of Default has occurred and is continuing or would occur as aresult of such transaction; and

(f) any other sale of the Consolidated Assets with an aggregate book value, when aggregated with all other

such sales since the Closing Date, not exceeding $200,000,000 on the date of such transfer; provided, however, that noDefault or Event of Default has occurred and is continuing or would occur as a result of such transaction.

60

CHAR1\935816v6


Section 7.6 Transactions with Affiliates.

The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assetsto, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of itsAffiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower orsuch Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among theBorrower and its direct or indirect wholly owned Subsidiaries not involving any other Affiliates and (c) any Restricted Paymentpermitted by Section 7.4.

Section 7.7 Restrictive Agreements.

The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist anyagreement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur orpermit any Lien upon any of its assets or properties, whether now owned or hereafter acquired, or (b) the ability of any Subsidiaryto pay dividends or other distributions with respect to its common stock, to make or repay loans or advances to the Borrower or anyother Subsidiary, to Guaranty Indebtedness of the Borrower or any other Subsidiary or to transfer any of its property or assets to theBorrower or any Subsidiary of the Borrower; provided, however, that (i) the foregoing shall not apply to restrictions or conditions setforth in Schedule 7.7 or restrictions or conditions imposed by law or by this Agreement or any other Loan Document, (ii) theforegoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pendingsuch sale, provided such restrictions and conditions apply only to the Subsidiary that is sold and such sale is permitted hereunder, and(iii) clause (a) shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness if suchrestrictions and conditions apply only to the property or assets securing such Indebtedness.

Section 7.8 Hedging Agreements.

The Borrower will not, and will not permit any of the Subsidiaries to, enter into any Hedging Agreement, other thanHedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or anySubsidiary is exposed in the conduct of its business or the management of its liabilities. Solely for the avoidance of doubt, theBorrower acknowledges that a Hedging Agreement entered into for speculative purposes or of a speculative nature (which shall bedeemed to include any Hedging Agreement under which the Borrower or any of the Subsidiaries is or may become obliged to makeany payment (i) in connection with the purchase by any third party of any common stock or any Indebtedness or (ii) as a result ofchanges in the market value of any common stock or any Indebtedness) is not a Hedging Agreement entered into in the ordinarycourse of business to hedge or mitigate risks.

Section 7.9 Amendment to Material Documents.

The Borrower will not, and will not permit any Subsidiary to, amend, modify or waive any of its rights in a mannermaterially adverse to the Borrower’s or Subsidiary’s duties or the

61CHAR1\935816v6


Lenders’ rights under this Agreement under (a) its certificate of incorporation, bylaws or other organizational documents or (b) anycontract, agreement, document, or instrument to which the Borrower or Subsidiary is a party.

Section 7.10 Accounting Changes.

The Borrower will not, and will not permit any Subsidiary to, make any significant change in accounting treatment orreporting practices, except as required by GAAP or approved by the Borrower’s independent accountants, or change the fiscal year ofthe Borrower or of any Subsidiary, except to change the fiscal year of a Subsidiary to conform its fiscal year to that of the Borrowerand except that Borrower or any Subsidiary may, upon 30 days prior written notice to the Administrative Agent, change its fiscal yearend to the Tuesday closest to any calendar quarter end.

Section 7.11 ERISA.

The Borrower will not, and will not permit any Subsidiary to engage in any transaction in connection with which theBorrower or such Subsidiary could reasonably be expected to be subject to a civil penalty assessed pursuant to ERISA which wouldhave a Material Adverse Effect on the Borrower or such Subsidiary.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.1 Events of Default.

If any of the following events (each an “Event of Default”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or of any reimbursement obligation in respect ofany LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixedfor prepayment or otherwise; or

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an

amount payable under clause (a) of this Article) payable under this Agreement or any other Loan Document, when and asthe same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days;or

(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary

in or in connection with this Agreement or any other Loan Document (including the Exhibits and Schedules attachedthereto) and any amendments or modifications hereof or waivers hereunder, or in any certificate, report, financial statementor other document submitted to the Administrative Agent or the Lenders by any Loan Party or any representative of anyLoan Party pursuant to or in

62CHAR1\935816v6


connection with this Agreement or any other Loan Document shall prove to be incorrect in any material respect when madeor deemed made or submitted; or

(d) the Borrower shall fail to observe or perform any covenant or agreement contained in Sections 5.1, 5.2,

5.3 (with respect to the Borrower’s existence), 5.9 or Articles VI or VII; or (e) any Loan Party shall fail to observe or perform any covenant or agreement contained in this Agreement

or any other Loan Document (other than those referred to in clauses (a), (b) and (d) above), and such failure shall remainunremedied for 30 days after the earlier of (i) any officer of the Borrower becomes aware of such failure, or (ii) writtennotice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(f) the Borrower or any Subsidiary (whether as primary obligor or as guarantor or other surety) shall fail to

pay any principal of or premium or interest on any Material Indebtedness that is outstanding, when and as the same shallbecome due and payable (whether at scheduled maturity, required prepayment, acceleration, demand or otherwise), andsuch failure shall continue after the applicable grace period, if any, specified in the agreement or instrument evidencing suchMaterial Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating tosuch Material Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement orinstrument, if the effect of such event or condition is to accelerate, or permit the acceleration of, the maturity of suchMaterial Indebtedness; or any such Material Indebtedness shall be declared to be due and payable; or required to be prepaidor redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or any offerto prepay, redeem, purchase or defease such Material Indebtedness shall be required to be made, in each case prior to thestated maturity thereof; or

(g) the Borrower or any Material Subsidiary shall (i) commence a voluntary case or other proceeding or file

any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency orother similar law now or hereafter in effect or seeking the appointment of a custodian, trustee, receiver, liquidator or othersimilar official of it or any substantial part of its property, (ii) consent to the institution of, or fail to contest in a timely andappropriate manner, any proceeding or petition described in clause (i) of this Section, (iii) apply for or consent to theappointment of a custodian, trustee, receiver, liquidator or other similar official for the Borrower or any such MaterialSubsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filedagainst it in any such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take any action for thepurpose of effecting any of the foregoing; or

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i)

liquidation, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or anysubstantial part of its assets,

63CHAR1\935816v6


under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or (ii) theappointment of a custodian, trustee, receiver, liquidator or other similar official for the Borrower or any Material Subsidiaryor for a substantial part of its assets, and in any such case, such proceeding or petition shall remain undismissed for a periodof 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or

(i) the Borrower or any Material Subsidiary shall become unable to pay, shall admit in writing its inability

to pay, or shall fail to pay, its debts as they become due; or (j) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together

with other ERISA Events that have occurred, could reasonably be expected to result in liability to the Borrower and theSubsidiaries in an aggregate amount exceeding $25,000,000; or

(k) any judgment or order for the payment of money in excess of $25,000,000 in the aggregate shall be

rendered against the Borrower or any Subsidiary, and either (i) enforcement proceedings shall have been commenced byany creditor upon such judgment or order or (ii) there shall be a period of 30 consecutive days during which a stay ofenforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(l) any nonmonetary judgment or order shall be rendered against the Borrower or any Subsidiary that could

reasonably be expected to have a Material Adverse Effect, and there shall be a period of 30 consecutive days during which astay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(m) a Change in Control shall occur or exist; or (n) any Loan Document, at any time after its execution and delivery and for any reason other than as

expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect;or the Borrower or any Subsidiary Loan Party contests in any manner the validity or enforceability of any Loan Document;or the Borrower or any Subsidiary Loan Party denies that it has any or further liability or obligation under any LoanDocument, or purports to revoke, terminate or rescind any Loan Document;

then, and in every such event (other than an event with respect to the Borrower described in clause (g) or (h) of this Section) and atany time thereafter during the continuance of such event, the Administrative Agent may, and upon the written request of the RequiredLenders shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate theCommitments, whereupon the Commitment of each Lender shall terminate immediately; (ii) declare the principal of and any accruedinterest on the Loans, and all other Obligations owing hereunder, to be, whereupon the same shall become due and payableimmediately, without presentment, demand, protest or other notice of any kind, all of which are

64CHAR1\935816v6


hereby waived by the Borrower; (iii) exercise all remedies contained in any other Loan Document; and (iv) exercise any otherremedies available at law or in equity; and that, if an Event of Default specified in either clause (g) or (h) shall occur, theCommitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon,and all fees, and all other Obligations shall automatically become due and payable, without presentment, demand, protest or othernotice of any kind, all of which are hereby waived by the Borrower.

ARTICLE IX

THE ADMINISTRATIVE AGENT

Section 9.1 Appointment and Authority.

Each of the Lenders and the Issuing Bank hereby irrevocably appoints Bank of America to act on its behalf as theAdministrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions onits behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with suchactions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the AdministrativeAgent, the Lenders and the Issuing Bank, and neither the Borrower nor any other Loan Party shall have rights as a third partybeneficiary of any of such provisions.

Section 9.2 Rights as a Lender.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lenderas any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders”shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the AdministrativeAgent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financialadvisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary orother Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to theLenders.

Section 9.3 Exculpatory Provisions.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the otherLoan Documents. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred

and is continuing; (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except

discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the AdministrativeAgent is required to

65CHAR1\935816v6


exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall beexpressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be requiredto take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or thatis contrary to any Loan Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to

disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliatesthat is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in anycapacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of

the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shallbelieve in good faith shall be necessary, under the circumstances as provided in Sections 8.1 and 10.2) or (ii) in the absence of its owngross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless anduntil notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Bank.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement,

warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of anycertificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance orobservance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of anyDefault, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any otheragreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than toconfirm receipt of items expressly required to be delivered to the Administrative Agent.

Section 9.4 Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice,request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranetwebsite posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by theproper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it tohave been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with anycondition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfactionof a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or theIssuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior tothe making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who maybe counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action

66CHAR1\935816v6


taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 9.5 Delegation of Duties.

The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under anyother Loan Document by or through any one or more sub-agents appointed by the Administrative Agent; provided, however, that suchappointment shall not relieve the Administrative Agent of any responsibility or liability with respect to the duties, rights and/or powersperformed or exercised by such sub-agents. The Administrative Agent and any such sub-agent may perform any and all of its dutiesand exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall applyto any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to theirrespective activities in connection with the syndication of the credit facilities provided for herein as well as activities asAdministrative Agent.

Section 9.6 Resignation of Administrative Agent.

The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Bank and the Borrower.Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, toappoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in theUnited States, with such successor to have combined capital and surplus and undivided profits of not less than $500,000,000. If nosuch successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days afterthe retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lendersand the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if theAdministrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then suchresignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall bedischarged from its duties and obligations hereunder and under the other Loan Documents and (2) all payments, communications anddeterminations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and theIssuing Bank directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in thisSection. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to andbecome vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiringAdministrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if notalready discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor AdministrativeAgent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. Afterthe retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article andSection 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective RelatedParties in respect of any actions taken or omitted to be

67CHAR1\935816v6


taken by any of them while the retiring Administrative Agent was acting as Administrative Agent. Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as

Issuing Bank and Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) suchsuccessor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank andSwingline Lender, (b) the retiring Issuing Bank and Swingline Lender shall be discharged from all of their respective duties andobligations hereunder or under the other Loan Documents, and (c) the successor Issuing Bank shall issue letters of credit insubstitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangement satisfactory to theretiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.

Section 9.7 Non-Reliance on Administrative Agent and Other Lenders.

Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative

Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate,made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Bank also acknowledges that itwill, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and basedon such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or nottaking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnishedhereunder or thereunder.

Section 9.8 Administrative Agent May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal ofany Loan or L/C Exposure shall then be due and payable as herein expressed or by declaration or otherwise and irrespective ofwhether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention insuch proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect

of the Loans, L/C Exposure and all other Obligations that are owing and unpaid and to file such other documents as may benecessary or advisable in order to have the claims of the Lenders, the Issuing Bank and the Administrative Agent (includingany claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Bank and theAdministrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Bank andthe Administrative Agent under 2.14 and 10.3) allowed in such judicial proceeding; and

68

CHAR1\935816v6


(b) to collect and receive any monies or other property payable or deliverable on any such claims and todistribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial

proceeding is hereby authorized by each Lender and the Issuing Bank to make such payments to the Administrative Agent and, in theevent that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Bank, to payto the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of theAdministrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.9 and 10.3.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or

adopt on behalf of any Lender or the Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting theObligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in anysuch proceeding.

Section 9.9 Guaranty Matters.

The Lenders and the Issuing Bank irrevocably authorize the Administrative Agent, at its option and in its discretion, torelease any Guarantor from its obligations under the Subsidiary Guaranty Agreement if such Person ceases to be a Subsidiary as aresult of a transaction permitted hereunder. Upon request by the Administrative Agent at any time, the Required Lenders will confirmin writing the Administrative Agent’s authority to release any Guarantor from its obligations under the Subsidiary GuarantyAgreement pursuant to this Section 9.9.

Section 9.10 No Other Duties, Etc.

Anything herein to the contrary notwithstanding, none of the book managers or arrangers listed on the cover page hereofshall have any powers, duties, or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, asapplicable, as the Administrative Agent, Lender, Issuing Bank or Swingline Lender.

ARTICLE X

MISCELLANEOUS

Section 10.1 Notices.

(a) Except in the case of notices and other communications expressly permitted to be given by telephone, all noticesand other communications to any party herein to be effective shall be in writing and shall be delivered by hand or overnight courierservice, mailed by certified or registered mail or sent by telecopy, as follows:

69

CHAR1\935816v6


To the Borrower: Ruby Tuesday, Inc.150 West Church AvenueMaryville, TN 37801Attention: Chief Financial OfficerTelecopy: 865-379-6817

To the Administrative Agent,Issuing Bank and

Swingline Lender: Borrowings and Paydowns:Bank of America, N.A.Credit Services DepartmentLynn Cole101 N. Tryon StreetCharlotte, NC 28255-0001Phone: 704-387-3614Fax: 704-409-0003

Bank of America, N.A.New York, NYABA# 026-006-593Account# 136-621-225-0600Attention: Credit ServicesRef: Ruby Tuesday

Financial Reports and Bank Group Information:Bank of America, N.A.Agency ManagementAntonikia L. Thomas231 S. LaSalle St.ILl-231-10-41Chicago, IL 60604Phone: 312-828-8938Fax: 877-206-8432

In either case,

with a copy to: Bank of America, N.A. 100 Federal Street Boston, MA 02110

Attention: John H. Schmidt

To any other Lender: the address set forth in the AdministrativeQuestionnaire

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the otherparties hereto. All such notices and other communications shall, when transmitted by overnight delivery, or faxed, be effective when

70CHAR1\935816v6


delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon thethird Business Day after the date deposited into the mail or if delivered, upon delivery; provided, that notices delivered to theAdministrative Agent, the Issuing Bank or the Swingline Lender shall not be effective until actually received by such Person at itsaddress specified in this Section 10.1.

(b) Any agreement of the Administrative Agent and the Lenders herein to receive certain notices by telephone or

facsimile is solely for the convenience and at the request of the Borrower. The Administrative Agent and the Lenders shall be entitledto rely on the authority of any Person purporting to be a Person authorized by the Borrower to give such notice and the AdministrativeAgent and Lenders shall not have any liability to the Borrower or other Person on account of any action taken or not taken by theAdministrative Agent or the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the Borrower to repay theLoans and all other Obligations hereunder shall not be affected in any way or to any extent by any failure of the Administrative Agentand the Lenders to receive written confirmation of any telephonic or facsimile notice or the receipt by the Administrative Agent andthe Lenders of a confirmation which is at variance with the terms understood by the Administrative Agent and the Lenders to becontained in any such telephonic or facsimile notice.

Section 10.2 Waiver; Amendments.

(a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or powerhereunder or any other Loan Document, and no course of dealing between the Borrower and the Administrative Agent or any Lender,shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power or any abandonment ordiscontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other rightor power hereunder or thereunder. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunderand under the other Loan Documents are cumulative and are not exclusive of any rights or remedies provided by law. No waiver ofany provision of this Agreement or any other Loan Document or consent to any departure by the Borrower therefrom shall in anyevent be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall beeffective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, themaking of a Loan or the issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardlessof whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default or Event ofDefault at the time.

(b) No amendment or waiver of any provision of this Agreement or the other Loan Documents, nor consent to any

departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrowerand the Required Lenders or the Borrower and the Administrative Agent with the consent of the Required Lenders and then suchwaiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, thatno amendment or waiver shall: (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce theprincipal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or

71CHAR1\935816v6


reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the date fixed for anypayment of any principal of, or interest on, any Loan or LC Disbursement or interest thereon or any fees hereunder or reduce theamount of, waive or excuse any such payment, or postpone the scheduled date for the termination or reduction of any Commitment,without the written consent of each Lender affected thereby, (iv) change Section 2.21(b) or (c) in a manner that would alter the prorata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of thisSection or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders whichare required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without theconsent of each Lender; (vi) release any guarantor or limit the liability of any such guarantor under any guaranty agreement withoutthe written consent of each Lender; or (vii) release all or substantially all collateral (if any) securing any of the Obligations, withoutthe written consent of each Lender; provided further, that no such agreement shall amend, modify or otherwise affect the rights, dutiesor obligations of the Administrative Agent, the Swingline Lender or the Issuing Bank without the prior written consent of such Person.

Section 10.3 Expenses; Indemnification.

(a) The Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of the Administrative Agent and BASincluding the reasonable fees, charges and disbursements of counsel for the Administrative Agent and BAS actually incurred, inconnection with the syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documentsand any amendments, modifications or waivers thereof (whether or not the transactions contemplated in this Agreement or any otherLoan Document shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by each Issuing Bank in connection withthe issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) allout-of-pocket costs and expenses (including, without limitation, the reasonable fees, charges and disbursements of outside counsel,fees of inside counsel, accountants, consultants, and other similar professional fees) actually incurred by the Administrative Agent,BAS, the Issuing Bank or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement,including its rights under this Section, or in connection with the Loans made or any Letters of Credit issued hereunder, including allsuch out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent, BAS, each Issuing Bank and each Lender, and each

Related Party of any of the foregoing (each, an “Indemnitee”) against, and hold each of them harmless from, any and all costs, losses,liabilities, claims, damages and related expenses, including the actual and reasonable fees, charges and disbursements of any counselfor any Indemnitee, which may be incurred by or asserted against any Indemnitee arising out of, in connection with or as a result of (i)the execution or delivery of this Agreement or any other agreement or instrument contemplated hereby, the performance by the partieshereto of their respective obligations hereunder or the consummation of any of the transactions contemplated hereby, (ii) any Loan orLetter of Credit or any actual or proposed use of the proceeds therefrom (including any refusal by the applicable Issuing Bank to honora demand for

72CHAR1\935816v6


payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms ofsuch Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned by theBorrower or any Subsidiary or any Environmental Liability related in any way to the Borrower or any Subsidiary or (iv) any actual orprospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any othertheory and regardless of whether any Indemnitee is a party thereto; provided, that the Borrower shall not be obligated to indemnifyany Indemnitee for any of the foregoing arising out of such Indemnitee’s gross negligence or willful misconduct, as determined by acourt of competent jurisdiction in a final and nonappealable judgment.

(c) The Borrower shall pay, and hold the Administrative Agent, BAS and each of the Lenders harmless from and

against, any and all present and future stamp, documentary, and other similar taxes with respect to this Agreement and any other LoanDocuments, any collateral described therein, or any payments due thereunder, and save the Administrative Agent, BAS and eachLender harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes.

(d) To the extent that the Borrower fails to pay any amount required to be paid to the Administrative Agent, BAS, the

Issuing Bank or the Swingline Lender under clauses (a), (b) or (c) hereof, each Lender severally agrees to pay to the AdministrativeAgent, BAS, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s Pro Rata Share (determined as of the timethat the unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided, however, that the unreimbursedexpense or indemnified payment, claim, damage, liability or related expense, as the case may be, was incurred by or asserted againstthe Administrative Agent, BAS, the Issuing Bank or the Swingline Lender in its capacity as such.

(e) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any

Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages)arising out of, in connection with or as a result of, this Agreement or any agreement or instrument contemplated hereby, thetransactions contemplated therein, any Loan or any Letter of Credit or the use of proceeds thereof.

(f) All amounts due under this Section shall be payable promptly after written demand therefor.

Section 10.4 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement and the other Loan Documents shall bebinding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby,except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or thereunder without the priorwritten consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights orobligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of

73CHAR1\935816v6


participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a securityinterest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party heretoshall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than theparties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of thisSection and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bankand the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of itsrights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitment and theLoans (including for purposes of this subsection (b), participations in LC Exposure and Swingline Loans) at the time owing to it);provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitmentand the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or anApproved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of theCommitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then ineffect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment,determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to theAdministrative Agent or, if “Trade Date” is specified in the Assignment and Acceptance, as of the Trade Date,shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default hasoccurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheldor delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrentassignments from members of an Assignee Group to a single assignee (or to an assignee and members of itsAssignee Group) will be treated as a single assignment for purposes of determining whether such minimumamount has been met;

(ii) Required Consents. No consent shall be required for any assignment except to the extent required bysubsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shallbe required unless (1) an Event of Default has occurred

74CHAR1\935816v6


and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender oran Approved Fund;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld ordelayed) shall be required for any such assignment to a Person that is not a Lender with a Commitment in respectof the Commitment subject to such assignment, an Affiliate of such Lender or an Approved Fund with respect tosuch Lender;

(C) the consent of the Issuing Bank (such consent not to be unreasonably withheld or delayed)

shall be required for any assignment that increases the obligation of the assignee to participate in exposure underone or more Letters of Credit (whether or not then outstanding); and

(D) the consent of the Swingline Lender (such consent not to unreasonably withheld or delayed)shall be required for any assignment.

(iii) Assignment and Acceptance. The parties to each assignment shall execute and deliver to the

Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee in the amount of$3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to wave such processing andrecordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agentan Administrative Questionnaire.

(iv) No Assignment to Borrower. No such assignment shall be made to the Borrower or any of theBorrower’s Affiliates or Subsidiaries.

(v) No Assignment to Natural Persons. No such assignment shall be made to a natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after theeffective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement and, to theextent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement,and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released fromits obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rightsand obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits ofSections 2.18, 2.19, 2.20, 10.2 and 10.3 with respect to facts and circumstances occurring prior to the effective date of suchassignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment ortransfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated forpurposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d)of this Section.

75CHAR1\935816v6


(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain atthe Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register for the recordation of thenames and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and LC Exposure owing to, eachLender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and theBorrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to theterms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall beavailable for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or theAdministrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’sAffiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement(including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in LC Exposure and/orSwingline Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) suchLender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, theAdministrative Agent, the other Lenders and the Issuing Bank shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lendersells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve anyamendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide thatsuch Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described inSection 10.2 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall beentitled to the benefits of Sections 2.18, 2.19, 2.20 to the same extent as if it were a Lender and had acquired its interest by assignmentpursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits ofSection 10.7 as though it were a Lender, provided such Participant agrees to be subject to Section 10.7 as though it were a Lender.

(e) Limitation on Participant Rights. A Participant shall not be entitled to receive any greater payment underSection 2.18 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to suchParticipant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant thatwould be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless the Borrower is notified ofthe participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.20(e)as though it were a Lender.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of itsrights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge orassignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lenderfrom any of

76CHAR1\935816v6


its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import inany Assignment and Acceptance shall be deemed to include electronic signatures or the keeping of records in electronic form, each ofwhich shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-basedrecordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal ElectronicSignatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similarstate laws based on the Uniform Electronic Transactions Act

(h) Resignation as Issuing Bank or Swingline Lender after Assignment. Notwithstanding anything to the contrarycontained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank ofAmerica may, (i) upon thirty days’ notice to the Borrower and the Lenders, resign as Issuing Bank and/or (ii) upon thirty days’ noticeto the Borrower, resign as Swingline Lender. In the event of any such resignation as Issuing Bank or Swingline Lender, the Borrowershall be entitled to appoint from among the Lenders a successor Issuing Bank or Swingline Lender hereunder; provided, however, thatno failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as Issuing Bank or SwinglineLender, as the case may be. If Bank of America resigns as Issuing Bank, it shall retain all the rights, powers, privileges and duties ofthe Issuing Bank hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Issuing Bankand all LC Exposure with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund riskparticipations in LC Borrowings pursuant to Section 2.23). If Bank of America resigns as Swingline Lender, it shall retain all therights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effectivedate of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstandingSwingline Loans pursuant to Section 2.6(c).Upon the appointment of a successor Issuing Bank and/or Swingline Lender, (1) suchsuccessor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank orSwingline Lender, as the case may be, and (2) the successor Issuing Bank shall issue letters of credit in substitution for the Letters ofCredit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectivelyassume the obligations of Bank of America with respect to such Letters of Credit.

Section 10.5 Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement and the other Loan Documents shall be construed in accordance with and be governed by the law(without giving effect to the conflict of law principles thereof) of the State of Georgia.

(b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive

jurisdiction of the United States District Court of the Western District of North Carolina, and of any state court of the State of NorthCarolina located in

77CHAR1\935816v6


Mecklenburg County and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreementor any other Loan Document or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment,and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceedingmay be heard and determined in such North Carolina state court or, to the extent permitted by applicable law, such Federal court. Eachof the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in otherjurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Documentshall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action orproceeding relating to this Agreement or any other Loan Document against the Borrower or its properties in the courts of anyjurisdiction.

(c) The Borrower irrevocably and unconditionally waives any objection which it may now or hereafter have to the

laying of venue of any such suit, action or proceeding described in paragraph (b) of this Section and brought in any court referred to inparagraph (b) of this Section. Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable law, thedefense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to the service of process in the manner provided for notices in

Section 10.1. Nothing in this Agreement or in any other Loan Document will affect the right of any party hereto to serve process inany other manner permitted by law.

Section 10.6 WAIVER OF JURY TRIAL.

EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLELAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLYARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATEDHEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TOENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVEBEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHERTHINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.7 Right of Setoff.

In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, eachLender and the Issuing Bank shall have the right, at any time or from time to time upon the occurrence and during the continuance ofan Event of Default,

78CHAR1\935816v6


without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicablelaw, to set off and apply against all deposits (general or special, time or demand, provisional or final) of the Borrower at any time heldor other obligations at any time owing by such Lender and the Issuing Bank to or for the credit or the account of the Loan Partiesagainst any and all Obligations held by such Lender or the Issuing Bank, as the case may be, irrespective of whether such Lender orthe Issuing Bank shall have made demand hereunder and although such Obligations may be unmatured. Each Lender and the IssuingBank agree promptly to notify the Administrative Agent and the Loan Parties after any such set-off and any application made by suchLender and the Issuing Bank, as the case may be; provided, however, that the failure to give such notice shall not affect the validity ofsuch set-off and application.

Section 10.8 Counterparts; Integration.

This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts(including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. ThisAgreement, the Fee Letter, the other Loan Documents, and any separate letter agreement(s) relating to any fees payable to theAdministrative Agent constitute the entire agreement among the parties hereto and thereto regarding the subject matters hereof andthereof and supersede all prior agreements and understandings, oral or written, regarding such subject matters.

Section 10.9 Survival.

All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or otherinstruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the otherparties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Lettersof Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the AdministrativeAgent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at thetime any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest onany Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit isoutstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.18, 2.19, 2.20, and 10.3 andArticle IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby,the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of thisAgreement or any provision hereof. All representations and warranties made herein, in the certificates, reports, notices, and otherdocuments delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement and the other LoanDocuments, and the making of the Loans and the issuance of the Letters of Credit.

79

CHAR1\935816v6


Section 10.10 Severability.

Any provision of this Agreement or any other Loan Document held to be illegal, invalid or unenforceable in anyjurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without affectingthe legality, validity or enforceability of the remaining provisions hereof or thereof; and the illegality, invalidity or unenforceability ofa particular provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 10.11 Confidentiality.

Each of the Administrative Agent, the Issuing Bank and each Lender agrees to take normal and reasonable precautions tomaintain the confidentiality of any information designated in writing as confidential and provided to it by the Borrower or anySubsidiary, except that such information may be disclosed (i) to any Related Party of the Administrative Agent, the Issuing Bank orany such Lender, including without limitation accountants, legal counsel and other advisors, (ii) to the extent required by applicablelaws or regulations or by any subpoena or similar legal process, (iii) to the extent requested by any regulatory agency or authority, (iv)to the extent that such information becomes publicly available other than as a result of a breach of this Section, or which becomesavailable to the Administrative Agent, the Issuing Bank, any Lender or any Related Party of any of the foregoing on a nonconfidentialbasis from a source other than the Borrower, (v) in connection with the exercise of any remedy hereunder or any suit, action orproceeding relating to this Agreement or the enforcement of rights hereunder, and (ix) subject to provisions substantially similar tothis Section 10.11, to any actual or prospective assignee or Participant, or (vi) with the consent of the Borrower. Any Person requiredto maintain the confidentiality of any information as provided for in this Section shall be considered to have complied with itsobligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such information as suchPerson would accord its own confidential information.

Section 10.12 Interest Rate Limitation.

Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with allfees, charges and other amounts which may be treated as interest on such Loan under applicable law (collectively, the “Charges”),shall exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be contracted for, charged, taken, received orreserved by a Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loanhereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, theinterest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of thisSection shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased(but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate tothe date of repayment, shall have been received by such Lender.

80

CHAR1\935816v6


Section 10.13 Payments Set Aside.

To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or theAdministrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereofis subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlemententered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, inconnection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation orpart thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not beenmade or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand itsapplicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of suchdemand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.

Section 10.14 Patriot Act Notice.

Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf ofany Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signedinto law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, whichinformation includes the name and address of the Borrower and other information that will allow such Lender or the AdministrativeAgent, as applicable, to identify the Borrower in accordance with the Act.

Section 10.15 No Advisory or Fiduciary Responsibility.

In connection with all aspects of each transaction contemplated hereby, the Borrower acknowledges and agrees, andacknowledges its Affiliates’ understanding, that: (i) the credit facility provided for hereunder and any related arranging or otherservices in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any otherLoan Document) are an arm’s-length commercial transaction between the Borrower and its Affiliates, on the one hand, and theAdministrative Agent and the Arranger, on the other hand, and the Borrower is capable of evaluating and understanding andunderstands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents(including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to suchtransaction, the Administrative Agent and the Arranger each is and has been acting solely as a principal and is not the financialadvisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person; (iii)neither the Administrative Agent nor the Arranger has assumed or will assume an advisory, agency or fiduciary responsibility in favorof the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect toany amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether the AdministrativeAgent or the Arranger has advised or is currently advising the Borrower or any of its Affiliates on other matters) and neither theAdministrative Agent nor the

81

CHAR1\935816v6


Arranger has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except thoseobligations expressly set forth herein and in the other Loan Documents; (iv) the Administrative Agent and the Arranger and theirrespective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower andits Affiliates, and neither the Administrative Agent nor the Arranger has any obligation to disclose any of such interests by virtue ofany advisory, agency or fiduciary relationship; and (v) the Administrative Agent and the Arranger have not provided and will notprovide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including anyamendment, waiver or other modification hereof or of any other Loan Document) and the Borrower has consulted its own legal,accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to thefullest extent permitted by law, any claims that it may have against the Administrative Agent or the Arranger with respect to anybreach or alleged breach of agency or fiduciary duty.

Section 10.16 Waiver of Notice of Termination. Those Lenders party hereto which are also party to the Existing Credit Agreement hereby waive any prior notice

requirement under the Existing Credit Agreement with respect to the termination of commitments thereunder and the making of anyprepayments thereunder.

(remainder of page left intentionally blank)

82

CHAR1\935816v6


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respectiveauthorized officers as of the day and year first above written.

RUBY TUESDAY, INC.,as Borrower

By /s/ Marguerite N. DuffyName: Marguerite N. DuffyTitle: Senior Vice President

[SEAL]

BANK OF AMERICA, N.A.,as Administrative Agent

By /s/ Michael BrashlerName: Michael BrashlerTitle: Vice Presdient

BANK OF AMERICA, N.A.,as a Lender, an Issuing Bank andSwingline Lender

By /s/ John H. SchmidtName: John H. SchmidtTitle: Vice President

SUNTRUST BANK,as a Lender and an Issuing Bank

By /s/ Susan HallName: Susan HallTitle: Managing Director

RUBY TUESDAY INC.AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT


WACHOVIA BANK,NATIONAL ASSOCIATION,as a Lender

By /s/ Susan T. GallagherName: Susan T. GallagherTitle: Vice President

REGIONS BANK,successor by merger to AmSouth Bank,as a Lender

By /s/ Amy GillenName: Amy GillenTitle: Senior Vice President

BRANCH BANKING AND TRUST COMPANY,as a Lender

By /s/ R. Andrew BeamName: R. Andrew BeamTitle: Senior Vice President

U.S. BANK, NATIONAL ASSOCIATION,

as a Lender

By /s/ Frances W. JosephicName: Frances W. JosephicTitle: Vice President

CITIBANK, N.A.,

as a Lender

By /s/ Mark FloydName: Mark FloydTitle: Vice President

RUBY TUESDAY INC.

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT


WELLS FARGO BANK, N.A.,as a Lender

By /s/ Sharon PrinceName: Sharon PrinceTitle: Vice President

FIFTH THIRD BANK,an Ohio banking corporation,

as a Lender

By /s/ John K. PerezName: John K. PerezTitle: Vice President

RUBY TUESDAY INC.AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT


SCHEDULE 1.1(a)

APPLICABLE MARGIN

PricingLevel

Adjusted Total Debt to

EBITDAR Ratio

Applicable Margin for

Eurodollar Loans

Applicable Margin for

Base Rate Loans

Applicable Commitment

Fee Percentage

I Less than 2.0:1.00 0.50% per annum

0.000% per annum

0.10% per annum

II Less than 2.50:1.00 butgreater than or equal to2.0:1.00

0.625% per annum

0.000% per annum

0.125% per annum

III Less than 3.0:1.00 butgreater than or equal to2.50:1.00

0.75% per annum

0.000% per annum

0.15% per annum

IV Greater than or equal to3.0:1.00

1.0% per annum

0.000% per annum

0.20% per annum


Schedule 1.1(b)

EXISTING LETTERS OF CREDIT

Beneficiary L/C Number ExpiryDate Issuer Amount

Zurich American Insurance 3056168 5/12/2007 Bank of America, N.A. $590,000.00

Board of County Supervisor 3058188 2/13/2007 Bank of America, N.A. $16,535.00

Hartford Fire InsuranceCompany 3058771 9/8/2007 Bank of America, N.A. $9,425,000.00

Greensboro ABC Board 3060220 12/15/2007 Bank of America, N.A. $2,000.00

The Travelers IndemnityCompany 3061048 1/31/2008 Bank of America, N.A. $1,568,000.00

Florida Self Insurers Guaranty 3061952 3/20/2007 Bank of America, N.A. $60,000.00

Industrial Commission ofArizona 3062109 3/20/2007 Bank of America, N.A. $106,000.00

Citicorp Leasing 3063377 1/13/2008 Bank of America, N.A. $6,750,000.00

Jefferson County Commission 3064318 7/15/2007 Bank of America, N.A. $5,750.00

National Union Fire Insurance 3065198 9/8/2007 Bank of America, N.A. $365,000.00

National Union Fire Insurance 3065199 9/8/2007 Bank of America, N.A. $292,513.00

NOLIN 3072448 1/5/2008 Bank of America, N.A. $7,000.00

Board of County Supervisor 3076886 2/25/2007 Bank of America, N.A. $30,704.00

North Wales Water Authority 3077718 11/14/2007 Bank of America, N.A. $40,090.00

Montgomery Township 3077719 11/14/2007 Bank of America, N.A. $456,354.80

Montgomery Township 3078856 12/16/2007 Bank of America, N.A. $26,400.00

Director, Division of SELF F501115 6/8/2007 SunTrust Bank $300,000.00


SCHEDULE 1.2

REVOLVING COMMITMENTS

Lender

RevolvingCommitment

Pro Rata Share

Bank of America, N.A. $110,000,000.00 22.000000000%

CitiBank, N.A. $75,000,000.00 15.000000000%

Wachovia Bank, National Association $75,000,000.00 15.000000000%

Regions Bank $50,000,000.00 10.000000000%

SunTrust Bank, Inc $50,000,000.00 10.000000000%

Wells Fargo Bank, N.A. $50,000,000.00 10.000000000%

Branch Banking and Trust Company $30,000,000.00 6.000000000%

Fifth Third Bank $30,000,000.00 6.000000000%

U.S. Bank, National Association $30,000,000.00 6.000000000%

Total $500,000,000.00 100.000000000%


SCHEDULE 4.14

SUBSIDIARIES

PERCENTAGE OF OWNERSHIP OF SUBSIDIARIES

1. The following are subsidiaries of Borrower (owned, in the percentage indicated, by Borrower unless otherwise noted):

Name State of Organization % OwnedRT of Annapolis, Inc. (name change) Maryland 100%4721 RT of Pennsylvania Pennsylvania 100%Ruby Tuesday of Marley Station, Inc. Maryland 100%Morrison of New Jersey, Inc. New Jersey 100%Orpah, Inc. Maryland 100%RT Hospitality - York, JV Pennsylvania 50%Ruby Tuesday of Allegany County, Inc. Maryland 100%Ruby Tuesday of Columbia, Inc. Maryland 90%Ruby Tuesday of Linthicum, Inc. Maryland 100%Ruby Tuesday of Salisbury, Inc. Maryland 100%Ruby Tuesday Sunday Club, Inc. Alabama 100%Ruby Tuesday of St. Mary’s, Inc. Maryland 85%Ruby Tuesday of Frederick, Inc. Maryland 97%RT of Cecil County, Inc. Maryland 97%RT of Clarksville, Inc. Maryland 90%Quality Outdoor Services, Inc. Tennessee 100%RT Airport, Inc. Delaware 100%RT Franchise Acquisition, LLC (A), (C) Delaware 100%RT Louisville Franchise, LLC (B) Delaware 99%RT McGhee Tyson, LLC Delaware 99%RT One Percent Holdings, Inc. Delaware 100%RT Southwest Franchise, LLC (A), (B) Delaware 99%Ruby Tuesday, LLC Delaware 100%RT One Percent Holdings, LLC Delaware 100%RT Minneapolis Holdings, LLC (C) Delaware 100%RT Omaha Holdings, LLC (C) Delaware 100%RT Denver, Inc. Georgia 100%RT Louisville, Inc. Georgia 100%RT Orlando, Inc. Georgia 100%RT South Florida, Inc. Georgia 100%


Name State of Organization % OwnedRT Tampa, Inc Georgia 100%RT West Palm Beach, Inc. Georgia 100%RTBD, Inc. (A) Delaware 100%RT Kentucky Restaurant Holdings, LLC (A), (C) Delaware 100%RT New Hampshire Restaurant Holdings, LLC (C) Delaware 100%RTGC, LLC (A) Colorado 100%RT Restaurant Services, LLC Delaware 100%RT Finance, Inc. (A), (C) Delaware 100%RT Florida Equity, LLC (A) Delaware 100%RT New York Franchise, LLC (A) Delaware 100%RT Tampa Franchise, LP (A) Delaware 100%RT Northern California Franchise, LLC Delaware 100%RT Michiana Franchise, LLC (A) Delaware 100%RT Orlando Franchise, LP (A) Delaware 100%RT South Florida Franchise, LP (A) Delaware 100%RTTA, LP Texas 100%RTT Texas, Inc. Texas 100%RTTT, LLC (B) Texas 100%RT Distributing, LLC Tennessee 100%Ruby Tuesday GC Cards, Inc. (A) Colorado 100%

A) Material Subsidiary B) 99% owned by RT Franchise Acquisition, LLC C) 100% owned by RTBD, Inc. 2. The following “liquor clubs/corporations” are owned by the members thereof and controlled by a Board of Directors, who aretypically employees of Borrower or it’s Subsidiaries and Affiliates. These “clubs” enter into service agreements with Borrower toprovide the services necessary to conduct alcoholic beverage sales and related service at Borrower’s restaurants located in the relevantstates.

Name State of Organization RT Jonesboro Club Arkansas RT Arkansas Club, Inc. Arkansas Ruby Tuesday of BWI, Inc. Maryland RT of Riverside, Inc. Maryland Ruby Tuesday of Pocomoke City, Inc. Maryland RT of Fruitland, Inc. Maryland RTMB Lodging Joint Venture Pennsylvania RT Stonebridge Joint Venture Pennsylvania


SCHEDULE 7.1

EXISTING LIENS

None.


SCHEDULE 7.3

EXISTING INVESTMENTS See Schedule 4.14 for a listing of direct and indirect Subsidiaries of Borrower in which Borrower has made an Investment. Various promissory notes issued to Borrower by franchise partners or other entities as listed below on this Schedule 7.3. Option Agreement dated November 20, 2000 between Borrower and Specialty Restaurant Group, LLC (SRG) pursuant to whichBorrower has the option to acquire a 33% membership interest in SRG. Line of Credit Agreement and Promissory Term Note, each dated August 31, 1999, between Borrower (as lender) and RTMcGhee-Tyson, LLC (as borrower) in the amount of $1,000,000. Line of Credit Agreement and Promissory Term Note, each dated March 6, 2000, between Borrower (as lender) and RT FranchiseAcquisition, LLC (as borrower) in the amount of $150,000. Limited liability company interests or limited partner interests held by Borrower or a Subsidiary in franchise partners as follows:

(a) 50% ($501,000) in connection with RT Minneapolis Franchise, LLC (held by RTMinneapolis Holdings, LLC);

(b) 50% ($501,000) in connection with RT Omaha Franchise, LLC (held by RT OmahaHoldings, LLC);

(c) 50% ($501,000) in connection with RT Detroit Franchise, LLC (held by RT FranchiseAcquisition, LLC);

(d) 50% ($501,000) in connection with RT KCMO Franchise, LLC (held by Ruby Tuesday,Inc.);

(e) 50% ($501,000) in connection with RT Michigan Franchise, LLC (held by RT FranchiseAcquisition, LLC);

(f) 50% ($501,000) in connection with RT New England Franchise, LLC (held by RubyTuesday, Inc.);

(g) 50% ($501,000) in connection with RT Western Missouri Franchise, LLC (held by RT OnePercent Holdings, LLC);

(h) 50% ($501,000) in connection with RT West Palm Beach Franchise, LP (39% held by RTFlorida Equity, LLC, and 11% held by RT West Palm Beach, Inc.);

(i) 50% ($501,000) in connection with RT St. Louis Franchise, LLC (held by RT One PercentHoldings, LLC);

(j) 1% each ($1,000 each) in connection with each other Franchise Partner (Ruby Tuesday,Inc. holds 1% each of RT Long Island Franchise, LLC, RT Seattle Franchise, LLC, RTIndianapolis Franchise, LLC, RT Utah Franchise, LLC, RT Las Vegas Franchise, LLC, RTPortland Franchise, LLC, and RT Denver Franchise, LP)

CHAR1\787495v8


LLC, RT Portland Franchise, LLC, and RT Denver Franchise, LP)and the right to increasesuch ownership to 50% or more as allowed in the Franchise Partner Program.

Effective as of December 5, 2006:

Original Outstanding Note Payoff Debt Balance Date DateRTI loans to:

RT Chicago Franchise, LLC.................... 7,038,000 1,000,000 03/27/00 03/27/11RT Michigan Franchise, LLC.................. 6,000,000 5,714,000 05/27/00 03/27/19RT Long Island Franchise, LLC............... 1,437,000 1,437,000 03/31/06 05/10/09RT Detroit Franchise, LLC..................... 3,205,000 1,881,000 03/27/00 03/27/11RT St. Louis Franchise, LLC.................. 2,055,000 1,987,000 12/05/01 09/05/11RT Minneapolis Franchise, LLC............... 1,528,000 1,007,000 10/12/98 08/12/10RT Indianapolis Franchise, LLC............... 1,250,000 1,525,000 12/05/01 12/05/12RT Utah Franchise, LP........................... 1,300,000 1,300,000 01/07/05 01/01/09All Saints Investments Limited, et al......... 931,005 1,060,000 03/24/03 03/17/07

Maximum Available Credit

RTI Lines of credit:

RT Utah Franchise, LP........................ 490,000

RT Long Island Franchise, LCC............. 400,000 03/03/06

RT Portland, LP................................ 10,000 09/22/06

RT New England Franchise, LLC........... 200,000 235,000 08/05/05 12/31/06

24,246,000

CHAR1\787495v8


SCHEDULE 7.7

RESTRICTIVE AGREEMENTS

1. Restrictive agreements provided for in, or in other documents or agreements executed in connection with, the Amended andRestated Franchise Loan Facility Agreement in the amount of $48,000,000 (which may be increased to a total of $73,000,000) by andamong Borrower, Bank of America, N.A. , as Servicer, and each of the participants party thereto dated as of November 19, 2004together with any renewal or replacement thereof.

2. Liens and/or restrictive agreements provided for in, or in other documents or agreements executed in connection with, theFinancing Agreement between Borrower and Citicorp Leasing, Inc. (“Citicorp”) whereby Borrower agrees to provide a letter of creditto Citicorp as partial guaranty of up to $20 million in construction/development financing by Citicorp to Borrower’s FranchisePartners. The maximum amount of Borrower’s possible letter of credit under the Citicorp facility is $8.0 million. CHAR1\787495v8

EXHIBIT A

REVOLVING CREDIT NOTE

_______________

FOR VALUE RECEIVED, the undersigned, Ruby Tuesday, Inc., a Georgia corporation (the “Borrower”), herebypromises to pay to ________________ (the “Lender”) or its registered assigns, in accordance with the provisions of that certainAmended and Restated Revolving Credit Agreement dated as of February 28, 2007, (as the same may be amended, restated,supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders from time to timeparty thereto and Bank of America, N.A., as administrative agent for the lenders, the principal amount of each Revolving Loan fromtime to time made by the Lender to the Borrower pursuant to the Credit Agreement, in lawful money of the United States of Americain immediately available funds, and to pay interest from the date hereof on the principal amount thereof from time to time outstanding,in like funds at the rate or rates per annum and payable on such dates as provided in the Credit Agreement. In addition, should legalaction or an attorney-at-law be utilized to collect any amount due hereunder, the Borrower further promises to pay all costs ofcollection, including the reasonable attorneys’ fees of the Lender.

The Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan from the date of suchRevolving Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the CreditAgreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollarsin immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder, suchunpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before aswell as after judgment) computed at the per annum rate set forth in the Credit Agreement.

This Revolving Credit Note is issued in connection with, and is entitled to the benefits of, the Credit Agreement which,among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, forprepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the CreditAgreement, all upon the terms and conditions therein specified. THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED INACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA AND ANY APPLICABLE LAWS OFTHE UNITED STATES OF AMERICA. CHAR1\936505v2

Exhibit A


RUBY TUESDAY, INC.

By:Name:Title:

[SEAL]

CHAR1\936505v2

Exhibit A


EXHIBIT B

SWINGLINE NOTE

_______________

FOR VALUE RECEIVED, the undersigned, Ruby Tuesday, Inc., a Georgia corporation (the “Borrower”), hereby promisesto pay to Bank of America, N.A. (the “Swingline Lender”) or its registered assigns, in accordance with the provisions of that certainAmended and Restated Revolving Credit Agreement dated as of February 28, 2007 (as the same may be amended, restated,supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders from time to timeparty thereto and Bank of America, N.A., as administrative agent for the lenders, the principal amount of each Swingline Loan fromtime to time made by the Swingline Lender to the Borrower pursuant to the Credit Agreement, in lawful money of the United States ofAmerica in immediately available funds, and to pay interest from the date hereof on the principal amount thereof from time to timeoutstanding, in like funds, at said office, at the rate or rates per annum and payable on such dates as provided in the Credit Agreement.In addition, should legal action or an attorney-at-law be utilized to collect any amount due hereunder, the Borrower further promises topay all costs of collection, including the reasonable attorneys’ fees of the Swingline Lender.

The Borrower promises to pay interest on the unpaid principal amount of each Swingline Loan from the date of suchSwingline Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the CreditAgreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Swing LineLender in Dollars in immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when duehereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment(and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.

This Swingline Note is issued in connection with, and is entitled to the benefits of, the Credit Agreement which, amongother things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional andmandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions ofthe Credit Agreement, all upon the terms and conditions therein specified. THIS SW1NGLINE NOTE SHALL BE CONSTRUED INACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA AND ANY APPLICABLE LAWS OFTHE UNTTED STATES OF AMERICA. CHAR1\936505v2

Exhibit B


RUBY TUESDAY, INC.

By:Name:Title:

[SEAL]

CHAR1\936505v2

Exhibit B


EXHIBIT C

FORM OFASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (this “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is enteredinto by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized termsused but not defined herein have the meanings provided in the Credit Agreement identified below, receipt of a copy of which is herebyacknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to andincorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocablypurchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the CreditAgreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights andobligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extentrelated to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor underthe respective facilities identified below (including, without limitation, the Letters of Credit and the Swingline Loans and theGuarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes ofaction and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising underor in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactionsgoverned thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims,malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assignedpursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to hereincollectively as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expresslyprovided in this Assignment and Acceptance, without representation or warranty by the Assignor.

1. Assignor:

2. Assignee: [and is an Affiliate/Approved Fund of [identify Lender]]

3. Borrower: Ruby Tuesday, Inc., a Georgia corporation

4. Administrative Agent: Bank of America, N.A., as the administrative agent under theCredit Agreement

CHAR1\936505v2

Exhibit C


5. Credit Agreement: Amended and Restated Revolving Credit Agreement dated as ofFebruary 28, 2007 (as amended, modified, supplemented or extended from time to time, the“Credit Agreement”) among Ruby Tuesday, Inc., a Georgia corporation (the “ Borrower”), theGuarantors from time to time party thereto, the Lenders from time to time party thereto andBank of America, N.A., as Administrative Agent, Swingline Lender and Issuing Bank.

CHAR1\936505v2

Exhibit C


6. Assigned Interest:

Facility Assigned1

Aggregate Amount ofCommitment/Loans

for all Lenders

Amount ofCommitment/Loans

Assigned2 Percentage Assigned of

Commitment/Loans3

7. Trade Date: __________________

8. Effective Date: __________________ The terms set forth in this Assignment and Acceptance are hereby agreed to:

ASSIGNOR: [NAME OF ASSIGNOR]

By:Name:Title:

ASSIGNEE: [NAME OF ASSIGNEE]

By:Name:Title:

_________________________1 Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under thisAssignment (e.g. “Revolving Commitment”)2 Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and theEffective Date.3 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. CHAR1\936505v2

Exhibit C


[Consented to and]4 Accepted: BANK OF AMERICA, N.A.,as Administrative Agent

By:Name:Title: Consented to: RUBY TUESDAY, INC.,a Georgia corporation

By:Name:Title: [Consented to:] 5

BANK OF AMERICA, N.A.,as Issuing Bank

By:Name:Title:

_________________________4 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.5 To be added only if the consent of the Issuing Bank is required by the terms of the Credit Agreement. CHAR1\936505v2

Exhibit C


Annex 1 to Assignment and Acceptance

STANDARD TERMS AND CONDITIONS 1. Representations and Warranties. 1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) theAssigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and hastaken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplatedhereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connectionwith the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiencyor value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries orAffiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, anyof its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document. 1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, toexecute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become aLender under the Credit Agreement, (ii) it meets the requirements to be an assignee under Section 10.4(b)(ii), (iv) and (v) of the CreditAgreement (subject to such consents, if any, as may be required under Section 10.4(b)(iii) of the Credit Agreement), (iii) from andafter the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of theAssigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assetsof the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire theAssigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has receivedor has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.1thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decisionto enter into this Assignment and Acceptance and to purchase the Assigned Interest, (vi) it has, independently and without relianceupon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, madeits own credit analysis and decision to enter into this Assignment and Acceptance and to purchase the Assigned Interest, and (vii) if itis a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement,duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the AdministrativeAgent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time,continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform inaccordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as aLender. CHAR1\936505v2

Exhibit C


2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest(including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excludingthe Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date. 3. General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and theirrespective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which togethershall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance bytelecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment andAcceptance shall be governed by, and construed in accordance with, the laws of the State of Georgia.

CHAR1\936505v2

Exhibit C


EXHIBIT D

FORM OFSUBSIDIARY GUARANTY AGREEMENT

THIS SUBSIDIARY GUARANTY AGREEMENT , dated as of February 28, 2007 (the “Subsidiary Guaranty

Agreement”) among each of the Subsidiaries (each such subsidiary individually, a “Guarantor” and collectively, the “Guarantors”) ofRuby Tuesday, Inc., a Georgia corporation (the “ Borrower”) from time to time parties hereto, and, Bank of America, N.A., a nationalbanking association as administrative agent (the “Administrative Agent”) for the Lenders (as defined in the Credit Agreement referredto below).

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 (as amended,restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders from timeto time party thereto (the “Lenders”) and Bank of America, N.A., as Administrative Agent for the Lenders (in such capacity, the“Administrative Agent”), swingline lender (in such capacity, the “Swingline Lender”) and issuing bank (in such capacity, the “IssuingBank”). Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

The Lenders have agreed to make Loans to the Borrower, and the Issuing Bank has agreed to issue Letters of Credit for theaccount of the Borrower, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. Each of theGuarantors is a direct or indirect wholly-owned Subsidiary of the Borrower and acknowledges that it will derive substantial benefitfrom the making of the Loans by the Lenders, and the issuance of the Letters of Credit by the Issuing Bank. The obligations of theLenders to make Loans and of the Issuing Bank to issue Letters of Credit are conditioned on, among other things, the execution anddelivery by the Guarantors of this Subsidiary Guaranty Agreement. As consideration therefor and in order to induce the Lenders tomake Loans and the Issuing Bank to issue Letters of Credit, the Guarantors are willing to execute this Subsidiary GuarantyAgreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Definitions. Capitalized terms used but not otherwise defined shall have the meanings provided in the CreditAgreement. As used herein:

“Guaranteed Obligations” shall mean all amounts owing by the Borrower to the Administrative Agent, theIssuing Bank or any Lender (including the Swingline Lender) pursuant to or in connection with this Agreement or any otherLoan Document, including without limitation, all principal, interest (including any interest accruing after the filing of anypetition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Borrower,whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), all reimbursement obligations,fees, expenses, indemnification and reimbursement payments, costs and expenses (including all fees and expenses ofcounsel to the Administrative Agent and any Lender (including the Swingline Lender) incurred pursuant to the CreditAgreement or any other Loan Document), whether direct or indirect, absolute or contingent, liquidated or unliquidated, nowexisting or hereafter arising hereunder or thereunder, and all obligations arising

CHAR1\936505v2Exhibit D


under Hedging Agreements relating to the foregoing to the extent permitted hereunder, and all obligations and liabilitiesincurred in connection with collecting and enforcing the foregoing, together with all renewals, extensions, modifications orrefinancings thereof.

SECTION 2. The Guaranty. Each of the Guarantors hereby jointly and severally guarantees to each Lender, each Affiliate

of a Lender that enters into a Hedging Agreement with a Loan Party and the Administrative Agent as hereinafter provided, as primaryobligor and not as surety, the prompt payment of the Guaranteed Obligations in full when due (whether at stated maturity, as amandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) strictly in accordance with the termsthereof. The Guarantors hereby further agree that if any of the Guaranteed Obligations are not paid in full when due (whether at statedmaturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise), the Guarantors will, jointlyand severally, promptly pay the same, without any demand or notice, and that in the case of any extension of time of payment orrenewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, as amandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) in accordance with the terms of suchextension or renewal.

Notwithstanding any provision to the contrary contained in the Credit Agreement, or in any other of the Loan Documents orHedging Agreements, the obligations of each Guarantor under this Subsidiary Guaranty Agreement and the other Loan Documentsshall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance underthe Debtor Relief Laws or any comparable provisions of any applicable state law.

SECTION 3. Guaranteed Obligations Unconditional. The obligations of the Guarantors hereunder are absolute andunconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents, HedgingAgreements, or any other agreement or instrument referred to therein, or any substitution, release, impairment or exchange of anyother guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable Law,irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of asurety or guarantor, it being the intent of this Section 3 that the obligations of the Guarantors hereunder shall be absolute andunconditional under any and all circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation,indemnity, reimbursement or contribution against the Borrower or any other Guarantor for amounts paid hereunder until such time asthe Guaranteed Obligations have been paid in full and the Commitments have expired or terminated. Without limiting the generality ofthe foregoing, it is agreed that, to the fullest extent permitted by Law, the occurrence of any one or more of the following shall notalter or impair the liability of any Guarantor hereunder which shall remain absolute and unconditional as described above:

(a) at any time or from time to time, without notice to any Guarantor, the time for any performance of orcompliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

(b) any of the acts mentioned in any of the provisions of any of the Loan Documents, any HedgingAgreement between any Loan Party and any Lender, or any



Affiliate of a Lender, or any other agreement or instrument referred to in the Loan Documents, such Hedging Agreementsshall be done or omitted;

(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed

Obligations shall be modified, supplemented or amended in any respect, or any right under any of the Loan Documents, anyHedging Agreement between any Loan Party and any Lender, or any Affiliate of a Lender, or any other agreement orinstrument referred to in the Loan Documents or such Hedging Agreements shall be waived or any other guarantee of any ofthe Guaranteed Obligations or any security therefor shall be released, impaired or exchanged in whole or in part orotherwise dealt with;

(d) any Lien granted to, or in favor of, the Administrative Agent, any Lender or any of the holder of

Guaranteed Obligations as security for any of the Guaranteed Obligations shall fail to attach or be perfected; or (e) any of the Guaranteed Obligations shall be determined to be void or voidable (including, without

limitation, for the benefit of any creditor of any Guarantor) or shall be subordinated to the claims of any Person (including,without limitation, any creditor of any Guarantor).

With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment,

demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any Lender exhaust anyright, power or remedy or proceed against any Person under any of the Loan Documents, any Hedging Agreement between any LoanParty and any Lender, or any Affiliate of a Lender, or any other agreement or instrument referred to in the Loan Documents, suchHedging Agreements, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.

SECTION 4. Reinstatement. The obligations of the Guarantors hereunder shall be automatically reinstated if and to theextent that for any reason any payment by or on behalf of any Person in respect of the Guaranteed Obligations is rescinded or must beotherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy orreorganization or otherwise, and each Guarantor agrees that it will indemnify the Administrative Agent and each Lender on demandfor all reasonable costs and expenses (including, without limitation, the fees, charges and disbursements of external counsel) incurredby the Administrative Agent or such Lender in connection with such rescission or restoration, including any such costs and expensesincurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar paymentunder any bankruptcy, insolvency or similar law.

SECTION 5. Certain Additional Waivers . Each Guarantor agrees that such Guarantor shall have no right of recourse to

security for the Guaranteed Obligations, except through the exercise of rights of subrogation pursuant to Section 3 and through theexercise of rights of contribution pursuant to Section 7.

SECTION 6. Remedies. The Guarantors agree that, to the fullest extent permitted by Law, as between the Guarantors, onthe one hand, and the Administrative Agent and the Lenders, on the other hand, the Guaranteed Obligations may be declared to beforthwith due and payable as provided in Section 8.1 of the Credit Agreement (and shall be deemed to have become CHAR1\936505v2

Exhibit D


automatically due and payable in the circumstances provided in Section 8.1 of the Credit Agreement) for purposes of Section 2notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Guaranteed Obligations frombecoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Obligationsbeing deemed to have become automatically due and payable), the Guaranteed Obligations (whether or not due and payable by anyother Person) shall forthwith become due and payable by the Guarantors for purposes of Section 2.

SECTION 7. Rights of Contribution. The Guarantors agree among themselves that, in connection with payments madehereunder, each Guarantor shall have contribution rights against the other Guarantors as permitted under applicable law. Suchcontribution rights shall be subordinate and subject in right of payment to the obligations of such Guarantors under the LoanDocuments and no Guarantor shall exercise such rights of contribution until all Guaranteed Obligations have been paid in full and theCommitments have terminated.

SECTION 8. Guaranty of Payment: Continuing Guaranty. The guarantee in this Subsidiary Guaranty Agreement is aguaranty of payment and not of collection, and is a continuing guaranty and shall apply to all Guaranteed Obligations wheneverarising.

SECTION 9. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of theBorrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the GuaranteedObligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none ofthe Administrative Agent or the Lenders will have any duty to advise any of the Guarantors of information known to it or any of themregarding such circumstances or risks.

SECTION 10. Representations and Warranties . Each Guarantor represents and warrants as to itself that all representations

and warranties relating to it (as a Subsidiary of the Borrower) contained in the Credit Agreement are true and correct.

SECTION 11. Termination. The guaranties made hereunder (a) shall terminate when all the Guaranteed Obligations havebeen paid in full in cash and the Lenders have no further commitment to lend under the Credit Agreement, the LC Exposure has beenreduced to zero and the Issuing Bank has no further obligation to issue Letters of Credit under the Credit Agreement and (b) shallcontinue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescindedor must otherwise be restored by any Lender or any Guarantor upon the bankruptcy or reorganization of the Borrower, any Guarantoror otherwise. In connection with the foregoing, the Administrative Agent shall execute and deliver to such Guarantor or Guarantor’sdesignee, at such Guarantor’s expense, any documents or instruments which such Guarantor shall reasonably request from time totime to evidence such termination and release.

SECTION 12. Binding Effect; Several Agreement; Assignments . Whenever in this Agreement any of the parties hereto isreferred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises andagreements by or on behalf of the Guarantors that are contained in this Agreement shall bind and inure to the benefit of each partyhereto and their respective successors and assigns. This Agreement shall become effective as to any Guarantor when a counterparthereof executed on behalf of such Guarantor shall have CHAR1\936505v2

Exhibit D


been delivered to the Administrative Agent, and a counterpart hereof shall have been executed on behalf of the Administrative Agent,and thereafter shall be binding upon such Guarantor and the Administrative Agent and their respective successors and assigns, andshall inure to the benefit of such Guarantor, the Administrative Agent and the Lenders, and their respective successors and assigns,except that no Guarantor shall have the right to assign its rights or obligations hereunder or any interest herein (and any suchattempted assignment shall be void). If all of the capital stock or other equity interest of a Guarantor is sold, transferred or otherwisedisposed of pursuant to a transaction permitted by the Credit Agreement, such Guarantor shall be released from its GuaranteedObligations under this Agreement without further action, and upon request of such Guarantor or the Borrower, the AdministrativeAgent will execute and deliver to the Borrower, at the Borrower’s expense, such additional documents, instruments or agreements (allof which shall be prepared by the Borrower) as the Borrower or Guarantor shall reasonably request to further evidence the terminationof this Guaranty. This Agreement shall be construed as a separate agreement with respect to each Guarantor and may be amended,modified, supplemented, waived or released with respect to any Guarantor without the approval of any other Guarantor and withoutaffecting the Guaranteed Obligations of any other Guarantor hereunder.

SECTION 13. Waivers; Amendment. (a) No failure or delay of the Administrative Agent in exercising any power or righthereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment ordiscontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any otherright or power. The rights and remedies of the Administrative Agent hereunder and of the Lenders under the other Loan Documentsare cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of thisAgreement or consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be permittedby paragraph (b) below, and then such waiver and consent shall be effective only in the specific instance and for the purpose for whichgiven. No notice or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice in similar or othercircumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuantto a written agreement entered into between the Guarantors with respect to which such waiver, amendment or modification relates andthe Administrative Agent, with the prior written consent of the Required Lenders (except as otherwise provided in the CreditAgreement).

SECTION 14. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH ANDGOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THESTATE OF GEORGIA.

SECTION 15. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 10.1of the Credit Agreement. All communications and notices hereunder to each Guarantor shall be given to it at its address set forth onSchedule I attached hereto.

SECTION 16. Survival of Agreement; Severability. (a) All covenants, agreements representations and warranties made bythe Guarantors herein and in the certificates or other CHAR1\936505v2

Exhibit D


instruments prepared or delivered in connection with or pursuant to this Agreement or the other Loan Documents shall be consideredto have been relied upon by the Administrative Agent and the Lenders and shall survive the making by the Lenders of the Loans andthe issuance of the Letters of Credit by the Issuing Bank regardless of any investigation made by any of them or on their behalf, andshall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any other fee or amountpayable under this Agreement or any other Loan Document is outstanding and unpaid or the LC Exposure does not equal zero and aslong as the Commitments have not been terminated.

(b) In the event one or more of the provisions contained in this Agreement or in any other Loan Documentshould be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remainingprovisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that theinvalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision inany other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceableprovisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal orunenforceable provisions.

SECTION 17. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original,

but all of which when taken together shall constitute a single contract (subject to Section 12), and shall become effective as providedin Section 12. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of amanually executed counterpart of this Agreement.

SECTION 18. Rules of Interpretation. The rules of interpretation specified in Section 1.4 of the Credit Agreement shall beapplicable to this Agreement.

SECTION 19. Jurisdiction; Consent to Service of Process. (a) Each Guarantor hereby irrevocably and unconditionallysubmits, for itself and its property, to the nonexclusive jurisdiction of any Georgia State court or Federal court of the United States ofAmerica sitting in Atlanta, Georgia, and any appellate court from any thereof, in any action or proceeding arising out of or relating tothis Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties heretohereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determinedin such Georgia State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a finaljudgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or inany other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Issuing Bank orany Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against anyGuarantor or its properties in the courts of any jurisdiction.

(b) Each Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally andeffectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceedingarising out of or relating to this Agreement or the other Loan Documents in any Georgia State or Federal court. Each of theparties hereto hereby irrevocably waives, to the fullest extent



permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided fornotices in Section 15. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in anyother manner permitted by law.

SECTION 20. Waiver of Jury Trial . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT

PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANYLITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT ORTHE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT ORATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTYWOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THISAGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUALWAIVERS AND CERTIFICATIONS IN THIS SECTION 20.

SECTION 21. Waiver of Certain Damages. To the extent permitted by applicable law, no Guarantor shall assert, and each

Guarantor hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitivedamages (as opposed to actual or direct damages) arising out of, in connection with or as a result of, this Subsidiary GuarantyAgreement or any agreement or instrument contemplated hereby, the transactions contemplated therein, any Loan or any Letter ofCredit or the use of proceeds thereof.

SECTION 22. Additional Guarantors. Pursuant to Section 5.10 of the Credit Agreement, each Subsidiary Loan Party thatwas not in existence on the date of the Credit Agreement is required to enter into this Agreement as a Guarantor upon becomingSubsidiary Loan Party. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary Loan Partyof an instrument in the form of Annex 1, such Subsidiary Loan Party shall become a Guarantor hereunder with the same force andeffect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding an additional Guarantor as aparty to this Agreement shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantorhereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement.

SECTION 23. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and the IssuingBank are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and alldeposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by suchLender or the Issuing Bank to or for the credit or the account of any Guarantor against any or all the Guaranteed Obligations of suchGuarantor now or hereafter existing under this Agreement and the other Loan Documents held by such Lender or the Issuing Bank,irrespective of whether or not such Person shall have made any demand under this Agreement or any other Loan Document andalthough such Guaranteed Obligations may be unmatured. The CHAR1\936505v2

Exhibit D


rights of each Lender and the Issuing Bank under this Section 22 are in addition to other rights and remedies (including other rights ofsetoff) which such Lender or the Issuing Bank, as the case may be, may have.

SECTION 24. No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplatedhereby, each Guarantor acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) the credit facility providedfor under the Credit Agreement and any related arranging or other services in connection therewith (including in connection with anyamendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction betweeneach Loan Party and its Affiliates, on the one hand, and the Administrative Agent and the Arranger, on the other hand, and each LoanParty is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactionscontemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof);(ii) in connection with the process leading to such transaction, the Administrative Agent and the Arranger each is and has been actingsolely as a principal and is not the financial advisor, agent or fiduciary, for any Loan Party or any of its Affiliates, stockholders,creditors or employees or any other Person; (iii) neither the Administrative Agent nor the Arranger has assumed or will assume anadvisory, agency or fiduciary responsibility in favor of any Loan Party with respect to any of the transactions contemplated hereby orthe process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other LoanDocument (irrespective of whether the Administrative Agent or the Arranger has advised or is currently advising any Loan Party orany of its Affiliates on other matters) and neither the Administrative Agent nor the Arranger has any obligation to any Loan Party orany of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in theother Loan Documents; (iv) the Administrative Agent and the Arranger and their respective Affiliates may be engaged in a broadrange of transactions that involve interests that differ from those of any Loan Party and its Affiliates, and neither the AdministrativeAgent nor the Arranger has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship;and (v) the Administrative Agent and the Arranger have not provided and will not provide any legal, accounting, regulatory or taxadvice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof orof any other Loan Document) and each Loan Party has consulted its own legal, accounting, regulatory and tax advisors to the extent ithas deemed appropriate. Each Loan Party hereby waives and releases, to the fullest extent permitted by law, any claims that it mayhave against the Administrative Agent or the Arranger with respect to any breach or alleged breach of agency or fiduciary duty.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

CHAR1\936505v2

Exhibit D


IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

RTBD, INC.

By:Name:Title:

RT FINANCE, INC.

By:Name:Title:

RUBY TUESDAY GC CARDS, INC.

By:Name:Title:

RT TAMPA FRANCHISE, LP

By:Name:Title:

RT ORLANDO FRANCHISE, LP

By:Name:Title:

RT SOUTH FLORIDA FRANCHISE, LP

By:Name:Title:

CHAR1\936505v2

Exhibit D


RT NEW YORK FRANCHISE, LLC

By:Name:Title:

RT SOUTHWEST FRANCHISE, LLC

By:Name:Title:

RT MICHIANA FRANCHISE, LLC

By:Name:Title:

RT FRANCHISE ACQUISITION, LLC

By:Name:Title:

RT KENTUCKY RESTAURANT HOLDINGS, LLC

By:Name:Title:

RT FLORIDA EQUITY, LLC

By:Name:Title:

CHAR1\936505v2

Exhibit D


RTGC, LLC

By:Name:Title:

BANK OF AMERICA, N.A., asAdministrative Agent

By:Name:Title:

[SIGNATURE PAGE TO SUBSIDIARY GUARANTY AGREEMENT] CHAR1\936505v2

Exhibit D


SCHEDULE I TO THE SUBSIDIARY GUARANTY AGREEMENT

Guarantor(s) Address

RTBD, Inc. Attn: Griffin Corporate Services, Victoria Garrett 300 Delaware Avenue, 9th Floor Wilmington, DE 19801

with a copy to:

Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT FINANCE, INC. Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RUBY TUESDAY GC CARDS, INC. Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT TAMPA FRANCHISE, LP Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT ORLANDO FRANCHISE, LP Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT SOUTH FLORIDA FRANCHISE, LP Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT NEW YORK FRANCHISE, LLC Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT SOUTHWEST FRANCHISE, LLC Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT MICHIANA FRANCHISE, LLC Attn: Legal Department150 West Church Avenue

Maryville, TN 37801 CHAR1\936505v2

Exhibit D


RT FRANCHISE ACQUISITION, LLC Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RT KENTUCKY RESTAURANT Attn: Legal DepartmentHOLDINGS, LLC 150 West Church Avenue Maryville, TN 37801

RT FLORIDA EQUITY, LLC Attn: Legal Department150 West Church Avenue

Maryville, TN 37801

RTGC, LLC Attn: Legal Department150 West Church Avenue

Maryville, TN 37801 CHAR1\936505v2

Exhibit D


ANNEX 1 TO THE SUBSIDIARY GUARANTY AGREEMENT

SUPPLEMENT NO. � dated as of �, to the Subsidiary Guaranty Agreement (the “Guaranty Agreement”) dated as ofFebruary 28, 2007 among each of the subsidiaries listed on Schedule I thereto (each such Subsidiary individually, a “Guarantor” andcollectively, the “Guarantors”) of RUBY TUESDAY, INC., a Georgia corporation (the “ Borrower”), and BANK OF AMERICA,N.A., a national banking association, as Administrative Agent (the “Administrative Agent”) for the Lenders (as defined in the CreditAgreement referred to below).

