10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15 (d)

of the Securities Exchange Act of 1934

FOR QUARTER ENDED SEPTEMBER 19, 2004 COMMISSION FILE NUMBER 1-7323

FRISCH’S RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

OHIO	31-0523213
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2800 GILBERT AVENUE, CINCINNATI, OHIO	45206
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	513-961-2660

Not Applicable

Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES     X                NO             

The total number of shares outstanding of the issuer’s no par common stock, as of September 24, 2004 was:  5,039,325

TABLE OF CONTENTS

			PAGE
PART I - FINANCIAL INFORMATION
	ITEM 1.	FINANCIAL STATEMENTS
		CONSOLIDATED STATEMENT OF EARNINGS	3
		CONSOLIDATED BALANCE SHEET	4 - 5
		CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY	6
		CONSOLIDATED STATEMENT OF CASH FLOWS	7
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8 - 21
	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22 - 27
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
	ITEM 4.	CONTROLS AND PROCEDURES	27 - 28
PART II - OTHER INFORMATION
	ITEM 1.	LEGAL PROCEEDINGS	29
	ITEM 4.	SUBMISSION ON MATTERS TO A VOTE OF SECURITY HOLDERS	29 - 30
	ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K	30 - 32
SIGNATURE			33

Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Statement of Earnings

(Unaudited)

	Sixteen Weeks Ended
	September 19, 2004		September 21, 2003
Revenue
Sales	$	84,062,163	$	77,037,276
Other		422,855		365,769
Total revenue		84,485,018		77,403,045
Costs and expenses
Cost of sales
Food and paper		29,414,304		26,205,431
Payroll and related		27,992,646		25,887,294
Other operating costs		17,554,540		15,559,189
		74,961,490		67,651,914
Administrative and advertising		4,324,761		3,958,443
Interest		806,096		733,667
Total costs and expenses		80,092,347		72,344,024
Earnings before income taxes		4,392,671		5,059,021
Income taxes		1,494,000		1,771,000
Net Earnings	$	2,898,671	$	3,288,021
Earnings per share (EPS) of common stock:
Basic net earnings per share	$	.58	$	.66
Diluted net earnings per share	$	.56	$	.65

The accompanying notes are an integral part of these statements.

3

Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Balance Sheet

ASSETS

	September 19, 2004 (unaudited)		May 30, 2004
Current Assets
Cash	$	557,387	$	294,410
Receivables
Trade		1,634,929		1,384,798
Other		375,216		381,090
Inventories		4,470,456		4,381,814
Prepaid expenses and sundry deposits		2,550,322		2,076,319
Prepaid and deferred income taxes		1,024,427		1,024,427
Total current assets		10,612,737		9,542,858
Property and Equipment
Land and improvements		54,215,980		50,250,328
Buildings		76,080,694		75,040,561
Equipment and fixtures		80,193,790		77,673,937
Leasehold improvements and buildings on leased land		19,887,123		19,751,361
Capitalized leases		7,519,109		7,388,580
Construction in progress		7,424,289		6,918,091
		245,320,985		237,022,858
Less accumulated depreciation and amortization		103,598,602		101,302,386
Net property and equipment		141,722,383		135,720,472
Other Assets
Goodwill		740,644		740,644
Other intangible assets		1,376,450		1,122,982
Investments in land		1,148,293		1,148,293
Property held for sale		1,145,785		1,160,785
Long-term receivables		132,532		210,578
Net cash surrender value-life insurance policies		4,720,083		4,600,873
Other		2,615,086		2,600,469
Total other assets		11,878,873		11,584,624
	$	164,213,993	$	156,847,954

The accompanying notes are an integral part of these statements.

4

LIABILITIES AND SHAREHOLDERS’ EQUITY

	September 19, 2004 (unaudited)		May 30, 2004
Current Liabilities
Long-term obligations due within one year
Long-term debt	$	7,157,236	$	6,230,801
Obligations under capitalized leases		554,774		508,520
Self insurance		1,344,011		1,310,191
Accounts payable		13,839,789		13,380,257
Accrued expenses		7,120,023		8,238,293
Income taxes		945,247		436,265
Total current liabilities		30,961,080		30,104,327
Long-Term Obligations
Long-term debt		39,776,685		35,226,734
Obligations under capitalized leases		3,581,379		3,221,384
Self insurance		1,949,158		2,384,893
Deferred income taxes		3,540,082		3,540,082
Deferred compensation and other		3,012,903		2,903,974
Total long-term obligations		51,860,207		47,277,067
Commitments		-		-
Shareholders’ Equity
Capital stock
Preferred stock - authorized, 3,000,000 shares without par value; none issued		-		-
Common stock - authorized, 12,000,000 shares without par value; issued, 7,494,010 and 7,490,845 shares - stated value - $1		7,494,010		7,490,845
Additional contributed capital		62,072,606		61,976,027
		69,566,616		69,466,872
Retained earnings		44,710,880		42,920,243
		114,277,496		112,387,115
Less cost of treasury stock (2,455,351 and 2,469,345 shares)		32,884,790		32,920,555
Total shareholders’ equity		81,392,706		79,466,560
	$	164,213,993	$	156,847,954

5

Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Statement of Shareholders’ Equity

Sixteen weeks ended September 19, 2004 and September 21, 2003

(Unaudited)

	Common stock at $1 per share - Shares and amount		Additional contributed capital			Retained earnings			Treasury shares			Total
Balance at June 1, 2003		7,420,763		60,926,377			34,490,774			(33,072,188	)		69,765,726
Net earnings for sixteen weeks		-		-			3,288,021			-			3,288,021
Stock options exercised - new shares issued		31,751		326,655			-			-			358,406
Tax benefit from stock options exercised		-		116,614			-			-			116,614
Treasury shares re-issued		-		18,180			-			44,495			62,675
Cash dividends - $.20 per share		-		-			(994,169	)		-			(994,169	)
Balance at September 21, 2003		7,452,514		61,387,826			36,784,626			(33,027,693	)		72,597,273
Net earnings for thirty-six weeks		-		-			7,240,989			-			7,240,989
Stock options exercised - new shares issued		38,331		427,728			-			-			466,059
Stock options exercised - treasury shares re-issued		-		(9,103	)		-			107,138			98,035
Tax benefit from stock options exercised		-		249,855			-			-			249,855
Employee stock purchase plan		-		(80,279	)		-			-			(80,279	)
Cash dividends - $.22 per share		-		-			(1,105,372	)		-			(1,105,372	)
Balance at May 30, 2004		7,490,845		61,976,027			42,920,243			(32,920,555	)		79,466,560
Net earnings for sixteen weeks		-		-			2,898,671			-			2,898,671
Stock options exercised - new shares issued		3,165		46,683			-			-			49,848
Stock options exercised - treasury shares re-issued		-		896			-			2,223			3,119
Tax benefit from stock options exercised		-		10,138			-			-			10,138
Other treasury shares re-issued		-		38,862			-			33,542			72,404
Cash dividends - $.22 per share		-		-			(1,108,034	)		-			(1,108,034	)
Balance at September 19, 2004	$	7,494,010	$	62,072,606		$	44,710,880		($	32,884,790	)	$	81,392,706

The accompanying notes are an integral part of these statements.

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Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

Sixteen weeks ended September 19, 2004 and September 21, 2003

(unaudited)

	2004			2003
Cash flows provided by (used in) operating activities:
Net earnings	$	2,898,671		$	3,288,021
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization		3,489,168			3,327,569
Loss on disposition of assets		57,445			162,232
		6,445,284			6,777,822
Changes in assets and liabilities:
Accounts receivable		(244,257	)		13,361
Inventories		(88,642	)		(136,283	)
Prepaid expenses and sundry deposits		(474,003	)		(779,248	)
Other assets		(177,938	)		572,536
Accounts payable		(94,794	)		1,556,534
Accrued expenses		(1,118,270	)		(1,078,622	)
Accrued income taxes		508,982			713,234
Tax benefit from stock options exercised		10,138			116,614
Self insured obligations		(401,915	)		(548,745	)
Other liabilities		108,929			64,600
		(1,971,770	)		493,981
Net cash provided by operating activities		4,473,514			7,271,803
Cash flows provided by (used in) investing activities:
Additions to property and equipment		(8,999,056	)		(7,054,801	)
Proceeds from disposition of property		10,057			3,493
Proceeds from litigation settlement		-			1,700,000
Change in other assets		(138,055	)		(594,700	)
Net cash (used in) investing activities		(9,127,054	)		(5,946,008	)
Cash flows provided by (used in) financing activities:
Proceeds from borrowings		7,500,000			2,000,000
Payment of long-term debt and capital lease obligations		(2,155,145	)		(1,743,278	)
Cash dividends paid		(553,709	)		(445,655	)
Proceeds from stock options exercised - new shares issued		49,848			358,406
Proceeds from stock options exercised - treasury shares re-issued		3,119			-
Other treasury shares re-issued		72,404			62,675
Net cash provided by financing activities		4,916,517			232,148
Net increase in cash and equivalents		262,977			1,557,943
Cash and equivalents at beginning of year		294,410			1,133,443
Cash and equivalents at end of quarter	$	557,387		$	2,691,386
Supplemental disclosures:
Interest paid	$	911,684		$	854,633
Income taxes paid (net of refunds, if any)		974,880			941,153
Dividends declared but not paid		554,325			548,514
Lease transactions capitalized		537,777			-

The accompanying notes are an integral part of these statements.

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Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

First Quarter Ended September 19, 2004

NOTE A – ACCOUNTING POLICIES

A summary of the Company’s significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Description of the Business

Frisch’s Restaurants, Inc. (The Company) is a regional company that operates and licenses others to operate full service family-style restaurants under the name “Frisch’s Big Boy”, and operates grill buffet style restaurants under the name “Golden Corral” under certain licensing agreements. All restaurants currently operated by the Company are located in various regions of Ohio, Kentucky and Indiana. Plans are in place to expand Golden Corral operations into certain parts of Michigan, Pennsylvania and West Virginia.

The Company owns the trademark “Frisch’s” and has exclusive, irrevocable ownership of the rights to the “Big Boy” trademark, trade name and service mark in the states of Kentucky and Indiana, and in most of Ohio and Tennessee. Substantially all of the Frisch’s Big Boy restaurants also offer “drive-thru” service. The Company also licenses Big Boy restaurants to other operators, currently in certain parts of Ohio, Kentucky and Indiana. In addition, the Company operates a commissary and food manufacturing plant near its headquarters in Cincinnati, Ohio that services all Big Boy restaurants operated by the Company, and is available to supply restaurants licensed to others.

Consolidation Practices

The accompanying consolidated financial statements include the accounts of Frisch’s Restaurants, Inc. and all of its subsidiaries. Significant inter-company accounts and transactions have been eliminated in consolidation. In the opinion of management, these interim financial statements include all adjustments (all of which were normal and recurring) necessary for a fair presentation of all periods presented. In addition, certain reclassifications may have been made to prior year information to conform to the current year presentation.

Fiscal Year

The Company’s fiscal year is the 52 or 53 week period ending on the Sunday nearest to the last day of May. The first quarter of each fiscal year contains sixteen weeks, while the last three quarters each normally contain twelve weeks. Every fifth or sixth year, the additional week needed to make a 53 week year is added to the fourth quarter, resulting in a thirteen week fourth quarter.

Use of Estimates

The preparation of financial statements requires management to use estimates and assumptions to measure certain items that affect the amounts reported. These judgments are based on knowledge and experience about past and current events, and assumptions about future events. Although management believes its estimates are reasonable and adequate, future events affecting them may differ markedly from current judgment.

Some of the more significant items requiring the use of estimates include liabilities for self insurance and deferred executive compensation, value of intangible assets, and the carrying values of long-lived assets and long-lived assets to be disposed of.

Cash and Cash Equivalents

Highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Outstanding checks in the amount of $704,000 were included in accounts payable as of May 30, 2004.

Receivables

The Company values its trade notes and accounts receivable on the reserve method. The reserve balance was $30,000 as of September 19, 2004 and May 30, 2004. The reserve is monitored for adequacy based on historical collection patterns and write-offs, and current credit risks.

8

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Inventories

Inventories, comprised principally of food items, are valued at the lower of cost, determined by the first-in, first-out method, or market.

Accounting for Rebates

Cash consideration received from certain food vendors is treated as a reduction of cost of sales and is recognized in the same period the Company sells the food.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided principally on the straight-line method over the estimated service lives, which range from 10 to 25 years for buildings or components thereof and 5 to 10 years for equipment. Leasehold improvements are depreciated over 10 to 25 years or the remaining lease term, whichever is shorter. Software is depreciated over three to ten years. Interest on borrowings is capitalized during active construction periods of major capital projects. Capitalized interest for the sixteen weeks ended September 19, 2004 and September 21, 2003 was $45,000 and $70,000, respectively. In addition, capitalization of the value of certain employees’ time who worked on the implementation of the Company’s enterprise information system was $96,000 and $78,000 respectively, for the sixteen weeks ended September 19, 2004 and September 21, 2003.

The cost of land not yet in service is included in “construction in progress” if construction has begun or if construction is likely within the next twelve months. Estimated remaining expenditures for new restaurant construction that was in progress as of September 19, 2004 totaled approximately $1,817,000, including $1,548,000 for two Golden Corral restaurants and $269,000 for one Big Boy restaurant. The cost of land on which construction is not likely within the next twelve months is classified as “Investments in land” in the consolidated balance sheet.

Under Statement of Financial Accounting Standards No. 144 (SFAS 144), “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company considers a history of cash flow losses on a restaurant-by-restaurant basis to be its primary indicator of potential impairment. Carrying values are reviewed for impairment when events or changes in circumstances indicate that the assets’ carrying values may not be recoverable from the estimated future cash flows expected to result from the properties’ use and eventual disposition. When undiscounted expected future cash flows are less than carrying values, an impairment loss is recognized equal to the amount by which the carrying values exceed the net realizable values of the assets. Net realizable values are generally determined by estimates provided by real estate brokers and/or the Company’s past experience in disposing of unprofitable restaurant properties. Management believes that this policy is the Company’s only critical accounting policy because of its potential for significant impact on the financial condition and results of the Company’s operations.

No impairment losses were recognized during either of the sixteen weeks ended September 19, 2004 or September 21, 2003.

Statement of Financial Accounting Standards No. 143 (SFAS 143) “Accounting for Asset Retirement Obligations” is applicable to legal obligations associated with the retirement of certain tangible long-lived assets. The adoption of SFAS 143 on June 2, 2003 did not materially impact the Company’s financial statements.

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Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Statement of Financial Accounting Standards No. 146 (SFAS 146) “Accounting for Obligations Associated with Disposal Activities” addresses the accounting treatment of costs in connection with exit or disposal activities. It requires that liabilities be recognized for exit and disposal costs only when the liabilities are incurred, rather than upon the commitment to an exit or disposal plan. SFAS 146 is effective for any disposal or exit activity initiated after December 31, 2002. Its application is not expected to materially impact the Company’s financial statements.

Certain surplus property is currently held for sale. All of the surplus property is stated at the lower of cost or market and is classified as “Property held for sale” in the consolidated balance sheet. Market values are generally determined by real estate brokers and/or the Company’s judgment.

Goodwill and Other Intangible Assets, Including Licensing Agreements

Acquired goodwill is tested annually for impairment and also whenever an impairment indicator arises. Impairment losses are recorded when impairment is determined to have occurred. As of September 19, 2004 and May 30, 2003, the carrying amount of goodwill acquired in prior years was $741,000, which is net of $308,000 amortized in prior years.

Intangible assets having a finite useful life are subject to amortization, and are tested annually for impairment. The Company’s other intangible assets consist principally of initial franchise fees paid for each new Golden Corral restaurant the Company opens. Amortization of the $40,000 initial fee begins when the restaurant opens and is computed using the straight-line method over the 15-year term of each individual restaurant’s franchise agreement. The fees are ratably amortized at $2,667 per year per restaurant, or approximately $75,000 per year in each of the next five years for the 28 Golden Corral restaurants in operation as of September 19, 2004. Amortization was $22,000 and $17,000 respectively, for the sixteen weeks ended September 19, 2004 and September 21, 2003. The remaining balance of other intangible assets, including fees paid for future Golden Corral restaurants, is not currently being amortized because these assets have indefinite or as yet to be determined useful lives.

An analysis of other intangible assets follows:

	September 19, 2004			May 30, 2004
	(in thousands)
Golden Corral initial franchise fees subject to amortization	$	1,120		$	1,040
Less accumulated amortization		(196	)		(174	)
Carrying amount of Golden Corral initial franchise fees subject to amortization		924			866
Current portion of Golden Corral initial franchise fees subject to amortization		(75	)		(69	)
Golden Corral fees not yet subject to amortization		380			180
Other intangible assets		147			146
Total intangible assets	$	1,376		$	1,123

The franchise agreements with Golden Corral Franchising Systems, Inc. also require the Company to pay fees based on defined gross sales. These costs are charged to operations as incurred.

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Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Revenue from restaurant operations is recognized upon receipt of payment from customers. Revenue from the sale of commissary products to Big Boy restaurants licensed to other operators is recognized upon shipment of product. Revenue from franchise fees, based on sales of Big Boy restaurants licensed to other operators, is recorded on the accrual method as earned. Initial franchise fees are recognized as revenue when the fees are deemed fully earned and non-refundable, ordinarily upon the execution of the license agreement, in consideration of the Company’s services to that time.

New Store Opening Costs

New store opening costs consist of new employee training costs, the cost of a team to coordinate the opening and the cost of certain replaceable items such as uniforms and china. New store opening costs are charged to expense as incurred. Opening costs for the sixteen weeks ended September 19, 2004 and September 21, 2003 were $723,000 ($504,000 for Golden Corral and $219,000 for Big Boy) and $434,000 ($411,000 for Golden Corral and $23,000 for Big Boy), respectively.

Benefit Plans

The Company has two qualified defined benefit pension plans covering all of its eligible employees. (Hourly restaurant employees hired after December 31, 1998 are ineligible to enter the qualified defined benefit pension plans. Instead, these employees are offered participation in a 401(k) savings plan with a matching 40% employer cash contribution.) Qualified defined benefit pension plan benefits are based on years-of-service and other factors. The Company’s funding policy is to contribute at least annually amounts sufficient to satisfy legal funding requirements plus such additional tax-deductible amounts deemed advisable under the circumstances. Contributions are intended to provide not only for benefits attributed to service-to-date, but also for those expected to be earned in the future. In addition, the Company has an unfunded non-qualified Supplemental Executive Retirement Plan (SERP) that provides a supplemental retirement benefit to the executive officers of the Company and certain other “highly compensated employees” whose benefits under the qualified plans are reduced when their compensation exceeds Internal Revenue Code imposed limitations or when elective salary deferrals are made to the Company’s non-qualified Executive Savings Plan. Prepaid pension benefit costs (see Note E – Pension Plans) and Executive Savings Plan assets are the principal components of “Other long-term assets” in the balance sheet.

The executive officers of the Company and certain other “highly compensated employees” began receiving comparable pension benefits commencing in the year 2000, through a non-qualified Non Deferred Cash Balance Plan instead of accruing additional benefits under the qualified defined benefit pension plans and the SERP. (Also see Note E – Pension Plans.)

Self Insurance

The Company self-insures its Ohio workers’ compensation claims up to $250,000 per claim. Initial self insurance liabilities are accrued based on prior claims history. An annual review of claims experience is performed during the first quarter of ensuing fiscal years and adjustments are made to the self insurance liabilities to more closely reflect annual claims experience. Favorable claims experience allowed reserves to be lowered by $614,000 and $710,000 respectively, during the sixteen weeks ended September 19, 2004 and September 21, 2003.

As of September 19, 2004, the Company had two outstanding letters of credit totaling $175,000 in support of its self-insurance program.

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Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

With the exception of long-term debt (see Note B Long-Term Debt), the carrying value of the Company’s financial instruments approximates fair value.

Income Taxes

Taxes are provided on all items included in the statement of earnings regardless of when such items are reported for tax purposes. The provision for income taxes in all periods has been computed based on management’s estimate of the effective tax rate for the entire year.

Stock Based Compensation

The Company accounts for stock options using the intrinsic value method of measuring compensation expense prescribed by Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees,” as permitted by Statement of Financial Accounting Standards No. 123 (SFAS 123), “Accounting for Stock Based Compensation.” No stock based employee compensation cost is included in net income, as all options granted have had an exercise price equal to the market value of the stock on the date of the grant. In accordance with Statement of Financial Standards No. 148 (SFAS 148), “Accounting for Stock Based Compensation – Transition and Disclosure,” the following table presents the effect on net income and earnings per share had the Company accounted for stock options using the fair value recognition provisions of SFAS 123:

	Sixteen weeks ended
	September 19, 2004		September 21, 2003
	(in thousands, except per share data)
Net Income, as reported	$	2,899	$	3,288
Deduct: total stock-based employee compensation expense determined under fair value based method for all grants (a), net of tax effects		129		89
Pro forma net income	$	2,770	$	3,199
Earnings per share
Basic – as reported	$	.58	$	.66
Basic – pro forma	$	.55	$	.64
Diluted – as reported	$	.56	$	.65
Diluted – pro forma	$	.54	$	.63

(a) For a summary of options granted, refer to the stock option section of Note D – Capital Stock.

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Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A - ACCOUNTING POLICIES (CONTINUED)

The estimated total stock-based employee compensation expense was determined using the modified Black-Scholes option pricing model with the following weighted average assumptions:

	Sixteen weeks ended
	September 19, 2004	September 21, 2003
Dividend yield	1.61%	1.91%
Expected volatility	29%	27%
Risk free interest rate	3.86%	2.38%
Expected lives	5 years	5 years
Weighted average fair value of options granted	$8.25	$4.20

New Accounting Pronouncements

The Company reviewed all significant newly issued accounting pronouncements and concluded that, other than those disclosed herein, no material impact is anticipated on the financial statements as a result of future adoption.

NOTE B – LONG-TERM DEBT

	September 19, 2004				May 30, 2004
	Payable within one year		Payable after one year		Payable within one year		Payable after one year
	(in thousands)
Construction Draw Facility -
Construction Phase Loans	$	-	$	1,000	$	-	$	-
Term Loans		7,157		28,777		6,231		25,227
Bullet Loan		-		10,000		-		10,000
Revolving Credit Loan		-		-		-		-
	$	7,157	$	39,777	$	6,231	$	35,227

The portion payable after one year matures as follows:

	September 19, 2004		May 30, 2004
	(in thousands)
Period ending in 2006	$	8,522	$	6,664
2007		7,013		6,376
2008		16,234		15,684
2009		4,165		4,059
2010		2,310		1,616
Subsequent to 2010		1,533		828
	$	39,777	$	35,227

13

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE B – LONG-TERM DEBT (CONTINUED)

The Construction Draw Facility is an unsecured draw credit line that provides for borrowing of up to $61,500,000 to construct and open Golden Corral restaurants. As of September 19, 2004, $9,000,000 remained available to be borrowed before the Facility expires September 1, 2006, unless extended. It is subject to a ¼ percent unused commitment fee. Under the terms of the Facility, funds borrowed are initially governed as a Construction Phase Loan, with interest determined by a pricing matrix that uses changeable basis points, determined by certain of the Company’s financial ratios. The basis points are added to or subtracted from one of various indices chosen by the Company. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. As of September 19, 2004, $1,000,000 that had been borrowed during the sixteen weeks ended September 19, 2004 remained as a Construction Phase Loan, bearing interest at 3.05 percent. Within six months of the completion and opening of each restaurant, the balance outstanding under each Construction Phase Loan must be converted to a Term Loan amortized over a period not to exceed seven years. Upon conversion, the Company may select a fixed interest rate over the chosen term or may choose among various adjustable rate options. Fixed interest rates have been chosen for all of the Term Loans (original notes for $51,500,000), the weighted average of which is 6.18 percent, and all of the Term Loans are being repaid in 84 equal monthly installments of principal and interest aggregating $766,000, expiring in various periods ranging from May 2006 through September 2011. Prepayments of the Term Loans are permissible upon payment of sizeable prepayment fees and other amounts. Any outstanding Construction Phase Loan that has not been converted into a Term Loan shall mature and be payable in full on September 1, 2006, unless extended.

The $10,000,000 Bullet Loan is secured by mortgages on the real property of six Golden Corral restaurants. It matures and is payable in one installment on December 31, 2007. Variable rated interest, currently 3.81 percent, is determined by adding 200 basis points to the London Interbank Offered Rate (LIBOR). At any time during the term of the loan, the Company has the option of designating that the loan bear interest for the remainder of the term at a fixed rate equal to the lender’s cost of funds plus 200 basis points. Variable LIBOR based interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. Fixed cost of funds based interest shall be payable monthly in arrears.

A $5,000,000 unsecured Revolving Credit Loan is in place that is intended to fund temporary working capital needs. The loan, none of which was outstanding as of September 19, 2004, is subject to a 30 consecutive day out-of-debt period each year. It matures on September 1, 2006, unless extended. Interest is determined by the same pricing matrix used for Construction Phase Loans under the Construction Draw Facility, the basis points from which are added to or subtracted from one of various indices chosen by the Company. The loan is subject to a ¼ percent unused commitment fee. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly.

These loan agreements contain covenants relating to tangible net worth, interest expense, cash flow, debt levels, capitalization changes, asset dispositions, investments and restrictions on pledging certain restaurant operating assets. The Company was in compliance with all loan covenants as of September 19, 2004. Compensating balances are not required by these loan agreements.

The fair values of the Bullet Loan, Revolving Credit Loan and Construction Phase Loan approximate carrying value as of September 19, 2004 and May 30, 2004 as the current provisions of the loans call for variable rated interest. The fair values of the fixed rate Term Loans shown in the following table are based on fixed rates that would be available for loans with identical terms and maturities, if borrowed at September 19, 2004 and May 30, 2004.

14

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE B – LONG-TERM DEBT (CONTINUED)

	September 19, 2004				May 30, 2004
	Carrying value		Fair value		Carrying value		Fair value
	(in thousands)
Construction Draw Facility -
Construction Phase Loans	$	1,000	$	1,000	$	-	$	-
Term Loans		35,934		36,406		31,458		31,822
Revolving Credit Loan		-		-		-		-
Bullet Loan		10,000		10,000		10,000		10,000

NOTE C - LEASED PROPERTY

The Company occupies certain of its restaurants pursuant to lease agreements. The majority of the leases are for fifteen or twenty years and contain renewal options for ten to fifteen years, and/or have favorable purchase options. As of September 19, 2004, eleven of the Company’s 29 leased restaurant locations have been capitalized. Delivery equipment is also held under capitalized leases expiring during periods through 2012. Amortization of capitalized lease assets is computed on the straight-line method over the primary terms of the leases. An analysis of the capitalized leased property follows:

	Asset balances at
	September 19, 2004			May 30, 2004
	(in thousands)
Restaurant facilities	$	6,306		$	6,306
Equipment		1,213			1,083
		7,519			7,389
Less accumulated amortization		(5,820	)		(6,116	)
	$	1,699		$	1,273

As of September 19, 2004, eighteen of the Company’s restaurant properties are occupied pursuant to operating leases, four of which are ground leases for Golden Corral restaurants. Another Golden Corral ground lease has been entered into for a restaurant to open in the spring of 2005. The operating lease table below includes scheduled payments for this lease even though payments will not begin until the restaurant opens. The Company also occupies office space under an operating lease that expires during 2013, with renewal options available through 2023. The Company has the option to purchase the office property in 2023. Total rental expense of operating leases was $499,000 and $440,000 respectively, during the sixteen weeks ended September 19, 2004 and September 21, 2003.

Future minimum lease payments under capitalized leases and operating leases, including residual value guarantees on certain of the capitalized leases, having an initial or remaining term of one year or more follow:

15

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE C - LEASED PROPERTY (CONTINUED)

Period ending September 19,	Capitalized leases			Operating leases
	(in thousands)
2005	$	944		$	1,384
2006		850			1,282
2007		620			1,117
2008		2,481			916
2009		122			823
2010 to 2025		259			9,002
Total		5,276		$	14,524
Amount representing interest		(1,140	)
Present value of obligations		4,136
Portion due within one-year		(555	)
Long-term obligations	$	3,581

Not included in the above table are certain leases of former operating properties that the Company has assigned or sub-let to third parties. The average annual obligations of these leases approximate $50,000 over the next five years. The Company remains contingently liable for the performance of these leases. In the event of default by the assignees or sub-lessees, the Company generally retains the right to re-assign or sub-let the properties.

NOTE D - CAPITAL STOCK

2003 Stock Option and Incentive Plan

Shareholders approved the 2003 Stock Option and Incentive Plan (the “2003 Incentive Plan” or “Plan”) on October 6, 2003. The 2003 Incentive Plan provides for several forms of awards including stock options, stock appreciation rights, stock awards including restricted and unrestricted awards of stock, and performance awards. The Plan will continue in effect until terminated by the Board of Directors. Subject to adjustment for changes in capitalization, the maximum number of shares of common stock that the Plan may issue is 800,000. The Plan provides that the total number of shares of common stock covered by options plus the number of stock appreciation rights granted to any one individual may not exceed 80,000 during any fiscal year. Additionally, no more than 80,000 shares of common stock may be issued in payment of performance awards denominated in shares, and no more than $1,000,000 in cash (or fair market value, if paid in shares) may be paid pursuant to performance awards denominated in dollars, granted to any one individual during any fiscal year if the awards are intended to qualify as performance based compensation. Employees of the Company and non-employee directors of the Company are eligible to be selected to participate in the Plan. Participation is based on selection by the Compensation Committee (the Committee) of the Board of Directors. Although there is no limit to the number of participants in the Plan, there are approximately 40 persons currently participating in the Plan.

