10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d) of

the Securities Exchange Act of 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 21, 2010

COMMISSION FILE NUMBER 001-7323

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    YES  ¨    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ¨	Accelerated Filer  x
Non-accelerated Filer  ¨ (Do not check if a smaller reporting company)	Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

There were 5,067,999 shares outstanding of the issuer’s no par common stock, as of September 20, 2010.

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 - 26
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27 - 35
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
	Item 4.	Controls and Procedures	36
PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings	37
	Item 1A.	Risk Factors	37 - 39
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
	Item 3.	Defaults Upon Senior Securities	40
	Item 4.	(Removed and Reserved)	40
	Item 5.	Other Information	40
	Item 6.	Exhibits	40 - 43
SIGNATURE			44

Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Statement of Earnings

(unaudited)

	Sixteen Weeks Ended
	September 21, 2010			September 22, 2009
Sales	$	92,925,834		$	88,982,102
Cost of sales
Food and paper		31,979,503			30,273,962
Payroll and related		30,765,103			29,704,600
Other operating costs		21,262,727			20,017,149
		84,007,333			79,995,711
Gross profit		8,918,501			8,986,391
Administrative and advertising		4,812,330			4,454,390
Franchise fees and other revenue		(399,263	)		(392,259	)
Operating profit		4,505,434			4,924,260
Interest expense		474,155			531,595
Earnings before income taxes		4,031,279			4,392,665
Income taxes		1,290,000			1,405,000
Net Earnings	$	2,741,279		$	2,987,665
Earnings per share (EPS) of common stock:
Basic net earnings per share	$	.54		$	.59
Diluted net earnings per share	$	.54		$	.57

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

3

Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Balance Sheet

ASSETS

	September 21, 2010		June 1, 2010
	(unaudited)
Current Assets
Cash and equivalents	$	1,024,885	$	647,342
Trade and other receivables		1,599,143		1,533,799
Inventories		5,662,223		5,958,540
Prepaid expenses and sundry deposits		1,552,582		760,032
Prepaid and deferred income taxes		1,172,848		1,489,119
Total current assets		11,011,681		10,388,832
Property and Equipment
Land and improvements		78,178,040		77,458,187
Buildings		103,329,390		101,478,173
Equipment and fixtures		97,803,241		96,531,395
Leasehold improvements and buildings on leased land		25,343,576		23,267,910
Capitalized leases		2,330,279		2,158,899
Construction in progress		5,269,433		5,855,478
		312,253,959		306,750,042
Less accumulated depreciation and amortization		141,596,122		138,051,284
Net property and equipment		170,657,837		168,698,758
Other Assets
Goodwill		740,644		740,644
Other intangible assets		691,393		718,357
Investments in land		923,435		923,435
Property held for sale		2,846,051		2,758,998
Deferred income taxes		2,950,940		3,162,703
Other		1,755,403		1,860,919
Total other assets		9,907,866		10,165,056
Total assets	$	191,577,384	$	189,252,646

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

4

LIABILITIES AND SHAREHOLDERS’ EQUITY

	September 21, 2010			June 1, 2010
	(unaudited)
Current Liabilities
Long-term obligations due within one year
Long-term debt	$	7,845,146		$	7,517,765
Obligations under capitalized leases		251,541			240,893
Self insurance		618,302			528,220
Accounts payable		11,749,649			10,557,636
Accrued expenses		9,521,649			9,641,305
Income taxes		120,327			54,972
Total current liabilities		30,106,614			28,540,791
Long-Term Obligations
Long-term debt		22,444,074			23,795,046
Obligations under capitalized leases		1,096,550			994,151
Self insurance		1,089,278			1,040,778
Underfunded pension obligation		11,334,493			10,747,629
Deferred compensation and other		3,934,630			4,040,235
Total long-term obligations		39,899,025			40,617,839
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, 7,586,764 and 7,585,764 shares - stated value - $1		7,586,764			7,585,764
Additional contributed capital		65,359,647			65,222,878
		72,946,411			72,808,642
Accumulated other comprehensive loss		(7,611,343	)		(7,856,427	)
Retained earnings		91,025,017			89,701,652
		83,413,674			81,845,225
Less cost of treasury stock (2,518,765 and 2,525,174 shares)		(34,788,340	)		(34,559,851	)
Total shareholders’ equity		121,571,745			120,094,016
Total liabilities and shareholders’ equity	$	191,577,384		$	189,252,646