A. Reference is made to the Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 (asamended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lendersfrom time to time party thereto (the “Lenders”) and Bank of America, N.A., as Administrative Agent, swingline lender and issuingbank (in such capacity, the “Issuing Bank”). Capitalized terms used herein and not otherwise defined herein shall have the meaningsassigned to such terms in the Credit Agreement.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms inthe Guaranty Agreement and the Credit Agreement.

C. The Guarantors have entered into the Guaranty Agreement in order to induce the Lenders to make Loans and theIssuing Bank to issue Letters of Credit. Pursuant to Section 5.10 of the Credit Agreement, each Subsidiary Loan Party that was not inexistence or not a Subsidiary Loan Party on the date of the Credit Agreement is required to enter into the Guaranty Agreement as aGuarantor upon becoming a Subsidiary Loan Party. Section 22 of the Guaranty Agreement provides that additional Subsidiaries of theBorrower may become Guarantors under the Guaranty Agreement by execution and delivery of an instrument in the form of thisSupplement. The undersigned Subsidiary of the Borrower (the “New Guarantor”) is executing this Supplement in accordance with therequirements of the Credit Agreement to become a Guarantor under the Guaranty Agreement in order to induce the Lenders to makeadditional Loans and the Issuing Bank to issue additional Letters of Credit and as consideration for Loans previously made and Lettersof Credit previously issued. Accordingly, the Administrative Agent and the New Guarantor agree as follows:

SECTION 1. In accordance with Section 22 of the Guaranty Agreement, the New Guarantor by its signature below becomesa Guarantor under the Guaranty Agreement with the same force and effect as if originally named therein as a Guarantor and the NewGuarantor hereby (a) agrees to all the terms and provisions of the Guaranty Agreement applicable to it as Guarantor thereunder and (b)represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct on and as ofthe date hereof. Each reference to a Guarantor in the Guaranty Agreement shall be deemed to include the New Guarantor. TheGuaranty Agreement is hereby incorporated herein by reference.

SECTION 2. The New Guarantor represents and warrants to the Administrative Agent and the Lenders that this Supplementhas been duly authorized, executed and delivered by it and CHAR1\936505v2

Exhibit D


constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts each of which shall constitute an original, but all of whichwhen taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shallhave received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and theAdministrative Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective asdelivery of a manually signed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Guaranty Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THELAWS OF THE STATE OF GEORGIA.

SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal orunenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the GuarantyAgreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereofin a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties heretoshall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economiceffect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 15 of theGuaranty Agreement. All communications and notices hereunder to the New Guarantor shall be given to it at the address set forthunder its signature below, with a copy to the Borrower.

SECTION 8. The New Guarantor agrees to reimburse the Administrative Agent for its out-of-pocket expenses in connectionwith this Supplement, including the reasonable fees, disbursements and other charges actually incurred of counsel for theAdministrative Agent. CHAR1\936505v2

Exhibit D


IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this Supplement to theGuaranty Agreement as of the day and year first above written.

[Name of New Guarantor]

By:Name:Title:Address:

BANK OF AMERICA, N.A., asAdministrative Agent

By:Name:Title:

CHAR1\936505v2

Exhibit D


EXHIBIT 2.3

NOTICE OF REVOLVING BORROWING

[date] Bank of America, N.A.Credit Services DepartmentLynne Barrett Cole,AVP; Credit Services ConsultantCharlotte SAG Servicing TeamMail Code: NC1-001-04-39One Independence Center101 N. Tryon StreetCharlotte, NC 28255-0001 Dear Sirs:

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 (asamended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the undersigned, asBorrower, the Lenders named therein, and Bank of America, N.A., as Administrative Agent. Terms defined in the Credit Agreementare used herein with the same meanings. This notice constitutes a Notice of Revolving Borrowing, and the Borrower hereby requests aRevolving Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information withrespect to the Revolving Borrowing requested hereby:

(A) Aggregate principal amount of Revolving Borrowing: ________________

(B) Date of Revolving Borrowing (which is a Business Day): ______________

(C) Interest Rate basis: __________________________

(D) Interest Period: _____________________________

(E) Location and number of Borrower’s account to which proceeds of Revolving Borrowing are to bedisbursed:_________________

CHAR1\936505v2

Exhibit 2.3


The Borrower hereby represents and warrants that the conditions specified in paragraphs (a), (b) and (c) of Section 3.2 ofthe Credit Agreement are satisfied.

Very truly yours,

RUBY TUESDAY, INC.

By:___________________________Name:Title:

CHAR1\936505v2

Exhibit 2.3


EXHIBIT 2.6

NOTICE OF SWINGLINE BORROWING


Reference is made to the Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 (asamended, restated, supplemented or modified from time to time, the “Credit Agreement”), among the undersigned, as Borrower, theLenders named therein, and Bank of America, N.A., as Administrative Agent, Issuing Bank, and Swingline Lender. Terms defined inthe Credit Agreement are used herein with the same meanings. This notice constitutes a Notice of Swingline Borrowing, and theBorrower hereby requests a Swingline Borrowing under the Credit Agreement, and in that connection the Borrower specifies thefollowing information with respect to the Swingline Borrowing requested hereby:

(A) Principal amount of Swingline Loan: ___________________________________

(B) Date of Swingline Loan (which is a Business Day): _______________________

(C) Location and number of Borrower’s account to which proceeds of Swingline Loan are to be disbursed:_____________________

The Borrower hereby represents and warrants that the conditions specified in paragraphs (a), (b) and (c) of Section 3.2 of

the Credit Agreement are satisfied.

Very truly yours,

RUBY TUESDAY, INC.

By:________________________Name:Title:

CHAR1\936505v2

Exhibit 2.6


EXHIBIT 2.8

FORM OF CONTINUATION/CONVERSION


Reference is made to the Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 (asamended, restated or modified from time to time, the “Credit Agreement”), among the undersigned, as Borrower, the Lenders namedtherein, and Bank of America, N.A., as Administrative Agent, Issuing Bank, and Swingline Lender. Terms defined in the CreditAgreement are used herein with the same meanings. This notice constitutes a Notice of Continuation/Conversion and the Borrowerhereby requests the conversion or continuation of a Borrowing under the Credit Agreement, and in that connection the Borrowerspecifies the following information with respect to the Borrowing to be converted or continued as requested hereby:

(A) Borrowing to which this request applies: ___________________________

(B) Principal amount of Borrowing to be converted/continued: ____________

(C) Effective date of election (which is a Business Day): _________________

(D) Interest rate basis: _____________________

(E) Interest Period: _______________________

Very truly yours,

RUBY TUESDAY, INC. By:__________________________

Name:Title:

CHAR1\936505v2

Exhibit 2.8


EXHIBIT 3.1(b)(iv)

RUBY TUESDAY, INC.

CERTIFICATE REGARDING CHARTER, BYLAWS,RESOLUTIONS AND INCUMBENCY

The undersigned, Scarlett May, being the Secretary of Ruby Tuesday, Inc., a Georgia corporation (the “Borrower”),

hereby gives this certificate to induce Bank of America, N.A., as Agent (the “Administrative Agent”), and each of the financialinstitutions (the “Participants”) listed on the signature pages to the Amended and Restated Revolving Credit Agreement (hereindefined) to consummate certain financial accommodations with the Borrower pursuant to the terms of that certain Amended andRestated Revolving Credit Agreement, dated of even date herewith, between the Borrower, The Administrative Agent and theParticipants (the “Credit Agreement”). Capitalized terms used herein which are not otherwise defined herein shall have the meaningsgiven to them in the Credit Agreement.

The undersigned hereby certifies that:

1. In her aforesaid capacity as Secretary of the Borrower, she is familiar with, and keeps control of, its articles ofincorporation, bylaws and minute books, and schedules meetings of its Board of Directors;

2. Attached hereto as Exhibit A is a true and correct copy of the Articles of Incorporation of the Borrower, as ineffect on the date hereof;

3. Attached hereto as Exhibit B is a true and correct copy of the bylaws of the Borrower as in effect on the datehereof;

4. Attached hereto as Exhibit C is a true and correct copy of resolutions of the Board of Directors of the Borrowerduly adopted on [ ], at a meeting of the members of said Board of Directors at which a quorum was present and actingthroughout, that such proceedings were conducted in accordance with the Articles of Incorporation and bylaws of the Borrower, andsaid resolutions have not been amended, rescinded, modified or revoked, and are in full force and effect as of the date hereof;

5. The following persons constitute officers of the Borrower, and such officers are duly authorized and empoweredto execute the Credit Agreement and all other documents and agreements to which the Borrower is a party; and the signaturesexecuted below are the true and correct signatures of such officers: CHAR1\936505v2

Exhibit 3.1(b)(iv)


Title Name SignatureSenior Vice President and Marguerite N. Duffy ________________________Chief Financial Officer,Treasurer and AssistantSecretary

Vice President, General Scarlett May ________________________Counsel and Secretary

IN WITNESS WHEREOF, the undersigned has executed this certificate in his capacity as Secretary, this ____ day of

__________, 20__.

__________________________________Scarlett MaySecretary

The undersigned being a duly authorized officer of the Borrower, hereby certifies to the Administrative Agent and the

Participants that Scarlett May is the duly appointed Secretary of the Borrower, and she is duly authorized and empowered to executethis Certificate and all documents to which Borrower is a party, and the signature executed above is his true and correct signature.

__________________________________Marguerite N. DuffySenior Vice President

CHAR1\936505v2Exhibit 3.1(b)(iv)


EXHIBIT 3.1(b)(vi)

FORM OF GENERAL COUNSEL LEGAL OPINION

February __, 2007

To: Each of the Lenders party to the Amended and Restated Revolving Credit Agreement referenced below and eachassignee thereof that becomes a “Lender” as provided therein, and Bank of America, N.A., in its capacity asAdministrative Agent

Re: Amended and Restated Revolving Credit Agreement dated as of February __, 2007, among Ruby Tuesday, Inc., each ofthe Lenders listed on the signature pages thereto and Bank of America, N.A., in its capacity as Administrative Agent,Issuing Bank and Swingline Lender (the “Credit Agreement”)

Ladies and Gentlemen:

This opinion is furnished pursuant to Section 3.1(b)(vi) of the Credit Agreement. Terms used herein which are defined inthe Credit Agreement shall have the respective meanings set forth or referred to in the Credit Agreement, unless otherwise definedherein.

I am (a) Vice President, General Counsel and Secretary for Ruby Tuesday, Inc., a Georgia corporation (the “Borrower”),and (b) Vice President and Secretary of RTBD, Inc., a Delaware corporation, RT Finance, Inc., a Delaware corporation, RT TampaFranchise, LP, a Delaware limited partnership, RT Orlando Franchise, LP, a Delaware limited partnership, RT South FloridaFranchise, LP a Delaware limited partnership, RTGC, LLC, a Colorado limited liability company, RT New York Franchise, LLC, aDelaware limited liability company, RT Southwest Franchise, LLC, a Delaware limited liability company, RT Michiana Franchise,LLC, a Delaware limited liability company, RT Franchise Acquisition, LLC, a Delaware limited liability company, RT Florida Equity,LLC, a Delaware limited liability company, RT Kentucky Restaurant Holdings, LLC, a Delaware limited liability company, and RubyTuesday GC Cards, Inc., a Colorado corporation (each a “Guarantor;” collectively, the “Guarantors;” the Borrower and Guarantorsreferred to collectively herein as the “Loan Parties”), in connection with the preparation, negotiation, execution, and delivery of thefollowing documents, each dated of even date herewith unless otherwise noted (the following documents listed in clauses (1) through(5) are collectively referred to as the “Credit Documents”):

1. The Credit Agreement; 2. The Revolving Credit Notes; 3. The Swingline Note; 4. The Subsidiary Guaranty Agreement; 5. The Fee Letter, dated as of January 22, 2007; and 6. All other instruments, documents, certificates, agreements, and writings executed by the Loan Parties in

connection with the above documents.

In connection with this opinion, I have examined the Credit Documents and the other documents described above. I havealso examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records,certificates of public


Each of the Lenders party to the Credit AgreementFebruary __, 2007Page 2

officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisablefor purposes of this opinion.

I have assumed the genuineness of all signatures (other than those on behalf of the Loan Parties), the capacity of allnatural persons, authenticity of all documents submitted to me as originals, the conformity to original documents of all documentssubmitted to me as certified or photostatic copies, and the authenticity of the originals of such documents.

With respect to any element of mutuality which may be required in order to support the enforceability of the CreditDocuments, I have assumed that the Lenders and the Administrative Agent have all requisite power and authority to enter into andperform their respective obligations under the Credit Agreement and such other Credit Documents to which they are parties, that theCredit Agreement and such other Credit Documents have been duly authorized, executed and delivered by such Lenders and theAdministrative Agent, and that the Credit Agreement and such other Credit Documents constitute the legal, valid and bindingobligations of such Lenders and the Administrative Agent.

Based on the foregoing, and subject to the qualifications hereinafter set forth, I am of the opinion that:

1. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the Stateof Georgia; each of RTBD, Inc., and RT Finance, Inc., is a corporation duly organized, validly existing and ingood standing under the laws of the State of Delaware; each of RT New York Franchise, LLC, RT FranchiseAcquisition, LLC, RT Southwest Franchise, LLC, RT Michiana Franchise, LLC, RT Florida Equity, LLC andRT Kentucky Restaurant Holdings, LLC is a limited liability company duly organized, validly existing and ingood standing under the laws of the State of Delaware; each of RT Tampa Franchise, LP, RT Orlando Franchise,LP and RT South Florida Franchise, LP is a limited partnership duly organized, validly existing and in goodstanding under the laws of the State of Delaware; RTGC, LLC, is a limited liability company duly organized,validly existing and in good standing under the laws of the State of Colorado; and Ruby Tuesday GC Cards, Inc.is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado.

2. Each Loan Party has, respectively, the corporate or organizational power to own and operate its property and toconduct its business as now conducted and to execute, deliver and perform the Credit Documents to which it is aparty, and has taken all necessary corporate or organizational action to authorize the execution, delivery andperformance of such Credit Documents to which it is a party. Each Loan Party has, respectively, duly authorized,executed and delivered each Credit Document to which it is a party.

3. No consent, approval or authorization of, or registration, declaration or filing with, any Governmental Authorityof the United States, the State of Tennessee, the State of Georgia (with respect to Borrower), the State ofDelaware (with respect to RTBD, Inc., RT Finance, Inc., RT Tampa Franchise, LP, RT Orlando Franchise, LP,RT South Florida Franchise, LP, RT New York Franchise, LLC, RT Michiana Franchise, LLC, RT FranchiseAcquisition, LLC, RT Southwest Franchise, LLC, RT Florida



Equity, LLC, and RT Kentucky Restaurant Holdings, LLC), or the State of Colorado (with respect to RTGC, LLCand Ruby Tuesday GC Cards, Inc) is required in connection with the execution, delivery and performance by eachsuch Loan Party, nor the validity or enforceability against such Loan Party, of the Credit Documents to which suchLoan Party is a party.

4. (a) The execution, delivery and performance by each of the Loan Parties of the Credit Documents to which it isa party does not and will not violate (i)(A) the articles or certificate of incorporation or bylaws of the Borrower,RTBD, Inc., RT Finance, Inc., or Ruby Tuesday GC Cards, Inc.; (B) the articles or certificate of organization orformation or operating agreement of RTGC, LLC, RT New York Franchise, LLC, RT Franchise Acquisition,LLC, RT Southwest Franchise, LLC, RT Michiana Franchise, LLC, RT Florida Equity, LLC or RT KentuckyRestaurant Holdings, LLC; or (C) the articles or certificate of limited partnership or partnership agreement of RTTampa Franchise, LP, RT Orlando Franchise, LP or RT South Florida Franchise, LP; or (ii) any other existingRequirement of Law of the United States of America, the State of Tennessee, the State of Georgia (with respectto Borrower), the State of Delaware (with respect to RTBD, Inc., RT Finance, Inc., RT Florida Equity, LLC,Ruby Tuesday, LLC, RT New York Franchise, LLC, RT Franchise Acquisition, LLC, RT Southwest Franchise,LLC, RT Kentucky Restaurant Holdings, LLC, and RT Tampa Franchise, LP), or the State of Colorado (withrespect to RTGC, LLC) (excluding any fair trade, franchising or other business opportunity or similar laws as towhich I express no opinion) applicable to such Loan Party, or (iii) insofar as known to me, any determination ofan arbitrator or a court or other Governmental Authority of the United States of America, the State of Tennessee,the State of Georgia, the State of Delaware or the State of Colorado applicable to such Loan Party

(b) The execution, delivery and performance by each Loan Party of the Credit Documents to which it is a party donot and will not result in a breach of or default under any material written agreements or the creation or impositionof a contractual lien or security interest in, on or against any of its respective properties under any material writtenagreements. With your permission I have assumed, based upon the Borrower’s representations to me, that the term“material written agreements” as used in the preceding sentence includes only the documents listed or described inSchedule 1 attached hereto.

5. Each of the Credit Documents constitutes the legal, valid and binding obligations of each of the Loan Parties thatis a party thereto, enforceable against each such Loan Party in accordance with its terms, subject to (i)bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws relating to or affectingthe rights of creditors generally, including without limitation fraudulent conveyance or transfer laws (includingbut not limited to any applicable state laws, the common law trust fund doctrine and Section 548 of the UnitedStates Bankruptcy Code), and preference and equitable subordination laws and principles; (ii) general principlesof equity (whether considered in a proceeding at law or in equity); and (iii) concepts of materiality,unconscionability, reasonableness, impracticability or impossibility of performance, good faith and fair dealing.



6. None of the Loan Parties is an “investment company” or a company “controlled” by an “investment company”within the meaning of the Investment Company Act of 1940.

7. The use by the Borrower of the proceeds of the Loans as provided in the Credit Agreement does not violateRegulation T, U or X of the Board of Governors of the Federal Reserve System.

My opinion set forth above is subject to the following qualifications:

A. My opinion is limited to the laws of the United States of America and the State of Tennessee, except to the extent thatmy opinions in paragraphs 1, 2, 3 and 4(a) relate to matters of Delaware, Florida and Colorado law. My opinions in paragraphs 1, 2, 3and 4(a) with respect to Delaware law are based solely on my review of the General Corporation Law of the State of Delaware, theDelaware Limited Liability Company Act and the Delaware Limited Partnership Act. I call your attention to the fact that I am notadmitted to practice in the State of Delaware. My opinions in paragraphs 1, 2, 3 and 4(a) with respect to Colorado law are based solelyon my review of the Colorado Corporate Code and the Colorado Limited Liability Company Act. I call your attention to the fact that Iam not admitted to practice in the State of Colorado. I have relied, with respect to all matters of the laws of the State of Georgia, onthe opinion of Hunton & Williams LLP, of even date herewith. I express no opinion regarding the usury laws of the State of Georgia.

B. With respect to the opinions contained in paragraph 1 above, I have not obtained tax clearance certificates from thetaxing authorities of the relevant jurisdictions.

Based upon the limitations and qualifications set forth above, I confirm to you that:

(i) No litigation, investigation, or proceeding of or before any arbitrators or other Governmental Authorities ispending against or, to the knowledge of Borrower, threatened against or affecting any of the Loan Parties (A) as to which there is areasonable possibility of an adverse determination that could reasonably be expected to have, either individually or in the aggregate, aMaterial Adverse Effect or (B) which in any manner draws into question the validity or enforceability against the Borrower or anyother Loan Party of the Credit Agreement or any other Credit Document.

(ii) The Borrower is qualified to transact business as a foreign corporation and in good standing in the States ofAlabama, Florida, Georgia, North Carolina, Ohio, Pennsylvania, Tennessee and Virginia. The foregoing statement is based solelyupon certificates provided by agencies of certain of those states, copies of which Borrower has delivered to you on the date hereof, andis limited to the meaning ascribed to such certificates by each applicable state agency.

The opinions set forth herein are rendered to the Administrative Agent and the Lenders party to the Credit Agreement andtheir respective successors and permitted assigns in accordance with the Credit Agreement (the “Opinion Recipients”) in connectionwith the transactions referred to in this letter, are solely for the benefit of the Opinion Recipients and may not be distributed to orrelied upon by any other person (other than Hunton & Williams LLP, which may rely upon this opinion in rendering to you itsopinion, of even date herewith,



with respect to the Credit Documents) or relied upon by the Opinion Recipients in any other context, or quoted in whole or in part orotherwise reproduced in any other document, nor is this opinion to be filed with any Governmental Authority, except that the OpinionRecipients may disclose this opinion to their respective counsel, accountants, auditors, other consultants and advisors and regulatoryagencies having jurisdiction over them. This opinion speaks as of its date and does not purport to address matters which may ariseafter such date. I expressly disclaim any obligation to advise you of any changes of law or facts that may hereafter come or be broughtto my attention which would alter the opinions herein set forth. Finally, my opinions set forth herein are limited to the mattersexpressly set forth herein, and no opinion is implied or may be inferred beyond the matters expressly so stated.

Very truly yours,

/s/ Scarlett MayScarlett MayRuby Tuesday, Inc.Vice President, General Counsel and

Secretary

cc: Hunton & Williams LLP



SCHEDULE 1

MATERIAL WRITTEN AGREEMENTS

1. Financing Agreement dated July 1, 2004, between Citicorp Leasing, Inc. and Ruby Tuesday, Inc., whereby Borrower agreesto provide a letter of credit to Citicorp as partial guaranty of up to $20 million in construction/development financing byCiticorp to Borrower’s franchise partners. The maximum amount of Borrower’s possible letter of credit under the Citicorpfacility is $8.0 million.

2. Note Purchase Agreement dated April 1, 2003, and a First Amendment to Note Purchase Agreement dated October 1, 2003,among Borrower and each purchaser (“Note Holders”) thereto regarding the private sale of Borrower’s promissory notes toNote Holders in an aggregate amount not to exceed $150,000,000.

3. Amended and Restated Loan Facility Agreement and Guaranty dated as of November 19, 2004 (as amended, the “FranchiseFacility”) among the Borrower, Bank of America (“Servicer” and each participant thereto (“Franchise Facility Participants”)in the amount of $48,000,000 which may be increased to $73,000,000, and under which Borrower guarantees a portion ofsuch facility.

4. The Borrower has entered into Sharing Agreements with Morrison Fresh Cooking, Inc. (acquired by Piccadilly Cafeterias,Inc.) and Morrison Management Specialists, Inc. (formerly Morrison Health Care, Inc.) providing for the assumption ofliabilities and cross-indemnities designed to allocate, generally, among these three companies, financial responsibility forliabilities arising out of or in connection with business activities prior to the March, 1996 spin-off transaction.

EXHIBIT 3.1(b)(vii)

FORM OF OFFICER’S CERTIFICATE

Reference is made to the Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 (asamended, restated, supplemented or modified from time to time, the “Credit Agreement”), among RUBY TUESDAY, INC. (the“Borrower”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Issuing Bank, andSwingline Lender. Terms defined in the Credit Agreement are used herein with the same meanings. This certificate is being deliveredpursuant to Section 3.1(b)(vii) of the Credit Agreement.

I, [____________], [___________] of the Borrower, DO HEREBY CERTIFY that: (a) at the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or

extension of a Letter of Credit, as applicable, no Default or Event of Default shall exist or would result; and

(b) all representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct inall material respects on and as of the date of such Borrowing or the date of issuance, amendment, extension or renewal of a Letter ofCredit, in each case before and after giving effect thereto; and

(c) since the date of the most recent financial statements of the Borrower described in Section 4.4 of the CreditAgreement or delivered pursuant to Section 5.1(a) of the Credit Agreement, there shall have been no change which has had or couldreasonably be expected to have a Material Adverse Effect.

IN WITNESS WHEREOF, I have hereunto signed my name this 28th day of February, 2007.__________________________

Name:Title:

CHAR1\936505v2

Exhibit 3.1(b)(vi)


AMENDED AND RESTATED LOAN FACILITY AGREEMENT

AND GUARANTY

by and among

RUBY TUESDAY, INC.,

BANK OF AMERICA, N.A., as Servicer

AMSOUTH BANK, as Documentation Agent

SUNTRUST BANK, as Co-Syndication Agent

WACHOVIA BANK N.A., as Co-Syndication Agent

and

EACH OF THE PARTICIPANTS PARTY HERETO

Dated as of November 19, 2004

BANC OF AMERICA SECURITIES LLC

as Lead Arranger

AMENDED AND RESTATEDLOAN FACILITY AGREEMENT AND GUARANTY

Table of Contents Page

ARTICLE I DEFINITIONS 2

Section 1.1 Definitions. 2 Section 1.2 Accounting Terms and Determination. 22 Section 1.3 Terms Generally. 22 Section 1.4 Exhibits and Schedules. 22

ARTICLE II LOAN FACILITY 23

Section 2.1 Establishment of Commitment; Terms of Loans and Letters of Credit. 23 Section 2.2 Conveyance of Participant's Interest. 24

Section 2.3Funding of Advances; Funding of Participant's Interest in Loans;Purchase of Participation in Letters of Credit. 25

Section 2.4 Commitment Fees and Participant's Letter of Credit Fees. 27 Section 2.5 Interest on Funded Participant's Interest. 28 Section 2.6 Default Interest. 28 Section 2.7 Voluntary Reduction of the Unutilized Commitment. 29 Section 2.8 Extension of Commitment. 29 Section 2.9 Reserve Requirements; Change in Circumstances. 31 Section 2.10 Wind-Down Event. 32 Section 2.11 Pro Rata Treatment. 33 Section 2.12 Payments. 33 Section 2.13 Sharing of Setoffs. 33

ARTICLE III SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OFPAYMENTS 34


Section 3.1 Servicer's Obligations with Respect to Loans; Collateral; Non-Recourse. 34 Section 3.2 Application of Payments. 35 Section 3.3 Servicing Report. 36

ARTICLE IV LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND 37

Section 4.1 Default Notice Of Loan. 37 Section 4.2 Waiver or Cure By The Sponsor; Fully Guaranteed Pool. 37 Section 4.3 Standstill Period; Defaulted Loan Guaranty Demand. 37 Section 4.4 No Waiver or Cure Available. 38 Section 4.5 Fixed Charge Coverage Ratio for Loan Documents executed under the Prior Loan Agreement. 38 Section 4.6 Movement of Loans into and out of Fully Guaranteed Pool. 39 Section 4.7 Extension of Maturity Date of Defaulted Loans during the Response Period and the Standstill Period. 39

ARTICLE V REPRESENTATIONS AND WARRANTIES 39

Section 5.1 Existence; Power. 40 Section 5.2 Organizational Power; Authorization. 40

-i-

Section 5.3 Governmental Approvals; No Conflicts. 40 Section 5.4 Financial Statements. 40 Section 5.5 Litigation and Environmental Matters. 41 Section 5.6 Compliance with Laws and Agreements. 41 Section 5.7 Investment Company Act, Etc. 41 Section 5.8 Taxes. 41 Section 5.9 Margin Regulations. 42 Section 5.10 ERISA. 42 Section 5.11 Ownership of Property. 42 Section 5.12 Disclosure. 42 Section 5.13 Labor Relations. 43 Section 5.14 Subsidiaries. 43 Section 5.15 Representations and Warranties with Respect to Specific Loans. 43

ARTICLE VI COVENANTS 44

Section 6.1 Financial Statements and Other Information. 44 Section 6.2 Notices of Material Events. 46 Section 6.3 Existence; Conduct of Business. 47 Section 6.4 Compliance with Laws, Etc. 47 Section 6.5 Payment of Obligations. 47 Section 6.6 Books and Records. 47 Section 6.7 Visitation, Inspection, Etc. 47 Section 6.8 Maintenance of Properties; Insurance. 48 Section 6.9 Additional Subsidiaries. 48 Section 6.10 Additional Guaranties. 48 Section 6.11 Minimum Fixed Charge Coverage Ratio. 49 Section 6.12 Maximum Adjusted Total Debt to EBITDAR Ratio. 49 Section 6.13 Maximum Adjusted Total Debt to Adjusted Total Capital Ratio. 49 Section 6.14 Indebtedness. 49 Section 6.15 Negative Pledge. 50 Section 6.16 Fundamental Changes. 51 Section 6.17 Investments, Loans, Etc. 52 Section 6.18 Restricted Payments. 53 Section 6.19 Sale of Assets. 53 Section 6.20 Transactions with Affiliates. 54 Section 6.21 Restrictive Agreements. 54 Section 6.22 Sale and Leaseback Transactions. 55 Section 6.23 Hedging Agreements. 55 Section 6.24 Amendment to Material Documents. 55 Section 6.25 Accounting Changes. 55 Section 6.26 ERISA. 55

ARTICLE VII CREDIT EVENTS 56

Section 7.1 Credit Events. 56

-ii-

ARTICLE VIII GUARANTY 59


Section 8.1 Limitation on Guaranty of Loans. 59 Section 8.2 Obligations of Sponsor With Respect to Loans. 60 Section 8.3 Continuing Guaranty. 62 Section 8.4 Waivers. 62 Section 8.5 Additional Actions. 62 Section 8.6 Additional Waivers. 63 Section 8.7 Postponement of Obligations. 63 Section 8.8 Effect on additional Guaranties. 63 Section 8.9 Reliance on Guaranty and Purchase Obligation; Disclaimer of Liability. 64 Section 8.10 Reinstatement of Obligations. 64 Section 8.11 Right to Bring Separate Action. 65

ARTICLE IX INDEMNIFICATION 65

Section 9.1 Indemnification. 65 Section 9.2 Notice Of Proceedings; Right To Defend. 66 Section 9.3 Third Party Beneficiaries. 67

ARTICLE X SURVIVAL OF LOAN FACILITY 67

Section 10.1 Survival of Loan Facility. 67

ARTICLE XI CONDITIONS PRECEDENT 68

Section 11.1 Conditions to Effective Date. 68 Section 11.2 Effect of Amendment and Restatement. 69

ARTICLE XII THE SERVICER 70

Section 12.1 Appointment of Servicer as Agent. 70 Section 12.2 Nature of Duties of Servicer. 70 Section 12.3 Lack of Reliance on the Servicer. 70 Section 12.4 Certain Rights of the Servicer. 71 Section 12.5 Reliance by Servicer. 71 Section 12.6 Indemnification of Servicer. 71 Section 12.7 The Servicer in its Individual Capacity. 72 Section 12.8 Holders of Participation Certificates. 72 Section 12.9 Appointment of Documentation Agent and Co-Syndication Agents. 72

ARTICLE XIII MISCELLANEOUS 72

Section 13.1 Notices. 72 Section 13.2 Amendments, Etc. 72 Section 13.3 No Waiver; Remedies Cumulative. 73 Section 13.4 Payment of Expenses, Etc. 74 Section 13.5 Right of Setoff. 74 Section 13.6 Benefit of Agreement; Assignments; Participations. 74 Section 13.7 Governing Law; Submission to Jurisdiction. 76 Section 13.8 Counterparts. 77 Section 13.9 Severability. 77 Section 13.10 Independence of Covenants. 77

-iii-

Section 13.11 Change in Accounting Principles, Fiscal Year or Tax Laws. 78 Section 13.12 Headings Descriptive; Entire Agreement. 78 Section 13.13 Patriot Act Notice. 78

EXHIBITS

Exhibit A - Form of Assignment and AcceptanceExhibit B - Form of Subsidiary Guaranty AgreementExhibit C - Form of Indemnity and Contribution AgreementExhibit D - Form of Loan AgreementExhibit E - Form of Participation CertificateExhibit F - Form of Servicing Report

SCHEDULES

Schedule 5.14 - SubsidiariesSchedule 6.14 - Outstanding IndebtednessSchedule 6.15 - Existing LiensSchedule 6.17 - Existing InvestmentsSchedule 6.21 - Restrictive Agreements


-iv-

AMENDED AND RESTATEDLOAN FACILITY AGREEMENT AND GUARANTY

THIS AMENDED AND RESTATED LOAN FACILITY AGREEMENT AND GUARANTY (the “Agreement”) made as of this 19th day of November,2004 by and among RUBY TUESDAY, INC., a Georgia corporation having its principal place of business and chief executive office at 150 W. Church Avenue,Maryville, Tennessee 37801 (“Sponsor”), BANK OF AMERICA, N.A. (“Bank of America”) and each of the other lending institutions listed on the signaturepages hereto (Bank of America, such lenders, together with any assignees thereof becoming “Participants” pursuant to the terms of this Agreement, the“Participants”), BANK OF AMERICA, N.A., a national banking association as Servicer and agent for the Participants (in such capacity, the “Servicer”),AMSOUTH BANK as Documentation Agent for the Participants (in such capacity, the “Documentation Agent”), and SUNTRUST BANK and WACHOVIABANK N.A., both as Co-Syndication Agent for the Participants (in such capacity, the “Co-Syndication Agents”).


WHEREAS, the Sponsor, Participants and Servicer, in order to make available a loan facility to certain franchisees of Sponsor, entered into that certainAmended and Restated Loan Facility Agreement and Guaranty dated as of October 11, 2000, as amended by that certain First Amendment dated February 28,2001; Second Amendment dated October 10, 2001; Third Amendment dated October 17, 2001; Fourth Amendment dated October 9, 2002; Fifth Amendmentdated March 31, 2003; Sixth Amendment dated April 30, 2003; and Seventh Amendment dated October 7, 2003 (as so amended and as otherwise amended ormodified, the “Prior Loan Facility Agreement”) by and among Sponsor, Servicer and the Participants;

WHEREAS, in order to expedite the ongoing operations of the loan facility, Sponsor and Servicer entered into that certain Servicing Agreement, dated as ofApril 30, 2003 (as amended or modified from time to time, the “Servicing Agreement”) to set forth certain agreements regarding fees and operations;

WHEREAS, at the request of Sponsor, Sponsor, the Participants and Servicer are entering into this Agreement to amend, restate and supercede the terms ofthe Prior Loan Facility Agreement and to modify certain other terms and provisions thereof, all as is more fully set forth below;

THEREFORE, upon the terms and conditions hereinafter stated, and in consideration of the mutual premises set forth above and other adequateconsideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree that the Prior Loan FacilityAgreement is amended and restated as follows:

-1-

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (such meanings to be equallyapplicable to both the singular and plural forms of the terms defined):

“Adjusted LIBO Rate” shall mean, with respect to each Payment Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)determined pursuant to the following formula:

“Adjusted LIBO Rate” = LIBOR 1.00 - LIBOR Reserve Percentage

As used herein, LIBOR Reserve Percentage shall mean, for any Payment Period for any Funded Participant’s Interest outstanding hereunder, the reservepercentage (expressed as a decimal) equal to the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency,supplemental, special or other reserves) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency liabilities as defined inRegulation D (or against any successor category of liabilities as defined in Regulation D).

“Adjusted Total Capital” shall mean, as of any date of determination, the sum of (i) Adjusted Total Debt as of such date and (ii) Consolidated Net Worth asof such date.

“Adjusted Total Debt” shall mean, as of any date of determination, (i) all Indebtedness of the Sponsor and its Subsidiaries on a consolidated basis, includingwithout limitation all Loans and LC Exposure, but excluding all Indebtedness of the type described in subsection (xi) of the definition of Indebtedness andexcluding any Synthetic Lease Obligations to the extent that such Synthetic Lease Obligations are included in clause (ii) below, plus (ii) to the extent notincluded in clause (i), the present value of all lease obligations arising under operating leases of Sponsor and its Subsidiaries as determined in accordance withGAAP, applying a discount rate of ten percent (10%).

“Adjusted Total Debt to Adjusted Total Capital Ratio” shall mean, as of any date of determination, the ratio of (i) Adjusted Total Debt as of such date to(ii) Adjusted Total Capital as of such date.

“Adjusted Total Debt to EBITDAR Ratio” shall mean, as of any date of determination, the ratio of (i) Adjusted Total Debt as of such date to(ii) Consolidated EBITDAR as of such date, measured for the four Fiscal Quarter period ending on such date.


“Advance” shall mean a funding of an advance pursuant to the Loan Commitment of any Borrower pursuant to a Funding Request.

-2-

“Affiliate” shall mean, as to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or isunder common Control with, such Person.

“Agreement” shall mean this Amended and Restated Loan Facility Agreement and Guaranty as it may hereafter be amended or modified. This Agreementsupercedes and replaces the Prior Loan Facility Agreement.

“Approved Fund” shall mean any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing incommercial loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Participant, (b) an Affiliateof a Participant or (c) an entity or an Affiliate of an entity that administers or manages a Participant.

“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Participant and an Eligible Assignee in accordance with the termsof this Agreement and substantially in the form of Exhibit A.

“Borrower” shall mean a Franchisee or other affiliated Person who is primarily liable for repayment of a Loan as a result of having executed LoanDocuments as maker, or its permitted assignee.

“Borrowers’ Commitment Fee” shall have the meaning set forth in Section 2.4.

“Borrower Rate” shall mean, with respect to each Loan, the Prime Rate per annum plus any additional margin per annum specified for such Loan bySponsor in the applicable Funding Approval Notice, such margin not to exceed four percent (4.0%) per annum.

“Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina are authorizedor required by law to close and (ii) if such day relates to a Borrowing of, a payment or prepayment of principal or interest on, a conversion of or into, or anInterest Period for, a Eurodollar Loan or a notice with respect to any of the foregoing, any day on which dealings in Dollars are carried on in the Londoninterbank market.

“Capital Expenditures” shall mean for any period, without duplication, (a) the additions to property, plant and equipment and other capital expenditures ofthe Sponsor and its Subsidiaries that are (or would be) set forth on a consolidated statement of cash flows of the Sponsor for such period prepared in accordancewith GAAP and (b) Capital Lease Obligations incurred by the Sponsor and its Subsidiaries during such period.

“Capital Lease Obligation” of any Person shall mean all obligations of such Person to pay rent or other amounts under any lease (or other arrangementconveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leaseson a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance withGAAP.

-3-

“Change in Control” shall mean the occurrence of one or more of the following events: (a) any sale, lease, exchange or other transfer (in a single transactionor a series of related transactions) of all or substantially all of the assets of the Sponsor to any Person or “group” (within the meaning of the Securities ExchangeAct of 1934 and the rules of the Securities and Exchange Commission thereunder in effect on the date hereof), (b) the acquisition of ownership, directly orindirectly, beneficially or of record, by any Person or “group” (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities andExchange Commission thereunder as in effect on the date hereof) of 30% or more of the outstanding shares of the voting stock of the Sponsor; or (c) occupationof a majority of the seats (other than vacant seats) on the board of directors of the Sponsor by Persons who were neither (i) nominated by the current board ofdirectors or (ii) appointed by directors so nominated.

“Change in Control Provision” shall mean any term or provision contained in any indenture, debenture, note, or other agreement or document evidencing orgoverning Indebtedness of Sponsor evidencing debt or a commitment to extend loans in excess of $2,000,000 which requires, or permits the holder(s) of suchIndebtedness of Sponsor to require that such Indebtedness of Sponsor be redeemed, repurchased, defeased, prepaid or repaid, either in whole or in part, or thematurity of such Indebtedness of Sponsor to be accelerated in any respect, as a result of a change in ownership of the capital stock of Sponsor or voting rightswith respect thereto.

“Closing Date” shall mean, for any Loan, the date upon which the Loan Documents with respect to such Loan are executed and delivered and the LoanCommitment is established thereunder.

“Code” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time.

“Collateral” shall mean property subject to a security interest or lien which secures a Loan.

“Collateral Agreement” shall mean an agreement executed by a Borrower and any other Persons primarily or secondarily liable for all or part of the Loan,granting a security interest to the Servicer in specified Collateral as security for such Loan.

“Commitment” shall have the meaning set forth in Section 2.1(a).

“Commitment Fee” shall have the meaning set forth in Section 2.4.

“Commitment Termination Date” shall have the meaning set forth in Section 2.1(a).

-4-


“Consolidated Assets” shall mean, as of any date, the total assets of the Sponsor and its Subsidiaries that would be reflected on the Sponsor’s consolidatedbalance sheet as of such date prepared in accordance with GAAP.

“Consolidated Companies” shall mean, collectively, Sponsor and all of its Subsidiaries, and “Consolidated Company” shall mean, individually, the Sponsoror any of its Subsidiaries.

“Consolidated EBITDA” shall mean, for the Sponsor and its Subsidiaries for any period, an amount equal to the sum of (a) Consolidated Net Income forsuch period plus (b) to the extent deducted in determining Consolidated Net Income for such period, (i) Consolidated Interest Expense, (ii) income tax expensedetermined on a consolidated basis in accordance with GAAP, (iii) depreciation and amortization determined on a consolidated basis in accordance with GAAPand (iv) all other non-cash charges determined on a consolidated basis in accordance with GAAP, in each case for such period.

“Consolidated EBITDAR” shall mean, for the Sponsor and its Subsidiaries for any period, an amount equal to the sum of (a) Consolidated EBITDA plus (b)Consolidated Lease Expense, in each case for such period.

“Consolidated EBITR” shall mean, for the Sponsor and its Subsidiaries for any period, an amount equal to the sum of (a) Consolidated Net Income for suchperiod plus (b) to the extent deducted in determining Consolidated Net Income for such period, (i) Consolidated Interest Expense, (ii) income tax expensedetermined on a consolidated basis in accordance with GAAP, (iii) all other non-cash charges, determined on a consolidated basis in accordance with GAAP, and(iv) Consolidated Lease Expense, in each case for such period.

“Consolidated Fixed Charges” shall mean, for the Sponsor and its Subsidiaries for any period, the sum (without duplication) of (a) Consolidated InterestExpense for such period and (d) Consolidated Lease Expense for such period.

“Consolidated Interest Expense” shall mean, for the Sponsor and its Subsidiaries for any period determined on a consolidated basis in accordance withGAAP, the sum of (i) total cash interest expense, including without limitation the interest component of any payments in respect of Capital Leases Obligationscapitalized or expensed during such period (whether or not actually paid during such period) plus (ii) the net amount payable (or minus the net amountreceivable) under Hedging Agreements during such period (whether or not actually paid or received during such period).

“Consolidated Lease Expense” shall mean, for any period, the aggregate amount of fixed and contingent rental and operating lease expense payable by theSponsor and its Subsidiaries with respect to leases of real and personal property (excluding Capital Lease Obligations) determined on a consolidated basis inaccordance with GAAP for such period.

“Consolidated Net Income” shall mean, for any period, the net income (or loss) of the Sponsor and its Subsidiaries for such period determined on aconsolidated basis in accordance with GAAP, but excluding therefrom (to the extent otherwise included therein) (i) any extraordinary gains or losses, (ii) anygains attributable to write-ups of assets,

-5-

(iii) any equity interest of the Sponsor or any Subsidiary of the Sponsor in the unremitted earnings of any Person that is not a Subsidiary and (iv) any income (orloss) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Sponsor or any Subsidiary on the date that suchPerson’s assets are acquired by the Sponsor or any Subsidiary.

“Consolidated Net Worth” shall mean, as of any date, (i) the total assets of the Sponsor and its Subsidiaries that would be reflected on the Sponsor’sconsolidated balance sheet as of such date prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, inthe stock and surplus of Subsidiaries, minus the sum of (i) the total liabilities of the Sponsor and its Subsidiaries that would be reflected on the Sponsor’sconsolidated balance sheet as of such date prepared in accordance with GAAP and (ii) the amount of any write-up in the book value of any assets resulting froma revaluation thereof or any write-up in excess of the cost of such assets acquired reflected on the consolidated balance sheet of the Sponsor as of such dateprepared in accordance with GAAP.

“Consolidated Restaurant Revenues” shall mean, for the Sponsor and its Subsidiaries for any period, an amount equal to the restaurant sales and operatingrevenue generated at the restaurant level determined on a consolidated basis in accordance with GAAP, but excluding therefrom (to the extent otherwise includedtherein) any franchise royalty revenues or fees.

“Control” shall mean the power, directly or indirectly, either to (i) vote 5% or more of securities having ordinary voting power for the election of directors(or persons performing similar functions) of a Person or (ii) direct or cause the direction of the management and policies of a Person, whether through the abilityto exercise voting power, by contract or otherwise. The terms “Controlling”, “Controlled by”, and “under common Control with” have meanings correlativethereto.

“Credit Event” shall have the meaning set forth in Section 7.1 of this Agreement.

“Credit Parties” shall mean, collectively, each of the Sponsor and the Guarantors.

“Deemed Loan Default ” shall have the meaning set forth in Section 4.5(a) of this Agreement.

“Defaulted Borrower” means a Borrower under a Defaulted Loan.

“Defaulted Loan” means a Loan evidenced by Loan Documents under the terms of which exist one or more Loan Defaults which have not been cured orwaived as permitted herein.

“Dollar” and “U.S. Dollar” and the sign “$” shall mean lawful money of the United States of America.

“Effective Date ” means November 19, 2004.

-6-


“Eligible Assignee” shall mean (a) the Servicer or any Participant; (b) an Affiliate of the Servicer or any Participant; (c) an Approved Fund; and (d) anyother Person (other than a natural Person) approved by the Servicer, and unless a Credit Event has occurred and is continuing, approved by the Sponsor (eachsuch approval not to be unreasonably withheld or delayed) provided that notwithstanding the foregoing “Eligible Assignee” shall not include the Sponsor or anyof the Sponsor’s Affiliates or Subsidiaries. If the consent of the Sponsor to an assignment or to an Eligible Assignee is required hereunder, the Sponsor shall bedeemed to have given its consent five Business Days after the date notice thereof has actually been delivered by the assigning Servicer or Participant to theSponsor, unless such consent is expressly refused by the Sponsor prior to such fifth Business Day.

“Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreementsissued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of naturalresources, the management, Release or threatened Release of any Hazardous Material.

“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation andremediation, costs of administrative oversight, fines, natural resource damages, penalties or indemnities), of the Sponsor or any Subsidiary directly or indirectlyresulting from or based upon (a) any actual or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment ordisposal of any Hazardous Materials, (c) any actual or alleged exposure to any Hazardous Materials, (d) the Release or threatened Release of any HazardousMaterials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated), which, together with the Sponsor, is treated as a single employer underSection 414(b) or (c) of the Code or, solely for the purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer underSection 414 of the Code.

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan(other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as definedin Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA ofan application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Sponsor or any of its ERISA Affiliates of anyliability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Sponsor or any ERISA Affiliate from the PBGC or a planadministrator appointed by the PBGC of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) theincurrence by the Sponsor or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or

-7-

Multiemployer Plan; or (g) the receipt by the Sponsor or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Sponsor or anyERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolventor in reorganization, within the meaning of Title IV of ERISA.

“Excluded Management Salary” shall mean, with respect to any Borrower for any period, (1) two-thirds of the salary and expenses paid to the FranchiseePartner of such Borrower during any period that the Borrower has only one Qualified Store and (2) one-third of the salary and expenses paid to the FranchiseePartner of such Borrower during any period that the Borrower has only two Qualified Stores.

“Executive Officer” shall mean with respect to any Person, the President, Vice Presidents, Chief Financial Officer, Treasurer, Secretary and any Personholding comparable offices or duties.

“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100 th of 1%) equal to the weighted averageof the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published by theFederal Reserve Bank of New York on the next succeeding Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate forsuch day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the quotations for such day on such transactions received by theServicer from three Federal funds brokers of recognized standing selected by the Servicer.

“Fee Letter” shall mean that certain letter agreement dated April 30, 2003, as amended, (if amended) by and between the Sponsor and the Servicer, settingforth certain fees applicable to the loan facility described herein, either as originally executed or as hereafter amended or modified.

“Final Termination Date” shall mean the date which is sixty (60) days after the expiration of the last Loan Commitment established hereunder.

“Fiscal Quarter” shall mean any fiscal quarter of the Sponsor or the Consolidated Companies, as applicable.

“Fixed Charge Coverage Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated EBITR to (b) Consolidated Fixed Charges, in eachcase measured for the four Fiscal Quarter period ending on such date.

“Foreign Subsidiary” shall mean any Subsidiary that is organized under the laws of a jurisdiction other than one of the fifty states of the United States or theDistrict of Columbia.

“Franchise Documents” means, collectively, (i) the participation and operating agreements for any Borrower that is a limited liability company or limitedpartnership agreement for any Borrower that is a limited partnership and (ii) the written agreements between Sponsor and a Borrower whereby the Borrower isauthorized to establish one or more “Ruby

-8-

Tuesday” franchises, including without limitation the Ruby Tuesday, Inc. Operating Agreements between Sponsor and a Borrower and each other operatingagreement and development agreement related to each franchise location, all as amended or modified from time to time.

“Franchise Partner Program” shall mean the optional financing and business structuring program offered by the Sponsor to a limited number of qualifiedrestaurant operators, such operators to be determined by the Sponsor in its sole discretion, which provides such restaurant operators a business structure fororganizing, owning and funding the establishment and operation of restaurants doing business under operating concepts owned by Sponsor.


“Franchisee” means, collectively, a limited liability company or limited partnership in which the Sponsor owns an equity interest pursuant to the FranchisePartner Program.

“Franchisee Debt” shall mean, for any Borrower without duplication, (i) indebtedness for borrowed money or for the deferred purchase price of property orservices (other than trade accounts payable on customary terms in the ordinary course of business), (ii) financial obligations evidenced by bonds, debentures,notes or other similar instruments, (iii) financial obligations as lessee under leases which shall have been or should be, in accordance with GAAP, recorded ascapital leases, and (iv) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, orotherwise to assure a creditor against loss in respect of, indebtedness or financial obligations of others of the kinds referred to in clauses (i) through (iii) above.

“Franchisee Debt Service” means, for any period for any Borrower whose Loans were extended, or Letters of Credit issued pursuant to, Loan Documentsexecuted under the Prior Loan Facility Agreement, the sum of (A) interest expense paid in cash during such period plus (B) scheduled amortization of allFranchisee Debt (excluding Franchisee Debt of the type described in clause (iv) of the definition of “Franchisee Debt”) for such period, in each case measuredfor such Borrower and its subsidiaries on a consolidated basis in accordance with GAAP.

“Franchisee EBITDAR” means, for any period for any Borrower whose Loans were extended, or Letters of Credit issued pursuant to, Loan Documentsexecuted under the Prior Loan Facility Agreement, (1) net income (loss) for such period, plus, (2) to the extent subtracted in determining such net income (loss),(a) interest expense for such period, (b) tax expense for such period, (c) depreciation, amortization and other non-cash charges for such period, (d) FranchiseeRents for such period, (e) Non-recurring Expenses for such period, and (f) Excluded Management Salary for such period, if any, minus (3) Non-recurring Incomefor such period to the extent included in such net income (loss), in each case measured for such Borrower and its subsidiaries on a consolidated basis.

“Franchisee Fixed Charge Coverage Ratio” shall mean, as of any date for any Borrower whose Loans were extended, or Letters of Credit issued pursuant to,Loan Documents executed under the Prior Loan Facility Agreement, the ratio of (i) Franchisee EBITDAR to (ii) the sum of (A) Franchisee Debt Service plus(B) Franchisee Rents, in each case for the

-9-

immediately preceding four fiscal quarters ended on or closest to such date; provided, however, that Sponsor may elect to exclude from the calculation of theFranchisee Fixed Charge Coverage Ratio for any Borrower the Franchisee EBITDAR, the Franchisee Debt Service and the Franchisee Rents incurred by suchBorrower and its subsidiaries that are attributable to any stores that are not Qualified Stores; provided, further, however, that if the Sponsor at any time includesany store that is not a Qualified Store in the calculation of the Franchisee Fixed Charge Coverage Ratio, such store shall thereafter be included in all subsequentcalculations of the Franchisee Fixed Charge Coverage Ratio.

“Franchisee Loan Program” shall mean that transaction evidenced by (i) this Agreement wherein the Sponsor has guaranteed, to the extent set forth herein,certain obligations of franchisees of the Sponsor, and (ii) the other “Operative Documents” (as such term is defined herein) executed by the ConsolidatedCompanies in connection herewith and therewith.

“Franchisee Partner” means, collectively, the person other than the Sponsor that owns an equity interest in the Borrower and any Person who directly orindirectly owns or controls such Person.

“Franchise Partner Program” shall mean the optional financing and business structuring program offered by the Sponsor to a limited number of qualifiedrestaurant operators, such operators to be determined by the Sponsor in its sole discretion, which provided such restaurant operators a business structure fororganizing, owning and funding the establishment and operation of restaurants doing business under operating concepts owned by the Sponsor.

“Franchisee Rents” means, for any period for any Borrower whose Loans were extended, or Letters of Credit issued pursuant to, Loan Documents executedunder the Prior Loan Facility Agreement, the aggregate amount of all lease and rent payments for which such Borrower and its subsidiaries are directly orindirectly liable (as lessee or as guarantor or other surety) under all operating leases in effect at any time during such period, determined on a consolidated basisin accordance with GAAP.

“Fronting Advance” shall have the meaning set forth in Section 2.3.

“Fully Guaranteed Pool” shall mean Loans which are subject to the full and unlimited guaranty of the Sponsor pursuant to the terms of Section 4.2 andArticle VIII of this Agreement.

“Funded Participant’s Interest” means the aggregate outstanding amount of Advances made by a Participant hereunder with respect to the Loans, and shallinclude, with respect to Bank of America, the aggregate outstanding amount of Fronting Advances.

“Funding Approval Notice” means a written notice to the Servicer from Sponsor setting forth the conditions of a proposed Loan Commitment, consistentwith the requirements therefor as set forth in this Agreement, and containing such information and in substantially such form as shall be agreed to by Servicerand Sponsor pursuant to the Servicing Agreement.

-10-

“Funding Request” means (x) a request from a Borrower to the Servicer to fund a portion of such Borrower’s Loan Commitment, and (y) the Initial FundingRequest.

“GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.3.

“Guaranteed Obligations” means the aggregate amount of the Loan Indebtedness outstanding under the Loan Documents and guaranteed by the Sponsorpursuant to this Agreement to include, without limitation (i) all principal, interest and commitment fees due with respect to all Loans, including post-petitioninterest in any proceeding under federal bankruptcy laws, (ii) all fees, expenses, and amounts payable by any Borrower for reimbursement or indemnificationunder the terms of the Loan Agreement or any other Loan Document executed in connection with the Loan to such Borrower, (iii) all amounts advanced byServicer to protect or preserve the value of any security for the Loans, and (iv) all renewals, extensions, modifications, and refinancings (in whole or in part) ofany of the amounts referred to in clauses (i) and (ii) above).

“Governmental Authority” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state


or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing,regulatory or administrative powers or functions of or pertaining to government.

“Guarantor” shall mean each Subsidiary Loan Party now or hereafter a party to the Subsidiary Guaranty Agreement or any Subsidiary that becomes a partyto the Subsidiary Guaranty Agreement pursuant to Section 6.9, and their respective successors and permitted assigns.

“Guaranty” of or by any Person (the “guarantor”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economiceffect of Guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor “) in any manner, whether directly or indirectly andincluding any obligation, direct or indirect, of the guarantor (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtednessor other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property,securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital,equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or otherobligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued in support of such Indebtedness or obligation; provided, that theterm “Guaranty” shall not include endorsements for collection or deposits in the ordinary course of business. The amount of any Guaranty shall be deemed to bean amount equal to the stated or determinable amount of the primary obligation in respect of which Guaranty is made or, if not so stated or determinable, themaximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in goodfaith. The term “Guarantee” used as a verb has a corresponding meaning.

-11-

“Guaranty Payments” mean all payments made by the Sponsor pursuant to Section 8.2 of this Agreement with respect to Loans in the Limited GuarantyPool, and shall exclude all payments made by the Sponsor hereunder with respect to Loans in the Fully Guaranteed Pool.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, includingpetroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all othersubstances or wastes of any nature regulated pursuant to any Environmental Law.

“Hedging Agreements” shall mean interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currencyfuture or option contracts, commodity agreements and other similar agreements or arrangements designed to protect against fluctuations in interest rates,currency values or commodity values, in each case to which any Sponsor or any Subsidiary is a party.

“Hostile Acquisition” shall mean any Investment resulting in control of a Person involving a tender offer or proxy contest that has not been recommended orapproved by the board of directors of the Person that is the subject of the Investment prior to the first public announcement or disclosure relating to suchInvestment.

“Indebtedness” of any Person shall mean, without duplication (i) all obligations of such Person for borrowed money, (ii) all obligations of such Personevidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred purchase price of property orservices (other than trade payables incurred in the ordinary course of business; provided, that for purposes of Section 7.1(e), trade payables overdue by more than120 days shall be included in this definition except to the extent that any of such trade payables are being disputed in good faith and by appropriate measures),(iv) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (v) all CapitalLease Obligations of such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions ofcredit, (vii) all Guarantees of such Person of the type of Indebtedness described in clauses (i) through (vi) above, (viii) all Indebtedness of a third party securedby any Lien on property owned by such Person, whether or not such Indebtedness has been assumed by such Person, (ix) all obligations of such Person,contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any common stock of such Person, (x) Off-Balance Sheet Liabilities and (xi)all obligations under Hedging Agreements. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which suchPerson is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor.

“Initial Funding Request” means the Funding Request submitted by a Borrower for the initial Advance on the Closing Date of such Loan.

-12-

“Indemnity and Contribution Agreement” shall mean the Indemnity and Contribution Agreement, as amended, restated, supplemented or otherwisemodified from time to time, substantially in the form of Exhibit C, among the Sponsor, the Subsidiary Loan Parties and the Servicer, as amended, restated,supplemented or otherwise modified from time to time.

“Investment” shall have the meaning assigned to such term in Section 6.17.

“Letter of Credit” shall mean a standby letter of credit issued by the Servicer on behalf of a Borrower pursuant to the terms of the applicable LoanCommitment on the terms and conditions set forth in the applicable Loan Agreement.

“LC Exposure” shall mean, at any time, the sum of (i) the aggregate undrawn amount of all outstanding Letters of Credit at such time, plus (ii) the aggregateamount of all LC Disbursements that have not been reimbursed by or on behalf of the Sponsor at such time. The LC Exposure of any Participant shall be its ProRata Share of the total LC Exposure at such time.

“Letter of Credit Fee” shall mean the fee paid by each Borrower pursuant to the terms of the applicable Loan Agreement with respect to all outstandingLetter of Credit Obligations thereunder.

“Letter of Credit Obligations” shall mean, with respect to each Borrower, the aggregate of the face amount of all outstanding Letters of Credit issued by theServicer on behalf of such Borrower pursuant to the applicable Loan Agreement plus, without duplication, the aggregate amount of unreimbursed draws on suchLetters of Credit.

“Letter of Credit Outstandings” shall mean the aggregate amount of all Letter of Credit Obligations.

“LIBOR” shall mean, for any Payment Period (rounded upwards, as necessary, to the nearest 1/100 of 1%) the rate per annum equal to the British BankersAssociation LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designatedby the Servicer from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Payment Period, for Dollar


deposits (for delivery on the first day of such Payment Period) with a term equivalent to such Payment Period. If such rate is not available at such time for anyreason, then the “Eurodollar Base Rate” for such Payment Period shall be the rate per annum determined by the Servicer to be the rate at which deposits inDollars for delivery on the first day of such Payment Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued orconverted by Bank of America and with a term equivalent to such Payment Period would be offered by Bank of America’s London Branch to major banks in theLondon interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such PaymentPeriod.

“Lien” shall mean any mortgage, pledge, security interest, lien (statutory or otherwise), charge, encumbrance, hypothecation, assignment, depositarrangement, or other arrangement having the practical effect of the foregoing or any preference, priority or other security agreement or preferential arrangementof any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as anyof the foregoing).

-13-

“Limited Guaranty Pool” shall mean each of the Loans outstanding hereunder other than the Loans comprising the Fully Guaranteed Pool.

“Loan” means the aggregate Advances made pursuant to a Loan Commitment, as evidenced by the relevant Promissory Note.

“Loan Commitment” means the commitment of the Servicer to each Borrower to make Advances to such Borrower in the aggregate amount specified in therelevant Promissory Note, subject to the terms and conditions set forth therein.

“Loan Agreement” means the Line of Credit Agreement setting forth the terms and conditions, as between a Borrower and the Servicer, under which theServicer has established a Loan Commitment to make Advances to the Borrower, substantially in the form of Exhibit D.

“Loan Default” means an occurrence with respect to a Loan which is defined by the applicable Loan Documents to be an event of default (including but notlimited to a Loan Payment Default).

“Loan Documents” means the Loan Agreement, the Promissory Note, any Personal Guaranty, any Spousal Consent, the Collateral Agreements, any Lettersof Credit and any other documents relating to the Loan or Letters of Credit delivered by any Borrower or any guarantor or surety thereof to the Servicer and anyamendments thereto (provided that such amendments are made with the consent of Sponsor, where such consent is required under this Agreement).

“Loan Indebtedness” means all amounts due and payable by a Borrower under the terms of the Loan Documents for a given Loan and outstanding Letters ofCredit, including, without limitation, outstanding principal, accrued interest, any commitment fees, letter of credit fees and all reasonable costs and expenses ofany legal proceeding brought by the Servicer to collect any of the foregoing (including without limitation, reasonable attorneys’ fees actually incurred).

“Loan Payment Default” means the failure of a Borrower to make a payment of principal, accrued interest thereon or any other amounts, within the cureperiod following the due date therefor, as provided under the applicable Loan Documents.

“Loan Term” means the period from the Closing Date of a Loan Commitment until the Maturity Date of such Loan Commitment and the Loan outstandingthereunder, which period shall not exceed twelve months.

“Margin Regulations” shall mean Regulation G, Regulation T, Regulation U and Regulation X of the Board of Governors of the Federal Reserve System, asthe same may be in effect from time to time.

-14-

“Material Adverse Effect” shall mean, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination inany litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, conditionor conditions, occurrence or occurrences whether or not related, a material adverse change in, or a material adverse effect on, (i) the business, results ofoperations, financial condition, assets, liabilities or prospects of the Sponsor or of the Sponsor and its Subsidiaries taken as a whole, (ii) the ability of the CreditParties to perform any of their respective obligations under the Operative Documents, (iii) the rights and remedies of the Servicer and the Participants under anyof the Operative Documents or (iv) the legality, validity or enforceability of any of the Operative Documents.

“Material Indebtedness” shall mean Indebtedness (other than the Loans and Letters of Credit) or obligations in respect of one or more Hedging Agreements,of any one or more of the Sponsor and the Subsidiaries in an aggregate principal amount exceeding $25,000,000. For purposes of determining MaterialIndebtedness, the “principal amount” of the obligations of the Sponsor or any Subsidiary in respect to any Hedging Agreement at any time shall be the maximumaggregate amount (giving effect to any netting agreements) that the Sponsor or such Subsidiary would be required to pay if such Hedging Agreement wereterminated at such time.

“Material Subsidiary” shall mean (i) each Credit Party other than the Sponsor, and (ii) each other Subsidiary of the Sponsor, now existing or hereafterestablished or acquired, that at any time prior to the Maturity Date, has or acquires total assets in excess of $5,000,000, or that accounted for or produced morethan 5% of the Consolidated Net Income (Loss) of the Sponsor on a consolidated basis during any of the three most recently completed Fiscal Years of theSponsor, or that is otherwise material to the operations or business of the Sponsor or another Material Subsidiary.

“Maturity Date” means, with respect to any Loan Commitment, the date set forth under the applicable Loan Documents when such Loan Commitmentterminates and all principal and interest with respect to the Loan outstanding thereunder shall become due and payable in full; provided that, each Maturity Dateshall be a Payment Date.

“Maximum Amount” shall have the meaning set forth in Section 8.1 hereof.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.


“Non-recurring Expenses ” shall mean, for any Borrower for any period, all expenses of such Borrower and its Subsidiaries for such period that areextraordinary and generally not reflected in any prior period or reasonably anticipated to be incurred in any subsequent period.

-15-

“Non-recurring Income ” shall mean, for any Borrower for any period, all income of such Borrower and its Subsidiaries for such period that is extraordinaryand generally not reflected in any prior period or reasonably anticipated to be incurred in any subsequent period.

“Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notesreceivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions which do not create a liability on the balance sheet ofsuch Person, (iii) any Synthetic Lease Obligation or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takesthe place of borrowing but which does not constitute a liability on the balance sheet of such Person in accordance with GAAP.

“Operative Documents” shall mean this Agreement, the Subsidiary Guaranty Agreement, the Indemnity and Contribution Agreement, the ServicingAgreement, the Fee Letter and any other documents delivered by Sponsor or any Guarantor to the Servicer or the Participants in connection herewith ortherewith.

“OSHA” shall mean the Occupational Safety and Health Act of 1970, as amended from time to time, and any successor statute.

“Participant” shall mean Bank of America, the other lending institutions listed on the signature pages hereof and each assignee thereof, if any, pursuant tothe terms hereof.

“Participating Commitment ” shall mean the amount set forth opposite each Participant’s name on the signature pages hereof, as such amount may bemodified by assignment pursuant to the terms hereof; provided that, following the termination of the Commitment, each Participant’s Participating Commitmentshall be deemed to be its Pro Rata Share of the aggregate Loan Commitments.

“Participant Funding” shall mean a funding by the Participants of their Pro Rata Share of Loans outstanding.

“Participant’s Interest” shall have the meaning set forth in Section 2.2.

“Participant’s Letter of Credit Fee ” shall have the meaning set forth in Section 2.4(c).

“Participant Payment Date” has the meaning set forth in Section 2.5(b).

“Participant’s Unused Commitment” shall mean, with respect to any Participant, the difference between such Participant’s Participating Commitment andsuch Participant’s Funded Participant’s Interest, as further reduced by such Participant’s Pro Rata Share of the Letter of Credit Outstandings.

“Participant’s Unused Sponsor Commitment” shall mean, with respect to any Participant, the difference between such Participant’s ParticipatingCommitment and such Participant’s Pro Rata Share of all outstanding Loan Commitments.

“Participation Certificate” shall mean, a certificate issued by the Servicer to a Participant, substantially in the form of Exhibit E attached hereto, evidencingsuch Participant’s ownership interest conveyed hereunder.

-16-

“Payment Date” shall mean with respect to any Loan, the date set forth under the applicable Loan Documents for such Loan as the date for repayment ofprincipal and interest with respect to such Loan.

“Payment Period” shall mean a period of one (1) month; provided that (i) the first Payment Period hereunder shall commence on November 30, 2004 andshall end on the last Business Day of such month and (ii) the last day of each Payment Period shall be a Business Day.

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA, and any successor entity performing similar functions.

“Permitted Encumbrances” shall mean

a. Liens imposed by law for taxes not yet due or which are being contested in good faith by appropriate proceedings and with respect to whichadequate reserves are being maintained in accordance with GAAP;

b. statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law created in theordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to whichadequate reserves are being maintained in accordance with GAAP;

c. pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and othersocial security laws or regulations;

d. deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and otherobligations of a like nature, in each case in the ordinary course of business;

e. judgment and attachment liens not giving rise to a Credit Event or Liens created by or existing from any litigation or legal proceeding that arecurrently being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance withGAAP; and


f. easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course ofbusiness that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere withthe ordinary conduct of business of the Sponsor and its Subsidiaries taken as a whole;

provided, that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

-17-

“Permitted Investments” shall mean:

a. direct obligations of, or obligations the principal of and interest on which are unconditionally Guaranteed by, the United States (or by anyagency thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year fromthe date of acquisition thereof;

b. commercial paper having the highest rating, at the time of acquisition thereof, of S&P or Moody’s and in either case maturing within sixmonths from the date of acquisition thereof;

c. certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days of the date of acquisition thereof issued orGuaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized underthe laws of the United States or any state thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

d. fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (i) above and entered intowith a financial institution satisfying the criteria described in clause (iii) above; and

e. mutual funds investing solely in any one or more of the Permitted Investments described in clauses (i) through (iv) above.

“Person” shall mean an individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or anyGovernmental Authority.

“Personal Guaranty” shall mean any guaranty from a principal of a Borrower substantially in the form attached to the Servicing Agreement.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of theCode or Section 302 of ERISA, and in respect of which the Sponsor or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 ofERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Prior Loan Facility Agreement” shall have the meaning as set forth in the Recital paragraphs above.

“Prior Servicing Agreement” shall have the meaning as set forth in the Recital paragraphs above.

“Pro Rata Share” shall mean, with respect to each of the Participants, the percentage designated as such Participant’s Pro Rata Share on the signature pageshereof, as such percentage may change from time to time as a result of assignments or amendments pursuant to this Agreement.

-18-

“Promissory Note” means a Master Note of a Borrower, substantially in the form attached hereto as Exhibit D setting forth the obligation of such Borrowerto repay the Loan evidenced thereby.

“Qualified Store” shall mean any store that has been open for at least twelve months and was not acquired by a Borrower from the Sponsor during the lasttwelve months.

“Quarterly Date” has the meaning set forth in Section 2.4(a).

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and anysuccessor regulations.

“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents andadvisors of such Person and such Person’s Affiliates.

“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into theenvironment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.

“Required Participants” shall mean at any time, the Participants holding at least 51 % of the sum of (x) aggregate Funded Participant’s Interest, plus (y) theParticipant’s Unused Commitments, or, following the termination of the Commitment and the Loan Commitments, the Participants holding at least 51 % of theaggregate outstanding Funded Participant’s Interests at such time.

“Response Period” means a period of sixty (60) days commencing on the day on which a Loan Payment Default or Loan Default occurs; provided that noResponse Period shall extend beyond the Final Termination Date.


“Responsible Officer” shall mean any of the president, the chief executive officer, the chief operating officer, the chief financial officer, the treasurer or avice president of the Sponsor or such other representative of the Sponsor as may be designated in writing by any one of the foregoing with the consent of theAdministrative Agent; and, with respect to the financial covenants only, the chief financial officer or the treasurer of the Sponsor.

“Restricted Payment” shall have the meaning set forth in Section 6.18.

“Revolving Facility” means that certain revolving credit facility in the amount of up to $200,000,000 extended to the Sponsor by a syndicate of lenders withBank of America as their agent, all pursuant to the Revolving Facility Credit Agreement, with an option of the Sponsor to increase such facility by $100,000,000up to a total amount of $300,000,000.