Options to purchase shares of the Company’s common stock permit the holder to purchase a fixed number of shares at a fixed price. When options are granted, the Committee determines the number of shares subject to the option, the term of the option which may not exceed 10 years, the time or times when the option will become exercisable and the price per share that a participant must pay to exercise the option. No option will be granted with an exercise price that is less than 100 percent of fair market value on the date of the grant.

Stock appreciation rights (SAR’s) are rights to receive payment, in cash, shares of common stock or a combination of the two, equal to the excess of (1) the fair market value of a share of common stock on the date of exercise over (2) the price per share of common stock established in connection with the grant of the SAR (the reference price). The reference price must be at least 100 percent of the common stock’s fair market value on the date the SAR is granted. SAR’s may be granted by the Committee in its discretion to any participant, and may have terms no longer than 10 years.

16

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D - CAPITAL STOCK (CONTINUED)

Stock awards are grants of shares of common stock that may be restricted (subject to a holding period or other conditions) or unrestricted. The committee determines the amounts, vesting, if any, terms and conditions of the awards, including the price to be paid, if any, for restricted awards and any contingencies related to the attainment of specified performance goals or continued employment or service.

The Committee may also grant performance awards to participants. Performance awards are the right to receive cash, common stock or both, at the end of a specified performance period, subject to satisfaction of the performance criteria and any vesting conditions established for the award.

As of September 19, 2004, no awards (meaning any form of stock option, stock appreciation right, restricted stock award, unrestricted stock award or performance award) had been granted under the 2003 Stock Option and Incentive Plan.

Other Stock Option Plans

The 1993 Stock Option Plan is not affected by the adoption of the 2003 Stock Option and Incentive Plan. The 1993 Stock Option Plan originally authorized the grant of stock options for up to 562,432 shares (as adjusted for changes in capitalization in earlier years) of the common stock of the Company for a ten-year period beginning May 9, 1994. Shareholders approved the Amended and Restated 1993 Stock Option Plan (Amended Plan) in October 1998, which extended the availability of options to be granted to October 4, 2008. As of September 19, 2004, 6,204 shares remained available to be optioned. Of the 556,228 cumulative shares optioned to date, 388,743 remain outstanding as of September 19, 2004.

Shares may be optioned to employees at not less than 75% of fair market value on the date granted. The Amended Plan added a provision for automatic, annual stock option grants of 1,000 shares to each of the Company’s non-employee directors. The per share exercise price for options granted to non-employee directors must equal 100 percent of fair market value on the date of grant. The Amended Plan also added a Company right to repurchase shares acquired on exercise of options if an optionee chooses to dispose of such shares. Stock appreciation rights are not provided for under the Amended Plan. All outstanding options under the 1993 Plan were granted at fair market value and expire 10 years from the date of grant. Outstanding options to the President and Chief Executive Officer generally vest in six months, while options granted to non-employee directors vest after one year. Outstanding options granted to other key employees vest in three equal annual installments.

The 1984 Stock Option Plan expired May 8, 1994. The final 14,090 outstanding options expired during the sixteen weeks ended September 21, 2003, 10 years from the date originally granted.

The changes in outstanding and exercisable options involving both the 1993 and the 1984 Plans are summarized below:

	Sixteen weeks ended
	September 19, 2004			September 21, 2003
	No. of shares	Weighted avg. price per share		No. of shares	Weighted avg. price per share
Outstanding at beginning of year	319,993	$	15.97	321,665	$	13.96
Granted during the sixteen weeks	74,000	$	29.74	84,000	$	18.87
Exercised during the sixteen weeks	3,331	$	15.90	31,751	$	11.29
Expired during the sixteen weeks	-		-	14,090	$	14.38
Forfeited during the sixteen weeks	1,919	$	18.94	500	$	17.17
Outstanding at end of quarter	388,743	$	18.58	359,324	$	15.32
Exercisable at beginning of year	227,314	$	13.21	233,156	$	13.21
Exercisable at end of quarter	265,240	$	15.29	226,813	$	13.62

17

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D - CAPITAL STOCK (CONTINUED)

Stock options outstanding and exercisable as of September 19, 2004 for the 1993 Stock Option Plan:

Range of Exercise Prices per Share	No. of shares	Weighted average price per share	Weighted average remaining life in years
Outstanding:
$  8.31 to $13.00	75,814	$10.57	5.59 years
$13.01 to $18.00	71,257	$13.79	6.83 years
$18.01 to $24.20	168,172	$19.35	8.30 years
$24.21 to $30.13	73,500	$29.74	9.75 years
$  8.31 to $30.13	388,743	$18.58	7.77 years
Exercisable:
$  8.31 to $12.00	75,814	$10.57	-
$12.01 to $16.00	71,257	$13.79	-
$16.01 to $19.78	118,169	$19.23	-
$24.21 to $30.13	0	0
$  8.31 to $30.13	265,240	$15.29	-

Shareholders approved the Employee Stock Option Plan (elsewhere referred to as Employee Stock Purchase Plan) in October 1998. The Plan provides employees who have completed 90 days of continuous service with an opportunity to purchase shares of the Company’s common stock through payroll deduction. Immediately following the end of each semi-annual offering period, participant account balances are used to purchase shares of stock at the lesser of 85% of the fair market value of shares at the beginning of the offering period or at the end of the offering period. The Plan authorizes a maximum of 1,000,000 shares that may be purchased on the open market or from the Company’s treasury. As of April 30, 2004 (latest available data), 93,265 shares had been purchased through the plan. Shares purchased through the Plan are held by the Plan’s custodian until withdrawn or distributed. As of April 30, 2004, the custodian held 41,678 shares on behalf of employees.

A total of 58,492 common shares (as adjusted for changes in capitalization in earlier years) were reserved for issuance under the non-qualified Executive Savings Plan when it was established in 1993. As of September 19, 2004, 49,374 shares remained in the reserve, including 7,801 shares allocated but not issued to participants.

There are no other outstanding options, warrants or rights.

Treasury Stock

As of September 19, 2004, the Company’s treasury held 2,455,351 shares of the Company’s common stock. From September 1998 through January 2002, 1,135,286 shares of the Company’s common stock were repurchased at a cost of $12,162,000 pursuant to repurchase programs authorized by the Company’s Board of Directors. No shares were repurchased under the authorization that expired on October 7, 2004.

Most of the remaining shares held in the treasury were acquired in August 1997 pursuant to the terms of a modified “Dutch Auction” self-tender offer.

18

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D - CAPITAL STOCK (CONTINUED)

Earnings Per Share

Basic earnings per share is based on the weighted average number of outstanding common shares during the period presented. Diluted earnings per share includes the effect of common stock equivalents, which assumes the exercise and conversion of dilutive stock options.

	Basic earnings per share			Stock equivalents	Diluted earnings per share
	Weighted average shares outstanding	EPS			Weighted average shares outstanding	EPS
September 19, 2004	5,034,866	$	.58	124,322	5,159,188	$	.56
September 21, 2003	4,964,226		.66	103,397	5,067,623		.65

NOTE E - PENSION PLANS

As discussed more fully in Note A – Accounting Policies, the Company sponsors two qualified defined benefit plans plus an unfunded non-qualified Supplemental Executive Retirement Plan (SERP) for “highly compensated employees” (HCE’s). The following table shows the components of net periodic pension cost for the sixteen weeks ended September 19, 2004 and September 21, 2003:

	Sixteen weeks ended
Net periodic pension cost components	September 19, 2004			September 21, 2003
Service cost	$	621		$	521
Interest cost		484			391
Expected return on plan assets		(628	)		(469	)
Amortization of prior service cost		23			21
Amortization of loss		120			146
Net periodic pension cost	$	620		$	610

Contributions to the Plans are expected to exceed $2,120,000 during fiscal 2005. In addition, $304,000 from the fiscal 2004 was contributed to the plans after May 30, 2004.

Compensation expense (not included in the net periodic pension cost described above) relating to the Non Deferred Cash Balance Plan (see Note A – Accounting Policies) was $151,000 and $154,000 respectively, during the sixteen weeks ended September 19, 2004 and September 21, 2003. Fiscal 2005’s contribution to the Non-Deferred Cash Balance Plan is expected to exceed $500,000.

The Company also sponsors two 401(k) plans and a non-qualified Executive Savings Plan for certain HCE’s who have been disqualified from participation in the 401(k) plans (see Note A – Accounting Policies). In the sixteen weeks ended September 19, 2004 and September 21, 2003, matching contributions to the 401(k) plans amounted to $53,000 and $49,000 respectively. Matching contributions to the Executive Savings Plan were $8,000 and $5,000 respectively, during the sixteen weeks ended September 19, 2004 and September 21, 2003.

The Company does not sponsor post retirement health care benefits.

19

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE F – SEGMENT INFORMATION

The Company has two reportable segments within the food service industry: Big Boy restaurants and Golden Corral restaurants. Financial information by operating segment is as follows:

	Sixteen weeks ended
	September 19, 2004			September 21, 2003
	(in thousands)
Sales
Big Boy	$	55,192		$	53,169
Golden Corral		28,870			23,868
	$	84,062		$	77,037
Earnings before income taxes
Big Boy	$	6,253		$	6,669
Opening expense		(219	)		(23	)
Total Big Boy		6,034			6,646
Golden Corral		1,614			1,339
Opening expense		(504	)		(411	)
Total Golden Corral		1,110			928
Administrative expense		(2,368	)		(2,147	)
Interest expense		(806	)		(734	)
Other – net		423			366
Total Corporate Items		(2,751	)		(2,515	)
	$	4,393		$	5,059
Depreciation and amortization
Big Boy	$	2,196		$	2,266
Golden Corral		1,293			1,062
	$	3,489		$	3,328
Capital expenditures
Big Boy	$	3,227		$	1,735
Golden Corral		5,772			5,320
	$	8,999		$	7,055

	As of
	September 19, 2004		May 30, 2004
Identifiable assets
Big Boy	$	88,846	$	84,680
Golden Corral		75,368		72,168
	$	164,214	$	156,848

20

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE G – CONTINGENCIES

The construction of a Golden Corral restaurant in Canton, Ohio was halted in August 2001 in order to assess structural concerns. In March 2002, a final assessment of the defects resulted in the Company’s decision to construct a new building on another part of the lot. (The restaurant finally opened for business in January 2003.) On July 30, 2002, the general contractor that built the defective building filed a demand for arbitration against the Company seeking $294,000 plus interest, fees, and costs it claims is owed by the Company under the construction contract. The Company denies the claim and has filed a counterclaim against the general contractor alleging defective construction and claiming damages, lost profits, interest and costs in an amount exceeding $1,000,000. The Company is vigorously prosecuting this claim and believes that it will ultimately prevail.

On August 29, 2002, the Company filed a separate lawsuit against the architect that designed the defective building alleging negligent design and claiming damages, lost profits, interest and costs exceeding $2,500,000. In July 2003, the Company resolved all claims, counterclaims and cross claims against the trial court defendants, including the architect and the architect’s structural engineering consultant. The defendants agreed to pay the Company the sum of $1,700,000 in full and final settlement of all claims. The Company received the settlement funds in full during the first quarter of fiscal year 2004 and the case was dismissed.

NOTE H - RELATED PARTY TRANSACTIONS

A Big Boy licensed restaurant owned by an officer and director of the Company and two Big Boy licensed restaurants owned by children and other family members of an officer and directors of the Company pay to the Company franchise and advertising fees, employee leasing and other fees, and make purchases from the Company’s commissary.

The total paid to the Company by these three restaurants amounted to $1,488,000 and $1,340,000 respectively, during the sixteen weeks ended September 19, 2004 and September 21, 2003. The amount owed to the Company from these restaurants was $193,000 and $116,000 respectively, as of September 19, 2004 and May 30, 2004. Amounts due are generally settled within 28 days of billing.

All related party transactions described herein were effected on substantially similar terms as transactions with persons having no relationship with the Company.

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The Company’s First Quarter of Fiscal 2005 consists of the sixteen weeks ended September 19, 2004, and compares with the sixteen weeks ended September 21, 2003, which constituted the First Quarter of Fiscal 2004. The first quarter of the Company’s fiscal year normally accounts for a disproportionate share of annual revenue and earnings because it contains sixteen weeks whereas the following three quarters normally contain only twelve weeks each. Operations consist of two reportable segments within the restaurant industry: “Big Boy” restaurants and “Golden Corral” restaurants.

Record revenue of $84,485,000 was achieved for the First Quarter of Fiscal 2005, an increase of $7,082,000, or 9.1 percent above revenue for the First Quarter of Fiscal 2004. Net earnings for the First Quarter of Fiscal 2005 were $2,899,000, or diluted earnings per share (EPS) of $.56, compared to $3,288,000, or diluted EPS of $.65 in the First Quarter of Fiscal 2004.

The decline in earnings can be directly traced to disappointing same store sales increases in Big Boy Restaurants, same store sales decreases in Golden Corral restaurants and higher food costs.

Results for the first quarters of both years were positively impacted by favorable claims experience in the Company’s self insurance program. Self insurance reserves were lowered by $614,000 ($405,000 net after income tax, or $.08 diluted EPS) in the First Quarter of Fiscal 2005, while the First Quarter of Fiscal 2004 received the benefit of a $710,000 adjustment ($461,000 net after income tax, or $.09 diluted EPS).

Results of Operations

The Company’s revenues consist primarily of retail restaurant sales. Big Boy restaurant sales also include wholesale sales from the Company’s commissary to restaurants licensed to other Big Boy operators, the amounts of which total less than three percent of total revenue in the First Quarters of Fiscal 2005 and 2004. Total revenue also includes franchise and other fees, the amounts of which were not material to the First Quarters of Fiscal 2005 and 2004. References to sales or revenue in the discussion that follows refer to restaurant sales (including the minimal amounts of wholesale sales discussed above).

Changes in sales occur when new restaurants are opened and older restaurants are closed. Changes in customer counts and menu price increases affect changes in same store sales. Consolidated restaurant sales reached record heights during the First Quarter of Fiscal 2005:

	1st Quarter
	2005		2004
	(in thousands)
Big Boy sales	$	55,192	$	53,169
Golden Corral sales		28,870		23,868
Consolidated restaurant sales	$	84,062	$	77,037

Most of the increase in Big Boy sales resulted from more restaurants in operation, as same store sales in Big Boy restaurants increased only .6 percent during the First Quarter of Fiscal 2005. A 1.8 percent decline in customer counts at same stores was covered by a 2.5 percent rise in the average guest check, reflecting average menu price increases of 1.1 percent implemented shortly before last year’s first quarter ended, 1.6 percent near the end of last year’s third quarter and 1.5 percent near the end of this year’s first quarter. The disappointing .6 percent same store increase was the second consecutive quarter of soft same store sales increases.

The Company currently operates 90 Big Boy restaurants, including one that opened in August 2004 and one that reopened in late September 2004 that had been closed for rebuilding in May 2004. During the last twelve months one other new Big Boy opened in January 2004, while another Big Boy restaurant was relocated to a superior site within the same neighborhood. Two buildings are likely to be constructed in the near term, including one rebuild and one relocation. One older, very low volume Big Boy will cease operating in November 2004.

22

The Golden Corral sales increases were also the result of more restaurants in operation:

	First Quarter 2005	First Quarter 2004
In operation at beginning of year	26	20
Opened during the first quarter	1	2
In operation at end of first quarter	27	22
Total sales weeks	424	335

Two Golden Corral restaurants were under construction as of September 19, 2004, including one that opened in late September 2004. The other one should open in November 2004. Current plans call for four Golden Corrals to open respectively in April, June, August and September of 2005.

Golden Corral same store sales decreased 4.5 percent during the First Quarter of Fiscal 2005. Customer counts declined 10.9 percent while the average guest check increased 7.2 percent, reflecting price increases of 3.3 percent in November 2003 and 2.3 percent in May 2004. The decline in customer counts can be attributed to the “sister-store” effect of building additional restaurants in existing markets which temporarily causes decreased customer counts in individual restaurants.

Following general industry practice, same store sales comparisons include only those restaurants that had been open for five full fiscal quarters prior to the start of the comparison periods. Accordingly, only twenty restaurants are included in the 4.5 percent decrease mentioned above, whereas a total of 27 Golden Corral restaurants were in operation at the end of the First Quarter of Fiscal 2005.

Pre-tax earnings for both operating segments are highlighted below (also see Note F to the consolidated financial statements):

	1st Quarter
	2005		2004
	(in thousands)
Big Boy pre-tax earnings	$	6,034	$	6,646
Golden Corral pre-tax earnings		1,110		928
Total pre-tax earnings by segment	$	7,144	$	7,574

The operating percentages shown in the following table are percentages of restaurant sales (as defined in a previous paragraph) rather than of total revenue. The table supplements the discussion that follows which concerns cost of sales for both the Big Boy and Golden Corral reporting segments, including food cost, payroll and other operating costs.

	1st Quarter 2005			1st Quarter 2004
	Total	Big	GC	Total	Big	GC
		Boy			Boy
Sales	100.0	100.0	100.0	100.0	100.0	100.0
Food and Paper	35.0	32.5	39.8	34.0	31.6	39.5
Payroll and Related	33.3	34.7	30.7	33.6	34.8	31.0
Other Operating Costs (including opening costs)	20.9	19.5	23.5	20.2	18.7	23.4
Gross Profit	10.8	13.3	6.0	12.2	14.9	6.1

23

The higher food and paper cost percentages for the First Quarter of Fiscal 2005 are the result of higher commodity costs, especially meat and dairy, in both the Big Boy and Golden Corral restaurant segments. Golden Corral food cost percentages moderated during the latter half of the First Quarter of Fiscal 2005 reflecting a drop in the market price of sirloin top butts that are used on the Golden Corral Great Steaks Buffet. The food and paper cost percentages for the Golden Corral segment are much higher than the Big Boy segment because of the all-you-can-eat nature of the Golden Corral concept. Menu price hikes, as discussed above, helped to counter the effects of the higher cost of food.

Self insured claims experience is reviewed annually during the first quarter. The assumptions used to measure these adjustments can be complex and sometimes require management to exercise considerable judgment. However, management does not consider the adjustments made during the annual review to be critical to the fair presentation of the Company’s financial condition or its results of operations for the fiscal year taken as a whole. Favorable claims experience allowed self insurance liabilities to be lowered by $614,000 during the First Quarter of Fiscal 2005 and by $710,000 in the First Quarter of Fiscal 2004.

Payroll and related cost percentages moved downward in the First Quarter of Fiscal 2005 for both the Big Boy and Golden Corral restaurant segments, even when the benefit of the self insurance reserve adjustments that were apportioned to payroll and related costs is excluded. There was no appreciable change in average pay rates for either Big Boy or Golden Corral. Golden Corral management continues its sharp focus on controlling the number of service hours worked.

Pressure is once again mounting in Washington for an increase in the minimum wage. If such legislation is enacted, the Company would counter the effects with higher menu prices, together with tighter payroll standards and a reduction in hours worked. New overtime pay rules initiated by the U.S. Department of Labor went into effect in August 2004. The new rules had a negligible impact on the Company.

Net periodic pension cost (computed under Statement of Financial Accounting Standards No. 132 R) was $620,000 and $610,000 respectively, in the First Quarter of Fiscal 2005 and the First Quarter of 2004. The leveling of the expense reflects the peak of the impact that resulted from earlier years’ poor returns on equity investments that are held by the Company’s defined benefit pension plans. Costs should begin to taper downward in future years, assuming expected returns on investments are achieved. Contributions to these plans for Fiscal 2005 are expected to exceed $2,120,000.

Other operating costs include occupancy costs such as maintenance, rent, depreciation, property tax, insurance and utilities; field supervision; accounting and payroll preparation costs; franchise fees for Golden Corral restaurants; opening costs and many other restaurant operating expenses. As most of these expenses tend to be more fixed in nature, same store sales decreases at Golden Corral cause these costs to be a higher percentage of sales, as reflected in the above table. Driving the increase for Big Boy restaurants was higher opening costs and higher manager trainee costs.

No impairments of assets were recorded in either the First Quarter of Fiscal 2005 or the First Quarter of Fiscal 2004.

Administrative and advertising expense increased $366,000 during the First Quarter of Fiscal 2005, or 9.3 percent higher than the First Quarter of Fiscal 2004. The largest component of the increase is higher spending for advertising and marketing that is proportionate with higher sales levels, reflecting the Company’s long standing policy to spend a constant percentage of Big Boy and Golden Corral sales on advertising and marketing.

Interest expense increased $72,000 during the First Quarter of Fiscal 2005, or 9.9 percent higher than the First Quarter of Fiscal 2004. The increase was caused by the combination of higher debt and the creep in interest rates.

Income tax expense as a percentage of pretax earnings was estimated at 34 percent in the First Quarter of Fiscal 2005 and was 35 percent in the First Quarter of Fiscal 2004. These rates have been kept consistently low through the Company’s use of tax credits, principally the federal credit allowed for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips, and to a lesser degree, the federal Work Opportunity Tax Credit (WOTC). WOTC has been restored by Congress retroactively to January 1, 2004.

Critical Accounting Policies

Two factors are required for an accounting policy to be deemed critical. The policy must be significant to the fair presentation of a company’s financial condition and its results of operations, and the policy must require

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management’s most difficult, subjective or complex judgments. Management believes that its policy used in accounting for the impairment of long-lived assets is the Company’s only critical accounting policy because of its potential for significant impact on financial condition and results of operations. A discussion of this policy can be found under the “Property and Equipment” caption of Note A to the consolidated financial statements.

Liquidity and Capital Resources

Restaurant sales provide the Company’s principal source of cash. The funds from sales are immediately available for the Company’s use, as substantially all restaurant sales are received in cash or credit cards. Net earnings plus depreciation provide the primary source of cash provided by operating activities. Other sources of cash may include borrowing against credit lines, proceeds from employees’ exercising of stock options and occasional sales of real estate. In addition to servicing debt, these cash flows are utilized for discretionary objectives, including capital projects (principally restaurant expansion) and dividends.

The Company has historically maintained a strategic negative working capital position, a common practice in the restaurant industry. As significant cash flows are consistently provided by operations, and credit lines are readily available, the use of this practice should not hinder the Company’s ability to satisfactorily retire any of its obligations when due, including the aggregated contractual obligations and commercial commitments as shown in the following table below.

Aggregated Information about Contractual Obligations and Commercial Commitments

September 19, 2004

	Payments due by period (in thousands)
	Total	year 1	year 2	year 3	year 4	year 5	more than 5 years
Long-Term Debt	46,934	7,157	8,522	7,013	16,234	4,165	3,843
Rent due under Capital Lease Obligations	5,276	944	850	620	2,481	122	259
1  Rent due under Operating Leases	14,524	1,384	1,282	1,117	916	823	9,002
Unconditional Purchase Obligations	3,364	3,308	56
Other Long-Term Obligations	None
Total Contractual Cash Obligations	70,098	12,793	10,710	8,750	19,631	5,110	13,104

1 Not included are certain leases of former operating properties that the Company has assigned or sub-let to third parties. The average annual obligations of these leases approximate $50 over the next five years. The Company remains contingently liable for the performance of these leases. In the event of default by the assignees or sub-lessees, the Company generally retains the right to re-assign or re-sublet the properties.

The working capital deficit was $20,348,000 as of September 19, 2004. The working capital deficit is expected to continue increasing over the next few years at a modest, manageable pace as construction debt is prudently increased to supplement the use of internally generated cash to finance expansion plans. In October 2004, the maximum amount that may be borrowed under the terms of the Company’s Construction Draw Facility was increased by $6,500,000, which increased to $9,000,000 the amount that is currently available to be drawn upon before the Facility expires on September 1, 2006, unless extended. Additionally, a $5,000,000 working capital revolving line of credit (currently unused) is readily available if needed.

Operating cash flows were $4,474,000 in the First Quarter of Fiscal 2005, or $2,798,000 lower than the First quarter of Fiscal 2004. The decrease is due to the combination of lower earnings and decreases in accounts payable.

Investing activities in the First Quarter of Fiscal 2005 included $8,999,000 in capital costs. The capital spending includes $5,772,000 for Golden Corral restaurants, consisting of new restaurant construction, site acquisitions and remodeling costs. Also included in the capital costs was $3,227,000 spent on Big Boy restaurants, consisting of new restaurant construction, remodeling existing restaurants including kitchen and dining room expansions, routine equipment replacements and other capital outlays.

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It is the Company’s policy to own the land on which it builds new restaurants; however, it is sometimes necessary to enter ground leases to obtain desirable land on which to build. Four of the 27 Golden Corral restaurants have been built on leased land. Another Golden Corral ground lease has been entered into for a restaurant to open in the Spring of 2005. All of these leases have been accounted for as operating leases. As of September 19, 2004, the Company occupied a total of 29 restaurants pursuant to leases, eleven of which are capital leases under the provisions of Statement of Financial Accounting Standards No. 13 (SFAS 13), “Accounting for Leases” as amended.

Financing activities in the First Quarter of Fiscal 2005 included $7,500,000 of new debt borrowed against the Company’s credit lines. Scheduled and other payments of long-term debt and capital lease obligations amounted to $2,155,000 during the First Quarter of Fiscal 2005. Regular quarterly cash dividends paid to shareholders totaled $554,000. Dividends declared but not paid as of September 19, 2004 totaled $554,000. The Company expects to continue its 44 year practice of paying regular quarterly cash dividends.

The Company’s stock repurchase program expired October 7, 2004. It had authorized the repurchase of up to 500,000 shares of the Company’s common stock. No shares were acquired during the two year life of the program as the price at which shares of the Company’s common stock had been traded did not warrant the utilization of the program.

As of September 19, 2004, 389,000 shares remain outstanding under the 1993 Stock option Plan, including 265,000 fully vested shares at a weighted average price per share of $15.29. Shareholders approved the 2003 Stock Option and Incentive Plan in October 2003. The maximum number of shares that the new Plan may issue is 800,000. As of September 19, 2004, no awards had been granted under the 2003 Stock option and Incentive Plan.

Construction costs remaining to be paid for the Big Boy restaurant that reopened in late September was estimated at $269,000 as of September 19, 2004. The approximate cost to build and equip a new Big Boy restaurant ranges from $2,300,000 to $2,800,000, depending on land cost. Two buildings are likely to be constructed during the next twelve months, consisting of one rebuild and one relocation. Approximately one-fifth of the Company’s Big Boy restaurants are routinely renovated or decoratively updated each year at an average cost of $75,000 per restaurant. In addition, certain high-volume Big Boy restaurants are regularly evaluated to determine whether their kitchens should be redesigned for increased efficiencies. A typical kitchen redesign costs approximately $125,000.

The Company reached a new agreement with Golden Corral Franchising Systems, Inc. in July 2004. The new agreement added 21 Golden Corral restaurants to the development schedule, bringing the total to 62 to be in operation by December 31, 2011. Twenty-seven restaurants were in operation as of September 19, 2004 and the 28^th opened shortly after the quarter ended. The build-out plan calls for one more to open before December 31, 2004, five will be opened each year through December 2010, with the final three to be opened in 2011. Costs remaining for two restaurants that were under construction as of September 19, 2004 were estimated at $1,548,000. The cost to build and equip each Golden Corral restaurant ranges from $2,500,000 to $3,400,000, including land and land improvements, the cost of which can vary greatly from location to location. Five of the original Golden Corral restaurants have reached the age at which remodeling is warranted. The work to be completed in Fiscal 2005 will cost approximately $150,000 per restaurant.

Risk Factors and Safe Harbor Statement

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) that are not historical facts are forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified in sentences that contain words such as “should”, “could”, “will”, “may”, “plan”, “expect”, “anticipate”, “estimate”, “project”, “intend”, “believe” and similar words that are used to convey the fact that the statement being made is prospective and does not strictly relate to historical or present facts. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from anticipated results. The Company undertakes no obligation to update any of the forward-looking statements that may be contained in this MD&A.

Food safety is the most significant risk to any company that operates in the restaurant industry. It has become the focus of increased government regulatory initiatives at the local, state and federal levels resulting in higher compliance costs to the Company. To limit the Company’s exposure to the risk of food contamination, management rigorously emphasizes and enforces the Company’s food safety policies in all of the Company’s restaurants, and at the commissary and food manufacturing plant that the Company operates for Big Boy restaurants. These policies are designed to work cooperatively with programs established by health agencies at all levels of government authority,

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including the federal Hazard Analysis of Critical Control Points (HACCP) program. In addition, the Company makes use of ServSafe Training, a nationally recognized program developed by the National Restaurant Association. The ServSafe program provides accurate, up-to-date science-based information to all levels of restaurant workers on all aspects of food handling, from receiving and storing to preparing and serving. All restaurant managers are required to receive re-certification in ServSafe Training every five years.

Other examples of risks and uncertainties facing the Company include, but are not limited to, the following: intense competition for customers; consumer perceptions of value, food quality and quality of service; changing consumer preferences, particularly based on concerns with nutritional content of the Company’s food or restaurant food in general; changing demographics in neighborhoods where the Company operates restaurants; changes in business strategy and development plans; the rising cost of quality sites on which to build restaurants; poor selection of restaurant sites; changes in the supply and cost of food; the effects of other inflationary pressures, especially higher costs for health care benefits and higher energy prices; rolling power outages; shortages of qualified labor; seasonal weather conditions, particularly during the winter months of the third quarter; natural disasters; fires or explosions; criminal acts, including bomb threats, robberies, hostage taking, kidnapping and other violent crimes; acts of terrorists or acts of war; civil disturbances; boycotts; variable interest rates; limitations on borrowing capacity; legal claims; changes in accounting standards; estimates used in preparing financial statements; disruptions to the business during transitions to new computer software; financial stability of technology vendors to support computer software over the long-term; unauthorized access to information systems; changes in governmental regulations regarding the environment; exposure to penalties for potential violations of numerous governmental regulations in general, and immigration (I-9) and minor labor regulations in particular; any future imposition by OSHA of costly ergonomics regulations on workplace safety; legislative changes affecting labor law, especially increases in the federal minimum wage; and legislation or court rulings that result in changes to tax codes.