5

Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Statement of Shareholders’ Equity

Sixteen weeks ended September 21, 2010 and September 22, 2009

(unaudited)

	Common stock at $1 per share - Shares and amount		Additional contributed capital			Accumulated other comprehensive income (loss)			Retained earnings			Treasury shares			Total
Balance at June 2, 2009	$	7,582,347	$	64,721,328		$	(6,634,422	)	$	82,306,488		$	(33,598,597	)	$	114,377,144
Net earnings for sixteen weeks		—		—			—			2,987,665			—			2,987,665
Other comprehensive income, net of tax		—		—			176,859			—			—			176,859
Stock options exercised - new shares issued		3,417		80,449			—			—			—			83,866
Stock options exercised - treasury shares re-issued		—		(3,480	)		—			—			13,540			10,060
Excess tax benefit from stock - based compensation		—		6,144			—			—			—			6,144
Other treasury shares re-issued		—		40,557			—			—			34,216			74,773
Stock-based compensation expense		—		80,531			—			—			—			80,531
Cash dividends - $.25 per share		—		—			—			(1,275,932	)		—			(1,275,932	)
Balance at September 22, 2009		7,585,764		64,925,529			(6,457,563	)		84,018,221			(33,550,841	)		116,521,110
Net earnings for thirty-six weeks		—		—			—			7,011,266			—			7,011,266
Other comprehensive loss, net of tax		—		—			(1,398,864	)		—			—			(1,398,864	)
Stock-based compensation expense		—		275,030			—			—			—			275,030
Treasury shares acquired		—		—			—			—			(1,009,010	)		(1,009,010	)
Employee stock purchase plan		—		22,319			—			—			—			22,319
Cash dividends - $.26 per share		—		—			—			(1,327,835	)		—			(1,327,835	)
Balance at June 1, 2010		7,585,764		65,222,878			(7,856,427	)		89,701,652			(34,559,851	)		120,094,016
Net earnings for sixteen weeks		—		—			—			2,741,279			—			2,741,279
Other comprehensive income, net of tax		—		—			245,084			—			—			245,084
Stock options exercised - new shares issued		1,000		9,375			—			—			—			10,375
Stock options exercised - treasury shares re-issued		—		(191,865	)		—			—			855,444			663,579
Excess tax benefit from stock - based compensation		—		208,223			—			—			—			208,223
Treasury shares acquired		—		—			—			—			(1,118,171	)		(1,118,171	)
Other treasury shares re-issued		—		16,308			—			—			34,238			50,546
Stock based compensation expense		—		94,728			—			—			—			94,728
Cash dividends - $.28 per share		—		—			—			(1,417,914	)		—			(1,417,914	)
Balance at September 21, 2010	$	7,586,764	$	65,359,647		($	7,611,343	)	$	91,025,017		($	34,788,340	)	$	121,571,745
									Sixteen weeks ended September 21, 2010			Thirty-six weeks ended June 1, 2010			Sixteen weeks ended September 22, 2009
Comprehensive income:
Net earnings for the period									$	2,741,279		$	7,011,266		$	2,987,665
Change in defined benefit pension plans, net of tax										245,084			(1,398,864	)		176,859
Comprehensive income									$	2,986,363		$	5,612,402		$	3,164,524

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

6

Frisch’s Restaurants, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

Sixteen weeks ended September 21, 2010 and September 22, 2009

(unaudited)