-19-

“Revolving Facility Credit Agreement” means that certain Amended and Restated Revolving Credit Agreement, dated as of November 19, 2004, among theSponsor, a syndicate of lenders and Bank of America, as administrative agent for such lenders, as amended, extended, replaced or refinanced from time to time.

“Ruby Tuesday” shall mean “Ruby Tuesday”, an operating concept of Sponsor.

“Servicer’s Letter of Credit Fee” shall have the meaning set forth in the Servicing Agreement.

“Servicing Agreement” shall mean that certain Servicing Agreement dated as of April 30, 2003, as amended, by and between the Sponsor and Bank ofAmerica, N.A., as amended, restated, supplemented or otherwise modified from time to time.

“Servicing Fee” shall mean the fee payable to the Servicer pursuant to the terms of the Servicing Agreement.

“Servicing Report” shall have the meaning set forth in Section 3.3.

“Servicer” shall mean Bank of America and its successors and assigns.

“Sponsor’s Commitment Fee” shall have the meaning set forth in Section 2.4.

“Sponsor’s Fee” shall have the meaning set forth in the Servicing Agreement.

“Sponsor’s Letter of Credit Fee ” shall have the meaning set forth in the Servicing Agreement.

“Spousal Consent” shall mean a consent of the spouse of a Person executing a Personal Guaranty, substantially in the form attached to the ServicingAgreement.

“Standard & Poor’s” shall mean Standard & Poor’s Rating Service, a division of The McGraw-Hill Companies.

“Standstill Period” means a sixty (60) day period commencing on the date immediately following the date that the Response Period expires during which theServicer and the Participants will continue to refrain from exercising remedies against a Defaulted Borrower while a Defaulted Loan remains in the LimitedGuaranty Pool.

“Subordinated Debt” shall mean all Indebtedness of Sponsor subordinated to all obligations of Sponsor or any other Credit Party arising under thisAgreement and the Subsidiary Guaranty Agreement, created, incurred or assumed on terms and conditions satisfactory in all respects to the Servicer and theParticipants, including without limitation, with respect to interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies, andsubordination provisions, as evidenced by the written approval of the Servicer and Required Participants.

-20-

“Subsidiary” shall mean, with respect to any Person (the “parent”), any corporation, partnership, joint venture, limited liability company, association orother entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statementswere prepared in accordance with GAAP as of such date, as well as any other corporation, partnership, joint venture, limited liability company, association orother entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power, or in thecase of a partnership, more than 50% of the general partnership interests are, as of such date, are directly or indirectly owned, controlled (intentionally lowercase)or held by the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of the Sponsor.

“Subsidiary Guaranty Agreement” shall mean the Subsidiary Guaranty Agreement, substantially in the form of Exhibit B, made by the Subsidiary LoanParties in favor of the Administrative Agent for the benefit of the Lenders, as amended, restated, supplemented or otherwise modified from time to time.

“Subsidiary Loan Party” shall mean any Material Subsidiary that is not a Foreign Subsidiary..

“Synthetic Lease” means a lease transaction under which the parties intend that (i) the lease will be treated as an “operating lease” by the lessee pursuant toStatement of Financial Accounting Standards No. 13, as amended and (ii) the lessee will be entitled to various tax and other benefits ordinarily available toowners (as opposed to lessees) of like property.

“Synthetic Lease Obligations” shall mean, with respect to any Person, the sum of (i) all remaining rental obligations of such Person as lessee underSynthetic Leases which are attributable to principal and, without duplication, (ii) all rental and purchase price payment obligations of such Person under suchSynthetic Leases assuming such Person exercises the option to purchase the lease property at the end of the lease term.

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any GovernmentalAuthority.


“Traditional Franchisee” means, collectively, a franchisee of the Sponsor that (i) is not a Franchisee and (ii) is not operating under the Franchise PartnerProgram.

“Unmatured Credit Event” shall mean any condition or event which, with notice or the passage of time or both, would constitute a Credit Event.

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as suchterms are defined in Part I of Subtitle E of Title IV of ERISA.

-21-

Section 1.2 Accounting Terms and Determination.

Unless otherwise defined or specified herein, all accounting terms shall be construed herein, all accounting determinations hereunder shall be made, allfinancial statements required to be delivered hereunder shall be prepared, and all financial records shall be maintained in accordance with, GAAP; provided, thatif the Sponsor notifies the Servicer that the Sponsor wishes to amend any covenant herein to eliminate the effect of any change in GAAP on the operation of suchcovenant, then the Sponsor’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change inGAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Sponsor and the RequiredParticipants; provided, further, that if the Sponsor notifies the Servicer that the Sponsor wishes to change its fiscal year end in accordance with Section 6.25 andsuch change affects any covenant in Sections 6.11 through 6.13, then the Sponsor’s compliance with such covenant shall be determined on the basis of the fiscalyear end in effect immediately before such requested change in fiscal year end became effective, until such covenant is amended in a manner satisfactory to theSponsor and the Required Participants.

Section 1.3 Terms Generally.

The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronounshall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by thephrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. In the computation of periods of timefrom a specified date to a later specified date, the word “from” means “from and including” and the word “to” means “to but excluding”. Unless the contextrequires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement,instrument or other document as it was originally executed or as it may from time to time be amended, supplemented or otherwise modified (subject to anyrestrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include suchPerson’s successors and permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words of similar import shall be construed to refer to thisAgreement as a whole and not to any particular provision hereof, (iv) all references to Articles, Sections, Exhibits and Schedules shall be construed to refer toArticles, Sections, Exhibits and Schedules to this Agreement and (v) all references to a specific time shall be construed to refer to the time in the city and state ofthe Servicer’s principal office, unless otherwise indicated.

Section 1.4 Exhibits and Schedules.

All Exhibits and Schedules attached hereto are by reference made a part hereof.

-22-

ARTICLE II

LOAN FACILITY

Section 2.1 Establishment of Commitment; Terms of Loans and Letters of Credit.

(a) Commitment. Subject to and upon the terms and conditions set forth in this Agreement and the other Operative Documents, and in relianceupon the guaranty of the Sponsor set forth herein, the Servicer hereby establishes a Commitment to the Sponsor to establish Loan Commitments andmake Advances to such Franchisees as may be designated by the Sponsor in its Funding Approval Notices during a period commencing onNovember 19, 2004 and ending on October 5, 2006 (as such period may be extended for one or more subsequent three-year periods pursuant toSection 2.8 hereof, the “Commitment Termination Date”) in an aggregate committed amount at any one time outstanding not to exceedFORTY-EIGHT MILLION AND NO/100 DOLLARS ($48,000,000) (the “Commitment”).

(b) Authorization of Loan Commitments; Loan Terms; Letter of Credit Terms. Within the limits of the Commitment and in accordance with theprocedures set forth in the Servicing Agreement, the Sponsor may authorize the Servicer to establish a Loan Commitment in favor of a Franchisee whomeets the credit criteria established by the Sponsor. The amount of each Loan Commitment shall be determined by the Sponsor but shall not be lessthan $50,000 nor exceed $3,500,000 for any Franchisee. Pursuant to the Loan Commitment, the Servicer shall agree to make Advances to the Borrowerthereunder in a minimum amount of (i) $10,000 for Loans in the amount of $50,000 to $250,000 and in integral multiples of $1,000 and (ii) $25,000 forLoans in the amount of $250,001 to $3,500,000 and in integral multiples of $1,000, such Advances not to exceed four (4) per month unless the Servicershall otherwise agree, and except that any Loan Commitments outstanding on the date hereof that provide otherwise may remain in effect until suchtime as such Loan Commitments are renewed or refinanced. In addition, the Servicer shall agree to issue Letters of Credit on behalf of such Borrowerin an aggregate amount at any one time outstanding not to exceed $250,000; provided, however, the Servicer shall not be obligated to issue any Letterof Credit unless the terms and provisions of such Letter of Credit are satisfactory to the Servicer in its reasonable discretion. Each Loan shall bearinterest at the Borrower Rate designated by Sponsor in the applicable Funding Approval Notice, and interest shall be payable on each Payment Date


and on the Maturity Date of such Loan when all principal and interest shall be due and payable in full. Each Loan may be prepaid in full or in part onany Business Day, without premium or penalty. The Loan Term of each Loan shall not exceed twelve months. Each Letter of Credit shall be for a termof not more than one year (unless otherwise agreed by the Servicer) and shall mature on a date which is at least ten (10) days prior to the Maturity Date.If any drawing is made upon a Letter of Credit and not reimbursed by the applicable Borrower on the same Business Day, then the applicable Borrowershall be deemed to have requested an Advance to repay such amount and the Servicer shall make such Advance regardless of the minimumrequirements set forth above and regardless of whether or not a Default or Event of Default exists under the applicable Loan Documents, whichamounts shall be Advances for all purposes hereunder. Notwithstanding the foregoing, the terms of all Loans and Loan Commitments governed byLoan Documents executed and delivered by Borrowers prior to the Effective Date shall be subject in all respects to Section 11.2.2.

-23-

(c) Obligation to Establish Loan Commitments. Servicer’s obligation to establish each Loan Commitment under the Operative Documents issubject to the fulfillment of the following conditions as of the Closing Date of such Loan:

(i) this Agreement and each of the other Operative Documents shall be in full force and effect;

(ii) the representations and warranties of the Sponsor contained in Article V hereof shall be true and correct in all material respectswith the same effect as though such representations and warranties had been made on the Closing Date of such Loan, in each case before andafter giving effect thereto or, if such representations and warranties relate solely to an earlier date, were true and correct as of such earlierdate;

(iii) the Servicer shall have received a Funding Approval Notice from the Sponsor authorizing such Loan Commitment;

(iv) all precedents and conditions to the Loan Commitment specified in the Servicing Agreement, together with such additionalprecedents and conditions as may, at Sponsor’s election, be included in the applicable Funding Approval Notice, shall have been completed tothe Servicer’s reasonable satisfaction; and

(v) no Credit Event or Unmatured Credit Event shall have occurred and be continuing.

Section 2.2 Conveyance of Participant’s Interest.

(a) The Servicer hereby sells, assigns, transfers and conveys to the Participants, without recourse or warranty, and each Participant herebypurchases from the Servicer, an undivided percentage ownership interest (which percentage shall be equal to each Participant’s Pro Rata Share) in (i)the Commitment, (ii) the Loan Commitments, (iii) the Loans and Letter of Credit Obligations, (iv) the Collateral, (v) all rights against any guarantor ofany Loan, including the Sponsor, and (vi) all right, title and interest to any payment or right to receive payment with respect to the foregoing(collectively, the “Participant’s Interest”). Notwithstanding the foregoing, each Participant’s right to receive payments of interest, commitments fees,letter of credit fees or other fees with respect to the Commitment, the Loan Commitments, the Loans and the Letter of Credit Obligations shall notexceed the amounts which such Participant is entitled to receive pursuant to the terms of this Agreement.

-24-

(b) In consideration of the entry by each Participant into this Agreement and the obligation of each Participant hereunder, the Servicer shall issueto each Participant on the Closing Date, a Participation Certificate. Each Participation Certificate shall be in the amount of the relevant Participant’sParticipating Commitment, and the Funded Participant’s Interest outstanding thereunder shall bear interest as hereinafter set forth and shall be payableas hereinafter set forth.

(c) In accordance with the terms and conditions hereof, and in consideration of the sale of the Participant’s Interest to such Participant, eachParticipant severally agrees from time to time, during the period commencing on the Closing Date and ending on the Final Termination Date, to fund itsPro Rata Share of outstanding Loans (including Advances made by the Servicer in connection with unreimbursed drawing upon outstanding Letters ofCredit) made by the Servicer in an aggregate amount at any one outstanding not to exceed such Participant’s Participating Commitment (subject to eachParticipant’s obligations pursuant to Section 2.3(d) hereof).

Section 2.3 Funding of Advances; Funding of Participant’s Interest in Loans; Purchase of Participation in Letters of Credit.

(a) The Servicer shall fund Advances requested by the Borrowers pursuant to the terms of the Loan Documents in accordance with the terms ofthe applicable Loan Documents and the Servicing Agreement. On the date of any such funding, the Servicer shall elect whether or not to require theParticipants to fund their respective Pro Rata Share of such Advance or Advances to be made on such date. In the event that the Servicer elects not torequire the Participants to fund their Pro Rata Share of the Advances on such date, the Servicer shall make such Advance (each, a “Fronting Advance”)to the Borrower for the account of the Servicer; provided that, the aggregate amount of Fronting Advances outstanding on any date shall not exceed theamount of Bank of America’s Participating Commitment and further provided that the sum of (x) the aggregate Fronting Advances plus (y) theaggregated Funded Participant’s Interest plus (z) the aggregate Letter of Credit Outstandings shall not exceed the amount of the Commitment. If (i) anyCredit Event shall have occurred, (ii) after giving effect to any Advance, the aggregate Fronting Advances outstanding hereunder would exceed Bank ofAmerica’s Participating Commitment, or (iii) the Servicer otherwise determines in its sole discretion to request a Participant Funding hereunder, thenthe Servicer shall notify the Participants pursuant to subsection (b) requesting a Participant Funding. The Servicer shall issue Letters of Credit requestedby the Borrowers pursuant to the terms of the Loan Documents in accordance with the terms of the applicable Loan Documents and the ServicingAgreement. The Participants shall be notified in each Servicing Report of the aggregate amount of Letter of Credit Outstandings.


(b) Notification of Participant Funding. In the event that the Servicer desires that the Participants fund their respective Pro Rata Shares ofAdvances or Loans made or outstanding pursuant to the Loan Documents, the Servicer shall deliver written or telecopy notice to the Participants (ortelephonic notice promptly confirmed in writing or by telecopy) (a “Participant Funding Request”) by no later than noon (Charlotte, North Carolinatime) on the date three Business Days prior to the requested date of the Participant Funding which shall specify (x) the date of the Participant Funding,which shall be a Business Day, and (y) each Participant’s Pro Rata Share of the Loans outstanding to be funded in connection with such ParticipantFunding.

-25-

(c) Participant Obligation. Each Participant shall make its Participant Funding in the amount of its Pro Rata Share on the proposed date thereofby wire transfer of immediately available funds to the Servicer in Atlanta, Georgia by not later than 2:00 P.M. (Charlotte, North Carolina time). Unlessthe Servicer shall have received notice from a Participant prior to the date of any Participant Funding that such Participant will not make available tothe Servicer such Participant’s Pro Rata Share of such Participant Funding, the Servicer may assume that the Participant has made such portionavailable to the Servicer on the date of such Participant Funding in accordance with this subsection (c) and the Servicer may, in reliance on suchassumption, make available to the Borrowers a corresponding amount or credit the same to Fronting Advances. If and to the extent that such Participantshall not have made such portion available to the Servicer, such Participant and the Sponsor shall severally agree to repay the Servicer forthwith (ondemand in the case of the Participant and within three (3) days of such demand in the case of the Sponsor), without duplication, such amount withinterest at the Federal Funds Rate plus 2% per annum and, until such time as such Participant has repaid to the Servicer such amount, such Participantshall (i) have no right to vote regarding any issue on which voting is required or advisable under this Agreement or the other Operative Documents, and(ii) shall not be entitled to receive any payments of interest, fees or repayment of the principal amount of such Advance which the Participant has failedto pay to the Servicer. If such Participant shall repay to the Servicer such amount, then such amount shall constitute part of such Participant’s FundedParticipant’s Interest.

(d) Participant’s Obligation Absolute and Unconditional. Each Participant’s obligations to fund its Pro Rata Share of any requested ParticipantFunding shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim,recoupment, defense, or other right which such Participant may have against the Servicer, the Sponsor, any Borrower or any other Person for anyreason whatsoever, (ii) the occurrence of any Credit Event or Unmatured Credit Event, (iii) the occurrence of any Loan Default, (iv) any adversechange in the condition (financial or otherwise) of the Sponsor or any other Credit Party or any Borrower, (v) the acceleration or maturity of any Loanor the Sponsor’s obligations hereunder or the termination of the Commitment, Loan Commitment or the Participating Commitments after the making ofany Fronting Advance, (vi) any breach of this Agreement by the Sponsor or any other Participant, or (vii) any other circumstance, happening or eventwhatsoever, whether or not similar to any of the foregoing.

(e) Fundings Following Default. Notwithstanding the foregoing provisions of this Section 2.3, no Participant shall be required to fund its ProRata Share of any requested Participant Funding for purposes of refunding a Fronting Advance pursuant to subsection (d) above if a Credit Event,Unmatured Credit Event or Loan Default with respect to the relevant Loan has occurred and is continuing and, prior to the making by the Servicer ofsuch Fronting Advance, the Servicer had received written

-26-

notice from Sponsor, the relevant Borrower or any Participant specifying that such Credit Event, Unmatured Credit Event or Loan Default had occurredand was continuing (and identifying the same as a Credit Event, Unmatured Credit Event or Loan Default, as the case may be); provided that , in thecase of an Unmatured Credit Event or Credit Event where the Participants are not pursuing remedies, the Participants will be obligated to fund theirrespective Pro Rata Shares of Fronting Advances as long as the aggregate amount of such Fronting Advances does not exceed $2,000,000. EachParticipant expressly agrees, however, that it shall be obligated to fund its Pro Rata Share of requested Participant Funding with respect to Advancesmade by the Servicer with respect to unreimbursed drawings upon outstanding Letters of Credit whether or not a Credit Event, Unmatured Credit Eventor Loan Default has occurred and is continuing and whether or not made as a Fronting Advance.

Section 2.4 Commitment Fees and Participant’s Letter of Credit Fees.

(a) Each Participant will receive from the Sponsor under the Operative Documents a commitment fee (the “Sponsor’s Commitment Fee”) withrespect to the average daily amount of each Participant’s Unused Commitment, for the period commencing on the Effective Date and ending on theFinal Termination Date, or such earlier date as the Participating Commitment shall expire or terminate, equal to 0.375% per annum, such Sponsor’sCommitment Fee to be payable quarterly in arrears within 20 days following the end of such calendar quarter (“Quarterly Date”) (by way of example,fees due in January, February and March will be paid on April 20 th) calculated on the basis of a 360-day year and the actual number of days elapsed;

(b) Each Participant will receive from amounts paid by the Borrowers under the Loan Documents and the Sponsor under the OperativeDocuments, a letter of credit fee (the “Participant’s Letter of Credit Fee”) with respect to the average daily amount of each Participant’s Pro Rata Shareof the Letter of Credit Outstandings, for the period commencing on the Closing Date and ending on the Final Termination Date, or such earlier date asthe Participating Commitment shall expire or terminate, equal to 1.75% per annum, such Participant’s Letter of Credit Fee to be payable quarterly inarrears on each Quarterly Date, calculated on the basis of a 360-day year and the actual number of days elapsed. To the extent that the letter of creditfee set forth in the Loan Documents to which a Borrower is a party is less than 1.75% per annum, the Sponsor shall pay a portion of the Participant’sLetter of Credit Fee in an amount equal to (A)(i) 1.75% minus (ii) the letter of credit fee percentage set forth in the Loan Documents to which theBorrower is a party, multiplied by (B) the average daily amount of each Participant’s Pro Rata Share of the Letter of Credit Outstandings, whichamount shall be payable in arrears on each Quarterly Date, calculated on the basis of a 360-day year and the actual number of days elapsed, whichamount paid by the Sponsor under this Section 2.4(c) shall not constitute Guaranty Payments with respect to Loans in the Limited Guaranty Pool.

-27-


(c) All Commitment Fees and Participant’s Letter of Credit Fees shall be paid on each Quarterly Date, in immediately available funds, to theParticipants by the Servicer from amounts received from the Borrowers and Sponsor.

(d) In the event that (i) the Commitment Fees received by the Servicer from the Borrowers and the Sponsor are not sufficient on any QuarterlyDate to pay the Commitment Fees to the Participants required pursuant hereto, or (ii) the Letter of Credit Fees received by the Servicer from theBorrowers and the Sponsor are not sufficient on any Quarterly Date to pay the Participant’s Letter of Credit Fees required pursuant hereto, the Sponsorshall, upon demand of the Servicer, immediately fund such difference to the Servicer (with such payment allocated to specific Loan Payment Defaultsas agreed by Sponsor and Servicer) and the Sponsor shall promptly be reimbursed by the Servicer upon receipt of such amount from the Borrower.

Section 2.5 Interest on Funded Participant’s Interest.

(a) Subject to the provisions of Section 2.6, each Participant’s Funded Participant’s Interest shall bear interest (computed on the basis of theactual number of days elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the Payment Period in which suchFunded Participant’s Interest is outstanding (with the Payment Period being automatically reset on the last Business Day of each month for the nextPayment Period regardless of the date of any Participant Funding hereunder) plus an additional one hundred seventy-five basis points (1.75%) perannum.

(b) Interest on each Participant’s Funded Participant’s Interest shall be payable by the Servicer to the Participants within 20 days after the end ofeach calendar month (the “Participant Payment Date”) from interest payments received on the Loans on the applicable Payment Dates.

(c) In the event that on any Participant Payment Date the interest received by the Servicer from the Borrowers and the Sponsor is not sufficientto pay the interest to the Participants required pursuant hereto, the Sponsor shall, upon demand of the Servicer, immediately fund such difference to theServicer (with such payment allocated to specific Loan Payment Defaults as agreed by Sponsor and Servicer) and if such shortfall results from LoanPayment Defaults rather than interest rate variances, either, at the election of the Sponsor, (x) the Sponsor shall be reimbursed by the Servicer uponreceipt of such amount from the Borrower, (y) the Loan Indebtedness shall be deemed to be reduced by such amount upon a repayment or purchase ofsuch Defaulted Loan by Sponsor in accordance with the terms of this Agreement, or (z) such amount shall be deemed to have satisfied Sponsor’sobligation to cure such Loan Payment Default hereunder.

Section 2.6 Default Interest.

If any amount payable to the Servicer or the Participants by the Sponsor under the Operative Documents is not paid on the date due hereunder, such amountshall bear interest (to the extent permitted by law) for each day from such date up to (but not including) the date of actual payment (after as well as beforejudgment) at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the Prime Rate plus 2% per annum.

-28-

Section 2.7 Voluntary Reduction of the Unutilized Commitment.

Upon at least three (3) Business Days’ prior telephonic notice (promptly confirmed in writing) to the Servicer, Sponsor shall have the right, withoutpremium or penalty, to terminate the Commitment, in part or in whole, provided that (i) any such termination shall apply to proportionately and permanentlyreduce the Participating Commitments of each of the Participants, (ii) any partial termination pursuant to this Section 2.7 shall be in an amount of at least$5,000,000 and integral multiples of $1,000,000, and (iii) the

Commitment may not be reduced to an amount which is less than the aggregate sum of all outstanding Loan Commitments.

Section 2.8 Extension of Commitment.

(a) The Sponsor may, by written notice to the Servicer (which shall promptly deliver a copy to each of the Participants), given not more thansixty (60) days prior to the then scheduled Commitment Termination Date, request that the Participants extend the then scheduled CommitmentTermination Date (the “Existing Date”) for an additional three-year period. Concurrently with the delivery of such written notification, the Sponsorshall deliver to the Servicer (which shall promptly deliver a copy to each of the Participants), a certificate of the chief financial officer or treasurer ofthe Sponsor, setting forth in reasonable detail (i) the amount of the Guaranty Payments made by the Sponsor since the Effective Date with respect toLoans in the Limited Guaranty Pool and (ii) all Loans and the amounts thereof that are in the Fully Guaranteed Pool as of such date. Each Participantshall, by notice to the Sponsor and the Servicer given within fifteen (15) Business Days after receipt of such request, advise the Sponsor and theServicer whether or not such Participant consents to the extension request (and any Participant which does not respond during such 15-day period shallbe deemed to have advised the Sponsor and the Servicer that it will not agree to such extension).

(b) In the event that, on the 15th Business Day after receipt of the notice delivered pursuant to subsection (a) above, all of the Participants shallhave agreed to extend their respective Participating Commitments, the Commitment Termination Date shall be deemed to have been extended, effectiveas of the Existing Date, to the date which is three years thereafter.

(c) In the event that, on the 15th Business Day after receipt of the notice delivered pursuant to subsection (a) above, all of the Participants shallnot have agreed to extend their respective Participating Commitments, the Sponsor shall notify the consenting Participants (“Consenting Participants”)of the amount of the Participating Commitments of the non-extending Participants (“Non-Consenting Participants”) and such Consenting Participantsshall, by notice to the Sponsor and the Servicer given


-29-

within ten (10) Business Days after receipt of such notice, advise the Servicer and Sponsor whether or not such Participant wishes to purchase all or aportion of the Participating Commitments of the Non-Consenting Participants (and any Participant which does not respond during such 10-BusinessDay period shall be deemed to have rejected such offer). In the event that more than one Consenting Participant agrees to purchase all or a portion ofsuch Participating Commitments, the Sponsor and the Servicer shall allocate such Participating Commitments among such Consenting Participants soas to preserve, to the extent possible, the relative pro rata shares of the Consenting Participants of the Participating Commitments prior to suchextension request. If Consenting Participants do not elect to assume all of the Participating Commitments of the Non-Consenting Participants, theSponsor shall have the right to arrange for one or more banks (any such bank being called a “New Participant”), to purchase the ParticipatingCommitment of any Non-Consenting Participant. Each Non-Consenting Participant shall assign its Commitment and the Loans outstanding hereunderto the Consenting Participant or New Participant purchasing such Participating Commitment in accordance with Section 13.6, in return for payment infull of all principal, interest and other amounts owing to such Non-Consenting Participant hereunder, on or before the Existing Date and, as of theeffective date of such assignment, shall no longer be a party hereto, provided that each New Participant shall be subject to the approval of the Servicer(which approval shall not be unreasonably withheld). If (and only if) Participants (including New Participants) holding Participating Commitmentsrepresenting at least an amount equal to the greater of (x) the sum of all outstanding Loan Commitments and (y) 66 2/3 % of the aggregate ParticipatingCommitments on the date of such extension request shall have agreed to such extension by the Existing Date (the “Continuing Participants”), then (i)the Commitment Termination Date shall be extended for an additional three year period and (ii) the Participating Commitment of any Non-ConsentingParticipant which has not been assigned to a Consenting Participant or a New Participant shall terminate (with the result that the amount of theCommitment shall be decreased by the amount of such Participating Commitment), and all amounts owing to such Non-Consenting Participant shallbecome due and payable, together with all interest accrued thereon and all other amounts owed to such Non-Consenting Participant hereunder, on theExisting Date applicable to such Participant without giving effect to any extension of the Commitment Termination Date.

(d) Increase in Commitment. So long as no Credit Event has occurred and is continuing, the Sponsor may, at any time, by written notice to theServicer, who shall promptly notify the Participants, request that the Commitment and the aggregate principal amount of the ParticipatingCommitments be increased to $73,000,000. No Participant (or any successor thereto) shall have any obligation to increase its ParticipatingCommitment or its other obligations under the Agreement and the other Operative Documents, and any decision by a Participant to increase itsParticipating Commitment shall be made in its sole discretion independently from any other Participant. The Sponsor shall have the right to obtaincommitments from existing Participants or new banks or financial institutions in an aggregate principal amount such that the existing ParticipantCommitments, plus the aggregate principal amount of the new commitments by the Participants or new banks or financial institutions do not exceed$73,000,000; provided, however, that (1) the new banks or financial institutions must be reasonably acceptable to the Servicer, (2) the new banks orfinancial

-30-

institutions must become parties to this Agreement pursuant to joinder agreements in form and substance reasonably satisfactory to the Servicer,pursuant to which they shall become Participants, shall be granted all of the rights of a Participant under this Agreement and the other CreditDocuments and shall assume all liabilities and obligations of a Participant under this Agreement and (3) if an existing Participant agrees to increase itsParticipating Commitment, such Participant shall execute an agreement evidencing its increase in its Participating Commitment in form and substancesatisfactory to the Servicer. Upon the execution and delivery by such existing Participant or new bank or financial institution of such agreement orjoinder, the aggregate principal amount of the Participating Commitments shall be deemed amended to include the additional ParticipatingCommitment of such existing Lender or the new Participating Commitment of such new bank or financial institution and the Commitment shall beincreased by a corresponding amount. If the commitments received for any increase in the Commitment requested by the Sponsor exceed the amount ofsuch request, the Sponsor and the Servicer shall have the right to decide how such commitments are allocated. If commitments for the total amount ofany such request are not obtained, the Sponsor shall have the right to accept the commitments which are obtained and accept such increase in anamount less than requested. The Sponsor shall have the right to decline any such increase if the Pro Rata Share of any existing Participant immediatelyprior to the implementation of such increase would be different immediately thereafter. The Servicer is authorized to enter into, on behalf of theParticipants, any amendment to this Agreement or any other Operative Document as may be necessary to incorporate the terms of any such increase.

Section 2.9 Reserve Requirements; Change in Circumstances.

(a) Notwithstanding any other provision herein, if, by reason of (i) after the Effective Date, the introduction of or any change (including anychange by way of imposition or increase of reserve requirements) in or in the interpretation of any law or regulation, or (ii) the compliance with anyguideline or request from any central bank or other Governmental Authority or quasi-Governmental Authority exercising control over banks orfinancial institutions generally (whether or not having the force of law), any reserve (including any imposed by the Federal Reserve Board), specialdeposit or similar requirement (including a reserve, special deposit or similar requirement that takes the form of a tax) against assets of, deposits with orfor the account of, or credit extended by, any Participant’s office through which it funds its obligations hereunder shall be imposed or deemedapplicable or any other condition affecting its obligation to make or maintain its Funded Participant’s Interest at a rate based upon the Adjusted LIBORate shall be imposed on any Participant or its office through which it funds its obligations hereunder or the interbank Eurodollar market; and as aresult thereof there shall be any increase in the cost to such Participant of agreeing to make or making, funding or maintaining funds its obligationshereunder (except to the extent already included in the determination of the applicable Adjusted LIBO Rate), or there shall be a reduction in the amountreceived or receivable by that Participant or its office through which it funds its obligations hereunder, then the Sponsor shall from time to time, uponwritten notice from and demand by the Participant (with a copy of

-31-

such notice and demand to the Servicer), pay to the Servicer for the account of that Participant within five Business Days after the date specified in suchnotice and demand, additional amounts sufficient to indemnify that Participant against such increased cost. A certificate as to the amount of suchincreased cost submitted to the Sponsor and the Servicer by that Participant, shall, except for manifest error, be final, conclusive and binding for allpurposes.

(b) If while the Commitment or any Loan Commitments are outstanding, any Participant (including the Servicer) determines that the adoption ofany law, rule or regulation regarding capital adequacy or capital maintenance, or any change in any of the foregoing or in the interpretation or


administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, orcompliance by any Participant (or any lending office of such Participant) or any Participant’s holding company with any request or directive regardingcapital adequacy or capital maintenance (whether or not having the force of law) of any such authority, central bank or comparable agency, has theeffect of reducing the rate of return on such Participant’s capital or on the capital of such Participant’s holding company, if any, as a consequence ofthis Agreement, the Loan Documents or the purchases made by such Participant pursuant hereto to a level below that which such Participant or suchParticipant’s holding company could have achieved but for such adoption, change or compliance (taking into consideration such Participant’s policiesand the policies of such Participant’s holding company with respect to capital adequacy) by an amount reasonably deemed by such Participant to bematerial, then from time to time, within 15 days after written demand by such Participant, the Sponsor pay to such Participant such additional amountor amounts as will compensate such Participant or such Participant’s holding company for such reduction. A certificate as to the amount of any suchadditional amount or amounts, submitted to the Sponsor and the Servicer by such Participant, shall, except for manifest error, be final, conclusive andbinding for all purposes.

Section 2.10 Wind-Down Event.

In the event that (i) the Commitment is not extended for any reason and the Commitment Termination Date occurs, (ii) the Sponsor has made GuarantyPayments of $5,000,000 or more in the aggregate since the Effective Date, or (iii) three or more Loans become Defaulted Loans since the Effective Date(provided, that for purposes of this clause (iii), (A) any Defaulted Loan that remains in the Limited Guaranty Pool because a new Franchisee Partner has acquiredan interest in the Defaulted Borrower shall be treated as a separate Loan for purposes of the three Defaulted Loan test above and (B) any Defaulted Loans that aremoved to the Fully Guaranteed Pool shall not be treated as a Defaulted Loan for purposes of the three Defaulted Loan test above unless and until such Loan isreturned to the Limited Guaranty Pool and another Loan Default occurs) (each, a “Wind Down Event”), then the Sponsor shall not have the right to request thatany further Loan Commitments be established or that any Loan Commitments be extended or renewed. The occurrence of a Wind Down Event shall not affectthe obligation of (x) the Servicer to make Advances pursuant to existing Loan Commitments, (y) the Participants to fund their Participant’s Interest as providedherein, or (z) the Credit Parties under the Operative Documents.

-32-

Section 2.11 Pro Rata Treatment.

Subject to the application of payments pursuant to Article III and except as specifically provided therein, each payment of principal of any FundedParticipant’s Interest, each payment of interest with respect to the Funded Participant’s Interest, each payment of the Commitment Fees and Participant’s Letterof Credit Fees and each reduction of the Commitment shall be allocated pro rata among the Participants in accordance with their respective applicable Pro RataShare. Each Participant agrees that in computing such Participant’s portion of any Funded Participant’s Interest to be made hereunder, the Servicer may, in itsdiscretion, round each Participant’s percentage of such Participant Funding Request to the next higher or lower whole dollar amount.

Section 2.12 Payments.

(a) The Sponsor shall make each payment required to be made by Sponsor hereunder and under any other Operative Document to any Participantor the Servicer not later than 1:00 p.m. (Charlotte, North Carolina time), on the date when due in dollars to the Servicer at its offices in Atlanta, Georgiain immediately available funds.

(b) Whenever any payment hereunder or under any other Operative Document shall become due, or otherwise would occur, on a day that is not aBusiness Day, such payment may be made on the next preceding Business Day.

Section 2.13 Sharing of Setoffs.

Each Participant agrees that if it shall, in accordance with applicable law, through the exercise of a right of banker’s lien, setoff or counterclaim against theSponsor or any Borrower, or pursuant to a secured claim under Section 506 or Title 11 of the United States Code or other security or interest arising from, or inlieu of, such secured claim, received by the Participant under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means,obtain payment (voluntary or involuntary) in respect of any Funded Participant’s Interest under this Agreement as a result of which the unpaid principal portionof its Funded Participant’s Interest shall be proportionately less than the unpaid principal portion of the Funded Participant’s Interest of any other Participant, itshall be deemed simultaneously to have purchases from such other Participant at face value, and shall promptly pay to such other Participant the purchase pricefor, a participation in the Funded Participant’s Interest of such other Participant, so that the aggregate unpaid principal amount of the Funded Participant’sInterest and participations in Funded Participant’s Interests held by each Participant shall be in the same proportion to the aggregate unpaid principal amount ofall Funded Participant’s Interests then outstanding as the principal amount of its Purchases prior to such exercise of banker’s lien, setoff or counterclaim or otherevent was to the principal amount of all Funded Participant’s Interests outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event;provided, however, that, if any such purchase or purchases or adjustments shall be made pursuant to this Section and the payment giving rise thereto shallthereafter be recovered, such purchase or

-33-

purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. The Sponsorexpressly consents to the foregoing arrangements and agrees, to the extent permitted by applicable law, that any Participant holding a Funded Participant’sInterest or a participation in a Funded Participant’s Interest deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff orcounterclaim with respect to any and all moneys owing by the Sponsor to such Participant by reason thereof.


ARTICLE III

SERVICER’S SERVICING OBLIGATIONS; DISTRIBUTION OF PAYMENTS

Section 3.1 Servicer’s Obligations with Respect to Loans; Collateral; Non-Recourse.

(a) The Servicer shall, for itself and the benefit of all of the Participants and the Sponsor, (i) document, close, manage, administer and collect theLoans and issue and administer the Letters of Credit in accordance with the terms of this Agreement and the Servicing Agreement and exercise alldiscretionary powers involved in such management, administration and collection and (ii) shall distribute the funds received with respect to the Loansand Letter of Credit Obligations and from the Sponsor in accordance with the terms of this Agreement. The Servicer agrees that it will exercise thesame care in administering the Loans as it exercises with respect to loans of similar size and type in which no participations are allocated, and each ofthe Participants agrees that the Servicer shall have no further responsibility to the Participants.

(b) The forms of the Loan Agreement and Promissory Note used by the Servicer as documentation for each Loan shall be substantially in theforms attached hereto. The Sponsor shall have the right to direct the Servicer to make modifications to such forms and amendments thereto from time totime provided that, the Servicer shall receive $250 from the Borrower for each such modification and amendment and provided further that, theSponsor may not direct the Servicer to revise or amend such forms so as to be inconsistent with the terms of Section 2.1 hereof.

(c) Notwithstanding anything in this Agreement to the contrary, each of the Participants acknowledges and agrees that the Servicer shall have noobligation to the Participants with respect to (i) the creation, perfection, priority or continuation of any Lien on any Collateral obtained by the Servicerwith respect to the Loans at the request of the Sponsor, or (ii) the obtaining or retention of any guaranties required by the Sponsor (other than todistribute any proceeds therefrom in accordance with the terms of this Article III). The Participants acknowledge and agree that the Sponsor has theright to release or modify the terms of any Collateral or any Personal Guaranty.

(d) Each of the Participants acknowledges and agrees that all payments made to the Participants pursuant to this Agreement by the Servicer shallbe made solely

-34-

from amounts received from the Sponsor, the Borrowers and other obligors or Collateral under the applicable Loan Documents and the Servicer shallhave no personal liability for any amounts payable to the Participants hereunder.

Section 3.2 Application of Payments.

(a) The Servicer and the Sponsor shall instruct each Borrower to make payments with respect to Loans, Letter of Credit Obligations and theLoan Commitments directly to the Servicer, either by mail, wire transfer or debit pursuant to an ACH Authorization (as such term is defined in theServicing Agreement).

(b) Reserved.

(c) On each Participant Payment Date, all payments of interest received by the Servicer from the Borrowers and the Sponsor pursuant to itsGuaranty contained herein with respect to the Loans and not previously distributed by the Servicer, shall be applied to pay all accrued but unpaidinterest on the Funded Participant’s Interest pursuant to this Agreement, then to pay all accrued but unpaid Servicing Fees and then to pay the Sponsor’sFee, in accordance with the terms of the Servicing Agreement.

(d) On each Quarterly Date, all payments of Letter of Credit Fees received by the Servicer from the Borrowers and the Sponsor pursuant to itsGuaranty contained herein with respect to the Letter of Credit Obligations and not previously distributed by the Servicer, shall be applied to pay allaccrued but unpaid Participant’s Letter of Credit Fees on the Funded Participant’s Letter of Credit Interest pursuant to this Agreement, then to pay allaccrued but unpaid Servicer’s Letter of Credit Fees and then to pay the Sponsor’s Letter of Credit Fee, in accordance with the terms of the ServicingAgreement.

(e) On any Business Day on which the Servicer shall receive any payment in respect of the principal amount of any Loan, whether from aBorrower, the Sponsor pursuant to its Guaranty contained herein, or any other obligor with respect thereto, the Servicer may elect, in its sole discretionto (i) apply such principal payment to fund any requested Advances, (ii) apply such amount to repay any outstanding Fronting Advances, or (iii) toeither (x) distribute such amount to the Participants to reduce each Participant’s Funded Participant’s Interest or (y) apply such amount to Bank ofAmerica’s Funded Participant’s Interest only (with the understanding that the Funded Participant’s Interest of each Participant shall not be deemed tohave been repaid until such amount is actually received by such Participant); provided that, in the event that the Servicer elects to apply any repaymentto reduce Bank of America’s Funded Participant’s Interest without a corresponding reduction of the other Participant’s Funded Participant’s Interest,Bank of America shall be obligated to make a payment to each Participant equal to such Participant’s Pro Rata Share of such payment upon the earlierof (i) the next Quarterly Date and (ii) the occurrence of a Credit Event hereunder.

(f) If during any period when no Credit Event has occurred and is continuing, amounts received by Servicer are not capable of being allocated toany specific Loan or

-35-


Letter of Credit Obligations or, in the case of amounts allocable to a specific Loan or Letter of Credit Obligations, are not sufficient to repay allobligations then due and owing with respect thereto, such amounts shall be applied by the Servicer as follows: (i) first, to the payment of CommitmentFees and Participant’s Letter of Credit Fees owing to the Participants hereunder, (ii) second, to the payment of accrued interest on the FundedParticipant’s Interest hereunder, (iii) third, to the payment of the Servicing Fees and Servicer’s Letter of Credit Fees owing under the ServicingAgreement, (iv) fourth, to the repayment of the Funded Participant’s Interests outstanding hereunder, (v) fifth, to the payment of all other amountsowing to the Servicer or any Participant hereunder, and (vi) sixth, if all obligations of the Sponsor pursuant to the Operative Documents have beensatisfied in full, to the Sponsor.

(g) During any period when a Credit Event has occurred and is continuing, any amounts received by Servicer with respect to the Loans or theLetter of Credit Obligations shall be applied, after deduction of any expenses incurred in the collection of any such amounts, as follows (i) first, to thepayment of any accrued and unpaid Servicing Fees and Servicer’s Letter of Credit Fees, (ii) second, to each Participant in accordance with Pro RataShare, and (iii) thereafter, to such Persons as may be legally entitled thereto.

(h) If not sooner repaid, all amounts due and payable to the Servicer and the Participants shall be due and payable in full on the FinalTermination Date, and if any Letter of Credit Obligations are outstanding on such date, the Sponsor shall be required to post cash collateral for suchLetter of Credit Obligations in an amount equal to 105% thereof.

Section 3.3 Servicing Report.

On each Participant Payment Date, the Servicer shall telecopy to the Sponsor and each Participant a servicing report in the form of Exhibit F attached hereto(the “Servicing Report”) setting forth the following information with respect the Loans:

(a) the aggregate principal balance of the Loans as of the close of business on the last Business Day of the preceding Payment Period;

(b) the aggregate amount of Loans repurchased by the Sponsor or amounts collected with respect to the Collateral for the Loans;

(c) the aggregate amount of Letter of Credit Outstandings as of the close of business on the last Business Day of the preceding Payment Period;

(d) the aggregate Loan Commitments as of the close of business on the last Business Day of the preceding Payment Period; and

(e) each Loan which is fifteen days or more past due (including the past due amount and the number of days past due).

-36-

ARTICLE IV

LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND

Section 4.1 Default Notice Of Loan.

The Servicer shall notify the Sponsor and the relevant Borrower of a Loan Payment Default within fifteen (15) days following the occurrence thereof and ofany other Loan Default in accordance with the terms of the Servicing Agreement.

Section 4.2 Waiver or Cure By The Sponsor; Fully Guaranteed Pool.

Unless a Credit Event or Unmatured Credit Event has occurred and is continuing, within the Response Period, the Sponsor shall be entitled (but notobligated) to, in the case of a Loan Payment Default, cure such Loan Payment Default and shall be entitled to waive any other Loan Default except as set forth inSection 4.4. During a Response Period, the Servicer shall refrain from taking any legal action against the Defaulted Borrower under the Defaulted Loan which isthe subject of such Response Period, and from accelerating payment of the Loan Indebtedness under such Defaulted Loan but the Servicer shall cease fundingany further Advances pursuant to the Loan Commitment or issuing any Letters of Credit. If the Sponsor cures a Loan Payment Default prior to the expiration of aResponse Period and waives any other Loan Default (subject to Section 4.4) prior to the expiration of a Response Period, then as to each Loan Payment Defaultor other Loan Default so waived or so cured, the Defaulted Borrower’s and the Servicer’s respective rights and obligations under the Loan Documents shall berestored to the same status as if such waived or cured Loan Default never occurred except that, with respect to any Loan Payment Default cured by the Sponsorhereunder, such Loan shall be deemed to have been moved from the Limited Guaranty Pool into the Fully Guaranteed Pool and shall thereafter be guaranteedfully and completely by the Sponsor as provided herein.

Section 4.3 Standstill Period; Defaulted Loan Guaranty Demand.

(a) In the event that following the end of a Response Period, a Loan Payment Default is not cured or in the event that any other Loan Default isnot then waived, then unless a Credit Event has occurred and is continuing, the Servicer will continue to refrain from exercising remedies against suchBorrower during the Standstill Period provided that the Sponsor immediately pays all past due interest and fees owing to the Servicer pursuant to theapplicable Loan Documents, if any, on such Defaulted Loans. After the Standstill Period ends, the Servicer shall have the right at any time thereafter, todemand payment of the entire Loan Indebtedness with respect to such Loan from the Sponsor pursuant to Article VIII hereof (unless the events set forthin Section 8.2(b)(ii) or (iii) have occurred), which amount, subject to the limitations set forth therein, shall be due and payable on the date which is


five (5) days following demand. The Sponsor hereby acknowledges and agrees that the requirement for payment in full of the Loan Indebtedness shallinclude the posting of cash collateral with the Servicer in an amount equal to 105% of the outstanding Letter of Credit

-37-

Obligations of such Borrower, unless the outstanding Letters of Credit are canceled and returned to the Servicer. The provisions of this Section 4.3(a)are subject in all respects to Section 8.1 below.

(b) In the event that the Sponsor is not obligated to repay the Loan Indebtedness with respect to a Defaulted Loan pursuant to Article VIII hereofor in the event that a Credit Event has occurred and is continuing and Sponsor has not purchased all outstanding Loans hereunder, the Sponsor agreesthat the Servicer shall be released from its obligations to the Sponsor hereunder with respect to administering and enforcing all Loans and mayadminister and enforce such Loans and Letter of Credit Obligations as it deems appropriate, without regard to any limitations or restrictions set forthherein (but subject to Article III hereof in all events) or in any other Operative Document.

Section 4.4 No Waiver or Cure Available.

Notwithstanding anything contained in this Article to the contrary, but subject to the limitations set forth in Section 8.1 below, the Sponsor shall, withinseven (7) days of its receipt of a written demand from the Servicer instructing it to do so, make payment of the Loan Indebtedness of any Loan and assume theLoan Commitment of a Defaulted Borrower whose Loan Default either arises from the bankruptcy or insolvency of the Borrower or the termination of theFranchise Documents with such Borrower. The Sponsor hereby acknowledges and agrees that, subject to the limitations set forth in Section 8.1 below, therequirement for payment in full of the Loan Indebtedness shall include the posting of cash collateral with the Servicer in an amount equal to 105% of theoutstanding Letter of Credit Obligations of such Borrower.

Section 4.5 Fixed Charge Coverage Ratio for Loan Documents executed under the Prior Loan Agreement.

(a) The parties hereto acknowledge that certain of the Loan Documents executed under the Prior Loan Facility Agreement do not contain a fixedcharge coverage ratio in the form required under the Loan Agreement attached hereto as Exhibit D. Notwithstanding the fact that no Loan Default canarise under such Loan Documents as a result of the applicable Borrower failing to meet such fixed charge coverage ratio, a Loan Default shall bedeemed to have occurred for purposes of this Agreement if the Franchisee Fixed Charge Coverage Ratio for any Borrower that executed LoanDocuments under the Prior Loan Facility Agreement is less than 1.2 to 1.0, as of the last day of any fiscal quarter based upon the precedingtwelve-month period, commencing on the last day of the first fiscal quarter of such Borrower in which such Borrower or its Subsidiaries own at leastone Qualified Store.

(b) During the sixty-day period immediately following the date that the Sponsor delivers the Borrower Compliance Certificate to the Servicersetting forth any Deemed Loan Default, the Sponsor shall have the right, by written notice to the Servicer, to move the Loan with respect to which theDeemed Loan Default has occurred from the Limited Guaranty Pool and into the Fully Guaranteed Pool. If such Loan has not been moved into theFully Guaranteed Pool at the end of such sixty-day period, then the

-38-

Sponsor must purchase such Loan and assume the related Loan Commitment for a purchase price equal to the outstanding Loan Indebtedness, includingthe posting of cash collateral with the Servicer in an amount equal to 105% of the outstanding Letter of Credit Obligations of such Borrower (unless theoutstanding Letters of Credit are canceled and returned to the Servicer), on the date which is 120 days after the date that the Sponsor delivers theBorrower Compliance Certificate to the Servicer setting forth any Deemed Loan Default, unless prior to the expiration of such 120-day period, theevents set forth in Section 8.2(c)(i) or (ii) have occurred with respect to such Loan. Any amounts paid by the Sponsor to repurchase such Loans fromthe Limited Guaranty Pool shall be deemed Guaranty Payments and shall be subject to the limitations set forth in Section 8.1.

Section 4.6 Movement of Loans into and out of Fully Guaranteed Pool.

(a) If no Loan Payment Default or Loan Default have occurred for four consecutive fiscal quarters with respect to any Loan in the FullyGuaranteed Pool, the Sponsor shall have the right, by written notice to the Servicer, to move such Loan out of the Fully Guaranteed Pool and into theLimited Guaranty Pool.

(b) If a Loan that otherwise must be repurchased by the Sponsor pursuant to Section 8.2(b) or 8.2(c) instead remains in the Limited GuarantyPool as a result of the events described in 8.2(b)(ii) or 8.2(c)(ii), the Sponsor shall have the right to place such Loan in the Fully Guaranteed Pool withinthirty (30) days of such new Franchise Partner acquiring an interest in the applicable Borrower, by delivering written notice thereof to the Servicer. TheSponsor shall also have the right to move any Loan placed in the Fully Guaranteed Pool pursuant to this Section 4.6(b) from the Fully Guaranteed Pooland into the Limited Guaranty Pool at any time by delivering written notice thereof to the Servicer.

Section 4.7 Extension of Maturity Date of Defaulted Loans during the Response Period and the Standstill Period.


The Servicer, Participants and the Sponsor agree that (x) during any Response Period, the maturity date of any Loans that have matured prior to, or matureduring, such Response Period shall automatically be extended to the last day of such Response Period and (y) during any Standstill Period, the maturity date ofany Loans that have matured prior to, or mature during, such Standstill Period shall automatically be extended to the last day of such Standstill Period.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Sponsor (as to itself and each of the Consolidated Companies) hereby represents and warrants to the Servicer and each of the Participants that:

-39-

Section 5.1 Existence; Power.

The Sponsor and each of its Subsidiaries (i) is duly organized, validly existing and in good standing as a corporation or a limited liability company under thelaws of the jurisdiction of its organization, (ii) has all requisite power and authority to carry on its business as now conducted, and (iii) is duly qualified to dobusiness, and is in good standing, in each jurisdiction where such qualification is required, except where a failure to be so qualified could not reasonably beexpected to result in a Material Adverse Effect.

Section 5.2 Organizational Power; Authorization.

The execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party are within such Credit Party’s organizationalpowers and have been duly authorized by all necessary organizational, and if required, shareholder action. This Agreement has been duly executed and deliveredby the Sponsor, and constitutes, and each other Loan Document to which any Credit Party is a party, when executed and delivered by such Credit Party, willconstitute, valid and binding obligations of the Sponsor or such Credit Party (as the case may be), enforceable against the Sponsor or such Credit party (as thecase may be) in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similarlaws affecting the enforcement of creditors’ rights generally and by general principles of equity.

Section 5.3 Governmental Approvals; No Conflicts.

The execution, delivery and performance by the Sponsor of this Agreement, and by each Credit Party of the other Loan Documents to which it is a party(a) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained ormade and are in full force and effect, (b) will not violate any applicable law, rule or regulation or the charter, bylaws or other organizational documents of theSponsor or any of its Subsidiaries or any judgment, order or ruling of any Governmental Authority, (c) will not violate or result in a default under any indenture,material agreement or other material instrument binding on the Sponsor or any of its Subsidiaries or any of its assets or give rise to a right thereunder to requireany payment to be made by the Sponsor or any of its Subsidiaries and (d) will not result in the creation or imposition of any Lien on any asset of the Sponsor orany of its Subsidiaries, except Liens (if any) created under, or permitted by, the Loan Documents or Permitted Encumbrances.

Section 5.4 Financial Statements.

The Sponsor has furnished to each Participant the audited consolidated balance sheet of the Sponsor and its Subsidiaries as of June 1, 2004 and the relatedconsolidated statements of income, shareholders’ equity and cash flows for the fiscal year then ended prepared by KPMG L.L.P. Such financial statements fairlypresent the consolidated financial condition of the Sponsor and its Subsidiaries as of such dates and the consolidated results of operations for such periods inconformity with GAAP consistently applied. Since June 1, 2004, there have been no changes with respect to the Sponsor and its Subsidiaries which have had orcould reasonably be expected to have, singly or in the aggregate, a Material Adverse Effect.

-40-

Section 5.5 Litigation and Environmental Matters.

(a) No litigation, investigation or proceeding of or before any arbitrators or Governmental Authorities is pending against or, to the knowledge ofthe Sponsor, threatened against or affecting the Sponsor or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adversedetermination that could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect or (ii) which in any mannerdraws into question the validity or enforceability against the Sponsor or any Credit Party of this Agreement or any other Loan Document.

(b) Neither the Sponsor nor any of its Subsidiaries (i) has failed to comply with any applicable Environmental Law or to obtain, maintain orcomply with any permit, license or other approval required under any applicable Environmental Law, (ii) has become subject to any EnvironmentalLiability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability,except for any failure or Environmental Liability that would not have a Material Adverse Effect.

Section 5.6 Compliance with Laws and Agreements.


The Sponsor and each Subsidiary is in compliance with (a) all applicable laws, rules, regulations, judgments, orders and rulings of any GovernmentalAuthority, and (b) all indentures, agreements or other instruments binding upon it or its properties, except in either case where non-compliance, either singly or inthe aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 5.7 Investment Company Act, Etc.

Neither the Sponsor nor any of its Subsidiaries is (a) an “investment company”, or is “controlled” by an “investment company”, as such terms are definedin, or subject to regulation under, the Investment Company Act of 1940, as amended, (b) a “holding company” as defined in, or subject to regulation under, thePublic Utility Holding Company Act of 1935, as amended or (c) otherwise subject to any other regulatory scheme limiting its ability to incur debt.

Section 5.8 Taxes.

The Sponsor and its Subsidiaries and each other Person for whose taxes the Sponsor or any Subsidiary could become liable have timely filed or caused to befiled all Federal income tax returns and all other material tax returns that are required to be filed by them, and have paid all taxes shown to be due and payable onsuch returns or on any assessments made against it or its property and all other taxes, fees or other charges imposed on it or any of its property by anyGovernmental Authority, except (i) to the extent the failure to do so would not have a Material Adverse Effect or (ii) where the same are currently beingcontested in good faith by appropriate proceedings and for which the Sponsor or such Subsidiary,

-41-

as the case may be, has set aside on its books adequate reserves in accordance with GAAP. As of the Closing Date, the charges, accruals and reserves on thebooks of the Sponsor and its Subsidiaries in respect of such taxes are adequate, and no tax liabilities that could be materially in excess of the amount so providedare anticipated.

Section 5.9 Margin Regulations.

None of the proceeds of any of the Loans or Letters of Credit will be used for “purchasing” or “carrying” any “margin stock” with the respective meaningsof each of such terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the applicable MarginRegulations.

Section 5.10 ERISA.

No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability isreasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefitobligations under each Plan (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the mostrecent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulatedbenefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of thedate of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans.

Section 5.11 Ownership of Property.

(a) As of the Closing Date, each of the Sponsor and its Subsidiaries has good title to, or valid leasehold or other appropriate legal interests in, allof its real and personal property material to the operation of its business, free and clear of any Encumbrances except Permitted Encumbrances.

(b) The Sponsor and each of its Subsidiaries owns, or is licensed, or otherwise has the right, to use, all patents, trademarks, service marks, tradenames, copyrights, franchises, licenses, and other intellectual property material to its business, and the use thereof by the Sponsor and its Subsidiariesdoes not infringe on the rights of any other Person, except for any such infringements that, individually or in the aggregate, would not have a MaterialAdverse Effect.

Section 5.12 Disclosure.

The Sponsor has disclosed to the Servicer all agreements, instruments, and corporate or other restrictions to which the Sponsor or any of its Subsidiaries issubject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.None of the reports (including without limitation all reports that the Sponsor is required to file with the Securities and Exchange Commission), financialstatements, certificates or other information furnished by or on behalf

-42-

of the Sponsor to the Servicer or any Participant or anyone on their behalf in connection with the negotiation or syndication of this Agreement or any other LoanDocument or delivered hereunder or thereunder (as modified or supplemented by any other information so furnished) contains any material misstatement of fact


or omits to state any material fact necessary to make the statements therein, taken as a whole, in light of the circumstances under which they were made, notmisleading.

Section 5.13 Labor Relations.

There are no strikes, lockouts or other material labor disputes, or grievances against the Sponsor or any of its Subsidiaries, or, to the Sponsor’s knowledge,threatened against or affecting the Sponsor or any of its Subsidiaries, and no significant unfair labor practice, charges or grievances are pending against theSponsor or any of its Subsidiaries, or to the Sponsor’s knowledge, threatened against any of them before any Governmental Authority. All payments due from theSponsor or any of its Subsidiaries pursuant to the provisions of any collective bargaining agreement have been paid or accrued as a liability on the books of theSponsor or any such Subsidiary, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

Section 5.14 Subsidiaries.

As of the date of this Agreement, Schedule 5.14 sets forth the name of, the ownership interest of the Sponsor in, the jurisdiction of incorporation ororganization of, and the type of, each Subsidiary and identifies each Material Subsidiary that is a Subsidiary Loan Party.

Section 5.15 Representations and Warranties with Respect to Specific Loans.

The Sponsor represents and warrants to the Servicer and each Participant with respect to each Loan Commitment established and each Advance madepursuant to the Operative Documents that:

(a) The Promissory Note, Loan Agreement and each other Loan Document executed in connection with such Loan Commitment each constitutesa valid and binding agreement of each Borrower or guarantor party thereto and is enforceable against each such party in accordance with its terms,except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditor’srights generally and by general principles of equity.

(b) The Promissory Note and accompanying Loan Documents executed in connection with such Loan and delivered to the Servicer are the onlycontracts evidencing the transaction described therein and constitute the entire agreement of the parties thereto with respect to such transaction andSponsor has not made any other promises, agreements or representations and warranties with respect to the transactions evidenced by such PromissoryNote.

-43-

(c) The Promissory Note and each accompanying Loan Document executed in connection with such Loan is genuine and all signatures, names,amounts and other facts and statements therein and thereon are true and correct.

(d) All disclosures required to be made under applicable federal and state law in connection with such Loan have been properly and completelymade with respect to each Promissory Note, the other Loan Documents and the Loan and each such Promissory Note, other Loan Documents and Loanis in full compliance with all applicable federal and state laws, including without limitation, applicable state and federal usury laws and regulations.

(e) The proceeds of each Promissory Note will be solely for the purpose of financing the acquisition and expansion of restaurants franchised bythe Sponsor and operated by the relevant Borrower and not for any non-business purposes.

ARTICLE VI

COVENANTS

The Sponsor covenants and agrees that so long as the Commitment remains outstanding or any Loans or Letters of Credit remain outstanding or the Sponsorhas any obligations under the Operative Documents:

Affirmative Covenants

Section 6.1 Financial Statements and Other Information.

The Sponsor will deliver to the Servicer and each Participant:

(a) as soon as available and in any event within 90 days after the end of each fiscal year of Sponsor, a copy of the annual audited report for suchfiscal year for the Sponsor and its Subsidiaries, containing consolidated balance sheets of the Sponsor and its Subsidiaries as of the end of such fiscalyear and the related consolidated statements of income, stockholders’ equity and cash flows (together with all footnotes thereto) of the Sponsor and itsSubsidiaries for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail andreported on by KPMG L.L.P or other independent public accountants of nationally recognized standing (without a “going concern” or like qualification,exception or explanation and without any qualification or exception as to scope of such audit) to the effect that such financial statements present fairly


in all material respects the financial condition and the results of operations of the Sponsor and its Subsidiaries for such fiscal year on a consolidatedbasis in accordance with GAAP and that the examination by such accountants in connection with such consolidated financial statements has been madein accordance with generally accepted auditing standards;

-44-

(b) as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Sponsor,an unaudited consolidated balance sheet of the Sponsor and its Subsidiaries as of the end of such fiscal quarter and the related unaudited consolidatedstatements of income and cash flows of the Sponsor and its Subsidiaries for such fiscal quarter and the then elapsed portion of such fiscal year, settingforth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of Sponsor’s previous fiscal year, allcertified by the chief financial officer or treasurer of the Sponsor as presenting fairly in all material respects the financial condition and results ofoperations of the Sponsor and its Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and theabsence of footnotes;

(c) concurrently with the delivery of the financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer ortreasurer, (i) certifying as to whether there exists a Unmatured Credit Event or Credit Event on the date of such certificate, and if a Unmatured CreditEvent or Credit Event then exists, specifying the details thereof and the action which the Sponsor has taken or proposes to take with respect thereto,(ii) setting forth in reasonable detail calculations demonstrating compliance with Article VI, (iii) setting forth whether the Borrower is in compliancewith Section 6.11, and (iv) stating whether any change in GAAP or the application thereof has occurred since the date of the Sponsor’s most recentaudited financial statements referred to in Section 6.1 or which have been previously delivered hereunder and, if any change has occurred, specifyingthe effect of such change on the financial statements accompanying such certificate;

(d) concurrently with the delivery of the financial statements referred to in clause (a) above, a certificate of the accounting firm that reported onsuch financial statements stating whether they obtained any knowledge during the course of their examination of such financial statements of anyUnmatured Credit Event or Credit Event (which certificate may be limited to the extent required by accounting rules or guidelines);

(e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed withthe Securities and Exchange Commission, or any Governmental Authority succeeding to any or all functions of said Commission, or with any nationalsecurities exchange, or distributed by the Sponsor to its shareholders generally, as the case may be; and

(f) promptly following any request therefor, such other information regarding the results of operations, business affairs and financial condition ofthe Sponsor or any Subsidiary as the Servicer or any Participant may reasonably request.

The Sponsor hereby acknowledges that (a) the Servicer will make available to the Participants materials and/or information provided by or on behalf of theSponsor hereunder (collectively, “Sponsor Materials”) by posting the Sponsor Materials on IntraLinks or another similar electronic system (the “Platform”) and(b) certain of the Participants may be

-45-

“public-side” Participants (i.e., Participants that do not wish to receive material non-public information with respect to the Sponsor or its securities) (each, a“Public Participant”). The Sponsor hereby agrees that (w) all Sponsor Materials that are to be made available to Public Participants shall be clearly andconspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by markingSponsor Materials “PUBLIC,” the Sponsor shall be deemed to have authorized the Servicer and the Participants to treat such Sponsor Materials as either publiclyavailable information or not material information (although it may be sensitive and proprietary) with respect to the Sponsor or its securities for purposes ofUnited States Federal and state securities laws; (y) all Sponsor Materials marked “PUBLIC” are permitted to be made available through a portion of the Platformdesignated “Public Investor;” and (z) the Servicer shall be entitled to treat any Sponsor Materials that are not marked “PUBLIC” as being suitable only forposting on a portion of the Platform not designated “Public Investor.”

Section 6.2 Notices of Material Events.

The Sponsor will furnish to the Servicer and each Participant prompt written notice of the following:

(a) the occurrence of any Unmatured Credit Event or Credit Event;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to theknowledge of the Sponsor, affecting the Sponsor or any Subsidiary which, if adversely determined, could reasonably be expected to result in a MaterialAdverse Effect;

(c) the occurrence of any event or any other development by which the Sponsor or any of its Subsidiaries (i) fails to comply with any applicableEnvironmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) becomessubject to any Environmental Liability, (iii) receives notice of any claim with respect to any Environmental Liability, or (iv) becomes aware of anybasis for any Environmental Liability and in each of the preceding clauses, which individually or in the aggregate, could reasonably be expected toresult in a Material Adverse Effect;

(d) the occurrence of any ERISA Event that alone, or together with any other ERISA Events that have occurred, could reasonably be expected to


result in liability of the Sponsor and its Subsidiaries in an aggregate amount exceeding $25,000,000; and

(e) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a written statement of a Responsible Officer setting forth the details of the event ordevelopment requiring such notice and any action taken or proposed to be taken with respect thereto.

-46-

Section 6.3 Existence; Conduct of Business.

The Sponsor will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and maintain in full force andeffect its legal existence and its respective rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conductof its business and will continue to engage in the same business as presently conducted or such other businesses that are reasonably related thereto; provided,however, that nothing in this Section shall prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.16.

Section 6.4 Compliance with Laws, Etc.

The Sponsor will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and requirements of any Governmental Authorityapplicable to its business and properties, including without limitation, all Environmental Laws, ERISA, and OSHA except where the failure to do so, eitherindividually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 6.5 Payment of Obligations.

The Sponsor will, and will cause each of its Subsidiaries to, pay and discharge at or before maturity, all of its obligations and liabilities (including withoutlimitation all tax liabilities and claims that could result in a statutory Lien) before the same shall become delinquent or in default, except where (i) (a) the validityor amount thereof is being contested in good faith by appropriate proceedings and (b) the Sponsor or such Subsidiary has set aside on its books adequate reserveswith respect thereto in accordance with GAAP or (ii) the failure to make payment thereof, when aggregated with all other such unpaid obligations and liabilities,could not reasonably be expected to result in a Material Adverse Effect or (iii) the failure to make payment thereof could not result in a statutory Lien.

Section 6.6 Books and Records.

The Sponsor will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries shall be made ofall dealings and transactions in relation to its business and activities to the extent necessary to prepare the consolidated financial statements of Sponsor inconformity with GAAP.

Section 6.7 Visitation, Inspection, Etc.

The Sponsor will, and will cause each of its Subsidiaries to, permit any representative of the Servicer or any Participant, to visit and inspect its properties, toexamine its books and records and to make copies and take extracts therefrom, and to discuss its affairs, finances and accounts with any of its officers and withits independent certified public accountants, all at such reasonable times and as often as the Servicer or any Participant may reasonably request after reasonableprior notice to the Sponsor; provided, however, if a Credit Event has occurred and is continuing, no prior notice shall be required.

-47-

Section 6.8 Maintenance of Properties; Insurance.

The Sponsor will, and will cause each of its Subsidiaries to, (a) keep and maintain good and marketable title to all property subject to no Liens exceptPermitted Encumbrances and keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tearexcepted except where the failure to do so, either individually or it the aggregate, could not reasonably be expected to result in a Material Adverse Effect and (b)maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business, and the properties and business of itsSubsidiaries, against loss or damage of the kinds customarily insured against by companies in the same or similar businesses operating in the same or similarlocations.


If any additional Material Subsidiary is acquired or formed after the Closing Date, the Sponsor will, within thirty (30) days after such Material Subsidiary isacquired or formed, notify the Servicer and the Participants thereof and will cause such Material Subsidiary to become a Subsidiary Loan Party (so long as suchMaterial Subsidiary is not a Foreign Subsidiary) by executing agreements in the form of Exhibit B and Exhibit C in form and substance satisfactory to theServicer and the Required Participants and will cause such Material Subsidiary to deliver simultaneously therewith similar documents applicable to such MaterialSubsidiary required under Section 11.1 as reasonably requested by the Servicer.



If at the end of any fiscal quarter of the Sponsor:

(a) the total assets of Subsidiaries that are not Guarantors constitute more than ten percent (10%) of the total assets of the ConsolidatedCompanies, or

(b) the Consolidated Net Income of Subsidiaries that are not Guarantors constitute more than ten percent (10%) of the Consolidated Net Incomeof the Consolidated Companies,

then the Sponsor shall (i) notify the Servicer thereof in the certificate delivered pursuant to Section 6.1(c) for such fiscal quarter and (ii) within 15 days thereafter,cause the appropriate number of Subsidiaries to become Guarantors (by execution of a joinder agreement to the Subsidiary Guaranty in form and substancesatisfactory to the Servicer) such that the statements set forth in clauses (a) and (b) above are not true.

Financial Covenants

-48-


The Consolidated Companies will maintain, as of the last day of each Fiscal Quarter, a Fixed Charge Coverage Ratio of not less than 2.50:1.00.


The Consolidated Companies will maintain, as of the end of each Fiscal Quarter, an Adjusted Total Debt to EBITDAR Ratio of not greater than 3.00:1.00.

Section 6.13 Maximum Adjusted Total Debt to Adjusted Total Capital Ratio.

The Consolidated Companies will maintain, as of the end of each Fiscal Quarter, an Adjusted Total Debt to Adjusted Total Capital Ratio of not greater than0.60:1.00.

Negative Covenants

Section 6.14 Indebtedness.

The Sponsor will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness created pursuant to the Loan Documents;

(b) Indebtedness existing on the date hereof and set forth on Schedule 6.14 and extensions, renewals and replacements of any such Indebtednessthat do not increase the outstanding principal amount thereof (immediately prior to giving effect to such extension, renewal or replacement) or shortenthe maturity or the weighted average life thereof;

(c) Capital Lease Obligations and any Indebtedness assumed by any Credit Party in connection with the acquisition of equity of or in, and/orassets of any Franchisee or Traditional Franchisee of the Sponsor, or the merger or consolidation of such Franchisee or Traditional Franchisee into theSponsor or any Subsidiary, provided that: (i) such Indebtedness exists prior to such acquisition but is not incurred in anticipation of such acquisition,and (ii) no Credit Event has occurred and is continuing before or after giving effect to such transaction;

(d) Unsecured Indebtedness of the Sponsor and its Subsidiaries evidenced by the $85,000,000 4.69% Senior Notes, Series A, due April 1, 2010and the $65,000,000 5.42% Senior Notes, Series B, due April 1, 2013 and extensions, renewals and replacements of any such Indebtedness that do notincrease the outstanding principal amount thereof (immediately prior to giving effect to such extension, renewal or replacement);

-49-

(e) Indebtedness in respect of the Revolving Credit Facility and extensions, renewals and replacements of any such Indebtedness that do notincrease the outstanding principal amount thereof (immediately prior to giving effect to such extension, renewal or replacement);


(f) Indebtedness of the Sponsor owing to any Subsidiary and of any Subsidiary owing to the Sponsor or any other Subsidiary; provided,however, that any such Indebtedness that is owed to a Subsidiary that is not a Subsidiary Loan Party shall be subject to Section 6.17;

(g) Guaranties by the Sponsor of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Sponsor or any other Subsidiary;provided, however, that Guaranties by any Credit Party of Indebtedness of any Subsidiary that is not a Subsidiary Loan Party shall be subject toSection 6.17;

(h) Subordinated Debt of the Sponsor (but not Subsidiaries of the Sponsor);

(i) Indebtedness in respect of obligations under Hedging Agreements permitted by Section 6.23; and

(j) Other Indebtedness of the Sponsor and its Subsidiaries in an aggregate principal amount at any time outstanding not to exceed 15% ofConsolidated Net Worth of the Sponsor as calculated on the last day of the Fiscal Quarter for which the Sponsor has delivered, or is required to havedelivered, financial statements to the Participants pursuant to this Agreement; (it being acknowledged that such Indebtedness includes the principalamount outstanding of Indebtedness of a Franchisee or Traditional Franchisee if such Indebtedness secured by any Lien on property owned by theSponsor or its Subsidiaries, whether or not such Indebtedness has been assumed by the Sponsor or its Subsidiaries).