The Company continually takes reasonable preventive measures to reduce its risks and uncertainties. However, the nature of some risks and uncertainties leaves the Company with little control. The materialization of any of the risks and uncertainties identified herein, together with those risks not specifically listed or those that are presently unforeseen, could result in significant adverse effects on the Company’s financial position, results of operations and cash flows, which could include the permanent closure of the affected restaurant(s) with an impairment of assets charge taken against earnings.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company has market risk exposure to interest rate changes primarily relating to its $10,000,000 bullet loan. Interest rates are presently determined by adding 200 basis points to the London Interbank Offered Rate (LIBOR). The Company does not currently use derivative financial instruments to manage its exposure to changes in interest rates. The Company does not use foreign currency.

Food supplies for Big Boy restaurants are generally plentiful and may be obtained from any number of suppliers. Quality and price are the principal determinants of source. Centralized purchasing and food preparation through the Company’s commissary and food manufacturing plant ensures uniform product quality and safety, timeliness of distribution to restaurants and results in lower food and supply costs. Certain commodities, principally beef, chicken, pork, dairy products, fish, french fries and coffee, are generally purchased based upon market prices established with vendors. Purchase contracts for some of these items may contain contractual provisions that limit the price to be paid. The Company does not use financial instruments as a hedge against changes in commodity pricing.

Except for items such as fresh produce and dairy products that are purchased from any number of local suppliers, the Company currently purchases substantially all food, beverage and other menu items for use in its Golden Corral restaurants from the same vendor that Golden Corral Franchising Systems, Inc. (Franchisor) uses for its operations. Deliveries are made two to three times per week. Other vendors are available to provide products that meet the Franchisor’s specifications should the Company wish or need to make a change.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) reviewed and evaluated the Company’s disclosure controls and procedures, as defined in Securities Exchange Act regulations 240.13a-15(e) and 240.15d-15(e) as of the end of the period covered by this report. Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of September 19, 2004.

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The Company completed the second and final implementation phase of its enterprise information system in September 2004. Phase I of the implementation, which included new software modules for the General Ledger, Accounts Payable, Procurement, Inventory Control and Asset Management, was completed in April 2004. Phase II of the implementation incorporated Payroll and Human Resources modules into the system. Certain changes in the system of internal control have been instituted to enhance the effectiveness of all the system’s modules.

There were no other significant changes in the Company’s internal controls over financial reporting during the fiscal quarter ended September 19, 2004 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is the owner of a Golden Corral Restaurant located in North Canton, Ohio. In 2001, The Company’s general contractor, Fortney & Weygandt, Inc. (“Fortney”) constructed a Golden Corral Restaurant at the original location on the North Canton site. Complicated geological conditions at the site required that the restaurant be built on a structural slab (platform), which rested upon driven piles. The foundation system for the building had been designed by a Houston, Texas engineering firm called Maverick Engineering, Inc. (“Maverick”). Maverick was a subcontractor to Frisch’s architect of record, LMH&T.

Shortly before the scheduled opening of the restaurant, it was discovered that, due to a combination of design and construction errors, the building had shifted, which caused separation of the building from its underground plumbing system. The Company elected to demolish the original structure, and subsequently built a new building on a different portion of the original parcel. The restaurant’s grand opening was, therefore, delayed until January 2003.

On July 30, 2002, the Company’s general contractor, Fortney, filed a Demand for Arbitration against the Company with the American Arbitration Association. Fortney sought recovery of its “outstanding contract balance,” in the sum of $293,638, plus interest, fees, and costs. Fortney contends that it is owed this money by the Company under the terms of the General Construction Contract. The Company has denied that it owes these monies to Fortney, and has filed a counterclaim against Fortney alleging defective construction. The Company’s claim against Fortney is for excess cost of construction, loss profits, interest and costs, in an amount exceeding $1,000,000.

On August 29, 2002, the Company filed a lawsuit in the Stark County, Ohio Court of Common Pleas against its former architect, LMH&T, alleging negligent design as a casual factor in the demise of the original structure. The Company sought dameages including lost profits, interest, and costs exceeding $2,500,000. LMH&T brought into the lawsuit its structural engineering consultant, Maverick, as well as the Company’s soils consultant, Cowherd Banner Carlson Engineering (“CBC”).

In July 2003, the Company resolved all claims, counterclaims, and cross-claims, against and involving the trial court defendants. The trial court defendants, including LMH&T and Maverick, agreed to pay to the Company the sum of $1,700,000 in full and final settlement of all claims. The Company received the settlement funds in full during the first quarter of fiscal year 2004 and the case was dismissed.

The resolution between the Company and the trial court defendants (design team) is separate and apart from the dispute between Fortney and the Company, which remains before the American Arbitration Association. In that action, Fortney continues to seek recovery of $293,638, plus interest, fees, and costs. The Company continues to seek the balance of its claim from Fortney.

From time to time, the Company is subject to various claims and suits in the ordinary course of business. The Company does not believe that any ultimate liability for such claims will have a material impact on its earnings, cash flows or financial position.

ITEMS 2, 3, and 5, the answers to which are either “none” or “not applicable”, are omitted.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

a) The Annual Meeting of Shareholders was held on October 4, 2004.

b) Directors elected on October 4, 2004 to serve until the 2006 annual meeting of shareholders:

Jack C. Maier	William J. Reik, Jr.
William A. Mauch	Lorrence T. Kellar

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Directors whose terms continued after the meeting (serving until the 2005 annual meeting of shareholders):

Malcolm M. Knapp	Dale P. Brown	Daniel W. Geeding
Blanche F. Maier	Craig F. Maier

c) The following matters were voted upon:

1) Election of Directors to serve until the 2006 annual meeting of shareholders:

Name	For	Withheld Authority
Jack C. Maier	3,737,363	63,230
William A. Mauch	3,735,647	64,946
William J. Reik, Jr.	3,790,015	10,578
Lorrence T. Kellar	3,791,610	8,983

2) Proposal to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year commencing May 31, 2004 was approved. It received the following votes:

For	Against	Abstain
3,784,755	10,687	5,151

d) Not applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) EXHIBITS

3 (a) Third Amended Articles of Incorporation, filed as Exhibit (3) (a) to the Registrant’s Form 10-K Annual Report for 1993, is incorporated herein by reference.

3 (b) Code of Regulations, filed as Exhibit (3) (a) to the Registrant’s Form 10-Q Quarterly Report for December 15, 1996, is incorporated herein by reference.

3 (c) Amendments to the Code of Regulations adopted October 1, 1984, filed as Exhibit (3) (b) to the Registrant’s Form 10-Q Quarterly Report for December 15, 1996, is incorporated herein by reference.

3 (d) Amendments to the Code of Regulations adopted October 24, 1996, filed as Exhibit (3) (c) to the Registrant’s Form 10-Q Quarterly Report for December 15, 1996, is incorporated herein by reference.

10 (a) Intellectual Property Use and Noncompete Agreement between the Registrant and Liggett Restaurant Enterprises LLC (now known as Big Boy Restaurants International, LLC) dated January 8, 2001, filed as Exhibit (10) (a) to the Registrant’s Form 10-Q Quarterly Report for March 4, 2001, is incorporated herein by reference.

10 (b) Transfer Agreement between the Registrant and Liggett Restaurant Enterprises LLC (now known as Big Boy Restaurants International, LLC) dated January 8, 2001, filed as Exhibit (10) (b) to the Registrant’s Form 10-Q Quarterly Report for March 4, 2001, is incorporated herein by reference.

10 (c)1 First Amended and Restated Loan Agreement (Golden Corral) and Exhibit 10(c)2 Second Amended and Restated Loan Agreement (Revolving and Bullet Loans) between the Registrant and US Bank NA effective October 15, 2004 are filed herewith.

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10 (d) Area Development Agreement, Termination Agreement and Addendum effective July 20, 2004 between the Registrant and Golden Corral Franchising Systems, Inc., filed as Exhibit 10 (f) to the Registrant’s Form 10-K Annual Report for 2004, is incorporated herein by reference.

10 (e) Employment Agreement between the Registrant and Jack C. Maier effective May 29, 2000, filed as Exhibit (10) (d) to the Registrant’s Form 10-Q Quarterly Report for September 17, 2000, is incorporated herein by reference. *

10 (f) Employment Agreement between the Registrant and Craig F. Maier effective June 2, 2003, filed as Exhibit 10 (h) to the Registrant’s Form 10-K Annual Report for 2003, is incorporated herein by reference. *

10 (g) Frisch’s Executive Savings Plan effective November 15, 1993, filed as Exhibit (10) (a) to the Registrant’s Form 10-Q Quarterly Report for September 17, 1995, is incorporated herein by reference. *

10 (h) Second Amendment to the Frisch’s Executive Savings Plan effective July 28, 2004, is filed herewith. *

10 (i) Frisch’s Executive Retirement Plan effective June 1, 1994, filed as Exhibit (10) (b) to the Registrant’s Form 10-Q Quarterly Report for September 17, 1995, is incorporated herein by reference. *

10 (j) Amendment No. 1 to Frisch’s Executive Retirement Plan effective January 1, 2000, filed as Exhibit 10 (k) to the Registrant’s form 10-K Annual Report for 2003, is incorporated herein by reference.*

10 (k) 2003 Stock Option and Incentive Plan, filed as Appendix A to the Registrant’s Proxy Statement dated August 28, 2003, is incorporated herein by reference. *

10 (l) Forms of agreement to be used for stock options granted to employees and to non-employee directors under the Registrant’s 2003 Stock Option and Incentive Plan, filed as Exhibits 99.1 and 99.2 to the Registrant’s From 8-K dated October 1, 2004, are incorporated herein by reference. *

10 (m) Amended and Restated 1993 Stock Option Plan, filed as Exhibit A to the Registrant’s Proxy Statement dated September 9, 1998, is incorporated herein by reference. *

10 (n) Employee Stock Option Plan, filed as Exhibit B to the Registrant’s Proxy Statement dated September 9, 1998, is incorporated herein by reference. *

10 (o) Agreement between the Registrant and Craig F. Maier dated November 21, 1989, filed as Exhibit (10) (g) to the Registrant’s Form 10-K Annual Report for 1990, is incorporated herein by reference. *

10 (p) Frisch’s Nondeferred Cash Balance Plan effective January 1, 2000, filed as Exhibit (10) (r) to the Registrant’s Form 10-Q Quarterly Report for December 10, 2000, is incorporated herein by reference, together with the Trust Agreement established by the Registrant between Firstar Bank, N.A. (Trustee) (now known as US Bank) and Donald H. Walker (Grantor). There are identical Trust Agreements between Firstar Bank, N.A. (Trustee) (now known as US Bank) and Craig F. Maier, Paul F. McFarland, W. Gary King, Karen F. Maier, Ken C. Hull, Michael E. Conner, Todd M. Rion and certain other “highly compensated employees” (Grantors). *

10 (q) Senior Executive Bonus Plan effective June 2, 2003, filed as Exhibit (10) (s) to the Registrant’s Form 10-K Annual Report for 2003, is incorporated herein by reference.*

* denotes compensatory plan or agreement

15 Letter re: unaudited interim financial statements, is filed herewith.

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31.1 Certification of Chief Executive Officer pursuant to rule 13a -14(a) is filed herewith.

31.2 Certification of Chief Financial Officer pursuant to rule 13a - 14(a) is filed herewith.

32.1 Section 1350 Certification of Chief Executive Officer is filed herewith.

32.2 Section 1350 Certification of Chief Financial Officer is filed herewith.

b). Reports on Form 8-K:

A Form 8-K was filed July 9, 2004 reporting under item 12 the Registrant’s press release announcing financial results for the year ended May 30, 2004.

A Form 8-K was filed on July 26, 2004 reporting under item 5 the Registrant’s press release announcing that it had entered an agreement with Golden Corral Franchising Systems, Inc. to add 21 Golden Corral Restaurants to its development plans.

A Form 8-K was filed on August 2, 2004 reporting under item 12 a correction to the condensed balance sheet as of May 30, 2004 that had been attached to the Registrant’s year end earnings press release.

A Form 8-K was filed on October 1, 2004 reporting under item 1.01, Entry into a Material Definitive Agreement, to provide the forms of agreement to be used for stock options granted to employees and to non-employee directors under the Registrant’s 2003 Stock option and Incentive Plan. Copies of the forms of agreement were attached as Exhibits 99.1 and 99.2.

A Form 8-K was filed on October 18, 2004 reporting under item 2.02, Results of Operations and Financial Condition, the Registrant’s press release announcing financial results for the quarter ending September 19, 2004.

A Form 8-K was filed on October 19, 2004 reporting under item 2.03, Creation of a Direct Financial Obligation, the Registrant’s agreement to amend and restate its credit facilities with US Bank NA.

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SIGNATURE

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

	FRISCH’S RESTAURANTS, INC.
	(registrant)
DATE   October 19, 2004
	BY     /s/ Donald H. Walker
	Donald H. Walker
	Vice President – Finance, Treasurer and
	Principal Financial and Accounting Officer

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EX-10.C1

Exhibit 10(c) 1

FIRST AMENDED AND RESTATED LOAN AGREEMENT

[GOLDEN CORRAL]

THIS FIRST AMENDED AND RESTATED LOAN AGREEMENT [GOLDEN CORRAL] (this “Agreement”) is made and entered into as of the 15th day of October, 2004 by and between (i) FRISCH’S RESTAURANTS, INC., an Ohio corporation (the “Borrower” ), and (ii) U.S. BANK NATIONAL ASSOCIATION, a national banking association formerly known as Firstar Bank, N.A. and Star Bank, National Association (the “Bank”), and amends and restates the Loan Agreement made and entered into as of October 9, 1998 by and between the Borrower and the Bank, as amended (the “Prior Loan Agreement”).

1. Representations and Warranties. To induce the Bank to enter into this Agreement and to agree to make and/or to continue the Loans described in Section 4 hereof, the Borrower makes the following representations and warranties:

(a) Existence. The Borrower is duly organized, validly existing and in good standing as a corporation under the laws of the State of Ohio, and each Subsidiary (as hereinafter defined) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Borrower and each Subsidiary is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction in which the failure to be so qualified by the Borrower or the Subsidiary would have a material adverse effect on its business, prospects or financial condition. “Subsidiary” for purposes hereof means any corporation or other entity the majority of the voting stock of which is owned, directly or indirectly, beneficially or of record, by the Borrower or any Subsidiary, or which is otherwise controlled, directly or indirectly, by the Borrower or any Subsidiary.

(b) Authority. The Borrower and each Subsidiary has full power and authority to own its properties and to conduct its business as such business is now being conducted, and the Borrower has full power and authority to execute, deliver and perform under this Agreement, the Notes (as hereinafter described) and all other documents and instruments executed in connection with or otherwise relating to this Agreement or the Loans (as hereinafter defined) (collectively, the “Loan Documents”).

(c) Borrowing Authorization. The execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents: (i) have been duly authorized by all requisite corporate action; (ii) do not and will not violate (A) any provision of any law, statute, rule or regulation, (B) any order, judgment or decree of any court, arbitrator or other agency of government, (C) the Articles of Incorporation or Code of Regulations or other organizational or governing documents of the Borrower, or (D) any provision of any agreement (including, without limitation, any agreement with stockholders) to which the Borrower or any Subsidiary is a party or subject, or by which it or any of its properties or assets are bound; (iii) do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Borrower or any Subsidiary; and (iv) do not and will not require any consent, approval or other action by or any notice to or filing with any court or administrative or governmental body. This Agreement and the other Loan Documents have been duly executed and delivered on behalf of the Borrower and constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms.

Exhibit 10(c) 1

(d) Financial Information and Reports. Exhibit A to this Agreement is a complete list of the financial statements and projected financial statements furnished by the Borrower to the Bank in connection with the borrowings to be made hereunder. Each such historical financial statement fairly presents in accordance with generally accepted accounting principles the financial condition of the Borrower and its Subsidiaries and the results of their operations as of the date (or with respect to the period) noted in such financial statements. Other than any liability incident to any actions described in Exhibit B to this Agreement, neither the Borrower nor any Subsidiary has any material contingent liabilities required to be disclosed under generally accepted accounting principles which are not provided for or disclosed in such financial statements. Each such statement (including any related schedule and/or notes) is true, correct and complete in all material respects (subject, as to interim statements, to changes resulting from audits and year-end adjustments) and has been prepared in accordance with generally accepted accounting principles consistently followed throughout the periods involved. No such statement omits to state a material fact necessary to make such statement not misleading in light of the circumstances under which it was made. There has been no material adverse change in the business, operations or condition (financial or otherwise) of the Borrower or any Subsidiary since the date of such financial statements.

(e) Indebtedness. Neither the Borrower nor any Subsidiary has any Indebtedness (as hereinafter defined) other than Permitted Indebtedness (as hereinafter defined), or has guaranteed the obligations of any other person (except by endorsement of negotiable instruments payable on sight for deposit or collection or similar banking transactions in the usual course of business), and to the best of the Borrower’s knowledge after diligent investigation, there exists no default under the provisions of any instrument evidencing any Indebtedness of the Borrower or any Subsidiary or of any agreement relating thereto. “Indebtedness” as used herein means all indebtedness for borrowed money which in accordance with generally accepted accounting principles would be considered as a liability, all rental obligations under leases required to be capitalized under generally accepted accounting principles, all guarantees and other contingent obligations in respect of, or obligations to purchase or otherwise acquire, Indebtedness of others, and Indebtedness of others secured by any lien on property owned by the Borrower or any Subsidiary, whether or not the Borrower or such Subsidiary has assumed such Indebtedness.

(f) Actions. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary before any court, arbitrator or administrative or governmental agency except for those described in Exhibit B to this Agreement, none of which might result in any material adverse change in the business, operations or condition (financial or otherwise) of the Borrower or any Subsidiary, nor, to the best of the Borrower’s knowledge after diligent investigation, is there any basis for any such action which might result in such a material adverse change.

(g) Title to Property. The Borrower and each Subsidiary has good and marketable title to its real properties (other than properties which it leases as lessee) and good title to all of its other properties and assets, including the properties and assets reflected in the most recent balance sheet described in Exhibit A hereto (other than properties and assets disposed of in the ordinary course of business since the date thereof), free and clear of all liens, mortgages, pledges,

2

Exhibit 10(c) 1

security interests, encumbrances or charges of any kind, including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof (each, a “Lien”), other than the following (each, a “Permitted Lien”): (i) Liens described on Exhibit C hereto, (ii) leases required under generally accepted accounting principles to be capitalized on the Borrower’s or such Subsidiary’s books (“Capitalized Leases”) so long as there is no violation of any of the Financial Covenants set forth on Exhibit D hereto, and (iii) Liens in favor of the Bank. The Borrower and each Subsidiary is in undisturbed possession under all leases necessary in any material respect for the operation of its business, and no such leases contain any unusual or burdensome provisions which might materially affect or impair the Borrower’s or the Subsidiary’s operations thereunder. All such leases are valid and in full force and effect.

(h) Employee Benefit Plans. To the best of the Borrower’s knowledge after diligent investigation, no “reportable event” or “prohibited transaction,” as defined by the Employee Retirement Income Security Act of 1974 (“ERISA”) has occurred or is continuing, as to any plan of the Borrower or any of its affiliates which poses a threat of taxes or penalties against or termination of such plans (or trusts related thereto). Neither the Borrower nor any of its affiliates has violated in any material respect the requirements of any “qualified pension benefit plan,” as defined by ERISA and the Internal Revenue Code of 1986, or done anything to create any material liability under the Multi-Employee Pension Plan Amendment Act. Neither the Borrower nor any of its affiliates has incurred any material liability to the Pension Benefit Guarantee Corporation (the “PBGC”) in connection with such plans, including, but not limited to, any “funding deficiency” (as defined by ERISA).

(i) Compliance. The Borrower and each Subsidiary is in compliance in all material respects with all laws, statutes, ordinances, rules, regulations and orders of any governmental entity (including, but not by way of limitation, any such laws, statutes, ordinances, rules, regulations and orders related to ecology, human health and the environment) applicable to it.

(j) Adverse Contracts and Conditions. Neither the Borrower nor any Subsidiary is a party to any contract or agreement, or subject to any charge, restriction, judgment, decree or order, materially and adversely affecting its business, property, assets, operations or condition, financial or otherwise, nor a party to any labor dispute. There are no restrictions applicable to any Subsidiary which might limit its ability to pay dividends or make loans to the Borrower.

(k) Taxes. The Borrower and each Subsidiary has filed all federal, state and local tax returns and other reports which it is required by law to file, has paid all taxes, assessments and other similar charges that are due and payable, other than taxes, if any, being contested by the Borrower or a Subsidiary in good faith and as to which adequate reserves have been established in accordance with generally accepted accounting principles, and has withheld all employee and similar taxes which it is required by law to withhold. Federal income tax returns of the Borrower and each Subsidiary have been examined by the taxing authorities or closed by applicable statutes and satisfied for all fiscal years prior to and including the fiscal year ended May 30, 1998. Federal income tax returns of the Borrower and its Subsidiaries for the fiscal year ended May 30, 2001 may still be examined by the taxing authorities.

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Exhibit 10(c) 1

2. Borrower’s Covenants. The Borrower agrees that, from the date of this Agreement and until the Loans are paid in full and all obligations under this Agreement are fully performed, and the commitment of the Bank to make Loans hereunder has terminated:

(a) Purpose of Loans. The Loans shall be used only for the purpose of financing the construction and opening of Golden Corral Restaurants (collectively, the “Restaurants”). The Loans are not and shall not be secured, directly or indirectly, by any stock or for any purpose which would violate either Regulation U, 12 C.F.R. Part 221, or Regulation X, 12 C.F.R. Part 224, promulgated by the Board of Governors of the Federal Reserve System.

(b) Financial Covenants. The Borrower shall comply with each of the financial covenants set forth in Exhibit D to this Agreement (collectively, the “Financial Covenants”).

(c) Financial Statements; Periodic Reports. The Borrower shall furnish to the Bank: (i) as soon as practicable and in any event within ninety (90) days after the last day of each fiscal year of the Borrower, a copy of the annual audit report of the Borrower, prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding fiscal year, and consisting of a consolidated balance sheet as at the end of such fiscal year and consolidated statements of earnings, stockholders’ equity and cash flows of the Borrower and its Subsidiaries for such fiscal year, setting forth in each case in comparative consolidated form corresponding consolidated figures from the preceding annual audit, certified by a nationally-recognized firm of independent certified public accountants, whose certificate shall be in scope and substance reasonably satisfactory to the Bank and shall include, without limitation, a certification that in auditing the Borrower, such accountant has obtained no knowledge of an Event of Default (as hereinafter defined) hereunder, or if any Event of Default exists, specifying the nature and period of existence thereof, and accompanied by such accountant’s management letter with respect thereto; (ii) as soon as practicable and in any event within forty-five (45) days after the last day of each of the Borrower’s first three fiscal quarters, a copy of the Borrower’s unaudited financial statements, prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding fiscal quarter, and consisting of a consolidated balance sheet as at the end of such fiscal quarter and consolidated statements of earnings, stockholders’ equity and cash flows of the Borrower and its Subsidiaries for the period from the beginning of the then-current fiscal year through the end of such fiscal quarter, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, and certified by an authorized financial officer of the Borrower, subject to changes resulting from year-end adjustments; (iii) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as the Borrower shall send to its stockholders and copies of all registration statements (without exhibits) and all regulatory and periodic reports which the Borrower files with the Securities and Exchange Commission (the “SEC”) or any governmental body or agency succeeding to the functions of the SEC; and (iv) with reasonable promptness, such other financial data in such form as the Bank may reasonably request, provided that the Bank shall keep such data confidential to the extent required by applicable securities laws.

Together with each delivery of financial statements required under clauses (i) and (ii) above, the Borrower shall deliver a certificate of its Chief Financial Officer (A) setting forth a comparison between actual calculated results and covenanted results for each of the Financial Covenants set forth on Exhibit D hereto and (B) stating that, to the best of such Chief Financial

4

Exhibit 10(c) 1

Officer’s knowledge after diligent investigation, no Event of Default hereunder then exists, or if such an Event of Default hereunder does then exist, specifying the nature thereof, the period of existence thereof, and the action the Borrower proposes to take with respect thereto. The Borrower further agrees that promptly upon the President or Chief Financial Officer of the Borrower obtaining knowledge of an event that constitutes an Event of Default hereunder, the Borrower shall deliver to the Bank a certificate specifying the nature thereof, the period of existence thereof, and the action the Borrower proposes to take with respect thereto. The Bank is authorized to deliver a copy of any financial statement or other communication or document delivered to it pursuant to this Section 2(c) to any regulatory body having jurisdiction over it if such delivery is required by such regulatory body. The Borrower and each Subsidiary shall permit the Bank and its agents and representatives, at the expense of the Bank, to inspect its real and personal property, including without limitation any and all of the Restaurants, and to verify accounts and inspect and make copies of or extracts from its books, records and files, and to discuss its affairs, finances and accounts with its principal officers, all at such reasonable times and as often as the Bank may reasonably request.

In addition to the foregoing, the Borrower shall furnish to the Bank, as soon as practicable and in any event within forty-five (45) days after the last day of each of the Borrower’s four (4) fiscal quarters, key operating statistics (in form and detail reasonably satisfactory to the Bank and including, without limitation, key sales, earnings, and EBITA information) for each of the Borrower’s Golden Corral Restaurants.

(d) Insurance. The Borrower shall, and shall cause each Subsidiary to, maintain with responsible carriers All Risk coverage for the full replacement value of all of its real and personal property, except that the Borrower and each Subsidiary may self-insure risks to its real and personal property in an amount not to exceed Five Hundred Thousand Dollars ($500,000), and maintain with responsible carriers general public liability insurance coverage including Excess liability coverage in an amount not less than Twenty-Five Million Dollars ($25,000,000), except that the Borrower and each Subsidiary may self-insure general public liability risks in an amount not to exceed Five Hundred Thousand Dollars ($500,000) per occurrence during the term of this Agreement. The Borrower shall deliver to the Bank, together with delivery of the financial statements required under Section 2(c)(i) above, a certificate specifying the details of all such insurance in effect.

(e) Taxes. The Borrower shall, and shall cause each Subsidiary to, file all federal, state and local tax returns and other reports it is required by law to file, and shall pay when due all taxes, assessments and other liabilities, except that the Borrower and any Subsidiary shall not be obligated to pay any taxes or assessments which it is contesting in good faith, provided that adequate reserves therefor are established in accordance with generally accepted accounting principles, that such contests will not materially adversely affect the Borrower’s or any Subsidiary’s operations or financial condition, and that such taxes and assessments are promptly paid when the dispute is finally determined.

(f) Existence and Status. The Borrower shall, and shall cause each Subsidiary to, maintain its existence in good standing under the laws of each jurisdiction described in Section 1(a) of this Agreement, provided that the Borrower or any Subsidiary may change its jurisdiction of incorporation if it shall remain in good standing under the laws thereof.

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Exhibit 10(c) 1

(g) Maintenance of Property. The Borrower shall, and shall cause each Subsidiary to, maintain to the extent consistent with good business practices all of its real and personal property in good condition and repair, not commit or permit any waste thereof, and not, except in the ordinary course of business, remove or permit the removal of any improvement, accession or fixture therefrom that may in any way materially impair the value of said property.

(h) Compliance with Law. The Borrower shall, and shall cause each Subsidiary to, comply at all times with all laws, statutes, ordinances, rules, regulations and orders of any governmental entity (including, but not by way of limitation, such laws, statutes, ordinances, rules, regulations and orders relating to ecology, human health and the environment) having jurisdiction over it or any part of its assets, where such failure to comply would have a material adverse effect on the Borrower’s or any Subsidiary’s operations or financial condition or the ability of the Borrower to perform its obligations hereunder. The Borrower and each Subsidiary shall obtain and maintain all permits, licenses, approvals and other similar documents required by any such laws, statutes, ordinances, rules, regulations or orders.

(i) Notice. The Borrower shall notify the Bank in writing, promptly upon the Borrower’s learning thereof, of: (i) any litigation, suit or administrative proceeding which may materially affect the operations, financial condition or business of the Borrower or any Subsidiary, whether or not the claim is considered by the Borrower to be covered by insurance, unless the applicable insurer has agreed to defend any such claim and cover the liability therefor; (ii) the occurrence of any material event described in Section 4043 of ERISA or any anticipated termination, partial termination or merger of a “Plan” (as defined in ERISA) or a transfer of the assets of a Plan; (iii) any labor dispute to which the Borrower or any Subsidiary may become a party; (iv) any default by the Borrower or any Subsidiary under any note, indenture, loan agreement, mortgage, lease or other similar agreement to which the Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary or its assets are bound; and (v) any default by any obligor under any material note or other evidence of debt payable to the Borrower or any Subsidiary.

(j) Liens. The Borrower shall not, and shall not permit any Subsidiary to, create, assume or permit to exist any Lien with respect to any of its assets, whether now owned or hereafter acquired, except Permitted Liens. Furthermore, the Borrower shall not, and shall not permit any Subsidiary to, enter into any agreement with any other person or entity pursuant to which the Borrower or any Subsidiary agrees not to create, assume or permit to exist any Lien with respect to any of its assets, whether now owned or hereafter acquired.

(k) Indebtedness. The Borrower shall not, and shall not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except the following (each, “Permitted Indebtedness”): (i) Indebtedness incurred under this Agreement and other Indebtedness to the Bank; (ii) outstanding Indebtedness reflected in the historical financial statements listed in Exhibit A attached hereto (but not any refinancing or refunding of such Indebtedness); (iii) Indebtedness described in Exhibit E attached hereto; and (iv) Indebtedness incurred in connection with Capitalized Leases so long as there is no violation of any of the Financial Covenants set forth on Exhibit D hereto.