	September 21, 2010			September 22, 2009
Cash flows provided by (used in) operating activities:
Net earnings	$	2,741,279		$	2,987,665
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization		4,561,760			4,220,961
Loss on disposition of assets, net of abandonments		42,669			71,705
Stock based compensation expense		94,728			80,531
Net periodic pension cost		1,026,204			810,827
Contributions to pension plans		(50,000	)		(125,000	)
		8,416,640			8,046,689
Changes in assets and liabilities:
Accounts receivable		(65,344	)		144,098
Inventories		296,317			1,005,885
Prepaid expenses and sundry deposits		(792,550	)		(813,074	)
Other assets		29,274			25,580
Prepaid, accrued and deferred income taxes		675,355			(212,603	)
Excess tax benefit from stock based compensation		(208,222	)		(6,144	)
Accounts payable		431,976			1,917,915
Accrued expenses		(119,656	)		(3,009,232	)
Self insured obligations		138,582			117,216
Deferred compensation and other liabilities		(123,605	)		300,928
		262,127			(529,431	)
Net cash provided by operating activities		8,678,767			7,517,258
Cash flows provided by (used in) investing activities:
Additions to property and equipment		(6,513,235	)		(7,508,829	)
Proceeds from disposition of property		34,540			14,415
Change in other assets		102,720			(291,207	)
Net cash (used in) investing activities		(6,375,975	)		(7,785,621	)
Cash flows provided by (used in) financing activities:
Proceeds from borrowings		1,000,000			4,000,000
Payment of long-term debt and capital lease obligations		(2,081,924	)		(2,228,597	)
Cash dividends paid		(657,877	)		(612,014	)
Proceeds from stock options exercised—new shares issued		10,375			83,866
Proceeds from stock options exercised—treasury shares re-issued		663,579			10,060
Excess tax benefit from stock based compensation		208,223			6,144
Treasury shares acquired		(1,118,171	)		—
Treasury shares re-issued		50,546			74,772
Net cash (used in) provided by financing activities		(1,925,249	)		1,334,231
Net increase in cash and equivalents		377,543			1,065,868
Cash and equivalents at beginning of year		647,342			898,779
Cash and equivalents at end of quarter	$	1,024,885		$	1,964,647
Supplemental disclosures:
Interest paid	$	445,307		$	479,741
Income taxes paid		614,645			1,674,803
Income tax refunds received		—			57,201
Dividends declared but not paid		760,037			663,918
Lease transactions capitalized		171,380			—

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

7

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

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. and Subsidiaries (Company) is a regional company that operates full service family-style restaurants under the name “Frisch’s Big Boy.” The Company also operates grill buffet style restaurants under the name “Golden Corral” pursuant to certain licensing agreements. All 93 Big Boy restaurants operated by the Company as of September 21, 2010 are located in various regions of Ohio, Kentucky and Indiana. All 35 Golden Corral restaurants operated by the Company as of September 21, 2010 are located primarily in the greater metropolitan areas of Cincinnati, Columbus, Dayton, Toledo and Cleveland, Ohio, Louisville, Kentucky and Pittsburgh, Pennsylvania.

The Company owns the trademark “Frisch’s” and has exclusive, irrevocable ownership of the rights to the “Big Boy” trademark, trade name and service marks in the states of Kentucky and Indiana, and in most of Ohio and Tennessee. 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 unaudited consolidated financial statements include all of the Company’s accounts, prepared in conformity with generally accepted accounting principles in the United States of America (US GAAP). 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.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

Fiscal Year

The Company’s fiscal year is the 52 week (364 days) or 53 week (371 days) period ending on the Tuesday 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. The current fiscal year will end on Tuesday, May 31, 2011 (fiscal year 2011), a period of 52 weeks. The year ended June 1, 2010 (fiscal year 2010) was also a 52 week year.

Use of Estimates and Critical Accounting Policies

The preparation of financial statements in conformity with US GAAP 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. Significant estimates and assumptions are used to measure self-insurance liabilities, deferred executive compensation obligations, net periodic pension cost and future pension obligations, the carrying values of property held for sale and for long-lived assets including property and equipment, goodwill and other intangible assets.