The Sponsor will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its assets or property nowowned or hereafter acquired or, except:

(a) Permitted Encumbrances;

(b) any Liens on any property or asset of the Sponsor or any Subsidiary existing on the Closing Date set forth on Schedule 6.15; provided, thatsuch Lien shall not apply to any other property or asset of the Sponsor or any Subsidiary;

(c) purchase money Liens upon or in any fixed or capital assets to secure the purchase price or the cost of construction or improvement of suchfixed or capital assets or to secure Indebtedness incurred solely for the purpose of financing the acquisition, construction or improvement of such fixedor capital assets (including Liens securing any Capital Lease Obligations); provided, however, that (i) such Lien secures Indebtedness permitted bySection 6.14, (ii) such Lien attaches to such asset

-50-

concurrently or within 180 days after the acquisition, improvement or completion of the construction thereof; (iii) such Lien does not extend to anyother asset; and (iv) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets;

(d) any Lien (i) existing on any asset of any Person at the time such Person becomes a Subsidiary of the Sponsor, (ii) existing on any asset of anyPerson at the time such Person is merged with or into the Sponsor any Subsidiary of the Sponsor or (iii) existing on any asset prior to the acquisitionthereof by the Sponsor or any Subsidiary of the Sponsor; provided, however, that any such Lien was not created in the contemplation of any of theforegoing and any such Lien secures only those obligations which it secures on the date that such Person becomes a Subsidiary or the date of suchmerger or the date of such acquisition; and

(e) Liens on the assets of the Sponsor or a Subsidiary granted to secure Indebtedness incurred by a Franchisee or a Traditional Franchisee, ascontemplated in Section 6.14(j), whether or not such Indebtedness has been assumed by the Sponsor or its Subsidiaries; provided, that the value of theassets of the Sponsor or a Subsidiary encumbered by such Liens described in this subsection (e) shall not exceed $25,000,000 in the aggregate at anytime with such value being determined based on the greater of (i) the net book value of such assets or (ii) the fair market value of such assets; and

(f) extensions, renewals, or replacements of any Lien referred to in paragraphs (a) through (e) of this Section; provided, however, that theprincipal amount of the Indebtedness secured thereby is not increased and that any such extension, renewal or replacement is limited to the assetsoriginally encumbered thereby.

Section 6.16 Fundamental Changes.

(a) Except as permitted in Section 6.19, the Sponsor will not, and will not permit any Subsidiary to, merge into or consolidate into any otherPerson, or permit any other Person to merge into or consolidate with it, or sell, lease, transfer or otherwise dispose of (in a single transaction or a seriesof transactions) all or substantially all of its assets (in each case, whether now owned or hereafter acquired) or all or substantially all of the stock of anyof its Subsidiaries (in each case, whether now owned or hereafter acquired) or liquidate or dissolve; provided, however, that if at the time thereof andimmediately after giving effect thereto, no Unmatured Credit Event or Credit Event shall have occurred and be continuing (i) the Sponsor or anySubsidiary may merge with a Person if the Sponsor (or such Subsidiary if the Sponsor is not a party to such merger) is the surviving Person, (ii) anySubsidiary may merge into another Subsidiary; provided, however, that if any party to such merger is a Subsidiary Loan Party, the Subsidiary LoanParty shall be the surviving Person, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of all or substantially all of its assets to theSponsor or to a Subsidiary Loan Party and (iv) any Subsidiary (may liquidate or dissolve into a Subsidiary Loan Party) or into the Sponsor if theSponsor determines in

-51-


good faith that such liquidation or dissolution is in the best interests of the Sponsor and is not materially disadvantageous to the Participants; provided,however, that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unlessalso permitted by Section 6.19.

(b) The Sponsor will not, and will not permit any of its Subsidiaries to, engage in any business other than businesses of the type conducted by theSponsor and its Subsidiaries on the date hereof and businesses reasonably related thereto.


The Sponsor will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that wasnot a wholly owned Subsidiary prior to such merger), any common stock, evidence of indebtedness or other securities (including any option, warrant, or otherright to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guaranty any obligations of, or make or permit to exist any investmentor any other interest in, any other Person (all of the foregoing being collectively called “Investments”), or purchase or otherwise acquire (in one transaction or aseries of transactions) any assets of any other Person that constitute a business unit, or create or form any Subsidiary, except:

(a) Investments (other than Permitted Investments) existing on the date hereof and set forth on Schedule 6.17 (including Investments inSubsidiaries);


(c) Guaranties constituting Indebtedness permitted by Section 6.14;

(d) Investments made by any Credit Party in or to any other Credit Party;

(e) loans or advances to employees, officers or directors of the Sponsor or any Subsidiary in the ordinary course of business for travel, relocationand related expenses;

(f) Hedging Agreements permitted by Section 6.23; and

(g) Investments in franchise operators through the Franchise Partner Program; and

(h) Investments received in settlement of Indebtedness created in the ordinary course of business;

(i) Investments in the stock or other assets of any other Person that is engaged in a business permitted by Section 6.17(b) that, as a result of suchInvestment, becomes a Subsidiary of Sponsor (other than Hostile Acquisitions); provided, however, that the aggregate purchase price of Investmentsmade pursuant to this subsection (i) shall not exceed at any time fifteen percent (15%) of the Consolidated Net Worth of the Sponsor as calculated onthe last day of Fiscal Quarter for which the Sponsor has delivered, or is required to have delivered, financial statements to the Participants pursuant tothis Agreement; and

-52-

(j) Investments in common stock of the Sponsor to the extent permitted under Section 6.17.

Investments under Section 6.17 shall not be permitted if, before or after giving effect to the making of such Investment, a Credit Event or UnmaturedCredit Event has occurred or is continuing.


The Sponsor will not, and will not permit its Subsidiaries to, (x) declare or make, or agree to pay or make, directly or indirectly, any dividend on any classof its stock, or (y) make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, retirement, defeasanceor other acquisition of, any shares of common stock or Indebtedness subordinated to the Obligations of the Sponsor or any options, warrants, or other rights topurchase such common stock or such Indebtedness, whether now or hereafter outstanding (each, a “Restricted Payment”), except for (i) dividends payable by theSponsor solely in shares of any class of its common stock, (ii) Restricted Payments made by any Subsidiary to the Sponsor or to another Credit Party and (iii)cash dividends paid on, and cash redemptions of, the common stock of the Sponsor; provided, however, that no Credit Event or Unmatured Credit Event hasoccurred and is continuing before or after giving effect to the payment of such dividend or redemption.

Section 6.19 Sale of Assets.

The Sponsor will not, and will not permit any of its Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of, any of its assets, business orproperty, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s common stock to any Personother than the Sponsor or any wholly owned Subsidiary of the Sponsor or a Subsidiary Loan Party (or to qualify directors if required by applicable law), except:

(a) the sale or other disposition for fair market value of obsolete or worn out property or other property not necessary for operations, disposed ofin the ordinary course of business;


(b) the sale of inventory and Permitted Investments in the ordinary course of business;

(c) the sale, lease or transfer of assets of any Subsidiary to the Sponsor or any other Credit Party;

-53-

(d) the sale of any assets pertaining to Ruby Tuesday units pursuant to the Sponsor’s Franchise Partner Program;

(e) the sale of any assets pertaining to Ruby Tuesday units pursuant to the Sponsor’s Traditional Franchise program, provided that the aggregateunits sold to Traditional Franchisees subsequent to the Closing Date shall not exceed the lesser of: (i) twenty-five (25) units or (ii) units whoseConsolidated Restaurant Revenues represent more than 5% of the Consolidated Restaurant Revenues of the Sponsor for the four Fiscal Quarter periodending with the most recent Fiscal Quarter ended; provided, however, that no Credit Event or Unmatured Credit Event has occurred and is continuingor would occur as a result of such transaction;

(f) any other sale of the Consolidated Assets with an aggregate book value, when aggregated with all other such sales since the Closing Date, notexceeding 7.5% of the aggregate book value of all of the Consolidated Assets on the date of such transfer; provided, however, that no Credit Event orUnmatured Credit Event has occurred and is continuing or would occur as a result of such transaction.


The Sponsor will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwiseacquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business atprices and on terms and conditions not less favorable to the Sponsor or such Subsidiary than could be obtained on an arm’s-length basis from unrelated thirdparties, (b) transactions between or among the Sponsor and its wholly owned Subsidiaries not involving any other Affiliates and (c) any Restricted Paymentpermitted by Section 6.18.


The Sponsor will not, and will not permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement that prohibits, restrictsor imposes any condition upon (a) the ability of the Sponsor or any Subsidiary to create, incur or permit any Lien upon any of its assets or properties, whethernow owned or hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to its common stock, to make or repayloans or advances to the Sponsor or any other Subsidiary, to Guaranty Indebtedness of the Sponsor or any other Subsidiary or to transfer any of its property orassets to the Sponsor or any Subsidiary of the Sponsor; provided, however, that (i) the foregoing shall not apply to restrictions or conditions set forth inSchedule 6.21 or restrictions or conditions imposed by law or by this Agreement or any other Loan Document, (ii) the foregoing shall not apply to customaryrestrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only tothe Subsidiary that is sold and such sale is permitted hereunder, and (iii) clause (a) shall not apply to restrictions or conditions imposed by any agreement relatingto secured Indebtedness permitted under Section 6.14 of this Agreement if such restrictions and conditions apply only to the property or assets securing suchIndebtedness.

-54-

Section 6.22 Sale and Leaseback Transactions.

The Sponsor will not, and will not permit any of the Subsidiaries to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer anyproperty, real or personal, used or useful in its business, whether now owned or hereinafter acquired, and thereafter rent or lease such property or other propertythat it intends to use for substantially the same purpose or purposes as the property sold or transferred (such arrangement referred to as a “Sale Leaseback”).Notwithstanding the preceding limitation, Sponsor may enter into any Sale Leaseback provided the aggregate amount of such transactions does not exceed$50,000,000.

Section 6.23 Hedging Agreements.

The Sponsor will not, and will not permit any of the Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements entered into in theordinary course of business to hedge or mitigate risks to which the Sponsor or any Subsidiary is exposed in the conduct of its business or the management of itsliabilities. Solely for the avoidance of doubt, the Sponsor acknowledges that a Hedging Agreement entered into for speculative purposes or of a speculativenature (which shall be deemed to include any Hedging Agreement under which the Sponsor or any of the Subsidiaries is or may become obliged to make anypayment (i) in connection with the purchase by any third party of any common stock or any Indebtedness or (ii) as a result of changes in the market value of anycommon stock or any Indebtedness) is not a Hedging Agreement entered into in the ordinary course of business to hedge or mitigate risks.

Section 6.24 Amendment to Material Documents.

The Sponsor will not, and will not permit any Subsidiary to, amend, modify or waive any of its rights in a manner materially adverse to the Sponsor’s orSubsidiary’s duties or the Participants’ rights under this Agreement under (a) its certificate of incorporation, bylaws or other organizational documents or (b) anycontract, agreement, document, or instrument to which the Sponsor or Subsidiary is a party.


Section 6.25 Accounting Changes.

The Sponsor will not, and will not permit any Subsidiary to, make any significant change in accounting treatment or reporting practices, except as requiredby GAAP or approved by the Sponsor’s independent accountants, or change the fiscal year of the Sponsor or of any Subsidiary, except to change the fiscal yearof a Subsidiary to conform its fiscal year to that of the Sponsor and except that Sponsor or any Subsidiary may, upon 30 days prior written notice to the Servicer,change its fiscal year end to the Tuesday closest to any calendar quarter end.

Section 6.26 ERISA.

The Sponsor will not, and will not permit any Subsidiary to engage in any transaction in connection with which the Sponsor or such Subsidiary couldreasonably be expected to

-55-

be subject to a civil penalty assessed pursuant to ERISA which would have a Material Adverse Effect on the Sponsor or such Subsidiary.

ARTICLE VII

CREDIT EVENTS

Section 7.1 Credit Events.

In the event that:

(a) Sponsor shall fail to pay any amount due and payable under this Agreement or any other Operative Document, when and as the same shallbecome due and payable, and such failure shall continue unremedied for a period of three (3) Business Days; or

(b) any representation or warranty made or deemed made by or on behalf of the Sponsor or any Subsidiary in or in connection with thisAgreement or any other Operative Document (including the Exhibits and Schedules attached thereto) and any amendments or modifications hereof orwaivers hereunder, or in any certificate, report, financial statement or other document submitted to the Servicer or the Participants by any Credit Partyor any representative of any Credit Party pursuant to or in connection with this Agreement or any other Operative Document shall prove to be incorrectin any material respect when made or deemed made or submitted; or

(c) Sponsor shall fail to observe or perform any covenant or agreement contained in Sections 6.1, 6.2, 6.3 (with respect to the Sponsor’sexistence) or 6.12 through 6.26; or

(d) any Credit Party shall fail to observe or perform any covenant or agreement contained in this Agreement or any other Loan Document (otherthan those referred to in clauses (a) and (c) above), and such failure shall remain unremedied for 30 days after the earlier of (i) any officer of theSponsor becomes aware of such failure, or (ii) written notice thereof shall have been given to the Sponsor by the Servicer or any Participant; or

(e) the Sponsor or any Subsidiary (whether as primary obligor or as guarantor or other surety) shall fail to pay any principal of or premium orinterest on any Material Indebtedness that is outstanding, when and as the same shall become due and payable (whether at scheduled maturity, requiredprepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement orinstrument evidencing such Material Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating tosuch Material Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of suchevent or condition is to accelerate, or permit the acceleration of, the maturity of such Material

-56-

Indebtedness; or any such Material Indebtedness shall be declared to be due and payable; or required to be prepaid or redeemed (other than by aregularly scheduled required prepayment or redemption), purchased or defeased, or any offer to prepay, redeem, purchase or defease such MaterialIndebtedness shall be required to be made, in each case prior to the stated maturity thereof; or

(f) the Sponsor or any Material Subsidiary shall (i) commence a voluntary case or other proceeding or file any petition seeking liquidation,reorganization or other relief under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or seeking theappointment of a custodian, trustee, receiver, liquidator or other similar official of it or any substantial part of its property, (ii) consent to the institutionof, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this Section, (iii) apply for or consent tothe appointment of a custodian, trustee, receiver, liquidator or other similar official for the Sponsor or any such Material Subsidiary or for a substantialpart of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a generalassignment for the benefit of creditors, or (vi) take any action for the purpose of effecting any of the foregoing; or


(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other reliefin respect of the Sponsor or any Material Subsidiary or its debts, or any substantial part of its assets, under any federal, state or foreign bankruptcy,insolvency or other similar law now or hereafter in effect or (ii) the appointment of a custodian, trustee, receiver, liquidator or other similar official forthe Sponsor or any Material Subsidiary or for a substantial part of its assets, and in any such case, such proceeding or petition shall remain undismissedfor a period of 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or

(h) the Sponsor or any Material Subsidiary shall become unable to pay, shall admit in writing its inability to pay, or shall fail to pay, its debts asthey become due; or

(i) an ERISA Event shall have occurred that, in the opinion of the Required Participants, when taken together with other ERISA Events that haveoccurred, could reasonably be expected to result in liability to the Sponsor and the Subsidiaries in an aggregate amount exceeding $25,000,000; or

(j) any judgment or order for the payment of money in excess of $25,000,000 in the aggregate shall be rendered against the Sponsor or anySubsidiary, and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be aperiod of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be ineffect; or

-57-

(k) any nonmonetary judgment or order shall be rendered against the Sponsor or any Subsidiary that could reasonably be expected to have aMaterial Adverse Effect, and there shall be a period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason ofa pending appeal or otherwise, shall not be in effect; or

(l) a Change in Control shall occur or exist; or

(m) any provision of any Subsidiary Guaranty Agreement shall for any reason cease to be valid and binding on, or enforceable against, anySubsidiary Loan Party, or any Subsidiary Loan Party shall so state in writing, or any Subsidiary Loan Party shall seek to terminate its SubsidiaryGuaranty Agreement;

(n) (x) there shall exist or occur any default as provided under the terms of any other Operative Document, or any Operative Document ceases tobe in full force and effect or the validity or enforceability thereof is disaffirmed by or on behalf of Sponsor or any other Credit Party, or at any time it isor becomes unlawful for Sponsor or any other Credit Party to perform or comply with its obligations under any Operative Document, or the obligationsof Sponsor or any other Credit Party under any Operative Document are not or cease to be legal, valid and binding on Sponsor or any such Credit Partyor (y) any party to the Sharing Agreements shall default with respect to its covenants or obligations thereunder where such default results in aMaterially Adverse Effect with respect to the Credit Parties;

then upon the occurrence and continuation of any such event (each, a “Credit Event”):

the Servicer may, and upon the written request of the Required Participants, shall, take any or all of the following actions, without prejudice to the rights ofthe Servicer or any Participant to enforce its claims against Sponsor, any other Credit Party, any Borrower or other obligor with respect to any Loan: (i) declarethe Commitment terminated, whereupon the Commitment shall terminate immediately and any commitment fee shall forthwith become due and payable withoutany other notice of any kind; (ii) demand that the Sponsor purchase specified or all outstanding Loans and Loan Commitments by paying to the Servicer the LoanIndebtedness of each such Loan and assuming the Servicer’s obligations thereunder; whereupon such amount shall become, forthwith due and payable withoutpresentment, demand, protest or other notice of any kind, all of which are hereby waived by the Sponsor; provided, that, if a Credit Event specified inSection 7.1(f) or (g) shall occur, the result which would occur upon the giving of notice by the Servicer to any Credit Party, shall occur automatically without thegiving of any such notice, and (iii) may exercise any other rights or remedies available under the Operative Documents, at law or in equity. In addition, theServicer may, and upon the written request of the Required Participants, shall (x) cease funding further Advances pursuant to the Loan Commitments and (y)declare all Loan Indebtedness thereunder to be immediately due and payable in accordance with the terms of the Loan Documents and exercise all rights andremedies provided under the Loan Documents; provided that, the Servicer shall not take the actions authorized under clause (y) unless the Sponsor has failed tohonor its obligation to pay the entire Loan Indebtedness demanded by the Servicer (or deemed demanded) within ten (10) Business Days. The Sponsor herebyacknowledges and agrees that its obligation hereunder to

-58-

purchase all outstanding Loans and Loan Commitments shall include the obligation to immediately post cash-collateral for all outstanding Letter of CreditObligations in an amount equal to 105% of the amount thereof. The Sponsor hereby acknowledges and agrees that the acceleration of the Loans pursuant toclause (y) above immediately moves such Loans from the Limited Recourse Pool to the Fully Guaranteed Pool and that at all times after such acceleration allsuch Loans shall be deemed to be part of the Fully Guaranteed Pool.

ARTICLE VIII

GUARANTY

In addition to its obligations to repurchase the Loans upon the occurrence of a Credit Event and its other obligations hereunder, the Sponsor hereby agrees asfollows:


Unconditional Guaranty

The Sponsor hereby unconditionally and irrevocably guarantees to the Servicer, each Participant and any permitted assignee thereof, the full andprompt payment of all Guaranteed Obligations and all costs, charges and expenses (including reasonable attorneys’ fees) actually incurred or sustainedby the Servicer or any Participant in enforcing the obligations of the Sponsor hereunder or the obligations of the Borrowers under the applicable LoanDocuments. If any portion of the Guaranteed Obligations is not paid when due, Sponsor hereby agrees to and will immediately pay same, without resortby Servicer or any Participant to any other person or party. The obligation of Sponsor to Servicer and each Participant hereunder is primary, absolute andunconditional, except as may be specifically set forth herein. This is a guaranty of payment and not of collection. This guaranty is subject to thelimitations set forth in Sections 8.1 and 8.2 below.

Section 8.1 Limitation on Guaranty of Loans.

The obligation of the Sponsor pursuant to this Article VIII with respect to the Limited Guaranty Pool shall be limited, as of any date that Guaranty Paymentsare made by the Sponsor, or demanded by the Servicer, with respect to any Loans in the Limited Guaranty Pool, to an amount (the “Maximum Amount”) equal tothe greater of (a) fifty percent (50%) of the aggregate outstanding principal amount of the Loans on such date (after giving effect to any payments, recoveries onCollateral or other recoveries made by the Servicer or any Participant on such date with respect to the Loans), (b) three (3) times the largest aggregateoutstanding Loan, or (c) $10,000,000; provided that the maximum cumulative amount of Guaranty Payments that the Sponsor shall be required to make withrespect to Loans in the Limited Guaranty Pool shall be $24,000,000 (the “Maximum Cumulative Amount”); provided however that, if on any date theCommitment is increased in accordance with Section 2.8(d), the Maximum Cumulative Amount shall be increased by an amount equal to fifty percent (50%) ofsuch increase in the Commitment on such date.

-59-

The foregoing limitation shall not in any way limit the obligation of the Sponsor with respect to the Guaranteed Obligations relating to the Fully GuaranteedPool or any obligation of the Sponsor to purchase the Loans and assume the Loan Commitments relating thereto upon the occurrence of a Credit Event withoutregard to any limitations set forth in this Article VIII.

Section 8.2 Obligations of Sponsor With Respect to Loans.

(a) If a Loan Payment Default occurs and is not cured by Sponsor during the Response Period, or if a Loan Default other than a Loan PaymentDefault occurs and is not waived by Sponsor during the Response Period, then the Standstill Period shall commence and the Sponsor shall immediatelypay all past due interest and fees owing to the Servicer pursuant to the applicable Loan Documents, if any, on such Defaulted Loans and shall continueto make timely payment of interest and fees, if any, on such Defaulted Loans during the Standstill Period, which payment of interest and fees shall notconstitute Guaranty Payments made against Loans in the Limited Guaranty Pool.

(b) On the date that the Standstill Period expires, the Sponsor agrees to cause one of the following to occur: (i) all Loan Indebtedness withrespect to such Defaulted Loans shall have been repaid in full, (ii) the Sponsor has acquired one hundred percent (100%) of the Borrower owing suchDefaulted Loans; or (iii) the Sponsor and a new Franchise Partner have acquired one hundred percent (100%) of the Borrower owing such DefaultedLoans and such new Franchise Partner (x) has agreed to permit the entire Loan Indebtedness with respect to the Defaulted Loans to remain outstandingor (y) has agreed to permit a portion of the Loan Indebtedness with respect to the Defaulted Loans to remain outstanding and the Sponsor has repaid theremaining portion of the Loan Indebtedness, which repayment shall constitute Guaranty Payments made against Loans in the Limited Guaranty Pool. Ifeither of the conditions set forth in clauses (ii) or (iii) above occur, then all Loan Payment Defaults must be immediately cured and all Loan Defaultsshall be deemed waived by the Servicer. If none of the events set forth in clauses (i) through (iii) above have occurred by the end of the StandstillPeriod, the Sponsor shall be deemed to have failed to perform its agreement hereunder for purposes of Section 7.1(c) above.

(c) Notwithstanding anything set forth in subsection (b)(i) above, the Sponsor shall not be required to repay any Loan Indebtedness with respectto any such Defaulted Loans beyond the amounts set forth in Section 8.1; provided, however, that (i) the Sponsor shall remain obligated to cause one ofthe events set forth in clause (b)(ii) and (b)(iii) above to have occurred by the date that the Standstill Period expires and (ii) to the extent that theSponsor is not obligated to repay all Loan Indebtedness with respect to such Defaulted Loan pursuant to Section 8.1, the Sponsor agrees that (A) theServicer shall be released from its obligations to the Sponsor hereunder with respect to administering and enforcing such Defaulted Loans and mayadminister and enforce such Loans and Letter of Credit Obligations as it deems appropriate, without regard to any limitations or restrictions set forthherein (but subject to Article III hereof in all events) or in any other Operative Document and (B) it shall not amend, modify, rescind or terminate anyFranchise Documents with any Borrower that owes any Defaulted Loan or related Letter of Credit Obligations to the

-60-

Servicer, without the consent of the Servicer, and any Franchise Documents with any such Borrower that have previously been rescinded or terminatedshall immediately and automatically be reinstated, and all such Franchise Documents shall remain in full force and effect at all times until (x) theServicer has been paid in full with respect to such Loan Indebtedness and all commitments of the Servicer to make additional advances to suchBorrower have been terminated or (y) the Servicer has otherwise, in its opinion, exhausted all rights and remedies against the Borrower and hasterminated all commitments to such Borrower; provided, further, however, that the Sponsor may continue to enforce the proper use of the “RubyTuesday” servicemark (or other trademark or servicemark used in the operation of the store) and the maintenance of required systems and standards, ineach case as required by the Franchisee Documents, so long as the remedy the Sponsor uses to enforce such compliance is not termination of the “RubyTuesday” franchise held by such Borrower.

(d) On the date that Sponsor is required to purchase any Loan with respect to which a Deemed Loan Default has occurred pursuant to Section 4.5above, one of the following must have occurred: (i) the Sponsor shall have purchased such Loan and assumed the related Loan Commitment from the


Servicer by paying the Servicer an amount equal to the Loan Indebtedness with respect to such Loan, (ii) the Sponsor have acquired one hundredpercent (100%) of the Borrower that owes such Loan or (iii) the Sponsor and a new Franchise Partner have acquired one hundred percent (100%) of theBorrower that owes such Loan. Notwithstanding anything set forth in clause (i) of the foregoing sentence, the Sponsor shall not be required torepurchase such Loan to the extent the Sponsor would be required to repay any Loan Indebtedness with respect to any such Loan beyond the amountsset forth in Section 8.1; provided, however, that to the extent that the Sponsor is not obligated to repay all Loan Indebtedness with respect to such Loanpursuant to Section 8.1, the Sponsor agrees that it will not amend, modify, rescind or terminate any Franchise Documents with any Borrower that owessuch Loan or related Letter of Credit Obligations to the Servicer, without the consent of the Servicer, and (y) all such Franchise Documents shallremain in full force and effect at all times until the Servicer has been paid in full with respect to such Loan Indebtedness and all commitments of theServicer to make additional advances to such Borrower have been terminated; provided, further, however, that the Sponsor may continue to enforce theproper use of the “Ruby Tuesday” servicemark (or other trademark or servicemark used in the operation of the store) and the maintenance of requiredsystems and standards, in each case as required by the Franchisee Documents, so long as the remedy the Sponsor uses to enforce such compliance is nottermination of the “Ruby Tuesday” franchise held by such Borrower.

(e) To the extent that the Sponsor makes any payments on Loans owed by Borrowers that are wholly owned by the Sponsor, such payments shallnot constitute Guaranty Payments made against Loans in the Limited Guaranty Pool.

(f) In the event that the Servicer receives payment in full of the Loan Indebtedness from the Sponsor, the Servicer agrees that on behalf of theParticipants under this Agreement, the Servicer shall assign to the Sponsor all of its right, title and interest in and to the Loan Documents related to suchLoan which has been paid in full by the Sponsor, including any Collateral Documents, within five (5) days of such payment by the Sponsor.

-61-

Section 8.3 Continuing Guaranty.

The obligations of the Sponsor pursuant to this Article VIII constitute a guarantee which is continuing in nature and shall be effective with respect to the fullamount outstanding under all Guaranteed Obligations, now existing or hereafter made or extended, regardless of the amount, subject only to the limitations setforth in the preceding Section 8.1 and Section 8.2.

Section 8.4 Waivers.

The Sponsor hereby waives notice of Servicer’s and each Participant’s acceptance of this Agreement and the creation, extension or renewal of any Loans orother Guaranteed Obligations. Sponsor hereby consents and agrees that, at any time or times, without notice to or further approval from Sponsor, and without inany way affecting the obligations of Sponsor hereunder, Servicer and the Participants may, with or without consideration (i) release, compromise with, or agreenot to sue, in whole or in part, any Borrower or any other obligor, guarantor, endorser or surety on any Loans or any other Guaranteed Obligations, (ii) renew,extend, accelerate, or increase or decrease the principal amount of any Loans or other Guaranteed Obligations, either in whole or in part, (iii) amend, waive, orotherwise modify any of the terms of any Loans or other Guaranteed Obligations or of any mortgage, deed of trust, security agreement, or other undertaking ofany of the Borrowers or any other obligor, endorser, guarantor or surety in connection with any Loans or other Guaranteed Obligations, and (iv) apply anypayment received from Borrowers or from any other obligor, guarantor, endorser or surety on the Loans or other Guaranteed Obligations to any of the liabilitiesof Borrowers or of such other obligor, guarantor, endorser, or surety which Servicer may choose; provided, however, that during the Response Period and theStandstill Period, the Servicer and Participants shall not intentionally take any of the actions set forth in clause (i) through (iv) above.

Section 8.5 Additional Actions.

Sponsor hereby consents and agrees that the Servicer may at any time or times, either with or without consideration, surrender, release or receive anyproperty or other Collateral of any kind or nature whatsoever held by it or for its account securing any Loans or other Guaranteed Obligations, or substitute anyCollateral so held by Servicer for other Collateral of like or different kind, without notice to or further consent from Sponsor, and such surrender, receipt, releaseor substitution shall not in any way affect the obligations of Sponsor hereunder; provided, however, that during the Response Period and the Standstill Period, theServicer and Participants shall not intentionally take any of the actions described above. Servicer shall have full authority to adjust, compromise, and receive lessthan the amount due upon any such Collateral, and may enter into any accord and satisfaction agreement with respect to the same as Servicer may deemadvisable without affecting the obligations of Sponsor hereunder. Servicer shall be under no duty to undertake to collect upon such Collateral or any part thereof,and Sponsor’s obligations hereunder shall not be affected by Servicer’s alleged negligence or mistake in judgment in handling, disposing of, obtaining, or failingto collect upon or perfect a security interest in, any such Collateral.

-62-

Section 8.6 Additional Waivers.

Sponsor hereby waives presentment, demand, protest, and notice of dishonor of any of the liabilities guaranteed hereby. Neither Servicer nor any Participantshall have any duty or obligation (i) to proceed or exhaust any remedy against any Borrower, any other obligor, guarantor, endorser, or surety on any Loans orother Guaranteed Obligations, or any other security held by Servicer or any Participant for any Loans or other Guaranteed Obligations, or (ii) to give any noticewhatsoever (except as expressly provided herein of in the Loan Documents) to Borrowers, Sponsor, or any other obligor, guarantor, endorser, or surety on anyLoans or other Guaranteed Obligations, before bringing suit, exercising rights to any such security or instituting proceedings of any kind against Sponsor, anyBorrower, or any of them, and Sponsor hereby waives any requirement for such actions by Servicer or any Participant. Upon default by any Borrower andServicer’s demand to Sponsor hereunder, Sponsor shall be held and bound to Servicer and each Participant directly as principal debtor in respect of the paymentof the amounts hereby guaranteed, such liability of Sponsor being joint and several with each Borrower and all other obligors, guarantors, endorsers and suretieson the Loans or other Guaranteed Obligations.


Section 8.7 Postponement of Obligations.

Until the Loan and other Guaranteed Obligations of any Borrower to the Servicer and the Participants have been paid in full (i) all present and futureindebtedness of such Borrower to Sponsor is hereby postponed to the present and future indebtedness of such Borrower to Servicer and each Participant, and allmonies received from such Borrower or for its account by Sponsor with respect to such indebtedness shall be received in trust for Servicer and the Participants,and promptly upon receipt, shall be paid over to Servicer for distribution to the Participants in accordance herewith until such Borrower’s indebtedness toServicer and the Participants is fully paid and satisfied, all without prejudice to and without in any way affecting the obligations of Sponsor hereunder; providedthat unless and until the occurrence of a Loan Default or Loan Payment Default, the Sponsor may accept and retain any payments made by any Borrower to theSponsor in the ordinary course of business, and (ii) Sponsor shall not have any rights of subrogation or otherwise to participate in any security held by theServicer for any Loan to such Borrower or any other Guaranteed Obligations arising therefrom, and Sponsor hereby waives such rights until such time as suchLoan and other Guaranteed Obligations have been paid in full to the Servicer and each Participant (whether by repurchase by the Sponsor, pursuant to thisArticle VIII or otherwise).

Section 8.8 Effect on additional Guaranties.

The obligations of the Sponsor pursuant to this Article VIII are in addition to, and are not intended to supersede or be a substitute for any other guarantee,suretyship agreement, or instrument which Servicer may hold in connection with any Loans or other Guaranteed Obligations.

-63-

Section 8.9 Reliance on Guaranty and Purchase Obligation; Disclaimer of Liability.

Sponsor expressly acknowledges and agrees that each of the Servicer and the Participants, in making its credit decision with regard to the funding of theLoans, will rely solely upon the guaranty and purchase obligation of Sponsor set forth above and in Article VII and that neither the Servicer nor any Participant isunder any obligation or duty to perform any credit analysis or investigation with regard to the creditworthiness of any Borrower. In addition, the Servicerexpressly disclaims any responsibility or liability for the authenticity of signatures on any of the Loan Documents (other than the Servicer’s), the authority of thePersons executing the Loan Documents (other than the Servicer) or the enforceability or compliance with laws of any of the Loan Documents.

SPONSOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT SPONSOR’S OBLIGATIONS TO PURCHASE LOANS UNDER THISAGREEMENT ARE ABSOLUTE AND UNCONDITIONAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SPONSOR’SOBLIGATION SHALL NOT BE AFFECTED BY THE EXISTENCE OF ANY DEFAULT BY ANY BORROWER UNDER THE APPLICABLE LOANDOCUMENTS, ANY EXCHANGE, RELEASE OR NONPERFECTION OF ANY LIEN WITH RESPECT TO ANY COLLATERAL SECURING PAYMENTOF ANY LOAN, THE SUBSTITUTION OR RELEASE OF ANY ENTITY PRIMARILY OR SECONDARILY LIABLE FOR ANY LOAN, ANY LACK OFENFORCEABILITY OF ANY LOAN DOCUMENT, ANY LAW, REGULATION, OR ORDER OF ANY JURISDICTION AFFECTING ANY LOAN ORLOAN DOCUMENT OR THE RIGHTS OF THE HOLDER THEREOF, ANY CHANGE IN THE CONDITION OR PROSPECTS OF THE BORROWER,INCLUDING WITHOUT LIMITATION, INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING, OR ANY OTHERCIRCUMSTANCE WHICH MIGHT, BUT FOR THE PROVISIONS OF THIS PARAGRAPH, CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OFSPONSOR’S OBLIGATIONS HEREUNDER. SPONSOR’S OBLIGATIONS HEREUNDER SHALL NOT BE AFFECTED BY ANY SET-OFF OR CLAIMWHICH IT MIGHT HAVE AGAINST THE SERVICER OR ANY PARTICIPANT, WHETHER ARISING OUT OF THIS AGREEMENT OR OTHERWISE.

Section 8.10 Reinstatement of Obligations.

The obligations of the Sponsor pursuant to the Operative Documents shall continue to be effective or be reinstated, as the case may be, if at any timepayment or any part thereof, of principal of, interest on or any other amount with respect to any Loan or any obligation of Sponsor pursuant to the OperativeDocuments is rescinded or must otherwise be restored by the Servicer or any Participant upon the bankruptcy or reorganization of Sponsor, any Borrower or anyguarantor or otherwise.

-64-

Section 8.11 Right to Bring Separate Action.

Nothing contained in this Article VIII shall be construed to affect any other right that Sponsor may otherwise have under this Agreement, or any OperativeDocument, at law or in equity to institute an action or assert a claim against the Servicer or any Participant based upon a breach of Servicer’s or suchParticipant’s obligations set forth in the Operative Documents or to assert a compulsory counterclaim with respect thereto and any waiver of notice or othermatter set forth in this Article VIII shall not affect Sponsor’s right to seek damages arising from the failure of the Servicer to give such notice otherwise requiredby the terms of the Operative Documents.

ARTICLE IX

INDEMNIFICATION

Section 9.1 Indemnification.


(a) In addition to the other rights of the Servicer and the Participants hereunder, Sponsor hereby agrees to protect, indemnify and save harmlessthe Servicer, each Participant, and the officers, directors, shareholders, employees, agents and representatives thereof (each an “Indemnified Party”)from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs (including, without limitation, reasonableattorney’s fees and costs actually incurred), expenses or disbursements of any kind or nature whatsoever, whether brought by the Borrowers or anyother party, with respect to or in connection with or arising out of (i) the execution and delivery of this Agreement, any other Operative Document orany agreement or instrument contemplated hereby or thereby, including without limitation, the Loan Documents, the performance by the parties heretoor thereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby, (ii) the making oradministration of the Loan Commitments, the Loans or any of them, including any violation of federal or state usury or other laws, provided that withrespect to clauses (i) and (ii), Sponsor shall have no obligation to indemnify the Servicer and all Participants for more than one (1) counsel’s reasonablefees and expenses, (iii) the enforcement, performance and administration of this Agreement or the Loan Documents or any powers granted to theServicer hereunder or under any Loan Documents, (iv) any misrepresentation of the Sponsor hereunder, (v) any matter arising pursuant to anyEnvironmental Laws as a result of the Collateral or (vi) any actual or prospective claim, litigation, investigation or proceeding relating to any of theforegoing, whether based on contract, tort or any other theory, whether or not the Indemnified Party is a named party thereto, except to the extent thatsuch losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment tohave resulted from the gross negligence or willful misconduct of such Indemnified Party; provided, that the Sponsor shall not be obligated to indemnifyany Indemnified Party for any of the foregoing arising out of such Indemnified Party’s gross negligence or willful misconduct

-65-

or a breach by an Indemnified Party of its obligations under the Loan Agreement, in each case, as determined by a court of competent jurisdiction in afinal and nonappealable judgment; provided, however, that the Sponsor waives and agrees not to bring, or to permit any of its Affiliates to bring, anyclaim against any Indemnified Party for any action other than a claim for losses arising out of gross negligence or willful misconduct.

(b) In addition to amounts payable elsewhere provided in this Agreement, without duplication, the Sponsor hereby agrees to protect, indemnify,pay and save the Servicer and each Participant harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges andreasonable expenses (including reasonable attorney’s fees and disbursements) which the Servicer or any Participant may incur or be subject to as aconsequence of (i) the issuance of any Letter of Credit for the account of a Borrower, other than as a result of the gross negligence or willfulmisconduct of the Servicer; (ii) the failure of the Servicer to honor a drawing under any Letter of Credit due to any act or omission (whether rightful orwrongful) of any present or future de jure or de facto government or governmental authority; or (iii) any third party claim arising therefrom.

(c) The foregoing indemnities shall survive the termination of this Agreement.

Section 9.2 Notice Of Proceedings; Right To Defend.

(a) Any Person with an indemnification claim (or potential claim) pursuant to Section 9.1 (“Potential Indemnitee”) agrees to notify Sponsor (the“Potential Indemnitor”) in writing within a reasonable time after receipt by it of written notice of the commencement of any administrative, legal orother proceeding, suit or action by a Person (other than the Potential Indemnitee or an affiliate thereof), if a claim for indemnification may be made bythe Potential Indemnitee against the Potential Indemnitor under this Article IX.

(b) Following receipt by the Potential Indemnitor of any such notice from a Potential Indemnitee, (an “Indemnity Notice”), the PotentialIndemnitor shall be entitled at its own cost and expense to investigate and participate in the proceeding, suit or action referred to in the IndemnityNotice. At such time as the Potential Indemnitor shall have acknowledged in writing to the Potential Indemnitee that it will pay any judgment, damages,or losses incurred by the Potential Indemnitee in the proceeding, suit or action referred to in the Indemnity Notice other than those for gross negligenceor willful misconduct on the part of the Potential Indemnitee (at which time the “Potential Indemnitor” shall be deemed to be the “Indemnitor” and the“Potential Indemnitee” shall be deemed to be the “Indemnitee”), the Indemnitor shall be entitled, to the extent that it shall desire, to assume the defenseof such proceeding, suit or action, with counsel reasonably satisfactory to the Indemnitee. If the Indemnitor shall so assume the defense of suchproceeding, suit or action, the Indemnitor shall conduct such defense with due diligence and at its own cost and expense.

-66-

(c) In the event that the Indemnitor so assumes the defense of such proceeding, suit or action, the Indemnitor shall not be entitled to settle suchproceeding, suit or action without the written consent of the Indemnitee, provided that in the event that the Indemnitee does not consent to suchsettlement not to be unreasonably withheld or delayed (i) the Indemnitor’s indemnification liability in connection with such proceeding, suit or actionshall not exceed the amount of such proposed settlement and (ii) Indemnitee shall assume and pay all costs and expenses, including reasonableattorneys’ fees, incurred by Indemnitor from the date that the Indemnitor presented the Indemnitee the terms of the proposed settlement. An Indemnitorshall not be liable to an Indemnitee for any settlement of a claim in any proceeding, suit or other action referred to in an Indemnity Notice, consented toby the Indemnitee without the consent of the Indemnitor.

(d) A Potential Indemnitor shall be liable to a Potential Indemnitee for a settlement of a claim in any proceeding, suit or other action referred toin an Indemnity Notice consented to by such Potential Indemnitee only if (i) such Potential Indemnitor first had a reasonable opportunity to investigatesuch claim and participate in such proceeding, suit or action, (ii) the Potential Indemnitee gave the Potential Indemnitor at least ten (10) Business Daysnotice of the proposed terms of such settlement prior to entering into such settlement and (iii) the Potential Indemnitor did not acknowledge in writingto the Potential Indemnitee, by the expiration of such ten (10) Business Days period, or such longer period as may be agreed to by the PotentialIndemnitee and Potential Indemnitor that it would pay any judgment, damages or losses incurred by the Potential Indemnitee in such proceeding suit oraction.


Section 9.3 Third Party Beneficiaries.

No Persons shall be deemed to be third party beneficiaries of this Agreement. Except as expressly otherwise provided in this Agreement, this Agreement issolely for the benefit of Sponsor and the Servicer, the Participants and their respective successors and permitted assigns, and no other Person shall have any right,benefit, priority or interest under, or because of the existence of, this Agreement.

ARTICLE X

SURVIVAL OF LOAN FACILITY

Section 10.1 Survival of Loan Facility.

The terms of this Loan Facility Agreement shall survive the termination of the Commitment hereunder and the termination of any Loan Commitmentestablished pursuant the terms hereof until (x) the indefeasible payment in full of each of the Loans, (y) the termination of each of the Letters of Creditoutstanding, and (z) the indefeasible payment in full of all outstanding Letter of Credit Obligations. Notwithstanding the foregoing, Article IX hereof shallsurvive the termination of this Agreement upon such repayment and termination.

-67-

ARTICLE XI

CONDITIONS PRECEDENT

Section 11.1 Conditions to Effective Date.

Notwithstanding any other provision of this Agreement and without affecting in any manner the rights of the Participants and Servicer hereunder, it isunderstood and agreed that this Agreement shall not become effective, and the Prior Loan Facility Agreement shall remain in full force and effect, Sponsor shallhave no rights under this Agreement and Servicer and Participants shall not be obligated to take, fulfill or perform any action hereunder, until the followingconditions have been fulfilled:

11.1.1 Receipt of Documents.

The Servicer shall have received the following, each dated as of the Effective Date, in form and substance satisfactory to the Servicer:

(a) Duly executed counterparts of this Agreement.

(b) Duly executed counterparts of the Servicing Agreement and the Fee Letter.

(c) Duly executed counterparts of the Guaranty Agreement.

(d) Certified copies of the articles of incorporation or other charter documents of each Subsidiary Loan Party, together with certificatesof good standing or existence, as may be available from the Secretary of State of the jurisdiction of incorporation or formation of suchSubsidiary Loan Party and each other jurisdiction as requested by the Servicer;

(e) A certificate of the Secretary or Assistant Secretary of each Subsidiary Loan Party, attaching and certifying copies of its bylaws andof the resolutions of its boards of directors, authorizing the execution, delivery and performance of the Loan Documents and OperativeDocuments to which it is a party and certifying the name, title and true signature of each officer of such Subsidiary Loan Party executingthe Loan Documents and Operative Documents to which it is a party;

(f) A favorable written opinion of Hunton & Williams, LLP, counsel for Sponsor and Guarantor, and Scarlett May, general counsel tothe Sponsor, in a

-68-

form satisfactory to the Servicer and each Participant and covering such matters relating to the transactions contemplated hereby asthe Servicer may reasonably request.

(g) In addition, each of the Participants shall have received a duly executed Participation Certificate from the Servicer.


11.1.2 Corporate Actions

All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidenthereto or delivered in connection therewith shall be satisfactory in form and substance to the Servicer.

Section 11.2 Effect of Amendment and Restatement.

11.2.1 Upon the effectiveness of this Agreement on the Effective Date pursuant to Section 11.1:

(a) the Prior Loan Facility Agreement shall be deemed terminated and superceded by this Agremeent;

(b) any and all indemnification obligations of Sponsor under the Prior Loan Facility Agreement and any other Operative Documentsshall be deemed to be indemnification obligations of Sponsor exclusively under this Agreement, in full force and effect for the benefit ofServicer, each Participant and any other Person indemnified under the Prior Loan Facility Agreement or any other Operative Documentat any time prior to the Effective Date (including, without limitation, to the extent set forth in Section 9.1 of the Prior Loan FacilityAgreement as in effect on the Effective Date);

(c) all “Loans”, “Letters of Credit” and “Loan Commitments” extended by Servicer under the Prior Loan Facility Agreement shall, tothe extent outstanding on the Effective Date, be deemed to be outstanding under this Agreement and shall not be deemed to be paid,released, discharged or otherwise satisfied by the execution of this Agreement; and

(d) any and all references to the Prior Loan Facility Agreement shall, without further action of the parties, be deemed a reference to thisAgreement, as this Agreement shall be further amended or amended and restated from time to time hereafter.

-69-

11.2.2 Notwithstanding anything herein to the contrary, the Servicer and Participants agree that the interest rates, commitment fees,letter of credit fees and other amounts payable by Borrowers with respect to Loans extended under, and Letters of Credit issued pursuant to,the Prior Loan Facility Agreement shall continue at the same rates and amounts set forth in the Loan Documents for such Loan until suchtime as the Loan Commitments to such Borrowers are renewed or refinanced, at which time the provisions set forth herein shall apply. Noamounts paid by the Sponsor under this Section 11.2.2 shall constitute Guaranty Payments.

ARTICLE XII

THE SERVICER

Section 12.1 Appointment of Servicer as Agent.

To the extent of its ownership interest in the Loans, each Participant hereby designates Servicer as its agent to administer all matters concerning the Loansand to act as herein specified. Each Participant hereby irrevocably authorizes the Servicer to take such actions on its behalf under the provisions of thisAgreement, the other Operative Documents, and all other instruments and agreements referred to herein or therein, and to exercise such powers and to performsuch duties hereunder and thereunder as are specifically delegated to or required of the Servicer by the terms hereof and thereof and such other powers as arereasonably incidental thereto. The Servicer may perform any of its duties hereunder by or through its agents or employees.

Section 12.2 Nature of Duties of Servicer.

The Servicer shall have no duties or responsibilities except those expressly set forth in this Agreement and the other Operative Documents. None of theServicer nor any of its respective officers, directors, employees or agents shall be liable for any action taken or omitted by it as such hereunder or in connectionherewith, unless caused by its or their gross negligence or willful misconduct. The Servicer shall not have by reason of this Agreement a fiduciary relationship inrespect of any Participant; and nothing in this Agreement, express or implied, is intended to or shall be so construed as to impose upon the Servicer anyobligations in respect of this Agreement or the other Operative Documents except as expressly set forth herein.

Section 12.3 Lack of Reliance on the Servicer.

Independently and without reliance upon the Servicer, each Participant, to the extent it deems appropriate, has made and shall continue to make (i) its ownindependent investigation of the financial condition and affairs of the Credit Parties in connection with the taking or not taking of any action in connectionherewith, and (ii) its own appraisal of

-70-


the creditworthiness of the Credit Parties, and, except as expressly provided in this Agreement, the Servicer shall have no duty or responsibility, either initially oron a continuing basis, to provide any Participant with any credit or other information with respect thereto, whether coming into its possession before the makingof the Loans or at any time or times thereafter.

The Servicer shall not be responsible to any Participant for any recitals, statements, information, representations or warranties herein or in any document,certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, collectibility, priority orsufficiency of this Agreement, the Guaranty Agreement, and Loan Document or any other documents contemplated hereby or thereby, or the financial conditionof the Credit Parties or any Borrower, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions orconditions of this Agreement, the Guaranty Agreement or the other documents contemplated hereby or thereby, or the financial condition of the Credit Parties orany Borrower, or the existence or possible existence of any Unmatured Credit Event or Credit Event.

Section 12.4 Certain Rights of the Servicer.

If the Servicer shall request instructions from the Required Participants with respect to any action or actions (including the failure to act) in connection withthis Agreement, the Servicer shall be entitled to refrain from such act or taking such act, unless and until the Servicer shall have received instructions from theRequired Participants; and the Servicer shall not incur liability in any Person by reason of so refraining. Without limiting the foregoing, no Participant shall haveany right of action whatsoever against the Servicer as a result of the Servicer acting or refraining from acting hereunder in accordance with the instructions of theRequired Participants.

Section 12.5 Reliance by Servicer.

The Servicer shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletypeor telecopier message, cable gram, radiogram, order or other documentary, teletransmission or telephone message believed by it to be genuine and correct and tohave been signed, sent or made by the proper Person. The Servicer may consult with legal counsel (including counsel for any Credit Party), independent publicaccountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice ofsuch counsel, accountants or experts.

Section 12.6 Indemnification of Servicer.

To the extent the Servicer is not reimbursed and indemnified by the Credit Parties, each Participant will reimburse and indemnify the Servicer, ratablyaccording to the respective Pro Rata Shares, in either case, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or assertedagainst the Servicer in performing its duties hereunder, in any way relating to or arising out of this Agreement or the other Operative Documents; provided thatno Participant shall be liable to the Servicer for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements resulting from the Servicer’s gross negligence or willful misconduct.

-71-

Section 12.7 The Servicer in its Individual Capacity.

With respect to its obligations under this Agreement and the amounts advanced by it, the Servicer shall have the same rights and powers hereunder as anyother Participant and may exercise the same as though it were not performing the duties specified herein; and the terms “Participants”, “Required Participants”,or any similar terms shall, unless the context clearly otherwise indicates, include the Servicer in its individual capacity. The Servicer may accept deposits from,lend money to, and generally engage in any kind of banking, trust, financial advisory or other business with the Consolidated Companies or any affiliate of theConsolidated Companies as if it were not performing the duties specified herein, and may accept fees and other consideration from the Consolidated Companiesfor services in connection with this Agreement and otherwise without having to account for the same to the Participants.

Section 12.8 Holders of Participation Certificates.

The Servicer may deem and treat the payee of any Participation Certificate as the owner thereof for all purposes hereof unless and until a written notice ofthe assignment or transfer thereof shall have been filed with the Servicer. Any request, authority or consent of any Person who, at the time of making suchrequest or giving such authority or consent, is the holder of any Participation Certificate shall be conclusive and binding on any subsequent holder, transferee orassignee of such Participation Certificate or of any Participation Certificate or Certificates issued in exchange therefor.

Section 12.9 Appointment of Documentation Agent and Co-Syndication Agents.

The Participants hereby appoint AmSouth Bank as Documentation Agent and Wachovia Bank, National Association and SunTrust Bank as Co-SyndicationAgents. Each Participant agrees that the Documentation Agent and Co-Syndication Agents shall have no duties or obligations under any Operative Documents orLoan Documents to any Participants or to any Credit Party.

ARTICLE XIII


MISCELLANEOUS

Section 13.1 Notices.

All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, telecopy or similar teletransmission orwriting) and shall be given to such party at its address or applicable teletransmission number set forth on the signature pages hereof, or such other address orapplicable teletransmission number as such party may hereafter specify by notice to the Servicer and Sponsor. Each such notice, request or other communicationshall be effective (i) if given by telex, when such telex is

-72-

transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by mail, 72 hours after such communication isdeposited in the mail with first class postage prepaid, addressed as aforesaid, (iii) if given by telecopy, when such telecopy is transmitted to the telecopy numberspecified in this Section and the appropriate confirmation is received, or (iv) if given by any other means (including, without limitation, by air courier), whendelivered or received at the address specified in this Section; provided that notices to the Servicer shall not be effective until received.

Section 13.2 Amendments, Etc.

No amendment or waiver of any provision of this Agreement or the other Operative Documents, nor consent to any departure by any Credit Party therefrom,shall in any event be effective unless the same shall be in writing and signed by the Required Participants (and in the case of any amendment, the applicableCredit Party), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that noamendment, waiver or consent shall, unless in writing and signed by all the Participants do any of the following: (i) waive any of the conditions specified inSection 2.1 or 11.1, (ii) increase the Participating Commitments or contractual obligations of the Participants to Servicer or Sponsor under this Agreement, (iii)reduce the principal of, or interest on, the Participation Certificates or any fees hereunder, (iv) postpone any date fixed for the payment in respect of principal of,or interest on, the Participation Certificates or any fees hereunder, (v) agree to release any Guarantor from its obligations under any Guaranty Agreement or theSponsor from its obligations pursuant to Article VIII, (vi) modify the definition of “Required Participants,” or (vii) modify Article IV, Article VIII or thisSection 13.2. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing and signed by the Servicer in addition to the Participantsrequired hereinabove to take such action, affect the rights or duties of the Servicer under this Agreement or under any other Operative Document or LoanDocument. In addition, notwithstanding the foregoing, the Servicer and the Sponsor may, without the consent of or notice to the Participants, enter intoamendments, modifications or waivers with respect to the Servicing Agreement and the Fee Letter as long as such amendments or modifications do not conflictwith the terms of this Agreement.

Section 13.3 No Waiver; Remedies Cumulative.

No failure or delay on the part of the Servicer or any Participant in exercising any right or remedy hereunder or under any other Operative Document, andno course of dealing between any Credit Party and the Servicer or any Participant shall operate as a waiver thereof, nor shall any single or partial exercise of anyright or remedy hereunder or under any other Operative Document preclude any other or further exercise thereof or the exercise of any other right or remedyhereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Servicer or anyParticipant would otherwise have. No notice to or demand on any Credit Party not required hereunder or under any other Operative Document in any case shallentitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Servicer or theParticipants to any other or further action in any circumstances without notice or demand.

-73-

Section 13.4 Payment of Expenses, Etc.

(a) Sponsor shall whether or not the transactions hereby contemplated are consummated, pay all reasonable, out-of-pocket costs and expenses ofthe Servicer in the administration (both before and after the execution hereof and including reasonable expenses actually incurred relating to advice ofcounsel as to the rights and duties of the Servicer and the Participants [with respect to administration only] with respect thereto) of, and in connectionwith the preparation, execution and delivery of, preservation of rights under, enforcement of, and, after a Unmatured Credit Event or Credit Event,refinancing, renegotiation or restructuring of, this Agreement and the other Operative Documents and the documents and instruments referred totherein, and any amendment, waiver or consent relating thereto (including, without limitation, the reasonable fees actually incurred and disbursementsof counsel for the Servicer, accountants, consultants, and other similar professional fees), and in the case of enforcement of this Agreement or anyOperative Document after an Credit Event, all such reasonable, out-of-pocket costs and expenses (including, without limitation, the reasonable feesactually incurred and reasonable disbursements and changes of counsel), for any of the Participants; and

(b) Pay and hold the Servicer and each of the Participants harmless from and against any and all present and future stamp, documentary, andother similar Taxes with respect to this Agreement, the Participation Certificates, the Loan Documents and any other Operative Documents, anycollateral described therein, or any payments due thereunder, and save the Servicer and each Participant harmless from and against any and allliabilities with respect to or resulting from any delay or omission to pay such Taxes.

Section 13.5 Right of Setoff.


In addition to and not in limitation of all rights of offset that any Participant may have under applicable law, each Participant shall, upon the occurrence ofany Credit Event and whether or not such Participant has made any demand or any Credit Party’s obligations have matured, have the right to appropriate andapply to the payment of any Credit Party’s obligations hereunder and under the other Operative Documents, all deposits of any Credit Party (general or special,time or demand, provisional or final) then or thereafter held by and other indebtedness or property then or thereafter owing by such Participant or other holder toany Credit Party, whether or not related to this Agreement or any transaction hereunder.

Section 13.6 Benefit of Agreement; Assignments; Participations.

(a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the partieshereto, provided that Sponsor may not assign or transfer any of its interest hereunder without the prior written consent of the Participants.

-74-

(b) Any Participant may make, carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an Affiliate of suchParticipant.

(c) Each Participant may assign all of its interests, rights and obligations under this Agreement (including all of its Participating Commitmentsand the Funded Participant’s Interest at the time owing to it and the Participation Certificates held by it) to any Eligible Assignee; provided, however,that (i) the Sponsor has given its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed) unless suchassignment is an Affiliate of the assigning Participant or unless a Credit Event has occurred and is continuing hereunder, (ii) the amount of theParticipating Commitment of the assigning Participant subject to each assignment (determined as of the date the assignment and acceptance withrespect to such assignment is delivered to the Servicer) shall not be less than the entire Participating Commitment of such assignor and (iii) the partiesto each such assignment shall execute and deliver to the Servicer an Assignment and Acceptance as set forth Exhibit A, together with the ParticipationCertificate subject to such assignment and, unless such assignment is to an Affiliate of such Participant, a processing and recordation fee of $3,500payable by the assigning Participant or the Eligible Assignee. Within ten (10) Business Days after receipt of the notice and the Assignment andAcceptance, Servicer shall execute and deliver, in exchange for the surrendered Participation Certificate, a new Participation Certificate to the order ofsuch assignee in a principal amount equal to the applicable Participating Commitment assumed by it pursuant to such Assignment and Acceptance.Such new Participation Certificate shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered ParticipationCertificate, shall be dated the date of the surrendered Participation Certificate which it replaces, and shall otherwise be in substantially the formattached hereto.

(d) Each Participant may, without the consent of Sponsor or the Servicer, sell participations to one or more banks or other entities in all or aportion of its rights and obligations under this Agreement (including all or a portion of its Participating Commitment and the Funded Participant’sInterest owing to it), provided, however, that (i) no Participant may sell a participation in its Participating Commitment (after giving effect to anypermitted assignment hereof) unless it retains an aggregate exposure of 50% of its original Participating Commitment, provided, however, sales ofparticipations to an Affiliate of such Participant shall not be included in such calculation; provided, however, no such maximum amount shall beapplicable to any such participation sold at any time there exists an Credit Event hereunder, (ii) such Participant’s obligations under this Agreementshall remain unchanged, (iii) such Participant shall remain solely responsible to the other parties hereto for the performance of such obligations, and(iv) the participating bank or other entity shall not be entitled to the benefit (except through its selling Participant) of the cost protection provisionscontained in Article II of this Agreement, and (v) Sponsor, Servicer and the other Participants shall continue to deal solely and directly with eachParticipant in connection with such Participant’s rights and obligations under this Agreement and the other Operative Documents, and such Participantshall retain the sole right to enforce the obligations of Sponsor relating to the Loans and to approve any amendment, modification or waiver of anyprovisions of this Agreement (other than an amendment

-75-

requiring approval of 100% of the Participants). Each Participant shall promptly notify in writing the Servicer and the Sponsor of any sale of aparticipation hereunder and shall certify to Sponsor and Servicer its compliance with the terms hereof.

(e) Any Participant or participant may, in connection with the assignment or participation or proposed assignment or participation, pursuant tothis Section, disclose to the assignee or participant or proposed assignee or participant any information relating to Sponsor or the other ConsolidatedCompanies furnished to such Participant by or on behalf of Sponsor or any other Consolidated Company. With respect to any disclosure of confidential,non-public, proprietary information, such proposed assignee or participant shall agree to use the information only for the purpose of making anynecessary credit judgments with respect to this credit facility and not to use the information in any manner prohibited by any law, including withoutlimitation, the securities laws of the United States. The proposed participant or assignee shall agree not to disclose any of such information except (i) todirectors, employees, auditors or counsel to whom it is necessary to show such information, each of whom shall be informed of and shall acknowledgethe confidential nature of the information, (ii) in any statement or testimony pursuant to a subpoena or order by any court, governmental body or otheragency asserting jurisdiction over such entity, or as otherwise required by law (provided prior notice is given to Sponsor and the Servicer unlessotherwise prohibited by the subpoena, order or law), and (iii) upon the request or demand of any regulatory agency or authority with proper jurisdiction.The proposed participant or assignee shall further agree to return all documents or other written material and copies thereof received from anyParticipant, the Servicer or Sponsor relating to such confidential information unless otherwise properly disposed of by such entity.

(f) Any Participant may at any time assign all or any portion of its rights in this Agreement to a Federal Reserve Bank; provided that no suchassignment shall release the Participant from any of its obligations hereunder.

Section 13.7 Governing Law; Submission to Jurisdiction.

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN


ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLESTHEREOF) OF THE STATE OF GEORGIA.

ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENTMAY BE BROUGHT IN THE SUPERIOR COURT OF MECKLENBURG COUNTY, NORTH CAROLINA, OR ANY OTHER COURT OFTHE STATE OF NORTH CAROLINA OR OF THE UNITED STATES OF AMERICA FOR THE WESTERN DISTRICT OF NORTHCAROLINA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, SPONSOR HEREBY ACCEPTS FOR ITSELF AND INRESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID

-76-

COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND SPONSOR HEREBY IRREVOCABLYWAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ONTHE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCHACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

SPONSOR HEREBY IRREVOCABLY DESIGNATES PRENTICE HALL CORPORATION, CHARLOTTE, NORTH CAROLINA, ASITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON BEHALF OF SPONSOR, SERVICE OF PROCESS INSUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANYDOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH LOCAL AGENTWILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF SUCH PROCESS BY MAIL TO SPONSORAT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF SPONSOR TO RECEIVE SUCH COPYSHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. SPONSOR FURTHER IRREVOCABLY CONSENTS TO THESERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THEMAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SPONSOR AT ITS SAIDADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.

Nothing herein shall affect the right of the Servicer, any Participant, or any Credit Party to serve process in any other manner permitted by law or tocommence legal proceedings or otherwise proceed against Sponsor in any other jurisdiction.

Section 13.8 Counterparts.

This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when soexecuted and delivered shall be an original, but all of which shall together constitute one and the same instrument.

Section 13.9 Severability.

In case any provision in or obligation under this Agreement or the other Operative Documents shall be invalid, illegal or unenforceable, in whole or in part,in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction,shall not in any way be affected or impaired thereby.

Section 13.10 Independence of Covenants.

-77-

All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that itwould be permitted by an exception to, or be otherwise within the limitation of, another covenant, shall not avoid the occurrence of an Unmatured Credit Eventor an Credit Event if such action is taken or condition exists.

Section 13.11 Change in Accounting Principles, Fiscal Year or Tax Laws.

If (i) any preparation of the financial statements referred to in Section 6.1 hereafter occasioned by the promulgation of rules, regulations, pronouncementsand opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accounts (or successors thereto oragencies with similar functions) result in a material change in the method of calculation of financial covenants, standards or terms found in this Agreement, (ii)there is any change in Sponsor’s fiscal quarter or Fiscal Year, except as permitted in Section 6.25 or (iii) there is a material change in federal tax laws whichmaterially affects any of the Consolidated Companies’ ability to comply with the financial covenants, standards or terms found in this Agreement, Sponsor andthe Required Participants agree to enter into negotiations in order to amend such provisions so as to equitably reflect such changes with the desired result that thecriteria for evaluating any of the Consolidated Companies’ financial condition shall be the same after such changes as if such changes had not been made. Unlessand until such provisions have been so amended, the provisions of this Agreement shall govern.

Section 13.12 Headings Descriptive; Entire Agreement.


The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning orconstruction of any provision of this Agreement. This Agreement, the other Operative Documents, and the agreements and documents required to be deliveredpursuant to the terms of this Agreement constitute the entire agreement among the parties hereto and thereto regarding the subject matters hereof and thereof andsupersede all prior agreements, representations and understandings related to such subject matters.

Section 13.13 Patriot Act Notice.

Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies theBorrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required toobtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information thatwill allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.

[Signatures Set Forth on Next Page]

-78-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

Address for Notices: RUBY TUESDAY, INC.,

Ruby Tuesday, Inc.150 West Church AvenueMaryville, TN 37801Attention: Marguerite N. DuffyTelecopy: (865) 379 - 6817

By /s/ Marguerite N. Duffy Title: Senior Vice President

[SEAL]

ATTEST:

By /s/ Scarlett MaySecretary

-1-

Address for Notices: BANK OF AMERICA, N.A., as Servicer

Commercial Agency ManagementLaura Schmuck, Agency Officer231 S. LaSalle StreetChicago, IL 60697Telecopy No. (877) 206-8427

By /s/ Laura B. Schmuck Name: Laura B. Schmuck Title: Agency Officer/ Asst Vice President

with a copy to:Bank of America, N.A.550 W. Main AvenueSuite 800Knoxville, TN 37902Attn: John M. HallTelecopy No. (865) 546-2865

-2-

Address for Notices: BANK OF AMERICA, N.A.

Bank of America, N.A.550 W. Main AvenueSuite 800Knoxville, TN 37902Attn: John M. HallTelecopy No. (865) 546-2865

By: /s/ John M. Hall Name: John M. Hall Title: Senior Vice President


Participating Commitment: $14,000,000.00Pro Rata Share: 29.16666667%

-3-

Address for Notices: AMSOUTH BANK

505 South Gay StreetKnoxville, TN 37902Attn: Matthew B. AshworthTelecopy No. (865) 521-5352

By: /s/ Matthew B. Ashworth Name: Matthew B. Ashworth Title: Vice President


-4-

Address for Notices: WACHOVIA BANK, NATIONAL ASSOCIATION

1339 Chestnut St.12th Floor Widener Building PA4843Philadelphia, PA 19107Attn: Mr. Mark SuppleTelecopy No. (267) 321-6700

By: /s/ Mark S. Supple Name: Mark S. Supple Title: Vice President


-5-

Address for Notices: SUNTRUST BANK

303 Peachtree St., NE, 2nd FloorAtlanta, GA 30308Attn: Center 1923Telecopy No. (404) 724-3716

By: /s/ Susan M. Hall Name: Susan M. Hall Title: Managing Director


-6-

EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (the “Assignment Agreement”) dated as of _______________________, 20__ between__________ (“Assignor”) and __________________________________ (“Assignee”). All capitalized terms used herein and not otherwise defined shall havethe respective meanings provided such terms in the Loan Facility Agreement referred to below.


WHEREAS, Assignor is a party to an Amended and Restated Loan Facility Agreement and Guaranty, dated as of November 19, 2004, amended to the datehereof, the “Loan Facility Agreement”), among Ruby Tuesday, Inc., a Georgia corporation (the “Sponsor”), various financial institutions (including Assignor, the“Participants”) and Bank of America, N.A., as Servicer (the “Servicer”); and

WHEREAS, Assignor has a Participating Commitment of $___________ under the Loan Facility Agreement pursuant to which it has outstanding a FundedParticipant’s Interest of $______________; and

WHEREAS, Assignor and Assignee wish Assignor to assign to Assignee its rights under the Loan Facility Agreement with respect to a portion of itsParticipating Commitment and of its outstanding Funded Participant’s Interest; and


WHEREAS, Assignor and Assignee wish Assignee to assume the obligations of Assignor under the Loan Facility Agreement to the extent of the rights soassigned;

NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

1. Assignment. Assignor hereby assigns to Assignee, without recourse, or representation or warranty (other than expressly provided herein) and subject toSection 4(b) hereof, ___% as the “Assignee’s Share” (“Assignee’s Share”) of all of Assignor’s rights, title and interest arising under the Loan Facility Agreementrelating to Assignor’s Participating Commitment and Funded Participant’s Interest heretofore made by the Assignor under the Loan Facility Agreement. Thedollar amount of Assignee’s Share of Assignor’s Participating Commitment is $__________ and the dollar amount of Assignee’s Share of Assignor’soutstanding Funded Participant’s Interest is $__________.

2. Assumption. Assignee hereby assumes from Assignor all of Assignor’s obligations arising under the Loan Facility Agreement relating to Assignee’s Shareof Assignor’s Participating Commitment and of the Funded Participant’s Interest. It is the intent of the parties hereto that Assignor shall be released from all of itsobligations under the Loan Facility Agreement relating to Assignee’s Share.

3. Assignments; Participations. Assignee may not assign all or any part of the rights granted to it hereunder or grant participations in all or any part of therights granted to it hereunder except in accordance with the provisions of Section 13.6 of the Loan Facility Agreement.

4. Payment of Interest and Fees to Assignee.

(a) As of the date hereof interest is payable in respect of Assignee’s Share of the Funded Participant’s Interest at a rate equal to __________ perannum above LIBOR for the Calculation Periods, and a Commitment Fee equal to __________ per annum on the Assignee’s Share of the average dailyunused portion of the Participating Commitment.

(b) Notwithstanding anything to the contrary contained in this Assignment Agreement, if and when Assignor receives or collects any payment ofinterest on its Funded Participant’s Interest attributable to Assignee’s Share or any payment of the Commitment Fee attributable to Assignee’s Sharewhich, in any such case, are required to be paid to Assignee pursuant to clause (a) above, Assignor shall distribute to Assignee such payment but onlyto the extent such interest or fee accrued after the Assignment Effective Date (as hereinafter defined).

(c) Notwithstanding anything to the contrary contained in this Assignment Agreement, if and when Assignee receives or collects any payment ofinterest on the Funded Participant’s Interest or any payment of the Commitment Fee which, in any such case, is required to be paid to Assignorpursuant to clause (a) above, Assignee shall distribute to Assignor such payment.

5. Payments on Assignment Effective Date. In consideration of the assignment by Assignor to Assignee of Assignee’s Share of Assignor’s ParticipatingCommitment and Funded Participant’s Interest as set forth above, Assignee agrees to pay to Assignor on or prior to the Assignment Effective Date an amountspecified by Assignor in writing on or prior to the Assignment Effective Date which represents Assignee’s Share of the principal amount of the FundedParticipant’s Interest of Assignor outstanding on the Assignment Effective Date.

6. Effectiveness.

(a) This Assignment Agreement shall become effective on the date (the “Assignment Effective Date”) (which is at least five days after the datehereof) on which (i) Assignor and Assignee shall have signed a copy hereof (whether the same or different copies) and, in the case of Assignee, shallhave delivered same to Assignor, (ii) the Sponsor shall have consented hereto, (iii) a copy of the fully executed Assignment, a fee of $3,500 (payable bythe Assignor or Assignee) and the Participation

Certificate evidencing the Participating Commitment and Funded Participant’s Interest assigned hereby shall have been delivered to the Servicer, and(iv) Assignee shall have paid to Assignor the amount set forth in Section 5.

(b) It is agreed that all interest attributable to Assignee’s Share of the Funded Participant’s Interest of Assignor and all Commitment Feesattributable to Assignee’s Share, which, in each case, accrues on and after the Assignment Effective Date shall be paid directly to the Assignee inaccordance with the Loan Facility Agreement.