(l) Loans; Investments. The Borrower shall not, and shall not permit any Subsidiary to, make or permit to remain outstanding any loan or advance to, or own or acquire any stock,

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Exhibit 10(c) 1

obligations or securities of, or any other interest in, or make any capital contribution to, any person or entity, except that the Borrower or any Subsidiary may: (i) make or permit to remain outstanding loans or advances to any Subsidiary or the Borrower; (ii) own or acquire stock, obligations or securities of a Subsidiary or of a corporation which immediately after such acquisition will be a Subsidiary; (iii) own or acquire prime commercial paper and certificates of deposit in United States commercial banks having capital resources in excess of Fifty Million Dollars ($50,000,000), in each case due within one (1) year from the date of purchase and payable in United States Dollars, obligations of the United States Government or any agency thereof, and obligations guaranteed by the United States Government, and repurchase agreements with such banks for terms of less than (1) one year in respect of the foregoing certificates and obligations; (iv) make travel advances in the ordinary course of business to officers and employees or other advances in the ordinary course of business to officers and employees (excluding advances to employees for relocation purposes) not to exceed One Hundred Twenty-Five Thousand Dollars ($125,000) in the aggregate at any time outstanding for the Borrower and all Subsidiaries; (v) make advances to employees for relocation purposes not to exceed One Hundred Fifty Thousand Dollars ($150,000) in the aggregate at any time outstanding for the Borrower and all Subsidiaries; (vi) own or acquire money-market preferred stock in an amount not to exceed Seven Hundred Fifty Thousand Dollars ($750,000); (vii) make or permit to remain outstanding loans or advances to, or own or acquire stock, obligations or securities of, any other person or entity, provided that the aggregate principal amount of such loans and advances (excluding loans which are fully secured by real estate consisting of former restaurant locations), plus the aggregate amount of the investment (at original cost) in such stock, obligations and securities, shall not exceed Five Hundred Thousand Dollars ($500,000) at any time outstanding for the Borrower and all Subsidiaries; and (viii) make investments in the Borrower’s non-qualified executive savings plan.

(m) Merger and Sale of Assets. Without the prior written consent of the Bank, the Borrower shall not, and shall not permit any Subsidiary to, merge or consolidate with any other corporation, or sell, lease or transfer or otherwise dispose of any of its assets, including, without limitation, the stock of any Subsidiary, or sell with recourse or discount or otherwise sell for less than the face value thereof any of its notes or accounts receivable, except that without the prior written consent of the Bank: (i) any Subsidiary may merge or consolidate with the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with any one or more other Subsidiaries; (ii) any Subsidiary may sell, lease, transfer or otherwise dispose of any of its assets to the Borrower or another Subsidiary; (iii) the Borrower or any Subsidiary may otherwise sell, lease, transfer or otherwise dispose of any of its assets having a book value of less than One Hundred Thousand Dollars ($100,000) provided that the aggregate book value of all such assets so sold, leased, transferred or otherwise disposed of by the Borrower and its Subsidiaries during any fiscal year shall not exceed Five Hundred Thousand Dollars ($500,000); and (iv) the Borrower or any Subsidiary may sell, lease, transfer or otherwise dispose of property (as hereinafter defined) and equipment in connection with remodelings and equipment replacements in the ordinary course of business. For purposes of this Section 2(m), “property” shall mean those components of the real estate (such as walls, electrical and plumbing) which are removed during a remodeling.

(n) Restrictions on Transactions With Stockholders and Other Affiliates. Except as otherwise expressly permitted under this Agreement, the Borrower shall not, and shall not permit any Subsidiary to, enter into or be a party to any transaction reportable under Item 404(a) of

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Exhibit 10(c) 1

Regulation S-K of the SEC, except in the ordinary course of business, pursuant to the reasonable requirements of its business, and upon fair and reasonable terms which are fully disclosed to the Bank and are no less favorable to the Borrower or such Subsidiary than the Borrower or such Subsidiary could obtain in a comparable arm’s length transaction with an unrelated third party.

(o) Books and Records. The Borrower shall, and shall cause each Subsidiary to, keep and maintain complete books of accounts, records and files with respect to its business in accordance with generally accepted accounting principles consistently applied in accordance with past practices and shall accurately and completely record all transactions therein.

(p) Business Activities. The Borrower shall, and shall cause each Subsidiary to, continue to engage in the types of business activities in which it is currently engaged or other activities involving food service and wholesaling food and related products, and shall not, and shall not permit any Subsidiary to, be engaged in any business activities other than the types in which it is currently engaged or other activities involving food service, lodging and wholesaling food and related products.

(q) Environmental Matters. The Borrower represents, warrants and covenants with the Bank that: (i) neither the Borrower nor any of its Subsidiaries nor, to the best of the Borrower’s knowledge, after due investigation, any other person or entity, has used or permitted any Hazardous Substances (as hereinafter defined) to be placed, held, stored or disposed of on any of the Designated Properties, in violation of any Environmental Laws (as hereinafter defined); (ii) none of the Designated Properties now contains any Hazardous Substance in violation of any Environmental Laws; (iii) there have been no complaints, citations, claims, notices, information requests, claims, notices, information requests, orders (including but not limited to clean-up orders) or directives on environmental grounds made or delivered to, pending or served on, or anticipated by the Borrower or any of its Subsidiaries, or of which the Borrower, after due investigation, including consideration of the previous uses of the Designated Properties and meeting the standard under 42 U.S.C. Section 9601(35)(B)(1986), is aware or should be aware (A) issued by a governmental department or agency having jurisdiction over any of the Designated Properties, or (B) issued or claimed by any persons, agencies or organizations or affecting any of the Designated Properties; and (iv) neither the Borrower nor any of its Subsidiaries, so long as any of the Indebtedness under this Agreement remains unpaid, shall allow any Hazardous Substances to be placed, held, stored or disposed on any of the Designated Properties or incorporated into any improvements on any of the Designated Properties in violation of any Environmental Laws. The term “Hazardous Substance” shall mean any solid, hazardous, toxic or dangerous waste, substance or material defined as such in or for the purpose of the Comprehensive Environmental Response, Compensation and Liability Act, any so-called “Superfund” or “Super-Lien” law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree relating to, or imposing liability or standards of conduct concerning, any Hazardous Substance (the “Environmental Laws”, as now or at any time hereafter in effect).

The Borrower agrees to indemnify and hold the Bank harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever, paid, incurred or suffered by, or asserted against the Bank for, with respect to, or as a direct or indirect result of, any of the following: (i) the presence on or under or the escape, seepage, leakage, spillage, discharge, emission, discharging or release from any of the

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Exhibit 10(c) 1

Designated Properties of any Hazardous Substance (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any of the Environmental Laws); or (ii) any liens against any of the Designated Properties or any interest or estate in any of the Designated Properties, created, permitted or imposed by the Environmental Laws, or any actual or asserted liability of or obligations of the Borrower or any of its Subsidiaries under the Environmental Laws.

The Borrower shall immediately notify the Bank should the Borrower become aware of any Hazardous Substance on any of the Designated Properties in violation of any Environmental Laws or any claim that any of the Designated Properties may be contaminated by any Hazardous Substance in violation of any Environmental Laws. The Borrower shall, at its own cost and expense, be responsible for the cleanup of any Hazardous Substance caused, or knowingly permitted, by the Borrower or any of its Subsidiaries to be on any of the Designated Properties which is in violation of any Environmental Laws including any removal, containment and remedial actions in accordance with all applicable Environmental Laws. The Borrower’s obligations hereunder shall not be subject to any limitation of liability provided herein or in any of the other Loan Documents and the Borrower acknowledges that its obligations hereunder are not conditional and shall continue in effect so long as a valid claim may lawfully be asserted against the Bank or for so long as this Agreement, any of the other Loan Documents or any renewal, amendment, extension or modification thereto remains in effect, whichever extends for a greater period of time.

(r) Waiver. Any variance from the covenants of the Borrower pursuant to this Section 2 shall be permitted only with the prior written consent and/or waiver of the Bank. Any such variance by consent and/or waiver shall relate solely to the variance addressed in such consent and/or waiver, and shall not operate as the Bank’s consent and/or waiver to any other variance of the same covenant or other covenants, nor shall it preclude the exercise by the Bank of any power or right under this Agreement, other than with respect to such variance.

3. Closing Conditions. The obligation of the Bank to make the Loans, or any portion thereof, and the effectiveness of this Agreement are, at the Bank’s option, subject to the satisfaction of each of the following conditions precedent:

(a) Default. Before and after giving effect to the Loans, or any portion thereof, no Event of Default or any event which, with the passage of time or the giving of notice, might mature into an Event of Default, shall have occurred and be continuing.

(b) Warranties. Before and after giving effect to the Loans or any portion thereof, the representations and warranties in Section 1 hereof shall be true and correct as though made on the date of such Loans or portion thereof.

(c) Certification. The Borrower shall have delivered to the Bank a certificate of the President or Chief Financial Officer of the Borrower dated as of the date hereof: (i) as to the matters set forth in Sections 3(a) and 3(b) above; (ii) to the effect that the resolutions described in Section 3(d) below have not been amended or rescinded and remain in full force and effect; (iii) as to the incumbency of the individuals authorized to sign this Agreement, the Notes (as hereinafter defined) and the other Loan Documents (with specimen signatures attached); and (iv) to the effect that the Articles of Incorporation and Code of Regulations of the Borrower are in full force and effect in the form delivered to the Bank.

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Exhibit 10(c) 1

(d) Resolutions. The Borrower shall have delivered to the Bank copies of the resolutions of the Borrower’s Board of Directors authorizing the borrowings hereunder and the execution and delivery of this Agreement, the Notes and other Loan Documents.

(e) Articles and Regulations. The Borrower shall have delivered to the Bank true and correct copies of its Articles of Incorporation and Code of Regulations.

(f) Construction Note. The Borrower shall have delivered the Construction Note (as hereinafter defined) to the Bank with all blanks appropriately completed and duly executed on behalf of the Borrower.

(g) Opinion. The Borrower shall have delivered to the Bank the opinion of outside counsel acceptable to the Bank, dated the date of this Agreement, to the effect that: (i) the Borrower is duly organized, validly existing and in good standing as a corporation under the laws of the State of Ohio; (ii) the Borrower has full power and authority to execute and deliver this Agreement, the Notes and the other Loan Documents and to perform its obligations thereunder; (iii) the execution and delivery by the Borrower of this Agreement, the Notes and the other Loan Documents, and the performance by the Borrower of its obligations thereunder, have been duly authorized by all necessary corporate action, and are not in conflict with any provision of law or of the Articles of Incorporation or Code of Regulations of the Borrower, nor in conflict with any agreement, order or decree binding upon the Borrower of which such counsel has knowledge; and (iv) this Agreement, the Notes and the other Loan Documents are the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws now or hereafter in effect, or by legal or equitable principles relating to or limiting creditors’ rights generally, or other rules of law or equity limiting the availability of specific performance or injunctive relief.

(h) Amendment Fee. The Borrower shall have paid to the Bank an amendment fee in the amount of $10,000.00.

(i) Revolving/Bullet Loan Agreement. The Borrower shall have delivered the Revolving/Bullet Loan Agreement (as hereinafter defined) and all related documents and instruments to the Bank with all blanks appropriately completed and duly executed on behalf of the Borrower.

4. Loans.

(a) Loans. Subject to the terms and conditions of this Agreement, and subject to there being no Event of Default (or event which might, with the giving of notice or the passage of time, mature into an Event of Default) by the Borrower hereunder, the Bank agrees to make loans to the Borrower in an aggregate amount not to exceed the lesser of (i) Forty-Four Million Dollars ($44,000,000) (the “Total Commitment Amount”) or (ii) the amount necessary to construct and open the Restaurants (collectively, the “Loans”); provided, however, that at no

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Exhibit 10(c) 1

time shall the ratio of (A) the sum of the outstanding principal balance of the Loans plus all other Senior Bank Debt (as defined in Exhibit D attached hereto) to (B) Borrower’s EBITDA (as defined in Exhibit D attached hereto) exceed 2.00 to 1.0. In the event that any of the upper limits described in the immediately preceding sentence shall at any time be exceeded, the Borrower shall immediately, without notice or demand, prepay the outstanding principal balance of the Loans such that the upper limits set forth in the immediately preceding sentence are not exceeded.

The Borrower shall provide the Bank notice of the Borrower’s desire to obtain Loan proceeds for the purpose of constructing and opening any particular Restaurant, which notice shall state the amount of the Loan requested and the location of the particular Restaurant. The term “Business Day” as used herein shall mean any day other than a Saturday, Sunday or holiday on which banks in Cincinnati, Ohio are required or authorized by law to close. The Loans shall be effectuated by the Bank crediting an account maintained by the Borrower at the Bank. No repayment or prepayment of the Loans shall be reason for any relending or additional lending of proceeds of the Loans to the Borrower, and no Loan proceeds shall be disbursed after August 31, 2006. The outstanding principal balance of each Loan which has not been converted into a Term Loan (as hereinafter defined) in accordance with the next paragraph hereof (such Loans which have not been so converted being collectively referred to herein as “Construction Loans”) shall mature and be payable in full on September 1, 2006 (the “Construction Loan Maturity Date”), unless the maturity thereof is accelerated as described herein. As of October 15, 2004, as a result of the prior draws by the Borrower under the Loans and conversions to Term Loans,                                                       Dollars ($                    ) remains available to be drawn by the Borrower under the Loans. The Construction Loans shall be evidenced by a Promissory Note in substantially the form of Exhibit F attached hereto, as the same may be amended and/or restated from time to time (the “Construction Note”).

Upon the substantial completion of construction of each Restaurant the construction or opening of which has been financed with Loan proceeds, the Borrower shall promptly notify the Bank in writing of the date thereof (each such date being referred to herein as a “Completion Date”). Within six (6) months after the Completion Date of each such Restaurant, the Borrower shall elect to convert the outstanding principal balance of all Loans obtained for the purpose of constructing or opening of such Restaurant to a term loan with a maturity date that is not greater than seven (7) years after the Conversion Date (each such Loan being referred to herein as a “Term Loan”), by providing ten (10) Business Days prior written notice to the Bank of (i) the date on which the Borrower desires such conversion to be effective (the “Conversion Date”), which date must be the first day of a calendar month and not later than the date which is six (6) months after the Completion Date, (ii) the maturity date elected by the Borrower for such Term Loan (each, a “Term Loan Maturity Date”; the Term Loan Maturity Dates and the Construction Loan Maturity Date are each sometimes referred to herein as a “Maturity Date”), which Maturity Date shall not be later than the date which is seven (7) years after the Conversion Date, and (iii) if the Borrower desires that such Term Loan bear interest at the Cost of Funds-Based Rate (as hereinafter defined), the irrevocable commitment by the Borrower to accept and be bound by its election of such Cost of Funds-Based Rate until the Maturity Date of such Term Loan.

Each Term Loan which bears interest at the Cost of Funds-Based Rate shall be evidenced by a Promissory Note in substantially the form of Exhibit G-1 attached hereto with all blanks appropriately completed and each Term Loan which does not bear interest at the Cost of Funds-Based

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Exhibit 10(c) 1

Rate shall be evidenced by a Promissory Note in substantially the form of Exhibit G-2 attached hereto with all blanks appropriately completed (each, a “Term Note”; the Term Notes and the Construction Note are sometimes collectively referred to herein as the “Notes”).

(b) Interest. “Prime Rate” means the prime rate announced by the Bank from time to time, as and when such rate changes. Interest on each advance of the Construction Loans hereunder (prior to conversion to a Term Loan) shall accrue at one of the following per annum rates selected by the Borrower: (i) upon notice to the Bank, the then applicable Prime Margin (as hereinafter defined) plus the Prime Rate (a “Prime Rate Loan”); (ii) upon a minimum of two New York Banking Days prior notice, the then applicable LIBOR/Money Market Margin (as hereinafter defined) plus the 1, 2, or 3 month LIBOR rate quoted by the Bank from Telerate Page 3750 or any successor thereto (which shall be the LIBOR rate in effect two New York Banking Days prior to commencement of the advance), adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “LIBOR Rate Loan”); or (iii) upon notice to the Bank, the then applicable LIBOR/Money Market Margin plus the rate, determined solely by the Bank, at which the Bank would be able to borrow funds of comparable amounts in the Money Markets for a 1, 2, or 3 month period, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “Money Market Rate Loan”).

The term “New York Banking Day” means any day (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.

The term “Money Markets” refers to one or more wholesale funding markets available to and selected by the Bank, including negotiable certificates of deposit, commercial paper, eurodollar deposits, bank notes, federal funds, interest rate swaps, or others.

In the event the Borrower does not timely select another interest rate option at least two New York Banking Days before the end of the Loan Period for a LIBOR Rate Loan or Money Market Rate Loan, the Bank may at any time after the end of the Loan Period convert the LIBOR Rate Loan or Money Market Rate Loan to a Prime Rate Loan, but until such conversion, the funds advanced under the LIBOR Rate Loan or Money Market Rate Loan shall continue to accrue interest at the same rate as the interest rate in effect for such LIBOR Rate Loan or Money Market Rate Loan prior to the end of the Loan Period.

The term “Loan Period” means the period commencing on the advance date of the applicable LIBOR Rate Loan or Money Market Rate Loan and ending on the numerically corresponding day 1, 2, or 3 months thereafter matching the interest rate term selected by the Borrower; provided, however, (y) if any Loan Period would otherwise end on a day which is not a New York Banking Day, then the Loan Period shall end on the next succeeding New York Banking Day unless the next succeeding New York Banking Day falls in another calendar month, in which case the Loan Period shall end on the immediately preceding New York Banking Day; or (z) if any Loan Period begins on the last New York Banking Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of the Loan Period), then the Loan Period shall end on the last New York Banking Day of the calendar month at the end of such Loan Period.

12

Exhibit 10(c) 1

No LIBOR Rate Loan or Money Market Rate Loan may extend beyond the Construction Loan Maturity Date in the case of the Construction Loans. In any event, if the Loan Period for a LIBOR Rate Loan or Money Market Rate Loan should happen to extend beyond the Construction Loan Maturity Date in the case of the Construction Loans, such Construction Loans must be prepaid at the Construction Loan Maturity Date. The Bank’s internal records of applicable interest rates shall be determinative in the absence of manifest error. Each LIBOR Rate Loan and each Money Market Rate Loan shall be in a minimum principal amount of Five Hundred Thousand Dollars ($500,000) and in increments of Five Hundred Thousand Dollars ($500,000) thereafter.

If a LIBOR Rate Loan or Money Market Rate Loan is prepaid prior to the end of the Loan Period, as defined above, for such loan, whether voluntarily or because prepayment is required due to such loan’s maturing or accelerating upon default or otherwise, the Borrower agrees to pay all of the Bank’s costs, expenses, and Interest Differential (as determined by the Bank) incurred as a result of such prepayment. The term “Interest Differential” shall mean that sum equal to the greater of zero or the financial loss incurred by the Bank resulting from prepayment, calculated as the difference between the amount of interest the Bank would have earned (from like investments in the Money Markets as of the first day of the LIBOR Rate Loan or Money Market Rate Loan) had prepayment not occurred and the interest the Bank will actually earn (from like investments in the Money Markets as of the date of prepayment) as a result of the redeployment of funds from the prepayment. Because of the short-term nature of this facility, the Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of a LIBOR Rate Loan or Money Market Rate Loan shall be in an amount equal to the remaining entire principal balance of such loan.

Any portion of the Construction Loans which is not at that time a LIBOR Rate Loan or a Money Market Rate Loan shall be a Prime Rate Loan.

The “LIBOR/Money Market Margin” is currently one hundred fifty (150) basis points and shall be subject to adjustment on each March 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank Debt to EBITDA for the period commencing on the first day of the Borrower’s then-current fiscal year and ending on the last day of the second quarter of such fiscal year and on each September 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank Debt to EBITA for the period commencing on the first day of the Borrower’s immediately preceding fiscal year and ending on the last day of such fiscal year, as follows: if the Borrower’s ratio of Senior Bank Debt to EBITDA is 1.50 to 1.0 or greater, the LIBOR/Money Market Margin shall be one hundred fifty (150) basis points; if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.50 to 1.0 but equal to or greater than 1.00 to 1.0, the LIBOR/Money Market Margin shall be one hundred twenty-five (125) basis points; and if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.00 to 1.0, the LIBOR/Money Market Margin shall be one hundred five (105) basis points. Such adjustments shall be based upon the Borrower’s ratio of Senior Bank Debt to EBITDA as determined from the financial statements delivered to the Bank pursuant to Section 2(c)(i) or (ii) hereof, as applicable. The foregoing provisions are not intended to, and shall not be construed to, authorize any violation by the Borrower of any Financial Covenant or constitute a waiver thereof or any commitment by the Bank to waive any violation by the Borrower of any Financial Covenant.

13

Exhibit 10(c) 1

The “Prime Margin” is currently negative fifty (-50) basis points and shall be subject to adjustment on each March 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank Debt to EBITDA for the period commencing on the first day of the Borrower’s then-current fiscal year and ending on the last day of the second quarter of such fiscal year and on each September 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank Debt to EBITDA for the period commencing on the first day of the Borrower’s immediately preceding fiscal year and ending on the last day of such fiscal year, as follows: if the Borrower’s ratio of Senior Bank Debt to EBITDA is 1.50 to 1.0 or greater, the Prime Margin shall be negative fifty (-50) basis points; if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.50 to 1.0 but equal to or greater than 1.00 to 1.0, the Prime Margin shall be negative seventy-five (-75) basis points; and if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.00 to 1.0, the Prime Margin shall be negative one hundred (-100) basis points. Such adjustments shall be based upon the Borrower’s ratio of Senior Bank Debt to EBITDA as determined from the financial statements delivered to the Bank pursuant to Section 2(c)(i) or (ii) hereof, as applicable. The foregoing provisions are not intended to, and shall not be construed to, authorize any violation by the Borrower of any Financial Covenant or constitute a waiver thereof or any commitment by the Bank to waive any violation by the Borrower of any Financial Covenant.

Upon conversion of a Construction Loan to a Term Loan, the Borrower shall choose that interest on such Term Loan shall accrue after such Term Loan’s Conversion Date as provided under either Option A or Option B that follows (with Option B only being available as a choice to the Borrower so long as no Event of Default or event which, with the passage of time or the giving of notice, might mature into an Event of Default, shall have occurred and be continuing): (A) under Option A (which shall be known as a “Variable Rate Term Loan”), for which Borrower shall execute a Promissory Note in substantially the form of Exhibit G-2 attached hereto, interest on such Variable Rate Term Loan shall accrue after such Variable Rate Term Loan’s Conversion Date at any of the following per annum rates selected by the Borrower: (x) upon notice to the Bank, as a Prime Rate Loan at the then applicable Prime Margin plus the Prime Rate; (y) upon a minimum of two New York Banking Days prior notice, as a LIBOR Rate Loan at the then applicable LIBOR/Money Market Margin plus the 1, 2, or 3 month LIBOR rate quoted by the Bank from Telerate Page 3750 or any successor thereto (which shall be the LIBOR rate in effect two New York Banking Days prior to commencement of the advance), adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation; or (z) upon notice to the Bank, as a Money Market Rate Loan at the then applicable LIBOR/Money Market Margin plus the rate, determined solely by the Bank, at which the Bank would be able to borrow funds of comparable amounts in the Money Markets for a 1, 2, or 3 month period, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation; or (B) under Option B (which shall be known as a “Cost of Funds Rate Term Loan”), for which Borrower shall execute a Promissory Note in substantially the form of Exhibit G-1 attached hereto, interest on such Cost of Funds Rate Term Loan shall accrue after such Cost of Funds Rate Term Loan’s Conversion Date at a fixed rate per annum equal to one hundred fifty (150) basis points plus the Bank’s Cost of Funds as of the Conversion Date (the “Cost of Funds-Based Rate”).

With respect to any Variable Rate Term Loan, in the event the Borrower does not timely select another interest rate option at least two New York Banking Days before the end of the Loan Period for a LIBOR Rate Loan or Money Market Rate Loan, the Bank may at any time

14

Exhibit 10(c) 1

after the end of the Loan Period convert the LIBOR Rate Loan or Money Market Rate Loan to a Prime Rate Loan, but until such conversion, the funds advanced under the LIBOR Rate Loan or Money Market Rate Loan shall continue to accrue interest at the same rate as the interest rate in effect for such LIBOR Rate Loan or Money Market Rate Loan prior to the end of the Loan Period. No Variable Rate Term Loan that is a LIBOR Rate Loan or Money Market Rate Loan may extend beyond the Term Loan Maturity Date for such Variable Rate Term Loan. In any event, if the Loan Period for a Variable Rate Term Loan that is a LIBOR Rate Loan or Money Market Rate Loan should happen to extend beyond the Term Loan Maturity Date for such Variable Rate Term Loan, such Variable Rate Term Loan must be prepaid at its Term Loan Maturity Date. The Bank’s internal records of applicable interest rates shall be determinative in the absence of manifest error. Each Variable Rate Term Loan that is LIBOR Rate Loan or a Money Market Rate Loan shall be in a minimum principal amount of Five Hundred Thousand Dollars ($500,000) and in increments of Five Hundred Thousand Dollars ($500,000) thereafter. If a Variable Rate Term Loan that is a LIBOR Rate Loan or a Money Market Rate Loan is prepaid prior to the end of the Loan Period for such loan, whether voluntarily or because prepayment is required due to such loan’s maturing or accelerating upon default or otherwise, the Borrower agrees to pay all of the Bank’s costs, expenses, and Interest Differential (as determined by the Bank) incurred as a result of such prepayment. Because of the short-term nature of this facility, the Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of a Variable Rate Term Loan that is a LIBOR Rate Loan or a Money Market Rate Loan shall be in an amount equal to the remaining entire principal balance of such loan. Any portion of a Variable Rate Term Loan which is not at that time a LIBOR Rate Loan or a Money Market Rate Loan shall be a Prime Rate Loan.

With respect to any Cost of Funds Rate Term Loan, the term “Cost of Funds” means the rate at which the Bank would be able to borrow funds of comparable amounts in the Money Markets for a period equal to the remaining term of such Cost of Funds Rate Term Loan, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, with such rate rounded upward to the nearest one-eighth percent, and the term “Money Markets” refers to one or more wholesale funding markets available to and selected by the Bank, including negotiable certificates of deposit, commercial paper, eurodollar deposits, bank notes, federal funds, interest rate swaps or others.

Interest on the Loans shall be computed on the basis of a year consisting of three hundred sixty (360) days but applied to the actual number of days elapsed.

At the option of the Bank, (a) prior to acceleration of the Loans, in the event that any interest on or principal of any Loan remains unpaid past thirty (30) days of the date due, and/or (b) upon the occurrence of any other Event of Default hereunder or upon the acceleration of the Loans, interest (computed and adjusted in the same manner, and with the same effect, as interest on the Loans prior to maturity) on the outstanding balance of the Loans shall be payable on demand at the Prime Rate plus an additional three percent (3%) per annum up to any maximum rate permitted by law, in all cases until paid and whether before or after the entry of any judgment thereon. In addition, in the event that the Borrower should fail to make any payment hereunder within ten (10) days of the date due, the Borrower shall pay the Bank a fee in an amount of up to five percent (5%) of the amount of such payment, but in no event less than Fifty Dollars ($50.00), which fee shall be immediately due and payable without notice or demand.

15

Exhibit 10(c) 1

(c) Payments. Interest on any portion of the Loans bearing interest based on the Prime Rate shall be payable monthly, in arrears, on the last day of each calendar month, and when such Loan is due (whether by reason of acceleration or otherwise). Interest on any portion of the Loans that is a LIBOR Rate Loan or a Money Market Rate Loan shall be payable, in arrears, on the last day of the Loan Period applicable thereto, and when such Loan is due (whether by reason of acceleration or otherwise). In addition, the Borrower shall pay all accrued but unpaid interest on each Construction Loan on the Conversion Date of such Construction Loan to a Term Loan.

The principal of each Construction Loan which has not been converted into a Term Loan shall be due and payable in full on the Construction Loan Maturity Date.

The principal of each Variable Rate Term Loan shall be payable in equal monthly installments in amounts sufficient to amortize the principal amount of such Variable Rate Term Loan over the period commencing on the Conversion Date for such Variable Rate Term Loan and ending on its Term Loan Maturity Date, with such payments commencing on the first day of the calendar month after the calendar month which includes the Conversion Date and continuing on the first day of each calendar month thereafter through and including the applicable Term Loan Maturity Date, at which time the outstanding principal balance of such Variable Rate Term Loan shall be due and payable in full.

With respect to each Cost of Funds Rate Term Loan, on the first day of the calendar month after the calendar month which includes the Conversion Date for such Cost of Funds Rate Term Loan and on the first day of each calendar month thereafter through and including the Term Loan Maturity Date thereof, the Borrower shall make equal payments of principal and interest in amounts sufficient to amortize the principal balance of such Cost of Funds Rate Term Loan as of the Conversion Date over the period commencing on the Conversion Date and extending until the Term Loan Maturity Date, with each such payment being applied first to accrued interest and then to principal. The outstanding principal balance of and all interest on each Cost of Funds Rate Term Loan shall be due and payable in full on its Term Loan Maturity Date.

All payments of principal and interest hereunder shall be made in immediately available funds to the Bank at such place as may be designated by the Bank to the Borrower in writing. The Bank is authorized by the Borrower to enter from time to time the balance of the Loans and all payments and prepayments thereon on the reverse of the Notes or in the Bank’s regularly maintained data processing records, and the aggregate unpaid amount of the Loans set forth thereon or therein shall be presumptive evidence of the amount owing to the Bank and unpaid thereon.

