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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 RESTATED
LOAN 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 2.3	Funding 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 OF PAYMENTS		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

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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.

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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.


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

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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 Acceptance
Exhibit B	-	Form of Subsidiary Guaranty Agreement
Exhibit C	-	Form of Indemnity and Contribution Agreement
Exhibit D	-	Form of Loan Agreement
Exhibit E	-	Form of Participation Certificate
Exhibit F	-	Form of Servicing Report
		SCHEDULES
Schedule 5.14	-	Subsidiaries
Schedule 6.14	-	Outstanding Indebtedness
Schedule 6.15	-	Existing Liens
Schedule 6.17	-	Existing Investments
Schedule 6.21	-	Restrictive Agreements

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AMENDED AND RESTATED
LOAN 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 signature pages 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 WACHOVIA BANK N.A., both as Co-Syndication Agent for the Participants (in such capacity, the “Co-Syndication Agents”).

W I T N E S S E T H:

WHEREAS, the Sponsor, Participants and Servicer, in order to make available a loan facility to certain franchisees of Sponsor, entered into that certain Amended 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 Amendment dated March 31, 2003; Sixth Amendment dated April 30, 2003; and Seventh Amendment dated October 7, 2003 (as so amended and as otherwise amended or modified, 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 of April 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 of the 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 adequate consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree that the Prior Loan Facility Agreement is amended and restated as follows:

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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 equally applicable 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 reserve percentage (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 in Regulation 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 as of 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, including without limitation all Loans and LC Exposure, but excluding all Indebtedness of the type described in subsection (xi) of the definition of Indebtedness and excluding any Synthetic Lease Obligations to the extent that such Synthetic Lease Obligations are included in clause (ii) below, plus (ii) to the extent not included in clause (i), the present value of all lease obligations arising under operating leases of Sponsor and its Subsidiaries as determined in accordance with GAAP, 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.

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“ 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.

“ Agreement ” shall mean this Amended and Restated Loan Facility Agreement and Guaranty as it may hereafter be amended or modified. This Agreement supercedes 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 in commercial 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 Affiliate of 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 terms of 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 Loan Documents 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 by Sponsor 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 authorized or 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 an Interest 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 London interbank market.

“ Capital Expenditures ” shall mean for any period, without duplication, (a) the additions to property, plant and equipment and other capital expenditures of the 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 accordance with 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 arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

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“ 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 any Person or “group” (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder in effect on the date hereof), (b) the acquisition of ownership, directly or indirectly, 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 and Exchange 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) occupation of 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 of directors 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 or governing 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 such Indebtedness of Sponsor to require that such Indebtedness of Sponsor be redeemed, repurchased, defeased, prepaid or repaid, either in whole or in part, or the maturity 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 rights with 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 Loan Commitment 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).

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“ 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 consolidated balance 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 Sponsor or 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 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 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 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 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 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 Interest Expense 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 with GAAP, the sum of (i) total cash interest expense, including without limitation the interest component of any payments in respect of Capital Leases Obligations capitalized or expensed during such period (whether or not actually paid during such period) plus (ii) the net amount payable (or minus the net amount receivable) 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 the Sponsor and its Subsidiaries with respect to leases of real and personal property (excluding Capital 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 Sponsor and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, but excluding therefrom (to the extent otherwise included therein) (i) any extraordinary gains or losses, (ii) any gains attributable to write-ups of assets,

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(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 (or loss) 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 such Person’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’s consolidated balance sheet as of such date prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the 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’s consolidated 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 from a 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 date prepared 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 operating revenue generated at the restaurant level determined on a consolidated basis in accordance with GAAP, but excluding therefrom (to the extent otherwise included therein) 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 ability to exercise voting power, by contract or otherwise. The terms “Controlling”, “Controlled by”, and “under common Control with” have meanings correlative thereto.

“ 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 or waived 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.