8

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE A — ACCOUNTING POLICIES (CONTINUED)

Management considers the following accounting policies to be critical accounting policies because the application of estimates to these policies requires management’s most difficult, subjective or complex judgments: self-insurance liabilities, net periodic pension cost and future pension obligations, and the carrying values of long-lived assets.

Cash and Cash Equivalents

Funds in transit from credit card processors are classified as cash. Highly liquid investments with original maturities of three months or less are considered as cash equivalents.

Receivables

Trade notes and accounts receivable are valued on the reserve method. The reserve balance was $30,000 as of September 21, 2010 and June 1, 2010. The reserve is monitored for adequacy based on historical collection patterns and write-offs, and current credit risks.

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 periods in which the rebates are earned.

Leases

Minimum scheduled lease payments on operating leases, including escalating rental payments, are recognized as rent expense on a straight-line basis over the term of the lease. Under certain circumstances, the lease term used to calculate straight-line rent expense includes option periods that have yet to be legally exercised. Contingent rentals, typically based on a percentage of restaurant sales in excess of a fixed amount, are expensed as incurred. Rent expense is also recognized during that part of the lease term when no rent is paid to the landlord, often referred to as a “rent holiday,” that generally occurs while a restaurant is being constructed on leased land. The Company does not typically receive leasehold incentives from landlords.

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 ten to 25 years for new buildings or components thereof and five to ten years for equipment. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the lease term. Property betterments are capitalized while the cost of maintenance and repairs is expensed as incurred.

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. As of September 21, 2010, two new Big Boy restaurant buildings were under construction on land owned by the Company, with estimated costs of approximately $1,197,000 (not already included in construction in progress) remaining to complete the projects. In addition, the cost of one other tract of land for Big Boy development is included in construction in progress as of September 21, 2010, as near term construction is expected. Other contracts that had been entered before September 21, 2010 to acquire sites for future development were cancellable at the Company’s sole discretion while due diligence is pursued under the inspection period provisions of the contracts.

Interest on borrowings is capitalized during active construction periods of new restaurants. Capitalized interest for the sixteen weeks ended September 21, 2010 and September 22, 2009 was $44,000 and $35,000, respectively.

9

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE A — ACCOUNTING POLICIES (CONTINUED)

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. Surplus property that is no longer needed by the Company, including two former Big Boy restaurants (one that ceased operations near the end of fiscal year 2008 and the other near the end of fiscal year 2009), is classified as “Property held for sale” in the consolidated balance sheet. All of the surplus property is stated at net realizable value. Market values are generally determined by opinions of value provided by real estate brokers and/or management’s judgment.

Costs incurred during the application development stage of computer software that is developed or obtained for internal use is capitalized, while the costs of the preliminary project stage are expensed as incurred, along with certain other costs such as training. Capitalized computer software is amortized on the straight-line method over the estimated service lives, which range from three to ten years. Software assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining service life.

Impairment of Long-Lived Assets

Management considers a history of cash flow losses on a restaurant-by-restaurant basis to be its primary indicator of potential impairment of long-lived assets. Carrying values are tested for impairment at least annually, and whenever events or changes in circumstances indicate that the carrying values of the assets may not be recoverable from the estimated future cash flows expected to result from the use and eventual disposition of the property. 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 greater of the net present value of the future cash flow stream or a floor value. Floor values are generally determined by opinions of value provided by real estate brokers and/or management’s judgment as developed through its experience in disposing of unprofitable restaurant properties.

No impairment losses were recognized during either of the sixteen weeks ended September 21, 2010 or September 22, 2009.

Restaurant Closing Costs

Any liabilities associated with exit or disposal activities are recognized only when the liabilities are incurred, rather than upon the commitment to an exit or disposal plan. Conditional obligations that meet the definition of an asset retirement obligation are currently recognized if fair value is reasonably estimable.

The carrying values of closed restaurant properties that are held for sale are reduced to estimated net realizable value in accordance with the accounting policy for impairment of long-lived assets (see above). When leased restaurant properties are closed, a provision is made equal to the present value of remaining non-cancellable lease payments after the closing date, net of estimated subtenant income. The carrying values of leasehold improvements are also reduced in accordance with the accounting policy for impairment of long-lived assets.