(d) Changes in Laws and Circumstances; Illegality.

(i) In the event of (A) any change in the reserve requirements and/or the assessment rates of the FDIC which are applicable to the Bank in making the Loans or any portion thereof as a LIBOR Rate Loan, Money Market Rate Loan, or Cost of Funds Rate Term Loan or (B) any change in circumstances affecting the interbank market, and the result of any such event described in clause (A) or (B) above is to increase the costs to the Bank of making the Loans, the Borrower shall promptly pay the Bank any additional amounts, upon demand

16

Exhibit 10(c) 1

accompanied by a reasonably detailed statement as to such additional amounts (which statement shall be conclusive in the absence of manifest error), which will reasonably compensate the Bank for such costs.

(ii) If by reason of circumstances affecting the interbank market adequate and reasonable means do not exist in the reasonable judgment of the Bank for ascertaining the rate of interest for a LIBOR Rate Loan, Money Market Rate Loan, or Cost of Funds Rate Term Loan at any time, the Bank shall forthwith give notice thereof to the Borrower. Unless and until such notice has been withdrawn by the Bank, the Borrower may not thereafter elect to have any portion of the Loans bear interest at a LIBOR based rate, Money Market based rate, or Cost of Funds-Based Rate, as applicable.

(iii) If any law, rule, regulation, treaty, guideline, order or directive or any change therein or in the interpretation or application thereof shall make it unlawful for the Loans to bear interest at a LIBOR based rate, Money Market based rate, or Cost of Funds-Based Rate, the Bank shall notify the Borrower thereof and no portion of the Loans may thereafter bear interest at a LIBOR based rate, Money Market based rate, or Cost of Funds-Based Rate, as applicable. If required by law, any portion of the Loans then bearing interest at a LIBOR based rate, Money Market based rate, or Cost of Funds-Based Rate, as applicable, shall cease to bear interest at the LIBOR based rate, Money Market based rate, or Cost of Funds-Based Rate, as applicable, and shall bear interest based on the Prime Rate.

(e) Prepayments. The Borrower may, at its option, from time to time repay or prepay part or all of the outstanding principal balance of the Loans bearing interest based on the Prime Rate without premium.

If any LIBOR Rate Loan or Money Market Rate Loan is prepaid prior to the end of the Loan Period for such loan, whether voluntarily or because prepayment is required due to such loan’s maturing or accelerating upon default or otherwise, the Borrower agrees to pay all of the Bank’s costs, expenses, and Interest Differential (as determined by the Bank) incurred as a result of such prepayment. Because of the short-term nature of this facility, the Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of a LIBOR Rate Loan or a Money Market Rate Loan shall be in an amount equal to the remaining entire principal balance of such loan.

There shall be no prepayments of any Cost of Funds Rate Term Loan, provided that the Bank may consider requests for its consent with respect to prepayment of any Cost of Funds Rate Term Loan, without incurring an obligation to do so, and the Borrower acknowledges that in the event that such consent is granted, the Borrower shall be required to pay the Bank, upon prepayment of all or part of the principal amount of a Cost of Funds Rate Term Loan before final maturity, a prepayment indemnity (“Prepayment Fee”) equal to the greater of zero, or that amount, calculated on any date of prepayment (“Prepayment Date”), which is derived by subtracting: (a) the principal amount of such Cost of Funds Rate Term Loan or portion of such Cost of Funds Rate Term Loan to be prepaid from (b) the Net Present Value of such Cost of Funds Rate Term Loan or portion of such Cost of Funds Rate Term Loan to be prepaid on such Prepayment Date; provided, however, that the Prepayment Fee shall not in any event exceed the maximum prepayment fee permitted by applicable law.

17

Exhibit 10(c) 1

“Net Present Value” shall mean the amount which is derived by summing the present values of each prospective payment of principal and interest which, without such full or partial prepayment, could otherwise have been received by the Bank over the remaining contractual life of such Cost of Funds Rate Term Loan. The individual discount rate used to present value each prospective payment of interest and/or principal shall be the Money Market Rate at Prepayment for the maturity matching that of each specific payment of principal and/or interest.

“Money Market Rate At Prepayment” shall mean that zero-coupon rate, calculated on the Prepayment Date, and determined solely by the Bank, as the rate at which the Bank would be able to borrow funds in Money Markets for the prepayment amount matching the maturity of a specific prospective Cost of Funds Rate Term Loan payment date, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation. A separate Money Market Rate at Prepayment will be calculated for each prospective interest and/or principal payment date.

In calculating the amount of such Prepayment Fee, the Bank is hereby authorized by the Borrower to make such assumptions regarding the source of funding, redeployment of funds, and other related matters, as the Bank may deem appropriate. If the Borrower fails to pay any Prepayment Fee when due, the amount of such Prepayment Fee shall thereafter bear interest until paid at the default rate specified in this Agreement (computed on the basis of a 360-day year, actual days elapsed). Any prepayment of principal shall be accompanied by a payment of interest accrued to date thereon; and said prepayment shall be applied to the principal installments in the inverse order of their maturities. All prepayments shall be in an amount of at least $100,000 or, if less, the remaining entire principal balance of the applicable Cost of Funds Rate Term Loan.

No partial prepayment of any of the Loans shall change any due date or the amount of any regularly-scheduled installment of principal thereof.

(f) Unused Credit Fee. The Borrower shall pay the Bank an unused credit fee in an amount equal to one quarter of one percent (.25%) per annum times the daily average of the unused Total Commitment Amount (the “Unused Credit Fee”), which fee shall be payable quarterly, in arrears, having commenced on the first day of December, 1998, and on the first day of each March, June, September and December thereafter, and when the Loans are due (whether by reason of acceleration or otherwise). The Unused Credit Fee shall be computed on the basis of a year consisting of three hundred sixty (360) days but applied to the actual number of days elapsed.

5. Events of Default. If any of the following events (each, an “Event of Default”) shall occur, then the Bank may, without further notice or demand, accelerate the Loans and declare them to be, and thereupon the Loans shall become, immediately due and payable (except that the Loans shall become automatically due and payable upon the occurrence of an event described in Sections 5(j), (k) and (l) below), and, to the extent that the Loan proceeds have not yet been used or fully drawn on by the Borrower, terminate the Bank’s obligation to disburse the balance of same; and the Bank shall have all rights provided herein or in any of the other Loan Documents or otherwise provided by law to realize on any collateral or security for the Loans:

(a) The Borrower does not pay the Bank any interest on the Loans within ten (10) days after the date due, whether by reason of acceleration or otherwise, or does not pay or repay to the Bank any principal of the Loans or any other obligation hereunder when due, whether by reason of acceleration or otherwise; or

18

Exhibit 10(c) 1

(b) The Borrower defaults in the performance or observance of any agreement contained in Section 2(c), 2(d), 2(e), 2(f), 2(g), 2(h), 2(i) or 2(o) hereof and such default has not been cured by the Borrower within ten (10) days after the occurrence thereof, or the Borrower defaults in the performance or observance of any other agreement contained in Section 2 hereof; or

(c) There shall have occurred any other violation or breach of any covenant, agreement or condition contained herein or in any other Loan Document which has not been cured by the Borrower within thirty (30) days after the earlier to occur of the date the Borrower has knowledge thereof and the date the Bank gives the Borrower notice thereof; or

(d) The Borrower does not pay when due or prior to the expiration of the applicable cure period, if any, any principal or interest on any other Indebtedness in excess of One Hundred Thousand Dollars ($100,000), or the Borrower defaults in the performance or observance of any other term or condition contained in any agreement or instrument under which such Indebtedness is created, and the holder of such other Indebtedness declares, or may declare, such Indebtedness due prior to its stated maturity because of the Borrower’s default thereunder; or

(e) There shall have occurred any violation or breach of any covenant, agreement or condition contained in any other agreement between the Borrower and the Bank which has not been cured by the Borrower prior to the expiration of the applicable cure period, if any, including without limitation, the Second Amended and Restated Loan Agreement [Revolving and Bullet Loans] between the Borrower and the Bank dated as of October 15, 2004, as amended from time to time (the “Revolving/Bullet Loan Agreement”); or

(f) The Borrower does not perform its obligations under any agreement material to its business, and the other party to such agreement declares, or may declare, such agreement in default; or

(g) Any representation or warranty made herein or in any other Loan Document or writing furnished in connection with this Agreement shall be false or misleading in any material respect when made; or

(h) The Borrower is generally not paying its debts as they become due; or

(i) With respect to the plans referred to in Section 1(h) above, or any other similar plan, a “reportable event” or “prohibited transaction” pursuant to ERISA has occurred which results in the imposition of material taxes or penalties against the Borrower or the termination of such plans (or trusts related thereto), or the Borrower incurs any material liability to the PBGC in connection with such plans; or

(j) The Borrower makes an assignment of a material part of its assets for the benefit of creditors; or

19

Exhibit 10(c) 1

(k) The Borrower applies for the appointment of a trustee or receiver for a material part of its assets or commences any proceedings relating to the Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or other liquidation law of any jurisdiction; or any such application is filed, or any such proceedings are commenced, against the Borrower, and the Borrower indicates its approval, consent or acquiescence thereto; or an order is entered appointing such trustee or receiver, or adjudicating the Borrower bankrupt or insolvent, or approving the petition in any such proceedings, and such order remains in effect for sixty (60) days; or

(l) Any order is entered in any proceedings against the Borrower decreeing the dissolution of the Borrower; or

(m) Any material part of the Borrower’s operations shall cease, other than temporary or seasonal cessations which are experienced by other companies in the same line of business and which would not have a material adverse effect on the Borrower’s operations or financial condition or its ability to perform its obligations hereunder; or

(n) Any final non-appealable judgment which, together with other outstanding judgments against the Borrower, causes the aggregate of such judgments in excess of confirmed insurance coverage satisfactory to the Bank to exceed Seven Hundred Fifty Thousand Dollars ($750,000), shall be rendered against the Borrower; or

(o) Jack C. Maier, Blanche F. Maier and Craig F. Maier and members of their families shall fail to beneficially own, in the aggregate, at least thirty percent (30%) of the outstanding common stock of the Borrower, with full voting rights; or

(p) Any event of default occurs under any other agreement to which the Borrower and the Bank are parties or under any document or instrument running to the benefit of the Bank from the Borrower.

The above recitation of Events of Default shall be interpreted in all respects in favor of the Bank. To the extent any cure-of-default period is provided above, the Bank may nevertheless, at its option pending completion of such cure, suspend its obligation to consider further disbursement of the Loans hereunder.

6. General.

(a) Reasonable Actions. The Bank agrees that in taking any action which it is permitted or empowered to take under this Agreement, it will act reasonably under what it believes are the facts and circumstances existing at such time.

(b) Delay. No delay, omission or forbearance on the part of the Bank in the exercise of any power or right shall operate as a waiver thereof, nor shall any single or partial delay, omission or forbearance in the exercise of any other power or right. The rights and/or remedies of the Bank herein provided are cumulative, shall be interpreted in all respects in favor of the Bank and are not exclusive of any other rights and/or remedies provided by law.

20

Exhibit 10(c) 1

(c) Notice. Except as otherwise expressly provided in this Agreement, any notice hereunder shall be in writing and shall be deemed to be given when personally delivered or when sent by certified mail, postage prepaid, and addressed to the parties at their addresses set forth below:

	Bank:	U.S. Bank National Association
		425 Walnut Street
		Cincinnati, Ohio 45202
		Attention:	Kendra Bach
			Vice President
	With a copy to:	Jeffrey S. Schloemer, Esq.
		Taft, Stettinius & Hollister LLP
		425 Walnut Street, Suite 1800
		Cincinnati, Ohio 45202
	Borrower:	Frisch’s Restaurants, Inc.
		2800 Gilbert Avenue
		Cincinnati, Ohio 45206
		Attention:	Mr. Donald H. Walker
			Vice President-Finance
	With copies to:	Craig F. Maier, President
		Frisch’s Restaurants, Inc.
		2800 Gilbert Avenue
		Cincinnati, Ohio 45206
and
		W. Gary King, Esq.
		Frisch’s Restaurants, Inc.
		2800 Gilbert Avenue
		Cincinnati, Ohio 45206

The Borrower or the Bank may, by written notice to the other as provided herein, designate another address for purposes hereunder.

(d) Expenses; Indemnity. The Borrower agrees to pay all reasonable out-of-pocket expenses of the Bank and its employees (including attorney’s fees and legal expenses, but excluding the salaries of the Bank’s own employees) incurred by the Bank in entering into and closing this Agreement and preparing the documentation in connection herewith, administering the obligations of the Borrower hereunder or under any of the other Loan Documents, and enforcing the obligations of the Borrower hereunder or under any of the other Loan Documents, and the Borrower agrees to pay the Bank upon demand for the same. The Borrower agrees to defend, indemnify and hold the Bank harmless from any liability, obligation, cost, damage or expense (including reasonable attorney’s fees and legal expenses) for taxes (other than income taxes), fees or third party claims which may arise or be related to the execution, delivery or performance of this Agreement or any of the other Loan Documents, except in the case of

21

Exhibit 10(c) 1

negligence or willful misconduct on the part of the Bank. The Borrower further agrees to indemnify and hold harmless the Bank from any loss or expense which the Bank may sustain or incur as a consequence of default by the Borrower in payment of any principal of or interest on the Loans, including, without limitation, any such loss or expense arising from interest or fees payable by the Bank to lenders of funds obtained by it in order to maintain interest rates on any of the Loans constituting a LIBOR Rate Loan, a Money Market Rate Loan, or a Cost of Funds Rate Term Loan.

(e) Survival. All covenants and agreements of the Borrower made herein or otherwise in connection with the transactions contemplated hereby shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall remain in effect so long as any obligations of the Borrower are outstanding hereunder or under any of the other Loan Documents.

(f) Severability. Any provision of this Agreement or any of the other Loan Documents which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition of enforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(g) Law. IMPORTANT: The Loans shall be deemed made in Ohio and this Agreement and all other Loan Documents, and all of the rights and obligations of the Borrower and the Bank hereunder and thereunder, shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrower and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to the Loans and/or this Agreement and/or any of the other Loan Documents shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (i) served personally or by certified mail to the other party at any of its addresses noted herein, or (ii) as otherwise provided under the laws of the State of Ohio. The interest rates and all other terms of the Loans negotiated with the Borrower are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

(h) Successors. This Agreement shall be binding upon and inure to the benefit of the Borrower and the Bank and their respective successors and assigns. The Borrower shall not assign its rights or delegate its duties hereunder without the prior written consent of the Bank.

(i) Amendment and Restatement. This Agreement amends and restates the Prior Loan Agreement and amounts outstanding under the Prior Loan Agreement shall not be deemed cancelled or satisfied, but shall be evidenced by this Agreement instead of by the Prior Loan Agreement.

22

Exhibit 10(c) 1

(j) Amendment. Except as otherwise expressly provided herein, this Agreement may not be modified or amended except in writing signed by authorized officers of the Bank and the Borrower.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly effective as of the date first set forth above.

U.S. BANK NATIONAL ASSOCIATION		FRISCH’S RESTAURANTS, INC.
By:	/s/ Kendra Bach	By:	/s/ Donald H. Walker
	Kendra Bach		Donald H. Walker
	Vice President		Vice President-Finance

23

Exhibit 10(c) 1

LIST OF EXHIBITS

A - Financial Information and Reports

B - Actions

C - Permitted Liens

D - Financial Covenants

E - Permitted Indebtedness

F - Construction Note

G-1 - Form of Term Note (Cost of Funds Rate Term Loan)

G-2 - Form of Term Note (Variable Rate Term Loan)

24

Exhibit 10(c) 1

EXHIBIT A

FINANCIAL INFORMATION AND REPORTS

1. Annual Report for the year ended May 30, 2004.

2. Projections for the Borrower for the year ending June 1, 2005.

A-1

Exhibit 10(c) 1

EXHIBIT B

ACTIONS

1. Fortney & Weygandt and LMH&T - #263 G.C Canton – Faulty Design, Engineering and Construction Claims. In July, 2003, the lawsuit against the architect and engineer was settled for $1,700,000.00. The arbitration of the dispute with the contractor remains open. We are seeking the balance of our claim and the contractor claims that it is owed $293,638.00.

2. BVI Double Drive Thru, Inc. – vs Glincher Properties and Frisch’s Restaurants, Inc. #202 Clarksville, IN Big Boy. Rally’s filed suit against the shopping center owner and Frisch’s, claiming that the placement of our building violates their access easement rights. They are asking for damages in an undetermined amount and attorneys fees. Frost Brown Todd, who represented us in the acquisition of the property, is handling our defense. Discovery has commenced.

3. Christina Barrett, et al vs. Frisch’s, et al - #124 Florence – Sexual Harassment Claims. On October 30, 2003, Christina Barrett and two other female employees filed suit against Frisch’s and another employee alleging sexual harassment. The case has been dismissed and the claim is being arbitrated.

4. Sherri Pennington, et al vs. Frisch’s, et al - #262 G.C. Mason-Montgomery – Wage and Hour Claim. On December 16, 2003, a collective action by current and former employees alleging violations of the Fair Labor Standards Act was filed in U.S. District Court. A motion has been filed to dismiss and compel arbitration.

5. Tammy Carlton vs. Frisch’s Restaurants, Inc., et al. #259 Golden Corral, Preston – Sexual Harassment Claim. The Plaintiff claims sexual harassment by her supervisor. She agreed to arbitration, which commenced in January, 2004. However, in March, 2004, she filed a complaint in the Jefferson County Circuit Court. We have filed a motion to dismiss or stay the lawsuit pending arbitration.

6. Jess Hollon vs. Frisch’s Restaurants, Inc., et al. – Area Supervisor – Sexual Harassment and Hostile Work Environment Claim. On March 30, 2004, the Plaintiff filed suit in Montgomery County Common Pleas Court, alleging, among other things, that he was subjected to reprisal after reporting sexual harassment, disparate treatment and a hostile work environment. A motion has been filed to dismiss and compel arbitration.

7. Lefler, et. al. vs. Frisch’s Restaurants, Inc. This case involves claims of sexual harassment, retaliation, intentional infliction of emotional distress and a violation of the Ohio Safe Workplace Act. An arbitrator has been selected.

8. Hamm vs. Frisch’s Restaurants, Inc. This is an arbitration involving age and/or workers compensation retaliation. Discovery has commenced.

B-1

Exhibit 10(c) 1

9. Court proceedings covered by general liability insurance: Lillie Guilfoyle, Betty Hayes, Andrea Kender, Barbara Melzer and Laura Shoulders.

10. Workers Compensation proceedings:

a. before a court: Tina Ferrell, Bonita Fraley and Bruce Schatzman

b. before Industrial Commission: Latasha Cobb, Delores Foley, Ashley Stephens and Rita Stewart

B-2

Exhibit 10(c) 1

EXHIBIT C

PERMITTED LIENS

NONE

C-1

Exhibit 10(c) 1

EXHIBIT D

FINANCIAL COVENANTS

The Borrower agrees that it shall:

(a) Tangible Net Worth. Not permit the Borrower’s tangible net worth, on a consolidated basis, to be less than the following amounts (each, a “Base Tangible Net Worth”) at any time during the following time periods (each, a “TNW Year”):

TNW Year	Base Tangible Net Worth
the period commencing with June 3, 2003 and continuing through the next to last day of the fiscal year ending May 30, 2004 (“FY 04”)	$63,000,000
any period commencing with the last day of a fiscal year, beginning with the period commencing on the last day of FY 04, through the next to last day of the next fiscal year	the Base Tangible Net Worth for the immediately preceding TNW Year plus $5,000,000

“Tangible net worth” for purposes hereof shall mean the total of book net worth less any assets, except capitalized leases, considered intangible under generally accepted accounting principles.

(b) Ratio of Senior Bank Debt to EBITDA. Not permit the ratio of the Borrower’s Senior Bank Debt to EBITDA to exceed 2.00 to 1.0 at any time.

“Senior Bank Debt” for purposes hereof shall mean the sum of all obligations of the Borrower to the Bank, including without limitation all obligations of the Borrower to the Bank incurred in connection with this Agreement and the Revolving/Bullet Loan Agreement, and all obligations of the Borrower to the Bank incurred in connection with any existing or future lease transactions capitalized or required to be capitalized on the Borrower’s books.

“EBITDA” for purposes hereof shall mean the Borrower’s consolidated gross (before interest, taxes, depreciation and amortization) earnings, less cash and non-cash extraordinary gains and non-cash extraordinary losses, calculated in accordance with generally accepted accounting principles consistently applied in accordance with past practices on a rolling four (4) quarter basis.

(c) Cash Flow Coverage Ratio. Not permit the ratio of (i) the Borrower’s EBITDA plus operating lease payments minus Ten Million Dollars ($10,000,000) minus cash dividends to the Borrower’s shareholders, to (ii) the sum of the Borrower’s scheduled principal payments on long-term debt and capital lease obligations plus interest expense plus operating lease payments (in each case for the same period that the Borrower’s EBITDA is measured), calculated in accordance with generally accepted accounting principles consistently applied in accordance with past practices on a rolling four (4) quarter basis, to be less than 1.25 to 1.0 at any time.

D-1

Exhibit 10(c) 1

(d) Interest Coverage Ratio. Not permit the Borrower’s Interest Coverage Ratio to be less than 2.00 to 1.0 at any time.

“Interest Coverage Ratio” for purposes hereof shall mean the Borrower’s ratio, on a consolidated basis, of (i) its earnings before total interest expense (as required to be reflected in audited financial statements prepared in accordance with generally accepted accounting principles) and current and deferred taxes, less cash and non-cash extraordinary gains and non-cash extraordinary losses, to (ii) its total interest expense (as required to be reflected in audited financial statements prepared in accordance with generally accepted accounting principles), calculated on a rolling four (4) quarter basis.

D-2

Exhibit 10(c) 1

EXHIBIT E

PERMITTED INDEBTEDNESS

	Balance September 19, 2004
Indebtedness to US Bank NA
Bullet Loan		10,000,000
Revolving Loan (up to $5,000,000 may be borrowed)		0
Golden Corral Credit Facility ($52,500,000 had cumulatively been borrowed as of 9/19/2004)		36,933,921
	$	46,933,921

Contingent liability as assignor/guarantor of the following leases:

Location		Assignee	Remaining Lease Term
Blue Ash, OH (HS Blue Ash) (1 five year renewal available to 11/30/10)	$7,800 per year	Anz Food Service	11/30/2005
Covington, KY (Riverview Hotel) (renewal options aggregating 50 years)	$48,072 per year	Remington Hotel Corporation	4/30/2020

Lease liability for closed restaurants & other non-operating property (lease not presently assigned)

Location	Remaining Lease Term	Rent Per Month
None

Plus indebtedness secured by permitted liens as described on Exhibit C and indebtedness replacing the indebtedness secured by the permitted liens as described on Exhibit C, provided that no such replacement indebtedness shall exceed the amount being replaced as shown on Exhibit C.

E-1

Exhibit 10(c) 1

EXHIBIT F

SIXTH AMENDED AND RESTATED PROMISSORY NOTE

$44,000,000	Cincinnati, Ohio
	October 15, 2004

FRISCH’S RESTAURANTS, INC., an Ohio corporation (the “Borrower”), for value received, hereby promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association formerly known as Firstar Bank, N.A. and Star Bank, National Association (the “Bank”), or it successors or assigns, on or before September 1, 2006, the principal sum of Forty-Four Million Dollars ($44,000,000), or such portion thereof as may be outstanding from time to time, together with interest thereon as hereinafter provided.

This is the Construction Note referred to in, was executed and delivered pursuant to, and evidences indebtedness of the Borrower incurred under, that certain First Amended and Restated Loan Agreement [Golden Corral] dated as of October 15, 2004 between the Borrower and the Bank, as the same has been and/or may be amended, restated, supplemented, renewed, or otherwise modified and in effect from time to time (the “Loan Agreement”), to which reference is hereby made for a statement of the terms and conditions under which the Construction Loans evidenced hereby were made and are to be repaid and for a statement of the Bank’s remedies upon the occurrence of an Event of Default. Capitalized terms used herein, but not otherwise specifically defined, shall have the meanings ascribed to such terms in the Loan Agreement.

The Borrower further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full at the rate or rates from time to time applicable to the Construction Loans as determined in accordance with the Loan Agreement; provided, however, that upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest on the outstanding principal balance of this Note at the rate of interest applicable following the occurrence of an Event of Default as determined in accordance with the Loan Agreement.

Interest on this Note shall be payable, at the times and from the dates specified in the Loan Agreement, on the date of any prepayment hereof, at maturity, whether due by acceleration or otherwise, and as otherwise provided in the Loan Agreement. From and after the date when the principal balance hereof becomes due and payable, whether by acceleration or otherwise, interest hereon shall be payable on demand. In no contingency or event whatsoever shall interest charged hereunder, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Bank has received interest hereunder in excess of the highest rate applicable hereto, such excess shall be applied in accordance with the terms of the Loan Agreement.

The indebtedness evidenced by this Note is secured pursuant to the terms of the Loan Documents.

F-1

Exhibit 10(c) 1

The Borrower hereby waives demand, presentment, and protest and notice of demand, presentment, protest, and nonpayment.

The Borrower further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including attorneys’ fees and legal expenses, incurred by the Bank in endeavoring to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise.

IMPORTANT: This Note shall be deemed made in Ohio and shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrower and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to this Note shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (a) served personally or by certified mail to the other party at any of its addresses noted herein, or (b) as otherwise provided under the laws of the State of Ohio. The interest rates and all other terms of this Note negotiated with the Borrower are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

This Note amends and restates the Fifth Amended and Restated Promissory Note dated as of September 15, 2003 given by the Borrower to the Bank, and evidences all amounts outstanding as of the date hereof under said Fifth Amended and Restated Promissory Note.

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

FRISCH’S RESTAURANTS, INC.
By:
Title:
Address:	2800 Gilbert Avenue
	Cincinnati, Ohio 45206

F-2

Exhibit 10(c) 1

EXHIBIT G-1

COST OF FUNDS RATE TERM LOAN

PROMISSORY NOTE

$	Cincinnati, Ohio
	1,

FRISCH’S RESTAURANTS, INC., an Ohio corporation (the “Borrower”), for value received, hereby promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association formerly known as Firstar Bank, N.A. and Star Bank, National Association (the “Bank”), or it successors or assigns, on or before                      1,              (the “Maturity Date”), the principal sum of                                          Dollars ($                    ), together with interest thereon as hereinafter provided.

This Note is a “Term Note” as described in and evidences a “Cost of Funds Rate Term Loan” made under that certain First Amended and Restated Loan Agreement [Golden Corral] dated as of October 15, 2004 between the Borrower and the Bank, as the same has been and/or may be amended, restated, supplemented, renewed, or otherwise modified and in effect from time to time (the “Loan Agreement”), and is subject to the terms and conditions thereof, including, without limitation, the terms thereof providing for acceleration of maturity of such Cost of Funds Rate Term Loan. If any term or condition of this Note conflicts with the express terms or conditions of the Loan Agreement, the terms and conditions of the Loan Agreement shall control. Terms used herein shall have the same meanings as in the Loan Agreement.

The outstanding principal balance of this Note shall bear interest at a per annum rate equal to                      percent (        %). Interest on this Note shall be computed on the basis of a year consisting of three hundred sixty (360) days but applied to the actual number of days elapsed.

The Borrower shall make monthly payments of principal and interest on this Note in the amount of                                          Dollars ($                    ), with each such payment being applied first to accrued interest and then to principal, commencing on the first day of                     ,              and on the first day of each month thereafter through and including the Maturity Date, at which time the outstanding principal balance of and all interest on this Note shall be due and payable in full.

At the option of the Bank, (a) prior to acceleration of this Note, in the event that any interest on or principal of this Note remains unpaid past thirty (30) days of the date due, and/or (b) upon the occurrence of any other Event of Default under the Loan Agreement or upon the acceleration of this Note, interest (computed and adjusted in the same manner, and with the same effect, as interest on this Note prior to maturity) on the outstanding balance of this Note shall be payable on demand at the Prime Rate (as hereinafter defined) plus an additional three percent (3%) per annum up to any maximum rate permitted by law, in all cases until paid and whether before or after the entry of any judgment thereon. The “Prime Rate” is that rate

G-1-1

Exhibit 10(c) 1

announced by the Bank from time to time as its prime rate, which rate is determined solely by the Bank pursuant to market factors and its own operating needs and is not necessarily the Bank’s best or most favorable rate for commercial or other loans. In addition, in the event that the Borrower should fail to make any payment hereunder within ten (10) days of the date due, the Borrower shall pay the Bank a fee in an amount of up to five percent (5%) of the amount of such payment, but in no event less than Fifty Dollars ($50.00), which fee shall be immediately due and payable without notice or demand.

All payments of principal and interest hereunder shall be made in immediately available funds to the Bank at 425 Walnut Street, Location 9150, Cincinnati, Ohio 45202, or at such other place as may be designated by the Bank to the Borrower in writing. The Bank is authorized by the Borrower to enter from time to time the balance of this Note and all payments and prepayments thereon on the reverse of this Note or in the Bank’s regularly maintained data processing records, and the aggregate unpaid amount set forth thereon or therein shall be presumptive evidence of the amount owing to the Bank and unpaid on this Note.

This Note may not be prepaid in whole or in part except upon (i) written notice to the Bank not less than thirty (30) days prior to the date of prepayment (which notice shall specify the date and amount of prepayment), (ii) the Bank granting its consent to such prepayment, which consent the Bank may grant or withhold in its sole discretion, (iii) payment to the Bank of a “Prepayment Fee” and other amounts as specified in and calculated in accordance with the terms of the Loan Agreement, and (iv) compliance with the other terms and conditions of the Loan Agreement.