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“ 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) any other Person (other than a natural Person) approved by the Servicer, and unless a Credit Event has occurred and is continuing, approved by the Sponsor (each such approval not to be unreasonably withheld or delayed) provided that notwithstanding the foregoing “Eligible Assignee” shall not include the Sponsor or any of 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 be deemed to have given its consent five Business Days after the date notice thereof has actually been delivered by the assigning Servicer or Participant to the Sponsor, 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 agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, 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 and remediation, costs of administrative oversight, fines, natural resource damages, penalties or indemnities), of the Sponsor or any Subsidiary directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) any actual or alleged exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials 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 under Section 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 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 to any Plan of an “accumulated funding deficiency” (as defined in 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 of an 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 any liability 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 plan administrator 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) the incurrence by the Sponsor or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or

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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 any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or 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 Franchisee Partner 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 Franchisee Partner 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 Person holding 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 average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal 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 for such 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 the Servicer 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, setting forth 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 each case 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 the District of Columbia.

“ Franchise Documents ” means, collectively, (i) the participation and operating agreements for any Borrower that is a limited liability company or limited partnership agreement for any Borrower that is a limited partnership and (ii) the written agreements between Sponsor and a Borrower whereby the Borrower is authorized to establish one or more “Ruby

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Tuesday” franchises, including without limitation the Ruby Tuesday, Inc. Operating Agreements between Sponsor and a Borrower and each other operating agreement 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 qualified restaurant operators, such operators to be determined by the Sponsor in its sole discretion, which provides such restaurant operators a business structure for organizing, 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 Franchise Partner Program.

“ Franchisee Debt ” shall mean, for any Borrower without duplication, (i) indebtedness for borrowed money or for the deferred purchase price of property or services (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 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 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 Documents executed under the Prior Loan Facility Agreement, the sum of (A) interest expense paid in cash during such period plus (B) scheduled amortization of all Franchisee Debt (excluding Franchisee Debt of the type described in clause (iv) of the definition of “Franchisee Debt”) for such period, in each case measured for 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 Documents executed 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) Franchisee Rents for such period, (e) Non-recurring Expenses for such period, and (f) Excluded Management Salary for such period, if any, minus (3) Non-recurring Income for 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

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immediately preceding four fiscal quarters ended on or closest to such date; provided , however , that Sponsor may elect to exclude from the calculation of the Franchisee Fixed Charge Coverage Ratio for any Borrower the Franchisee EBITDAR, the Franchisee Debt Service and the Franchisee Rents incurred by such Borrower and its subsidiaries that are attributable to any stores that are not 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 Franchisee Fixed Charge Coverage Ratio, such store shall thereafter be included in all subsequent calculations 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 Consolidated Companies 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 or indirectly 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 qualified restaurant operators, such operators to be determined by the Sponsor in its sole discretion, which provided such restaurant operators a business structure for organizing, 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 executed under the Prior Loan Facility Agreement, the aggregate amount of all lease and rent payments for which such Borrower and its subsidiaries are directly or indirectly 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 basis in 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 and Article 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 shall include, 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, consistent with the requirements therefor as set forth in this Agreement, and containing such information and in substantially such form as shall be agreed to by Servicer and Sponsor pursuant to the Servicing Agreement.

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“ 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 Funding Request.

“ 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 Sponsor pursuant to this Agreement to include, without limitation (i) all principal, interest and commitment fees due with respect to all Loans, including post-petition interest in any proceeding under federal bankruptcy laws, (ii) all fees, expenses, and amounts payable by any Borrower for reimbursement or indemnification under the terms of the Loan Agreement or any other Loan Document executed in connection with the Loan to such Borrower, (iii) all amounts advanced by Servicer 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) of any 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 party to 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 economic effect of Guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor “) in any manner, whether directly or indirectly and including 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 Indebtedness or 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 other obligation 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 the term “Guaranty” shall not include endorsements for collection or deposits in the ordinary course of business. The amount of any Guaranty shall be deemed to be an 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, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. The term “Guarantee” used as a verb has a corresponding meaning.

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“ Guaranty Payments ” mean all payments made by the Sponsor pursuant to Section 8.2 of this Agreement with respect to Loans in the Limited Guaranty Pool, 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, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances 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, currency future 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 or approved 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 such Investment.

“ 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 in respect 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 7.1 ( e ), trade payables overdue by more than 120 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 Capital Lease 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 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 such Person 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.