Goodwill and Other Intangible Assets, Including Licensing Agreements

As of September 21, 2010 and June 1, 2010, the carrying amount of goodwill that was acquired in prior years amounted to $741,000. Acquired goodwill is tested annually for impairment and whenever an impairment indicator arises. Impairment losses are recorded if impairment is determined to have occurred.

Other intangible assets consist principally of initial franchise fees paid for each new Golden Corral restaurant the Company has opened (finite useful lives are subject to amortization) or has the right to open (yet to be determined useful lives are not subject to amortization). 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, which equates to $85,000 per year in each of the next five years. Amortization was $26,000 in each of the sixteen weeks ended September 21, 2010 and September 22, 2009.

10

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE A — ACCOUNTING POLICIES (CONTINUED)

Other intangible assets are tested annually for impairment and whenever an impairment indicator arises.

An analysis of other intangible assets follows:

	September 21, 2010			June 1, 2010
	(in thousands)
Golden Corral initial franchise fees subject to amortization	$	1,280		$	1,280
Less accumulated amortization		(691	)		(665	)
Carrying amount of Golden Corral initial franchise fees subject to amortization		589			615
Current portion of Golden Corral initial franchise fees subject to amortization		(85	)		(85	)
Golden Corral fees not yet subject to amortization		135			135
Golden Corral — total intangible assets		639			665
Other intangible assets subject to amortization — net		18			19
Other intangible assets not yet subject to amortization		34			34
Total other intangible assets	$	691		$	718

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 as incurred to other operating costs.

Revenue Recognition

Revenue from restaurant operations is recognized upon the sale of products as they are sold to customers. All sales revenue is recorded on a net basis, which excludes sales tax collected from being reported as sales revenue and sales tax remitted from being reported as a cost. 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 certain percentages of sales volumes generated in 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, which ordinarily occurs upon the execution of the license agreement, in consideration of the Company’s services to that time.

Revenue from the sale of gift cards is deferred for recognition until the gift card is redeemed by the cardholder, or when the probability is remote that the cardholder will demand full performance by the Company and there is no legal obligation to remit the value of the unredeemed card under applicable state escheatment statutes.

11

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE A — ACCOUNTING POLICIES (CONTINUED)

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 as incurred to other operating costs:

	Sixteen weeks ended
	September 21, 2010		September 22, 2009
	(in thousands)
Big Boy	$	548	$	14
Golden Corral		—		—
	$	548	$	14

Benefit Plans

The Company maintains two qualified defined benefit pension plans: the Pension Plan for Operating Unit Hourly Employees (the Hourly Pension Plan) and the Pension Plan for Managers, Office and Commissary Employees (the Salaried Pension Plan). (See Note E — Pension Plans.) Both plans have been amended to comply with the Pension Protection Act of 2006 (PPA) and the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act), and have been further amended for technical corrections promulgated by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA) and guidance on the HEART Act provided by the Internal Revenue Service.

Benefits under both plans are based on years-of-service and other factors. The Company’s funding policy is to contribute at least the minimum annual amount sufficient to satisfy legal funding requirements plus additional discretionary tax deductible amounts that may be deemed advisable, even when no minimum funding is required. 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.

The Hourly Pension Plan covers hourly restaurant employees. The Hourly Pension Plan was amended on July 1, 2009 to freeze all future accruals for credited service after August 31, 2009. The Hourly Pension Plan had previously been closed to all hourly paid restaurant employees that were hired after December 31, 1998. Hourly restaurant employees hired January 1, 1999 or after have been eligible to participate in the Frisch’s Restaurants, Inc. Hourly Employees 401(k) Savings Plan (the Hourly Savings Plan), a defined contribution plan that provided a 40 percent match by the Company on the first ten percent of earnings deferred by the participants. The Company’s match had vested on a scale based on length of service that reached 100 percent after four years of service. The Hourly Savings Plan was amended effective September 1, 2009 to provide for immediate vesting along with a 100 percent match from the Company on the first three percent of earnings deferred by participants. All hourly restaurant employees are now eligible to participate in the Hourly Savings Plan, regardless of when hired.