7. Amendment of Loan Facility Agreement. On the Assignment Effective Date the Loan Facility Agreement shall be amended by deeming the signature ofAssignee herein as a signature to the Loan Facility Agreement. The Assignee shall be deemed a “Participant” for all purposes under the Loan Facility Agreementand shall be subject to and shall benefit from all of the rights and obligations of a Participant under the Loan Facility Agreement. The address of the Assignee fornotice purposes shall be as set forth below, and the Loan Facility Agreement shall be amended by deeming such signature page and address to be includedthereon. Without limiting the generality of the foregoing, Assignee agrees that it will perform its obligations as a Participant under the Loan Facility Agreementas required by the terms thereof and Assignee appoints and authorizes the Servicer to take such actions as Servicer on its behalf and exercise such powers underthe Loan Facility Agreement and the other Operative Documents as are delegated to the Servicer by the terms of the Loan Facility Agreement and the otherOperative Documents, together with such powers as are reasonably incidental thereto.


8. Representations and Warranties. Each of the Assignor and the Assignee represents and warrants to the other party as follows:

(a) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to fulfill itsobligations under, and to consummate the transactions contemplated by, this Assignment Agreement;

(b) the making and performance by it of this Assignment Agreement and all documents required to be executed and delivered by it hereunder donot and will not violate any law or regulation of the jurisdiction of its incorporation or any other law or regulation applicable to it;

(c) this Assignment Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable inaccordance with its terms; and

(d) all consents, licenses, approvals, authorizations, exemptions, registrations, filings, opinions and declarations from or with any agency,department, administrative authority, statutory corporation or judicial entity necessary for the validity or enforceability of its obligations under thisAssignment Agreement have been obtained, and no governmental authorizations other than any already obtained are required in connection with itsexecution, delivery and performance of this Assignment Agreement.

9. Expenses. The Assignor and the Assignee agree that each party shall bear its own expenses in connection with the preparation and execution of thisAssignment Agreement.

10. Miscellaneous.

(a) Assignor shall not be responsible to Assignee for the execution (by any party other than the Assignor), effectiveness, genuineness, validity,enforceability, collectibility or sufficiency of the Loan Facility Agreement, the Participation Certificates or the Guaranty Agreement or for anyrepresentations, warranties, recitals or statements made therein or in any written or oral statement or in any financial or other statements, instruments,reports, certificates or any other documents made or furnished or made available by Assignor to Assignee or by or on behalf of the Sponsor or anyGuarantor to Assignor or Assignee in connection with the Loan Facility Agreement, the Participation Certificates or the Guaranty Agreement and thetransactions contemplated thereby. Assignor shall not be required to ascertain or inquire as to the performance or observance of any of the terms,conditions, provisions, covenants or agreements contained in the Loan Facility Agreement, the Participation Certificates or the Guaranty Agreement oras to the existence or possible existence of any event which constitutes a Credit Event or an Unmatured Credit Event.

(b) Assignee represents and warrants that it has made its own independent investigation of the financial condition and affairs of the Sponsor andeach Guarantor in connection with the assignment of Assignee’s Share of Assignor’s Participating Commitment and of Assignor’s ParticipatingCommitment to Assignee hereunder and has made and shall continue to make its own appraisal of the creditworthiness of the Sponsor and eachGuarantor. Assignor shall have no duty or responsibility either initially or on a continuing basis to make any such investigation or any such appraisal onbehalf of Assignee or to provide Assignee with any credit or other information with respect thereto, whether coming into its possession before themaking of the Loans or at any time or times thereafter and shall further have no responsibility with respect to the accuracy of, or the completeness of,any information provided to Assignee, whether by Assignor or by or on behalf of either the Sponsor or any Guarantor.

(c) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS ASSIGNMENT AGREEMENT SHALL BEGOVERNED BY THE LAWS OF THE STATE OF GEORGIA.

(d) No term or provision of this Assignment Agreement may be changed, waived, discharged or terminated orally, but only by an instrument inwriting signed by both parties.

(e) This Assignment Agreement may be executed in one or more counterparts, each of which shall be an original but all of which, taken together,shall constitute one and the same instrument.

(f) The Assignor may at any time or from time to time grant to others assignments or participations in its Participating Commitment or itsFunded Participant’s Interest but not in the portions thereof assigned to Assignee pursuant to this Assignment Agreement. The Assignor represents andwarrants that it has not at any time prior to the Assignment Effective Date encumbered or assigned the portion of its Participating Commitment or itsFunded Participant’s Interest being assigned hereunder.

(g) All payments hereunder or in connection herewith shall be made in Dollars and in immediately available funds, if payable to the Assignor, tothe account of the Assignor at its address as designated in the Loan Facility Agreement, and, if payable to the Assignee, to the account of theAssignee’s address, as designated on the signature page hereof.

(h) This Assignment Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.Neither of the parties hereto may assign or transfer any of its rights or obligations under this Assignment Agreement without the prior consent of theother party.


(i) All representations and warranties made herein and indemnities provided for herein shall survive the consummation of the transactioncontemplated hereby.

(j) The Assignee acknowledges receipt of copies of the documents received in connection with the transactions contemplated by the LoanFacility Agreement, the Guaranty Agreement and this Assignment Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement as of the date first above written.

[NAME OF ASSIGNOR]

By: Title:

Assignee's Share of [NAME OF ASSIGNEE]Participating Commitment

$____________________________ By:____________________________ Title:

Assignee's Share ofFunded Participant's Interest:

$____________________________

Address:

Tel. No:____________________________Fax No:____________________________

CONSENTED TO AS OF THEDATE SET FORTH ABOVE:

RUBY TUESDAY, INC.

By:____________________________ Title:____________________________

EXHIBIT B

This SUBSIDIARY GUARANTY AGREEMENT dated as of November 19, 2004, among each of the Subsidiaries (each such subsidiary individually, a“Guarantor” and collectively, the “Guarantors”) of Ruby Tuesday, Inc., a Georgia corporation (the “Sponsor”) from time to time parties hereto in favor of Bankof America, N.A., a national banking association, as servicer (the “Servicer”) and the Participants (as defined in the Loan Facility Agreement referred to below).

Reference is made to the Amended and Restated Loan Facility Agreement dated as of November 19, 2004 (as amended, supplemented or otherwisemodified from time to time, the “Loan Facility Agreement”), among the Sponsor, the banks and financial institutions from time to time party thereto (the“Participants”) and Bank of America, N.A., as servicer. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms inthe Loan Facility Agreement.

The Servicer, on behalf of the Participants, has agreed to make Loans to certain franchisees of Sponsor and to issue Letters of Credit for the account of suchfranchisees of Sponsor, pursuant to, and upon the terms and subject to the conditions specified in, the Loan Facility Agreement. Each of the Guarantors is a director indirect wholly-owned Subsidiary of the Sponsor and acknowledges that it will derive substantial benefit from the making of the Loans by the Servicer, onbehalf of the Participants, and the issuance of the Letters of Credit by the Servicer, on behalf of the Participants. The obligations of the Servicer, on behalf of theParticipants, to make Loans and to issue Letters of Credit is conditioned on, among other things, the execution and delivery by the Guarantors of this SubsidiaryGuaranty Agreement. As consideration therefor and in order to induce the Servicer, on behalf of the Participants to make Loans and to issue Letters of Credit, theGuarantors are willing to execute this Subsidiary Guaranty Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guaranty. Each Guarantor unconditionally guaranties, jointly with the other Guarantors and severally, as a primary obligor and not merely as asurety, (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing at the Default Rate and interest


accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in suchproceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each paymentrequired to be made by the Sponsor under the Loan Facility Agreement in respect of any Letter of Credit, when and as due, including payments in respect ofreimbursement or disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations, including fees, costs,expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency ofany bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties to theServicer and the Participants under the Loan Facility Agreement, the other Operative Documents, and the Loan Documents, (b) the due and punctualperformance of all

covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the Loan Facility Agreement, the other Operative Documents, and theLoan Documents; and (c) the due and punctual payment and performance of all obligations of the Sponsor, monetary or otherwise, under each HedgingAgreement entered into with a counterparty that was a Participant or an Affiliate of a Participant at the time such Hedging Agreement was entered into (all themonetary and other obligations referred to in the preceding clauses (a) through (c) being collectively called the “Guaranteed Obligations”). Each Guarantorfurther agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remainbound upon its guarantee notwithstanding any extension or renewal of any Guaranteed Obligation.

SECTION 2. Guaranteed Obligations Not Waived. To the fullest extent permitted by applicable law, each Guarantor waives presentment to, demand ofpayment from and protest to the Sponsor of any of the Guaranteed Obligations, and also waives notice of acceptance of its guarantee and notice of protest fornonpayment. To the fullest extent permitted by applicable law, the obligations of each Guarantor hereunder shall not be affected by (a) the failure of the Serviceror any Participant to assert any claim or demand or to enforce or exercise any right or remedy against the Sponsor or any other Guarantor under the provisions ofthe Loan Facility Agreement, any other Operative Document, any Loan Document or otherwise, (b) any rescission, waiver, amendment or modification of, or anyrelease from any of the terms or provisions of, this Agreement, any other Operative Document, any Loan Document, any Guaranty or any other agreement,including with respect to any other Guarantor under this Agreement, or (c) the failure to perfect any security interest in, or the release of, any of the security heldby or on behalf of the Servicer or any Participant.

SECTION 3. Guaranty of Payment. Each Guarantor further agrees that its guarantee constitutes a guarantee of payment when due and not of collection, andwaives any right to require that any resort be had by the Servicer or any Participant to any of the security held for payment of the Guaranteed Obligations or toany balance of any deposit account or credit on the books of the Servicer or any Participant in favor of the Sponsor or any other person.

SECTION 4. No Discharge or Diminishment of Guaranty. The obligations of each Guarantor hereunder shall not be subject to any reduction, limitation,impairment or termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations), including any claim of waiver,release, surrender, alteration or compromise of any of the Guaranteed Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment ortermination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality ofthe foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Servicer or anyParticipant to assert any claim or demand or to enforce any remedy under the Loan Facility Agreement, any other Operative Document, any Loan Document orany other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, willful or otherwise, in the performance ofthe Guaranteed Obligations, or by any other act or omission that may or might in any manner or to the extent vary the risk of any Guarantor or that wouldotherwise operate as a discharge of each Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the GuaranteedObligations).

SECTION 5. Defenses of Sponsor Waived. To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out ofany defense of the Sponsor or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of theliability of the Sponsor, other than the final and indefeasible payment in full in cash of the Guaranteed Obligations. The Servicer and the Participants may, attheir election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security inlieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with the Sponsor or any other guarantor,without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Guaranteed Obligations have been fully, finally andindefeasibly paid in cash. Pursuant to applicable law, each Guarantor waives any defense arising out of any such election even though such election operates,pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Sponsoror any other Guarantor or guarantor, as the case may be, or any security.

SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing and not in limitation of any other right that the Servicer or any Participanthas at law or in equity against any Guarantor by virtue hereof, upon the failure of the Sponsor or any other Loan Party to pay any Obligation when and as thesame shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay,or cause to be paid, to the Servicer for the benefit of the Participants in cash the amount of such unpaid Guaranteed Obligations. Upon payment by any Guarantorof any sums to the Servicer, all rights of such Guarantor against the Sponsor arising as a result thereof by way of right of subrogation, contribution,reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of allthe Guaranteed Obligations. In addition, any indebtedness of the Sponsor now or hereafter held by any Guarantor is hereby subordinated in right of payment tothe prior payment in full in cash of the Guaranteed Obligations. If any amount shall erroneously be paid to any Guarantor on account of (i) such subrogation,contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of the Sponsor, such amount shall be held in trust for the benefit of theServicer and the Participants and shall forthwith be paid to the Servicer to be credited against the payment of the Guaranteed Obligations, whether matured orunmatured, in accordance with the terms of the Loan and Operative Documents.

SECTION 7. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the Sponsor’s financial condition and assets,and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that suchGuarantor assumes and incurs hereunder, and agrees that none of the Servicer or the Participants will have any duty to advise any of the Guarantors ofinformation known to it or any of them regarding such circumstances or risks.


SECTION 8. Representations and Warranties. Each Guarantor represents and warrants as to itself that all representations and warranties relating to it (as aSubsidiary of the Sponsor) contained in the Loan Facility Agreement are true and correct.

SECTION 9. Termination. The guaranties made hereunder (a) shall terminate when all the Guaranteed Obligations have been paid in full in cash and theParticipants have no further commitment to lend under the Loan Facility Agreement, the LC Exposure has been reduced to zero and the Participants have nofurther obligation to issue Letters of Credit under the Loan Facility Agreement and (b) shall continue to be effective or be reinstated, as the case may be, if at anytime payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Participant or any Guarantor upon the bankruptcy orreorganization of the Sponsor, any Guarantor or otherwise. In connection with the foregoing, the Servicer shall execute and deliver to such Guarantor orGuarantor’s designee, at such Guarantor’s expense, any documents or instruments which such Guarantor shall reasonably request from time to time to evidencesuch termination and release.

SECTION 10. Binding Effect; Several Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall bedeemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Guarantors that are contained inthis Agreement shall bind and inure to the benefit of each party hereto and their respective successors and assigns. This Agreement shall become effective as toany Guarantor when a counterpart hereof executed on behalf of such Guarantor shall have been delivered to the Servicer, and a counterpart hereof shall havebeen executed on behalf of the Servicer, and thereafter shall be binding upon such Guarantor and the Servicer and their respective successors and assigns, andshall inure to the benefit of such Guarantor, the Servicer and the Participants, and their respective successors and assigns, except that no Guarantor shall have theright to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void). If all of the capital stock or otherequity interest of a Guarantor is sold, transferred or otherwise disposed of pursuant to a transaction permitted by the Loan Facility Agreement, such Guarantorshall be released from its Guaranteed Obligations under this Agreement without further action, and upon request of the Guarantor or Sponsor, the Servicer willexecute and deliver to the Sponsor or such Gurantor, at the Sponsor’s expense, such additional documents, instruments or agreements (all of which shall beprepared by the Sponsor) as the Sponsor or Guarantor shall reasonably request to further evidence the termination of this Guaranty. This Agreement shall beconstrued as a separate agreement with respect to each Guarantor and may be amended, modified, supplemented, waived or released with respect to anyGuarantor without the approval of any other Guarantor and without affecting the Guaranteed Obligations of any other Guarantor hereunder.

SECTION 11. Waivers; Amendment. (a) No failure or delay of the Servicer of any in exercising any power or right hereunder shall operate as a waiverthereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power,preclude any other or further exercise thereof or the exercise of any other right or power. The rights of the Servicer and of the Participants hereunder and underthe other Operative Documents and Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiverof any provision of this Agreement or consent to any departure by any Guarantor therefrom

shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver and consent shall be effective only in the specificinstance and for the purpose for which given. No notice or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice insimilar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into betweenthe Guarantors with respect to which such waiver, amendment or modification relates and the Servicer, with the prior written consent of the Required Participants(except as otherwise provided in the Loan Facility Agreement).

SECTION 12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.

SECTION 13. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 13.1 of the Loan Facility Agreement.All communications and notices hereunder to each Guarantor shall be given to it at its address set forth on Schedule I attached hereto.

SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements representations and warranties made by the Guarantors herein and in thecertificates or other instruments prepared or delivered in connection with or pursuant to this Agreement, any other Operative Document or any Loan Documentsshall be considered to have been relied upon by the Servicer and the Participants and shall survive the making by the Participants of the Loans and the issuance ofthe Letters of Credit by the Participants regardless of any investigation made by any of them or on their behalf, and shall continue in full force and effect as longas the principal of or any accrued interest on any Loan or any other fee or amount payable under this Agreement, any other Operative Document or any LoanDocument is outstanding and unpaid or the LC Exposure does not equal zero and as long as the Commitments have not been terminated.

(b) In the event one or more of the provisions contained in this Agreement, any other Operative Document or any Loan Document should be held invalid,illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way beaffected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validityof such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions withvalid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 15. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when takentogether shall constitute a

single contract (subject to Section 10), and shall become effective as provided in Section 10. Delivery of an executed signature page to this Agreement byfacsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.


SECTION 16. Rules of Interpretation. The rules of interpretation specified in Section 1.3 of the Loan Facility Agreement shall be applicable to thisAgreement.

SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each Guarantor hereby irrevocably and unconditionally submits, for itself and its property, tothe nonexclusive jurisdiction of any Georgia State court or Federal court of the United States of America sitting in Atlanta, Georgia, and any appellate court fromany thereof, in any action or proceeding arising out of or relating to this Agreement, the other Operative Documents or the Loan Documents, or for recognition orenforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action orproceeding may be heard and determined in such Georgia State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agreesthat a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any othermanner provided by law. Nothing in this Agreement shall affect any right that the Servicer or any Participant may otherwise have to bring any action orproceeding relating to this Agreement, the other Operative Documents or Loan Documents against any Guarantor or its properties in the courts of anyjurisdiction.

(b) Each Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may nowor hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, the other Operative Documents or the LoanDocuments in any Georgia State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of aninconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 13. Nothing in this Agreementwill affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 18. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDEROR IN CONNECTION WITH THIS AGREEMENT, THE OTHER OPERATIVE DOCUMENTS OR LOAN DOCUMENTS. EACH PARTY HERETO(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OROTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHEROPERATIVE

DOCUMENTS AND LOAN DOCUMENTS AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS INTHIS SECTION 18.

SECTION 19. Additional Guarantors. Pursuant to Section 6.9 of the Loan Facility Agreement, each Subsidiary Loan Party that was not in existence on thedate of the Loan Facility Agreement is required to enter into this Agreement as a Guarantor upon becoming Subsidiary Loan Party. Upon execution and deliveryafter the date hereof by the Servicer and such Subsidiary Loan Party of an instrument in the form of Annex 1, such Subsidiary Loan Party shall become aGuarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding anadditional Guarantor as a party to this Agreement shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantorhereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement.

SECTION 20. Waiver of Certain Damages. To the extent permitted by applicable law, no Guarantor shall assert, and each Guarantor hereby waives, anyclaim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) arisingout of, in connection with or as a result of, this Subsidiary Guaranty Agreement or any agreement or instrument contemplated hereby, the transactionscontemplated therein, any Loan or any Letter of Credit or the use of proceeds thereof.

SECTION 21. Savings Clause. It is the intent of each Guarantor and the Guaranteed Parties that each Guarantor’s maximum Guaranteed Obligationshereunder shall be, but not in excess of:

(a) in a case or proceeding commenced by or against any Guarantor under the Bankruptcy Code on or within one year from the date on which any of theGuaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of suchGuarantor to the Guaranteed Parties) to be avoidable or unenforceable against such Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any statefraudulent transfer or fraudulent conveyance act or statute applied in such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(b) in a case or proceeding commenced by or against any Guarantor under the Bankruptcy Code subsequent to one year from the date on which any of theGuaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of suchGuarantor to the Guaranteed Parties) to be avoidable or unenforceable against such Guarantor under any state fraudulent transfer or fraudulent conveyance act orstatute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

(c) in a case or proceeding commenced by or against any Guarantor under any law, statute or regulation other than the Bankruptcy Code (including,without limitation, any other bankruptcy, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar debtor relief laws),the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Guaranteed Parties) to beavoidable or unenforceable against such Guarantor under such law, statute or regulation including, without limitation, any state fraudulent transfer or fraudulentconveyance act or statute applied in any such case or proceeding.

(The substantive laws under which the possible avoidance or unenforceability of the Guaranteed Obligations (or any other obligations of such Guarantor to theGuaranteed Parties) shall be determined in any such case or proceeding shall hereinafter be referred to as the “Avoidance Provisions”).

(d) To the extent set forth in Section 20(a), (b), and (c), but only to the extent that the Guaranteed Obligations would otherwise be subject to avoidanceunder the Avoidance Provisions, if any Guarantor is not deemed to have received valuable consideration, fair value or reasonably equivalent value for the


Guaranteed Obligations, or if the Guaranteed Obligations would render such Guarantor insolvent, or leave such Guarantor with an unreasonably small capital toconduct its business, or cause such Guarantor to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as theymature, in each case as of the time any of the Guaranteed Obligations are deemed to have been incurred under the Avoidance Provisions and after giving effect tothe contribution by such Guarantor, the maximum Guaranteed Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amountwhich, after giving effect thereto, would not cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Guaranteed Parties), as soreduced, to be subject to avoidance under the Avoidance Provisions. This Section 20 is intended solely to preserve the rights of the Guaranteed Parties hereunderto the maximum extent that would not cause the Guaranteed Obligations of such Guarantor to be subject to avoidance under the Avoidance Provisions, andneither the Guarantors nor any other Person shall have any right or claim under this Section 20 as against the Guaranteed Parties that would not otherwise beavailable to such Person under the Avoidance Provisions.

SECTION 22. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Participant is hereby authorized at any time and from timeto time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time heldand other Indebtedness at any time owing by such Participant to or for the credit or the account of any Guarantor against any or all the Guaranteed Obligations ofsuch Guarantor now or hereafter existing under this Agreement, the other Operative Documents and the Loan Documents held by such Participant, irrespective ofwhether or not such Person shall have made any demand under this Agreement, any other Operative Document or any Loan Document, and although suchGuaranteed Obligations may be unmatured. The rights of each Participant under this Section 22 are in addition to other rights and remedies (including otherrights of setoff) which such Participant may have.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

RUBY TUESDAY, LLC

By:/s/ Marguerite N. Duffy Name: Marguerite N. Duffy Title: Vice President

RTBD, INC.

By:/s/ Marguerite N. Duffy Name: Marguerite N. Duffy Title: President

RT FINANCE, INC.


RT FLORIDA EQUITY, INC.






RTGC, LLC










SUPPLEMENT NO. [ ] dated as of [ ], to the Subsidiary Guaranty Agreement (the “Guaranty Agreement”) dated as of November 19, 2004 among each of thesubsidiaries listed on Schedule I thereto (each such Subsidiary individually, a “Guarantor” and collectively, the “Guarantors”) of RUBY TUESDAY, INC., aGeorgia corporation (the “Sponsor”), in favor of BANK OF AMERICA, N.A., a national banking association, as Servicer (the “Servicer”) and the Participants(as defined in the Loan Facility Agreement referred to below).

A. Reference is made to the Amended and Restated Loan Facility Agreement dated as of November 19, 2004 (as amended, supplemented or otherwisemodified from time to time, the “Loan Facility Agreement”), among the Sponsor, the banks and financial institutions from time to time party thereto (the“Participants”) and Bank of America, N.A., as Servicer. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to suchterms in the Loan Facility Agreement.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guaranty Agreement and theLoan Facility Agreement.

C. The Guarantors have entered into the Guaranty Agreement in order to induce the Servicer, on behalf of the Participants, to make Loans and to issueLetters of Credit. Pursuant to Section 6.9 of the Loan Facility Agreement, each Subsidiary Loan Party that was not in existence or not a Subsidiary Loan Party onthe date of the Loan Facility Agreement is required to enter into the Guaranty Agreement as a Guarantor upon becoming a Subsidiary Loan Party. Section 19 ofthe Guaranty Agreement provides that additional Subsidiaries of the Sponsor may become Guarantors under the Guaranty Agreement by execution and deliveryof an instrument in the form of this Supplement. The undersigned Subsidiary of the Sponsor (the “New Guarantor”) is executing this Supplement in accordancewith the requirements of the Loan Facility Agreement to become a Guarantor under the Guaranty Agreement in order to induce the Servicer, on behalf of theParticipants, to make additional Loans and to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previouslyissued.

Accordingly, the Servicer and the New Guarantor agree as follows:

SECTION 1. In accordance with Section 19 of the Guaranty Agreement, the New Guarantor by its signature below becomes a Guarantor under the GuarantyAgreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms and provisionsof the Guaranty Agreement applicable to it as Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as aGuarantor thereunder are true and correct on and as of the date hereof. Each reference to a Guarantor in the Guaranty Agreement shall be deemed to include theNew Guarantor. The Guaranty Agreement is hereby incorporated herein by reference.

SECTION 2. The New Guarantor represents and warrants to the Servicer and the Participants that this Supplement has been duly authorized, executed anddelivered by it and

constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts each of which shall constitute an original, but all of which when taken together shallconstitute a single contract. This Supplement shall become effective when the Servicer shall have received counterparts of this Supplement that bear thesignatures of the New Guarantor. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of amanually signed counterpart of this Supplement.


SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OFGEORGIA.

SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, thevalidity, legality and enforceability of the remaining provisions contained herein and in the Guaranty Agreement shall not in any way be affected or impairedthereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of suchprovision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions withvalid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.


SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 13 of the Guaranty Agreement. Allcommunications and notices hereunder to the New Guarantor shall be given to it at the address set forth under its signature below, with a copy to the Sponsor.

SECTION 8. The New Guarantor agrees to reimburse the Servicer for its out-of-pocket expenses in connection with this Supplement, including thereasonable fees, disbursements and other charges actually incurred of counsel for the Servicer.

IN WITNESS WHEREOF, the New Guarantor has duly executed this Supplement to the Guaranty Agreement as of the day and year first above written.


By: Name: Title: Address:

EXHIBIT C

FORM OF INDEMNITY AND CONTRIBUTION AGREEMENT

This INDEMNITY AND CONTRIBUTION AGREEMENT dated as of November 19, 2004, among RUBY TUESDAY, INC., a Georgia corporation (the“Sponsor”), each Subsidiary listed on Schedule I hereto (the “Guarantors”), and BANK OF AMERICA, N.A., a national banking association, as servicer (in suchcapacity, the “Servicer”).

Reference is made to (a) the Amended and Restated Loan Facility Agreement and Guaranty dated as of November 19, 2004 (as amended, supplemented orotherwise modified from time to time, the “Loan Facility Agreement”), among the Sponsor, the Participants from time to time party thereto (the “Participants”),and Bank of America, N.A., as Servicer and (b) the Subsidiary Guaranty Agreement dated as November 19, 2004 , among the Guarantors and the Servicer (asamended, supplemented or otherwise modified from time to time, the “Guaranty Agreement”). Capitalized terms used herein and not defined herein shall havethe meanings assigned to such terms in the Loan Facility Agreement.

The Servicer, on behalf of the Participants, has agreed to make Loans to certain franchisees of the Sponsor, pursuant to, and upon the terms and subject tothe conditions specified in, the Loan Facility Agreement. The Guarantors have guaranteed such Loans and the other Obligations (as defined in the GuarantyAgreement) of the Sponsor under the Loan Facility Agreement pursuant to the Guaranty Agreement. The obligations of the Servicer, on behalf of theParticipants, to make Loans are conditioned on, among other things, the execution and delivery by the Sponsor and the Guarantors of an agreement in the formhereof.

Accordingly, the Sponsor, each Guarantor and the Servicer agree as follows:

SECTION 1. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (butsubject to Section 3), the Sponsor agrees that in the event a payment shall be made by any Guarantor under the Guaranty Agreement, the Sponsor shall indemnifysuch Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have beenmade to the extent of such payment.

SECTION 2. Contribution and Subrogation. Each Guarantor (a “Contributing Guarantor”) agrees (subject to Section 3) that, in the event a payment shall bemade by any other Guarantor under the Guaranty Agreement and such other Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by theSponsor as provided in Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of such payment or thegreater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the networth of the Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in thecase of any Guarantor becoming a party hereto pursuant to Section 12, the date of the Supplement hereto executed and delivered by such Guarantor). AnyContributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 2 shall be subrogated to the rights of such Claiming Guarantorunder Section 1 to the extent of such payment.

SECTION 3. Subordination. Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 1 and 2 and allother rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash ofthe Obligations. No failure on the part of the Sponsor or any Guarantor to make the payments required under applicable law or otherwise shall in any respectlimit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of theobligations of such Guarantor hereunder.

SECTION 4. Termination. This Agreement shall survive and be in full force and effect so long as any Obligation is outstanding and has not beenindefeasibly paid in full in cash, and so long as the LC Exposure has not been reduced to zero or any of the Commitments under the Loan Facility Agreementhave not been terminated, and shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation isrescinded or must otherwise be restored by any Lender or any Guarantor upon the bankruptcy or reorganization of the Sponsor, any Guarantor or otherwise.


SECTION 5. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.

SECTION 6. No Waiver; Amendment. (a) No failure on the part of the Servicer or any Guarantor to exercise, and no delay in exercising, any right, power orremedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by the Servicer or any Guarantorpreclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive ofany other remedies provided by law. None of the Servicer and the Guarantors shall be deemed to have waived any rights hereunder unless such waiver shall be inwriting and signed by such parties.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered intobetween the Sponsor, the Guarantors and the Servicer, with the prior written consent of the Required Participants (except as otherwise provided in the LoanFacility Agreement).

SECTION 7. Notices. All communications and notices hereunder shall be in writing and given as provided in the Guaranty Agreement and addressed asspecified therein.

SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed toinclude the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the parties that are contained in this Agreementshall bind and inure to the benefit of their

respective successors and assigns. Neither the Sponsor nor any Guarantor may assign or transfer any of its rights or obligations hereunder (and any suchattempted assignment or transfer shall be void) without the prior written consent of the Required Participants. Notwithstanding the foregoing, at the time anyGuarantor is released from its obligations under the Guaranty Agreement in accordance with such Guaranty Agreement and the Loan Facility Agreement, suchGuarantor will cease to have any rights or obligations under this Agreement.

SECTION 9. Survival of Agreement; Severability. (a) All covenants and agreements made by the Sponsor and each Guarantor herein and in the certificatesor other instruments prepared or delivered in connection with this Agreement or the other Loan Documents shall be considered to have been relied upon by theServicer, the Participants and each Guarantor and shall survive the making by the Servicer of the Loans and the issuance of the Letters of Credit, and shallcontinue in full force and effect as long as the principal of or any accrued interest on any Loans or any other fee or amount payable under the Loan FacilityAgreement or this Agreement or under any of the other Operative Documents or Loan Documents is outstanding and unpaid or the LC Exposure does not equalzero and as long as the Commitments have not been terminated.

(b) In case one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, no party hereto shallbe required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceabilityof the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replacethe invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal orunenforceable provisions.

SECTION 10. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts) each of which shallconstitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall be effective with respect to any Guarantorwhen a counterpart bearing the signature of such Guarantor shall have been delivered to the Servicer. Delivery of an executed signature page to this Agreementby facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 11. Rules of Interpretation. The rules of interpretation specified in Section 1.3 of the Loan Facility Agreement shall be applicable to thisAgreement.

SECTION 12. Additional Guarantors. Pursuant to Section 6.9 of the Loan Facility Agreement, each Subsidiary Loan Party of the Sponsor that was not inexistence or not such a Subsidiary Loan Party on the date of the Loan Facility Agreement is required to enter into the Guaranty Agreement as Guarantor uponbecoming such a Subsidiary Loan Party. Upon the execution and delivery, after the date hereof, by the Servicer and such Subsidiary of an instrument in the formof Annex I hereto, such Subsidiary shall become a Guarantor

hereunder with the same force and effect as if originally named as a Guarantor hereunder. The execution and delivery of any instrument adding an additionalGuarantor as a party to this Agreement shall not require the consent of any Guarantor hereunder. The rights and obligations of each Guarantor hereunder shallremain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first appearingabove.

RUBY TUESDAY, INC.

By:/s/ Marguerite N. Duffy Name: Marguerite N. Duffy Title: Senior Vice President

ATTEST:

/s/ Scarlett MaySecretary


RUBY TUESDAY, LLC asa Guarantor


RTBD, INC., as a Guarantor

By:/s/ Marguerite N. Duffy Name: Marguerite N. Duffy Title: President

RT FINANCE, INC., as a Guarantor


RT FLORIDA EQUITY, INC., as aGuarantor


RT TAMPA FRANCHISE, LP, as aGuarantor


RT NEW YORK FRANCHISE, LLC,as a Guarantor


RTGC, LLC, as a Guarantor


RT FRANCHISE ACQUISITION, LLC,as a Guarantor


RT SOUTHWEST FRANCHISE, LLC,as a Guarantor


RT KENTUCKY RESTAURANTHOLDINGS, LLC, as a Guarantor


BANK OF AMERICA, N.A., asServicer


By:/s/ Laura B. Schmuck Name: Laura B. Schmuck Title: Agency Officer Assistant Vice President

ANNEX I TOTHE INDEMNITY AND CONTRIBUTION AGREEMENT

SUPPLEMENT NO. [___] dated as of [________________], to the Indemnity and Contribution Agreement dated as of November 19, 2004 (as the samemay be amended, supplemented or otherwise modified from time to time, the “Indemnity and Contribution Agreement”) among RUBY TUESDAY, INC., aGeorgia corporation (the “Sponsor”), each Subsidiary listed on Schedule I thereto (the “Guarantors”) and BANK OF AMERICA, N.A., a national bankingassociation, as Servicer (the “Servicer”).

A. Reference is made to (a) the Amended and Restated Loan Facility Agreement dated as of November 19, 2004 (as amended, supplemented or otherwisemodified from time to time, the “Loan Facility Agreement”), among the Sponsor, the lenders from time to time party thereto (the “Participants”) and Bank ofAmerica, N.A., as the Servicer and (b) the Subsidiary Guaranty Agreement dated as November 19, 2004, among the Guarantors and the Servicer (as amended,supplemented or otherwise modified from time to time, the “Guaranty Agreement”).

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indemnity and ContributionAgreement and the Loan Facility Agreement.

C. The Sponsor and the Guarantors have entered into the Indemnity and Contribution Agreement in order to induce the Servicer, on behalf of theParticipants, to make Loans and to issue Letters of Credit. Pursuant to Section 6.9 of the Loan Facility Agreement, each Subsidiary Loan Party that was not inexistence or not such a Subsidiary Loan Party on the date of the Loan Facility Agreement is required to enter into the Guaranty Agreement as a Guarantor uponbecoming a Subsidiary Loan Party. Section 12 of the Indemnity and Contribution Agreement provides that additional Subsidiaries may become Guarantors underthe Indemnity and Contribution Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “NewGuarantor”) is executing this Supplement in accordance with the requirements of the Loan Facility Agreement to become a Guarantor under the Indemnity andContribution Agreement in order to induce the Servicer, on behalf of the Participants, to make additional Loans and to issue additional Letters of Credit and asconsideration for Loans previously made and Letters of Credit previously issued.


SECTION 1. In accordance with Section 12 of the Indemnity and Contribution Agreement, the New Guarantor by its signature below becomes a Guarantorunder the Indemnity and Contribution Agreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor herebyagrees to all the terms and provisions of the Indemnity and Contribution Agreement applicable to it as Guarantor thereunder. Each reference to a Guarantor in theIndemnity and Contribution Agreement shall be deemed to include the New Guarantor. The Indemnity and Contribution Agreement is hereby incorporated hereinby reference.

SECTION 2. The New Guarantor represents and warrants to the Servicer and the Participants that this Supplement has been duly authorized, executed anddelivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts) each of which shall constitute anoriginal, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Servicer shall have receivedcounterparts of this Supplement that, when taken together, bear the signature of the New Guarantor and the Servicer. Delivery of an executed signature page tothis Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Indemnity and Contribution Agreement shall remain in full force and effect.


SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neitherparty hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legalityand enforceability of the remaining provisions contained herein and in the Indemnity and Contribution Agreement shall not in any way be affected or impaired.The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effectof which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 7 of the Indemnity and ContributionAgreement. All communications and notices hereunder to the New Guarantor shall be given to it at the address set forth under its signature.

SECTION 8. The New Guarantor agrees to reimburse the Servicer for its reasonable out-of-pocket expenses in connection with this Supplement, includingthe reasonable fees, other charges and disbursements of counsel for the Servicer actually incurred.


IN WITNESS WHEREOF, the New Guarantor has duly executed this Supplement to the Indemnity and Contribution Agreement as of the day and year firstabove written.


By: Name: Title: Address:

SCHEDULE I TO SUPPLEMENT NO. ____ TO THE INDEMNITY AND CONTRIBUTION AGREEMENT

Guarantors

Name Address

EXHIBIT D

FORM OF LINE OF CREDIT AGREEMENT

THIS LINE OF CREDIT AGREEMENT dated as of_________ ____, 20___, is made between _____________________, a__________________________ (“Borrower”) and BANK OF AMERICA, N.A. (“Bank”), a national banking association having its principal office in Charlotte,North Carolina.


WHEREAS, Borrower engages in the business of owning and operating one or more restaurants under the name “Ruby Tuesday’s” pursuant to a franchiseagreement with Ruby Tuesday, Inc., a Georgia corporation (“Sponsor”);

WHEREAS, Borrower has requested and Bank has agreed to extend credit in the form of loans and letters of credit to Borrower to provide working capitalfor use in connection with its Ruby Tuesday franchise; and

WHEREAS, Borrower and Bank wish to enter into this Agreement to set forth the terms and conditions of Bank’s extension of credit to Borrower;

NOW THEREFORE, upon the terms and conditions hereinafter stated, and in consideration of the mutual premises set forth above and other adequateconsideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION.

1.1 As used in this Agreement, the following terms shall have the meanings set forth below (terms defined in the singular to have the same meaning whenused in the plural and vice versa):

“Advance” shall mean an advance of funds by Bank on behalf of Borrower pursuant to the Master Note executed by Borrower.

“Agreement” means this Line of Credit Agreement and all exhibits, riders and schedules at any time executed by the parties and made a part hereof byreference, either as originally executed or as hereafter amended, modified or supplemented from time to time.

“Applicable Law” means all laws, rules and regulations applicable to the Person, conduct, transaction, covenant or Loan Documents in question, including,without limitation, all applicable law and equitable principles; all provisions of all applicable state and federal constitutions, statutes, rules, regulations and ordersof governmental bodies; and all orders, judgments and decrees of all courts and arbitrators.


“Books and Records” means all of Borrower’s books and records evidencing or relating to its business, financial condition or any Collateral, including butnot limited to, ledgers, invoices, purchase orders, financial statements, computer tapes and disks.

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in Charlotte, North Carolina are authorized by lawto close.

“Closing Date” means the date upon which the initial Advance with respect to the Loan is funded.

“Closing Fee” shall have the meaning set forth in Section 2.5.

“Collateral” means any assets of the Borrower in which a Lien is granted to the Bank to secure the Loan Indebtedness.

“Collateral Agreement” means any security agreement, mortgage, deed to secure debt, deed of trust or other similar document granting a Lien onBorrower’s assets to the Bank to secure the Loan Indebtedness.

“Commitment Fee” shall have the meaning set forth in Section 2.6(a).

“Debt” shall mean, without duplication, (i) indebtedness for borrowed money or for the deferred purchase price of property or services (other than tradeaccounts payable on customary terms in the ordinary course of business), (ii) financial obligations evidenced by bonds, debentures, notes or other similarinstruments, (iii) financial obligations as lessee under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases, and (iv)obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure acreditor against loss in respect of, indebtedness or financial obligations of others of the kinds referred to in clauses (i) through (iii) above.

“Debt Service” means, for any period, the sum of (A) interest expense paid in cash during such period plus (B) scheduled amortization of all Debt(excluding Debt of the type described in clause (iv) of the definition of “Debt”) for such period, in each case measured for Borrower and its subsidiaries on aconsolidated basis in accordance with. GAAP.

“Default Condition” means the occurrence of any event which, after satisfaction of any requirement for the giving of notice or the lapse of time, or both,would become an Event of Default.

“Default Rate” means the annual percentage interest rate applied to the principal of the Loan not paid when due under the terms of the applicable LoanDocuments, which rate shall equal the sum of Prime Rate plus an additional ______ percent ( ___ %) per annum.

“EBITDAR” means, for any period, (1) net income (loss) for such period, plus, (2) to the extent subtracted in determining such net income (loss), (a)interest expense for such period, (b) tax expense for such period, (c) depreciation, amortization and other non-cash charges for such period, (d) Rents for suchperiod, (e) Non-recurring Expenses for such period, and (f) Excluded Management Salary for such period, if any, minus (3) Non-recurring Income for suchperiod to the extent included in such net income (loss), in each case measured for Borrower and its Subsidiaries on a consolidated basis.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Event of Default” shall have the meaning given to such term in Section 7 hereof.

“Excluded Management Salary” shall mean, for any period, (1) two-thirds of the salary and expenses paid to the Franchisee Partner of the Borrower duringany period that the Borrower has only one Qualified Store and (2) one-third of the salary and expenses paid to the Franchisee Partner of the Borrower during anyperiod that the Borrower has only two Qualified Stores.

“Fixed Charge Coverage Ratio” shall mean, as of any date, the ratio of (i) EBITDAR to (ii) the sum of (A) Debt Service plus (B) Rents, in each case for theimmediately preceding four fiscal quarters ended on or closest to such date; provided, however, that Sponsor may elect to exclude from the calculation of theFixed Charge Coverage Ratio the EBITDAR, the Debt Service and the Rents incurred by Borrower and its subsidiaries that are attributable to any stores that arenot Qualified Stores; provided, further, however, that if the Sponsor at any time includes any store that is not a Qualified Store in the calculation of the FixedCharge Coverage Ratio, such store shall thereafter be included in all subsequent calculations of the Fixed Charge Coverage Ratio.

“Floating Rate” means a rate of interest per annum equal to the Prime Rate plus an additional _____ percent ( ___%) per annum, such rate to change as andwhen the Prime Rate changes.

“Franchise Documents” means, collectively, (i) the participation and operating agreements for any Borrower that is a limited liability company or thelimited partnership agreement for any Borrower that is a ‘limited partnership and (ii) the written agreements between Sponsor and Borrower whereby Borroweris authorized to establish one or more “Ruby Tuesday” franchises, including, without limitation the Ruby Tuesday, Inc. Operating Agreements between Sponsorand a Borrower and each other operating agreement and development agreement related to each franchise location, all as amended or modified from time to time.

“Franchisee Partner” means, collectively, the Person other than the Sponsor that owns an equity interest in the Borrower and any Person who directly orindirectly owns or controls such Person.

“GAAP” means generally accepted accounting principles in the United States, consistently applied.

“Guarantor” means each Person who now or hereafter guarantees payment of the whole or any part of the Loan Indebtedness.


“Guaranty” means any guaranty executed by each of the partners, shareholders, member and where not prohibited by law, the spouses of such persons, ofBorrower, or such other Persons as may be required by the Bank, in favor of the Bank with respect to the obligations of Borrower with respect to the Loan in theform provided by the Bank, as the same may be amended, restated or supplemented from time to time.

“Letter of Credit” shall have the meaning set forth in Section 2.8 hereof.

“Letter of Credit Fee” shall have the meaning set forth in Section 2.6(b) hereof.

“Letter of Credit Obligations” means the total face amount of all outstanding Letters of Credit hereunder plus, without duplication, the aggregate amount ofall draws on Letters of Credit which have not been reimbursed by Borrower, whether with Advances or otherwise.

“Lien” means any interest in property securing an obligation, whether such interest is based on the common law, statute or contract, including, withoutlimitation, a security interest, lien or security title arising from a security agreement, mortgage, security deed, trust deed, pledge or condition sale, or a lease,consignment or bailment for security purposes.

“Loan” means, as of any date of determination, the aggregate amount of Advances outstanding pursuant to the Loan Commitment from the Bank toBorrower established pursuant to Section 2 hereof.

“Loan Commitment” means the committed amount of the loan facility established by the Bank in favor of Borrower in the amount not exceeding, and uponthe terms described in, this Agreement.

“Loan Documents” means this Agreement, the Master Note, the Collateral Agreements, any other documents relating to the Loan delivered by Borrower orany guarantor or surety thereof to the Bank and any amendments thereto.

“Loan Indebtedness” means all amounts due and payable by Borrower under the terms of the Loan Documents with respect to the Loan Commitment andthe Advances made thereunder, and Letters of Credit issued hereunder, including, without limitation, Letter of Credit Obligations, outstanding principal, accruedinterest, fees, any late charges, and all reasonable costs and expenses of any legal proceeding brought by the Bank to collect any of the foregoing (includingwithout limitation, reasonable attorneys’ fees actually incurred).

“Loan Term” shall mean the period commencing on the date hereof and ending on the Maturity Date.

“Master Note” means the note of Borrower, substantially in the form attached hereto as Exhibit A, setting forth the obligation of Borrower to repay theLoan.

“Maturity Date” shall have the meaning set forth in Section 2.3 hereto.

“Non-recurring Expenses” shall mean, for any period, all expenses of the Borrower and its Subsidiaries for such period that are extraordinary and generallynot reflected in any prior period or reasonably anticipated to be incurred in any subsequent period.

“Non-recurring Income” shall mean, for any period, all income of the Borrower and its Subsidiaries for such period that is extraordinary and generally notreflected in any prior period or reasonably anticipated to be incurred in any subsequent period.

“Payment Date” means with respect to the Loan, the last Business Day of each calendar month.

“Permitted Liens” means (i) Liens in favor of Bank or Sponsor, (ii) Liens for taxes not yet due or payable, (iii) statutory Liens securing the claims ofmaterialmen, mechanics, carriers and landlords for labor, materials, supplies or rentals incurred in the ordinary course of Borrower’s business, but only ifpayment thereof is not at the time required and such Liens are at all times junior in priority to the Liens in favor of Bank, (iv) Liens created (whether in the pastor in the future) in favor of lenders loaning money to Borrower in connection with (y) the acquisition from Sponsor (or its successors, assigns or affiliates) ofexisting Ruby Tuesday restaurants, or (z) the development and/or construction or permanent financing of Ruby Tuesday restaurants developed and operatedpursuant to any Franchise Document between Borrower, as franchisee, and the Sponsor (or its successors, assigns or affiliates) as franchisor, (v) Liens shown onExhibit B (if any), and (vi) Liens hereafter consented to by Bank in writing.

“Person” means a corporation, an association, partnership, an organization, a business, a business trust, a limited liability company, an individual, agovernment or political subdivision thereof or a governmental agency.

“Prime Rate” means the per annum rate of interest designated from time to time by the Bank to be its prime rate, with any change in the rate of interestresulting from a change in the Prime Rate to be effective as of the opening of business of the Bank on the day of such change. The prime rate is one of severalreference rates used by the Bank and the Bank makes loans at rates both higher and lower than the Prime Rate.

“Qualified Store” shall mean any store that has been open for at least twelve months and was not acquired by Borrower from the Sponsor during the lasttwelve months.

“Rents” means, for any period, the aggregate amount of all required lease and rent payments for which the Borrower and its subsidiaries are directly orindirectly liable (as lessee or as guarantor or other surety) under all operating leases in effect at any time during such period, determined on a consolidated basisin accordance with GAAP.


“Solvent” means, as to any Person, such Person (i) is able to pay, and does pay, its debts as they mature and (ii) has a positive tangible net worth determinedin accordance with GAAP.

“Subsidiary” means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of theboard of directors or other persons performing similar functions are at the time directly or indirectly owned by Borrower.

1.2 Accounting terms used in this Agreement such as “net income (loss)", “interest expense”, “tax expense”, “amortization,” “depreciation,” and“tangible net worth” shall have the meaning normally given them by, and shall be calculated (both as to amounts and classification of items) in accordance with,GAAP. Any pronoun used herein shall be deemed to cover all genders. All references to statutes and related regulations shall include any amendments of sameand any successor statutes and regulations, and all references to any instruments or agreements, including, without limitation, references to any of the LoanDocuments, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof.

SECTION 2. LOAN COMMITMENT; MASTER NOTE.

2.1 Establishment of Loan Commitment. (a) Bank hereby establishes until the Maturity Date (as hereinafter defined), a line of credit in favor of Borrowerin an amount equal to [$50,000 to $3,500,000] in aggregate principal amount at any one time outstanding (the “Loan Commitment”), as reduced by the aggregateamount of Letter of Credit Obligations from time to time outstanding. Within the limits of the Loan Commitment, the Borrower may borrow, repay andre-borrow; provided, however, that the Borrower may neither borrow nor re-borrow should there exist a Default Condition or an Event of Default.

2.2 Advances. Borrower may request Advances pursuant to the Loan Commitment by submitting a Request for Advance in the form attached hereto asExhibit B to the Bank, with a copy to Sponsor, on the Business Day prior to the date of the requested Advance (which shall be a Business Day). Each Advanceshall be in a minimum amount of (i) $10,000 for Loans in the amount of $10,000 to $250,000 and in integral multiples of $1,000 and (ii) $25,000 for Loans inthe amount of $250,001 to $3,500,000 and in integral multiples of $1,000. Borrower may not request more than four (4) Advances in any calendar month. TheBorrower may not request Advances if as a result thereof, the amount of the Loan would exceed the amount of the Loan Commitment. Borrower herebyirrevocably appoints the Sponsor as the sole Person authorized to execute and deliver a Request for Advance hereunder to the Bank. In furtherance of theforegoing, Borrower hereby makes, constitutes and appoints Sponsor, and its agents and designees, the true and lawful agents and attorneys-in-fact of Borrower,with full power of substitution, to endorse its name and take all actions necessary to request Advances hereunder and issue all Requests for Advances. Thepowers granted herein are coupled with an interest and shall be irrevocable during the term hereof.

2.3 Master Note; Repayment. The Loan Commitment and the Advances outstanding thereunder shall be evidenced by a note executed by Borrower infavor of Bank, substantially

in the form of Exhibit A attached hereto (the “Master Note”). The Master Note shall be dated as of the date hereof and shall be payable to the order of Bank inthe stated principal amount of the Loan Commitment. All amounts outstanding pursuant to the Master Note shall mature on the date (the “Maturity Date”) that isearlier of (i) the occurrence of an Event of Default in consequence of which Bank elects to accelerate the maturity and payment of the Loan Indebtedness, or (iii)the __________ of the Closing Date, as such date may be extended pursuant to Section 2.9 below, at which time all of the Loan Indebtedness shall be due andpayable in full. All payments of principal of, or interest on, the Loan Documents and all other sums due under the terms of the Loan and all payments withrespect to Letter of Credit Obligations shall be made in either (x) immediately available funds, or (y) checks or money orders made payable to the LoanOperations section of the Bank at its principal office in Charlotte, North Carolina in accordance with written instructions provided by the Bank.

2.4 Interest. (a) From and after the date hereof, interest shall accrue on the unpaid principal amount of the Loan Indebtedness at the Floating Rate. Interestshall be calculated daily and shall be computed on the basis of actual days elapsed over the period of a 365-day year. Interest shall be due and payable on eachPayment Date. After the occurrence of an Event of Default and during the continuance thereof, the outstanding principal balance of the Loan shall bear interest atthe Default Rate.

(b) In no contingency or event whatsoever shall the amount paid or agreed to be paid to Bank for the use, forbearance or detention of moneyadvanced under this Agreement exceed the highest lawful rate permissible under Applicable Law. It is the intent hereof that Borrower will not pay or contract topay, and that Bank not receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be charged to and paidby Borrower under Applicable Law. All interest (and charges deemed interest) paid or agreed to be paid to Bank shall, to the extent permitted by ApplicableLaw, be amortized, pro rated, allocated and spread in equal parts throughout the full term hereof until payment in full of the principal amount of the LoanIndebtedness owing hereunder (including the period of any renewal or extension hereof) so that interest on the principal amount of the Loan Indebtednessoutstanding hereunder for such full period will not exceed the maximum amount permitted by Applicable Law.

2.5 Closing Fee. On the Closing Date, the Borrower shall pay to the Bank in immediately available funds a closing fee (the “Closing Fee”) equal to thegreater of (i) 0.10% of the Loan Commitment or (ii) $500.00. The Closing Fee shall be fully earned and nonrefundable as of the Closing Date.

2.6 Commitment Fee; Letter of Credit Fees. On each Payment Date which is the last day of a calendar quarter, commencing on _____________ andcontinuing throughout the Loan Term, the Borrower shall pay to the Bank, in arrears:

(a) A commitment fee (the “Commitment Fee”) equal to _____% per annum of the average daily unused amount of the Loan Commitment (with theexpress understanding that Letters of Credit issued hereunder shall be deemed to be an utilization of the Loan Commitment).

(b) A letter of credit fee (the “Letter of Credit Fee”) equal to _____% per annum multiplied by the daily average Letter of Credit Obligationsoutstanding hereunder, provided that, if the aggregate Letter of Credit Fees payable by Borrower with respect to any Letter of Credit issued hereunder do


not exceed $1,000 per annum, the Borrower shall be required to, on the Payment Date which next follows the annual anniversary of the issuance of suchLetter of Credit, make an additional payment equal to $1,000 minus the Letter of Credit Fees payable with respect to such Letter of Credit during thepreceding year.

(c) The Commitment Fee and the Letter of Credit Fee shall be calculated on the basis of the actual number of days elapsed in 360-day year.

2.7 Loan Prepayment. Borrower shall have the right to prepay the Loan in whole or in part at any time and from time to time. Partial prepayments of theLoan shall be in a minimum amount of $25,000.

2.8 Letters of Credit. The Bank shall, from time to time upon request of the Borrower prior to the Maturity Date, but subject to the terms and conditionshereof, issue stand-by letters of credit in such form as requested by the Borrower and approved by the Bank from time to time (the “Letters of Credit”); provided,however, that the Borrower shall not be entitled to request the issuance of any Letter of Credit if there exists a Default or an Event of Default; and furtherprovided that (i) no Letter of Credit shall be issued if, as a result of such issuance, the aggregate amount of outstanding Letter of Credit Obligations would exceedthe lesser of (x) $250,000 and (y) the Loan Commitment; (ii) no Letter of Credit shall have a maturity date longer than one year from the date of issuance unlessthe Bank, in its sole discretion has agreed to a longer term; (iii) no Letter of Credit shall have a maturity date later than ten days prior to the Maturity Date; (iv)the Borrower shall give the Bank at least five (5) days prior written notice of each request for a Letter of Credit, which notice shall include the amount of therequested Letter of Credit, the name and address of the beneficiary and a precise written description of the terms of such Letter of Credit, together with thedocuments described in the next paragraph; and (v) no Letter of Credit shall be requested unless the face amount of such Letter of Credit does not exceed theunused portion of the Loan Commitment. Borrower hereby irrevocably appoints the Sponsor as the sole Person authorized to execute and deliver a request for aLetter of Credit and application required hereunder to the Bank. In furtherance of the foregoing, Borrower hereby makes, constitutes and appoints Sponsor, andits agents and designees, the true and lawful agents and attorneys-in-fact of Borrower, with full power of substitution, to endorse its name and take all actionsnecessary to request Letters of Credit hereunder and issue all requests for Letters of Credit and to execute and deliver all applications and other documents inconnection therewith. The powers granted herein are coupled with an interest and shall be irrevocable during the term hereof.

In conjunction with any request for the issuance of a Letter of Credit, the Borrower shall first deliver to Bank its form letter of credit application, dulycompleted by a duly authorized officer of the Borrower. To the extent that such letter of credit application’s terms are inconsistent with the terms of thisAgreement, this Agreement controls. Upon delivery to the Bank of such letter of credit application and other documents, instruments, or agreements which theBank may require from time to time hereafter in connection

therewith, each in form and substance satisfactory to the Bank, subject to the limitations set forth in this Section 2.8, the Bank shall issue a Letter of CreditBorrower understands and agrees that the Bank may refuse upon any reasonable circumstances to issue any Letter of Credit. Upon issuance, a Letter of Creditshall be deemed to be an utilization of the Loan Commitment. Upon any draw upon a Letter of Credit issued hereunder, the Borrower shall immediatelyreimburse the Bank for such drawn amount and, in the event that the Borrower fails to reimburse such amount on the same Business Day, the Bank shall beirrevocably authorized to draw such amount upon the Loan Commitment at which point the amount drawn shall be an Advance for all purposes hereunder,including without limitation, the accrual of interest. Upon the occurrence of any Event of Default pursuant to this Agreement, the Bank may require the Borrowerto immediately deposit with the Bank cash collateral in the amount of all outstanding Letter of Credit Obligations pursuant to this Agreement.

2.9 Extension of Maturity Date. The Borrower, on and before ninety (90) days prior to the Maturity Date, as it may from time to time exist, and with thewritten consent of the Sponsor, request in writing that the Bank extend the Maturity Date. Upon receipt of such notice and such consent, the Bank may, in theexercise of its sole discretion, extend the Maturity Date for an additional two-year period and will notify the Borrower and the Sponsor in writing of whether theBank will agree to such extension no later than sixty (60) days prior to the Maturity Date. Failure of the Bank to respond to such request shall be deemed to be anelection by the Bank not to extend the Maturity Date.

SECTION 3. CONDITIONS PRECEDENT.

Borrower shall deliver and Bank shall have received the following documents, each in form and substance satisfactory to Bank, as conditions precedent ofthe initial Advance comprising the Loan or the initial Letter of Credit issued hereunder, as the case may be:

(a) a validly executed copy of this Agreement;

(b) the validly executed Master Note;

(c) a validly executed copy of a Guaranty of each partner, member or majority stockholder of Borrower, and to the extent not prohibited byApplicable Law, the spouse of such Person;

[(d) a validly executed Collateral Agreement;

(e) a validly executed Landlord’s Waiver for each location of Borrower where the Collateral is located;

(f) validly executed Uniform Commercial Code Financing Statements suitable to enable Bank to perfect the security interest granted to itunder the Collateral Agreement;]

(g) evidence of Borrower’s good standing;


(h) a validly executed Officer’s Certificate or such other evidence acceptable to Bank evidencing Borrower’s authorization of the Loan andincumbency;

(i) a Certificate of Insurance from an insurer acceptable to Bank naming the Bank as loss payee/additional insured as follows:

Bank of America, N.A.Attention: Commercial Agency ManagementMailcode IL1-231-08-30231 South La Salle StreetChicago, Illinois 60604; and

(j) a validly executed Request for Advance, or a request for issuance of a Letter of Credit, as the case may be.

In addition, as conditions precedent of the initial Advance comprising the Loan or the initial Letter of Credit issued hereunder, as the case may be, (i) the Bankshall have satisfied itself that there are no Liens on any of the Collateral, other than Permitted Liens, (ii) the Bank shall be satisfied that all corporate or LLCproceedings necessary for the authorization of the Loan Commitment and the execution, delivery and performance of the Loan Documents, shall have beentaken, (iii) the Bank shall have received any other documents that it deems reasonably necessary or advisable and (iv) the Bank shall have received payment ofthe Closing Fee and, if required by the Bank at closing, (A) an amount equal to Bank’s out-of-pocket expenses and fees and expenses of Bank’s counsel incurredin connection with the negotiation, documentation and closing of the transactions contemplated hereby, and (B) an amount sufficient in the opinion of the Bankto reimburse the Bank for all taxes, collateral filing fees and other fees and charges payable on account of the execution, delivery or recording of any of the LoanDocuments or any loans or Letters of Credit outstanding hereunder.

SECTION 4. BORROWER’S REPRESENTATIONS AND WARRANTIES.

To induce Bank to enter into this Agreement, Borrower represents and warrants as follows:

4.1 Organization and Qualification of Borrower. Borrower is [limited liability company duly organized, validly existing and in good standing] [limitedpartnership duly organized, validly existing and in good standing] under the laws of the state shown on the first page hereof, and is qualified to do business in alljurisdictions where the character of its properties or the nature of its activities make such qualification necessary.

4.2 Trade Names, Subsidiaries and Location of Assets. Exhibit C attached hereto and made a part hereof fully and accurately discloses any legal name,trade name or style ever used by Borrower, any Subsidiaries owned by Borrower, and each office, other place of business or location of assets of Borrower.

4.3 Corporate or Other Authority; No Violation of Other Agreements. The execution, delivery and performance by Borrower of this Agreement and theother Loan Documents have been duly authorized by all necessary action on the part of Borrower and do not and will not (i) violate any provision of Borrower’s[Participation and Operating Agreement, Certificate of Formation] (partnership agreement] or other organization documents or any Applicable Law, or (ii) be inconflict with, result in a breach of, or constitute (following notice or lapse of time or both) a default under any Franchise Document or any other agreement towhich Borrower is a party or by which Borrower or any of its property is bound.

4.4 Enforceability. This Agreement and each of the other Loan Documents create legal, valid and binding obligations of Borrower enforceable againstBorrower in accordance with their respective terms.

4.5 Entire Agreement. The Master Note and accompanying Loan Documents executed in connection with the Loan and delivered to Bank are the onlycontracts evidencing the transaction described herein and constitute the entire agreement of the parties hereto with respect to the transaction.

4.6 Genuineness of Signatures. The Master Note and each accompanying Loan Document executed in connection the such Loan is genuine and allsignatures, names, amounts and other facts and statements therein and thereon are true and correct.

4.7 Litigation. There are no actions, suits, proceedings or investigations pending or, to the knowledge of Borrower, threatened before any court oradministrative or governmental agency that may, individually or collectively, adversely affect the financial condition or business operations of Borrower.

4.8 Solvency. Borrower is now and will remain Solvent.

4.9 Taxes. All federal, state and local tax returns have been duly filed, and all taxes, assessments and withholdings shown on such returns or billed toBorrower have been paid, and Borrower maintains adequate reserves and accruals in respect of all such federal, state and other taxes, assessments andwithholdings. There are no unpaid assessments pending against Borrower for any taxes or withholdings, and Borrower knows of no basis therefor.

4.10 Compliance with Laws. Borrower has duly complied with in all material respects, and its properties and business operations are in compliance in allmaterial respects with, the provisions of all Applicable Laws, including, without limitation ERISA, the Fair Labor Standards Act and OSHA. Borrower possessesall permits, franchises, licenses, trademark rights, trade names, patents and other authorizations reasonably necessary to enable it to conduct its businessoperations as now conducted, and no filing with (other than

documents relating to the Collateral if the Loan is secured), and no consent, authorization, order or license of, any Person is necessary in connection with theexecution or performance of this Agreement or the other Loan Documents.


4.11 No Default. No Default Condition or Event of Default exists.

4.12 Use of Proceeds. None pf the proceeds of any Advances by Bank have been or will be used to purchase or carry (or to satisfy or refinance anyindebtedness incurred to purchase or carry) any “margin stock” (as defined in Regulation U of the Federal Reserve Board). Advances shall be made for the solepurpose of working capital needs of Borrower in connection with the operation of a business, including, without limitation, the establishment of new locations, inthe form of one or more Ruby Tuesday restaurants.

Each submission of a Request for an Advance or a request for the issuance of a Letter of Credit made by Borrower pursuant to this Agreement or any otherLoan Document shall constitute an automatic representation and warranty by Borrower to Bank that there does not then exist any Default Condition or Event ofDefault and a reaffirmation as of the date of said request that all representations and warranties of Borrower contained in this Agreement and the other LoanDocuments are true in all material respects. All representations and warranties contained in this Agreement or in any of the other Loan Documents shall survivethe execution, delivery and acceptance hereof by Bank and the closing of the transactions described herein.

SECTION 5. BORROWER’S AFFIRMATIVE COVENANTS.

During the term of this Agreement, and thereafter for so long as there are is any outstanding Loan Indebtedness to Bank, Borrower covenants that, unlessotherwise consented to by Bank in writing, it shall:

5.1 Financial Reports. Deliver to Bank or cause to be delivered to Bank:

(i) within 90 days after the end of each fiscal year a balance sheet and income statement of Borrower as of the end of such year, prepared bySponsor or by such firm of independent public accountants as may be designated by Borrower and be satisfactory to Bank, and certified asprepared in accordance with GAAP and, to the extent delivered to Sponsor, audited financial statements for such period;

(ii) within 45 days after the end of each fiscal quarter a balance sheet and income statement of Borrower as of the end of such quarter,prepared by Sponsor and certified as prepared in accordance with GAAP (except for the year-end adjustments); and

(iii) with reasonable promptness, all reports by Borrower to its shareholders or partners and such other information as Bank may reasonablyrequest from time to time.

5.2 Books and Records. Maintain its Books and Records and accounts in accordance with GAAP and permit any Person designated by Bank or Sponsorto visit Borrower’s premises, inspect any of the Collateral or any of the Books and Records, and to make copies thereof and take extracts therefrom, and todiscuss Borrower’s financial affairs with Borrower’s financial officers and accountants subject in each instance to reasonable prior written notice to Borrower,except in the event of a default by Borrower, in which case notice shall not be required.

5.3 Taxes. Promptly file all tax returns and pay and discharge all taxes, assessments, withholdings and other governmental charges imposed upon it, itsincome or profits, or upon any property belonging to it, prior to the date on which penalties attach thereto.

5.4 Notices to Bank. Promptly notify Bank in writing of (i) the occurrence of any Default Condition or Event of Default; (ii) any pending or threatenedlitigation claiming damages in excess of $100,000 or seeking relief that, if granted, would adversely affect the financial condition or business operations ofBorrower; and (iii) any asserted violation by Borrower of or demand for compliance by Borrower with any Applicable Law.

5.5 Compliance with Applicable Laws. Comply in all material respects with all Applicable Laws, including, without limitation, ERISA, the Fair LaborStandards Act and OSHA.

5.6 Existence. Maintain its separate corporate or partnership existence and all rights, privileges and franchises in connection therewith, and maintain itsqualification and good standing in all jurisdictions where the failure to do so could have a material adverse effect upon its ability to repay the Loan Indebtedness.

5.7 Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio of not less than 1.2 to 1.0. This ratio will be calculated as of the last day ofeach fiscal quarter of the Borrower based upon the preceding twelve-month period, commencing on the last day of the first fiscal quarter in which the Borroweror its Subsidiaries own at least one Qualified Store.

SECTION 6. NEGATIVE COVENANTS.

During the term of this Agreement, and thereafter for so long as there is Loan Indebtedness outstanding, Borrower covenants that unless Bank has firstconsented thereto in writing, it will not:

6.1 Merger; Disposal or Moving of Collateral. Merge or consolidate with or acquire any substantial portion of the assets or stock of any Person; sell,lease, transfer or otherwise dispose of all or any portion of its properties (including any of the Collateral), except sales or rentals of Inventory in the ordinarycourse of business; or, without having given Bank at least 60 days prior written notice and having executed such instruments and agreements as Bank shallrequire, change its name, the location of any Collateral or the location of its chief executive office, principal place of business or the office at which it maintainsits Books and Records.


6.2 Liens. Grant or suffer to exist any Lien upon any of its assets except Permitted Liens.

6.3 Guarantees. Guarantee, assume, endorse or otherwise become contingently liable for any obligation or indebtedness of any Person, either directly orindirectly, exceeding $100,000 not existing as of this date, except by endorsement of items of payment for deposit or collection or guarantees of operating leasesin the ordinary course of business and except as set forth on Exhibit C attached hereto.

6.4 Loans. Make loans or advances of money to or investments in any Person, or (except in the ordinary course of business and on fair and reasonableterms) engage in any transaction with a subsidiary or affiliate.

SECTION 7. EVENTS OF DEFAULT.

7.1 List of Events of Default. The occurrence of any one or more of the following conditions or events shall constitute an "Event of Default":

(a) Borrower shall fail to pay any principal amount of the Loan Indebtedness or any other amount of the Loan Indebtedness on the due date thereof(whether due at stated maturity, on demand, upon acceleration or otherwise);

(b) any warranty, representation, or other statement by Borrower herein or in any instrument, certificate or financial statement furnished incompliance herewith proves to have been false or misleading in any material respect when made;

(c) Borrower shall fail or neglect to perform, keep or observe any covenant contained in this Agreement, any of the other Loan Documents or anyother agreement now or hereafter entered into with Bank;

(d) Borrower or any Guarantor shall fail to pay when due any amount owed to any creditor (other than Bank) or any Guarantor shall fail to pay orperform any liability or obligation in accordance with the terms of any agreement with Bank;

(e) Borrower or any Guarantor shall cease to be Solvent, shall die or become incompetent, shall suffer the appointment of a receiver, trustee,custodian or similar fiduciary, shall make an assignment for the benefit of creditors, or shall make an offer of settlement or composition to their respectiveunsecured creditors generally;

(f) any petition for an order for relief shall be filed by or against Borrower or any Guarantor under the Bankruptcy Code (if against Borrower or anyGuarantor, the continuation of such proceeding for more than 30 days);

(g) any judgment, writ of attachment or similar process is entered or filed against Borrower or any Guarantor or any of Borrower’s or anyGuarantor’s property and such

judgment, writ of attachment or process is not dismissed, satisfied or vacated within ten (10) days thereafter or results in the creation or imposition of anyLien upon any Collateral that is not a Permitted Lien;

(h) Any Guarantor shall revoke or attempt to revoke the guaranty signed by such Guarantor or shall repudiate such Guarantor’s liability thereunder;

(i) any Person, or group of Persons (whether or not related) other than Sponsor or one of its affiliates, shall have or obtain legal or beneficialownership of a majority of the outstanding voting securities or rights of Borrower, other than any Person, or group of Persons, that has such majorityownership on the date of execution of this Agreement as shown on Exhibit C;

(j) any of Borrower’s Franchise Documents shall terminate or be revoked for any reason, or Borrower shall have received notice from the Sponsorthat a default has occurred under any Franchise Documents; or

(k) Sponsor shall default in its obligations to the Bank pursuant to any agreement between the Bank and Sponsor and Sponsor shall not purchase theLoan, Letters of Credit and Loan Commitment hereunder within five (5) Business Days.

7.2 Advances and Letters of Credit. In no event shall the Bank have any obligation to make an Advance pursuant to the Loan Commitment or issue aLetter of Credit hereunder if there exists a Default Condition or an Event of Default.

SECTION 8. REMEDIES.

All of the Loan Indebtedness shall become immediately due and payable and the Loan Commitment shall be deemed immediately terminated (withoutnotice to or demand upon Borrower) upon the occurrence of an Event of Default under Section 7(f) of this Agreement; and upon and after the occurrence of anyother Event of Default, Bank shall have the right to terminate immediately the Loan Commitment and to declare the entire unpaid principal balance of andaccrued interest with respect to the Loan Indebtedness to be, and the same shall thereupon become, immediately due and payable upon receipt by Borrower ofwritten notice and demand or, in the case of all outstanding Letter of Credit Obligations, immediately subject to the cash collateral requirements of Section 2.8hereof. From and after the date on which the Loan Indebtedness becomes automatically due and payable or is declared by Bank to be due and payable asaforesaid, Bank shall have and may exercise from time to time any and all rights and remedies afforded to a secured party or otherwise under any LoanDocument or Applicable Law. If the Loan Indebtedness is collected by or through an attorney at law, Bank shall be entitled to collect reasonable attorneys’ feesand court costs from Borrower.


SECTION 9. WAIVERS.

Borrower waives notice of Bank’s acceptance hereof. Borrower hereby waives any requirement on the part of Bank to post any bond or other security as acondition to Bank’s right to obtain an immediate writ of possession with respect to any Collateral. Bank shall not be deemed to have waived any of its rightsupon or remedies hereunder or any Event of Default unless such waiver be in writing and signed by Bank. No delay or omission on the put of Bank in exercisingany right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right on anyfuture occasion.

SECTION 10. NOTICES.