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“ Indemnity and Contribution Agreement ” shall mean the Indemnity and Contribution Agreement, as amended, restated, supplemented or otherwise modified 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 Loan Commitment 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 aggregate amount 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 Pro Rata 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 outstanding Letter 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 the Servicer on behalf of such Borrower pursuant to the applicable Loan Agreement plus, without duplication, the aggregate amount of unreimbursed draws on such Letters 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 Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by 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 any reason, 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 in Dollars 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 or converted 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 the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Payment 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 or other title retention agreement and any capital lease having the same economic effect as any of the foregoing).

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“ 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 the relevant 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 the Servicer 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 not limited to a Loan Payment Default).

“ Loan Documents ” means the Loan Agreement, the Promissory Note, any Personal Guaranty, any Spousal Consent, the Collateral Agreements, any Letters of 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 any amendments 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 of Credit, including, without limitation, outstanding principal, accrued interest, any commitment fees, letter of credit fees and all reasonable costs and expenses of any 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 cure period 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 outstanding thereunder, 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, as the same may be in effect from time to time.

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“ 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 in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, a material adverse change in, or a material adverse effect on, (i) the business, results of operations, 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 Credit Parties to perform any of their respective obligations under the Operative Documents, (iii) the rights and remedies of the Servicer and the Participants under any of 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 Material Indebtedness, the “principal amount” of the obligations of the Sponsor or any Subsidiary in respect to any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Sponsor or such Subsidiary would be required to pay if such Hedging Agreement were terminated 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 hereafter established 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 more than 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 the Sponsor, 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 Commitment terminates and all principal and interest with respect to the Loan outstanding thereunder shall become due and payable in full; provided that, each Maturity Date shall 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 are extraordinary and generally not reflected in any prior period or reasonably anticipated to be incurred in any subsequent period.

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“ Non-recurring Income ” shall mean, for any Borrower for any period, all income of such Borrower and its Subsidiaries for such period that is extraordinary and 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 notes receivable 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 of such Person, (iii) any Synthetic Lease Obligation or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the 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 Servicing Agreement, the Fee Letter and any other documents delivered by Sponsor or any Guarantor to the Servicer or the Participants in connection herewith or therewith.

“ 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 to the terms hereof.

“ Participating Commitment ” shall mean the amount set forth opposite each Participant’s name on the signature pages hereof, as such amount may be modified by assignment pursuant to the terms hereof; provided that , following the termination of the Commitment, each Participant’s Participating Commitment shall 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 and such 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 Participating Commitment 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, evidencing such Participant’s ownership interest conveyed hereunder.

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“ 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 of principal 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 and shall 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 which adequate 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 the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate 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 other social security laws or regulations;

d. deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations 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 are currently being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; and

f. easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the 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.

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“ 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 any agency 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 from the 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 six months 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 or Guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the 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 into with 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 any Governmental 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 the Code 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 of ERISA 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 pages hereof, as such percentage may change from time to time as a result of assignments or amendments pursuant to this Agreement.

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“ Promissory Note ” means a Master Note of a Borrower, substantially in the form attached hereto as Exhibit D setting forth the obligation of such Borrower to 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 last twelve 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 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) 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) the Participant’s Unused Commitments, or, following the termination of the Commitment and the Loan Commitments, the Participants holding at least 51 % of the aggregate 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 no Response 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 a vice 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 the Administrative 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 with Bank of America as their agent, all pursuant to the Revolving Facility Credit Agreement, with an option of the Sponsor to increase such facility by $100,000,000 up to a total amount of $300,000,000.

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“ Revolving Facility Credit Agreement ” means that certain Amended and Restated Revolving Credit Agreement, dated as of November 19, 2004, among the Sponsor, 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 of America, 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 Servicing Agreement.

“ 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 the Servicer and the Participants will continue to refrain from exercising remedies against a Defaulted Borrower while a Defaulted Loan remains in the Limited Guaranty Pool.

“ Subordinated Debt ” shall mean all Indebtedness of Sponsor subordinated to all obligations of Sponsor or any other Credit Party arising under this Agreement and the Subsidiary Guaranty Agreement, created, incurred or assumed on terms and conditions satisfactory in all respects to the Servicer and the Participants, including without limitation, with respect to interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies, and subordination provisions, as evidenced by the written approval of the Servicer and Required Participants.