IMPORTANT: This Note shall be deemed made in Ohio and shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrower and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to this Note shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (a) served personally or by certified mail to the other party at any of its addresses noted herein, or (b) as otherwise provided under the laws of the State of Ohio. The interest rates and all other terms of this Note negotiated with the Borrower are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

G-1-2

Exhibit 10(c) 1

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

FRISCH’S RESTAURANTS, INC.
By:
Title:
Address:	2800 Gilbert Avenue
	Cincinnati, Ohio 45206

G-1-3

Exhibit 10(c) 1

EXHIBIT G-2

VARIABLE RATE TERM LOAN

PROMISSORY NOTE

$	Cincinnati, Ohio
	1,

FRISCH’S RESTAURANTS, INC., an Ohio corporation (the “Borrower”), for value received, hereby promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association formerly known as Firstar Bank, N.A. and Star Bank, National Association (the “Bank”), or it successors or assigns, on or before                      1,              (the “Maturity Date”), the principal sum of                                          Dollars ($                    ), together with interest thereon as hereinafter provided.

This is a Term Note referred to in, was executed and delivered pursuant to, and evidences a Variable Rate Term Loan made under, that certain First Amended and Restated Loan Agreement [Golden Corral] dated as of October 15, 2004 between the Borrower and the Bank, as the same has been and/or may be amended, restated, supplemented, renewed, or otherwise modified and in effect from time to time (the “Loan Agreement”), to which reference is hereby made for a statement of the terms and conditions under which the Variable Rate Term Loan evidenced hereby was made and is to be repaid and for a statement of the Bank’s remedies upon the occurrence of an Event of Default. Capitalized terms used herein, but not otherwise specifically defined, shall have the meanings ascribed to such terms in the Loan Agreement.

The Borrower further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full at the rate or rates from time to time applicable to a Variable Rate Term Loan as determined in accordance with the Loan Agreement; provided, however, that upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest on the outstanding principal balance of this Note at the rate of interest applicable following the occurrence of an Event of Default as determined in accordance with the Loan Agreement.

Interest on this Note shall be payable, at the times and from the dates specified in the Loan Agreement, on the date of any prepayment hereof, at maturity, whether due by acceleration or otherwise, and as otherwise provided in the Loan Agreement for a Variable Rate Term Loan. From and after the date when the principal balance hereof becomes due and payable, whether by acceleration or otherwise, interest hereon shall be payable on demand. In no contingency or event whatsoever shall interest charged hereunder, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Bank has received interest hereunder in excess of the highest rate applicable hereto, such excess shall be applied in accordance with the terms of the Loan Agreement.

G-2-1

Exhibit 10(c) 1

The principal of this Note shall be payable in                      (            ) installments of                                          Dollars ($                    ) each, commencing on the first day of                     ,              and on the first day of each month thereafter through and including the Maturity Date, at which time the outstanding principal balance of this Note shall be due and payable in full.

The indebtedness evidenced by this Note is secured pursuant to the terms of the Loan Documents.

The Borrower hereby waives demand, presentment, and protest and notice of demand, presentment, protest, and nonpayment.

The Borrower further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including attorneys’ fees and legal expenses, incurred by the Bank in endeavoring to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise.

IMPORTANT: This Note shall be deemed made in Ohio and shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrower and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to this Note shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (a) served personally or by certified mail to the other party at any of its addresses noted herein, or (b) as otherwise provided under the laws of the State of Ohio. The interest rates and all other terms of this Note negotiated with the Borrower are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

FRISCH’S RESTAURANTS, INC.
By:
Title:
Address:	2800 Gilbert Avenue
	Cincinnati, Ohio 45206

G-2-2

EX-10.C2

Exhibit 10(c) 2

SECOND AMENDED AND RESTATED LOAN AGREEMENT

[REVOLVING AND BULLET LOANS]

THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT [REVOLVING AND BULLET LOANS] (this “Agreement”) is made and entered into as of the 15th day of October, 2004 by and between (i) FRISCH’ S RESTAURANTS, INC., an Ohio corporation (the “Borrower” ), and (ii) U.S. BANK NATIONAL ASSOCIATION, a national banking association formerly known as Firstar Bank, N.A. and Star Bank, National Association (the “Bank”), and amends and restates the Amended and Restated Loan Agreement between the Borrower and the Bank dated as of August 29, 1996, as amended (the “Prior Loan Agreement”).

1. Representations and Warranties. To induce the Bank to enter into this Agreement and to agree to make and/or to continue the Loans described in Section 4 hereof, the Borrower makes the following representations and warranties:

(a) Existence. The Borrower is duly organized, validly existing and in good standing as a corporation under the laws of the State of Ohio, and each Subsidiary (as hereinafter defined) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Borrower and each Subsidiary is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction in which the failure to be so qualified by the Borrower or the Subsidiary would have a material adverse effect on its business, prospects or financial condition. “Subsidiary” for purposes hereof means any corporation or other entity the majority of the voting stock of which is owned, directly or indirectly, beneficially or of record, by the Borrower or any Subsidiary, or which is otherwise controlled, directly or indirectly, by the Borrower or any Subsidiary.

(b) Authority. The Borrower and each Subsidiary has full power and authority to own its properties and to conduct its business as such business is now being conducted, and the Borrower has full power and authority to execute, deliver and perform under this Agreement, the Notes (as hereinafter described) and all other documents and instruments executed in connection with or otherwise relating to this Agreement or the Loans (as hereinafter defined) (collectively, the “Loan Documents”).

(c) Borrowing Authorization. The execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents: (i) have been duly authorized by all requisite corporate action; (ii) do not and will not violate (A) any provision of any law, statute, rule or regulation, (B) any order, judgment or decree of any court, arbitrator or other agency of government, (C) the Articles of Incorporation or Code of Regulations or other organizational or governing documents of the Borrower, or (D) any provision of any agreement (including, without limitation, any agreement with stockholders) to which the Borrower or any Subsidiary is a party or subject, or by which it or any of its properties or assets are bound; (iii) do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Borrower or any Subsidiary; and (iv) do not and will not require any consent, approval or other action by or any notice to or filing with any court or administrative or governmental body. This Agreement and the other Loan

Exhibit 10(c) 2

Documents have been duly executed and delivered on behalf of the Borrower and constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms.

(d) Financial Information and Reports. Exhibit A to this Agreement is a complete list of the financial statements and projected financial statements furnished by the Borrower to the Bank in connection with the borrowings to be made hereunder. Each such historical financial statement fairly presents in accordance with generally accepted accounting principles the financial condition of the Borrower and its Subsidiaries and the results of their operations as of the date (or with respect to the period) noted in such financial statements. Other than any liability incident to any actions described in Exhibit B to this Agreement, neither the Borrower nor any Subsidiary has any material contingent liabilities required to be disclosed under generally accepted accounting principles which are not provided for or disclosed in such financial statements. Each such statement (including any related schedule and/or notes) is true, correct and complete in all material respects (subject, as to interim statements, to changes resulting from audits and year-end adjustments) and has been prepared in accordance with generally accepted accounting principles consistently followed throughout the periods involved. No such statement omits to state a material fact necessary to make such statement not misleading in light of the circumstances under which it was made. There has been no material adverse change in the business, operations or condition (financial or otherwise) of the Borrower or any Subsidiary since the date of such financial statements.

(e) Indebtedness. Neither the Borrower nor any Subsidiary has any Indebtedness (as hereinafter defined) other than Permitted Indebtedness (as hereinafter defined), or has guaranteed the obligations of any other person (except by endorsement of negotiable instruments payable on sight for deposit or collection or similar banking transactions in the usual course of business), and to the best of the Borrower’s knowledge after diligent investigation, there exists no default under the provisions of any instrument evidencing any Indebtedness of the Borrower or any Subsidiary or of any agreement relating thereto. “Indebtedness” as used herein means all indebtedness for borrowed money which in accordance with generally accepted accounting principles would be considered as a liability, all rental obligations under leases required to be capitalized under generally accepted accounting principles, all guarantees and other contingent obligations in respect of, or obligations to purchase or otherwise acquire, Indebtedness of others, and Indebtedness of others secured by any lien on property owned by the Borrower or any Subsidiary, whether or not the Borrower or such Subsidiary has assumed such Indebtedness.

(f) Actions. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary before any court, arbitrator or administrative or governmental agency except for those described in Exhibit B to this Agreement, none of which might result in any material adverse change in the business, operations or condition (financial or otherwise) of the Borrower or any Subsidiary, nor, to the best of the Borrower’s knowledge after diligent investigation, is there any basis for any such action which might result in such a material adverse change.

(g) Title to Property. The Borrower and each Subsidiary has good and marketable title to its real properties (other than properties which it leases as lessee) and good title to all of its other properties and assets, including the properties and assets reflected in the most recent balance sheet described in Exhibit A hereto (other than properties and assets disposed of in the

2

Exhibit 10(c) 2

ordinary course of business since the date thereof), free and clear of all liens, mortgages, pledges, security interests, encumbrances or charges of any kind, including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof (each, a “Lien”), other than the following (each, a “Permitted Lien”): (i) Liens described on Exhibit C hereto, (ii) leases required under generally accepted accounting principles to be capitalized on the Borrower’s or such Subsidiary’s books (“Capitalized Leases”) so long as there is no violation of any of the Financial Covenants set forth in Exhibit D hereto, and (iii) Liens in favor of the Bank. The Borrower and each Subsidiary is in undisturbed possession under all leases necessary in any material respect for the operation of its business, and no such leases contain any unusual or burdensome provisions which might materially affect or impair the Borrower’s or the Subsidiary’s operations thereunder. All such leases are valid and in full force and effect.

(h) Employee Benefit Plans. To the best of the Borrower’s knowledge after diligent investigation, no “reportable event” or “prohibited transaction,” as defined by the Employee Retirement Income Security Act of 1974 (“ERISA”) has occurred or is continuing, as to any plan of the Borrower or any of its affiliates which poses a threat of taxes or penalties against or termination of such plans (or trusts related thereto). Neither the Borrower nor any of its affiliates has violated in any material respect the requirements of any “qualified pension benefit plan,” as defined by ERISA and the Internal Revenue Code of 1986, or done anything to create any material liability under the Multi-Employee Pension Plan Amendment Act. Neither the Borrower nor any of its affiliates has incurred any material liability to the Pension Benefit Guarantee Corporation (the “PBGC”) in connection with such plans, including, but not limited to, any “funding deficiency” (as defined by ERISA).

(i) Purpose of Loans. Proceeds of the Loans shall be used to refinance amounts outstanding under the Prior Loan Agreement, to finance new restaurant locations and improvements, and for working capital. The Loans are not secured, directly or indirectly, by any stock for the purpose of purchasing or carrying any margin stock or for any purpose which would violate either Regulation U, 12 C.F.R. Part 221, or Regulation X, 12 C.F.R. Part 224, promulgated by the Board of Governors of the Federal Reserve System.

(j) Compliance. The Borrower and each Subsidiary is in compliance in all material respects with all laws, statutes, ordinances, rules, regulations and orders of any governmental entity (including, but not by way of limitation, any such laws, statutes, ordinances, rules, regulations and orders related to ecology, human health and the environment) applicable to it.

(k) Adverse Contracts and Conditions. Neither the Borrower nor any Subsidiary is a party to any contract or agreement, or subject to any charge, restriction, judgment, decree or order, materially and adversely affecting its business, property, assets, operations or condition, financial or otherwise, nor a party to any labor dispute. There are no restrictions applicable to any Subsidiary which might limit its ability to pay dividends or make loans to the Borrower.

(l) Taxes. The Borrower and each Subsidiary has filed all federal, state and local tax returns and other reports which it is required by law to file, has paid all taxes, assessments and other similar charges that are due and payable, other than taxes, if any, being contested by the Borrower or a Subsidiary in good faith and as to which adequate reserves have been established in accordance with generally accepted accounting principles, and has withheld all employee and

3

Exhibit 10(c) 2

similar taxes which it is required by law to withhold. Federal income tax returns of the Borrower and each Subsidiary have been examined by the taxing authorities or closed by applicable statutes and satisfied for all fiscal years prior to and including the fiscal year ended May 30, 1998. Federal income tax returns of the Borrower and its Subsidiaries for the fiscal year ended May 30, 2001 may still be examined by the taxing authorities.

2. Borrower’s Covenants. The Borrower agrees that, from the date of this Agreement and until the Loans are paid in full and all obligations under this Agreement are fully performed, and the commitment of the Bank to make Loans hereunder has terminated:

(a) Financial Covenants. The Borrower shall comply with each of the financial covenants set forth in Exhibit D to this Agreement (collectively, the “Financial Covenants”).

(b) Financial Statements; Periodic Reports. The Borrower shall furnish to the Bank: (i) as soon as practicable and in any event within ninety (90) days after the last day of each fiscal year of the Borrower, a copy of the annual audit report of the Borrower, prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding fiscal year, and consisting of a consolidated balance sheet as at the end of such fiscal year and consolidated statements of earnings, stockholders’ equity and cash flows of the Borrower and its Subsidiaries for such fiscal year, setting forth in each case in comparative consolidated form corresponding consolidated figures from the preceding annual audit, certified by a nationally-recognized firm of independent certified public accountants, whose certificate shall be in scope and substance reasonably satisfactory to the Bank and shall include, without limitation, a certification that in auditing the Borrower, such accountant has obtained no knowledge of an Event of Default (as hereinafter defined) hereunder, or if any Event of Default exists, specifying the nature and period of existence thereof, and accompanied by such accountant’s management letter with respect thereto; (ii) as soon as practicable and in any event within forty-five (45) days after the last day of each of the Borrower’s first three fiscal quarters, a copy of the Borrower’s unaudited financial statements, prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding fiscal quarter, and consisting of a consolidated balance sheet as at the end of such fiscal quarter and consolidated statements of earnings, stockholders’ equity and cash flows of the Borrower and its Subsidiaries for the period from the beginning of the then-current fiscal year through the end of such fiscal quarter, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, and certified by an authorized financial officer of the Borrower, subject to changes resulting from year-end adjustments; (iii) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as the Borrower shall send to its stockholders and copies of all registration statements (without exhibits) and all regulatory and periodic reports which the Borrower files with the Securities and Exchange Commission (the “SEC”) or any governmental body or agency succeeding to the functions of the SEC; and (iv) with reasonable promptness, such other financial data in such form as the Bank may reasonably request, provided that the Bank shall keep such data confidential to the extent required by applicable securities laws.

Together with each delivery of financial statements required under clauses (i) and (ii) above, the Borrower shall deliver a certificate of its Chief Financial Officer (A) setting forth a comparison between actual calculated results and covenanted results for each of the Financial Covenants set forth on Exhibit D hereto and (B) stating that, to the best of such Chief Financial

4

Exhibit 10(c) 2

Officer’s knowledge after diligent investigation, no Event of Default hereunder then exists, or if such an Event of Default hereunder does then exist, specifying the nature thereof, the period of existence thereof, and the action the Borrower proposes to take with respect thereto. The Borrower further agrees that promptly upon the President or Chief Financial Officer of the Borrower obtaining knowledge of an event that constitutes an Event of Default hereunder, the Borrower shall deliver to the Bank a certificate specifying the nature thereof, the period of existence thereof, and the action the Borrower proposes to take with respect thereto. The Bank is authorized to deliver a copy of any financial statement or other communication or document delivered to it pursuant to this Section 2(b) to any regulatory body having jurisdiction over it if such delivery is required by such regulatory body. The Borrower and each Subsidiary shall permit the Bank and its agents and representatives, at the expense of the Bank, to inspect its real and personal property and to verify accounts and inspect and make copies of or extracts from its books, records and files, and to discuss its affairs, finances and accounts with its principal officers, all at such reasonable times and as often as the Bank may reasonably request.

(c) Insurance. The Borrower shall, and shall cause each Subsidiary to, maintain with responsible carriers All Risk coverage for the full replacement value of all of its real and personal property, except that the Borrower and each Subsidiary may self-insure risks to its real and personal property in an amount not to exceed Five Hundred Thousand Dollars ($500,000), and maintain with responsible carriers general public liability insurance coverage including Excess liability coverage in an amount not less than Twenty-Five Million Dollars ($25,000,000), except that the Borrower and each Subsidiary may self-insure general public liability risks in an amount not to exceed Five Hundred Thousand Dollars ($500,000) per occurrence during the term of this Agreement. The Borrower shall deliver to the Bank, together with delivery of the financial statements required under Section 2(b)(i) above, a certificate specifying the details of all such insurance in effect.

(d) Taxes. The Borrower shall, and shall cause each Subsidiary to, file all federal, state and local tax returns and other reports it is required by law to file, and shall pay when due all taxes, assessments and other liabilities, except that the Borrower and any Subsidiary shall not be obligated to pay any taxes or assessments which it is contesting in good faith, provided that adequate reserves therefor are established in accordance with generally accepted accounting principles, that such contests will not materially adversely affect the Borrower’s or any Subsidiary’s operations or financial condition, and that such taxes and assessments are promptly paid when the dispute is finally determined.

(e) Existence and Status. The Borrower shall, and shall cause each Subsidiary to, maintain its existence in good standing under the laws of each jurisdiction described in Section 1(a) of this Agreement, provided that the Borrower or any Subsidiary may change its jurisdiction of incorporation if it shall remain in good standing under the laws thereof.

(f) Maintenance of Property. The Borrower shall, and shall cause each Subsidiary to, maintain to the extent consistent with good business practices all of its real and personal property in good condition and repair, not commit or permit any waste thereof, and not, except in the ordinary course of business, remove or permit the removal of any improvement, accession or fixture therefrom that may in any way materially impair the value of said property.

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Exhibit 10(c) 2

(g) Environmental Matters. The Borrower represents, warrants and covenants with the Bank that: (i) neither the Borrower nor any of its Subsidiaries nor, to the best of the Borrower’s knowledge, after due investigation, any other person or entity, has used or permitted any Hazardous Substances (as hereinafter defined) to be placed, held, stored or disposed of on any of the Designated Properties (as hereinafter defined), in violation of any Environmental Laws (as hereinafter defined); (ii) none of the Designated Properties now contains any Hazardous Substance in violation of any Environmental Laws; (iii) there have been no complaints, citations, claims, notices, information requests, orders (including but not limited to clean-up orders) or directives on environmental grounds made or delivered to, pending or served on, or anticipated by the Borrower or any of its Subsidiaries, or of which the Borrower, after due investigation, including consideration of the previous uses of the Designated Properties and meeting the standard under 42 U.S.C. Section 9601(35)(B)(1986), is aware or should be aware (A) issued by a governmental department or agency having jurisdiction over any of the Designated Properties, or (B) issued or claimed by any persons, agencies or organizations or affecting any of the Designated Properties; and (iv) neither the Borrower nor any of its Subsidiaries, so long as any of the Indebtedness under this Agreement remains unpaid, shall allow any Hazardous Substances to be placed, held, stored or disposed on any of the Designated Properties or incorporated into any improvements on any of the Designated Properties in violation of any Environmental Laws. The term “Hazardous Substance” shall mean any solid, hazardous, toxic or dangerous waste, substance or material defined as such in or for the purpose of the Comprehensive Environmental Response, Compensation and Liability Act, any so-called “Superfund” or “Super-Lien” law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree relating to, or imposing liability or standards of conduct concerning, any Hazardous Substance (the “Environmental Laws”, as now or at any time hereafter in effect).

The Borrower agrees to indemnify and hold the Bank harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever, paid, incurred or suffered by, or asserted against the Bank for, with respect to, or as a direct or indirect result of, any of the following: (i) the presence on or under or the escape, seepage, leakage, spillage, discharge, emission, discharging or release from any of the Designated Properties of any Hazardous Substance (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any of the Environmental Laws); or (ii) any liens against any of the Designated Properties or any interest or estate in any of the Designated Properties, created, permitted or imposed by the Environmental Laws, or any actual or asserted liability of or obligations of the Borrower or any of its subsidiaries under the Environmental Laws.

The Borrower shall immediately notify the Bank should the Borrower become aware of any Hazardous Substance on any of the Designated Properties in violation of any Environmental Laws or any claim that any of the Designated Properties may be contaminated by any Hazardous Substance in violation of any Environmental Laws. The Borrower shall, at its own cost and expense, be responsible for the cleanup of any Hazardous Substance caused, or knowingly permitted, by the Borrower or any of its Subsidiaries to be on any of the Designated Properties which is in violation of any Environmental Laws including any removal, containment and remedial actions in accordance with all applicable Environmental Laws. The Borrower’s obligations hereunder shall not be subject to any limitation of liability provided herein or in any of the other Loan Documents and the Borrower acknowledges that its obligations hereunder are

6

Exhibit 10(c) 2

not conditional and shall continue in effect so long as a valid claim may lawfully be asserted against the Bank or for so long as this Agreement, any of the other Loan Documents or any renewal, amendment, extension or modification thereto remain in effect, whichever extends for a greater period of time.

(h) Notice. The Borrower shall notify the Bank in writing, promptly upon the Borrower’s learning thereof, of: (i) any litigation, suit or administrative proceeding which may materially affect the operations, financial condition or business of the Borrower or any Subsidiary, whether or not the claim is considered by the Borrower to be covered by insurance, unless the applicable insurer has agreed to defend any such claim and cover the liability therefor; (ii) the occurrence of any material event described in Section 4043 of ERISA or any anticipated termination, partial termination or merger of a “Plan” (as defined in ERISA) or a transfer of the assets of a Plan; (iii) any labor dispute to which the Borrower or any Subsidiary may become a party; (iv) any default by the Borrower or any Subsidiary under any note, indenture, loan agreement, mortgage, lease or other similar agreement to which the Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary or its assets are bound; and (v) any default by any obligor under any material note or other evidence of debt payable to the Borrower or any Subsidiary.

(i) Liens. The Borrower shall not, and shall not permit any Subsidiary to, create, assume or permit to exist any Lien with respect to any of its assets, whether now owned or hereafter acquired, except Permitted Liens. Furthermore, the Borrower shall not, and shall not permit Subsidiary to, enter into any agreement with any other person or entity pursuant to which the Borrower or any Subsidiary agrees not to create, assume or permit to exist any Lien with respect to any of its assets, whether now owned or hereafter acquired.

(j) Indebtedness. The Borrower shall not, and shall not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except the following (each, “Permitted Indebtedness”): (i) Indebtedness incurred under this Agreement; (ii) outstanding Indebtedness reflected in the historical financial statements listed in Exhibit A attached hereto (but not any refinancing or refunding of such Indebtedness); (iii) Indebtedness described in Exhibit E attached hereto; (iv) Indebtedness incurred in connection with Capitalized Leases so long as there is no violation of any of the Financial Covenants set forth on Exhibit D hereto; and (v) other Indebtedness to the Bank.

(k) Loans; Investments. The Borrower shall not, and shall not permit any Subsidiary to, make or permit to remain outstanding any loan or advance to, or own or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any person or entity, except that the Borrower or any Subsidiary may: (i) make or permit to remain outstanding loans or advances to any Subsidiary or the Borrower; (ii) own or acquire stock, obligations or securities of a Subsidiary or of a corporation which immediately after such acquisition will be a Subsidiary; (iii) own or acquire prime commercial paper and certificates of deposit in United States commercial banks having capital resources in excess of Fifty Million Dollars ($50,000,000), in each case due within one (1) year from the date of purchase and payable in United States Dollars, obligations of the United States Government or any agency thereof, and obligations guaranteed by the United States Government, and repurchase agreements with such banks for terms of less than (1) one year in respect of the foregoing certificates and obligations; (iv) make travel advances in the ordinary course of business to

7

Exhibit 10(c) 2

officers and employees or other advances in the ordinary course of business to officers and employees (excluding advances to employees for relocation purposes) not to exceed One Hundred Twenty-Five Thousand Dollars ($125,000) in the aggregate at any time outstanding for the Borrower and all Subsidiaries; (v) make advances to employees for relocation purposes not to exceed One Hundred Fifty Thousand Dollars ($150,000) in the aggregate at any time outstanding for the Borrower and all Subsidiaries; (vi) own or acquire money-market preferred stock in an amount not to exceed Seven Hundred Fifty Thousand Dollars ($750,000); (vii) make or permit to remain outstanding loans or advances to, or own or acquire stock, obligations or securities of, any other person or entity, provided that the aggregate principal amount of such loans and advances (excluding loans which are fully secured by real estate consisting of former restaurant locations), plus the aggregate amount of the investment (at original cost) in such stock, obligations and securities, shall not exceed Five Hundred Thousand Dollars ($500,000) at any time outstanding for the Borrower and all Subsidiaries; and (viii) make investments in the Borrower’s non-qualified executive savings plan.

(l) Merger and Sale of Assets. Without the prior written consent of the Bank, the Borrower shall not, and shall not permit any Subsidiary to, merge or consolidate with any other corporation, or sell, lease or transfer or otherwise dispose of any of its assets, including, without limitation, the stock of any Subsidiary, or sell with recourse or discount or otherwise sell for less than the face value thereof any of its accounts receivable, except that without the prior written consent of the Bank: (i) any Subsidiary may merge or consolidate with the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with any one or more other Subsidiaries; (ii) any Subsidiary may sell, lease, transfer or otherwise dispose of any of its assets to the Borrower or another Subsidiary; (iii) the Borrower or any Subsidiary may otherwise sell, lease, transfer or otherwise dispose of any of its assets having a book value of less than One Hundred Thousand Dollars ($100,000) provided that the aggregate book value of all such assets so sold, leased, transferred or otherwise disposed of by the Borrower and its Subsidiaries during any fiscal year shall not exceed Five Hundred Thousand Dollars ($500,000); and (iv) the Borrower or any Subsidiary may sell, lease, transfer or otherwise dispose of property (as hereinafter defined) and equipment in connection with remodelings and equipment replacements in the ordinary course of business. For purposes of this Section 2(l), “property” shall mean those components of the real estate (such as walls, electrical and plumbing) which are removed during a remodeling.

(m) Intentionally deleted.

(n) Restrictions on Transactions With Stockholders and Other Affiliates. Except as otherwise expressly permitted under this Agreement, the Borrower shall not, and shall not permit any Subsidiary to, enter into or be a party to any transaction reportable under Item 404(a) of Regulation S-K of the Securities and Exchange Commission, except in the ordinary course of business, pursuant to the reasonable requirements of its business, and upon fair and reasonable terms which are fully disclosed to the Bank and are no less favorable to the Borrower or such Subsidiary than the Borrower or such Subsidiary could obtain in a comparable arm’s length transaction with an unrelated third party.

(o) Books and Records. The Borrower shall, and shall cause each Subsidiary to, keep and maintain complete books of accounts, records and files with respect to its business in accordance with generally accepted accounting principles consistently applied in accordance with past practices and shall accurately and completely record all transactions therein.

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Exhibit 10(c) 2

(p) Business Activities. The Borrower shall, and shall cause each Subsidiary to, continue to engage in the types of business activities in which it is currently engaged or other activities involving food service and wholesaling food and related products, and shall not, and shall not permit any Subsidiary to, be engaged in any business activities other than the types in which it is currently engaged or otherwise activities involving food service, lodging and wholesaling food and related products.

(q) Waiver. Any variance from the covenants of the Borrower pursuant to this Section 2 shall be permitted only with the prior written consent and/or waiver of the Bank. Any such variance by consent and/or waiver shall relate solely to the variance addressed in such consent and/or waiver, and shall not operate as the Bank’s consent and/or waiver to any other variance of the same covenant or other covenants, nor shall it preclude the exercise by the Bank of any power or right under this Agreement, other than with respect to such variance.

(r) Compliance with Law. The Borrower shall, and shall cause each Subsidiary to, comply at all times with all laws, statutes, ordinances, rules, regulations and orders of any governmental entity (including, but not by way of limitation, such laws, statutes, ordinances, rules, regulations and orders relating to ecology, human health and the environment) having jurisdiction over it or any part of its assets, where such failure to comply would have a material adverse effect on the Borrower’s or any Subsidiary’s operations or financial condition or the ability of the Borrower to perform its obligations hereunder. The Borrower and each Subsidiary shall obtain and maintain all permits, licenses, approvals and other similar documents required by any such laws, statutes, ordinances, rules, regulations or orders.

3. Closing Conditions. The obligation of the Bank to make the Loans, or any portion thereof, and the effectiveness of this Agreement are, at the Bank’s option, subject to the satisfaction of each of the following conditions precedent:

(a) Default. Before and after giving effect to the Loans, or any portion thereof, no Event of Default or any event which, with the passage of time or the giving of notice, might mature into an Event of Default, shall have occurred and be continuing.

(b) Warranties. Before and after giving effect to the Loans or any portion thereof, the representations and warranties in Section 1 hereof shall be true and correct as though made on the date of such Loans or portion thereof.

(c) Certification. The Borrower shall have delivered to the Bank a certificate of the President or Chief Financial Officer of the Borrower dated as of the date hereof: (i) as to the matters set forth in Sections 3(a) and 3(b) above; (ii) to the effect that the resolutions described in Section 3(d) below have not been amended or rescinded and remain in full force and effect; (iii) as to the incumbency of the individuals authorized to sign this Agreement, the Revolving Note (as hereinafter defined) and the other Loan Documents (with specimen signatures attached); and (iv) to the effect that the Articles of Incorporation and Code of Regulations of the Borrower are in full force and effect in the form delivered to the Bank.

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Exhibit 10(c) 2

(d) Resolutions. The Borrower shall have delivered to the Bank copies of the resolutions of the Borrower’s Board of Directors authorizing the borrowings hereunder and the execution and delivery of this Agreement, the Revolving Note and other Loan Documents.

(e) Articles and Regulations. The Borrower shall have delivered to the Bank true and correct copies of its Articles of Incorporation and Code of Regulations.