All notices and demands to or upon a party hereto shall be in writing and shall be sent by certified mail, return receipt requested, personal delivery againstreceipt or by telecopier or other facsimile transmission add shall be deemed to have been validly served, given or delivered when delivered against receipt or oneBusiness Day after deposit in the mail, postage prepaid, or, in the case of facsimile transmission, when indicated by verification receipt printed by the sendingmachine as having been received at the office of the noticed party, addressed in each case as follows:

If to Borrower: _______________________Attention ________________Telecopier No.:____________

If to Bank: Bank of America, N.A.Attention: Commercial Agency ManagementMailcode IL1-231-08-30231 South La Salle StreetChicago, Illinois 60604Telecopier No.:(877) 206-8427

or to such other address as each party may designate for itself by like notice given in accordance with this Section.

SECTION 11. INDEMNIFICATION.

Borrower hereby agrees to indemnify Bank and hold Bank harmless from and against any liability, loss, damage, suit, action or proceeding ever suffered orincurred by Bank as the result of Borrower’s failure to observe, perform or discharge Borrower’s duties hereunder or the issuance of any Letters of Credithereunder. Without limiting the generality of the foregoing, this indemnity shall extend to any claims asserted against Bank by any Person under anyenvironmental laws. If any taxes, collateral filing fees or other fees or charges shall be payable by Borrower or Bank on account of the execution, delivery orrecording of any of the Loan Documents or any loans or Letters of Credit outstanding hereunder, Borrower will pay (or reimburse Bank’s payment of) all suchtaxes, collateral filing fees or other fees or charges, including any applicable interests and penalties, and will indemnify and hold Bank harmless from and againstliability in connection therewith. The indemnity obligations of Borrower under this Section shall survive the payment in full of the Loan Indebtedness.

SECTION 12. ENTIRE AGREEMENT; AMENDMENT.

This Agreement and the other Loan Documents embody the entire understanding and agreement between the parties hereto with respect to the subject matterhereof, and this Agreement may not be modified or amended except by an agreement in writing signed by Borrower and Bank.

SECTION 13. SUCCESSORS AND ASSIGNS.

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; but Borrower shall not assignthis Agreement or any right or benefit hereunder to any Person. The Bank may assign its rights and obligations hereunder at any time and to any Person,including without limitation, to Sponsor.

SECTION 14. GOVERNING LAW.

THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS HEREUNDER, INCLUDING MATYERS OF CONSTRUCTION, VALIDITY ANDPERFORMANCE, SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD TO THE LAWS OFCONFLICTS THEREOF) AND IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT.

SECTION 15. MISCELLANEOUS.

Time is of the essence of this Agreement. Bank reserves the right to participate, sell or assign the Loan made hereunder and provide any participant orassignee all information in Bank’s possession regarding Borrower, its business and the Collateral. Borrower shall reimburse Bank for Bank’s out-of-pocketexpenses and for the fees and expenses and disbursements of Bank’s counsel in connection with the negotiation, documentation and closing of the transactionscontemplated hereby, and Borrower will pay all expenses incurred by Borrower in connection with the transactions. The Section headings are for convenienceonly and shall not limit or otherwise affect any of the terms hereof.

SECTION 16. RELATIONS WITH SPONSOR.


Borrower recognizes and acknowledges that the Bank has made the Loan Commitment available to Borrower hereunder at the behest of, as an accommodationto, and based upon the credit support of, Sponsor. Accordingly, Borrower agrees that from time to time the Bank may release to Sponsor such information aboutBorrower and the Loan as Sponsor may request, and the Bank may condition its agreement to any waiver, modification or amendment on the prior writtenconsent of Sponsor. Borrower further agrees that upon the occurrence of an Event of Default hereunder, the Bank may notify Sponsor of such Event of Defaultprior to notifying Borrower thereof, and the Bank shall not be liable to Borrower for failure to give simultaneous notice to Borrower. Borrower further agrees thatthe Bank shall not be liable to Borrower as a result of any information or document obtained by Bank regarding Borrower which is shared by Bank with Sponsoror any action taken under the Loan Documents based upon instructions from the Sponsor.

In addition, the Borrower acknowledges and agrees that to the extent that the Sponsor makes any payments to the Bank as a result of the credit support thatSponsor has provided to the Bank with respect to the Borrower, the Sponsor will be subrogated to the rights of the Bank pursuant to this Agreement and allrelated Loan Documents and may exercise and enforce in its own right the rights and remedies of the Bank hereunder and thereunder to the fullest extentprovided by law or at equity or by the terms of the Agreement and related Loan Documents.

WITNESS the hand and seal of the parties hereto on the date first above written.

Accepted in Charlotte, North Carolina:

BORROWER:

By: __________________________

Title:__________________________

Attest: ________________________

Secretary

[CORPORATE SEAL]

BANK:

BANK OF AMERICA, N.A.

By: ___________________________

Title: __________________________

EXHIBIT A

MASTER NOTE

[date] [$]

Charlotte, North Carolina

FOR VALUE RECEIVED, the undersigned, _____________, a ______________________, (the “Borrower”), promises to pay to the order of BANK OFAMERICA, N.A., a national banking association (the “Bank”) at Bank’s principal office in Charlotte, North Carolina, or at such other place as the holder hereofmay designate by notice if in writing to Borrower, in immediately available funds in lawful money of the United States of America, on the Maturity Date, as setforth in that certain Line of Credit Agreement, dated as of even date herewith (the “Agreement”) by and between the Borrower and Bank, the lesser of (i)principal sum of [FIFTY THOUSAND to THREE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($50,000 to $3,500,000.00)], or (ii) somuch thereof as shall have been from time to time disbursed hereunder in accordance with the Agreement and not theretofore repaid, as shown on the gridschedule attached hereto (the “Grid Schedule”).

In addition to principal, Borrower agrees to pay interest on the principal amounts disbursed hereunder from time to time from the date of each disbursementuntil paid at such rates of interest per annum and upon such dates as provided for in the Agreement. Interest shall accrue on the outstanding principal balancefrom the date hereof up to and through the date on which all principal and interest hereunder is paid in full, and shall be computed on the basis of the actualnumber of days elapsed in a 365-day year. Such interest is to be paid to Bank at its address set forth above. Any principal amount due under this Note that is notpaid on the due date therefor whether on the Maturity Date, or resulting from the acceleration of maturity upon the occurrence of an Event of Default (as definedin the Agreement), shall bear interest from the date due until payment in full at the Default Rate, as such term is defined in the Agreement.


This Master Note (“Note”) evidences a loan incurred pursuant to the terms and conditions of the Agreement to which reference is hereby made for a full andcomplete description of such terms and conditions, including, without limitation, provisions for the acceleration of the maturity hereof upon the existence oroccurrence of certain conditions or events, and the terms of any permitted prepayments hereof. All capitalized terms used in this Note shall have the samemeanings as set forth in the Agreement.

Upon the existence or occurrence of any Event of Default, the principal and all accrued interest hereof shall automatically become, or may be declared, dueand payable in the manner and with the effect provided in the Agreement.

Bank shall at all times have a right of set-off against any deposit balances of Borrower in the possession of the Bank and the Bank may apply the sameagainst payment of this Note or any other indebtedness of Borrower to the Bank. The payment of any indebtedness evidenced by this Note prior to the MaturityDate shall not affect the enforceability of this Note as to any future, different or other indebtedness incurred hereunder by the Borrower. In the event theindebtedness evidenced by this Note is collected by legal action or

through an attorney-at-law, the Bank shall be entitled to recover from Borrower all costs of collection, including, without limitation, reasonable attorneys’ fees ifcollected by or through an attorney-at-law.

Borrower acknowledges that the actual crediting of the amount of any disbursement under the Agreement to an account of Borrower or recording suchamount in the Grid Schedule shall, in the absence of manifest error, constitute presumptive evidence of such disbursement and that such Advance was made andborrowed under the Agreement. Such account records or Grid Schedule shall constitute, in the absence of manifest error, presumptive evidence of principalamounts outstanding and the payments made under the Agreement at any time and from time to time, provided that the failure of Bank to record on the GridSchedule or in such account the type or amount of any Advance shall not affect the obligation of the a undersigned to repay such amount actually advancedtogether with interest thereon in accordance with this Note and the Agreement.

Failure or forbearance of Bank to exercise any right hereunder, or otherwise granted by the Agreement or by law, shall not affect or release the liability ofBorrower hereunder, and shall not constitute a waiver of such right unless so stated by Bank in writing. THIS NOTE SHALL BE REDEEMED TO BEMADE UNDER, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OFGEORGIA (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF). Time is of the essence of this Note.

PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.

Executed under hand and seal of the Borrower as of the day and year first above

[NAME OF BORROWER]

By: __________________________

Name: ________________________

Title:_________________________

Attest:______________________

Name: ______________________

Title:_______________________

[CORPORATE SEAL]

GRID SCHEDULE

ADVANCES

DateAmount ofAdvance

Amount ofAdvance Repaid

Unpaid PrincipalBearing Interestat the Above- NotationReference Rate Made By

$________ $___________ $_________________


EXHIBIT B

Bank of America, N.A.Ruby Tuesday, Inc. Franchisee Loan Program

REQUEST FOR ADVANCE

Bank of America, N.A Attention: Commerical Agency Management [Date] Mailcode IL1-231-08-30 231 South La Salle Street Chicago, Illinois 60604 Facisimile: (877) 206-8427

Re: Name of Borrower ________________________ Closing Date: ________________________ Requested Advance: ________________________

Ladies and Gentlemen:

The above-referenced Borrower hereby requests an Advance in the amount of $________________ pursuant to the Line of Credit Agreement andPromissory Note dated as of the date set forth above, such Advance to be made on ___________________.

The Borrower hereby directs the Bank to fund such Advance in accordance with the following wiring instructions:

Name of Bank:________________________ City, State: ________________________ ABA No. ________________________ Account No. _______________________ Account Name:_______________________

The Borrower represents and warrants to the Bank that no Event of Default exists pursuant to the Line of Credit Agreement and Promissory Note referencedabove and that all representations and warranties set forth in said Line of Credit Agreement arc true and correct on the date hereof.

[Name of Borrower]

By: ______________________Title: _____________________

A. Permitted Liens

The following described Liens are Permitted Liens (if none, so state):

Name of Lien Holder Date of Recording Collateral

B. Trade Names and Styles

The following are the only trade names or trade styles ever used by Borrower (if none, so state):

C. Subsidiaries


The following are all of the subsidiaries owned by Borrower (if none, so state):

D. Business Locations

The following are all of the locations where Borrower has an office or other place of business or owns assets:

E. Stockholders/Members

The following are all of the stockholders or members of Borrower and the percentage of Borrower’s equity owned by each:

Stockholder's Name Percentage of Equity Owned

F. Guarantees

EXHIBIT E

FORM OF PARTICIPATION CERTIFICATE

SERVICER: Bank of America, N.A.CERTIFICATE NO. _____Commercial Agency ManagementIL1-231-08-30231 S. LaSalle StChicago, IL 60697

DATE: __________, 200__

This is to certify that Bank of America, N.A. (“Servicer”) has sold to _________________________ (“Participant”) and Participant has purchased fromServicer an undivided ______ percent (_%) ownership interest in (i) the Commitment, (ii) the Loan Commitments, (iii) the Loans, (iv) the Collateral, (v) allrights against any guarantor of any Loan, including the Sponsor, and (vi) all right, title and interest to any payment or right to receive payment with respect to theforegoing (collectively, the “Participant’s Interest”). Notwithstanding the foregoing, each Participant’s right to receive payments of interest, commitments fees orother fees with respect to the Commitment, the Loan Commitments and the Loans shall not exceed the amounts which such Participant is entitled to receivepursuant to the terms of the Loan Facility Agreement referenced below.

This Certificate is issued pursuant to the terms and conditions of an Amended and Restated Loan Facility Agreement and Guaranty dated as ofNovember 19, 2004 by and among Servicer, Participant, Ruby Tuesday, Inc. and certain other financial institutions named therein and from time to time a partythereto (as hereafter amended or modified, the “Loan Facility Agreement”). Reference is made to said Loan Facility Agreement for the terms and conditions ofthe participation evidenced hereby. All terms used in this Certificate shall have the same meanings as set forth in said Loan Facility Agreement.

This Certificate is neither transferable nor negotiable.

BANK OF AMERICA, N.A.,as Servicer

By:___________________________________ Name:______________________________ Title:_______________________________

EXHIBIT F

FORM OF MONTHLY SERVICING REPORTRuby Tuesday, Inc. Franchisee Loan Program


Payment Date __________________________

From: Bank of America, N.A. Attn:_____________________

Loans Outstanding As Of Payment Date $_________________________

Total Unfunded Commitments to BorrowersAs Of Payment Date $_________________________

Amount of Loans Repurchased By SponsorDuring Preceding Calculation Period $_________________________

Past Due Loans______ See attached past duereport

______ None for this period

Amount of Letters of Credit Outstandings $__________________________

SCHEDULE 5.14

PERCENTAGE OF OWNERSHIP OF SUBSIDIARIESAND RESTRICTIONS THEREON

1. The following are subsidiaries of Sponsor (owned, in the percentage indicated, by Sponsor unless otherwise noted):

Name State of Organization % OwnedRT of Annapolis, Inc. (name change) Maryland 100%4721 RT of Pennsylvania Pennsylvania 100%Ruby Tuesday of Marley Station, Inc. Maryland 100%Jezebel, Inc. Maryland 100%Morrison of New Jersey, Inc. New Jersey 100%Orpah,Inc. Maryland 100%RT Hospitality - York, JV Delaware 50%Ruby Tuesday of Allegany County, Inc. Maryland 100%Ruby Tuesday of Columbia, Inc. Maryland 90%Ruby Tuesday of Linthicum, Inc. Maryland 100%Ruby Tuesday of Salisbury, Inc. Maryland 100%Ruby Tuesday Sunday Club, Inc. Alabama 100%Ruby Tuesday of St. Mary’s, Inc. Maryland 85%RT of Dunkirk, Inc. Maryland 90%Ruby Tuesday of Frederick, Inc. Maryland 97%RT of Cecil County, Inc. Maryland 97%RT of Clarksville, Inc. Maryland 90%Quality Outdoor Services, Inc. Tennessee 100%RT Airport, Inc. Delaware 100%RT Franchise Acquisition, LLC (A), (C) Delaware 100%RT Louisville Franchise, LLC (B) Delaware 99%RT McGhee Tyson, LLC Delaware 99%RT Huntsville—Madison, LLC Delaware 100%RT One Percent Holdings, Inc. Delaware 100%RT Southwest Franchise, LLC (A), (B) Delaware 99%Ruby Tuesday, LLC (A) Delaware 100%RT One Percent Holdings, LLC Delaware 100%RT Minneapolis Holdings, LLC (C) Delaware 100%RT Omaha Holdings, LLC (C) Delaware 100%RT Arapahoe, LLC Delaware 100%RT Denver, Inc. Georgia 100%


Schedule 5.14


Name State of Organization % OwnedRT Louisville, Inc. Georgia 100%RT Orlando, Inc. Georgia 100%RT South Florida, Inc. Georgia 100%RT Tampa, Inc Georgia 100%RT West Palm Beach, Inc. Georgia 100%RTBD, Inc. (A) Delaware 100%RT Kentucky Restaurant Holdings, LLC (A), (C) Delaware 100%RT New Hampshire Restaurant Holdings, LLC (C) Delaware 100%RT Northern Illinois Holdings, LLC Delaware 100%RT New England Holdings, LLC Delaware 100%RTGC, LLC (A) Colorado 100%RT Michiana Holdings, LLC Delaware 100%RT Restaurant Services, LLC Delaware 100%RT Finance, Inc. (A), (C) Delaware 100%RT Florida Equity, LLC (A) Delaware 100%RT New York Franchise, LLC (A) Delaware 100%

A) Material Subsidiary B) 99% owned by RT Franchise Acquisition, LLC C) 100% owned by RTBD, Inc. 2. Free Race Mall Rest., L.P., is a New Jersey limited partnership of which Morrison of New Jersey, Inc., is a general partner. As such, Morrison of NewJersey, Inc., receives 99% of the partnership’s profits and 1.2% of the partnership’s capital. 3. The following “liquor clubs/corporations” are owned by the members thereof and controlled by a Board of Directors, who are typically employees ofSponsor or it’s Subsidiaries and Affiliates. These “clubs” enter into service agreements with Sponsor to provide the services necessary to conduct alcoholicbeverage sales and related service at Sponsor’s restaurants located in the relevant states.

Name State of Organization

RT Jonesboro Club Arkansas RT of Eldersburg, Inc. Maryland Ruby Tuesday of BWI, Inc. Maryland RT of Riverside, Inc. Maryland RTMB Lodging Joint Venture Pennsylvania RT Stonebridge Joint Venture Pennsylvania

Schedule 5.14


SCHEDULE 6.14

OUTSTANDING INDEBTEDNESS

1.

As of August 31. 2004 (In Thousands)

Short Term Borrowings $ 0 $ 0 Current Portion of Long-term Debt:

Phillips Colleges, Inc.

(Ruby Tuesday Gulfport) 48

CNL Financial I, Inc. 407

455 Long-term Debt:

Phillips Colleges, Inc.

(Ruby Tuesday Gulfport) 202

CNL Financial I, Inc. 4,681 4,883 $5,338

2. Amended and Restated Revolving Credit Agreement dated as of November 19, 2004, in the amount of up to $200,000,000.00 extended to Sponsorby a syndicate of lenders with Bank of America, N.A. as administrative agent, with an option of the Sponsor to increase such facility to a total of$300,000,000.00.

3. In the past and on limited occasions, Sponsor partially guaranteed specific GE Capital Business Asset Funding Corp. (“GE”) loans to Sponsor’sfranchisees. Sponsor has terminated this arrangement with GE. The total amount of Sponsor’s guaranty under this terminated arrangement is$1,168,300 as of 8/31/2004.

4. From time to time, Sponsor provides a guaranty of payment and performance with certain lenders to Sponsor’s franchisees, wherein Sponsorguarantees to such lender the completion of the construction of a Ruby Tuesday restaurant by such franchisees. The amount of each such guarantymay exceed $1,000,000 in a single case, and the aggregate amounts of such commitments will likely exceed $2,500,000.00 existing from time totime.

5. Sponsor has entered into a Financing Agreement with Citicorp Leasing, Inc. (“Citicorp”) whereby Sponsor agrees to provide a letter of credit toCiticorp as partial guaranty of up to $20 million in construction/development financing by Citicorp to Sponsor’s Franchise Partners. The maximumamount of Sponsor’s possible letter of credit under the Citicorp facility is $8.0 million.

6. Sponsor’s covenants in favor of Metropolitan Knoxville Airport Authority (the “Authority”) in connection with the Food and Beverage ConcessionAgreement dated September 1, 1999, between the Authority and RT McGhee-Tyson, LLC, a subsidiary of Sponsor.

Schedule 6.14


7. Indebtedness evidenced pursuant to letters of credit totaling $12,134,000.00 issued primarily in connection with Sponsor’s workers compensationand casualty insurance programs.

8. Indebtedness of RT Tampa Franchise, LP in the amount of $18.5 million, including a note payable to Sponsor with an outstanding balance of $2.3million, including any renewals or replacements of such total debt.

9. Indebtedness of RT New York Franchise, LLC in the amount of $7.4 million, including a note payable to Sponsor with an outstanding balance of$0.7 million, including any renewals or replacements of such total debt.

Schedule 6.14


SCHEDULE 6.15

EXISTING LIENS

Liens granted by RT Tampa Franchise, LP or RT New York Franchise, LLC securing the Indebtedness thereof described in Items 8 and 9, respectively, onSchedule 6.14. Liens granted by the Sponsor to Wells Fargo Bank Minnesota, National Association, encumbering the Sponsor’s restaurant located in Bay Minnette, AL andsecuring the indebtedness of RT Denver Franchise, L.P. in the amount of $1,771,000.

Schedule 6.15


SCHEDULE 6.17

INVESTMENTS(page 1 of 3)

See Schedule 4.14 for a listing of direct and indirect Subsidiaries of Sponsor in which Sponsor has made an Investment. Various promissory notes issued to Sponsor by franchise partners or other entities as listed below on this Schedule 6.17. Option Agreement dated November 20, 2000 between Sponsor and SRG pursuant to which Sponsor has the option to acquire a 33% membership interest in SRG. See Schedule 6.14, Items 2-10, inclusive. Line of Credit Agreement and Promissory Term Note, each dated August 31, 1999, between Sponsor (as lender) and RT McGhee-Tyson, LLC (as borrower) inthe amount of $1,000,000. Line of Credit Agreement and Promissory Term Note, each dated March 6, 2000, between Sponsor (as lender) and RT Franchise Acquisition, LLC (as borrower)in the amount of $150,000. Limited liability company interests or limited partner interests held by Sponsor or a Subsidiary in franchise partners as follows:

(a) 50% ($501,000) in connection with RT Minneapolis Franchise, LLC; (b) 50% ($501,000) in connection with RT Omaha Franchise, LLC; (c) 50% ($501,000) in connection with RT South Florida Franchise, LP; (d) 50% ($501,000) in connection with RT Northern Illinois Franchise, LLC; (e) 50% ($501,000) in connection with RT Orlando Franchise, LP; (f) 50% ($501,000) in connection with RT Detroit Franchise, LLC; (g) 50% ($501,000) in connection with RT KCMO Franchise, LLC; (h) 50% ($501,000) in connection with RT Michigan Franchise, LLC; (i) 50% ($501,000) in connection with RT New England Franchise, LLC; (j) 50% ($501,000) in connection with RT Western Missouri Franchise, LLC; (k) 50% ($501,000) in connection with RT West Palm Beach Franchise, LP; (l) 50% ($501,000) in connection with RT St. Louis Franchise, LLC;

Schedule 6.17


SCHEDULE 6.17


(m) 1% each ($1,000 each) in connection with each other Franchise Partner and the right to increase such ownership to50% or more as allowed in the Franchise Partner Program.

Page 3 of this SCHEDULE 6.17 follows and the remainder of this page is intentionally left blank.

Schedule 6.17


SCHEDULE 6.17


Effective as of August 31, 2004:

Original Outstanding Note Payoff Debt Balance Date Date

RT Chicago Franchise, LLC................ 7,038,000 6,395,000 03/27/00 03/27/13RT Western Missouri Franchise, LLC.... 6,700,000 6,200,000 12/05/01 07/05/12RT Michigan Franchise, LLC............... 6,000,000 5,714,000 05/27/00 09/27/10RT Long Island Franchise, LLC ............. 2,880,000 1,788,000 11/09/98 03/01/06RT Michiana Franchise, LLC................ 3,700,000 4,866,000 05/28/00 02/28/11RT West Palm Beach Franchise, LP .... 2,187,000 2,149,000 10/12/98 03/12/08RT Detroit Franchise, LLC................... 3,205,000 2,105,000 04/27/00 04/27/09RT St. Louis Franchise, LLC............... 2,055,000 1,987,000 12/05/01 09/05/11RT Orlando Franchise, LP.................... 1,451,331 988,000 10/31/97 12/01/06RT Minneapolis Franchise, LLC ........... 1,528,000 1,535,000 10/12/98 04/12/08RT Northern Illinois Franchise, LLC...... 1,840,000 1,533,000 11/06/00 06/06/10RT Indianapolis Franchise, LLC.......... 1,250,000 1,525,000 12/05/01 12/05/12All Saints Investments Limited, et al 465,000 505,000 03/24/03 03/24/05

RTI Line of credit: Maximum available credit:

RT Utah Franchise, LP.................... 600,000 500,000 12/08/03 03/08/05 37,790,000

Schedule 6.17


SCHEDULE 6.21

RESTRICTIVE AGREEMENTS

1. Liens and/or restrictive agreements provided for in, or in other documents or agreements executed in connection with, the Amended and RestatedRevolving Credit Agreement dated as of November 19, 2004, in the amount of up to $200,000,000.00 extended to Sponsor by a syndicate of lenders withBank of America, N.A. as administrative agent, with an option of the Sponsor to increase such facility to a total of $300,000,000.00.

2. Liens and/or restrictive agreements provided for in, or in other documents or agreements executed in connection with, the Financing Agreement betweenSponsor and Citicorp Leasing, Inc. (“Citicorp”) whereby Sponsor agrees to provide a letter of credit to Citicorp as partial guaranty of up to $20 million inconstruction/development financing by Citicorp to Sponsor’s Franchisees. The maximum amount of Sponsor’s possible letter of credit under the Citicorpfacility is $8.0 million.

Schedule 6.21


FOURTH AMENDMENTTO AMENDED AND RESTATED

LOAN FACILITY AGREEMENT AND GUARANTY

THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN FACILITY AGREEMENT AND GUARANTY dated as of May 21,2008 (the “Agreement”) is entered into among Ruby Tuesday, Inc., a Georgia corporation (the “ Sponsor”), the Guarantors, the Participants party hereto and Bankof America, N.A., as servicer and agent for the Participants (in such capacity, the “Servicer”). All capitalized terms used herein and not otherwise defined hereinshall have the meanings given to such terms in the Loan Facility Agreement (as defined below).

RECITALS

WHEREAS, the Sponsor, the Participants and the Servicer entered into that certain Amended and Restated Loan Facility Agreement and Guarantydated as of November 19, 2004 (as amended or modified from time to time, the “Loan Facility Agreement”);

WHEREAS, the Sponsor has requested that the Participants amend the Loan Facility Agreement as set forth below subject to the terms andconditions specified in this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Amendments. The Loan Facility Agreement is hereby amended as follows:

(a) Section 1.1 of the Loan Facility Agreement is hereby amended by adding the following defined terms in proper alphabeticalorder:

“Authoritative Guidance” shall have the meaning set forth in Section 6.1(h).

“Collateral Agent” shall mean Bank of America in its capacity as collateral agent under any of the Collateral Documentsand the Intercreditor Agreement or any successor collateral agent.

“Collateral Documents” shall mean a collective reference to the Pledge Agreement and such other security documents asmay be executed and delivered by the Credit Parties pursuant to the terms of Section 6.10A.

“Consolidated Entities” shall have the meaning set forth in Section 6.1(h). “Consolidated Working Capital” shall mean, at any time, the excess of (i) current assets (excluding cash and those

Permitted Investments identified in clauses (a.), (b.), (c.) and (e.) of the definition of Permitted Investments) of the Sponsor and itsSubsidiaries on a consolidated basis at such time over (ii) current liabilities (excluding current maturities of Indebtedness) of theSponsor and its Subsidiaries on a consolidated basis at such time, all as determined in accordance with GAAP.

“Control Event” shall mean (1) the execution by the Sponsor or any of its Subsidiaries or Affiliates of any agreement or

letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the

CHAR1\1054915v3


aggregate, may reasonably be expected to result in a Change in Control, (2) the execution of any written agreement which, when fullyperformed by the parties thereto, would result in a Change in Control or (3) the making of any written offer by any person (as such termis used in Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect onthe date hereof) or related persons constituting a group (as such term is used in Section 13(d)-5 under the Securities Exchange Act of1934 and the rules of the SEC thereunder as in effect on the date hereof) to the holders of the common stock of the Sponsor or of any ofits Affiliates, which offer, if accepted by the requisite number of holders, would result in a Change in Control.

“Domestic Subsidiary” shall mean any Subsidiary that is organized under the laws of any state of the United States or the

District of Columbia. “Equity Interests” shall mean, with respect to any Person, all of the shares of capital stock of (or other ownership or profit

interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capitalstock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capitalstock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from suchPerson of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership,member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or otherinterests are outstanding on any date of determination.

“Equity Issuance” means any issuance by the Sponsor or any Subsidiary to any Person of its Equity Interests.

“FIN 46R” shall have the meaning set forth in Section 6.1(h).

“Fourth Amendment Effective Date” shall mean May 21, 2008.

“Intercreditor Agreement” shall mean that certain Intercreditor and Collateral Agency Agreement dated as of the FourthAmendment Effective Date among the Sponsor, the Guarantors, the Purchasers, the Servicer, on behalf of all of the Participants, Bankof America, N.A., as the administrative agent on behalf of all the lenders under the Revolving Credit Facility and the Collateral Agent,as amended or modified from time to time.

“Investments” shall have the meaning set forth in Section 6.17.

“Permitted Liens” shall mean the Liens permitted by Section 6.15. “Pledge Agreement” shall mean that certain Pledge Agreement dated as of the Fourth Amendment Effective Date in favor

of the Collateral Agent, for the benefit of the holders of the Senior Secured Obligations executed by each of the Sponsor, the Guarantorsand the Collateral Agent, as amended or modified from time to time.

“Pledged Collateral” shall have the meaning set forth in the Pledge Agreement.

“Purchasers” shall mean the “Purchasers” under and as defined in the Senior Note Purchase Agreement.

2CHAR1\1054915v3


“Senior Notes” shall mean the “Notes” under and as defined in the Senior Note Purchase Agreement. “Senior Secured Obligations” shall have the meaning set forth in the Intercreditor Agreement.

(b) The following definitions in Section 1.1 of the Loan Facility Agreement are hereby amended to read as follows:

“Applicable Margin” shall mean, as of any date, the following percentages per annum determined by reference to theapplicable Adjusted Total Debt to EBITDAR Ratio in effect on such date as set forth below

PricingLevel

Adjusted Total Debt to

EBITDAR Ratio

Applicable Margin

I

< 2.50:1.00

1.00% per annum

II

< 3.00:1.00 but >2.50:1.00

1.25% per annum

III

< 3.50:1.00 but >3.00:1.00

1.50% per annum

IV

< 4.00:1.00 but >3.50:1.00

2.50% per annum

V

> 4.00:1.00

3.50% per annum

provided, that a change in the Applicable Margin resulting from a change in such ratio shall be effective on the second Business Dayafter which the Sponsor is required to deliver the financial statements required by Section 6.1(a) or (b) and the compliance certificaterequired by Section 6.1(c); provided, further, that if at any time the Sponsor shall have failed to deliver such financial statements andsuch certificate, the Applicable Margin shall be at Level V until such time as such financial statements and certificate are delivered, atwhich time the Applicable Margin shall be determined as provided above. Notwithstanding the foregoing, the Applicable Margin fromthe Fourth Amendment Effective Date until the financial statements and compliance certificate are required to be delivered for theSponsor’s fiscal year ending in June of 2008 shall be determined based upon Pricing Level V.

“Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on which commercial banks inCharlotte, North Carolina are authorized or required by law to close and (ii) if such day relates to an Advance of, a payment orprepayment of principal or interest on, a Payment Period for, an Adjusted LIBO Rate Loan or a notice

3CHAR1\1054915v3


with respect to any of the foregoing, any day on which dealings in Dollars are carried on in the London interbank market.

“Capital Expenditures” shall mean all expenditures of the Credit Parties and their Subsidiaries which, in accordance withGAAP, would be classified as capital expenditures, including, without limitation, Capital Lease Obligations.

“Change in Control” shall mean the occurrence of one or more of the following events: (a) any sale, lease, exchange or

other transfer (in a single transaction or a series of related transactions) of all or substantially all of the assets of the Sponsor to anyPerson or “group” (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder in effect on the datehereof), (b) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or “group” (within the meaningof the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of 30% or more of theoutstanding shares of the voting stock of the Sponsor; (c) occupation of a majority of the seats on the board of directors of the Sponsorby Persons who were neither (i) nominated by the current board of directors nor (ii) appointed by directors so nominated, (d) theoccurrence of a “Change in Control” under and as defined in the Senior Note Purchase Agreement or (e) the occurrence of a “Change inControl” under and as defined in the Revolving Facility Credit Agreement.

“Consolidated EBITDA” shall mean, for the Sponsor and its Subsidiaries for any period, an amount equal to the sum of (a)

Consolidated Net Income for such period minus (b) to the extent included in calculating Consolidated Net Income for such period, anynon-cash gains during such period minus (c) any actual cash payments made during such period related to non-cash charges included in(d)(v) below for a prior period plus (d) to the extent deducted in determining Consolidated Net Income for such period, (i) ConsolidatedInterest Expense, (ii) income tax expense determined on a consolidated basis in accordance with GAAP, (iii) depreciation andamortization determined on a consolidated basis in accordance with GAAP, (iv) for the Fiscal Quarters ending June 3, 2008, September2, 2008, December 2, 2008 and March 3, 2009 only, actual costs determined on a consolidated basis in accordance with GAAP incurredin connection with the closing of any stores or units during any such Fiscal Quarter; provided, that the amount of such costs shall notexceed $10,000,000 in the aggregate for all such Fiscal Quarters and (v) all other non cash charges, in each case, that do not represent acash item in such period, all as determined in accordance with GAAP.

“Fixed Charge Coverage Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated EBITDAR to (b)Consolidated Fixed Charges, in each case measured for the four Fiscal Quarter period ending on such date.

“Material Indebtedness” shall mean Indebtedness (other than the Loans and Letters of Credit) or obligations in respect ofone or more Hedging Agreements, of any one or more of the Sponsor and the Subsidiaries in an aggregate principal amount exceeding$10,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Sponsor or anySubsidiary in respect to any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any nettingagreements) that the Sponsor or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

4

CHAR1\1054915v3


“Operative Documents” shall mean this Agreement, the Collateral Documents, the Intercreditor Agreement, the SubsidiaryGuaranty Agreement, the Indemnity and Contribution Agreement, the Servicing Agreement, the Fee Letter and any other documentsdelivered by Sponsor or any Guarantor to the Servicer or the Participants in connection herewith or therewith.

“Revolving Facility” shall mean that certain revolving credit facility in the amount of up to $500,000,000 extended to the

Sponsor by a syndicate of lenders with Bank of America as their agent, all pursuant to the Revolving Facility Credit Agreement. “Revolving Facility Credit Agreement” shall mean that certain Amended and Restated Revolving Credit Agreement, dated

as of February 28, 2007, among the Sponsor, a syndicate of lenders and Bank of America, as administrative agent for such lenders, asamended, extended, replaced or refinanced from time to time.

“Senior Note Purchase Agreement” shall mean that certain Amended and Restated Note Purchase Agreement dated as ofMay 21, 2008 among the Sponsor and the Purchasers, as amended or modified from time to time.

(c) The definitions of “Consolidated EBITR”, “Change of Control Provision” and “Subordinated Debt” are each hereby deleted

from Section 1.1 of the Loan Facility Agreement in their entireties. (d) The second paragraph of Section 1.2 of the Loan Facility Agreement is hereby amended to read as follows:

Notwithstanding the above, the parties hereto acknowledge and agree that all calculations of the financial covenants in Section 6.11,

6.12 and 6.13 (including for purposes of determining the Applicable Margin) shall be made on a Pro Forma Basis. (e) Section 2.4(a) of the Loan Facility Agreement is hereby amended by deleting the reference to “0.375%” therein and replacing it

with a reference to “0.50%” (f) Section 2.8 of the Loan Facility Agreement is hereby amended to read as follows: Section 2.8 (Reserved.) (g) Clause (i) in Section 2.10 of the Loan Facility Agreement is hereby amended to read as follows:

(i) the Commitment Termination Date occurs, (h) Section 3.2(g) of the Loan Facility Agreement is hereby amended to read as follows:

(g) During any period when a Credit Event has occurred and is continuing, any amounts received by the Servicer withrespect to the Loans or the Letter of Credit Obligations shall be applied as follows:

First, to payment of that portion of such amounts constituting fees, indemnities, expenses and other amounts(including fees, charges and

5CHAR1\1054915v3


disbursements of counsel to the Servicer and amounts payable under Article II) payable to the Servicer in its capacity assuch;

Second, to payment of that portion of such Guaranteed Obligations constituting fees, indemnities and other

amounts (other than principal, interest and letter of credit fees) payable to the Participants and the Servicer (including fees,charges and disbursements of counsel to the respective Participants and the Servicer and amounts payable under Article II),ratably among them in proportion to the amounts described in this clause Second payable to them;

Third, to payment of that portion of such Guaranteed Obligations constituting accrued and unpaid letter of

credit fees and interest on the Loans and outstanding Letters of Credit and fees, premiums and any interest accrued thereon,ratably among the Participants in proportion to the respective amounts described in this clause Third held by them;

Fourth, to (a) payment of that portion of such Guaranteed Obligations constituting unpaid principal of the

Loans and outstanding Letters of Credit, (b) to cash collateralize that portion of LC Exposure comprised of the aggregateundrawn amount of Letters of Credit, ratably among the Participants and the Servicer in proportion to the respectiveamounts described in this clause Fourth held by them; and

Last, the balance, if any, after all of such Guaranteed Obligations have been indefeasibly paid in full, to the

Sponsor or as otherwise required by law;

provided that, amounts used to cash collateralize the aggregate undrawn amount of Letters of Credit pursuantto clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amountremains on deposit as cash collateral after all Letters of Credit have either been fully drawn or expired, such remainingamount shall be applied to such other Guaranteed Obligations, if any, in the order set forth above.

(i) References to “Loan Document” or “Loan Documents” in each of Sections 5.2, 5.3, 5.5, 5.12, 7.1(d), 9.1(a)(iii) and 12.3 shall be

replaced with “Operative Document” or “Operative Documents”, as applicable. (j) Section 5.14 of the Loan Facility Agreement is hereby amended to read as follows:

Section 5.14 Subsidiaries; Equity Interests.

As of the Fourth Amendment Effective Date, Schedule 5.14 sets forth the name of each Subsidiary and identifies eachMaterial Subsidiary, together with (i) jurisdiction of formation, (ii) number of shares of each class of Equity Interests outstanding, (iii)number and percentage of outstanding shares of each class owned (directly or indirectly) by any Credit Party or any Subsidiary and (iv)number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and all other similar rights withrespect thereto. The outstanding Equity Interests of each Subsidiary of any Credit Party are validly issued, fully paid and nonassessable.

6

CHAR1\1054915v3


(k) Article V of the Loan Facility Agreement is hereby amended by adding new Sections 5.17 and 5.18 at the end thereof whichshall read as follows:

Section 5.17 Perfection of Security Interests.

The Pledge Agreement creates a valid security interest in, and Lien on, the Pledged Collateral, which security interests andLiens are currently perfected security interests and Liens in favor of the Collateral Agent, prior to all other Liens.

Section 5.18 Guaranteed Obligations Rank Pari Passu.

The Guaranteed Obligations rank at least pari passu in right of payment with all obligations of the Credit Parties under theSenior Note Purchase Agreement (and the Senior Notes) and all obligations of the Credit Parties under the Revolving Facility.

(l) Section 6.1 of the Loan Facility Agreement is hereby amended by deleting the period after subsection (f) thereof and replacing

such period with a semi-colon and by inserting new subsections (g) and (h) following subsection (f) thereof which shall read as follows:

(g) concurrently with the financial statement referred to in clause (a) above, beginning with the fiscal year ending June2, 2009, (i) financial projections for the Sponsor and its Subsidiaries containing pro forma income statement, balance sheet and cashflow statement for each quarter of the next fiscal year and (ii) an updated corporate chart for the Sponsor and its Subsidiaries; and

(h) commencing with the Sponsor’s first fiscal quarter for which the Sponsor is required, and continuing for so long as

the Sponsor is required, pursuant to FASB Interpretation 46(R) (“FIN 46R”) or any other authoritative accounting guidance(collectively, “Authoritative Guidance”), to consolidate its Franchise Partners or any other less than 100% owned entity not previouslyrequired, under GAAP as in effect on December 31, 2002, to be so consolidated (collectively, the “Consolidated Entities”), each set offinancial statements delivered pursuant to paragraphs (a) and (b) above shall be accompanied by unaudited financial statements of thecharacter and for the dates and periods as in said paragraphs (a) and (b) covering each of the following:

(i) the Sponsor and its Subsidiaries on a consolidated basis, before giving effect to any consolidation of

the Consolidated Entities;

(ii) the Consolidated Entities on a consolidated basis; and

(iii) consolidating statements reflecting eliminations or adjustments required in order to reconcile theconsolidated statements referred to in subclauses (i) and (ii) above with the consolidated financial statements of theSponsor and its Subsidiaries delivered pursuant to paragraphs (a) and (b) above,

setting forth in each case (commencing, in the case of the consolidation of any Consolidated Entity pursuant to

Authoritative Guidance, with the Sponsor’s fiscal quarter that is four fiscal quarters following such consolidation) in comparative formthe figures for the corresponding periods in the previous fiscal year.

7

CHAR1\1054915v3


(m) Section 6.2 of the Loan Facility Agreement is hereby amended by deleting the period at the end of subsection (e) thereof and

replacing it with the following text “; and” and by adding a new Section 6.2(f) after subsection (e) thereof which shall read as follows:

(f) the occurrence of a Control Event.

(n) Section 6.9 of the Loan Facility Agreement is hereby amended to read as follows:


If any additional Material Subsidiary is acquired or formed after the Fourth Amendment Effective Date or any Subsidiarybecomes a Material Subsidiary after the Fourth Amendment Effective Date, the Sponsor will, within thirty (30) days after such MaterialSubsidiary is acquired or formed or such Subsidiary becomes a Material Subsidiary, notify the Servicer, the Collateral Agent and theParticipants thereof and will (A) cause such Material Subsidiary to become a Credit Party by executing an agreement in the form ofAnnex I to Exhibit B in form and substance satisfactory to the Servicer, (B) cause such Material Subsidiary to deliver simultaneouslytherewith similar documents applicable to such Material Subsidiary required under Section 11.1 as reasonably requested by the Serviceror Collateral Agent including, without limitation, a supplement to the Pledge Agreement and all certificates evidencing any certificatedEquity Interests required to be pledged pursuant to the Pledge Agreement, together with duly executed in blank and undated stockpowers attached thereto and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity,binding effect and enforceability of the documentation referred to in clauses (A) and (B) and (C)) and (C) become a party to theIntercreditor Agreement by executing and delivering to the Servicer a joinder agreement to the Intercreditor Agreement, all in form andsubstance reasonably satisfactory to the Servicer and the Collateral Agent.

(o) Section 6.10 of the Loan Facility Agreement is hereby amended to read as follows:


If at the end of any Fiscal Quarter of the Sponsor:

(a) the total assets of Subsidiaries that are not Guarantors constitute more than five percent (5%) of the total assets ofthe Consolidated Companies, or

(b) the Consolidated Net Income of Subsidiaries that are not Guarantors constitute more than five percent (5%) of theConsolidated Net Income of the Consolidated Companies, then the Sponsor shall (i) notify the Servicer thereof in the certificate delivered pursuant to Section 6.1(c) for such fiscal quarter and (ii)within 15 days thereafter, (A) cause the appropriate number of Subsidiaries to become Guarantors (by execution of an agreement in theform of Annex I to Exhibit B in form and substance satisfactory to the Servicer, (B) cause such Subsidiary to deliver simultaneouslytherewith similar documents required under Section 11.1 as reasonably requested by the Servicer or the Collateral Agent, includingwithout limitation, a supplement to the Pledge Agreement and all certificates

8CHAR1\1054915v3


evidencing any certificated Equity Interests required to be pledged pursuant to the Pledge Agreement, together with duly executed inblank and undated stock powers attached thereto and favorable opinions of counsel to such Person (which shall cover, among otherthings, the legality, validity, binding effect and enforceability of the documentation referred to in clauses (A) and (B) and (C)) and (C)cause such Subsidiary to become a party to the Intercreditor Agreement by executing and delivering to the Servicer a joinder agreementto the Intercreditor Agreement, all in form and substance reasonably satisfactory to the Servicer and the Collateral Agent. (p) Article VI of the Loan Facility Agreement is hereby amended by adding new Sections 6.10A and 6.10B after Section 6.10

thereof which shall read as follows:

Section 6.10A Pledged Assets.

The Sponsor will cause (a) 100% of the issued and outstanding Equity Interests of each Domestic Subsidiary owned by theSponsor or any other Credit Party and (b) 66% (or such greater percentage that, due to a change in an applicable law after the datehereof, (1) could not reasonably be expected to cause the undistributed earnings of such Foreign Subsidiary as determined for UnitedStates federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary’s United States parent and (2) couldnot reasonably be expected to cause any material adverse tax consequences) of the issued and outstanding Equity Interests entitled tovote (within the meaning of Treas. Reg. Section 1.956 2(c)(2)) and 100% of the issued and outstanding Equity Interests not entitled tovote (within the meaning of Treas. Reg. Section 1.956 2(c)(2)) in each Foreign Subsidiary directly owned by a Credit Party to besubject at all times to a first priority, perfected Lien in favor of the Collateral Agent, for the benefit of the holders of the Senior SecuredObligations, pursuant to the terms and conditions of the Collateral Documents, together with opinions of counsel and any filings anddeliveries reasonably necessary in connection therewith to perfect the security interests therein, all in form and substance reasonablysatisfactory to the Servicer and the Collateral Agent.

Section 6.10B Additional Guarantors.

Notwithstanding the provisions of Section 6.9, if at any time any Domestic Subsidiary that is not a Guarantor provides aguarantee of any Person’s obligations with respect to the Senior Note Purchase Agreement, then promptly (and in any event within five(5) days), the Sponsor will cause such Domestic Subsidiary to (A) become a Guarantor by executing and delivering to the Servicerexecuting an agreement in the form of Annex I to Exhibit B in form and substance satisfactory to the Servicer or such other documentsas the Servicer shall reasonably deem appropriate for such purpose, (B) deliver simultaneously therewith similar documents applicableto such Domestic Subsidiary required under Section 11.1 as reasonably requested by the Servicer or the Collateral Agent including,without limitation, a supplement to the Pledge Agreement and all certificates evidencing any certificated Equity Interests required to bepledged pursuant to the Pledge Agreement, together with duly executed in blank and undated stock powers attached thereto andfavorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect andenforceability of the documentation referred to in clauses (A) and (B) and (C)), all in form, content and scope reasonably satisfactory tothe Servicer and the Collateral Agent and (C) become a party to the Intercreditor Agreement by executing and delivering to the Servicera joinder

9CHAR1\1054915v3


agreement to the Intercreditor Agreement, all in form and substance reasonably satisfactory to the Servicer and the Collateral Agent.

(q) Section 6.11 of the Loan Facility Agreement is hereby amended to read as follows:


The Consolidated Companies will maintain as of the last day of each Fiscal Quarter, a Fixed Charge Coverage Ratio of notless than (a) 2.25 to 1.0 from the Fourth Amendment Effective Date through and including March 1, 2011 and (b) 2.50 to 1.0 thereafter. (r) Section 6.12 of the Loan Facility Agreement is hereby amended to read as follows:


The Consolidated Companies will maintain, as of the last day of each Fiscal Quarter, an Adjusted Total Debt to EBITDARRatio of not greater than (a) 4.50 to 1.0 from the Fourth Amendment Effective Date through and including June 3, 2008, (b) 4.60 to 1.0from June 4, 2008 through and including September 2, 2008, (c) 4.50 to 1.0 from September 3, 2008 through and including December2, 2008, (d) 4.25 to 1.0 from December 3, 2008 through and including September 1, 2009, (e) 4.00 to 1.0 from September 2, 2009through and including March 2, 2010, (f) 3.75 to 1.0 from March 3, 2010 through and including March 1, 2011 and (g) 3.50 to 1.0thereafter. (s) Section 6.14 of the Loan Facility Agreement is hereby amended to read as follows which Section 6.14 shall be inserted above

the phrase “Negative Covenants” in Article VI of the Loan Facility Agreement:

Section 6.14. Capital Expenditures.

The Consolidated Companies will not permit Capital Expenditures to exceed (i) $30,000,000 in the aggregate for the fiscalyear ending June 2, 2009, (ii) $30,000,000 in the aggregate for the fiscal year ending June 1, 2010 and (iii) for each fiscal yearthereafter, an aggregate amount of 30% of the Consolidated EBITDA for the prior fiscal year; provided, however, if subsequent to theFourth Amendment Effective Date, the Adjusted Total Debt to EBITDAR Ratio is less than 3.0 to 1.0 as of the last day of twoconsecutive Fiscal Quarters, the limitation on Capital Expenditures provided for above shall no longer apply.

(t) Section 6.15 of the Loan Facility Agreement is hereby amended to read as follows:


The Sponsor will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on anyof its assets or property now owned or hereafter acquired or, except:

10

CHAR1\1054915v3


(a) Permitted Encumbrances;

(b) any Liens on any property or asset of the Sponsor or any Subsidiary existing on the Fourth Amendment Effective

Date set forth on Schedule 6.15; provided, that such Lien shall not apply to any other property or asset of the Sponsor or anySubsidiary;

(c) Liens securing Indebtedness permitted under Section 6.27(e); provided that (i) such Liens do not at any time

encumber any property other than the property financed by such Indebtedness, (ii) the Indebtedness secured thereby does not exceed thecost of the property being acquired on the date of acquisition and (iii) such Liens attach to such property concurrently with or withinninety days after the acquisition thereof;

(d) Liens securing Indebtedness permitted by Section 6.27(f) assumed by the Sponsor or any Subsidiary in connection

with a Permitted Acquisition;

(e) Liens in favor of the Collateral Agent to secure the Senior Secured Obligations and

(f) extensions, renewals, or replacements of any Lien referred to in paragraphs (a) and (b) of this Section; provided,however, that the principal amount of the Indebtedness secured thereby is not increased and that any such extension, renewal orreplacement is limited to the assets originally encumbered thereby

(u) Section 6.17 of the Loan Facility Agreement is hereby amended to read as follows:


The Sponsor will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to anymerger with any Person that was not a wholly owned Subsidiary prior to such merger), any common stock, evidence of indebtedness orother securities (including any option, warrant, or other right to acquire any of the foregoing) of, make or permit to exist any loans oradvances to, Guaranty any obligations of, or make or permit to exist any investment or any other interest in, any other Person (all of theforegoing being collectively called “Investments”), or purchase or otherwise acquire (in one transaction or a series of transactions) anyassets of any other Person that constitute a business unit, or create or form any Subsidiary, except:

(a) Investments (other than Permitted Investments) existing on the Fourth Amendment Effective Date and set forth onSchedule 6.17 (including Investments in Subsidiaries);


(c) Guaranties of Indebtedness under (i) the Revolving Facility and (ii) other Indebtedness in an amount not to exceed$10,000,000 in the aggregate at any one time outstanding;

(d) Investments made by any Credit Party in or to any other Credit Party;

11CHAR1\1054915v3


(e) loans or advances to employees, officers or directors of the Sponsor or any Subsidiary in the ordinary course ofbusiness for travel, relocation and related expenses;

(f) Hedging Agreements permitted by Section 6.23;

(g) Investments in franchise operators through the Franchise Partner Program; provided, that such Investments madepursuant to this subsection (g) together with Investments made pursuant to subsection (h) below shall not exceed $10,000,000 in theaggregate at any one time outstanding;

(h) Investments in franchise operators through the Traditional Franchisee program pursuant to the purchase option

agreements entered into with those operators; provided, that such Investments made pursuant to this subsection (h) together withInvestments made pursuant to subsection (g) above shall not exceed $10,000,000 in the aggregate at any one time outstanding;

(i) Investments received in settlement of Indebtedness created in the ordinary course of business;

(j) Acquisitions by any Credit Party meeting the following requirements (each such Acquisition constituting a

“Permitted Acquisition”):

(i) as of the date of the consummation of such Acquisition, no Credit Event or Unmatured Credit Eventshall have occurred and be continuing or would result from such Acquisition, and the representations and warrantiescontained herein shall be true both before and after giving effect to such Acquisition;

(ii) such Acquisition is consummated on a non-hostile basis pursuant to a negotiated acquisition agreement

approved by the board of directors or other applicable governing body of the seller or entity to be acquired, and no materialchallenge to such Acquisition shall be pending or threatened by any shareholder or director of the seller or entity to beacquired;

(iii) the business to be acquired in such Acquisition is similar or related to one or more of the lines of

business in which the Sponsor and its Subsidiaries are engaged on the Closing Date; (iv) as of the date of consummation of such Acquisition, all material approvals required in connection

therewith shall have been obtained; (v) after giving effect to such Acquisition, the aggregate consideration (including cash and non-cash

consideration, any assumption of Indebtedness, deferred purchase price and any earn-out obligations) paid for allAcquisitions in any fiscal year shall not exceed $35,000,000; provided, however, if subsequent to the Fourth AmendmentEffective Date, the Adjusted Total Debt to EBITDAR Ratio is less than 3.0 to 1.0 as of the last day of two consecutiveFiscal Quarters, the annual basket provided for above shall no longer apply so long as (A) the Adjusted Total Debt toEBITDAR Ratio on a Pro Forma Basis after giving effect to any such Acquisition is less than 3.0 to 1.0 and (B) in the

12CHAR1\1054915v3


case where after giving effect to any such Acquisition, the aggregate consideration paid for all Acquisitions in theapplicable fiscal year exceeds $5,000,000 the Sponsor shall have delivered to the Servicer not less than five (5) days priorto the consummation of such Acquisition a pro form compliance certificate demonstrating that the Adjusted Total Debt toEBITDAR Ratio on a Pro Form Basis (after giving effect to any such Acquisition and all extensions of credit funded inconnection therewith as if made on the first day of the applicable period) is less than 3.0 to 1.0; and

(vi) in the case where after giving effect to any Acquisition, the aggregate consideration for all

Acquisitions occurring in the applicable fiscal year is greater than $5,000,000, not less than five (5) days prior to theconsummation of such Acquisition, the Sponsor shall have delivered to the Servicer, a pro forma compliance certificate,which shall reflect that, on a Pro Forma Basis, the Sponsor would have been in compliance with the financial covenants setforth in Article VI for the four fiscal quarter period reflected in the compliance certificate most recently delivered to theServicer pursuant to Section 6.1(c) prior to the consummation of such Acquisition (giving effect to such Acquisition andall extensions of credit funded in connection therewith as if made on the first day of such period); and

(k) Investments in common stock of the Sponsor to the extent permitted under Section 6.18.

Investments under Section 6.17 shall not be permitted if, before or after giving effect to the making of such Investment, a Credit Eventor Unmatured Credit Event has occurred and is continuing. (v) Section 6.18 of the Loan Facility Agreement is hereby amended to read as follows:


The Sponsor will not, and will not permit its Subsidiaries to, (x) declare or make, or agree to pay or make, directly orindirectly, any dividend or other distribution on any class of its Equity Interests, or (y) make any payment on account of, or set apartassets for a sinking or other analogous fund for, the purchase, redemption, retirement, defeasance or other acquisition of, any EquityInterests or Indebtedness subordinated to the Guaranteed Obligations of the Sponsor or any options, warrants, or other rights topurchase such Equity Interests or such Indebtedness, whether now or hereafter outstanding (each, a “Restricted Payment”) except for (i)dividends payable by the Sponsor solely in shares of any class of its Equity Interests, (ii) Restricted Payments made by any Subsidiaryto the Sponsor or to another Credit Party and (iii) subsequent to the Fourth Amendment Effective Date, after the Adjusted Total Debt toEBITDAR Ratio has been less than 3.0 to 1.0 as of the last day of two consecutive Fiscal Quarters, cash dividends paid on, and cashredemptions of, the Equity Interests of the Sponsor; provided, that (i) no Credit Event or Unmatured Credit Event shall have occurredand be continuing before or after giving effect to the payment of such dividend or redemption and (ii) the Adjusted Total Debt toEBITDAR Ratio on a Pro Forma Basis after giving effect to the payment of any such dividend or redemption is less than 3.0 to 1.0.

13

CHAR1\1054915v3


(w) Section 6.19(c) of the Loan Facility Agreement is hereby amended to read as follows:

(c) the sale, lease or transfer of assets of any Subsidiary to the Sponsor or any other Credit Party; provided,that if the sale, lease or transfer of assets is made by a Subsidiary that is not a Credit Party, such sale, lease or transfer mustnot be for consideration that exceeds the fair market value of the assets sold, leased or transferred;

(x) Section 6.20 of the Loan Facility Agreement is hereby amended to read as follows:


The Sponsor will not, and will not permit any of its Subsidiaries to enter into or permit to exist any transaction of any kind with any ofits Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Sponsor or such Subsidiarythan could be obtained on an arm’s length basis from unrelated third parties, (b) transactions between or among the Credit Parties not involving anyother Affiliates and (c) any Restricted Payment permitted by Section 6.18.

(y) Section 6.21 of the Loan Facility Agreement is hereby amended to read as follows:


The Sponsor will not, and will not permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist anyagreement that prohibits, restricts or imposes any condition upon (a) the ability of the Sponsor or any Subsidiary to create, incur orpermit any Lien upon any of its assets or properties, whether now owned or hereafter acquired, (b) the ability of any Credit Party toguarantee the Guaranteed Obligations or otherwise be a Credit Party pursuant to the Operative Documents or (c) the ability of anySubsidiary to pay dividends or other distributions with respect to its common stock, to make or repay loans or advances to the Sponsoror any other Subsidiary, to Guaranty Indebtedness of the Sponsor or any other Subsidiary or to transfer any of its property or assets tothe Sponsor or any Subsidiary of the Sponsor; provided, however, that (i) the foregoing shall not apply to restrictions or conditions setforth in Schedule 6.21 or restrictions or conditions imposed by law or by this Agreement or any other Operative Document, theRevolving Facility or the Senior Note Purchase Agreement, (ii) the foregoing shall not apply to customary restrictions and conditionscontained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only tothe Subsidiary that is sold and such sale is permitted hereunder and (iii) clause (a) shall not apply to restrictions or conditions imposedby any agreement relating to secured Indebtedness permitted hereby if such restrictions and conditions apply only to the property orassets securing such Indebtedness. (z) Article VI of the Loan Facility Agreement is hereby amended by adding new sections 6.27 and 6.28 at the end thereof which

shall read as follows:

Section 6.27 Indebtedness.

14

CHAR1\1054915v3


The Sponsor will not create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer toexist, any Indebtedness, except:

(a) Indebtedness under the Operative Documents;

(b) Indebtedness of the Sponsor and the Guarantors under the Revolving Facility;

(c) Indebtedness of the Sponsor and the Guarantors under the Senior Note Purchase Agreement in anaggregate principal amount not to exceed $150,000,000;

(d) Indebtedness of the Sponsor and its Subsidiaries existing on the Fourth Amendment Effective Date andset forth in Schedule 6.27;

(e) purchase money Indebtedness (including Capital Lease Obligations or Synthetic Lease Obligations)incurred by the Sponsor or any of its Subsidiaries to finance the purchase of fixed assets, and renewals, refinancings andextensions thereof; provided, that (i) the aggregate principal amount of all such Indebtedness at any one time outstandingshall not exceed $20,000,000, (ii) such Indebtedness when incurred shall not exceed the purchase price of the asset(s)financed; and (iii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balanceoutstanding thereon at the time of such refinancing;

(f) secured Indebtedness of the Credit Parties assumed in connection with a Permitted Acquisition so longas such Indebtedness (i) was not incurred in anticipation of or in connection with the respective Permitted Acquisition and(ii) does not exceed $50,000,000 in the aggregate at any time outstanding;

(g) obligations (contingent or otherwise) of the Sponsor or any Subsidiary existing or arising under anyHedging Agreement, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course ofbusiness for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, orproperty held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and notfor purposes of speculation or taking a “market view;” and (ii) such Hedging Agreement does not contain any provisionexonerating the non defaulting party from its obligation to make payments on outstanding transactions to the defaultingparty;

(h) Indebtedness in the form of Guaranties of Indebtedness permitted by Section 6.17(c); and

(i) other unsecured Indebtedness of the Sponsor and its Subsidiaries not to exceed $10,000,000 in theaggregate at any one time outstanding;

Section 6.28 Prepayment of Other Indebtedness, Etc. The Sponsor will not make (or give any notice with respect thereto), or permit any Subsidiary to make (or give notice with

respect thereto), any voluntary or optional

15CHAR1\1054915v3


payment or prepayment or redemption or acquisition for value of (including without limitation, by way of depositing money orsecurities with the trustee with respect thereto before due for the purpose of paying when due), refund, refinance or exchange of anyIndebtedness, except (i) Indebtedness under the Operative Documents, (ii) Indebtedness under the Revolving Credit Facility, (iii)Indebtedness under the Senior Note Purchase Agreement to the extent permitted by the Revolving Credit Agreement and (iv)intercompany debt owed to any Credit Party.

(aa) Section 7.1(c) of the Loan Facility Agreement is hereby amended to read as follows:

(c) Sponsor shall fail to observe or perform any covenant or agreement contained in Sections 6.1, 6.2, 6.3 (with

respect to the Sponsor’s existence) or 6.11 through 6.28; or

(bb) Sections 7.1(i) and (j) of the Loan Facility Agreement are hereby amended to read as follows:

(i) an ERISA Event shall have occurred that, in the opinion of the Required Participants, when taken together withother ERISA Events that have occurred, could reasonably be expected to result in liability to the Sponsor and the Subsidiaries in anaggregate amount exceeding $10,000,000; or

(j) one or more judgments or orders for the payment of money in excess of $10,000,000 in the aggregate shall berendered against the Sponsor or any Subsidiary, and either (i) enforcement proceedings shall have been commenced by any creditorupon such judgment or order or (ii) there shall be a period of 30 consecutive days during which a stay of enforcement of such judgmentor order, by reason of a pending appeal or otherwise, shall not be in effect; or

(cc) Section 7.1 of the Loan Facility Agreement is hereby amended by adding the word “or” after the semicolon at the end ofsubsection (n) thereof and by adding a new subsection (o) immediately thereafter to read as follows

(o) any Operative Document purporting to grant a Lien to secure any Senior Secured Obligation shall, at any time

after the delivery of such Operative Document, fail to create a valid and enforceable Lien on any Pledged Collateral purported to becovered thereby or such Lien shall fail or cease to be a perfected Lien with the priority required in the relevant Operative Document;

(dd) The first paragraph of Section 8.1 of the Loan Facility Agreement is hereby amended to read as follows:

The obligation of the Sponsor pursuant to this Article VIII with respect to the Limited Guaranty Pool shall be limited, as ofany date that Guaranty Payments are made by the Sponsor, or demanded by the Servicer, with respect to any Loans in the LimitedGuaranty Pool, to an amount (the “Maximum Amount”) equal to the greater of (a) fifty percent (50%) of the aggregate outstandingprincipal amount of the Loans on such date (after giving effect to any payments, recoveries on Collateral or other recoveries made bythe Servicer or any Participant on such date with respect to the Loans), (b) three (3) times the largest aggregate outstanding Loan, or (c)$10,000,000; provided that the maximum

16CHAR1\1054915v3


cumulative amount of Guaranty Payments that the Sponsor shall be required to make with respect to Loans in the Limited GuarantyPool shall be $24,000,000 (the “Maximum Cumulative Amount”).

(ee) Section 12.1 of the Loan Facility Agreement is hereby amended to read as follows:

Section 12.1 Appointment of Servicer as Agent.

(a) To the extent of its ownership interest in the Loans, each Participant hereby designates Servicer as its agent toadminister all matters concerning the Loans and to act as herein specified. Each Participant hereby irrevocably authorizes the Servicerto take such actions on its behalf under the provisions of this Agreement, the other Operative Documents, and all other instruments andagreements referred to herein or therein, and to exercise such powers and to perform such duties hereunder and thereunder as arespecifically delegated to or required of the Servicer by the terms hereof and thereof and such other powers as are reasonably incidentalthereto. The Servicer may perform any of its duties hereunder by or through its agents or employees

(b) Each of the Participants hereby consents to and approves the terms of the Intercreditor Agreement, a copy of whichis attached hereto as Exhibit G. The Participants acknowledge and agree to the terms of the Intercreditor Agreement and authorize anddirect the Servicer to enter into the Intercreditor Agreement on behalf of all of the Participants.

(c) Each of the Participants hereby consents to and approves the terms of the Pledge Agreement, a copy of which isattached hereto as Exhibit H. The Participants acknowledge and agree to the terms of the Pledge Agreement and authorize and directthe Collateral Agent to enter into the Pledge Agreement on behalf of all of the Participants.

(d) The Participants irrevocably authorize the Collateral Agent, at its option and in its discretion, to release any Lienon any Collateral granted to or held by the Collateral Agent under any Operative Document (a) upon termination of the Commitmentsand payment in full of all Guaranteed Obligations (other than contingent indemnification obligations), (b) that is transferred or to betransferred as part of or in connection with any transaction permitted hereunder or under any other Operative Document, or (c) asapproved in accordance with Section 13.2. Upon request by the Collateral Agent at any time, the Required Participants will confirm inwriting the Collateral Agent’s authority to release its interest in particular types or items of Collateral pursuant to this Section 12.1(d). (ff) Schedules 5.14, 6.15, 6.17 and 6.21 of the Loan Facility Agreement are hereby amended to read as provided on Schedule 5.14,

6.15, 6.17 and 6.21 and attached hereto and a new Schedule 6.27 Indebtedness is hereby added to the Loan Facility Agreement and shall read asprovided on Schedule 6.27 attached hereto.

(gg) Annex I to Exhibit B of the Loan Facility Agreement is hereby amended to read as provided on Annex I to Exhibit B attached

hereto. (hh) A new Exhibit G is hereby added to the Loan Facility Agreement to read as provided on Exhibit G attached hereto.

17

CHAR1\1054915v3


2.Conditions Precedent. This Agreement shall be effective upon the satisfaction of the following conditions precedent:

(a) the Servicer shall have received counterparts of this Agreement, duly executed by the Sponsor, the Guarantors, the Servicer andthe Required Participants;

(b) the Servicer shall have received counterparts of that certain Intercreditor and Collateral Agency Agreement dated as of the date

hereof (the “Intercreditor Agreement”) duly executed by the Sponsor, the Guarantors, the purchasers under and as defined in the Senior NotePurchase Agreement (the “Purchasers”), the Servicer, the Administrative Agent (as defined in the Revolving Credit Facility Agreement) and Bankof America, N.A. as collateral agent (the “Collateral Agent”);

(c) the Servicer shall have received counterparts of that certain Pledge Agreement dated as of the date hereof (the “Pledge

Agreement”) duly executed by the Sponsor, the Guarantors and the Collateral Agent; (d) the Servicer shall have received favorable opinions of legal counsel to the Sponsor and each other Credit Party, addressed to the

Servicer, the Collateral Agent and each Participant, dated as of the Fourth Amendment Effective Date, in form and substance reasonably satisfactoryto the Servicer;

(e) the Servicer shall have received a certified copy of (i) the fully executed Amended and Restated Senior Note PurchaseAgreement of even date herewith and (ii) the fully executed amendment agreement to the Revolving Facility Credit Agreement of even dateherewith, each in form and substance satisfactory to the Servicer;

(f) the Collateral Agent shall have received all certificates evidencing any certificated equity interests pledged to the Collateral

Agent pursuant to the Pledge Agreement, together with duly executed in blank stock powers attached thereto; (g) the Servicer shall have received a certificate of a Responsible Officer of the Sponsor and each other Credit Party, in form and

substance satisfactory to the Servicer attaching resolutions of each Credit Party approving and adopting this Agreement, the transactionscontemplated herein and authorizing the execution and delivery of this Agreement, the Pledge Agreement, the Intercreditor Agreement and anydocuments, agreements or certificates related thereto and certifying that such resolutions have not been amended, supplemented or otherwisemodified and remain in full force and effect as of the Fourth Amendment Effective Date;

(h) the Servicer shall have received UCC financing statements for the Sponsor and each other Credit Party for each appropriate

jurisdiction as is necessary, in the Servicer’s reasonable judgment, to perfect the Collateral Agent’s security interest in the Pledged Collateral (asdefined in the Pledge Agreement);

(i) the Servicer shall have received, for the benefit of each Participant signing this Agreement on or before May 20, 2008, an

amendment fee equal to 0.25% of such Participant’s Participating Commitment; and (j) the Servicer shall have received all other fees and expenses due and payable in connection with this Agreement.

18

CHAR1\1054915v3


3. Miscellaneous.

(a) Except as herein specifically agreed, the Loan Facility Agreement, and the obligations of the Credit Parties thereunder andunder the other Operative Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms.

(b) Each Guarantor (a) acknowledges and consents to all of the terms and conditions of this Agreement, (b) affirms all of its

obligations under the Operative Documents and (c) agrees that this Agreement and all documents executed in connection herewith do not operate toreduce or discharge its obligations under the Loan Facility Agreement or the other Operative Documents.

(c) The Sponsor and each Guarantor hereby represent and warrant as follows:

(i) Each Credit Party has taken all necessary action to authorize the execution, delivery and performance of thisAgreement.

(ii) This Agreement has been duly executed and delivered by the Credit Parties and constitutes the legal, valid and

binding obligations of each of the Credit Parties, enforceable in accordance with its terms, except as such enforceability may be subjectto (A) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rightsgenerally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or inequity).

(iii) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or

governmental authority or third party is required in connection with the execution, delivery or performance by any Credit Party of thisAgreement.

(d) The Sponsor represents and warrants to the Participants that (i) the representations and warranties set forth in Article V of the

Loan Facility Agreement and in each other Operative Document are true and correct in all material respects (before and after giving effect to thisAgreement) as of the date hereof with the same effect as if made on and as of the date hereof, except to the extent such representations andwarranties expressly relate to an earlier date and (ii) no event has occurred and is continuing which constitutes a Credit Event or Unmatured CreditEvent.

(e) This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an

original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by telecopy shall beeffective as an original and shall constitute a representation that an executed original shall be delivered.

(f) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE

GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.

[remainder of page intentionally left blank]

19CHAR1\1054915v3


Each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

SPONSOR: RUBY TUESDAY, INC., a Georgia corporation

By: /s/ Marguerite N. DuffyName: Marguerite N. Duffy

Title: Senior Vice President

GUARANTORS: RTBD, INC.

By: /s/ Marguerite N. DuffyName: Marguerite N. DuffyTitle: President

RT FINANCE, INC.

By: /s/ Marguerite N. Duffy

Name: Marguerite N. DuffyTitle: Vice President



Name: Marguerite N. Duffy

Title: Vice President RT TAMPA FRANCHISE, L.P.



Title: Vice President RT ORLANDO FRANCHISE, L.P.



Title: Vice President

20CHAR1\1054915v3


RT SOUTH FLORIDA FRANCHISE, L.P.


Title: Vice President RT NEW YORK FRANCHISE, LLC



Title: Vice President RT SOUTHWEST FRANCHISE, LLC



Title: Vice President RT MICHIANA FRANCHISE, LLC



Title: Vice President RT FRANCHISE ACQUISITION, LLC



Title: Vice President RT KENTUCKY RESTAURANT HOLDINGS, LLC



Title: Vice President RT FLORIDA EQUITY, LLC





RTGC, LLC



RT WEST PALM BEACH FRANCHISE, L.P.



RT MICHIGAN FRANCHISE, LLC



RT DETROIT FRANCHISE, LLC



RUBY TUESDAY, LLC





SERVICER: BANK OF AMERICA, N.A.,in its capacity as Servicer

By: /s/ Anne Zeschke Name: Anne ZeschkeTitle: Assistant Vice President

PARTICIPANTS: BANK OF AMERICA, N.A.

By: /s/ John H. SchmidtName: John H. SchmidtTitle: Vice President

REGIONS BANK,successor by merger to AmSouth Bank

By: /s/ Matthew B. AshworthName: Matthew B. AshworthTitle: Vice President

WACHOVIA BANK, N.A.