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“ Subsidiary ” shall mean, with respect to any Person (the “ parent ”), any corporation, partnership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, partnership, joint venture, limited liability company, association or other 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 the case 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 Loan Parties 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 to Statement of Financial Accounting Standards No. 13, as amended and (ii) the lessee will be entitled to various 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 price payment obligations of such Person under such Synthetic 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 Governmental Authority.

“ Traditional Franchisee ” means, collectively, a franchisee of the Sponsor that (i) is not a Franchisee and (ii) is not operating under the Franchise Partner Program.

“ 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 such terms are defined in Part I of Subtitle E of Title IV of ERISA.

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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, all financial statements required to be delivered hereunder shall be prepared, and all financial records shall be maintained in accordance with, GAAP; provided, that if 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 such covenant, then the Sponsor’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Sponsor and the Required Participants; 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 and such 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 fiscal year end in effect immediately before such requested change in fiscal year end became effective, until such covenant is amended in a manner satisfactory to the Sponsor 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 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 to have the same meaning and effect as the word “shall”. In the computation of periods of time from 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 context requires 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 any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein 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 particular provision 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 and state of the 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.

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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 reliance upon the guaranty of the Sponsor set forth herein, the Servicer hereby establishes a Commitment to the Sponsor to establish Loan Commitments and make Advances to such Franchisees as may be designated by the Sponsor in its Funding Approval Notices during a period commencing on November 19, 2004 and ending on October 5, 2006 (as such period may be extended for one or more subsequent three-year periods pursuant to Section 2.8 hereof, the “Commitment Termination Date”) in an aggregate committed amount at any one time outstanding not to exceed FORTY-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 the procedures set forth in the Servicing Agreement, the Sponsor may authorize the Servicer to establish a Loan Commitment in favor of a Franchisee who meets the credit criteria established by the Sponsor. The amount of each Loan Commitment shall be determined by the Sponsor but shall not be less than $50,000 nor exceed $3,500,000 for any Franchisee. Pursuant to the Loan Commitment, the Servicer shall agree to make Advances to the Borrower thereunder 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 for Loans 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 Servicer shall otherwise agree, and except that any Loan Commitments outstanding on the date hereof that provide otherwise may remain in effect until such time as such Loan Commitments are renewed or refinanced. In addition, the Servicer shall agree to issue Letters of Credit on behalf of such Borrower in an aggregate amount at any one time outstanding not to exceed $250,000; provided, however, the Servicer shall not be obligated to issue any Letter of Credit unless the terms and provisions of such Letter of Credit are satisfactory to the Servicer in its reasonable discretion. Each Loan shall bear interest 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 on any 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 term of 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 Borrower shall be deemed to have requested an Advance to repay such amount and the Servicer shall make such Advance regardless of the minimum requirements set forth above and regardless of whether or not a Default or Event of Default exists under the applicable Loan Documents, which amounts shall be Advances for all purposes hereunder. Notwithstanding the foregoing, the terms of all Loans and Loan Commitments governed by Loan Documents executed and delivered by Borrowers prior to the Effective Date shall be subject in all respects to Section 11.2.2.

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(c) Obligation to Establish Loan Commitments . Servicer’s obligation to establish each Loan Commitment under the Operative Documents is subject 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 respects with the same effect as though such representations and warranties had been made on the Closing Date of such Loan, in each case before and after giving effect thereto or, if such representations and warranties relate solely to an earlier date, were true and correct as of such earlier date;

(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 additional precedents and conditions as may, at Sponsor’s election, be included in the applicable Funding Approval Notice, shall have been completed to the 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 hereby purchases 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 of any 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 not exceed the amounts which such Participant is entitled to receive pursuant to the terms of this Agreement.