(f) Revolving Note. The Borrower shall have delivered the Revolving Note to the Bank with all blanks appropriately completed and duly executed on behalf of the Borrower.

(g) Opinion. The Borrower shall have delivered to the Bank the opinion of outside counsel acceptable to the Bank, dated the date of this Agreement, to the effect that: (i) the Borrower is duly organized, validly existing and in good standing as a corporation under the laws of the State of Ohio; (ii) the Borrower has full power and authority to execute and deliver this Agreement, the Revolving Note and the other Loan Documents and to perform its obligations thereunder; (iii) the execution and delivery by the Borrower of this Agreement, the Revolving Note and the other Loan Documents, and the performance by the Borrower of its obligations thereunder, have been duly authorized by all necessary corporate action, and are not in conflict with any provision of law or of the Articles of Incorporation or Code of Regulations of the Borrower, nor in conflict with any agreement, order or decree binding upon the Borrower of which such counsel has knowledge; and (iv) this Agreement, the Revolving Note and the other Loan Documents are the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws now or hereafter in effect, or by legal or equitable principles relating to or limiting creditors’ rights generally, or other rules of law or equity limiting the availability of specific performance or injunctive relief.

(h) Golden Corral Agreement. The Borrower shall have delivered the Golden Corral Agreement (as hereinafter defined) and all related documents and instruments to the Bank with all blanks appropriately completed and duly executed on behalf of the Borrower.

4. Loans.

(a) Loans.

(i) Revolving Loan. Subject to the terms and conditions of this Agreement, and subject to there being no Event of Default (or event which might, with the giving of notice or the passage of time, mature into an Event of Default) by the Borrower hereunder, the Bank agrees to lend and relend to the Borrower, upon request by the Borrower made to the Bank in the manner described in Sections 4(b) and (c) below, during the period from the date hereof to the earlier of (A) September 1, 2006, or the termination date of any extension hereof agreed to by the Borrower and the Bank as described below, or (B) the date of the occurrence of an Event of Default, unless waived by the Bank (the earlier of such dates being referred to herein as the “Commitment Termination Date”), a principal sum of up to Five Million Dollars ($5,000,000) (the “Total Commitment Amount”), as the Borrower may from time to time request for the Borrower’s working capital needs (the “Revolving Loan”); provided, however, that the

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Exhibit 10(c) 2

Bank shall not be required to make, and the Borrower shall not be entitled to receive, any Revolving Loan if, after giving effect thereto, the aggregate outstanding principal balance of the Revolving Loan would exceed the Total Commitment Amount.

Each Revolving Loan hereunder shall be in the amount of Five Hundred Thousand Dollars ($500,000) or a multiple thereof. The Revolving Loan shall be evidenced by a Fifteenth Amended and Restated Revolving Credit Promissory Note given by the Borrower to the Bank in substantially the form of Exhibit F attached hereto, as amended and/or restated from time to time (the “Revolving Note”). The Revolving Note shall mature and be payable in full on September 1, 2006, unless accelerated or extended as described herein. The Revolving Note shall replace the Fourteenth Amended and Restated Revolving Credit Promissory Note dated as of September 15, 2003 given by the Borrower to the Bank (the “Prior Note”), and amounts outstanding under the Prior Note shall not be deemed cancelled or satisfied, but shall be evidenced by the Revolving Note instead of by the Prior Note. If the outstanding principal balance of the Revolving Loan at any time exceeds the Total Commitment Amount, the Borrower shall immediately, without notice or demand, reduce the outstanding principal balance of the Revolving Loan such that the Total Commitment Amount is not exceeded.

Upon request by the Borrower, the Bank may consider extensions of the Commitment Termination Date, but is not hereby committing in any way thereto. Upon any such extension, at the option of the Bank, the Borrower shall execute a new promissory note substantially identical to the Revolving Note, except reflecting the new Commitment Termination Date, which thereupon shall be the Revolving Note hereunder.

Notwithstanding anything to the contrary herein, the Borrower covenants and agrees to pay down the outstanding balance of the Revolving Loan and the Revolving Note to Zero Dollars ($0) for not less than thirty (30) consecutive days during each of the Borrower’s fiscal years, commencing with the Borrower’s fiscal year beginning on June 3, 2002.

(ii) Bullet Loan. Subject to the terms and conditions of this Agreement, and subject to there being no Event of Default (or event which might, with the giving of notice or the passage of time, mature into an Event of Default) by the Borrower hereunder, as of December 27, 2002, the Bank agreed to make to the Borrower, and the Borrower agreed to borrow from the Bank, a term loan in the aggregate amount of Ten Million Dollars ($10,000,000) (the “Bullet Loan”) (the Bullet Loan and the Revolving Loan are sometimes herein referred to together collectively as the “Loans” and each individually as a “Loan”) to finance in part the Borrower’s working capital needs; provided, however, that at no time shall the unpaid balance of the Bullet Loan exceed seventy percent (70%) of the fair market value, as it exists from time to time, of the Borrower’s real property against which the Bank has received from the Borrower first priority mortgages as of December 27, 2002, and any substitute or additional mortgages hereafter that are satisfactory to the Bank in its sole discretion. In the event that the upper limit described in the immediately preceding sentence shall at any time be exceeded, the Borrower shall immediately, without notice or demand, prepay the outstanding principal balance of the Bullet Loan such that the upper limit set forth in the immediately preceding sentence is not exceeded.

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Exhibit 10(c) 2

No repayment or prepayment of the Bullet Loan shall be reason for any relending or additional lending of proceeds of the Bullet Loan to the Borrower. The outstanding principal balance of the Bullet Loan shall mature and be payable in full in one installment on December 31, 2007, unless the maturity thereof is accelerated as described herein. The Bullet Loan is evidenced by a Promissory Note in substantially the form of Exhibit G attached hereto, as the same may be amended and/or restated from time to time (the “Bullet Note”) (the Bullet Note and the Revolving Note are sometimes hereinafter referred to together collectively as the “Notes” and each individually as a “Note”).

(iii) Senior Bank Debt to EBITDA Ratio. The Borrower shall at no time permit the ratio of (A) the sum of the outstanding principal balance of the Loans plus all other Senior Bank Debt (as defined in Exhibit D attached hereto) to (B) Borrower’s EBITDA (as defined in Exhibit D attached hereto) to exceed 2.00 to 1.0.

(b) Interest.

(i) Revolving Loan. “Prime Rate” means the prime rate announced by the Bank from time to time, as and when such rate changes. Interest on each advance of the Revolving Loan hereunder shall accrue at one of the following per annum rates selected by the Borrower: (A) upon notice to the Bank, the then applicable Prime Margin (as hereinafter defined) plus the Prime Rate (a “Prime Rate Loan”); (B) upon a minimum of two New York Banking Days prior notice, the then applicable LIBOR/Money Market Margin (as hereinafter defined) plus the 1, 2, or 3 month LIBOR rate quoted by the Bank from Telerate Page 3750 or any successor thereto (which shall be the LIBOR rate in effect two New York Banking Days prior to commencement of the advance), adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “LIBOR Rate Loan”); or (C) upon notice to the Bank, the then applicable LIBOR/Money Market Margin plus the rate, determined solely by the Bank, at which the Bank would be able to borrow funds of comparable amounts in the Money Markets for a 1, 2, or 3 month period, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “Money Market Rate Loan”).

The term “New York Banking Day” means any day (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.

The term “Money Markets” refers to one or more wholesale funding markets available to and selected by the Bank, including negotiable certificates of deposit, commercial paper, eurodollar deposits, bank notes, federal funds, interest rate swaps, or others.

In the event the Borrower does not timely select another interest rate option at least two New York Banking Days before the end of the Loan Period for a LIBOR Rate Loan or Money Market Rate Loan, the Bank may at any time after the end of the Loan Period convert the LIBOR Rate Loan or Money Market Rate Loan to a Prime Rate Loan, but until such conversion, the funds advanced under the LIBOR Rate Loan or Money Market Rate Loan shall continue to accrue interest at the same rate as the interest rate in effect for such LIBOR Rate Loan or Money Market Rate Loan prior to the end of the Loan Period.

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Exhibit 10(c) 2

The term “Loan Period” means the period commencing on the advance date of the applicable LIBOR Rate Loan or Money Market Rate Loan and ending on the numerically corresponding day 1, 2, or 3 months thereafter matching the interest rate term selected by the Borrower; provided, however, (y) if any Loan Period would otherwise end on a day which is not a New York Banking Day, then the Loan Period shall end on the next succeeding New York Banking Day unless the next succeeding New York Banking Day falls in another calendar month, in which case the Loan Period shall end on the immediately preceding New York Banking Day; or (z) if any Loan Period begins on the last New York Banking Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of the Loan Period), then the Loan Period shall end on the last New York Banking Day of the calendar month at the end of such Loan Period.

No LIBOR Rate Loan or Money Market Rate Loan may extend beyond the Commitment Termination Date. In any event, if the Loan Period for a LIBOR Rate Loan or Money Market Rate Loan should happen to extend beyond the Commitment Termination Date, such loan must be prepaid at the Commitment Termination Date. The Bank’s internal records of applicable interest rates shall be determinative in the absence of manifest error. Each LIBOR Rate Loan and each Money Market Rate Loan shall be in a minimum principal amount of Five Hundred Thousand Dollars ($500,000) and in increments of Five Hundred Thousand Dollars ($500,000) thereafter.

If a LIBOR Rate Loan or Money Market Rate Loan is prepaid prior to the end of the Loan Period, as defined above, for such loan, whether voluntarily or because prepayment is required due to such loan’s maturing or accelerating upon default or otherwise, the Borrower agrees to pay all of the Bank’s costs, expenses, and Interest Differential (as determined by the Bank) incurred as a result of such prepayment. The term “Interest Differential” shall mean that sum equal to the greater of zero or the financial loss incurred by the Bank resulting from prepayment, calculated as the difference between the amount of interest the Bank would have earned (from like investments in the Money Markets as of the first day of the LIBOR Rate Loan or Money Market Rate Loan) had prepayment not occurred and the interest the Bank will actually earn (from like investments in the Money Markets as of the date of prepayment) as a result of the redeployment of funds from the prepayment. Because of the short-term nature of this facility, the Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of a LIBOR Rate Loan or Money Market Rate Loan shall be in an amount equal to the remaining entire principal balance of such loan.

Any portion of the Revolving Loan which is not at that time a LIBOR Rate Loan or a Money Market Rate Loan shall be a Prime Rate Loan.

The “LIBOR/Money Market Margin” is currently one hundred fifty (150) basis points and shall be subject to adjustment on each March 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank

13

Exhibit 10(c) 2

Debt to EBITDA for the period commencing on the first day of the Borrower’s then-current fiscal year and ending on the last day of the second quarter of such fiscal year and on each September 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank Debt to EBITDA for the period commencing on the first day of the Borrower’s immediately preceding fiscal year and ending on the last day of such fiscal year, as follows: if the Borrower’s ratio of Senior Bank Debt to EBITDA is 1.50 to 1.0 or greater, the LIBOR/Money Market Margin shall be one hundred fifty (150) basis points; if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.50 to 1.0 but equal to or greater than 1.00 to 1.0, the LIBOR/Money Market Margin shall be one hundred twenty-five (125) basis points; and if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.00 to 1.0, the LIBOR/Money Market Margin shall be one hundred five (105) basis points. Such adjustments shall be based upon the Borrower’s ratio of Senior Bank Debt to EBITDA as determined from the financial statements delivered to the Bank pursuant to Section 2(b)(i) or (ii) hereof, as applicable. The foregoing provisions are not intended to, and shall not be construed to, authorize any violation by the Borrower of any Financial Covenant or constitute a waiver thereof or any commitment by the Bank to waive any violation by the Borrower of any Financial Covenant.

The “Prime Margin” is currently negative fifty (-50) basis points and shall be subject to adjustment on each March 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank Debt to EBITDA for the period commencing on the first day of the Borrower’s then-current fiscal year and ending on the last day of the second quarter of such fiscal year and on each September 1 for application to the period commencing on such date in accordance with the Borrower’s ratio of Senior Bank Debt to EBITDA for the period commencing on the first day of the Borrower’s immediately preceding fiscal year and ending on the last day of such fiscal year, as follows: if the Borrower’s ratio of Senior Bank Debt to EBITDA is 1.50 to 1.0 or greater, the Prime Margin shall be negative fifty (-50) basis points; if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.50 to 1.0 but equal to or greater than 1.00 to 1.0, the Prime Margin shall be negative seventy-five (-75) basis points; and if the Borrower’s ratio of Senior Bank Debt to EBITDA is less than 1.00 to 1.0, the Prime Margin shall be negative one hundred (-100) basis points. Such adjustments shall be based upon the Borrower’s ratio of Senior Bank Debt to EBITDA as determined from the financial statements delivered to the Bank pursuant to Section 2(b)(i) or (ii) hereof, as applicable. The foregoing provisions are not intended to, and shall not be construed to, authorize any violation by the Borrower of any Financial Covenant or constitute a waiver thereof or any commitment by the Bank to waive any violation by the Borrower of any Financial Covenant.

(ii) Bullet Loan. Subject to the terms hereof, the Borrower shall from time to time have the option, upon a minimum of two New York Banking Days prior notice, of designating that portions of the principal balance of the Bullet Loan bear interest as a LIBOR Rate Loan at the then applicable LIBOR/Money Market Margin plus the 1, 2, or 3 month LIBOR rate quoted by the Bank from Telerate Page 3750 or any successor thereto (which shall be the LIBOR rate in effect two New York Banking Days prior to commencement of the advance), adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “Bullet LIBOR Loan”).

14

Exhibit 10(c) 2

In the event the Borrower does not timely select another interest rate option at least two New York Banking Days before the end of the Loan Period for a Bullet LIBOR Loan and in the event a Cost of Funds-Based Rate (as hereinafter defined) is not to come into effect for such Bullet LIBOR Loan at the end of its Loan Period, until one of the foregoing options is appropriately selected, such Bullet LIBOR Loan shall bear interest for rolling one month Loan Periods at a rate per annum equal to two hundred (200) basis points plus the 1 month LIBOR rate quoted by the Bank from Telerate Page 3750 or any successor thereto (which shall be the LIBOR rate in effect two New York Banking Days prior to commencement of the applicable Loan Period), adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation.

No Bullet LIBOR Loan may extend beyond the maturity date for the Bullet Loan. In any event, if the Loan Period for a Bullet LIBOR Loan should happen to extend beyond the maturity date for the Bullet Loan, such Bullet LIBOR Loan must be prepaid at the maturity date for the Bullet Loan. The Bank’s internal records of applicable interest rates shall be determinative in the absence of manifest error. Each Bullet LIBOR Loan shall be in a minimum principal amount of Five Hundred Thousand Dollars ($500,000) and in increments of Five Hundred Thousand Dollars ($500,000) thereafter.

If a Bullet LIBOR Loan is prepaid prior to the end of the Loan Period, as defined above, for such loan, whether voluntarily or because prepayment is required due to such loan’s maturing or accelerating upon default or otherwise, the Borrower agrees to pay all of the Bank’s costs, expenses, and Bullet LIBOR Loan Interest Differential (as determined by the Bank) incurred as a result of such prepayment. The term “Bullet LIBOR Loan Interest Differential” shall mean that sum equal to the greater of zero or the financial loss incurred by the Bank resulting from prepayment, calculated as the difference between the amount of interest the Bank would have earned (from like investments in the Money Markets as of the first day of the Bullet LIBOR Loan) had prepayment not occurred and the interest the Bank will actually earn (from like investments in the Money Markets as of the date of prepayment) as a result of the redeployment of funds from the prepayment. Because of the short-term nature of this facility, the Borrower agrees that the Bullet LIBOR Loan Interest Differential shall not be discounted to its present value. Any prepayment of a Bullet LIBOR Loan shall be in an amount equal to the remaining entire principal balance of such loan.

As an alternative method of computing interest on the Bullet Loan, and subject to the terms hereof, so long as no Event of Default or event which, with the passage of time or the giving of notice, might mature into an Event of Default, shall have occurred and be continuing, the Borrower shall at any time while the Bullet Loan remains outstanding have the option of designating that the entire unpaid balance of the Bullet Loan thereafter bear interest for its entire remaining term (the date of commencement of such term being referred to as the “Conversion Date”) at a rate per annum equal to at a fixed rate per annum equal to two hundred (200) basis points plus the Bank’s Cost of Funds as of the Conversion Date (the “Cost of Funds-Based Rate”). Upon the

15

Exhibit 10(c) 2

effectiveness of such designation, the Bullet Loan may be referred to as a “Bullet Cost of Funds Loan.” “Cost of Funds” means the rate at which the Bank would be able to borrow funds of comparable amounts in the Money Markets for a period equal to the remaining term of the Bullet Cost of Funds Loan, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, with such rate rounded upward to the nearest one-eighth percent.

(iii) Payments. Interest on any portion of the Loans bearing interest based on the Prime Rate or constituting the Bullet Cost of Funds Loan shall be payable monthly, in arrears, on the last day of each calendar month, and when such Loan is due (whether by reason of acceleration or otherwise). Interest on any portion of the Loans that is a LIBOR Rate Loan, a Money Market Rate Loan, or a Bullet LIBOR Loan shall be payable, in arrears, on the last day of the Loan Period applicable thereto, and when such Loan is due (whether by reason of acceleration or otherwise). In addition, the Borrower shall pay all accrued but unpaid interest on the Bullet Loan on the Conversion Date designating the Bullet Loan as the Bullet Cost of Funds Loan.

The principal of Revolving Loan shall be due and payable in full on the Commitment Termination Date.

The outstanding principal balance of the Bullet Loan shall mature and be payable in full in one installment on December 31, 2007, unless the maturity thereof is accelerated as described herein.

Interest on the Loans shall be computed on the basis of a year consisting of three hundred sixty (360) days but applied to the actual number of days elapsed.

(iv) Default/Late Payments. At the option of the Bank, (A) prior to acceleration of the Loans, in the event that any interest on or principal of any Loan remains unpaid past thirty (30) days of the date due, and/or (B) upon the occurrence of any other Event of Default hereunder or upon the acceleration of the Loans, interest (computed and adjusted in the same manner, and with the same effect, as interest on the Loans prior to maturity) on the outstanding balance of the Revolving Loan shall be payable on demand at the Prime Rate plus an additional three percent (3%) per annum up to any maximum rate permitted by law and on the outstanding balance of the Bullet Loan shall be payable on demand at the highest rate then being charged on any part of the Bullet Loan plus an additional three percent (3%) per annum up to any maximum rate permitted by law, in any and all such cases until paid and whether before or after the entry of any judgment thereon. In addition, in the event that the Borrower should fail to make any payment hereunder within ten (10) days of the date due, the Borrower shall pay the Bank a fee in an amount of up to five percent (5%) of the amount of such payment, but in no event less than Fifty Dollars ($50.00), which fee shall be immediately due and payable without notice or demand.

(c) Making of Revolving Loan. The Borrower shall notify the Bank by 12:00 noon on the day on which it desires to obtain a Revolving Loan hereunder bearing interest based on the Prime Rate, and shall notify the Bank on the date specified in Section 4(b) hereof of its desire to

16

Exhibit 10(c) 2

obtain a LIBOR Rate Loan or a Money Market Rate Loan. Such notice may be given by telephone but shall be promptly followed by written confirmation by the Borrower to the Bank. In the case of any Revolving Loan bearing interest based on the Prime Rate, such notice shall specify the amount of such Revolving Loan, and in the case of any LIBOR Rate Loan or Money Market Rate Loan, such notice shall include the items described in Section 4(b) hereof. The Loans shall be effectuated by the Bank crediting an account maintained by the Borrower at the Bank.

(d) Unused Credit Fee. The Borrower shall pay the Bank an unused credit fee in an amount equal to one quarter of one percent (0.25%) per annum times the daily average of the unused Total Commitment Amount (the “Unused Credit Fee”), which fee shall be payable quarterly, in arrears, having commenced on the first day of December, 1998, and on the first day of each March, June, September and December thereafter, and when the Revolving Loan is due (whether by reason of acceleration or otherwise). The Unused Credit Fee shall be computed on the basis of a year consisting of three hundred sixty (360) days but applied to the actual number of days elapsed.

(e) Changes in Laws and Circumstances; Illegality.

(i) In the event of (A) any change in the reserve requirements and/or the assessment rates of the FDIC which are applicable to the Bank in making the Loans or any portion thereof that is a LIBOR Rate Loan, a Money Market Rate Loan, or a Bullet LIBOR Loan or (B) any change in circumstances affecting the interbank market, and the result of any such event described in clause (A) or (B) above is to increase the costs to the Bank of making the Loans, the Borrower shall promptly pay the Bank any additional amounts, upon demand accompanied by a reasonably detailed statement as to such additional amounts (which statement shall be conclusive in the absence of manifest error), which will reasonably compensate the Bank for such costs.

(ii) If by reason of circumstances affecting the interbank market adequate and reasonable means do not exist in the reasonable judgment of the Bank for ascertaining a rate of interest for a LIBOR Rate Loan, a Money Market Rate Loan, or a Bullet LIBOR Loan at any time, the Bank shall forthwith give notice thereof to the Borrower. Unless and until such notice has been withdrawn by the Bank, the Borrower may not thereafter elect to have any portion of the Loans bear interest at a LIBOR based rate or a Money Market based rate, as applicable, and in the case of the Bullet Loan, such Loan shall thereafter bear interest at the Cost of Funds-Based Rate.

(iii) If any law, rule, regulation, treaty, guideline, order or directive or any change therein or in the interpretation or application thereof shall make it unlawful for the Loans to bear interest at the rate of interest for a LIBOR Rate Loan, a Money Market Rate Loan, or a Bullet LIBOR Loan, the Bank shall notify the Borrower thereof and no portion of the Loans may thereafter bear interest at a LIBOR based rate or a Money Market based rate, as applicable. If required by law, any portion of the Loans then bearing interest at a LIBOR based rate or a Money Market based rate, as applicable, shall cease to bear interest at the LIBOR based rate or a Money Market based rate, as applicable, and shall bear interest based on the Prime Rate plus the applicable Prime Margin (or in the case of the Bullet Loan, the Cost of Funds-Based Rate).

17

Exhibit 10(c) 2

(f) Prepayments; Reduction of Total Commitment Amount. The Borrower may, at its option, from time to time repay or prepay part or all of the outstanding principal balance of the Loans bearing interest based on the Prime Rate without premium.

If any LIBOR Rate Loan or Money Market Rate Loan is prepaid prior to the end of the Loan Period for such loan, whether voluntarily (including, without limitation, any such prepayment made in connection with a reduction in the Total Commitment Amount, as described below) or because prepayment is required due to such loan’s maturing or accelerating upon default or otherwise, the Borrower agrees to pay all of the Bank’s costs, expenses, and Interest Differential (as determined by the Bank) incurred as a result of such prepayment. If any Bullet LIBOR Loan is prepaid prior to the end of the Loan Period for such loan, whether voluntarily or because prepayment is required due to such loan’s maturing or accelerating upon default or otherwise, the Borrower agrees to pay all of the Bank’s costs, expenses, and Bullet LIBOR Loan Interest Differential (as determined by the Bank) incurred as a result of such prepayment. Because of the short-term nature of this facility, the Borrower agrees that neither the Interest Differential nor the Bullet LIBOR Loan Interest Differential shall be discounted to its present value. Any prepayment of a LIBOR Rate Loan, Money Market Rate Loan, or Bullet LIBOR Loan shall be in an amount equal to the remaining entire principal balance of such loan.

The Total Commitment Amount may, at the option of the Borrower, be permanently reduced by any amount as of the last day of any of the Borrower’s fiscal quarters, by the Borrower giving the Bank written notice thereof and paying to the Bank any amount necessary so that the outstanding principal balance of the Revolving Loan will not exceed the Total Commitment Amount.

There shall be no prepayments of the Bullet Cost of Funds Loan, provided that the Bank may consider requests for its consent with respect to prepayment of the Bullet Cost of Funds Loan, without incurring an obligation to do so, and the Borrower acknowledges that in the event that such consent is granted, the Borrower shall be required to pay the Bank, upon prepayment of all or part of the principal amount of the Bullet Cost of Funds Loan before final maturity, a prepayment indemnity (“Prepayment Fee”) equal to the greater of zero, or that amount, calculated on any date of prepayment (“Prepayment Date”), which is derived by subtracting: (a) the principal amount of the Bullet Cost of Funds Loan or portion of the Bullet Cost of Funds Loan to be prepaid from (b) the Net Present Value of the Bullet Cost of Funds Loan or portion of the Bullet Cost of Funds Loan to be prepaid on such Prepayment Date; provided, however, that the Prepayment Fee shall not in any event exceed the maximum prepayment fee permitted by applicable law.

“Net Present Value” shall mean the amount which is derived by summing the present values of each prospective payment of principal and interest which, without such full or partial prepayment, could otherwise have been received by the Bank over the remaining contractual life of the Bullet Cost of Funds Loan. The individual discount rate used to present value each prospective payment of interest and/or principal shall be the Money Market Rate at Prepayment for the maturity matching that of each specific payment of principal and/or interest.

“Money Market Rate At Prepayment” shall mean that zero-coupon rate, calculated on the Prepayment Date, and determined solely by the Bank, as the rate at which the Bank would be

18

Exhibit 10(c) 2

able to borrow funds in Money Markets for the prepayment amount matching the maturity of a specific prospective Bullet Cost of Funds Loan payment date, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation. A separate Money Market Rate at Prepayment will be calculated for each prospective interest and/or principal payment date.

In calculating the amount of such Prepayment Fee, the Bank is hereby authorized by the Borrower to make such assumptions regarding the source of funding, redeployment of funds, and other related matters, as the Bank may deem appropriate. If the Borrower fails to pay any Prepayment Fee when due, the amount of such Prepayment Fee shall thereafter bear interest until paid at the default rate specified in this Agreement (computed on the basis of a 360-day year, actual days elapsed). Any prepayment of principal shall be accompanied by a payment of interest accrued to date thereon; and said prepayment shall be applied to the principal installments in the inverse order of their maturities. All prepayments shall be in an amount of at least $100,000 or, if less, the remaining entire principal balance of the Bullet Cost of Funds Loan.

No partial prepayment of any of the Loans shall change any due date or the amount of any regularly-scheduled installment of principal thereof.

(g) Payments. All payments of principal and interest hereunder shall be made in immediately available funds to the Bank at such place as may be designated by the Bank to the Borrower in writing. The Bank is authorized by the Borrower to enter from time to time the balance of the Loans and all payments and prepayments thereon on the reverse of the Notes or in the Bank’s regularly maintained data processing records, and the aggregate unpaid amount of the Loans set forth thereon or therein shall be presumptive evidence of the amount owing to the Bank and unpaid thereon. Upon request and payment by the Borrower of a reasonable fee which compensates the Bank for the cost of issuing the same, the Bank shall provide the Borrower with a statement showing all payments and prepayments on the Loans.

5. Events of Default. If any of the following events (each, an “Event of Default”) shall occur, then the Bank may, without further notice or demand, accelerate the Loans and declare them to be, and thereupon the Loans shall become, immediately due and payable (except that the Loans shall become automatically due and payable upon the occurrence of an event described in Sections 5(j), (k) and (l) below), and, to the extent the Total Commitment Amount has not yet been used or fully drawn on by the Borrower, terminate the balance of same:

(a) The Borrower does not pay the Bank any interest on the Loans within ten (10) days after the date due, whether by reason of acceleration or otherwise, or does not pay or repay to the Bank any principal of the Loans or any other obligation hereunder when due, whether by reason of acceleration or otherwise; or

(b) The Borrower defaults in the performance or observance of any agreement contained in Section 2(b), 2(c), 2(d), 2(e), 2(f), 2(g), 2(h) or 2(o) hereof and such default has not been cured by the Borrower within ten (10) days after the occurrence thereof, or the Borrower defaults in the performance or observance of any other agreement contained in Section 2 hereof; or

19

Exhibit 10(c) 2

(c) There shall have occurred any other violation or breach of any covenant, agreement or condition contained herein or in any other Loan Document which has not been cured by the Borrower within thirty (30) days after the earlier to occur of the date the Borrower has knowledge thereof and the date the Bank gives the Borrower notice thereof; or

(d) The Borrower does not pay when due or prior to the expiration of the applicable cure period, if any, any principal or interest on any other Indebtedness in excess of One Hundred Thousand Dollars ($100,000), or the Borrower defaults in the performance or observance of any other term or condition contained in any agreement or instrument under which such Indebtedness is created, and the holder of such other Indebtedness declares, or may declare, such Indebtedness due prior to its stated maturity because of the Borrower’s default thereunder; or

(e) There shall have occurred any violation or breach of any covenant, agreement or condition contained in any other agreement between the Borrower and the Bank which has not been cured by the Borrower prior to the expiration of the applicable cure period, if any, including without limitation, the First Amended and Restated Loan Agreement [Golden Corral] dated as of October 15, 2004 between the Borrower and the Bank, as amended from time to time (the “Golden Corral Agreement”); or

(f) The Borrower does not perform its obligations under any agreement material to its business, and the other party to such agreement declares, or may declare, such agreement in default; or

(g) Any representation or warranty made herein or in any other Loan Document or writing furnished in connection with this Agreement shall be false or misleading in any material respect when made; or

(h) The Borrower is generally not paying its debts as they become due; or

(i) With respect to the plans referred to in Section 1(h) above, or any other similar plan, a “reportable event” or “prohibited transaction” pursuant to ERISA has occurred which results in the imposition of material taxes or penalties against the Borrower or the termination of such plans (or trusts related thereto), or the Borrower incurs any material liability to the PBGC in connection with such plans; or

(j) The Borrower makes an assignment of a material part of its assets for the benefit of creditors; or

(k) The Borrower applies for the appointment of a trustee or receiver for a material part of its assets or commences any proceedings relating to the Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or other liquidation law of any jurisdiction; or any such application is filed, or any such proceedings are commenced, against the Borrower, and the Borrower indicates its approval, consent or acquiescence thereto; or an order is entered appointing such trustee or receiver, or adjudicating the Borrower bankrupt or insolvent, or approving the petition in any such proceedings, and such order remains in effect for sixty (60) days; or

20

Exhibit 10(c) 2

(l) Any order is entered in any proceedings against the Borrower decreeing the dissolution of the Borrower; or

(m) Any material part of the Borrower’s operations shall cease, other than temporary or seasonal cessations which are experienced by other companies in the same line of business and which would not have a material adverse effect on the Borrower’s operations or financial condition or its ability to perform its obligations hereunder; or

(n) Any final non-appealable judgment which, together with other outstanding judgments against the Borrower, causes the aggregate of such judgments in excess of confirmed insurance coverage satisfactory to the Bank to exceed Seven Hundred Fifty Thousand Dollars ($750,000), shall be rendered against the Borrower; or

(o) Jack C. Maier, Blanche F. Maier and Craig F. Maier and members of their immediate families shall fail to beneficially own, in the aggregate, at least thirty percent (30%) of the outstanding common stock of the Borrower, with full voting rights; or

(p) Any event of default occurs under any other agreement to which the Borrower and the Bank are parties or under any document or instrument running to the benefit of the Bank from the Borrower.