The Salaried Pension Plan covers restaurant management, office and commissary employees (salaried employees). The Salaried Pension Plan was amended on July 1, 2009 to close entry into the plan to employees hired after June 30, 2009. Salaried employees hired before June 30, 2009 continue to participate in the Salaried Pension Plan and are credited with normal benefits for years of service. Salaried employees are automatically enrolled, unless otherwise elected, in the Frisch’s Employee 401(k) Savings Plan (the Salaried Savings Plan), a defined contribution plan. The Salaried Savings Plan provides immediate vesting under two different Company matching schedules. Employees who are participants in the Salaried Pension Plan (hired before June 30, 2009) may continue to defer up to 25 percent of their compensation under the Salaried Savings Plan, with the Company contributing a ten percent match on the first eighteen percent deferred. Beginning September 1, 2009, salaried employees hired after June 30, 2009 receive a 100 percent match from the Company on the first three percent of compensation deferred.

12

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE A — ACCOUNTING POLICIES (CONTINUED)

The executive officers of the Company and certain other “highly compensated employees” (HCE’s) are disqualified from participation in the Salaried Savings Plan. A non-qualified savings plan — Frisch’s Executive Savings Plan (FESP) — provides a means by which the HCE’s may continue to defer a portion of their compensation. FESP allows deferrals of up to 25 percent of a participant’s compensation into a choice of mutual funds or common stock of the Company. Matching contributions are added to the first ten percent of salary deferred at a rate of ten percent for deferrals into mutual funds, while a fifteen percent match is added to deferrals into the Company’s common stock. HCE’s hired after June 30, 2009 receive a 100 percent matching contribution from the Company on the first three percent of compensation deferred into either mutual funds or common stock.

Although the Company owns the mutual funds of the FESP until the retirement of the participants, the funds are invested at the direction of the participants. FESP assets are the principal component of “Other long-term assets” in the consolidated balance sheet. The common stock is a “phantom investment” that may be paid in actual shares or in cash upon retirement of the participant. The FESP liability to the participants is included in “Deferred compensation and other” long term obligations in the consolidated balance sheet.

The Company also maintains an unfunded non-qualified Supplemental Executive Retirement Plan (SERP) that was originally intended to provide a supplemental retirement benefit to the HCE’s whose benefits under the Salaried Pension Plan were reduced when their compensation exceeded Internal Revenue Code imposed limitations or when elective salary deferrals were made to FESP. The SERP was amended effective January 1, 2000 to exclude any benefit accruals after December 31, 1999 (interest continues to accrue) and to close entry into the plan by any HCE hired after December 31, 1999.

Effective January 1, 2000, a Nondeferred Cash Balance Plan was adopted to provide comparable retirement type benefits to the HCE’s in lieu of future accruals under the Salaried Pension Plan and the SERP. The comparable benefit amount is determined each year and converted to a lump sum (reported as W-2 compensation) from which taxes are withheld and the net amount is deposited into the HCE’s individual trust account (see Note E — Pension Plans).

Self-Insurance

The Company self-insures its Ohio workers’ compensation claims up to $300,000 per claim. Initial self-insurance liabilities are accrued based on prior claims history, including an amount developed for incurred but unreported claims. Management performs a comprehensive review each fiscal quarter and adjusts the self-insurance liabilities as deemed appropriate based on claims experience, which continues to benefit from active claims management and post accident drug testing. Self-insurance liabilities were increased $93,000 (charged to expense) and $209,000 respectively, in the sixteen weeks ended September 21, 2010 and September 22, 2009.

Income Taxes

Income taxes are provided on all items included in the consolidated statement of earnings regardless of when such items are reported for tax purposes, which gives rise to deferred income tax assets and liabilities. The provision for income taxes in all periods presented has been computed based on management’s estimate of the effective tax rate for the entire year.