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(b) In consideration of the entry by each Participant into this Agreement and the obligation of each Participant hereunder, the Servicer shall issue to each Participant on the Closing Date, a Participation Certificate. Each Participation Certificate shall be in the amount of the relevant Participant’s Participating Commitment, and the Funded Participant’s Interest outstanding thereunder shall bear interest as hereinafter set forth and shall be payable as 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, each Participant severally agrees from time to time, during the period commencing on the Closing Date and ending on the Final Termination Date, to fund its Pro Rata Share of outstanding Loans (including Advances made by the Servicer in connection with unreimbursed drawing upon outstanding Letters of Credit) made by the Servicer in an aggregate amount at any one outstanding not to exceed such Participant’s Participating Commitment (subject to each Participant’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 of the applicable Loan Documents and the Servicing Agreement. On the date of any such funding, the Servicer shall elect whether or not to require the Participants 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 to require 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 the amount of Bank of America’s Participating Commitment and further provided that the sum of (x) the aggregate Fronting Advances plus (y) the aggregated Funded Participant’s Interest plus (z) the aggregate Letter of Credit Outstandings shall not exceed the amount of the Commitment. If (i) any Credit Event shall have occurred, (ii) after giving effect to any Advance, the aggregate Fronting Advances outstanding hereunder would exceed Bank of America’s Participating Commitment, or (iii) the Servicer otherwise determines in its sole discretion to request a Participant Funding hereunder, then the Servicer shall notify the Participants pursuant to subsection (b) requesting a Participant Funding. The Servicer shall issue Letters of Credit requested by the Borrowers pursuant to the terms of the Loan Documents in accordance with the terms of the applicable Loan Documents and the Servicing Agreement. 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 of Advances or Loans made or outstanding pursuant to the Loan Documents, the Servicer shall deliver written or telecopy notice to the Participants (or telephonic notice promptly confirmed in writing or by telecopy) (a “Participant Funding Request”) by no later than noon (Charlotte, North Carolina time) 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 Participant Funding.

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(c) Participant Obligation . Each Participant shall make its Participant Funding in the amount of its Pro Rata Share on the proposed date thereof by wire transfer of immediately available funds to the Servicer in Atlanta, Georgia by not later than 2:00 P.M. (Charlotte, North Carolina time). Unless the Servicer shall have received notice from a Participant prior to the date of any Participant Funding that such Participant will not make available to the Servicer such Participant’s Pro Rata Share of such Participant Funding, the Servicer may assume that the Participant has made such portion available to the Servicer on the date of such Participant Funding in accordance with this subsection (c) and the Servicer may, in reliance on such assumption, make available to the Borrowers a corresponding amount or credit the same to Fronting Advances. If and to the extent that such Participant shall not have made such portion available to the Servicer, such Participant and the Sponsor shall severally agree to repay the Servicer forthwith (on demand in the case of the Participant and within three (3) days of such demand in the case of the Sponsor), without duplication, such amount with interest at the Federal Funds Rate plus 2% per annum and, until such time as such Participant has repaid to the Servicer such amount, such Participant shall (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 failed to pay to the Servicer. If such Participant shall repay to the Servicer such amount, then such amount shall constitute part of such Participant’s Funded Participant’s Interest.

(d) Participant’s Obligation Absolute and Unconditional . Each Participant’s obligations to fund its Pro Rata Share of any requested Participant Funding 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 any reason whatsoever, (ii) the occurrence of any Credit Event or Unmatured Credit Event, (iii) the occurrence of any Loan Default, (iv) any adverse change in the condition (financial or otherwise) of the Sponsor or any other Credit Party or any Borrower, (v) the acceleration or maturity of any Loan or the Sponsor’s obligations hereunder or the termination of the Commitment, Loan Commitment or the Participating Commitments after the making of any Fronting Advance, (vi) any breach of this Agreement by the Sponsor or any other Participant, or (vii) any other circumstance, happening or event whatsoever, 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 Pro Rata 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 of such Fronting Advance, the Servicer had received written

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notice from Sponsor, the relevant Borrower or any Participant specifying that such Credit Event, Unmatured Credit Event or Loan Default had occurred and was continuing (and identifying the same as a Credit Event, Unmatured Credit Event or Loan Default, as the case may be); provided that , in the case of an Unmatured Credit Event or Credit Event where the Participants are not pursuing remedies, the Participants will be obligated to fund their respective Pro Rata Shares of Fronting Advances as long as the aggregate amount of such Fronting Advances does not exceed $2,000,000. Each Participant expressly agrees, however, that it shall be obligated to fund its Pro Rata Share of requested Participant Funding with respect to Advances made by the Servicer with respect to unreimbursed drawings upon outstanding Letters of Credit whether or not a Credit Event, Unmatured Credit Event or 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”) with respect to the average daily amount of each Participant’s Unused Commitment, for the period commencing on the Effective Date and ending on the Final Termination Date, or such earlier date as the Participating Commitment shall expire or terminate, equal to 0.375% per annum, such Sponsor’s Commitment 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 Operative Documents, 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 Share of the Letter of Credit Outstandings, for the period commencing on the Closing Date and ending on the Final Termination Date, or such earlier date as the Participating Commitment shall expire or terminate, equal to 1.75% per annum, such Participant’s Letter of Credit Fee to be payable quarterly in arrears 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 credit fee 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’s Letter 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 the Borrower is a party, multiplied by (B) the average daily amount of each Participant’s Pro Rata Share of the Letter of Credit Outstandings, which amount 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, which amount paid by the Sponsor under this Section 2.4(c) shall not constitute Guaranty Payments with respect to Loans in the Limited Guaranty Pool.