The above recitation of Events of Default shall be interpreted in all respects in favor of the Bank. To the extent any cure-of-default period is provided above, the Bank may nevertheless, at its option pending completion of such cure, suspend its obligation to consider further disbursement of the Loans hereunder.

6. General.

(a) Reasonable Actions. The Bank agrees that in taking any action which it is permitted or empowered to take under this Agreement, it will act reasonably under what it believes are the facts and circumstances existing at such time.

(b) Delay. No delay, omission or forbearance on the part of the Bank in the exercise of any power or right shall operate as a waiver thereof, nor shall any single or partial delay, omission or forbearance in the exercise of any other power or right. The rights and/or remedies of the Bank herein provided are cumulative, shall be interpreted in all respects in favor of the Bank and are not exclusive of any other rights and/or remedies provided by law.

(c) Notice. Except as otherwise expressly provided in this Agreement, any notice hereunder shall be in writing and shall be deemed to be given when personally delivered or when sent by certified mail, postage prepaid, and addressed to the parties at their addresses set forth below:

Bank:	U.S. Bank National Association
	425 Walnut Street
	Cincinnati, Ohio 45202
	Attention: Kendra Bach
	Vice President

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Exhibit 10(c) 2

With a copy to:	Jeffrey S. Schloemer, Esq.
	Taft, Stettinius & Hollister LLP
	425 Walnut Street, Suite 1800
	Cincinnati, Ohio 45202
Borrower:	Frisch’s Restaurants, Inc.
	2800 Gilbert Avenue
	Cincinnati, Ohio 45206
	Attention: Mr. Donald H. Walker
	Treasurer
With copies to:	Craig F. Maier, President
	Frisch’s Restaurants, Inc.
	2800 Gilbert Avenue
	Cincinnati, Ohio 45206
and
	W. Gary King, Esq.
	Frisch’s Restaurants, Inc.
	2800 Gilbert Avenue
	Cincinnati, Ohio 45206

The Borrower or the Bank may, by written notice to the other as provided herein, designate another address for purposes hereunder.

(d) Expenses; Indemnity. The Borrower agrees to pay all reasonable out-of-pocket expenses of the Bank and its employees (including attorney’s fees and legal expenses, but excluding the salaries of the Bank’s own employees) incurred by the Bank in entering into and closing this Agreement and preparing the documentation in connection herewith, administering the obligations of the Borrower hereunder or under any of the other Loan Documents, and enforcing the obligations of the Borrower hereunder or under any of the other Loan Documents, and the Borrower agrees to pay the Bank upon demand for the same. The Borrower agrees to defend, indemnify and hold the Bank harmless from any liability, obligation, cost, damage or expense (including reasonable attorney’s fees and legal expenses) for taxes (other than income taxes), fees or third party claims which may arise or be related to the execution, delivery or performance of this Agreement or any of the other Loan Documents, except in the case of negligence or willful misconduct on the part of the Bank. The Borrower further agrees to indemnify and hold harmless the Bank from any loss or expense which the Bank may sustain or incur as a consequence of default by the Borrower in payment of any principal of or interest on the Loans, including, without limitation, any such loss or expense arising from interest or fees payable by the Bank to lenders of funds obtained by it in order to maintain interest rates on any LIBOR Rate Loan, Money Market Rate Loan, Bullet LIBOR Loan, or Bullet Cost of Funds Loan.

(e) Survival. All covenants and agreements of the Borrower made herein or otherwise in connection with the transactions contemplated hereby shall survive the execution

22

Exhibit 10(c) 2

and delivery of this Agreement and the other Loan Documents, and shall remain in effect so long as any obligations of the Borrower are outstanding hereunder or under any of the other Loan Documents.

(f) Severability. Any provision of this Agreement or any of the other Loan Documents which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition of enforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(g) Law. IMPORTANT: The Loans shall be deemed made in Ohio and this Agreement and all other Loan Documents, and all of the rights and obligations of the Borrower and the Bank hereunder and thereunder, shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrower and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to the Loans and/or this Agreement and/or any of the other Loan Documents shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (i) served personally or by certified mail to the other party at any of its addresses noted herein, or (ii) as otherwise provided under the laws of the State of Ohio. The interest rates and all other terms of the Loans negotiated with the Borrower are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

(h) Successors. This Agreement shall be binding upon and inure to the benefit of the Borrower and the Bank and their respective successors and assigns. The Borrower shall not assign its rights or delegate its duties hereunder without the prior written consent of the Bank.

(i) Amendment and Restatement. This Agreement amends and restates the Prior Loan Agreement and amounts outstanding under the Prior Loan Agreement shall not be deemed cancelled or satisfied, but shall be evidenced by this Agreement instead of by the Prior Loan Agreement.

(j) Amendment. Except as otherwise expressly provided herein, this Agreement may not be modified or amended except in writing signed by authorized officers of the Bank and the Borrower.

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Exhibit 10(c) 2

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly effective as of the date first set forth above.

U.S. BANK NATIONAL ASSOCIATION		FRISCH’S RESTAURANTS, INC.
By:	/s/ Kendra Bach	By:	/s/ Donald H. Walker
	Kendra Bach		Donald H. Walker
	Vice President		Vice President-Finance

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Exhibit 10(c) 2

LIST OF EXHIBITS

A	-	Financial Information and Reports
B	-	Actions
C	-	Permitted Liens
D	-	Financial Covenants
E	-	Permitted Indebtedness
F	-	Revolving Note
G	-	Bullet Note

25

Exhibit 10(c) 2

EXHIBIT A

FINANCIAL INFORMATION AND REPORTS

1. Annual Report for the year ended May 30, 2004.

2. Projections for the Borrower for the year ending June 1, 2005.

A-1

Exhibit 10(c) 2

EXHIBIT B

ACTIONS

1. Fortney & Weygandt and LMH&T - #263 G.C Canton – Faulty Design, Engineering and Construction Claims. In July, 2003, the lawsuit against the architect and engineer was settled for $1,700,000.00. The arbitration of the dispute with the contractor remains open. We are seeking the balance of our claim and the contractor claims that it is owed $293,638.00.

2. BVI Double Drive Thru, Inc. – vs Glincher Properties and Frisch’s Restaurants, Inc. #202 Clarksville, IN Big Boy. Rally’s filed suit against the shopping center owner and Frisch’s, claiming that the placement of our building violates their access easement rights. They are asking for damages in an undetermined amount and attorneys fees. Frost Brown Todd, who represented us in the acquisition of the property, is handling our defense. Discovery has commenced.

3. Christina Barrett, et al vs. Frisch’s, et al - #124 Florence – Sexual Harassment Claims. On October 30, 2003, Christina Barrett and two other female employees filed suit against Frisch’s and another employee alleging sexual harassment. The case has been dismissed and the claim is being arbitrated.

4. Sherri Pennington, et al vs. Frisch’s, et al - #262 G.C. Mason-Montgomery – Wage and Hour Claim. On December 16, 2003, a collective action by current and former employees alleging violations of the Fair Labor Standards Act was filed in U.S. District Court. A motion has been filed to dismiss and compel arbitration.

5. Tammy Carlton vs. Frisch’s Restaurants, Inc., et al. #259 Golden Corral, Preston – Sexual Harassment Claim. The Plaintiff claims sexual harassment by her supervisor. She agreed to arbitration, which commenced in January, 2004. However, in March, 2004, she filed a complaint in the Jefferson County Circuit Court. We have filed a motion to dismiss or stay the lawsuit pending arbitration.

6. Jess Hollon vs. Frisch’s Restaurants, Inc., et al. – Area Supervisor – Sexual Harassment and Hostile Work Environment Claim. On March 30, 2004, the Plaintiff filed suit in Montgomery County Common Pleas Court, alleging, among other things, that he was subjected to reprisal after reporting sexual harassment, disparate treatment and a hostile work environment. A motion has been filed to dismiss and compel arbitration.

7. Lefler, et. al. vs. Frisch’s Restaurants, Inc. This case involves claims of sexual harassment, retaliation, intentional infliction of emotional distress and a violation of the Ohio Safe Workplace Act. An arbitrator has been selected.

8. Hamm vs. Frisch’s Restaurants, Inc. This is an arbitration involving age and/or workers compensation retaliation. Discovery has commenced.

B-1

Exhibit 10(c) 2

9. Court proceedings covered by general liability insurance: Lillie Guilfoyle, Betty Hayes, Andrea Kender, Barbara Melzer and Laura Shoulders.

10. Workers Compensation proceedings:

a. before a court: Tina Ferrell, Bonita Fraley and Bruce Schatzman

b. before Industrial Commission: Latasha Cobb, Delores Foley, Ashley Stephens and Rita Stewart

B-2

Exhibit 10(c) 2

EXHIBIT C

PERMITTED LIENS

NONE

C-1

Exhibit 10(c) 2

EXHIBIT D

FINANCIAL COVENANTS

The Borrower agrees that it shall:

(a) Tangible Net Worth. Not permit the Borrower’s tangible net worth, on a consolidated basis, to be less than the following amounts (each, a “Base Tangible Net Worth”) at any time during the following time periods (each, a “TNW Year”):

TNW Year	Base Tangible Net Worth
the period commencing with June 3, 2003
and continuing through the next to last day of	$63,000,000
the fiscal year ending May 30, 2004 (“FY 04”)
any period commencing with	the Base Tangible Net
the last day of a fiscal year,	Worth for the
beginning with the period	immediately preceding
commencing on the last day	TNW Year plus $5,000,000
of FY 04, through the next to
last day of the next fiscal year

“Tangible net worth” for purposes hereof shall mean the total of book net worth less any assets, except capitalized leases, considered intangible under generally accepted accounting principles.

(b) Ratio of Senior Bank Debt to EBITDA. Not permit the ratio of the Borrower’s Senior Bank Debt to EBITDA to exceed 2.00 to 1.0 at any time.

“Senior Bank Debt” for purposes hereof shall mean the sum of all obligations of the Borrower to the Bank, including without limitation all obligations of the Borrower to the Bank incurred in connection with this Agreement and the Revolving/Bullet Loan Agreement, and all obligations of the Borrower to the Bank incurred in connection with any existing or future lease transactions capitalized or required to be capitalized on the Borrower’s books.

“EBITDA” for purposes hereof shall mean the Borrower’s consolidated gross (before interest, taxes, depreciation and amortization) earnings, less cash and non-cash extraordinary gains and non-cash extraordinary losses, calculated in accordance with generally accepted accounting principles consistently applied in accordance with past practices on a rolling four (4) quarter basis.

(c) Cash Flow Coverage Ratio. Not permit the ratio of (i) the Borrower’s EBITDA plus operating lease payments minus Ten Million Dollars ($10,000,000) minus cash dividends to the Borrower’s shareholders, to (ii) the sum of the Borrower’s scheduled principal payments on

D-1

Exhibit 10(c) 2

long term debt and capital lease obligations plus interest expense plus operating lease payments (in each case for the same period that the Borrower’s EBITDA is measured), calculated in accordance with generally accepted accounting principles consistently applied in accordance with past practices on a rolling four (4) quarter basis, to be less than 1.25 to 1.0 at any time.

(d) Interest Coverage Ratio. Not permit the Borrower’s Interest Coverage Ratio to be less than 2.00 to 1.0 at any time.

“Interest Coverage Ratio” for purposes hereof shall mean the Borrower’s ratio, on a consolidated basis, of (i) its earnings before total interest expense (as required to be reflected in audited financial statements prepared in accordance with generally accepted accounting principles) and current and deferred taxes, less cash and non-cash extraordinary gains and non-cash extraordinary losses, to (ii) its total interest expense (as required to be reflected in audited financial statements prepared in accordance with generally accepted accounting principles), calculated on a rolling four (4) quarter basis.

D-2

Exhibit 10(c) 2

EXHIBIT E

PERMITTED INDEBTEDNESS

	Balance September 19, 2004
Indebtedness to US Bank NA
Bullet Loan		10,000,000
Revolving Loan (up to $5,000,000 may be borrowed)		0
Golden Corral Credit Facility ($52,500,000 had cumulatively been borrowed as of 9/19/2004)		36,933,921
	$	46,933,921

Contingent liability as assignor/guarantor of the following leases:

Location		Assignee	Remaining Lease Term
Blue Ash, OH (HS Blue Ash)	$7,800 per year	Anz Food Service	11/30/2005
(1 five year renewal available to 11/30/10)
Covington, KY (Riverview Hotel)	$48,072 per year	Remington Hotel Corporation	4/30/2020
(renewal options aggregating 50 years)

Lease liability for closed restaurants & other non-operating property (lease not presently assigned)

Location	Remaining Lease Term	Rent Per Month
None

Plus indebtedness secured by permitted liens as described on Exhibit C and indebtedness replacing the indebtedness secured by the permitted liens as described on Exhibit C, provided that no such replacement indebtedness shall exceed the amount being replaced as shown on Exhibit C.

E-1

Exhibit 10(c) 2

EXHIBIT F

FIFTEENTH AMENDED AND RESTATED

REVOLVING CREDIT PROMISSORY NOTE

$5,000,000.00	Cincinnati, Ohio
	October 15, 2004

FRISCH’S RESTAURANTS, INC., an Ohio corporation (the “Borrower”), for value received, hereby promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association formerly known as Firstar Bank, N.A. and Star Bank, National Association (the “Bank”), or it successors or assigns, on or before September 1, 2006, the principal sum of FIVE MILLION DOLLARS ($5,000,000), or such portion thereof as may be outstanding from time to time, together with interest thereon as hereinafter provided.

This is the Revolving Note referred to in, was executed and delivered pursuant to, and evidences indebtedness of the Borrower incurred under, that certain Second Amended and Restated Loan Agreement [Revolving and Bullet Loans] dated as of October 15, 2004 between the Borrower and the Bank, as the same has been and/or may be amended, restated, supplemented, renewed, or otherwise modified and in effect from time to time (the “Loan Agreement”), to which reference is hereby made for a statement of the terms and conditions under which the Revolving Loan evidenced hereby was made and is to be repaid and for a statement of the Bank’s remedies upon the occurrence of an Event of Default. Capitalized terms used herein, but not otherwise specifically defined, shall have the meanings ascribed to such terms in the Loan Agreement.

The Borrower further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full at the rate or rates from time to time applicable to the Revolving Loan as determined in accordance with the Loan Agreement; provided, however, that upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest on the outstanding principal balance of this Revolving Note at the rate of interest applicable following the occurrence of an Event of Default as determined in accordance with the Loan Agreement.

Interest on this Revolving Note shall be payable, at the times and from the dates specified in the Loan Agreement, on the date of any prepayment hereof, at maturity, whether due by acceleration or otherwise, and as otherwise provided in the Loan Agreement. From and after the date when the principal balance hereof becomes due and payable, whether by acceleration or otherwise, interest hereon shall be payable on demand. In no contingency or event whatsoever shall interest charged hereunder, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Bank has received interest hereunder in excess of the highest rate applicable hereto, such excess shall be applied in accordance with the terms of the Loan Agreement.

F-1

Exhibit 10(c) 2

The indebtedness evidenced by this Revolving Note is secured pursuant to the terms of the Loan Documents.

The Borrower hereby waives demand, presentment, and protest and notice of demand, presentment, protest, and nonpayment.

The Borrower further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including attorneys’ fees and legal expenses, incurred by the Bank in endeavoring to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise.

IMPORTANT: This Revolving Note shall be deemed made in Ohio and shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrower and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to this Revolving Note shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (a) served personally or by certified mail to the other party at any of its addresses noted herein, or (b) as otherwise provided under the laws of the State of Ohio. The interest rates and all other terms of this Revolving Note negotiated with the Borrower are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

This Note amends and restates the Fourteenth Amended and Restated Revolving Credit Promissory Note dated as of September 15, 2003 given by the Borrower to the Bank, and evidences all amounts outstanding as of the date hereof under said Fourteenth Amended and Restated Revolving Credit Promissory Note.

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

FRISCH’S RESTAURANTS, INC.
By:
Title:
Address:	2800 Gilbert Avenue
	Cincinnati, Ohio 45206

F-2

Exhibit 10(c) 2

EXHIBIT G

BULLET NOTE

$10,000,000.00	Cincinnati, Ohio
	December 27, 2002

FOR VALUE RECEIVED, FRISCH’S RESTAURANTS, INC., an Ohio corporation (the “Borrower”), hereby unconditionally promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association formerly known as Firstar Bank, N.A. and Star Bank, National Association (the “Bank”), in lawful money of the United States of America and in immediately available funds, the principal sum of TEN MILLION DOLLARS ($10,000,000.00) on or before December 31, 2007.

This is the Bullet Note referred to in, was executed and delivered pursuant to, and evidences indebtedness of the Borrower incurred under, that certain Amended and Restated Loan Agreement dated as of August 29, 1996 between the Borrower and the Bank, as the same has been and/or may be amended, restated, supplemented, renewed, or otherwise modified and in effect from time to time (the “Loan Agreement”), to which reference is hereby made for a statement of the terms and conditions under which the Bullet Loan evidenced hereby was made and is to be repaid and for a statement of the remedies upon the occurrence of an Event of Default. Capitalized terms used herein, but not otherwise specifically defined, shall have the meanings ascribed to such terms in the Loan Agreement.

The Borrower further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full at the rate or rates from time to time applicable to the Bullet Loan as determined in accordance with the Loan Agreement; provided, however, that upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest on the outstanding principal balance of this Bullet Note at the rate of interest applicable following the occurrence of an Event of Default as determined in accordance with the Loan Agreement.

Interest on this Bullet Note shall be payable, at the times and from the dates specified in the Loan Agreement, on the date of any prepayment hereof, at maturity, whether due by acceleration or otherwise, and as otherwise provided in the Loan Agreement. From and after the date when the principal balance hereof becomes due and payable, whether by acceleration or otherwise, interest hereon shall be payable on demand. In no contingency or event whatsoever shall interest charged hereunder, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Bank has received interest hereunder in excess of the highest rate applicable hereto, such excess shall be applied in accordance with the terms of the Loan Agreement.

The indebtedness evidenced by this Bullet Note is secured pursuant to the terms of the Loan Documents.

G-1

Exhibit 10(c) 2

The Borrower hereby waives demand, presentment, and protest and notice of demand, presentment, protest, and nonpayment.

The Borrower further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including attorneys’ fees and legal expenses, incurred by the Bank in endeavoring to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise.

IMPORTANT: This Bullet Note shall be deemed made in Ohio and shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrower and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to this Bullet Note shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (a) served personally or by certified mail to the other party at any of its addresses noted herein, or (b) as otherwise provided under the laws of the State of Ohio. The interest rates and all other terms of this Bullet Note negotiated with the Borrower are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

FRISCH’S RESTAURANTS, INC.
By:	/s/ Donald H. Walker
Title:	Vice President-Finance
Address:	2800 Gilbert Avenue
	Cincinnati, Ohio 45206

G-2

EX-10.H

Exhibit 10 (h)

SECOND AMENDMENT TO THE FRISCH’S

EXECUTIVE SAVINGS PLAN

WHEREAS, Frisch’s Restaurants, Inc. (“Employer”) adopted the Frisch’s Executive Savings Plan (“Plan”) effective as of November 5, 1993; and

WHEREAS, pursuant to the terms of Article VIII of the Plan, the Employer has the right to amend or terminate the Plan at any time; and

WHEREAS, the Employer previously amended the Plan to adopt a prototype plan sponsored by Fidelity Management Trust Company to govern all Participant-directed investments other than investments in common stock of the Employer; and

WHEREAS, the Employer wishes to further amend the Plan to change various aspects of the Plan regarding investments in common stock of the Employer;

NOW THEREFORE, effective as of July 28, 2004, except as noted below, the Employer hereby modifies and amends the Plan as follows:

1. Section 2.13 of the Plan is deleted in its entirety and Sections 2.14 - 2.18 are renumbered to take into account the deletion of former section 2.13.

2. Section 3.1 of the Plan shall be amended effective June 1, 2004, such that the third sentence shall be deleted in its entirety and replaced with the following:

“The portion of a Participant’s Compensation that may be deferred hereunder for any Plan Year shall not exceed twenty-five percent (25%) of his Compensation for the entire Plan Year.”

3. Section 4.2 shall be amended effective July 28, 2004, such that the second sentence shall be deleted in its entirety and replaced with the following:

“Such investment options are as of the date hereof limited to the Common Stock Option and the Life Insurance Option as the Mutual Fund Option is provided through a separate plan sponsored by the Employer.”

4. Section 4.4 shall be amended effective July 28, 2004, such that the second sentence shall be deleted in its entirety and replaced with the following:

“The Employer Match shall be equal to fifteen percent (15%) of the Participant’s deferral allocated to the Common Stock Option.”

- 1 -

Exhibit 10 (h)

5. Section 5.1 shall be deleted in its entirety and replaced with the following:

“The Employer shall pay to the Participant the balance in the Participant’s Account in a single lump sum as soon as administratively practicable after the date on which the Participant’s employment by the Employer is terminated.”

6. Section 5.3 shall be deleted in its entirety and existing Section 5.4 shall be renumbered as Section 5.3 to take into account said deletion.

7. New Article X shall be added to the Plan to read as follows:

CHANGE OF CONTROL PROVISIONS

10.1 Impact of Event. In the event of a “Change of Control,” as defined in Section 10.2 (i), Employer shall, as soon as possible, but in no event longer than five (5) business days following the Change of Control, or sooner if directed by the Board, make an irrevocable contribution to the Plan in an amount that is necessary to fully fund the benefits or potential benefits for each Plan Participant or beneficiary pursuant to the terms of the Plan as of the date on which the Change of Control occurred; (ii) the Account shall be paid to the Participant within thirty (30) days of the effective date of the Change of Control or subsequent triggering event; and (iii) the Employer shall be responsible for determining the identity of the person entitled to receive benefits under the Plan and the amount of such benefits and for completing the payment of benefits to any person entitled to receive benefits under the Plan based on the records of the Employer prior to the Change of Control.

10.2 Definitions of “Change of Control”.

a. “Change of Control” shall mean the first to occur of the following events:

i. The “acquisition” after August 1, 2004, by any “Person” (as such term is defined below) of “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “1934 Act”), of any securities of the Employer (the “Voting Securities”) which, when added to the Voting Securities then “Beneficially Owned” by such Person, would result in such Person “Beneficially Owning” 50% or more of the combined voting power of the Employer’s then outstanding Voting Securities; provided, however, that for purposes of this paragraph “a,” a Person shall not be deemed to have made an acquisition of Voting Securities if such Person: (A) acquires Voting Securities as a result of a stock split, stock dividend or other corporate restructuring in which all stockholders of the class of such Voting Securities are treated on a pro rata basis; (B) is generally engaged in the business

- 2 -

Exhibit 10 (h)

of underwriting securities and acquires the Voting Securities (the “Underwriting Securities”) pursuant to the terms of an underwriting agreement (an “Underwriting Agreement”) to which the Employer and such underwriter are parties and which Underwriting Agreement is in accordance with Rule 10b-7 promulgated under the 1934 Act or to cover over allotments created in connection with a distribution of Voting Securities pursuant to an Underwriting Agreement; (C) acquires the Voting Securities directly from the Employer; (D) as a result of a redemption or purchase of Voting Securities by the Employer, becomes the Beneficial Owner of more than the permitted percentage of Voting Securities by the Employer pursuant to a reduction of the number of Voting Securities outstanding resulting in an increase in the proportional number of shares Beneficially Owned by such Person; (E) is the Employer or any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Employer (a “Subsidiary”) or (F) acquires Voting Securities in connection with a “Non-Control Transaction” (as defined below).

ii. The individuals who, as of August 1, 2004, are members of the Board of Directors of the Employer (the “Incumbent Board”), cease for any reason to constitute at least two-thirds of the Board of Directors of the Employer; provided, however, that if either the election of any new director or the nomination for election of any new director by the Employer’s stockholders was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any election contest or Proxy Contest.

iii. Approval by shareholders of the Employer of:

(1) A merger, consolidation or reorganization involving the Employer (a “Business Combination”) other than a Non-Control Transaction; or

(2) An agreement for the sale or other disposition of all or substantially all of the assets of the Employer to any Person (other than a transfer to a Subsidiary).

Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because 50% or more of the then outstanding Voting Securities is

- 3 -

Exhibit 10 (h)

Beneficially Owned by (x) a trustee or other fiduciary holding securities under one or more employee benefit plans or arrangements (or any trust forming a part thereof) maintained by the Employer or any Subsidiary or (y) any corporation which, immediately prior to its acquisition of such interest, is owned directly or indirectly by the shareholders of the Employer in the same proportion as their ownership of stock in the Company immediately prior to such acquisition.

b. “Non-Control Transaction” shall mean a Business Combination in which:

i. The shareholders of the Employer, immediately before the Business Combination, own, directly or indirectly immediately following the Business Combination, at least 67% of the combined voting power for the election of directors generally of the outstanding securities of the corporation resulting from the Business Combination (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before the Business Combination;

ii. The individuals who were members of the Board of Directors of the Employer immediately prior to the execution of the agreement providing for the Business Combination constitute at least two-thirds of the members of the Board of Directors of the Surviving Corporation; or

iii. No Person (other than the Employer or any Subsidiary, a trustee or other fiduciary holding securities under one or more employee benefit plans or arrangements or any trust forming a part thereof maintained by the Employer, the Surviving Corporation, or any Subsidiary) who, immediately prior to the Business Combination, did not have Beneficial Ownership of 50% or more of the then outstanding Voting Securities, upon consummation of the Business combination, shall be the Beneficial Owner of 50% or more of the combined voting power of the election of directors generally of the Surviving Corporation’s then outstanding securities.

c. For purposes of this Section 1.12, “Person” shall mean an individual, trust, partnership, corporation, limited liability company, or any other entity recognized under the laws of the State of Ohio; the foregoing notwithstanding, “Person” shall not include any Person who, as of August 1, 2004, owns twenty percent (20%) of the voting stock of the Employer, either directly, in a representative capacity, or as the beneficiary of a trust or other entity recognized under the laws of the State of Ohio.

8. In all other respects the Plan shall remain unchanged.

- 4 -

Exhibit 10 (h)

IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has caused this Amendment to be executed this 29th day of September, 2004.

FRISCH’S RESTAURANTS, INC.
By:	/s/ Michael E. Conner
	Vice President

- 5 -

EX-15

Exhibit 15

ACCOUNTANT’S REVIEW REPORT

Shareholders

Frisch’s Restaurants, Inc.

We have reviewed the accompanying consolidated balance sheet of Frisch’s Restaurants, Inc. (an Ohio Corporation) and subsidiaries as of September 19, 2004, the related consolidated statements of earnings, shareholders’ equity and cash flows for the sixteen week period then ended. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of May 30, 2004, and the related consolidated statements of earnings, shareholders’ equity and cash flows for the year then ended and in our report dated July 7, 2004, we expressed an unqualified opinion on those consolidated financial statements.

GRANT THORNTON LLP

Cincinnati, Ohio

October 13, 2004

EX-31.1

Exhibit 31.1

CERTIFICATION     RULE 13a – 14(a)/15d – 14 (a)

I, Craig F. Maier, President and Chief Executive Officer of Frisch’s Restaurants, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Frisch’s Restaurants, Inc. (the “Registrant”);

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

6. The Registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE October 16, 2004

/s/ Craig F. Maier

Craig F. Maier, President and Chief

Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION     RULE 13a – 14(a)/15d – 14(a)

I, Donald H. Walker, Vice President-Finance, Chief Financial Officer and Treasurer of Frisch’s Restaurants, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Frisch’s Restaurants, Inc. (the “Registrant”);

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

6. The Registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

DATE October 16, 2004

/s/ Donald H. Walker

Donald H. Walker, Vice President-Finance

Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of Frisch’s Restaurants, Inc. (the “Registrant”) on Form 10-Q for the quarter ended September 21, 2003 (the “Report”), the undersigned officer of the Registrant certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 16, 2004	By:	/s/ Craig F. Maier
		Craig F. Maier
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of Frisch’s Restaurants, Inc. (the “Registrant”) on Form 10-Q for the quarter ended September 19, 2004 (the “Report”), the undersigned officer of the Registrant certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 16, 2004	By:	/s/ Donald H. Walker
		Donald H. Walker
		Vice President, Treasurer and Chief
		Financial Officer