The Internal Revenue Service (IRS) is currently examining the Company’s tax return for the year ending June 2, 2009 (fiscal year 2009). The most recent examinations concluded by the IRS covered the tax years that ended May 30, 2004 and June 2, 2002, both of which were no-change audits.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts payable and accounts receivable, investments and long-term debt. The carrying values of cash and cash equivalents together with accounts payable and accounts receivable approximate their fair value based on their short-term character. The fair value of long-term debt is disclosed in Note B — Long-Term Debt.

13

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE A — ACCOUNTING POLICIES (CONTINUED)

The Company does not use the fair value option for reporting financial assets and financial liabilities and therefore does not report unrealized gains and losses in the consolidated statement of earnings. Fair value measurements for non-financial assets and non-financial liabilities are used primarily in the impairment analyses of long-lived assets, goodwill and other intangible assets

The Company does not use derivative financial instruments.

Subsequent Events

The Company evaluated all transactions that occurred after September 21, 2010 through the date the financial statements contained herein were issued. The evaluation determined that no material recognizable subsequent events had occurred.

New Accounting Pronouncements

The Company reviewed all significant newly issued accounting pronouncements and concluded that they are either not applicable to the Company’s business or that no material effect is expected on the financial statements as a result of future adoption.

NOTE B — LONG-TERM DEBT

	September 21, 2010				June 1, 2010
	Payable within one year		Payable after one year		Payable within one year		Payable after one year
	(in thousands)
Construction Loan —
Construction Phase	$	—	$	3,000	$	—	$	6,000
Term Loans		6,866		17,291		6,550		15,312
Revolving Loan		—		—		—		—
Stock Repurchase Loan —
Draw Phase		—		—
Term Loans		—		—
2009 Term Loan		979		2,153		968		2,483
	$	7,845	$	22,444	$	7,518	$	23,795

The portion payable after one year matures as follows:

	September 21, 2010		June 1, 2010
	(in thousands)
Period ending in 2012	$	9,555	$	12,254
2013		5,073		5,027
2014		3,483		3,400
2015		2,471		2,052
2016		1,228		1,034
Subsequent to 2016		634		28
	$	22,444	$	23,795

14

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE B — LONG-TERM DEBT (CONTINUED)

The Company has four unsecured loans in place, all with the same lending institution. A single Amended and Restated Loan Agreement (2010 Loan Agreement), under which the Company may not assume or permit to exist any other indebtedness, governs the four loans. The 2010 Loan Agreement amended and restated two prior loan agreements that consisted of a construction draw facility (Construction Loan) and a revolving credit agreement (Revolving Loan), and added a Stock Repurchase Loan. Borrowing under these three credit lines is permitted through April 2012. The 2009 Term Loan was previously governed under the revolving credit agreement.

The Construction Loan is an unsecured draw credit line intended to finance construction and opening and/or the refurbishing of restaurant operations. The 2010 Loan Agreement increased the amount available to be borrowed from $1,000,000 to $15,000,000.

The Construction Loan is subject to an unused commitment fee equal to 0.25 percent of the amount available to be borrowed. Funds borrowed are initially governed as a Construction Phase loan on an interest-only basis. Interest is determined by a pricing matrix that uses changeable basis points, determined by certain of the Company’s financial ratios. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. Prepayment of principal without penalty is permitted at the end of any rate period. Within six months of the completion and opening of each restaurant, the balance outstanding under each loan in the Construction Phase must be converted to a Term Loan, with an amortization period of not less than seven years nor more than twelve years as chosen by the Company. For funds borrowed since September 2007, any Term Loan converted with an initial amortization period of less than twelve years, a one-time option is available during the chosen term to extend the amortization period up to a total of twelve years. Upon conversion to an amortizing Term Loan, the Company may select a fixed interest rate over the chosen term or may choose among various adjustable rate options.