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(c) All Commitment Fees and Participant’s Letter of Credit Fees shall be paid on each Quarterly Date, in immediately available funds, to the Participants 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 Quarterly Date to pay the Commitment Fees to the Participants required pursuant hereto, or (ii) the Letter of Credit Fees received by the Servicer from the Borrowers and the Sponsor are not sufficient on any Quarterly Date to pay the Participant’s Letter of Credit Fees required pursuant hereto, the Sponsor shall, upon demand of the Servicer, immediately fund such difference to the Servicer (with such payment allocated to specific Loan Payment Defaults as 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 the actual 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 such Funded Participant’s Interest is outstanding (with the Payment Period being automatically reset on the last Business Day of each month for the next Payment Period regardless of the date of any Participant Funding hereunder) plus an additional one hundred seventy-five basis points (1.75%) per annum.

(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 of each 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 sufficient to pay the interest to the Participants required pursuant hereto, the Sponsor shall, upon demand of the Servicer, immediately fund such difference to the Servicer (with such payment allocated to specific Loan Payment Defaults as agreed by Sponsor and Servicer) and if such shortfall results from Loan Payment Defaults rather than interest rate variances, either, at the election of the Sponsor, (x) the Sponsor shall be reimbursed by the Servicer upon receipt of such amount from the Borrower, (y) the Loan Indebtedness shall be deemed to be reduced by such amount upon a repayment or purchase of such Defaulted Loan by Sponsor in accordance with the terms of this Agreement, or (z) such amount shall be deemed to have satisfied Sponsor’s obligation 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 amount shall 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 before judgment) 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.

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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, without premium or penalty, to terminate the Commitment, in part or in whole, provided that (i) any such termination shall apply to proportionately and permanently reduce 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 than sixty (60) days prior to the then scheduled Commitment Termination Date, request that the Participants extend the then scheduled Commitment Termination Date (the “Existing Date”) for an additional three-year period. Concurrently with the delivery of such written notification, the Sponsor shall deliver to the Servicer (which shall promptly deliver a copy to each of the Participants), a certificate of the chief financial officer or treasurer of the Sponsor, setting forth in reasonable detail (i) the amount of the Guaranty Payments made by the Sponsor since the Effective Date with respect to Loans 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 Participant shall, by notice to the Sponsor and the Servicer given within fifteen (15) Business Days after receipt of such request, advise the Sponsor and the Servicer whether or not such Participant consents to the extension request (and any Participant which does not respond during such 15-day period shall be 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 shall have agreed to extend their respective Participating Commitments, the Commitment Termination Date shall be deemed to have been extended, effective as 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 shall not 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 Participants shall, by notice to the Sponsor and the Servicer given

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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 a portion of the Participating Commitments of the Non-Consenting Participants (and any Participant which does not respond during such 10-Business Day 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 of such Participating Commitments, the Sponsor and the Servicer shall allocate such Participating Commitments among such Consenting Participants so as to preserve, to the extent possible, the relative pro rata shares of the Consenting Participants of the Participating Commitments prior to such extension request. If Consenting Participants do not elect to assume all of the Participating Commitments of the Non-Consenting Participants, the Sponsor shall have the right to arrange for one or more banks (any such bank being called a “New Participant”), to purchase the Participating Commitment of any Non-Consenting Participant. Each Non-Consenting Participant shall assign its Commitment and the Loans outstanding hereunder to the Consenting Participant or New Participant purchasing such Participating Commitme

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