By: /s/ Martha M. WintersName: Martha M. WintersTitle: Director

SUNTRUST BANK

By: /s/ Dan KomitorName: Dan KomitorTitle: Director


SCHEDULE 5.14

SUBSIDIARIES

PERCENTAGE OF OWNERSHIP OF SUBSIDIARIES AND RESTRICTIONS THEREON 1. The following are subsidiaries of Sponsor (owned, in the percentage indicated, by Sponsor unless otherwise noted):

Loan Party State ofFormation (i)

Number of Sharesof each class ofEquity Interests (ii)

Number of Shares Owned or Percentage ofMembership/Partnership Interests Held (iii)

Number and effect, ifexercised, of alloutstanding options,warrants, rights ofconversion or purchaseand other similar rights(iv)

RTBD, Inc. (A) Delaware 1000 shares$.01 par common

100 Shares – Ruby Tuesday, Inc. None

RT Finance, Inc. (A) Delaware 1000 shares$.01 par common

100 shares – RTBD, Inc. None

Ruby Tuesday GC Cards, Inc.(A)

Colorado 1000 shares$.01 par common

100 shares – RTGC, LLC None

RT Tampa Franchise, L.P. (A) Delaware None issued 1% - RT Tampa, Inc. (General Partner)99%-RT Florida Equity, LLC

N/A

RT Orlando Franchise, L.P. (A) Delaware None issued 1% - RT Orlando, Inc. (General Partner) 99% -RT Florida Equity, LLC

N/A

RT South Florida Franchise,L.P. (A)

Delaware None issued 1% - RT South Florida, Inc. (Gen. Partner) 99%- RT Florida Equity, LLC

N/A

RT New York Franchise, LLC(A)

Delaware None issued 100% - Ruby Tuesday, Inc. N/A

RT Southwest Franchise, LLC (A)

Delaware None issued 1% - RT One Percent Holdings, Inc. 99%- RTFranchise Acquisition, LLC

N/A

RT Michiana Franchise, LLC(A)

Delaware None issued 1% - RT One Percent Holdings, LLC 99%-Ruby Tuesday, Inc.

N/A

RT Franchise Acquisition, LLC(A)

Delaware None issued 100% - RTBD, Inc. N/A

RT Kentucky RestaurantHoldings, LLC (A)


RT Florida Equity, LLC (A) Delaware None issued 100% - Ruby Tuesday, Inc. N/A

RTGC, LLC (A) Colorado None issued 100% - Ruby Tuesday, Inc. N/A

RT West Palm Beach Franchise,L.P. (A)

Delaware None issued 1% - RT West Palm Beach, Inc. (Gen.Partner)99% - RT Florida Equity, LLC

N/A

RT Michigan Franchise, LLC(A)

Delaware None issued 100% - RT Franchise Acquisition, LLC N/A

RT Detroit Franchise, LLC (A) Delaware None issued 50% - RT Franchise Acquisition, LLC 50% -Ruby Tuesday, Inc.

N/A

Ruby Tuesday, LLC (A) Delaware None issued 100% - Ruby Tuesday, Inc. N/A

Quality Outdoor Services, Inc. Tennessee 200 shares with nopar or nominal value

All 90 shares outstanding purchased by RubyTuesday, Inc. per Stock PurchaseAgreement/closing docs—NO CERTIFICATEISSUED

None


RT Airport, Inc. Delaware 1000 shares $.01 parcommon

100 shares subscribed to Ruby Tuesday, Inc.per Share Subscription Agt -- NOCERTIFICATE ISSUED

None

RT Louisville Franchise, LLC Delaware None issued 99% - RT Franchise Acquisition, LLC 1% -RT Louisville, Inc.

N/A

RT McGhee Tyson, LLC Delaware None issued 99% - Ruby Tuesday, Inc. 1% - RT Airport,Inc.

N/A

RT One Percent Holdings, LLC Delaware None issued 100% - Ruby Tuesday, Inc. N/A

RT One Percent Holdings, Inc. Delaware 1000 shares $.01 parcommon

100 Shares - Ruby Tuesday, Inc. None

RT Minneapolis Holdings, LLC Delaware None issued 100% - RTBD, Inc. N/A

RT Omaha Holdings, LLC Delaware None issued 100% - RTBD, Inc. N/A

RT Denver, Inc. Georgia 1000 shares $.01 parcommon


RT Louisville, Inc. Georgia 1000 Shares $.01 parcommon


RT Orlando, Inc. Georgia 1000 Shares $.01 parcommon


RT South Florida, Inc. Georgia 1000 Shares $.01 parcommon


RT Tampa, Inc. Georgia 1000 Shares $.01 parcommon


RT West Palm Beach, Inc. Georgia 1000 Shares $.01 parcommon


RT New Hampshire RestaurantHoldings, LLC


RT Restaurant Services, LLC Delaware None issued 100% - Ruby Tuesday, Inc. N/A

RT Northern California Franchise,LLC

Delaware None issued 99% - RT Franchise Acquisition, LLC 1% -RT Finance, Inc.

N/A

Wok Hay 2, LLC Delaware None issued 90% - Ruby Tuesday, Inc. 10% - JamesCornett

N/A

RTTA, L.P. Texas None issued 1% - RTBD, Inc. (Gen. Partner) 99% - RTFranchise Acquisition, LLC

N/A

RT Distributing, LLC Tennessee None issued 100% - Ruby Tuesday, Inc. N/A(A) Material Subsidiary 2. The following “liquor clubs/corporations” are owned by the members thereof and controlled by a Board of Directors, who are typically employees ofSponsor or it’s Subsidiaries and Affiliates. These “clubs” enter into service agreements with Sponsor to provide the services necessary to conduct alcoholicbeverage sales and related service at Sponsor’s restaurants located in the relevant states.

Name State of Organization 4721 RT of Pennsylvania, Inc. Pennsylvania


Name State of Organization Orpah, Inc. Maryland RT Hospitality – York JV Pennsylvania Ruby Tuesday of St. Mary’s, Inc. Maryland Ruby Tuesday of Allegany County, Inc. Maryland Ruby Tuesday of Columbia, Inc. Maryland Ruby Tuesday of Linthicum, Inc. Maryland Ruby Tuesday of Salisbury, Inc. Maryland Ruby Tuesday Sunday Club, Inc. Alabama Ruby Tuesday of Frederick, Inc. Maryland RT of Cecil County, Inc. Maryland RT of Clarksville, Inc. Maryland RT of Riverside, Inc. Maryland Ruby Tuesday of Pocomoke City, Inc. Maryland RT of Fruitland, Inc. Maryland RTMB Lodging Joint Venture Pennsylvania RT Stonebridge Joint Venture Pennsylvania RT of Annapolis, Inc. Maryland Ruby Tuesday of Marley Station, Inc. Maryland RTT Texas, Inc. Texas RTTT, LLC Texas RT/Sayosha Chambersburg Joint Venture Pennsylvania


Schedule 6.15

Existing Liens

1. Liens arising from or related to indebtedness incurred by RT Tampa Franchise, L.P., a Subsidiary (see Schedule 5.14), in favor of GECapital Franchise Finance Corporation or its affiliates, and in favor of AMRESCO Capital, LP or its affiliates, which secures assets orproperty of such Subsidiary at the sites identified (see Schedule 6.27, Item 7 for a listing of such Debt and sites).

2. Liens arising from or related to indebtedness incurred by RT Michiana Franchise, LLC, a Subsidiary (see Schedule 5.14), in favor of GECapital Franchise Finance Corporation or its affiliates, and in favor of AMRESCO Capital, LP or its affiliates, which secures assets orproperty of such Subsidiary at the sites identified (see Schedule 6.27, Item 7 for a listing of such Debt and sites).

3. Liens arising from or related to indebtedness incurred by RT Orlando Franchise, L.P., a Subsidiary (see Schedule 5.14), in favor of GECapital Franchise Finance Corporation or its affiliates, which secures assets or property of such Subsidiary at the sites identified (seeSchedule 6.27, Item 7 for a listing of such Debt and sites).

4. Liens arising from or related to indebtedness incurred by RT South Florida Franchise, L.P., a Subsidiary (see Schedule 5.14), in favor of GECapital Franchise Finance Corporation or its affiliates, which secures assets or property of such Subsidiary at the sites identified (seeSchedule 6.27, Item 7 for a listing of such Debt and sites).

5. Liens arising from or related to indebtedness incurred by RT West Palm Beach Franchise, L.P., a Subsidiary (see Schedule 5.14), in favorof GE Capital Franchise Finance Corporation or its affiliates, which secures assets or property of such Subsidiary at the sites identified (seeSchedule 6.27, Item 7 for a listing of such Debt and sites).

6. Liens arising from or related to indebtedness incurred by RT Detroit Franchise, LLC, a Subsidiary (see Schedule 5.14), in favor of GECapital Franchise Finance Corporation or its affiliates, and in favor of Irwin Franchise Capital or its affiliates, which secures assets orproperty of such Subsidiary at the sites identified (see Schedule 6.27, Item 7 for a listing of such Debt and sites).

7. Liens arising from or related to indebtedness incurred by RT Michigan Franchise, LLC, a Subsidiary (see Schedule 5.14), in favor of GECapital Franchise Finance Corporation or its affiliates, which secures assets or property of such Subsidiary at the sites identified (seeSchedule 6.27, Item 7 for a listing of such Debt and sites).


Schedule 6.17

Existing Investments See Schedule 5.14 for a listing of direct and indirect Subsidiaries of Sponsor in which Sponsor has made an Investment. Various promissory notes issued to Sponsor by franchise partners or other entities as listed below on this Schedule 6.17. Limited liability company interests or limited partner interests held by Sponsor or a Subsidiary in franchise partners as follows:

(a) 50% ($501,000) in connection with RT Minneapolis Franchise, LLC; (b) 50% ($501,000) in connection with RT Omaha Franchise, LLC; (c) 50% ($501,000) in connection with RT KCMO Franchise, LLC; (d) 50% ($501,000) in connection with RT New England Franchise, LLC; (e) 50% ($501,000) in connection with RT Western Missouri Franchise, LLC; (f) 50% ($501,000) in connection with RT St. Louis Franchise, LLC; (g) 1% each ($1,000 each) in connection with each other Franchise Partner and the right to increase such ownership to

50% or more as allowed in the Franchise Partner Program.


Effective as of May 1, 2008:

Original Outstanding Note Payoff Debt Balance Date Date

RT Chicago Franchise, LLC................. 7,038,000 719,000 03/27/00 03/27/11RT Long Island Franchise, LLC............ 1,437,000 1,437,000 03/31/06 05/10/09RT St. Louis Franchise, LLC.................. 2,055,000 1,987,000 12/05/01 12/05/15RT Minneapolis Franchise, LLC............... 1,528,000 1,007,000 10/12/98 08/12/10RT Indianapolis Franchise, LLC............... 1,250,000 1,446,000 12/05/01 12/05/12RT Utah Franchise, LLC....................... 1,300,000 1,300,000 01/07/05 01/01/09

RTI Lines of credit:

RT Denver Franchise, L.P................... 265,000 RT Seattle Franchise, LLC............. 65,000 RT Las Vegas Franchise, LLC............. 45,000

RT Minneapolis Franchise, LLC........... 300,000 8,571,000


Schedule 6.21

Restrictive Agreements

1. Restrictive agreements provided for in, or in other documents or agreements executed in connection with, the Amended and Restated Revolving CreditAgreement in the amount of $500,000,000 by and among Sponsor, Bank of America, N.A., as Administrative Agent, and each of the lenders party thereto datedas of February 28, 2007 as amended or modified from time to time, together with any renewal or replacement thereof.

2. Liens and/or restrictive agreements provided for in, or in other documents or agreements executed in connection with, the Financing Agreementbetween Sponsor and Citicorp Leasing, Inc. (“Citicorp”) as amended or modified from time to time whereby Sponsor agrees to provide a letter of credit toCiticorp as partial guaranty of up to $20 million in construction/development financing by Citicorp to Sponsor’s Franchise Partners. The maximum amount ofSponsor’s possible letter of credit under the Citicorp facility is $8.0 million.

3. Liens and/or restrictive agreements provided for in, or in other documents or agreements executed in connection with, the Program and SupportAgreement by and between Sponsor and General Electric Capital Business Asset Funding Corporation dated as of January 2002 as amended or modified fromtime to time, whereby Company guarantees no more than 30% of the then outstanding aggregate of franchisee loans subject to the Program and SupportAgreement if an unpaid balance remains under any such loan to a franchisee after lender has realized its rights in the collateral subject to the loan.


Schedule 6.27

Indebtedness

1. Indebtedness in the estimated contingent amount of $842,103 arising under the Program and Support Agreement by and between Company and GeneralElectric Capital Business Asset Funding Corporation dated as of January 2002 as amended or modified from time to time, whereby Company guarantees no morethan 30% of the then outstanding aggregate of franchisee loans subject to the Program and Support Agreement if an unpaid balance remains under any such loanto a franchisee after lender has realized its rights in the collateral subject to the loan. The Program and Support Agreement was terminated effective July 1, 2004. 2. Indebtedness in the estimated contingent amount of $4,108,808 arising under the Financing Agreement by and between Company and CitiCorp Leasing, Inc.dated as of July 1, 2004 as amended or modified from time to time, whereby Company guarantees up to $2,666,000 of a participating franchisee’s loan subject tothe program. The Financing Agreement was terminated on July 1, 2007. This loan is secured by a letter of credit in the amount of $4,200,335. 3. Indebtedness totaling $12,880,278 evidenced pursuant to various letters of credit issued primarily in connection with Company’s workers compensation andcasualty insurance programs. 4. From time to time, Company indemnifies certain lenders to Company’s franchisees, wherein Company agrees to pay a portion of franchisee debt allocated tospecific leased property encumbered by such debt if such franchisee defaults under its loan to the indemnified lender due to a failure to obtain (i) certain landlordconsents to subletting the property by the Company to the franchisee or (ii) lease extensions for specific leased property. In the event of such payment, theindemnified lender assigns to Company all of its rights in the related collateral. 5. Company’s covenants in favor of Metropolitan Knoxville Airport Authority (the “Authority”) in connection with the Food and Beverage ConcessionAgreement dated September 1, 1999, between the Authority and RT McGhee-Tyson, LLC, a Subsidiary, wherein Company agrees to provide continuing workingcapital to RT McGhee Tyson, LLC during the term of the Concession Agreement. 6. The Company has entered into a Distribution Agreement and an Agreement Respecting Employee Benefit Matters as amended or modified from time to time(collectively referred to as sharing agreements) with Morrison Fresh Cooking, Inc. (acquired by Piccadilly Cafeterias, Inc.) and Morrison ManagementSpecialists, Inc. (formerly Morrison Health Care, Inc. and acquired by Compass Group, PLC) providing for the assumption of liabilities and cross-indemnitiesdesigned to allocate, generally, among these three companies, financial responsibility for liabilities arising out of or in connection with business activities prior tothe March, 1996 “spin-off” transaction.


7. FORMER FRANCHISE PARTNER (ACQUIRED) INDEBTEDNESS

(all figures in 000's)

MORTGAGEE TOTAL

RT Tampa Franchise, L.P. Debt:

GE - Cooper Creek Construction 609

GE - Healthpark Construction 1,192

RT Michiana Franchise, LLC Debt:

GE - Acquisition - Note 28525 1,775

GE - Acquisition - Note 28651 2,713

GE - Battle Creek Construction 848

RT Orlando Franchise, L.P. Debt:

GE - Bellair 785

GE - Leesburg 797

GE - Palm Coast Construction 1,496

RT South Florida Franchise, L.P. Debt:

GE - Deerfield Construction 599

GE - Homestead Construction 488

GE - Pompano Construction 754

RT West Palm Beach Franchise, L.P. Debt:

GE - Wellington FF&E 186

GE - Palm City Construction 1,462

GE - Palm City FF&E 164

GE - Royal Palm Construction 1,448

GE - Royal Palm FF&E. 70

GE - Sebastian 1,591

GE - Stuart 1,548

GE - Acquisition Debt 731

RT Detroit Franchise, LLC Debt:

GE - Saline Construction 1,413

GE - Saline FF&E 191

GE - Novi Construction 1,949

GE - Novi FF&E 260

GE - S. Canton Construction 1,246

GE - S. Canton FF&E 312

GE - Acquisition Debt 3,108

RT Michigan Franchise, LLC Debt:

GE - Cadillac Construction 1,325

GE - Port Huron Construction 881


GE - Gaylord Construction 1,608

GE - Traverse City Construction 287

GE - Traverse City FF&E 133

GE - Acquisition Debt 4,804

GE - Clarkston Construction 1,241

GE - Clarkston FF&E 212

GE - Mt. Pleasant Construction 1,188

GE - Mt. Pleasant FF&E 130

Total GE Capital 39,544

Irwin – RT Detroit Franchise, LLC 2,961

Amresco – RT Tampa Franchise, L.P. 2,039

Amresco – RT Orlando Franchise, L.P. 1,403

Mortage for Gulfport Restaurant 50

Capital Lease – Housing facility for training 170

Capital Lease – Equipment leases 15

TOTAL RUBY TUESDAY, INC. 46,187

* Former franchise partner (acquired) indebtedness balances are as of May 1, 2008.


Annex I to Exhibit B


SUPPLEMENT NO. [ ] dated as of [ ], to the Subsidiary Guaranty Agreement (the “Guaranty Agreement”) dated as of November 19, 2004 among

each of the subsidiaries listed on Schedule I thereto (each such Subsidiary individually, a “Guarantor” and collectively, the “Guarantors”) of RUBY TUESDAY,INC., a Georgia corporation (the “Sponsor”), in favor of BANK OF AMERICA, N.C., a national banking association, as Servicer (the “Servicer”) and theParticipants (as defined in the Loan Facility Agreement referred to below).

A. Reference is made to (i) the Amended and Restated Loan Facility Agreement dated as of November 19, 2004 (as amended, supplemented orotherwise modified from time to time, the “Loan Facility Agreement”), among the Sponsor, the banks and financial institutions from time to time party thereto(the “Participants”) and Bank of America, N.A., as Servicer and (ii) the Pledge Agreement dated as of May __, 2008 (as amended, restated, supplemented orotherwise modified from time to time, the “Pledge Agreement”), by and among the Sponsor and the Guarantors and Bank of America, N.A., as collateral agent(the “Collateral Agent”) for the benefit of the Secured Creditors (as such term is defined in the Pledge Agreement).

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guaranty Agreement, theLoan Facility Agreement and the Pledge Agreement.

C. The Guarantors have entered into the Guaranty Agreement in order to induce the Servicer, on behalf of the Participants, to make Loans and toissue Letters of Credit. . [Pursuant to Section 6.9 of the Loan Facility Agreement, each Material Subsidiary acquired or formed after the Fourth AmendmentClosing Date or any Subsidiary that becomes a Material Subsidiary after the Fourth Amendment Closing Date is required to enter into the Guaranty Agreementas a Guarantor.] [Pursuant to Section 6.10 of the Loan Facility Agreement, if at the end of any Fiscal Quarter of the Sponsor, (i) the total assets of Subsidiariesthat are not Guarantors constitute more than five percent (5%) of the total assets of the Consolidated Companies, or (ii) the Consolidated Net Income ofSubsidiaries that are not Guarantors constitute more than five percent (5%) of the Consolidated Net Income of the Consolidated Companies, then the appropriatenumber of Subsidiaries are required is required to enter into the Guaranty Agreement as Guarantors.] [Pursuant to Section 6.10B of the Credit Agreement, if atany time any Domestic Subsidiary that is not a Guarantor provides a guarantee of any Person’s obligations with respect to the Senior Note Purchase Agreement,then such Domestic Subsidiary is required to enter into the Guaranty Agreement as a Guarantor.] Section 19 of the Guaranty Agreement provides that additionalSubsidiaries of the Sponsor may become Guarantors under the Guaranty Agreement by execution and delivery of an instrument in the form of this Supplement.The undersigned Subsidiary of the Sponsor (the “New Guarantor”) is executing this Supplement in accordance with the requirements of the Loan FacilityAgreement to become a Guarantor under the Guaranty Agreement in order to induce the Servicer, on behalf of the Participants, to make additional Loans and toissue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued. CHAR1\1060814v2

Exhibit B



SECTION 1. In accordance with Section 19 of the Guaranty Agreement, the New Guarantor by its signature below becomes a Guarantor under theGuaranty Agreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms andprovisions of the Guaranty Agreement applicable to it as Guarantor thereunder and (b) represents and warrants that the representations and warranties made by itas a Guarantor thereunder are true and correct on and as of the date hereof. Each reference to a Guarantor in the Guaranty Agreement shall be deemed to includethe New Guarantor. The Guaranty Agreement is hereby incorporated herein by reference.

SECTION 2. The New Guarantor represents and warrants to the Servicer, the Collateral Agent and the Participants that this Supplement has been dulyauthorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. The New Guarantor represents and warrants to the Servicer, the Collateral Agent and the Participants that the exact legal name of the NewGuarantor, as it appears in its certificate of incorporation, is as set forth on the signature page hereto. The New Guarantor further represents and warrants that its(i) jurisdiction of incorporation, (ii) number of shares of each class of capital stock outstanding, (iii) number and percentage of outstanding shares of each classowned by the New Guarantor or any of its subsidiaries and (iv) number and effect, if exercised, of all outstanding options, warrants, rights of conversion orpurchase and all other similar rights with respect to such capital stock is as set forth on Schedule 1.

SECTION 4. This Supplement may be executed in counterparts each of which shall constitute an original, but all of which when taken together shallconstitute a single contract. This Supplement shall become effective when the Servicer shall have received counterparts of this Supplement that bear thesignatures of the New Guarantor. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of amanually signed counterpart of this Supplement.



SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, thevalidity, legality and enforceability of the remaining provisions contained herein and in the Guaranty Agreement shall not in any way be affected or impairedthereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of suchprovision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions withvalid provisions the CHAR1\1060814v2

Exhibit B


economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 13 of the Guaranty Agreement. Allcommunications and notices hereunder to the New Guarantor shall be given to it at the address set forth under its signature below, with a copy to the Sponsor.

SECTION 9. The New Guarantor agrees to reimburse the Servicer for its out-of-pocket expenses in connection with this Supplement, including thereasonable fees, disbursements and other charges actually incurred of counsel for the Servicer. CHAR1\1060814v2

Exhibit B


IN WITNESS WHEREOF, the New Guarantor has duly executed this Supplement to the Guaranty Agreement as of the day and year first abovewritten.


By:_____________________________ Name: Title: Address:

CHAR1\1060814v2Exhibit B


Schedule 1

1. Corporate Structure. Set forth below hereof is a complete and accurate list as of the date hereof with respect to the New Guarantor: (i) jurisdiction ofincorporation, (ii) number of shares of each class of capital stock outstanding, (iii) number and percentage of outstanding shares of each class owned by the NewGuarantor or any of its subsidiaries and (iv) number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and all othersimilar rights with respect to such capital stock.

CHAR1\1060814v2

Exhibit B


Exhibit G

Intercreditor Agreement

EXECUTION COPY

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

Dated as of May 21, 2008

By and Among

BANK OF AMERICA, N.A.,

as Collateral Agent

And

BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT FOR THE REVOLVING CREDIT FACILITY ON BEHALF OF

THE REVOLVING CREDIT FACILITY LENDERS,

BANK OF AMERICA, N.A., AS SERVICER FOR THE FRANCHISE LOAN FACILITY ON BEHALF OF THE FRANCHISELOAN FACILITY PARTICIPANTS ,

And

THE INSTITUTIONAL INVESTORS LISTED ON SCHEDULE 3 HERETO, AS NOTEHOLDERS


TABLE OF CONTENTS

SECTION HEADING PAGESECTION 1. Definitions 3 Section 1.1. Definitions 3 Section 1.2. Effectiveness of this Agreement 9

SECTION 2. Relationships Among Secured Parties 9 Section 2.1. Equal and Ratable Sharing of Collateral 9 Section 2.2. Restrictions on Actions 10 Section 2.3. Representations and Warranties 11 Section 2.4. Cooperation; Accountings 12 Section 2.5. Termination Note Agreement, Revolving CreditFacility

Agreement or Franchise Loan Facility Agreement 12SECTION 3. Appointment and Authorization of Collateral Agent 12SECTION 4. Agency Provisions 13 Section 4.1. Delegation of Duties 13 Section 4.2. Exculpatory Provisions 13 Section 4.3. Reliance by Collateral Agent 14 Section 4.4. Knowledge or Notice of Default or Event of Default 14 Section 4.5. Non-Reliance on Collateral Agent and Other Creditors 14 Section 4.6. Indemnification 15 Section 4.7. Collateral Agent in Its Individual Capacity 16 Section 4.8. Successor Collateral Agent 16

SECTION 5. Actions by the Collateral Agent 18 Section 5.1. Duties and Obligations 18 Section 5.2. Notification of Default 18 Section 5.3. Exercise of Remedies 18 Section 5.4. Changes to Security Documents 18 Section 5.5. Release of Collateral 18 Section 5.6. Other Actions 18 Section 5.7. Cooperation 19 Section 5.8. Distribution of Proceeds 19 Section 5.9. Authorized Investments 20 Section 5.10. Determination of Amount of Senior Secured Obligations 21 Section 5.11. Reinstatement 22

SECTION 6. Bankruptcy Proceedings 22SECTION 7. Miscellaneous 23


Section 7.1. Creditors; Other Collateral 23 Section 7.2. Marshalling 23 Section 7.3. Consents, Amendments, Waivers 23 Section 7.4. Governing Law 23 Section 7.5. Parties in Interest 23 Section 7.6. Counterparts 24 Section 7.7. Termination 24 Section 7.8. Notices 24


ATTACHMENTS TO INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT:

Schedule 1 – Information relating to the Noteholders

Exhibit A – List of Security Documents


INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

THIS INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT dated as of May 21, 2008 (this “Agreement”), is enteredinto by and among Bank of America, N.A., in its capacity as Collateral Agent (as hereinafter defined), Bank of America, N.A., in its capacity as administrativeagent (the “Revolving Credit Facility Agent”) under the Revolving Credit Facility Agreement (as hereinafter defined) on behalf of itself and each of theRevolving Credit Facility Secured Creditors (as hereinafter defined), Bank of America, N.A., in its capacity as servicer (the “Franchise Loan Facility Servicer”)under the Franchise Loan Facility Agreement (as hereinafter defined) on behalf of itself and each of the Franchise Loan Facility Secured Creditors (as hereinafterdefined), each of the institutional investors listed on Schedule 1 attached hereto (each a “Noteholder” and collectively, the “Noteholders”), the Company (ashereinafter defined) and the Guarantors (as hereinafter defined).

RECITALS:

A. Ruby Tuesday, Inc., a Georgia corporation (the “Company”), is concurrently herewith entering into that certain Amended and Restated NotePurchase Agreement dated as of May 21, 2008 (the “Note Agreement”) with the institutional investors listed on Schedule A attached thereto, (the “Holders”),said Note Agreement amends and restates that certain Note Purchase Agreement dated as of April 1, 2003 (as amended by that certain First Amendment dated asof October 1, 2003 and that certain Second Amendment dated as of November 30, 2007, the “Original Note Agreement”) pursuant to which the originalpurchasers purchased $150,000,000 aggregate principal amount of the Company’s Senior Notes consisting of $85,000,000 aggregate principal amount of its4.69% Senior Notes, Series A, due April 1, 2010 (as heretofore amended, the “Original Series A Notes”) and $65,000,000 aggregate principal amount of its5.42% Senior Notes, Series B, due April 1, 2013 (as heretofore amended, the “Original Series B Notes”; said Original Series B Notes together with the OriginalSeries A Notes are collectively referred to herein as the “Original Notes”). Pursuant to the Note Agreement, the Company is concurrently herewith amendingand restating the Original Notes to be in the forms of the Notes (as defined in the Note Agreement) attached to the Note Agreement and is issuing such Notes(herein, the “Senior Secured Notes”) to the Holders.

B. The Company has heretofore entered into that certain Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 withthe Revolving Credit Facility Lenders, the Revolving Credit Facility Agent, Bank of America, N.A., as issuing bank (the “Issuing Bank”) and swingline lender(as amended by that certain First Amendment to Amended and Restated Revolving Credit Agreement dated as of November 30, 2007 and that certain LimitedWaiver Agreement dated as of February 29, 2008, the “Original Revolving Credit Facility Agreement”), pursuant to which the Revolving Credit FacilityLenders provide to the Company a revolving credit loan maturing February 23, 2012 in an amount not to exceed $500,000,000. The Company is concurrentlyherewith entering into that certain Second Amendment to Amended and Restated Revolving Credit Agreement dated as of May 21, 2008 (the “SecondAmendment to Revolving Credit Facility Agreement”) to the Original Revolving Credit Facility Agreement (the Original Revolving Credit Facility Agreement asamended by the Second Amendment to Revolving Credit Facility Agreement being herein referred to as the “Revolving Credit Facility Agreement”).


C. The Company has heretofore entered that certain Amended and Restated Loan Facility Agreement and Guaranty dated as of November 19, 2004with the Franchise Loan Facility Servicer, AmSouth Bank, as Documentation Agent, SunTrust Bank, as Co-Syndication Agent, and Wachovia Bank, N.A., asCo-Syndication Agent, and the Participants party thereto (as amended by that certain First Amendment to Amended and Restated Loan Facility Agreement andGuaranty dated as of September 8, 2006, that certain Second Amendment to Amended and Restated Loan Facility Agreement and Guaranty dated as of February28, 2007 and that certain Third Amendment to Amended and Restated Loan Facility Agreement and Guaranty dated as of November 30, 2007, the “ OriginalFranchise Loan Facility Agreement”), pursuant to which the Franchise Loan Facility Participants provide to certain franchisees of the Company revolving creditloans maturing no later than October 5, 2011 in an aggregate amount not to exceed $48,000,000 and which revolving credit loans are guaranteed by theCompany. The Company is concurrently herewith entering into that certain Fourth Amendment to Amended and Restated Loan Facility Agreement and Guarantydated as of May 21, 2008 (the “Fourth Amendment to Franchise Loan Facility Agreement”) to the Original Franchise Loan Facility Agreement (the OriginalFranchise Loan Facility Agreement as amended by the Fourth Amendment to the Franchise Loan Facility Agreement being herein referred to as the “FranchiseLoan Facility Agreement”).

D. The obligations of the Company to the Noteholders under the Note Agreement, the Senior Secured Notes and the other Senior Note Documents(as hereafter defined), the obligations of the Company to the Revolving Credit Facility Lenders, the Revolving Credit Facility Agent and the Issuing Bank underthe Revolving Credit Facility Agreement and the other Revolving Credit Facility Loan Documents (as hereinafter defined), the obligations of the Company to theFranchise Loan Facility Servicer and the Franchise Loan Facility Participants under the Franchise Loan Facility Agreement and the other Franchise Loan FacilityDocuments (as hereinafter defined) and the other Senior Secured Obligations (as hereinafter defined) will be secured equally and ratably by the Collateral (ashereinafter defined) pursuant to certain documents set forth on Exhibit A hereto and the other Security Documents and administered in accordance with the termsand conditions hereof. The Noteholders, the Revolving Credit Facility Agent on behalf of the Revolving Credit Facility Lenders and the Franchise Loan FacilityServicer on behalf of the Franchise Loan Facility Participants desire to appoint Bank of America, N.A. as the collateral agent (the “Collateral Agent”) to act onbehalf of the Noteholders, the Revolving Credit Facility Lenders and the Franchise Loan Facility Participants regarding the Collateral, all as more fully providedherein. The parties hereto have entered into this Agreement to, among other things, further define the rights, duties, authority and responsibilities of the CollateralAgent and the relationship between the Noteholders, the Revolving Credit Facility Lenders and the Franchise Loan Facility Participants regarding their equal andratable interests in the Collateral.

NOW, THEREFORE , in consideration of the premises and other good and valuable consideration, the sufficiency and receipt of which arehereby acknowledged, the parties hereto hereby agree as follows:

-2-


SECTION 1. DEFINITIONS.Section 1.1. Definitions. The following terms shall have the meanings assigned to them below in this Section 1.1 or in the provisions of this

Agreement referred to below:

“Affiliate” shall mean at any time, and (a) with respect to any Person, any other Person that at such time directly or indirectly through one or moreintermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) with respect to the Company or any Subsidiary, anyPerson beneficially owning or holding, directly or indirectly, 5% or more of any class of voting or equity interests of the Company or any Subsidiary or anyPerson of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 5% or more of any class of voting or equityinterests. As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management andpolicies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference toan “Affiliate” is a reference to an Affiliate of the Company.

“Agreement” is defined in the preamble hereof, and shall include such agreement as amended, restated, supplemented or otherwise modified inaccordance with its terms.

“Bankruptcy Proceeding” shall mean, with respect to any Person, a general assignment by such Person for the benefit of its creditors, or theinstitution by or against such Person of any proceeding seeking relief as debtor, or seeking to adjudicate such Person as bankrupt or insolvent, or seekingreorganization, arrangement, adjustment or composition of such Person or its debts, under any law relating to bankruptcy, insolvency, reorganization or relief ofdebtors, or seeking appointment of a receiver, trustee, custodian or other similar official for such Person or for any substantial part of its property.

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which commercial banks in Chicago, Illinois, Charlotte, NorthCarolina or Knoxville, Tennessee are required or authorized to be closed.

“Cash Equivalent Investments” shall mean, (a) direct obligations of the United States Government or any agencies thereof and obligationsguaranteed by the United States Government, in each case having remaining terms to maturity of not more than 30 days; and (b) certificates of deposit, timedeposits and acceptances, having remaining terms to maturity of not more than 60 days issued by United States banks which have a combined capital and surplusof at least $1,000,000,000 and having an “A” rating or better assigned thereto by Standard & Poor’s Ratings Group, a Division of The McGraw Hill Companies,Inc. or Moody’s Investors Service, Inc.

“Collateral” shall mean all collateral under, and cash received in respect of, the Security Documents.

“Collateral Agent” shall be the party identified as such in the Recitals hereof, and its successors and permitted assigns.

-3-


“Commitment” shall mean (a) in respect of the Revolving Credit Facility Agreement, the commitment of the Revolving Credit Facility Lenders tofund borrowing requests by the Company or participate in Revolving Credit Facility Letters of Credit or the Issuing Bank to issue Revolving Credit FacilityLetters of Credit, in accordance with the Revolving Credit Facility Agreement and (b) in respect of the Franchise Loan Facility Agreement, the commitment ofthe Franchise Loan Facility Servicer to fund advances to franchisees designated by the Company or to issue Franchise Loan Facility Letters of Credit inaccordance with the Franchise Loan Facility Agreement or of the Franchise Loan Facility Participants to participate in advances to the franchisees or toparticipate in Franchise Loan Facility Letters of Credit.

“Company Proceeds” shall have the meaning assigned thereto in Section 2.1(c).

“Creditor” shall mean any one of the Noteholders, the Revolving Credit Facility Secured Creditors, the Franchise Loan Facility Secured Creditors,but, in each case, only in such capacity, and any successors and permitted assigns to the interests in the Senior Secured Obligations owing to any such Person insuch capacity.

“Default” shall mean any event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, constitute anEvent of Default.

“Default Notice” shall have the meaning assigned thereto in Section 5.2.

“Enforcement Event” shall mean (a) the commencement of a Bankruptcy Proceeding with respect to the Company or any Subsidiary, (b) theacceleration of the Senior Secured Notes or the obligations under the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreement or (c) theexercise of any remedy by the Collateral Agent against the Company or any Subsidiary with respect to the Collateral.

“Event of Default” shall mean any event or occurrence which would constitute (a) an “Event of Default” under the terms of the Note Agreement,the Revolving Credit Facility Agreement or any Security Document or (b) a “Credit Event” under the terms of the Franchise Loan Facility Agreement.

“Existing Guaranties” shall mean the Guaranty Agreement (as defined in the Note Agreement), the Subsidiary Guaranty Agreement (as defined inthe Revolving Credit Facility Agreement) and any Subsidiary Guaranty Agreement (as defined in the Franchise Loan Facility Agreement) as each is in effect onthe date hereof and as each may be amended, restated, supplemented, replaced or otherwise modified in accordance with the terms thereof.

“Fee Letter” shall mean the fee letter dated as of the date hereof by and between the Company and the Collateral Agent.

“Financing Documents” means the Franchise Loan Facility Documents, the Revolving Credit Facility Documents and the Senior Note Documents.

“Franchise Loan Facility Agreement” shall have the meaning assigned thereto in the Recital hereof, and shall include such agreement as amended,restated, replaced, supplemented or otherwise modified in accordance with its terms or as refinanced.

-4-


“Franchise Loan Facility Agreement Obligations” means the “Guaranteed Obligations” under and as defined in the Franchise Loan FacilityAgreement as in effect on the date hereof.

“Franchise Loan Facility Documents” shall mean the Franchise Loan Facility Agreement, the Existing Guaranties in favor of the Franchise LoanFacility Participants and all guaranties, fee letters, mortgages, security agreements, pledge agreements, documents, certificates and instruments relating to, arisingout of, or in any way connected therewith or any of the transactions contemplated thereby.

“Franchise Loan Facility Letters of Credit” shall mean all the letters of credit issued under or pursuant to the Franchise Loan Facility Agreement.

“Franchise Loan Facility Participant Exposure” shall mean, as of any date of determination, for any Franchise Loan Facility Participant, theamount of such Franchise Loan Facility Participant’s Participating Commitment; provided that, if (a) a Bankruptcy Proceeding with respect to the Company orany Guarantor has been commenced, (b) any of the Senior Secured Obligations have been accelerated (which acceleration has not been rescinded) or (c) suchFranchise Loan Facility Participant has terminated its Commitment, then “Franchise Loan Facility Participant Exposure” shall mean, as of such date ofdetermination, for such Franchise Loan Facility Participant, such Franchise Loan Facility Participant’s Funded Participant’s Interest.

“Franchise Loan Facility Participants” shall mean the financial institutions from time to time party to the Franchise Loan Facility Documents asParticipants thereunder and as defined therein and their successors and permitted assigns.

“Franchise Loan Facility Secured Creditors” shall mean the Franchise Loan Facility Servicer and the Franchise Loan Facility Participants.

“Franchise Loan Facility Servicer” shall have the meaning assigned thereto in the Recital hereof and shall include its successors and assigns.

“Funded Participant’s Interest” shall have the meaning assigned thereto in the Franchise Loan Facility Agreement as in effect on the date hereof.

“Guarantor” shall mean any Guarantor under an Existing Guaranty or any other guaranty in respect of indebtedness existing under the NoteAgreement, the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreement.

“Hedging Agreements” shall mean the Hedging Agreements under and as defined in the Revolving Credit Facility Agreement.

“Indemnity Share” shall have the meaning assigned thereto in Section 4.6.

“Issuing Bank” is defined in the preamble hereof, and shall include any successor thereof.

-5-


“Letter of Credit Collateral Account” shall have the meaning assigned thereto in Section 5.8 hereof.

“Letter of Credit Exposure” shall mean, at any time and without duplication, the sum of (a) the aggregate undrawn portion of all uncancelled andunexpired Letters of Credit and (b) the aggregate unpaid reimbursement obligations of the Company in respect of drawings under any Letter of Credit.

“Letters of Credit” shall mean the collective reference to the Revolving Credit Facility Letters of Credit and the Franchise Loan Facility Letters ofCredit.

“Lien” shall mean, with respect to any Person, any mortgage, pledge, security interest, lien (statutory or otherwise), charge, encumbrance,hypothecation, assignment, deposit arrangement, or other arrangement having the practical effect of the foregoing or any preference, priority or other securityagreement or preferential arrangement of any kind or nature whatsoever or any interest or title of any vendor, lessor, lender or other secured party to or of suchPerson under any conditional sale or other title retention agreement or capital lease, upon or with respect to any property or asset of such Person (including in thecase of stock, stockholder agreements, voting trust agreements and all similar arrangements).

“Make-Whole Amount” shall have the meaning assigned thereto in the Note Agreement as in effect on the date hereof.

“Majority Creditors” shall mean (a) Noteholders holding at least 51% of the aggregate outstanding principal amount of the indebtedness evidencedby the Senior Secured Notes, (b) Revolving Credit Facility Lenders holding at least 51% of the aggregate amount of the Revolving Credit Facility LenderExposure of all Revolving Credit Facility Lenders and (c) Franchise Loan Facility Participants holding at least 51% of the aggregate amount of the FranchiseLoan Facility Participant Exposure of all Franchise Loan Facility Participants, in each case, voting as a separate class.

“Non-Indemnifying Creditor” shall have the meaning assigned thereto in Section 4.6.

“Note Agreement” shall have the meaning assigned thereto in the Recitals hereof, and shall include such agreement as amended, restated, replaced,supplemented or otherwise modified in accordance with its terms or as refinanced.

“Noteholders” shall mean the parties identified as such in the Recitals hereof, and their successors and permitted assigns.

“Notice of Default” shall mean a notice pursuant to Section 5.2 hereof from the Collateral Agent to the Creditors of the occurrence of an Event ofDefault.

“Participating Commitment” shall have the meaning assigned thereto in the Franchise Loan Facility Agreement as in effect on the date hereof.

-6-


“Person” shall mean an individual, corporation, partnership, limited liability company, trust or unincorporated organization, and a government oragency or political subdivision thereof.

“Requisite Creditors” shall mean (a) the Noteholders holding obligations under the Senior Secured Notes, the approval of which is required toapprove any contemplated amendment or modification of, termination or waiver of any provision of or consent to any departure from the terms of this Agreementunder the terms of the Note Agreement, (b) the Revolving Credit Facility Creditors the approval of which is required to approve any contemplated amendment ormodification of, termination or waiver of any provision of or consent to any departure from the terms of this Agreement under the terms of the Revolving CreditFacility Agreement and (c) the Franchise Loan Facility Creditors the approval of which is required to approve any contemplated amendment or modification of,termination or waiver of any provision of or consent to any departure from the terms of this Agreement under the terms of the Franchise Loan FacilityAgreement, in each case, voting as a separate class.

“Returned Amount” shall have the meaning assigned thereto in Section 5.11.

“Revolving Commitment” shall have the meaning assigned thereto in the Revolving Credit Facility Agreement as in effect on the date hereof.

“Revolving Credit Exposure” shall have the meaning assigned thereto in the Revolving Credit Facility Agreement as in effect on the date hereof.

“Revolving Credit Facility Agent” shall have the meaning assigned thereto in the Recitals hereof, and shall include its successors and permittedassigns.

“Revolving Credit Facility Agreement” shall have the meaning assigned thereto in the Recitals hereof, and shall include such agreement asamended, restated, replaced, supplemented or otherwise modified in accordance with its terms or as refinanced.

“Revolving Credit Facility Agreement Obligations” shall mean the “Obligations” under and as defined in the Revolving Credit Facility Agreementas in effect on the date hereof.

“Revolving Credit Facility Documents” shall mean the Revolving Credit Facility Agreement, the Revolving Credit Notes, the Existing Guarantiesin favor of the Revolving Credit Facility Lenders and all fee letters, guaranties, mortgages, security agreements, pledge agreements, documents, certificates andinstruments relating to, arising out of, or in any way connected therewith or any of the transactions contemplated thereby.

“Revolving Credit Facility Lender Exposure” shall mean, as of any date of determination, for any Revolving Credit Facility Lender, the amount ofsuch Revolving Credit Facility Lender’s Revolving Commitment; provided that, if (a) a Bankruptcy Proceeding with respect to the Company or any Guarantorhas been commenced, (b) any of the Senior Secured Obligations have been accelerated (which acceleration has not been rescinded) or (c) such Revolving CreditFacility Lender has terminated its Commitment, then “Revolving Credit Facility Lender Exposure” shall mean, as of such date of determination, for suchRevolving Credit Facility Lender, such Revolving Credit Facility Lender’s Revolving Credit Exposure.

-7-


“Revolving Credit Facility Lenders” shall mean the financial institutions from time to time party to the Revolving Credit Facility Agreement asLenders thereunder and as defined therein and their successors and permitted assigns.

“Revolving Credit Facility Letters of Credit” shall mean all letters of credit issued under or pursuant to the Revolving Credit Facility Agreement.

“Revolving Credit Facility Secured Creditors” shall mean the Revolving Credit Facility Agent, the Issuing Bank, the Revolving Credit FacilityLenders and such Revolving Credit Facility Lenders and the Affiliates of Revolving Credit Facility Lenders which are parties to any Hedging Agreement withthe Company or any Guarantor.

“Revolving Credit Notes” shall mean the “Revolving Credit Notes” under and as defined in the Revolving Credit Facility Agreement as in effect onthe date hereof.

“Security” shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended.

“Security Documents” shall mean the documents set forth on Exhibit A hereto including the Fee Letter and all other agreements, documents andinstruments relating to, arising out of, or in any way connected with any of the foregoing documents or granting to the Collateral Agent Liens to secure the SeniorSecured Obligations, whether now or hereafter executed, each as amended or amended and restated in conjunction herewith, or as may be amended, restated,replaced, supplemented or otherwise modified from time to time hereafter in accordance with the terms hereof. Security Documents shall not include the NoteAgreement, the Senior Secured Notes, the Subsidiary Guaranty (as defined in the Note Agreement), the Revolving Credit Notes, the Subsidiary GuarantyAgreement (as defined in the Revolving Credit Facility Agreement), any Subsidiary Guaranty Agreement (as defined in the Franchise Loan Facility Agreement),the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreement.

“Senior Note Documents” shall mean the Note Agreement, the Senior Secured Notes, the Existing Guaranties in favor of the Noteholders and allother guaranties, mortgages, security agreements, pledge agreements, documents, certificates and instruments relating to, arising out of, or in any way connectedtherewith or any of the transactions contemplated thereby.

“Senior Secured Notes” shall have the meaning assigned thereto in the Recitals hereof.

“Senior Secured Obligations” shall mean collectively (a) the indebtedness, obligations and liabilities of the Company and its Affiliates (including,without limitation, the Guarantors) to the Noteholders under the Senior Note Documents (including, but not limited to, all unpaid principal of, Make-WholeAmount, if any, and accrued and unpaid interest on the Senior Secured Notes), (b) the indebtedness, obligations and liabilities of the Company and its Affiliates(including, without limitation, the Guarantors) to the Revolving Credit Facility Secured Creditors under the Revolving Credit Facility Documents (including, butnot limited to, all amounts owed in respect of Hedging Agreements of the Company or its Affiliates owing to a Revolving Credit Facility Secured Creditor or anyof its Affiliates) and any other Revolving Credit Facility Agreement Obligation and (c) the indebtedness, obligations and liabilities of the Company and itsAffiliates (including, without limitation, the Guarantors) to the Franchise Loan Facility

-8-


Secured Creditors under the Franchise Loan Facility Documents and any other Franchise Loan Facility Agreement Obligation, in each case whether now existingor hereafter arising, joint or several, direct or indirect, absolute or contingent, due or to become due, matured or unmatured, liquidated or unliquidated, arising bycontract, operation of law or otherwise, and all obligations of the Company and their Affiliates to the Creditors arising out of any extension, refinancing orrefunding of any of the foregoing obligations.

“Subsidiary” shall mean, as to any Person, any corporation, association or other business entity in which at least a majority of the outstandingvoting securities shall be beneficially owned, directly or indirectly, by such Person. Unless the context otherwise clearly requires, any reference to a “Subsidiary”is a reference to a Subsidiary of the Company.

Section 1.2. Effectiveness of this Agreement. The effectiveness of this Agreement is conditioned upon the execution and delivery of (a) thisAgreement by the Collateral Agent, the Noteholders, the Revolving Credit Facility Agent and the Franchise Loan Facility Servicer, (b) the Note Agreement byeach of the parties thereto and the Senior Secured Notes by the Company, (c) the Second Amendment to Revolving Credit Facility Agreement by each of theparties thereto, (d) the Fourth Amendment to the Franchise Loan Facility Agreement by each of the parties thereto and (e) the Security Documents by each of theparties thereto that are necessary for such agreements to be legally effective.

SECTION 2. RELATIONSHIPS AMONG SECURED PARTIES. Section 2.1. Equal and Ratable Sharing of Collateral.

(a) The equal and ratable sharing of Collateral by the Creditors as provided for by this Agreement shall not be altered or otherwiseaffected by any amendment, modification, supplement, extension, renewal, restatement or refinancing of any of the Note Agreement, the RevolvingCredit Facility Agreement, the Franchise Loan Facility Agreement or the institution of any Bankruptcy Proceeding unless expressly agreed to inwriting by the Requisite Creditors.

(b) Notwithstanding the order or time of attachment of, or the order, time, or manner of perfection or the order or time of filing orrecordation of any document or instrument, or other method of perfecting any Lien which may have heretofore been, or may hereafter be, granted to,or created in favor of, any Creditor (in its capacity as such) in any property or assets included or intended to be included in the Collateral, andnotwithstanding any conflicting terms or conditions which may be contained in any Financing Document or Security Document and notwithstandingany provision of the Uniform Commercial Code (as in effect in any applicable jurisdiction) or other applicable law, the Collateral Agent shall have asenior priority lien on and security interest in the Collateral. No Creditor (in its capacity as such) shall have apart from its interest as provided hereinand in the Security Documents, (i) any Lien on or security interest in the property and assets included in the Collateral or (ii) any Lien on or securityinterest in any other property or assets of the Company or any Subsidiary, and, notwithstanding the foregoing, to the extent any Creditor acquiresany such Liens or security interests, such Creditor shall be deemed to (and by its acceptance of this Agreement agrees to) hold

-9-


those Liens and security interests for the ratable benefit of all Creditors and such property or assets shall be deemed a part of the Collateral.

(c) All proceeds received by the Collateral Agent or any Creditor upon the sale, exchange, collection, foreclosure, or otherdisposition of or realization upon all or any part of the Collateral, in each case pursuant to the exercise of remedies under any Financing Documentor any Security Document, or upon any collection or enforcement under any guaranty of the Senior Secured Obligations in connection with, orduring the existence of, an Enforcement Event (together, the “Company Proceeds”), which term shall include, without limitation, (i) the proceeds ofany liquidation, foreclosure sale, enforcement of any Lien, or other realization upon any Collateral or of any collection or enforcement under anyguaranty of the Senior Secured Obligations, together with any other sums thereafter received by any Creditor or the Collateral Agent as part of theCollateral (including, without limitation, all amounts received by the Collateral Agent or any Creditor pursuant to the exercise by it of any right ofset off in respect of the Senior Secured Obligations held by it) and (ii) the proceeds of any distributions of Collateral received by any Creditor or theCollateral Agent in respect of any amounts owing to it under any of the Financing Documents following any marshaling of the assets of theCompany (whether in bankruptcy, reorganization, winding up proceedings or similar proceedings, or otherwise), or following confirmation of anyplan of arrangement or plan of reorganization of Company or any guarantor, shall be distributed among the Creditors and the Collateral Agent as setforth in Section 5.8.

Section 2.2. Restrictions on Actions. Each Creditor agrees that, so long as any Senior Secured Obligations are outstanding, the provisions of thisAgreement shall provide the exclusive method by which any Creditor may exercise rights and remedies under the Security Documents. Therefore, each Creditorshall, for the mutual benefit of all Creditors, except as permitted under this Agreement:

(a) refrain from taking or filing any action, judicial or otherwise, to enforce any rights or pursue any remedy under the SecurityDocuments, except for delivering notices hereunder;

(b) refrain from (1) selling any Senior Secured Obligations to the Company or any Affiliate of the Company or (2) accepting anyguaranty of, or any other security for, the Senior Secured Obligations from the Company or any Affiliate of the Company, except (i) the ExistingGuaranties, (ii) any guaranties required by Section 9.6 of the Note Purchase Agreement or Sections 5.10, 5.11 or 5.13 of the Revolving CreditFacility Agreement or Sections 6.9, 6.10 or 6.10B of the Franchise Loan Facility Agreement and (iii) any other guaranty or security granted to theCollateral Agent for the benefit of all Creditors; and

(c) refrain from exercising any rights or remedies under the Security Documents which have or may have arisen or which may ariseas a result of a Default or Event of Default;

-10-


provided, however, that nothing contained in subsections (a) through (c) above, shall prevent any Creditor from exercising any remedy under its documents thatdoes not exercise a right under the Security Document or constitute a demand for payment under the Existing Guaranties (or any other guaranty permitted bySection 2.2(b)). For the avoidance of doubt, the Creditors agree that none of the following shall be restricted by the provisions of this Agreement: (i) imposing adefault rate of interest in accordance with the Note Agreement, the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreement, as applicable,(ii) ceasing to honor requests for credit extensions of any kind including the issuance, extension or increase of Letters of Credit, (iii) ceasing to continue or makeEurodollar Loans under and as defined in the Revolving Credit Facility Agreement or ceasing to continue or make Adjusted LIBO Rate Loans under and asdefined in the Franchise Loan Facility Agreement, (iv) raising any defenses in any action in which it has been made a party defendant or has been joined as athird party, except that the Collateral Agent may direct and control any defense directly relating solely to the Collateral or any one or more of the SecurityDocuments but not relating to any Creditor, which shall be governed by the provisions of this Agreement or (v) exercising any right of setoff, recoupment orsimilar right; provided that the amounts so set-off or recouped shall constitute Collateral for purposes of this Agreement and the Creditor shall promptly causesuch amounts to be delivered to the Collateral Agent for deposit in the Special Trust Account.

Section 2.3. Representations and Warranties.(a) Each of the parties hereto represents and warrants to the other parties hereto that:

(i) the execution, delivery and performance by such Person of this Agreement has been duly authorized by allnecessary corporate proceedings and does not and will not contravene any provision of law, its charter or by-laws or any amendmentthereof, or of any indenture, agreement, instrument or undertaking binding upon such Person; and

(ii) the execution, delivery and performance by such Person of this Agreement will result in a valid and legally bindingobligation of such Person enforceable in accordance with its terms.

(b) The Revolving Credit Facility Agent represents and warrants to the other parties hereto that it is authorized to execute thisAgreement on behalf of itself and each other Revolving Credit Facility Secured Creditor and the execution, delivery and performance by theRevolving Credit Facility Agent of this Agreement will result in a valid and legally binding obligation of each Revolving Credit Facility SecuredCreditor enforceable in accordance with its terms.

(c) The Franchise Loan Facility Servicer represents and warrants to the other parties hereto that it is authorized to execute thisAgreement on behalf of itself and each other Franchise Loan Facility Secured Creditor and the execution, delivery and performance by the FranchiseLoan Facility Servicer of this Agreement will result in a valid and legally binding obligation of each Franchise Loan Facility Secured Creditorenforceable in accordance with its terms.

-11-


Section 2.4. Cooperation; Accountings. Each of the Creditors will, upon the reasonable request of another Creditor, from time to time execute anddeliver or cause to be executed and delivered such further instruments, and do and cause to be done such further acts as may be necessary or proper to carry outmore effectively the provisions of this Agreement. Each of the Noteholders, the Franchise Loan Facility Servicer on behalf of the Franchise Loan FacilitySecured Creditors, and the Revolving Credit Facility Agent on behalf of the Revolving Credit Facility Secured Creditors agree to provide to each other uponreasonable request a statement of all payments received in respect of Senior Secured Obligations.

Section 2.5. Termination of Note Agreement, Revolving Credit Facility Agreement or Franchise Loan Facility Agreement. Upon payment in fullof all Senior Secured Obligations to any Creditor, and, in the case of the Revolving Credit Facility Lenders, the termination of such Revolving Credit FacilityLender’s Commitment and the expiration or cancellation of all Letters of Credit issued by such Revolving Credit Facility Lender under such facility and in thecase of the Franchise Loan Facility Participants, the termination of such Franchise Loan Facility Participant’s Commitment and the expiration or cancellation ofall Letters of Credit issued by such Franchise Loan Facility Participant under such facility, such Creditor (a “Former Creditor”) shall, subject to Section 5.11hereof, cease to be bound by this Agreement; provided, however, if all or any part of any payments to any Creditor made prior to such Former Creditor ceasing tobe a party to this Agreement become a Returned Amount, then this Agreement in respect of such Former Creditor shall be renewed as of such date and shallthereafter continue in full force and effect to the extent of the Senior Secured Obligations so invalidated, set aside or repaid.

SECTION 3. APPOINTMENT AND AUTHORIZATION OF COLLATERAL AGENT.(a) Each Creditor and each other holder of a Senior Secured Obligations by its acceptance thereof hereby designates and appoints

Bank of America, N.A. as the Collateral Agent of such Creditor under this Agreement and the Security Documents. The appointment made by thisSection 3(a) is given for valuable consideration and coupled with an interest and, subject to Section 4.8, is irrevocable so long as the Senior SecuredObligations, or any part thereof, shall remain unpaid or any Revolving Credit Facility Lender or Franchise Loan Facility Participant is obligated tofund its Commitment or make or fund any advances under the Letters of Credit.

(b) Each Creditor and each other holder of a Senior Secured Obligations by its acceptance thereof hereby irrevocably authorizesBank of America, N.A. as the Collateral Agent for such Creditor to (1) execute and enter into each of the Security Documents and all otherinstruments relating to said Security Documents, (2) take action on its behalf expressly permitted to perfect, maintain and preserve the Liens grantedthereby, (3) execute instruments of release or to take such other action necessary to release Liens upon the Collateral to the extent authorized by thisAgreement or the Financing Documents or the Requisite Creditors, (4) act as its agent for perfection and (5) exercise such other powers and performsuch other duties as are, in each case, expressly delegated to the Collateral Agent by the terms hereof together with such powers as are reasonablyincidental thereto.

-12-


(c) Notwithstanding any provision to the contrary elsewhere in this Agreement or the Security Documents, the Collateral Agentshall not have any duties or responsibilities except those expressly set forth herein or therein and no implied covenants, functions, responsibilities,duties, obligations or liabilities shall be read into the Security Documents or this Agreement or otherwise be deemed to exist for, be undertaken by orapply to the Collateral Agent.

(d) The relationship between the Collateral Agent and each of the Creditors is that of an independent contractor. The use of the term“Collateral Agent” is for convenience only and is used to describe, as a form of convention, the independent contractual relationship between theCollateral Agent and each of the Creditors. Nothing contained in this Agreement nor the other Security Documents shall be construed to create anagency, trust or other fiduciary relationship between the Collateral Agent and any of the Creditors or the Company. As an independent contractorempowered by the Creditors to exercise certain rights and perform certain duties and responsibilities hereunder and under the other SecurityDocuments, the Collateral Agent is nevertheless a “representative” of the Creditors, as that term is defined in Article 1 of the Uniform CommercialCode, for purposes of actions for the benefit of the Creditors and the Collateral Agent with respect to all Collateral. Such actions include thedesignation of the Collateral Agent as “secured party”, “mortgagee” or the like on all financing statements and other documents and instruments,whether recorded or otherwise, relating to the attachment, perfection, priority or enforcement of any security interests, mortgages or deeds of trust incollateral security intended to secure the payment or performance of any of the Senior Secured Obligations, all for the benefit of the Creditors andthe Collateral Agent.

SECTION 4. AGENCY PROVISIONS.Section 4.1. Delegation of Duties. The Collateral Agent may exercise its powers and execute any of its duties under this Agreement and the

Security Documents by or through employees, agents or attorneys-in-fact and shall be entitled to take and to rely on advice of counsel concerning all matterspertaining to such powers and duties. The Collateral Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selectedby it with reasonable care. The Collateral Agent may utilize the services of such Persons as the Collateral Agent in its sole discretion may determine, and allreasonable fees and expenses of such Persons shall be borne by the Company (and shall constitute a Senior Secured Obligation under the Security Documentsand hereunder) and shall be subject to the indemnity provisions of Section 4.6.

Section 4.2. Exculpatory Provisions. Neither the Collateral Agent nor any of the Collateral Agent’s officers, directors, employees, agents,attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with thisAgreement or any Security Document (except for its or such Person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of theCreditors for any recitals, statements, representations or warranties made by the Company or any officer, representative, agent or employee thereof contained inany Security Document or in any certificate, report, statement or other document referred to or provided for in, or received by, the

-13-


Collateral Agent under or in connection with this Agreement or any Security Document, or for the value, validity, effectiveness, genuineness, enforceability orsufficiency of the Security Documents or for any failure of the Company to perform its obligations thereunder. The Collateral Agent shall be under no obligationto the Creditors to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Security Documents orany of the Senior Note Documents, the Revolving Credit Facility Documents or the Franchise Loan Facility Documents.

Section 4.3. Reliance by Collateral Agent. The Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing,resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document orconversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice andstatements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Collateral Agent.The Collateral Agent shall be fully justified in failing or refusing to take action under this Agreement or any Security Document unless it shall first receive suchadvice or concurrence of the Majority Creditors as is contemplated by Section 5 hereof and it shall first be indemnified to its reasonable satisfaction by theCreditors against any and all liability and expense which may be incurred by it by reason of taking, continuing to take or refraining from taking any such action.The Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Security Documents in accordancewith the provisions of Section 5.6 hereof and in accordance with written instructions of the Majority Creditors pursuant to Section 5.3 hereof, and such requestand any action taken or failure to act pursuant thereto shall be binding upon all the Creditors and all future holders of the Senior Secured Obligations.

Section 4.4. Knowledge or Notice of Default or Event of Default. The Collateral Agent shall not be deemed to have knowledge or notice of theoccurrence of any Default or Event of Default unless the Collateral Agent has received written notice from a Creditor or the Company referring to the NoteAgreement, the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreement, describing such Default or Event of Default, setting forth inreasonable detail the facts and circumstances thereof and stating that the Collateral Agent may rely on such notice without further inquiry; provided that thefailure of any Creditor to provide such notice shall not impair any rights of such Creditor hereunder.

Section 4.5. Non-Reliance on Collateral Agent and Other Creditors. Each Creditor expressly acknowledges that except as set forth in Section2.3(a) hereof, neither the Collateral Agent nor any of the Collateral Agent’s officers, directors, employees, agents, attorneys-in-fact or Affiliates has made anyrepresentations or warranties to it. Each Creditor represents that it has, independently and without reliance upon the Collateral Agent or any other Creditor, andbased on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property,financial and other condition and creditworthiness of the Company. Each Creditor also represents that it will, independently and without reliance upon theCollateral Agent or any other Creditor, and based on such documents and information as it shall deem appropriate at the time, continue to make its own creditanalysis, appraisals and decisions in taking or not taking action under the Security Documents and this Agreement and to make such investigation as it deemsnecessary to inform itself as to the

-14-


business, operations, property, financial and other condition and creditworthiness of the Company. The Collateral Agent shall have no duty or responsibility toprovide any Creditor with information concerning the business, operations, property, financial or other condition, or creditworthiness of Company that may comeinto the possession of the Collateral Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

Section 4.6. Indemnification.(a) Each Creditor agrees to indemnify the Collateral Agent and its employees, directors, officers, agents and attorneys-in-fact in

their capacity as such (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably accordingto its respective share of the sum of the aggregate outstanding principal amount of indebtedness evidenced by the Senior Secured Notes and theaggregate amount of Revolving Credit Facility Lender Exposure and Franchise Loan Facility Participant Exposure from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may atany time (including, without limitation, at any time following an Event of Default or the payment of the Senior Secured Obligations) be imposed on,incurred by or asserted against the Collateral Agent arising out of or relating to the Security Documents, the actions or omissions of the CollateralAgent specifically required or permitted by this Agreement or the Security Documents or the exercise of remedies pursuant to written instructions ofthe Majority Creditors pursuant to Section 5.3 hereof; provided that no Creditor shall be liable for the payment of any portion of such liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Collateral Agent’s grossnegligence or willful misconduct. If any Creditor (a “Non-Indemnifying Creditor”) fails to tender payment of its ratable share of any of suchIndemnified Liabilities (its “Indemnity Share”), then the Collateral Agent is hereby expressly granted the right thereafter to, and shall, withholdfrom any distributions of Collateral otherwise payable to such Non-Indemnifying Creditor an amount equal to its Indemnity Share remaining unpaidat such time of receipt of such distributions and apply such amount withheld in satisfaction of such Indemnity Share. The Collateral Agent shall alsohave the right to collect from such Non-Indemnifying Creditor, or withhold from any distributions to otherwise be made to such Non-IndemnifyingSecured Creditor, the Collateral Agent’s reasonable costs and expenses incurred in collecting such Non-Indemnifying Creditor’s Indemnity Share.The agreements in this Section 4.6(a) shall survive the payment of the Senior Secured Obligations, the resignation or removal of the CollateralAgent and the termination of this Agreement, the Security Documents and the Financing Documents.

(b) The Company agrees to indemnify the Collateral Agent its employees, directors, officers, agents and attorneys-in-fact in theircapacity as such from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements of any kind whatsoever (including, without limitation, reasonable attorneys’ fees and expenses) which may at any time (including,without limitation, at any time following an Event of Default or the payment of the Senior Secured Obligations) be imposed on, incurred by orasserted against the Collateral Agent arising out of or relating to (i) the Security Documents, (ii) the actions or omissions of the

-15-


Collateral Agent specifically required or permitted by this Agreement or the Security Documents or the exercise of remedies pursuant to writteninstructions of the Majority Creditors pursuant to Section 5.3 hereof, (iii) any actual or prospective claim, litigation, investigation or proceedingrelating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company, andregardless of whether any Person to be indemnified hereunder is a party thereto, in all cases, whether or not caused by or arising, in whole or in part,out of the comparative, contributory or sole negligence of such indemnitee and (iv) the payment, failure to pay, or delay in payment of any taxes inrespect of the granting of security under this Agreement or the Security Documents, any stamp or other taxes in respect of Senior SecuredObligations, or any other taxes imposed upon or assessed against the Collateral Agent relating to or, in connection with its services hereunder andthereunder (but excluding therefrom net income taxes and franchise taxes in lieu of net income taxes imposed on the Collateral Agent as a result of apresent or former connection between the jurisdiction of the governmental authority imposing such tax and the Collateral Agent (except aconnection arising solely from the Collateral Agent having executed, delivered or performed its obligations or received a payment under, orenforced, any of the Security Documents or any of the Financing Documents), provided that the Company shall not be liable under this Section4.6(b) for any such loss, claim, damage, liability, expense or obligation incurred by the Collateral Agent to the extent resulting from its own grossnegligence or willful misconduct. It is the express intention of the parties hereto that each Person to be indemnified hereunder shall be indemnifiedand held harmless against any and all losses, liabilities, claims or damages arising out of or resulting from the ordinary, sole or contributorynegligence of such Person. The Company shall also reimburse any Creditor upon demand for any indemnification obligation in respect of whichsuch Creditor shall become liable to the Collateral Agent as contemplated by Section 4.6(a) of this Agreement. The indemnity rights set forth in thisSection 4.6(b) shall survive the payment of the Senior Secured Obligations, the resignation or removal of the Collateral Agent and the termination ofthis Agreement, the Security Documents and the Financing Documents.

Section 4.7. Collateral Agent in Its Individual Capacity. Bank of America, N.A. and its Affiliates may make loans to, accept deposits from andgenerally engage in any kind of business with the Company and its Affiliates as though such Person was not the Collateral Agent hereunder. With respect to anyobligations owed to it under the Revolving Credit Facility Agreement or under the Franchise Loan Facility Agreement, Bank of America, N.A. shall have thesame rights and powers under this Agreement as any Creditor and may exercise the same as though it were not the Collateral Agent, and the terms “Creditor”and “Creditors” shall include the Collateral Agent in its individual capacity.

Section 4.8. Successor Collateral Agent.(a) The Collateral Agent may resign at any time upon 60 days’ written notice to the Creditors and the Company and may be

removed at any time, with or without cause, by the Majority Creditors by written notice delivered to the Company, the Collateral Agent and theCreditors. If the Collateral Agent is also a Revolving Credit Facility Lender or Franchise Loan Facility Participant, then the holders of at least 51%of

-16-


the outstanding principal amount of the indebtedness evidenced by the Senior Secured Notes may remove the Collateral Agent at any time. Afterany resignation or removal hereunder of the Collateral Agent, the provisions of this Section 4 shall continue to inure to its benefit as to any actionstaken or omitted to be taken by it in connection with its agency hereunder while it was the Collateral Agent under this Agreement.

(b) Upon receiving written notice of any such resignation or removal, a successor Collateral Agent shall be appointed by theMajority Creditors; provided, however, that such successor Collateral Agent shall be (1) a bank or trust company having a combined capital andsurplus of at least $1,000,000,000, subject to supervision or examination by a Federal or state banking authority; and (2) authorized under the lawsof the jurisdiction of its incorporation or organization to assume the functions of the Collateral Agent. If a successor Collateral Agent shall not havebeen appointed pursuant to this Section 4.8(b) within such 60 day period after the Collateral Agent’s resignation or upon removal of the CollateralAgent then any Creditor or the Collateral Agent (unless the Collateral Agent is being removed) may petition a court of competent jurisdiction for theappointment of a successor Collateral Agent. Such court shall, after such notice as it may deem proper, appoint a successor Collateral Agent meetingthe qualifications specified in this Section 4.8(b). The Creditors hereby consent to such petition and appointment so long as such criteria are met.

(c) The resignation or removal of a Collateral Agent shall take effect on the day specified in the notice described in Section 4.8(a),unless previously a successor Collateral Agent shall have been appointed and shall have accepted such appointment, in which event such resignationor removal shall take effect immediately upon the acceptance of such appointment by such successor Collateral Agent, provided, however, that nosuch resignation or removal shall be effective hereunder unless and until a successor Collateral Agent shall have been appointed and shall haveaccepted such appointment.

(d) The appointment of a successor Collateral Agent pursuant to Section 4.8(b) shall become effective upon the acceptance of theappointment as Collateral Agent hereunder by a successor Collateral Agent. Upon such effective appointment, the successor Collateral Agent shallsucceed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent. Such appointment and designationshall be full evidence of the right and authority to act as Collateral Agent hereunder and all Collateral, power, trusts, duties, documents, rights andauthority of the previous Collateral Agent shall rest in the successor, without any further deed or conveyance. The predecessor Collateral Agentshall, nevertheless, on the written request of the Majority Creditors or successor Collateral Agent, execute and deliver any other such instrumenttransferring to such successor Collateral Agent all the Collateral, properties, rights, power, trust, duties, authority and title of such predecessor. TheCompany, to the extent requested by the Majority Creditors or the Collateral Agent shall procure any and all documents, conveyances or instrumentsand execute the same, to the extent required, in order to reflect the transfer to the successor Collateral Agent.

-17-


SECTION 5. ACTIONS BY THE COLLATERAL AGENT.Section 5.1. Duties and Obligations. The duties and obligations of the Collateral Agent are only those set forth in this Agreement and in the

Security Documents.

Section 5.2. Notification of Default. If the Collateral Agent has been notified in writing that a Default or an Event of Default has occurred, theCollateral Agent shall notify the Creditors and may notify the Company of such determination. Any Creditor which has actual knowledge of a Default or anEvent of Default, shall deliver to the Collateral Agent a written statement to such effect (a “Default Notice”). Failure to deliver a Default Notice to the CollateralAgent, however, shall not (a) constitute a waiver of such Default or Event of Default by the Creditors or (b) impair any rights of such Creditor hereunder. NoDefault Notice from any Creditor shall be required to be given (i) if such Event of Default is waived or cured by amendment prior to the time a Default Notice isdelivered or (ii) if notice of such Event of Default has previously been delivered to the Collateral Agent. Upon receipt of a Default Notice or a notice as requiredby Section 4.4 from a Creditor, the Collateral Agent shall promptly (and in any event no later than five (5) Business Days after receipt of such notice in themanner provided in Section 7.8 hereof) issue its “Notice of Default” to all Creditors. The Notice of Default may contain a recommendation of actions by theCreditors and/or request instructions from the Creditors as to specific matters and shall specify a date on which responses are due.

Section 5.3. Exercise of Remedies. The Collateral Agent shall take only such actions and exercise only such remedies under the SecurityDocuments as are approved in a written notice delivered to the Collateral Agent and signed by the Majority Creditors.

Section 5.4. Changes to Security Documents. Any term of the Security Documents may be amended, and the performance or observance by theparties to a Security Document of any term of such Security Document may be waived (either generally or in a particular instance and either retroactively orprospectively) by the Collateral Agent only upon the written consent of the Requisite Creditors.

Section 5.5. Release of Collateral. Unless an Event of Default has occurred and is continuing and the Collateral Agent shall have received aDefault Notice in connection therewith, the Collateral Agent may (but shall not be obligated to), without the approval of the Majority Creditors as required bySection 5.3 hereof, release any Collateral under the Security Documents which is permitted to be sold or disposed of by the Company and its Affiliates pursuantto the Note Agreement, the Revolving Credit Facility Agreement and the Franchise Loan Facility Agreement and execute and deliver such releases as may benecessary to terminate of record the Collateral Agent’s security interest in such Collateral. In determining whether any such release is permitted, the CollateralAgent may rely upon the instructions or stipulation from the class of Majority Creditors party to such agreement.

Section 5.6. Other Actions. The Collateral Agent shall have the right to take such actions, or omit to take such actions, hereunder and under theSecurity Documents not inconsistent with the written instructions of the Majority Creditors delivered pursuant to Section 5.3 hereof or the terms of thisAgreement, including actions the Collateral Agent deems necessary or appropriate to perfect or continue the perfection of the Liens on the Collateral for

-18-


the benefit of the Creditors. Except as otherwise provided by applicable law, the Collateral Agent shall have no duty as to the collection or protection of theCollateral or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of rights pertaining to the Collateral beyondthose duties imposed by Section 207 of Article 9 of the Uniform Commercial Code with respect to any Collateral in the Collateral Agent’s actual possession.

Section 5.7. Cooperation. To the extent that the exercise of the rights, powers and remedies of the Collateral Agent in accordance with thisAgreement requires that any action be taken by any Creditor, such Creditor shall take such reasonable action and cooperate with the Collateral Agent toreasonably ensure that the rights, powers and remedies of all Creditors are exercised in full.

Section 5.8. Distribution of Proceeds. All amounts owing with respect to the Senior Secured Obligations shall be secured pro rata by theCollateral without distinction as to whether some Senior Secured Obligations are then due and payable and other Senior Secured Obligations are not then due andpayable. Upon any realization upon the Collateral and/or the receipt of any payments under any Security Document after the occurrence of an Enforcement Eventand any payments under any Existing Guaranty and any other guaranty of any Senior Secured Obligations, the Creditors agree that the proceeds thereof shall beapplied:

first, to any amounts owing to the Collateral Agent by the Company or the Creditors pursuant to this Agreement, the Fee Letter or theSecurity Documents, including, without limitation, payment of expenses incurred by the Collateral Agent with respect to maintenance and protectionof the Collateral and of expenses incurred with respect to the sale of or realization upon any of the Collateral or the perfection, enforcement orprotection of the rights of the Creditors (including reasonable attorneys’ fees and expenses);

second, equally and ratably to the payment of all amounts of the Senior Secured Obligations constituting reimbursement of expenses(including attorney fees and other expenses of other professionals) and indemnities (other than breakage costs) required to be paid pursuant to theNote Agreement, the Revolving Credit Facility Agreement or the Franchise Loan Credit Facility Agreement;

third, equally and ratably to the payment of all amounts of interest outstanding that constitute Senior Secured Obligations (other thanany Make-Whole Amount or breakage costs but including any periodic payments due under any Hedging Agreement constituting a Senior SecuredObligation) and letter of credit fees, commitment fees and administrative agent fees (such administrative agent fees not to exceed the amount thereofrequired to be paid pursuant to the applicable Financing Document as in effect on the date hereof) that constitute Senior Secured Obligations and arerequired to be paid pursuant to any Financing Document according to the aggregate amounts of such interest and fees then owing to each Creditor;

fourth, equally and ratably to the payment of all outstanding amounts of principal, Letter of Credit Exposure, the termination value ofany Hedging Agreement to the extent

-19-


such Hedging Agreement has been terminated on or prior to the date of the applicable distribution of proceeds, breakage compensation, prepaymentpremiums and up to $25,000,000 of Make-Whole Amount, if any, which constitute Senior Secured Obligations;

fifth, equally and ratably to all other amounts then due to the Creditors (including, without limitation, any Make-Whole Amount notpaid pursuant to clause fourth above) under the Note Agreement, the Revolving Credit Facility Agreement and the Franchise Loan Credit FacilityAgreement;

sixth, equally and ratably to all Disallowed Obligations under the Note Agreement, the Revolving Credit Facility Agreement and theFranchise Loan Credit Facility Agreement; and

seventh, the balance, if any, shall be returned to the Company or such other Persons as are entitled thereto.

Any payment pursuant to this Section 5.8 with respect to the outstanding amount of any undrawn Letters of Credit shall be paid to the CollateralAgent for deposit in an account (the “Letter of Credit Collateral Account”) to be held as collateral for the Senior Secured Obligations and disposed of asprovided herein. On each date on which a payment is made to a beneficiary pursuant to a draw on a Letter of Credit, the Collateral Agent shall distribute from theLetter of Credit Collateral Account for application to the payment of the reimbursement obligation due to the Revolving Credit Facility Lenders or the FranchiseLoan Facility Participants, as applicable, with respect to such draw an amount equal to the product of (1) the amount then on deposit in the Letter of CreditCollateral Account, and (2) a fraction, the numerator of which is the amount of such draw and the denominator of which is the outstanding amount of all undrawnLetters of Credit immediately prior to such draw. On each date on which a reduction in the outstanding amount of undrawn Letters of Credit occurs other than onaccount of a payment made to a beneficiary pursuant to a draw on a Letter of Credit, then the Collateral Agent shall distribute from the Letter of Credit CollateralAccount an amount equal to the product of (i) the amount then on deposit in the Letter of Credit Collateral Account, and (ii) a fraction, the numerator of which isthe amount of such reduction in the outstanding amount of undrawn Letters of Credit and the denominator of which is the amount of all undrawn Letters ofCredit immediately prior to such reduction, which amount shall be distributed as provided in the first paragraph of this Section 5.8. At such time as theoutstanding amount of all undrawn Letters of Credit is reduced to zero, any amount remaining in the Letter of Credit Collateral Account, after the distributiontherefrom as provided above, shall be distributed as provided in the first paragraph of this Section 5.8. All payments by the Collateral Agent hereunder shall bemade (u) if to a Noteholder, directly to the applicable Noteholder, (x) if to any Revolving Credit Facility Secured Creditor, to the Revolving Credit Facility Agentfor the account of the applicable Revolving Credit Facility Secured Creditor, (y) if to any Franchise Loan Facility Secured Creditor, to the Franchise LoanFacility Servicer for the account of the applicable Franchise Loan Facility Secured Creditor and (z) if to the Collateral Agent, directly to the Collateral Agent.

Section 5.9. Authorized Investments. Any and all funds held by the Collateral Agent in its capacity as Collateral Agent, whether pursuant to anyprovision of any of the Security

-20-


Documents or otherwise, shall to the extent feasible within a reasonable time be invested by the Collateral Agent in Cash Equivalent Investments. Any interestearned on such funds shall be disbursed to the Creditors in accordance with Section 5.8. The Collateral Agent may hold any such funds in a common interestbearing account. The Collateral Agent shall have no duty to place funds held pursuant to this Section 5.9 in investments which provide a maximum return;provided, however, that the Collateral Agent shall to the extent feasible invest funds in Cash Equivalent Investments with reasonable promptness. In the absenceof gross negligence or willful misconduct, the Collateral Agent shall not be responsible for any loss of any funds invested in accordance with this Section 5.9.

Section 5.10. Determination of Amount of Senior Secured Obligations.(a) In determining the amount of the Senior Secured Obligations owed to each Creditor and the portions thereof which are due on

account of principal, interest, fees, or expenses or otherwise, the Collateral Agent may request from each Creditor, and shall be entitled to rely upon,a statement from each Creditor setting forth the Senior Secured Obligations owed to it in such detail as shall permit the Collateral Agent to make theforegoing distributions. In the event of any dispute between any Creditors as to the Senior Secured Obligations owed to them or the amounts thereof,the Collateral Agent shall be entitled to hold such portion of the proceeds to be distributed as are subject to such dispute pending the resolution bythe parties or pursuant to a judicial determination.

(b) If in connection with a Bankruptcy Proceeding of the Company any portion of the Senior Secured Obligations referred to inclauses SECOND, THIRD, FOURTH or FIFTH of Section 5.8 is determined to be unenforceable or is disallowed (such portion to be hereinafterreferred to as a “Disallowed Obligation”), then such Disallowed Obligation shall not be included in the calculation of amounts to be paid pursuantto clauses SECOND, THIRD, FOURTH or FIFTH of Section 5.8 but shall be included in clause SIXTH of Section 5.8; provided, that in no eventshall a claim pursuant to an Existing Guaranty or any other guaranty of a Senior Secured Obligation be included as a Disallowed Obligation unlessthe Senior Secured Obligation which is guaranteed by such Existing Guaranty or other guaranty also constitutes a Disallowed Obligation. In noevent shall any Creditor take any action to challenge, contest or dispute the validity, extent, enforceability or priority of the Liens or claims of anyother Creditor on the Collateral, or that would have the effect of invalidating such liens, or support any person who takes any such action. Each ofthe Creditors agrees that it will not take any action to challenge, contest or dispute the validity, extent, enforceability or the secured status of anyother Creditor’s claims against the Company (other than any such claim resulting from the breach of this Agreement), or that would have the effectof invalidating such claim or support any person who takes any such action. For the avoidance of doubt, a Creditor’s claims that constitute SeniorSecured Obligations shall be included in any distribution of proceeds pursuant to Section 5.8 whether or not a Lien held by such Creditor isinvalidated or set aside. This Section 5.10(b) is without prejudice to the obligation of the Revolving Credit Facility Lenders and the Franchise LoanFacilities Participants to reimburse the Revolving Credit Facility Agent and the Franchise Loan Facility Servicer, respectively, for fees, expensesand other charges under the terms of the

-21-


Revolving Credit Facility Agreement and the Franchise Loan Facility Agreement irrespective of the disallowance of such fees, expenses or charges.

(c) If in connection with a Bankruptcy Proceeding of Company, the fees and expenses of the Collateral Agent referred to in clauseFirst of Section 5.8 are determined to be unenforceable or are disallowed, in whole or in part, each Creditor agrees to pay its Indemnity Share ofsuch fees and expenses.

Section 5.11. Reinstatement. If at any time the Collateral Agent or any Creditor shall be required to restore or return, or if such Person restores orreturns in good faith settlement of pending or threatened avoidance claims, to the Company or to the bankruptcy estate of the Company any payments ordistributions theretofore applied to the Senior Secured Obligations or any portion thereof, whether by reason of the insolvency, bankruptcy, reorganization orother similar event in respect of the Company (a “Returned Amount”), then, (a) the Collateral Agent (or Creditor, as applicable) shall promptly give notice of theReturned Amount to each Creditor and (b) each of the Creditors shall promptly transfer to the Collateral Agent (for reimbursement to the Collateral Agent orsuch Creditor, as the case may be) such amounts as are necessary such that each Creditor shall have received and retained the amount it would have receivedunder Section 5.8 had the Returned Amount not previously been distributed (its “Returned Amount Share”). If any Creditor (a “Non-Returning SecuredCreditor”) fails to tender payment of its Returned Amount Share, then the Collateral Agent is hereby expressly granted the right thereafter to, and shall, withholdfrom any distributions otherwise payable to such Non-Returning Secured Creditor an amount equal to its Returned Amount Share remaining unpaid at such timeof receipt of such distributions and apply such amount withheld in satisfaction of such Returned Amount Share. The Collateral Agent shall also have the right tocollect from such Non-Returning Secured Creditor, or withhold from any distributions under Section 5.8 to otherwise be made to such Non-Returning SecuredCreditor, the Collateral Agent’s reasonable costs and expenses incurred in collecting such Non-Returning Secured Creditor’s Returned Amount Share. Theagreements in this Section 5.11 shall survive the payment of the Senior Secured Obligations and the termination of the Financing Documents or this Agreement.

SECTION 6. BANKRUPTCY PROCEEDINGS.The following provisions shall apply during any Bankruptcy Proceeding of the Company or any Affiliate of the Company:

(a) The Collateral Agent shall act on the instructions of the Requisite Creditors with respect to the administration of the Collateral insuch Bankruptcy Proceeding and each Creditor agrees to be bound by such instructions with respect to matters pertaining to the Collateral.

(b) Each Creditor shall be free to act independently on any issue not directly relating solely to the Collateral. Each Creditor shallgive prior notice to the Collateral Agent of any action hereunder to the extent that such notice is possible. If such prior notice is not given, suchCreditor shall give prompt notice following any action taken hereunder.

-22-


(c) Any proceeds of the Collateral received by any Creditor as a result of, or during, any Bankruptcy Proceeding will be deliveredpromptly to the Collateral Agent for distribution in accordance with Section 5.8.

SECTION 7. MISCELLANEOUS.Section 7.1. Creditors; Other Collateral. The Creditors agree that all of the provisions of this Agreement shall apply to any and all properties,

assets and rights of the Company and their Affiliates, including, without limitation, the Guarantors, in which the Collateral Agent at any time acquires a securityinterest or Lien pursuant to the Security Documents, the Note Agreement, the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreementincluding, without limitation, real property or rights in, on or over real property, notwithstanding any provision to the contrary in any mortgage, securityagreement, pledge agreement or other document purporting to grant or perfect any Lien in favor of the Creditors or any of them or the Collateral Agent for thebenefit of the Creditors.

Section 7.2. Marshalling. The Collateral Agent shall not be required to marshall any present or future security for (including, without limitation,the Collateral), or guaranties of, the Senior Secured Obligations or any of them, or to resort to such security or guaranties in any particular order; and all of eachof such Person’s rights in respect of such security and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the extentthat they lawfully may, the Creditors hereby agree that they will not invoke any law relating to the marshalling of collateral which might cause delay in orimpede the enforcement of the Creditors’ rights under the Security Documents or under any other instrument evidencing any of the Senior Secured Obligations orunder which any of the Senior Secured Obligations is outstanding or by which any of the Senior Secured Obligations is secured or guaranteed.

Section 7.3. Consents, Amendments, Waivers. All amendments, waivers or consents of any provision of this Agreement shall be effective only ifthe same shall be in writing and signed by the Requisite Creditors referred to in clause (a) of the definition thereof, the Revolving Credit Facility Agent (actingupon the direction of the Requisite Creditors referred to in clause (b) of the definition thereof), the Franchise Loan Facility Servicer (acting upon the direction ofthe Requisite Creditors referred to in clause (c) of the definition thereof) and the Collateral Agent.

Section 7.4. Governing Law. This Agreement shall be deemed to be a contract under seal and shall for all purposes be governed by and construedin accordance with the laws of the State of Illinois.

Section 7.5. Parties in Interest. All terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respectivesuccessors and assigns of the parties hereto, including, without limitation, any future holder of the Senior Secured Obligations; provided that no Creditor mayassign or transfer its rights hereunder or under the Security Documents without such assignees or transferees agreeing, by executing an instrument in form andsubstance reasonably acceptable to the Collateral Agent, to be bound by the terms of this Agreement as though named herein; provided further, (a) that withrespect to the Revolving Credit Facility Secured Creditors (other than the Revolving Credit Facility Agent) and the Franchise Loan Facility Creditors (other thanthe Franchise Loan Facility Servicer), the

-23-


requirements of this Section 7.5 shall be satisfied upon satisfaction of the assignment provisions set forth in the Revolving Credit Facility Agreement or theFranchise Loan Facility Agreement, as applicable and (b) that with respect to the Revolving Credit Facility Agent and the Franchise Loan Facility Servicer, therequirements of this Section 7.5 shall be satisfied upon the satisfaction of the resignation of the Revolving Credit Facility Agent or the Franchise Loan FacilityServicer in accordance with the terms of the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreement, as applicable, and appointment of asuccessor thereto in accordance with the terms of the Revolving Credit Facility Agreement or the Franchise Loan Facility Agreement, as applicable.

Section 7.6. Counterparts. This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separatecounterpart, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument. In proving thisAgreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.

Section 7.7. Termination. Upon payment in full of the Senior Secured Obligations in accordance with their respective terms, the termination of theCommitments and the expiration or cancellation of all undrawn Letters of Credit under the Revolving Credit Facility Documents and the Franchise Loan FacilityDocuments, this Agreement shall terminate.

Section 7.8. Notices. Except as otherwise expressly provided herein, all notices, consents and waivers and other communications made or requiredto be given pursuant to this Agreement shall be in writing and shall be delivered by hand, mailed by registered or certified mail or prepaid overnight air courier,or by facsimile communications, addressed as follows:

If to the Collateral Agent, at: Bank of America, N.A.Agency Management231 South LaSalle StreetMail Code: IL1-231-10-41Chicago, Illinois 60604Attention: Laura CallTelephone: 312-828-3559Facsimile: 877-207-2883Email: [email protected]

If to any Revolving Credit Facility c/o Revolving Credit Facility Agent, Secured Creditor, at: Bank of America, N.A.

Agency Management231 South LaSalle StreetMail Code: IL1-231-10-41Chicago, Illinois 60604Attention: Laura CallTelephone: 312-828-3559Facsimile: 877-207-2883Email: [email protected]

-24-


If to any Franchise Loan Facility c/o Franchise Loan Facility Servicer Secured Creditor, at: Bank of America, N.A.

Agency Management231 South LaSalle StreetMail Code: IL1-231-10-41Chicago, Illinois 60604Attention: Laura CallTelephone: 312-828-3559Facsimile: 877-207-2883Email: [email protected]

If to any Noteholder, at: Such address as set forth for such Noteholder on Schedule 1 hereto

If to the Company, at: Ruby Tuesday, Inc.150 West Church AvenueMaryville, Tennessee 37801Attention: Chief Financial Officer

or at such other address for notice as the Collateral Agent, such Creditor or the Company shall last have furnished in writing to the Person giving the notice,provided that a notice by overnight air courier shall only be effective if delivered at a street address designated for such purpose and a notice by facsimilecommunication shall only be effective if made by confirmed transmission at a telephone number designated for such purpose. Notwithstanding any provision ofthis Agreement to the contrary, all notices to the Revolving Credit Facility Secured Creditors shall be delivered to the Revolving Credit Facility Agent and allnotices to the Franchise Loan Facility Secured Creditors shall be delivered to the Franchise Loan Facility Servicer. The obligation of any Revolving CreditFacility Secured Creditor to give notice hereunder may be satisfied by the giving of such notice by the Revolving Credit Facility Agent and the obligation of anyFranchise Loan Facility Secured Creditor to give notice hereunder may be satisfied by the giving of such notice by the Franchise Loan Facility Servicer.

-25-


IN WITNESS WHEREOF , the parties hereto have caused these presents to be duly executed as an instrument under seal by their authorizedrepresentatives as of the date first written above.

BANK OF AMERICA, N.A., as Collateral Agent

By /s/ Anne M. Zeschke

Name: Anne M. Zeschke

Title: Assistant Vice President

BANK OF AMERICA, N.A., as Revolving Credit Facility Agent

By /s/ Anne M. ZeschkeName: Anne M. ZeschkeTitle: Assistant Vice President

BANK OF AMERICA, N.A., as Franchise Loan Facility Servicer

By /s/ Anne M. ZeschkeName: Anne M. ZeschkeTitle: Assistant Vice President

Signature page to Intercreditor and Collateral Agency Agreement


THE NORTHWESTERN MUTUAL LIFE INSURANCECOMPANY, as a Noteholder

By /s/ Timothy S. Collins

Name: Timothy S. CollinsTitle: Its Authorized Representative

THE NORTHWESTERN MUTUAL LIFE INSURANCE

COMPANY, for its Group Annuity Separate Account, as aNoteholder

By /s/ Timothy S. Collins

Name: Timothy S. CollinsTitle:Authorized Representative

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA , as a

Noteholder

By /s/ Billy B. Greer

Vice President

PRUDENTIAL RETIREMENT INSURANCE AND ANNUITYCOMPANY , as a Noteholder

By: Prudential Investment Management, Inc.,

as Investment Manager


Vice President

PRUCO LIFE INSURANCE COMPANY , as a Noteholder


Assistant Vice President Signature page to Intercreditor and Collateral Agency Agreement


GIBRALTAR LIFE INSURANCE CO., LTD. , as a Noteholder

B y: Prudential Investment Management (Japan), Inc., as Investment Manager By: Prudential Investment Management, Inc., as Sub-Adviser


Vice President

ZURICH AMERICAN INSURANCE COMPANY , as a Noteholder

B y: Prudential Private Placement Investors, L.P. (as Investment Advisor) By: Prudential Private Placement Investors, Inc. (as its General Partner)


Vice President

PHOENIX LIFE INSURANCE COMPANY , as a Noteholder

By /s/ John H. Beers

Name: John H. Beers


NATIONWIDE LIFE INSURANCE COMPANY , as a Noteholder

By /s/ Thomas M. PowersName: Thomas M. Powers

Title: Authorized Signatory Signature page to Intercreditor and Collateral Agency Agreement


NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY , as

a Noteholder

By /s/ Joseph P. YoungName: Joseph P. Young

Title: Authorized Signatory

NATIONWIDE LIFE INSURANCE COMPANY OF AMERICA , as aNoteholder

By /s/ Joseph P. Young

Name: Joseph P. Young


NATIONWIDE LIFE AND ANNUITY COMPANY OF AMERICA ,as a Noteholder




NATIONWIDE MUTUAL FIRE INSURANCE COMPANY , as aNoteholder




UNITED OF OMAHA LIFE INSURANCE COMPANY , as aNoteholder

By /s/ Curtis R. Caldwell

Name: Curtis R. Caldwell

Title: Senior Vice President Signature page to Intercreditor and Collateral Agency Agreement


COMPANION LIFE INSURANCE COMPANY , as a Noteholder

By /s/ Curtis R. CaldwellName: Curtis R. Caldwell

Title: Authorized Signer

MODERN WOODMEN OF AMERICA , as a Noteholder

By /s/ Douglas A. PannierName: Douglas A. Pannier

Title: Portfolio Mgr. – Private Placements

ASSURITY LIFE INSURANCE COMPANY (successor in interest toSecurity Financial Life Insurance Co.), as a Noteholder

By /s/ Victor Weber

Name: Victor Weber

Title: Senior Director- Investments

BANC OF AMERICA SECURITIES LLC , as a Noteholder

By /s/ Jonathan M. BarnesName: Jonathan M. Barnes




Each of the undersigned hereby acknowledges (a) the terms of the foregoing Agreement, (b) that the foregoing Agreement is for the sole benefit ofthe Creditors and that it has no rights or benefits under such Agreement, and (c) that the provisions of the foregoing Agreement may be waived, amended ormodified without its consent.

RUBY TUESDAY, INC.

By /s/ Marguerite N. Duffy

Name: Marguerite N. Duffy Title: Senior Vice President

RTBD, INC.


Name: Marguerite N. Duffy Title: President

RUBY TUESDAY, LLC


Name: Marguerite N. Duffy Title: Vice President

RT FINANCE, INC.











RT ORLANDO FRANCHISE, LP












RT MICHIANA FRANCHISE, LLC











RT FLORIDA EQUITY, LLC



RTGC, LLC



RT WEST PALM BEACH FRANCHISE, LP



RT MICHIGAN FRANCHISE, LLC





INFORMATION RELATING TO THE NOTEHOLDERS

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY720 East Wisconsin AvenueMilwaukee, Wisconsin 53202Attention: Securities DepartmentTelecopier Number: (414) 665-7124 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY , for its Group Annuity Separate Account720 East Wisconsin AvenueMilwaukee, Wisconsin 53202Attention: Securities DepartmentTelecopier Number: (414) 665-7124 THE PRUDENTIAL INSURANCE COMPANYOF AMERICAc/o Prudential Capital Group1170 Peachtree Street, Suite 500Atlanta, GA 30309Attention: Managing Director PRUDENTIAL RETIREMENT INSURANCE ANDANNUITY COMPANYc/o Prudential Capital Group1170 Peachtree Street, Suite 500Atlanta, GA 30309Attention: Managing Director PRUCO LIFE INSURANCE COMPANYc/o Prudential Capital Group1170 Peachtree Street, Suite 500Atlanta, GA 30309Attention: Managing Director GIBRALTAR LIFE INSURANCE CO., LTD.c/o Prudential Private Placement Investors, L.P.c/o Prudential Capital Group1170 Peachtree Street, Suite 500Atlanta, GA 30309Attention: Managing Director

SCHEDULE 1(to Intercreditor and Collateral Agency Agreement)

ZURICH AMERICAN INSURANCE COMPANYc/o Prudential Capital Group1170 Peachtree Street, Suite 500Atlanta, GA 30309Attention: Managing Director NATIONWIDE LIFE INSURANCE COMPANYOne Nationwide Plaza (1-33-07)Columbus, Ohio 43215-2220Attention: Corporate Fixed-Income Securities NATIONWIDE LIFE AND ANNUITY

INSURANCE COMPANYOne Nationwide Plaza (1-33-07)Columbus, Ohio 43215-2220Attention: Corporate Fixed-Income Securities NATIONWIDE LIFE INSURANCE COMPANY

OF AMERICAOne Nationwide Plaza (1-33-07)Columbus, Ohio 43215-2220Attention: Corporate Fixed-Income Securities NATIONWIDE MUTUAL FIRE INSURANCE

COMPANY


One Nationwide Plaza (1-33-07)Columbus, Ohio 43215-2220Attention: Investments UNITED OF OMAHA LIFE INSURANCE

COMPANYMutual of Omaha PlazaOmaha, Nebraska 68175-1011Attention: 4-Investment Loan Administration COMPANION LIFE INSURANCE COMPANYc/o Mutual of Omaha Insurance CompanyMutual of Omaha PlazaOmaha, Nebraska 68175-1011Attention: 4-Investment Loan Administration

S-1- 2

PHOENIX LIFE INSURANCE COMPANYc/o Phoenix Investment Partners, Ltd.56 Prospect StreetHartford, Connecticut 06115Attention: Private Placements Division

Direct Number: (860) 403-5519Fax Number: (860) 403-7248 MODERN WOODMEN OF AMERICA1701 First AvenueRock Island, Illinois 61201Attention: Investment Department SECURITY FINANCIAL LIFE INSURANCE CO.4000 Pine Lake RoadP.O. Box 82248Lincoln, NE 68501-2248 BANC OF AMERICA SECURITIES LLC9 West 57th StreetNY1-302-02-01New York, New York 10019Attention: __________Telephone: __________Facsimile: __________

S-1- 3

SECURITY DOCUMENTS

Pledge Agreement dated as of the May 21, 2008 in favor of the Collateral Agent, for the benefit of the holders of the Senior Secured Obligations, executed byeach of the Company, the Guarantors and the Collateral Agent, as amended or modified from time to time.

CH2\2387083.7

EXHIBIT A(to Intercreditor and Collateral Agency Agreement)

Exhibit H

PLEDGE AGREEMENT


THIS PLEDGE AGREEMENT dated as of May 21, 2008 (as amended, modified, restated or supplemented from time to time, the “PledgeAgreement”) is by and among the parties identified as “Pledgors” on the signature pages hereto and such other parties as may become Pledgors hereunder afterthe date hereof by executing a Pledge Supplement Agreement in the form attached hereto as Schedule I and made a part hereof (individually a “Pledgor”, andcollectively the “Pledgors”) and Bank of America, N.A., as collateral agent under the Intercreditor Agreement (defined below) (in such capacity, the “ CollateralAgent”) for the Secured Creditors (defined below).

W I T N E S S E T H

WHEREAS, a credit facility has been established in favor of Ruby Tuesday, Inc., a Georgia corporation (“ Ruby Tuesday” or the “Borrower”),pursuant to the terms of that certain Amended and Restated Revolving Credit Agreement dated as of February 28, 2007 (as amended, modified, supplemented orextended from time to time, the “Credit Agreement”) among the Borrower, the lenders from time to time party thereto (the “Lenders”) and Bank of America,N.A., as administrative agent for the Lenders (“Administrative Agent”), issuing bank and swing line lender; and

WHEREAS, Ruby Tuesday has entered into that certain Amended and Restated Loan Facility Agreement and Guaranty dated as of November 19,2004 (as amended, modified, supplemented or extended from time to time, the “Loan Facility Agreement”) among Ruby Tuesday as the sponsor, the participantsfrom time to time party thereto (the “Participants”) and Bank of America, N.A. as servicer and agent for the Participants (the “Servicer”); and

WHEREAS, pursuant to that certain Amended and Restated Note Purchase Agreement dated as of May 21, 2008 among Ruby Tuesday and thepurchasers party thereto (the “Senior Note Purchasers”) (as amended, modified, restated or supplemented from time to time, the “Senior Note PurchaseAgreement”), Ruby Tuesday has issued and sold to the Senior Note Purchasers Amended and Restated Senior Secured Notes, Series A, due April 1, 2010 andAmended and Restated Senior Secured Notes, Series B, due April 1, 2013 (together with all notes issued in substitution or exchange therefore or in replacementthereof in accordance with the terms of the Senior Note Purchase Agreement, the “Senior Notes”); and

WHEREAS, the Lenders, the Participants and the Senior Note Purchasers have each required that the Pledgors execute and deliver to the CollateralAgent, for the benefit of the Secured Creditors, this Pledge Agreement; and

NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:

1. Definitions.

(a) Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Intercreditor Agreement.

(b) As used herein, the following terms shall have the meanings assigned thereto in the UCC: Accession, Financial Asset, Proceeds andSecurity.

(c) As used herein, the following terms shall have the meanings set forth below:

“Administrative Agent” has the meaning provided in the Recitals hereof. CHAR1\1042960v9


“Borrower” has the meaning provided in the Recitals hereof.

“Collateral Agent” has the meaning provided in the introductory paragraph hereof.

“Credit Agreement” has the meaning provided in the Recitals hereof.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy,assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of theUnited States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default Rate” has the meaning provided in the Intercreditor Agreement. “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any state of the United States or the District of

Columbia. “Enforcement Event” has the meaning provided in the Intercreditor Agreement.

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such

Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownershipor profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profitinterests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), andall of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting,and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“Event of Default” has the meaning provided in the Intercreditor Agreement.

“Financing Documents” has the meaning provided in the Intercreditor Agreement.

“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than one of the fifty states of theUnited States or the District of Columbia.

“Governmental Authority” means any nation or government, any state of other political subdivision thereof, any agency, authority,

instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing,regulatory or administrative powers or functions pertaining to government.

“Intercreditor Agreement” means that certain Intercreditor and Collateral Agency Agreement dated as of the date hereof among the

Borrower, the Subsidiaries of the Borrower party thereto, the Senior Note Purchasers, the Administrative Agent, on behalf of all of the Lendersunder the Credit Agreement, the Servicer on behalf of all the Participants under the Loan Facility Agreement and the Collateral Agent, as amended,modified, supplemented or extended from time to time.

“Lenders” has the meaning provided in the Recitals hereof. “Lien” has the meaning provided in the Intercreditor Agreement.

2

CHAR1\1042960v9


“Loan Facility Agreement” has the meaning provided in the Recitals hereof. “Non-Voting Equity” has the meaning provided in Section 2 hereof. “Participants” has the meaning provided in the Recitals hereof. “Permitted Liens” means any Lien which is permitted under each of the Credit Agreement, the Loan Facility Agreement and the Senior

Note Purchase Agreement.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership,Governmental Authority or other entity.

“Pledged Collateral” has the meaning provided in Section 2 hereof.

“Pledged Shares” has the meaning provided in Section 2 hereof.

“Pledgor” and “Pledgors” has the “meaning provided in the introductory paragraph hereof.

“Requisite Creditors” has the meaning provided in the Intercreditor Agreement.

“Ruby Tuesday” has the meaning provided in the Recitals hereof

“Secured Creditors” means the collective reference to the holders of the Senior Secured Obligations and “Secured Creditor” means anyone of them.

“Securities Act” has the meaning provided in Section 8 hereof. “Senior Note Purchasers” has the meaning provided in the Recitals hereof. “Senior Note Purchase Agreement” has the meaning provided in the Recitals hereof.

“Senior Notes” has the meaning provided in the Recitals hereof.

“Senior Secured Obligations” has the meaning provided in the Intercreditor Agreement. “Servicer” has the meaning provided in the Recitals hereof. “Subsidiary” has the meaning provided in the Intercreditor Agreement.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Georgia. “Voting Equity” has the meaning provided in Section 2 hereof.

2. Pledge and Grant of Security Interest. To secure the prompt payment and performance in full when due, whether by lapse of time,

acceleration, mandatory prepayment or otherwise, of the Senior Secured Obligations, each Pledgor hereby grants, pledges and assigns to the Collateral Agent, forthe benefit of the Secured Creditors, a continuing security interest in, and a right to set-off against, any and all right, title and interest of such Pledgor in and tothe following, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the “Pledged Collateral”):

(a) Pledged Shares. (i) One hundred percent (100%) (or, if less, the full amount owned by such Pledgor) of the issued andoutstanding Equity Interests owned by such Pledgor of

3CHAR1\1042960v9


each Domestic Subsidiary set forth on Schedule 2(a) attached hereto and (ii) sixty-six percent (66%) (or, if less, the full amount owned by suchPledgor) of the issued and outstanding shares of Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (“VotingEquity”) and one hundred percent (100%) (or, if less, the full amount owned by such Pledgor) of the issued and outstanding Equity Interests notentitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (“Non-Voting Equity”) owned by such Pledgor of each Foreign Subsidiarydirectly owned by such Pledgor set forth on Schedule 2(a) attached hereto, in each case together with the certificates (or other agreements orinstruments), if any, representing such Equity Interests, and all options and other rights, contractual or otherwise, with respect thereto (collectively,together with the Equity Interests described in Section 2(b) below, the “Pledged Shares”), including, but not limited to, the following:

(A) all shares, securities, membership interests and other Equity Interests or other property representing a dividend or

other distribution on or in respect of any of the Pledged Shares, or representing a distribution or return of capital upon or in respect ofthe Pledged Shares, or resulting from a stock split, revision, reclassification or other exchange therefor, and any other dividends,distributions, subscriptions, warrants, cash, securities, instruments, rights, options or other property issued to or received or receivableby the holder of, or otherwise in respect of, the Pledged Shares; and

(B) without affecting the obligations of the Pledgors under any provision prohibiting such action hereunder or underthe any Financing Document, in the event of any consolidation or merger involving the issuer of any Pledged Shares and in which suchissuer is not the surviving entity, all Equity Interests of the successor entity formed by or resulting from such consolidation or merger.

(b) Additional Shares. (i) One hundred percent (100%) (or, if less, the full amount owned by such Pledgor) of the issued and

outstanding Equity Interests owned by such Pledgor of any Person that hereafter becomes a Domestic Subsidiary and (ii) sixty-six percent (66%) (or,if less, the full amount owned by such Pledgor) of the Voting Equity and one hundred percent (100%) (or, if less, the full amount owned by suchPledgor) of the Non-Voting Equity owned by such Pledgor of any Person that hereafter becomes a Foreign Subsidiary directly owned by suchPledgor, including, without limitation, the certificates (or other agreements or instruments) representing such Equity Interests.

(c) Accessions and Proceeds. All Accessions and all Proceeds of any and all of the foregoing.

Without limiting the generality of the foregoing, it is hereby specifically understood and agreed that a Pledgor may from time to time hereafterdeliver additional Equity Interests to the Collateral Agent as collateral security for the Senior Secured Obligations. Upon delivery to the Collateral Agent, suchadditional Equity Interests shall be deemed to be part of the Pledged Collateral of such Pledgor and shall be subject to the terms of this Pledge Agreementwhether or not Schedule 2(a) is amended to refer to such additional Equity Interests.

3. Security for Senior Secured Obligations. The security interest created hereby in the Pledged Collateral of each Pledgor constitutes continuingcollateral security for all of the Senior Secured Obligations (subject to Section 23 hereof).

4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:

(a) Delivery of Certificates. Each Pledgor shall deliver to the Collateral Agent Agent (i) simultaneously with or prior to executionand delivery of this Pledge Agreement, all

4CHAR1\1042960v9


certificates, if any, representing the Pledged Shares of such Pledgor and (ii) promptly upon the receipt thereof by or on behalf of a Pledgor, all othercertificates and instruments constituting Pledged Collateral of a Pledgor. Prior to delivery to the Collateral Agent, all such certificates andinstruments constituting Pledged Collateral of a Pledgor shall be held in trust by such Pledgor for the benefit of the Collateral Agent pursuant hereto.All such certificates and instruments shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executedinstruments of transfer or assignment in blank, substantially in the form provided in Exhibit 4(a) attached hereto.

(b) Additional Securities. If such Pledgor shall receive (or become entitled to receive) by virtue of its being or having been the

owner of any Pledged Collateral, any (i) certificate or instrument, including without limitation, any certificate representing a dividend or distributionin connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares or membershipor other Equity Interests, stock splits, spin-off or split-off, promissory notes or other instruments; (ii) option or right, whether as an addition to,substitution for, conversion of, or an exchange for, any Pledged Collateral or otherwise in respect thereof; (iii) dividends payable in securities; or(iv) distributions of securities or other Equity Interests, cash or other property in connection with a partial or total liquidation, dissolution orreduction of capital, capital surplus or paid-in surplus, then such Pledgor shall accept and receive each such certificate, instrument, option, right,dividend or distribution in trust for the benefit of the Collateral Agent, shall segregate it from such Pledgor’s other property and shall deliver itforthwith to the Collateral Agent in the exact form received together with any necessary endorsement and/or appropriate stock power duly executedin blank, substantially in the form provided in Exhibit 4(a), to be held by the Collateral Agent as Pledged Collateral and as further collateral securityfor the Senior Secured Obligations.

(c) Financing Statements. Each Pledgor authorizes the Collateral Agent to file one or more financing statements (with a description

of the Pledged Collateral contained herein) disclosing the Collateral Agent’s security interest in the Pledged Collateral. Each Pledgor agrees toexecute and deliver to the Collateral Agent such financing statements and other filings as may reasonably be requested by the Collateral Agent inorder to perfect and protect the security interest created hereby in the Pledged Collateral of such Pledgor.

5. Representations and Warranties . Each Pledgor hereby represents and warrants to the Collateral Agent, for the benefit of the Secured

Creditors, that so long as any of the Senior Secured Obligations remains outstanding (other than any indemnity obligations that survive the termination of thecommitments relating thereto) and until all of the commitments relating thereto have been terminated:

(a) Authorization of Pledged Shares. The Pledged Shares owned by such Pledgor are duly authorized and validly issued, are fullypaid and nonassessable and are not subject to the preemptive rights of any Person.

(b) Title. Such Pledgor has good and indefeasible title to the Pledged Collateral of such Pledgor and is the legal and beneficial

owner of such Pledged Collateral free and clear of any Lien, other than Permitted Liens. There exists no “adverse claim” within the meaning ofSection 8-102 of the UCC with respect to the Pledged Shares of such Pledgor other than Permitted Liens.

(c) Exercising of Rights. The exercise by the Collateral Agent of its rights and remedies hereunder will not violate any law or

governmental regulation or any material contractual restriction binding on or affecting such Pledgor or any of its property.

5CHAR1\1042960v9


(d) Pledgor’s Authority. No authorization, approval or action by, and no notice or filing with any Governmental Authority or withthe issuer of any Pledged Collateral or any other Person is required either (i) for the pledge made by such Pledgor or for the granting of the securityinterest by such Pledgor pursuant to this Pledge Agreement (except as have been already obtained) or (ii) for the exercise by the Collateral Agent orthe Secured Creditors of their rights and remedies hereunder (except as may be required by the UCC or applicable foreign laws or laws affecting theoffering and sale of securities).

(e) Security Interest/Priority. This Pledge Agreement creates a valid security interest in favor of the Collateral Agent for the benefit

of the Secured Creditors, in the Pledged Collateral owned by such Pledgor. The taking of possession by the Collateral Agent of the certificatesrepresenting the Pledged Shares and all other certificates and instruments constituting Pledged Collateral will perfect and establish the first priorityof the Collateral Agent’s security interest in the Pledged Shares consisting of certificated securities of Domestic Subsidiaries and, when properlyperfected by filing or registration, in all other Pledged Collateral represented by such Pledged Shares and instruments securing the Senior SecuredObligations. Except as set forth in this Section 5(e), no action is necessary to perfect or otherwise protect such security interest.

(f) Partnership and Membership Interests. Except as previously disclosed to the Collateral Agent, none of the Pledged Shares

consisting of partnership or limited liability company interests owned by such Pledgor (i) is dealt in or traded on a securities exchange or in asecurities market, (ii) by its terms expressly provides that it is a security governed by Article 8 of the UCC, (iii) is an investment company security,(iv) is held in a securities account or (v) constitutes a Security or a Financial Asset.

(g) No Other Interests. As of the date hereof, such Pledgor does not own any Equity Interests in any Subsidiary other than as set

forth on Schedule 2(a) attached hereto.

6. Covenants. Each Pledgor hereby covenants, that so long as any of the Senior Secured Obligations remain outstanding and until all of thecommitments relating thereto have been terminated, such Pledgor shall:

(a) Books and Records. Mark its books and records (and shall cause the issuer of the Pledged Shares of such Pledgor to mark itsbooks and records) to reflect the security interest granted to the Collateral Agent, for the benefit of the Secured Creditors, pursuant to this PledgeAgreement.

(b) Defense of Title. Warrant and defend title to and ownership of the Pledged Collateral of such Pledgor at its own expense

against the claims and demands of all other parties claiming an interest therein, keep the Pledged Collateral free from all Liens, except for PermittedLiens, and not sell, exchange, transfer, assign, lease or otherwise dispose of Pledged Collateral of such Pledgor or any interest therein, except aspermitted under the Financing Documents.

(c) Further Assurances. Promptly execute and deliver at its expense all further instruments and documents and take all further

action that may be reasonably necessary and desirable or that the Collateral Agent may reasonably request in order to (i) perfect and protect thesecurity interest created hereby in the Pledged Collateral of such Pledgor (including, without limitation, any and all action necessary to satisfy theCollateral Agent that the Collateral Agent has obtained a first priority perfected security interest in all Pledged Collateral); (ii) enable the CollateralAgent to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral of such Pledgor; and (iii) otherwise effect thepurposes of this Pledge Agreement, including, without limitation and if requested by the Collateral Agent, delivering to

6CHAR1\1042960v9


the Collateral Agent upon its request after the occurrence of an Event of Default, irrevocable proxies in respect of the Pledged Collateral of suchPledgor.

(d) Amendments. Not make or consent to any amendment or other modification or waiver with respect to any of the Pledged

Collateral of such Pledgor or enter into any agreement or allow to exist any restriction with respect to any of the Pledged Collateral of such Pledgorother than pursuant hereto or as may be permitted under the Financing Documents.

(e) Compliance with Securities Laws. File all reports and other information now or hereafter required to be filed by such Pledgor

with the United States Securities and Exchange Commission and any other state, federal or foreign agency in connection with the ownership of thePledged Collateral of such Pledgor.

(f) Issuance or Acquisition of Equity Interests. Not, without executing and delivering, or causing to be executed and delivered, to

the Collateral Agent such agreements, documents and instruments as the Collateral Agent may reasonably request for the purpose of perfecting itssecurity interest therein, issue or acquire any Equity Interests constituting Pledged Collateral consisting of an interest in a partnership or a limitedliability company that (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is asecurity governed by Article 8 of the UCC, (iii) is an investment company security, (iv) is held in a securities account or (v) constitutes a Security ora Financial Asset.

7. Advances by Secured Creditors. On failure of any Pledgor to perform any of the covenants and agreements contained herein which

constitutes an Event of Default and while such Event of Default is continuing, the Collateral Agent may, at its sole option and in its sole discretion, upon priornotice to the Pledgors, perform the same and in so doing may expend such sums as the Collateral Agent may deem advisable in the performance thereof,including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien,expenditures made in defending against any adverse claim and all other expenditures that the Collateral Agent or the Secured Creditors may make for theprotection of the security hereof or may be compelled to make by operation of law. All such sums and amounts so expended shall be repayable by the Pledgorson a joint and several basis (subject to Section 23 hereof) promptly upon timely notice thereof and demand therefor, shall constitute additional Senior SecuredObligations and shall bear interest from the date said amounts are expended at the Default Rate. No such performance of any covenant or agreement by theCollateral Agent or the Secured Creditors on behalf of any Pledgor, and no such advance or expenditure therefor, shall relieve the Pledgors of any default underthe terms of this Pledge Agreement, the Financing Documents or any other documents relating to the Senior Secured Obligations.

8. Remedies.

(a) General Remedies. Upon the occurrence of an Event of Default and during the continuation thereof, the Collateral Agent and the SecuredCreditors shall have, in addition to the rights and remedies provided herein, in the Financing Documents, in any other documents relating to the Senior SecuredObligations, or by law (including, without limitation, levy of attachment and garnishment), the rights and remedies of a secured party under the UniformCommercial Code of the jurisdiction applicable to the affected Pledged Collateral.

(b) Sale of Pledged Collateral. Upon the occurrence of an Event of Default and during the continuation thereof, without limiting the generalityof this Section 8 and without notice, the Collateral Agent may, in its sole discretion, sell or otherwise dispose of or realize upon the Pledged Collateral, or anypart thereof, in one or more parcels, at public or private sale, at any exchange or broker’s board or elsewhere, at such price or prices and on such other terms asthe Collateral Agent may deem commercially reasonable, for cash, credit or for future delivery or otherwise in accordance with applicable

7CHAR1\1042960v9


law. To the extent permitted by law, any Secured Creditor may in such event, bid for the purchase of such securities. Each Pledgor agrees that, to the extentnotice of sale shall be required by law and has not been waived by such Pledgor, any requirement of reasonable notice shall be met if notice, specifying the placeof any public sale or the time after which any private sale is to be made, is personally served on or mailed, postage prepaid, to such Pledgor, in accordance withthe notice provisions of Section 14 of this Pledge Agreement at least ten days before the time of such sale. The Collateral Agent shall not be obligated to makeany sale of Pledged Collateral of such Pledgor regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale fromtime to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was soadjourned.

(c) Private Sale. Upon the occurrence of an Event of Default and during the continuation thereof, the Pledgors recognize that the CollateralAgent may be unable or deem it impracticable to effect a public sale of all or any part of the Pledged Shares or any of the securities constituting PledgedCollateral and that the Collateral Agent may, therefore, determine to make one or more private sales of any such Pledged Collateral to a restricted group ofpurchasers who will be obligated to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view tothe distribution or resale thereof. Each Pledgor acknowledges and agrees that any such private sale may be at prices and on other terms less favorable than theprices and other terms that might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to havebeen made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to delay sale of any such Pledged Collateral for the periodof time necessary to permit the issuer of such Pledged Collateral to register such Pledged Collateral for public sale under the Securities Act or under applicablestate securities laws. Each Pledgor further acknowledges and agrees that any offer to sell such Pledged Collateral that has been (i) publicly advertised on a bonafide basis in a newspaper or other publication of general circulation in the financial community of New York, New York (to the extent that such offer may beadvertised without prior registration under the Securities Act of 1933, as amended (the “Securities Act”)), or (ii) made privately in the manner described aboveshall be deemed to involve a “public sale” under the UCC, notwithstanding that such sale may not constitute a “public offering” under the Securities Act, and theCollateral Agent may, in such event, bid for the purchase of such Pledged Collateral.

(d) Retention of Pledged Collateral. To the extent permitted under applicable law, in addition to the rights and remedies hereunder, upon theoccurrence and during the continuance of an Event of Default, the Collateral Agent may, after providing the notices required by Sections 9-620 and 9-621 of theUCC or otherwise complying with the requirements of applicable law of the relevant jurisdiction, accept or retain all or any portion of the Pledged Collateral insatisfaction of the Senior Secured Obligations. Unless and until the Collateral Agent shall have provided such notices, however, the Collateral Agent shall not bedeemed to have accepted or retained any Pledged Collateral in satisfaction of any Senior Secured Obligations for any reason.

(e) Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the CollateralAgent or the Secured Creditors are legally entitled, the Pledgors shall be jointly and severally liable (subject to Section 23 hereof) for the deficiency, togetherwith interest thereon at the Default Rate, together with the costs of collection and attorneys’ fees and expenses. Any surplus remaining after the full payment andsatisfaction of the Senior Secured Obligations shall be returned to the Pledgors or to whomsoever a court of competent jurisdiction shall determine to be entitledthereto.

9. Rights of the Collateral Agent.

(a) Power of Attorney. Each Pledgor hereby designates and appoints the Collateral Agent, on behalf of the Secured Creditors, and each of itsdesignees or agents, as attorney-in-fact of such

8CHAR1\1042960v9


Pledgor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuation ofan Event of Default:

(i) to demand, collect, settle, compromise and adjust, and give discharges and releases concerning the Pledged Collateral, all as the

Collateral Agent may deem appropriate;

(ii) to commence and prosecute any actions at any court for the purposes of collecting any of the Pledged Collateral and enforcingany other right in respect thereof;

(iii) to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the

Collateral Agent may deem appropriate;

(iv) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the PledgedCollateral;

(v) to direct any parties liable for any payment in connection with any of the Pledged Collateral to make payment of any and all

monies due and to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct;

(vi) to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time inrespect of or arising out of any Pledged Collateral;

(vii) to sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the

Pledged Collateral;

(viii) to execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, securityand pledge agreements, affidavits, notices and other agreements, instruments and documents that the Collateral Agent may deem appropriate inorder to perfect and maintain the security interests and liens granted in this Pledge Agreement and in order to fully consummate all of thetransactions contemplated therein;

(ix) to exchange any of the Pledged Collateral or other property upon any merger, consolidation, reorganization, recapitalization or

other readjustment of the issuer thereof and, in connection therewith, deposit any of the Pledged Collateral with any committee, depository, transferagent, registrar or other designated agency upon such terms as the Collateral Agent may deem appropriate;

(x) to vote for a shareholder or member resolution, or to sign an instrument in writing, sanctioning the transfer of any or all of the

Pledged Collateral into the name of the Collateral Agent or one or more of the Secured Creditors or into the name of any transferee to whom thePledged Collateral or any part thereof may be sold pursuant to Section 8 hereof; and

(xi) to do and perform all such other acts and things as the Collateral Agent may deem appropriate or convenient in connection with

the Pledged Collateral.

This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of the Senior Secured Obligations shall remainoutstanding and until all of the commitments relating thereto shall have been terminated. The Collateral Agent shall be under no duty to exercise or withhold theexercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Collateral Agent in this Pledge Agreement, and shall not beliable for any failure to do so or any delay in doing so. The Collateral Agent shall not be liable for any act or omission or for any error of judgment or anymistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willfulmisconduct. This power of attorney is conferred

9CHAR1\1042960v9


on the Collateral Agent solely to protect, preserve and realize upon its security interest in the Pledged Collateral. To the extent any Secured Creditor obtains orseeks to obtain any benefit from this Pledge Agreement or asserts or claims any interest in the Pledged Collateral shall be deemed to have agreed to appoint theCollateral Agent as its attorney-in-fact with all rights and powers conferred to the Collateral Agent under this Pledge Agreement.

(b) Assignment by the Collateral Agent. The Collateral Agent may from time to time assign the Pledged Collateral and any portion thereof to asuccessor agent in accordance with the Intercreditor Agreement, and the assignee shall be entitled to all of the rights and remedies of the Collateral Agent underthis Pledge Agreement in relation thereto.

(c) The Collateral Agent’s Duty of Care . Other than the exercise of reasonable care to assure the safe custody of the Pledged Collateral whilebeing held by the Collateral Agent hereunder and to account for all proceeds thereof, the Collateral Agent shall have no duty or liability to preserve rightspertaining thereto, it being understood and agreed that the Pledgors shall be responsible for preservation of all rights in the Pledged Collateral, and the CollateralAgent shall be relieved of all responsibility for the Pledged Collateral upon surrendering it or tendering the surrender of it to the Pledgors. The Collateral Agentshall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if such Pledged Collateral isaccorded treatment substantially equal to that which the Collateral Agent accords its own property, which shall be no less than the treatment employed by areasonable and prudent agent in the industry, it being understood that the Collateral Agent shall not have responsibility for (i) ascertaining or taking action withrespect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not the Collateral Agent has or isdeemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any of the Pledged Collateral.

(d) Voting Rights in Respect of the Pledged Collateral.

(i) So long as no Event of Default shall have occurred and be continuing, each Pledgor may exercise any and all voting and otherconsensual rights pertaining to the Pledged Collateral of such Pledgor or any part thereof for any purpose not inconsistent with the terms of thisPledge Agreement or the Financing Documents; and

(ii) Upon the occurrence and during the continuance of an Event of Default and upon notice to the applicable Pledgor from the

Collateral Agent, all rights of a Pledgor to exercise the voting and other consensual rights that it would otherwise be entitled to exercise pursuant toparagraph (i) of this subsection shall cease and all such rights shall thereupon become vested in the Collateral Agent, which shall then have the soleright to exercise such voting and other consensual rights.

(e) Dividend Rights in Respect of the Pledged Collateral.

(i) So long as no Event of Default shall have occurred and be continuing and subject to Section 4(b) hereof, each Pledgor mayreceive and retain any and all dividends and distributions (other than stock dividends and other dividends and distributions constituting PledgedCollateral addressed hereinabove) or interest paid in respect of the Pledged Collateral to the extent they are allowed under the Financing Documents.

(ii) Upon the occurrence and during the continuance of an Event of Default:

(A) all rights of a Pledgor to receive the dividends, distributions and interest payments that it would otherwise beauthorized to receive and retain pursuant to paragraph (i) of this subsection shall cease and all such rights shall thereupon be vested in

10CHAR1\1042960v9


the Collateral Agent, which shall then have the sole right to receive and hold as Pledged Collateral such dividends, distributions andinterest payments; and

(B) all dividends and interest payments that are received by a Pledgor contrary to the provisions of paragraph (A) ofthis subsection shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of suchPledgor, and shall be forthwith paid over to the Collateral Agent as Pledged Collateral in the exact form received, to be held by theCollateral Agent as Pledged Collateral and as further collateral security for the Senior Secured Obligations.

(f) Release of Pledged Collateral. To the extent permitted by and in accordance with the Intercreditor Agreement, the Collateral

Agent may release any of the Pledged Collateral from this Pledge Agreement or may substitute any of the Pledged Collateral for other PledgedCollateral without altering, varying or diminishing in any way the force, effect, lien, pledge or security interest of this Pledge Agreement as to anyPledged Collateral not expressly released or substituted, and this Pledge Agreement shall continue as a first priority lien on all Pledged Collateral notexpressly released or substituted. Notwithstanding the foregoing, the Collateral Agent may release any Lien on any Pledged Collateral granted to orheld by the Collateral Agent under this Pledge Agreement (i) upon the termination of the Pledge Agreement in accordance with the terms of theIntercreditor Agreement, (ii) that is transferred or to be transferred as part of or in connection with any transfer or other disposition permitted underthe Financing Documents, or (iii) as approved in accordance with the Intercreditor Agreement. 10. Application of Proceeds. After the occurrence of an Enforcement Event, any payments hereunder and any proceeds of the Pledged

Collateral, when received by the Collateral Agent or any of the Secured Creditors in cash or its equivalent, will be applied in reduction of the Senior SecuredObligations in the order set forth in the Intercreditor Agreement, and each Pledgor irrevocably waives the right to direct the application of such payments andproceeds and acknowledges and agrees that the Collateral Agent shall have the continuing and exclusive right to apply and reapply any and all such paymentsand proceeds in the Collateral Agent’s sole discretion, notwithstanding any entry to the contrary upon its books and records.

11. Continuing Agreement.

(a) This Pledge Agreement shall be a continuing agreement in every respect and shall remain in full force and effect so long as any of theSenior Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated. Upon payment or other satisfaction of allSenior Secured Obligations and termination of all commitments relating thereto, this Pledge Agreement shall be automatically terminated and the CollateralAgent and the Secured Creditors shall, upon the request and at the expense of the Pledgors, forthwith release all of its liens and security interests hereunder, shallreturn all certificates or instruments pledged hereunder and shall execute and deliver all UCC termination statements and/or other documents reasonablyrequested by the Pledgors evidencing such termination. Notwithstanding the foregoing, all releases and indemnities provided hereunder shall survive terminationof this Pledge Agreement.

(b) This Pledge Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole orin part, of any of the Senior Secured Obligations is rescinded or must otherwise be restored or returned by the Collateral Agent or any Secured Creditor as apreference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made; provided that inthe event payment of all or any part of the Senior Secured Obligations is rescinded or must be restored or returned, all costs and expenses (including, withoutlimitation, reasonable attorneys’ fees and disbursements) incurred by the Collateral Agent or any

11CHAR1\1042960v9


Secured Creditor in defending and enforcing such reinstatement shall be deemed to be included as a part of the Senior Secured Obligations.

12. Amendments and Waivers . This Pledge Agreement and the provisions hereof may not be amended, waived, modified, changed, dischargedor terminated except by a written notice instrument executed by each Pledgor and the Collateral Agent; provided, that the Collateral Agent may not amend,waive, modify, change, discharge or terminate any provision of this Pledge Agreement without the written consent of the Requisite Creditors.

13. Successors in Interest. This Pledge Agreement shall create a continuing security interest in the Pledged Collateral and shall be binding uponeach Pledgor, its successors and assigns, and shall inure, together with the rights and remedies of the Collateral Agent and the Secured Creditors hereunder, to thebenefit of the Collateral Agent and the Secured Creditors and their successors and permitted assigns; provided, however, that, except as provided in theIntercreditor Agreement, none of the Pledgors may assign its rights or delegate its duties hereunder without the prior written consent of the requisite SecuredCreditors under the Intercreditor Agreement. To the fullest extent permitted by law, each Pledgor hereby releases the Collateral Agent and each Secured Creditor,and their respective successors and assigns, from any liability for any act or omission relating to this Pledge Agreement or the Pledged Collateral, except for anyliability arising from the gross negligence or willful misconduct of the Collateral Agent or such holder, or their respective officers, employees or agents.

14. Notices. All notices required or permitted to be given under this Pledge Agreement shall be given at the address specified below, or at suchother address as may be designated in a written notice to the other parties hereto:

if to the Pledgors: Ruby Tuesday, Inc.150 West Church AvenueMaryville, TN 37801Attention: Chief Financial OfficerTelecopy: 865-379-6817

if to the Collateral Agent: Bank of America, N.A.Agency Management231 South LaSalle StreetMail Code: IL1-231-10-41Chicago, Illinois 60604Attention: Laura CallTelephone: 312-828-3559Facsimile: 877-207-2883

15. Counterparts. This Pledge Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall

be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Pledge Agreement to produce oraccount for more than one such counterpart.

16. Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaningor construction of any provision of this Pledge Agreement.

17. Governing Law; Submission to Jurisdiction; Venue.

(a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THESTATE OF GEORGIA WITHOUT REGARD TO

12CHAR1\1042960v9


CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT OR ANY OTHER LOAN DOCUMENT

MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA SITTING IN MECKLENBURG COUNTY AND OF THE UNITEDSTATES DISTRICT COURT OF THE WESTERN DISTRICT OF NORTH CAROLINA, AND BY EXECUTION AND DELIVERY OF THIS PLEDGEAGREEMENT, EACH PLEDGOR AND THE COLLATERAL AGENT, ON BEHALF OF ITSELF AND EACH SECURED CREDITOR, CONSENTS, FORITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH PLEDGOR AND THECOLLATERAL AGENT, ON BEHALF OF ITSELF AND EACH SECURED CREDITOR, IRREVOCABLY WAIVES ANY OBJECTION, INCLUDINGANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW ORHEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS PLEDGEAGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER FINANCING DOCUMENT RELATED THERETO. EACH PLEDGOR AND THECOLLATERAL AGENT, ON BEHALF OF ITSELF AND EACH SECURED CREDITOR, WAIVES PERSONAL SERVICE OF ANY SUMMONS,COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

18. Waiver of Right to Trial by Jury.

EACH PARTY TO THIS PLEDGE AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS PLEDGE AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR INANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITHRESPECT TO THIS PLEDGE AGREEMENT OR ANY OTHER FINANCING DOCUMENT, OR THE TRANSACTIONS RELATED HERETO ORTHERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OROTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTIONSHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS PLEDGE AGREEMENT MAY FILE AN ORIGINALCOUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIESHERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

19. Severability. If any provision of this Pledge Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fullyseverable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceableprovisions.

20. Entirety. This Pledge Agreement, the other Financing Documents and the other documents relating to the Senior Secured Obligationsrepresent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including anycommitment letters or correspondence relating to the Financing Documents, any other documents relating to the Senior Secured Obligations, or the transactionscontemplated herein and therein.

21. Survival. All representations and warranties of the Pledgors hereunder shall survive the execution and delivery of this Pledge Agreement, theother Financing Documents and the other documents relating to the Senior Secured Obligations, the delivery of the Notes and the extension of credit thereunderor in connection therewith.

13CHAR1\1042960v9


22. Other Security. To the extent that any of the Senior Secured Obligations are now or hereafter secured by property other than the PledgedCollateral (including, without limitation, real and other personal property owned by a Pledgor), or by a guarantee, endorsement or property of any other Person,then to the maximum extent permitted by applicable law the Collateral Agent shall have the right to proceed against such other property, guarantee orendorsement upon the occurrence and during the continuance of any Event of Default, and the Collateral Agent shall have the right, in its sole discretion, todetermine which rights, security, liens, security interests or remedies the Collateral Agent shall at any time pursue, relinquish, subordinate, modify or take withrespect thereto, without in any way modifying or affecting any of them or the Senior Secured Obligations or any of the rights of the Collateral Agent or theSecured Creditors under this Pledge Agreement, under any of the other Financing Documents or under any other document relating to the Senior SecuredObligations.

23. Joint and Several Obligations of Pledgors.

(a) Each of the Pledgors is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by theSecured Creditors, for the mutual benefit, directly and indirectly, of each of the Pledgors and in consideration of the undertakings of each of the Pledgors toaccept joint and several liability for the obligations of each of them.

(b) Each of the Pledgors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor,joint and several liability with the other Pledgors with respect to the payment and performance of all of the Senior Secured Obligations arising under this PledgeAgreement, the other Financing Documents and any other documents relating to the Senior Secured Obligations, it being the intention of the parties hereto thatall the Senior Secured Obligations shall be the joint and several obligations of each of the Pledgors without preferences or distinction among them.

(c) Notwithstanding any provision to the contrary contained herein, in any other of the Financing Documents or in any other documentsrelating to the Senior Secured Obligations, the obligations of each Guarantor under the Intercreditor Agreement, the other Financing Documents and thedocuments relating to the Senior Secured Obligations shall be limited to an aggregate amount equal to the largest amount that would not render such obligationssubject to avoidance under Debtor Relief Laws or any comparable provisions of any applicable state law.

[Signature Pages Follow]

14CHAR1\1042960v9


Each of the parties hereto has caused a counterpart of this Pledge Agreement to be duly executed and delivered as of the date first above written.

PLEDGORS: RUBY TUESDAY, INC.,a Georgia corporation

By:/s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Senior Vice President

RTBD, INC.

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: President

RT FINANCE, INC.

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RUBY TUESDAY GC CARDS, INC.

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT TAMPA FRANCHISE, LP

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT ORLANDO FRANCHISE, LP

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President

CHAR1\1042960v9



By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT NEW YORK FRANCHISE, LLC

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT SOUTHWEST FRANCHISE, LLC

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT MICHIANA FRANCHISE, LLC

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT FRANCHISE ACQUISITION, LLC

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT KENTUCKY RESTAURANT HOLDINGS, LLC

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT FLORIDA EQUITY, LLC


CHAR1\1042960v9


RTGC, LLC

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT WEST PALM BEACH FRANCHISE, LP

By: /s/ Marguerite N. DuffyName:Marguerite N. DuffyTitle: Vice President RT MICHIGAN FRANCHISE, LLC




RUBY TUESDAY, LLC


CHAR1\1042960v9


Accepted and agreed to as of the date first above written. BANK OF AMERICA, N.A.,as Collateral Agent

By: /s/ Anne ZeschkeName:Anne ZeschkeTitle: Assistant Vice President CHAR1\1042960v9


SCHEDULE 2(a)

EQUITY INTERESTS

Pledgor

Issuer

Number ofShares/Units

CertificateNumber

Percentage Ownership

CHAR1\1042960v9


EXHIBIT 4(a)

FORM OF IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to the following shares of capital stock of ____________________, a ____________ corporation:

Number of Shares Certificate Number and irrevocably appoints __________________________________ its agent and attorney-in-fact to transfer all or any part of such capital stock and to take allnecessary and appropriate action to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more persons to act for him.

[HOLDER]

By:______________________ Name: Title: CHAR1\1042960v9


SCHEDULE I

FORM OF

PLEDGE SUPPLEMENT AGREEMENT (this “Supplement”), dated as of ________ __, 20__ is by and between [________] (the “NewPledgor”) and BANK OF AMERICA, N.A., in its capacity as Collateral Agent under the Pledge Agreement dated as of May __, 2008 (as amended or modifiedfrom time to time, the “Pledge Agreement”) among Ruby Tuesday, Inc., the other Pledgors party thereto and Bank of America, N.A., in its capacity as CollateralAgent for the benefit of the Secured Creditors. Terms used but not otherwise defined herein shall have the meanings provided in the Pledge Agreement.

The New Pledgor hereby agrees as follows with the Collateral Agent, for the benefit of the Secured Creditors:

1. The New Pledgor, as security for the Senior Secured Obligations, hereby pledges and assigns to the Collateral Agent, for the benefit of theSecured Creditors, and grants to the Collateral Agent, for the benefit of the Secured Creditors, a continuing security interest in any and all right, title and interestof the New Pledgor in and to the Pledged Shares, including, without limitation, the Pledged Shares identified on Schedule A attached hereto and all of thePledged Collateral relating thereto pursuant to the terms of the Pledge Agreement. The information on the Schedule 2(a) to the Pledge Agreement is herebyamended to add the information shown on the attached Schedule A. The New Pledgor intends that the Pledge Agreement be construed as if the Pledged Sharesidentified on Schedule A attached hereto had originally been included in Schedule 2(a) to the Pledge Agreement.

2. The New Pledgor hereby represents and warrants to the Collateral Agent, for the benefit of the Secured Creditors, that (a) this Supplementhas been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms,subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally, (b) the representations andwarranties made by it as a Pledgor under the Pledge Agreement are true and correct on and as of the date hereof based upon the applicable information referred toin clause (c) of this Section and (c) the original stock certificate(s) evidencing the Pledged Shares identified on Schedule A attached hereto and executed stockpower(s) with respect thereto in the form of Schedule B hereto accompany this Supplement.

3. The New Pledgor authorizes the Collateral Agent to file one or more financing statements (with a description of the Pledged Collateralcontained herein) disclosing the Collateral Agent’s security interest in the Pledged Collateral. The New Pledgor agrees to execute and deliver to the CollateralAgent such financing statements and other filings as may be requested by the Collateral Agent in order to perfect and protect the security interest created herebyin the Pledged Collateral of such New Pledgor.

4. The New Pledgor hereby acknowledges, agrees and confirms that by execution of this Supplement, the New Pledgor will be deemed to be aparty to the Pledge Agreement and a “Pledgor” for all purposes thereunder and shall have all of the obligations of the Pledgors thereunder as though it hadexecuted the Pledge Agreement.

5. This Supplement may be executed in two or more counterparts, each of which shall constitute an original but all of which when takentogether shall constitute one contract.

6. This Supplement shall be governed by and construed and interpreted in accordance with the laws of the State of Georgia.

[remainder of page intentionally left blank] CHAR1\1042960v9


IN WITNESS WHEREOF, the New Pledgor has caused this Supplement to be duly executed by its authorized officer, and the Collateral Agent hascaused the same to be accepted by its authorized officer, as of the day and year first above written.

[New Pledgor]

By ____________________

Name:__________________Title:___________________

Acknowledged and accepted:

BANK OF AMERICA, N.A., as Collateral Agent

By ___________________

Name:_________________Title:__________________

2

CHAR1\1042960v9


Schedule Ato

Supplement Agreement

EQUITY INTERESTS

Pledgor

Issuer

Number ofShares/Units

CertificateNumber

Percentage Ownership

3CHAR1\1042960v9


SCHEDULE B

FORM OF IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to the following shares of capital stock of ____________________, a ____________ corporation:

Number of Shares Certificate Number and irrevocably appoints __________________________________ its agent and attorney-in-fact to transfer all or any part of such capital stock and to take allnecessary and appropriate action to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more persons to act for him.

[HOLDER]

By:_________________ Name: Title: CHAR1\1042960v9


EXHIBIT 31.1

CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Samuel E. Beall, III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ruby Tuesday, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.

Date: October 13, 2009 /s/ Samuel E. Beall, III Samuel E. Beall, IIIChairman of the Board, Presidentand Chief Executive Officer


EXHIBIT 31.2

CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Marguerite N. Duffy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ruby Tuesday, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.

Date: October 13, 2009 /s/ Marguerite N. Duffy Marguerite N. DuffySenior Vice President andChief Financial Officer


EXHIBIT 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ruby Tuesday, Inc. (the “Company”) on Form 10-Q for the period ended September 1, 2009 (the “Report”), as filedwith the Securities and Exchange Commission on the date hereof, I, Samuel E. Beall, III, Chairman of the Board, President and Chief Executive Officer of theCompany, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

Date: October 13, 2009 /s/ Samuel E. Beall, IIISamuel E. Beall, IIIChairman of the Board, Presidentand Chief Executive Officer


EXHIBIT 32.2

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ruby Tuesday, Inc. (the “Company”) on Form 10-Q for the period ended September 1, 2009 (the “Report”), as filedwith the Securities and Exchange Commission on the date hereof, I, Marguerite N. Duffy, Senior Vice President and Chief Financial Officer of the Company,certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

Date: October 13, 2009 /s/ Marguerite N. Duffy Marguerite N. DuffySenior Vice President andChief Financial Officer

_______________________________________________Created by Morningstar Document Research documentresearch.morningstar.com


http://documentresearch.morningstar.com

q3 2009 earning report of ruby tuesday inc

Investor Relations

financial statements

q ruby

quarterly period

check mark

q quarterly report pursuant

future financial performance

securities exchange

financial informationitem