As of September 21, 2010, the aggregate outstanding balance under the Construction Loan was $27,157,000, which consisted of $24,157,000 in Term Loans and $3,000,000 in the Construction Phase awaiting conversion. Since the inception of the Construction Loan (including prior loan agreements), seventeen of the Term Loans ($39,500,000 out of $88,500,000 in original notes) had been retired as of September 21, 2010. All of the outstanding Term Loans are subject to fixed interest rates, the weighted average of which is 5.68 percent, all of which are being repaid in 84 equal monthly installments of principal and interest aggregating $712,000, expiring in various periods currently ranging from January 2011 through September 2017. Prepayments of Term Loans initiated prior to September 2009 are permissible upon payment of sizeable prepayment fees and other amounts. For Term Loans initiated after September 2009, the Company has the option at the time of conversion to include a small premium over the otherwise applicable fixed interest rate in exchange for the right to prepay in whole or in part at any time without incurring a prepayment fee.

The $3,000,000 balance in the Construction Phase as of September 21, 2010 was borrowed under two separate draws ($2,000,000 in May 2010 and $1,000,000 in September 2010), both of which are currently subject to variable interest rates of 1.9% or lower. If the 2010 Loan Agreement is not renewed by April 2012, any outstanding amount in the Construction Phase that has not been converted into a Term Loan shall mature and be payable in full at that time.

The Revolving Loan provides an unsecured credit line that allows for borrowing of up to $5,000,000 to fund temporary working capital needs. Amounts repaid may be re-borrowed so long as the amount outstanding does not at any time exceed $5,000,000. The Revolving Loan, none of which was outstanding as of September 21, 2010, will mature and be payable in full in April 2012, unless it is renewed sooner. It is subject to a 30 consecutive day out-of-debt period each fiscal year. Interest is determined by the same pricing matrix used for loans in the Construction Phase as described above under the Construction Loan. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. The loan is subject to a 0.25 percent unused commitment fee.

15

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE B — LONG-TERM DEBT (CONTINUED)

The Stock Repurchase Loan is an unsecured draw credit line intended to finance repurchases of the Company’s common stock, under which up to $10,000,000 may be borrowed. Amounts drawn are on an interest-only basis for six months (Draw Phase). Interest is determined by the same pricing matrix used for loans in the Construction Phase as described above under the Construction Loan. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. Prepayment of principal without penalty is permitted at the end of any rate period during the Draw Phase. The balance outstanding must be converted semi-annually to a Term Loan amortized over seven years. The Stock Repurchase Loan is not subject to an unused commitment fee.

The 2009 Term Loan originated in September 2009 when $4,000,000 was borrowed to fund the acquisition of five Big Boy restaurants from the landlord of the facilities. The 2009 Term Loan requires 48 equal monthly installments of $89,000 including principal and interest at a fixed 3.47 percent rate. The final payment of the unsecured loan is due October 21, 2013.

The 2010 Loan Agreement contains covenants relating to cash flows, debt levels, lease expense, asset dispositions, investments and restrictions on pledging certain restaurant operating assets. The Company was in compliance with all loan covenants as of September 21, 2010. The 2010 Loan Agreement does not require compensating balances.

The fair values of the fixed rate Term Loans within the Construction Loan as shown in the following table are based on fixed rates that would have been available at September 21, 2010 if the loans could have been refinanced with terms similar to the remaining terms under the present Term Loans. The carrying value of substantially all other long-term debt approximates its fair value.

	Carrying Value		Fair Value
Terms Loans within the Construction Loan	$	24,157,000	$	25,440,000

NOTE C — LEASED PROPERTY

Although the Company’s policy is to own the property on which it operates restaurants, the Company occupies certain of its restaurants pursuant to lease agreements. As of September 21, 2010, 22 restaurants were in operation on non-owned premises, of which 21 were classified as operating leases and one was a capital lease. Most of the operating leases are for fifteen or twenty years and contain multiple five year renewal options. Seven of the operating leases are for Golden Corral operations. Big Boy restaurants are operated under the terms of fourteen operating leases and one capital lease.

Office space is occupied under an operating lease that expires during fiscal year 2013, with renewal options available through fiscal year 2023. A purchase option is available in 2023 to acquire the office property in fee simple estate.

Rent expense under operating leases for the sixteen weeks ended:

	September 21, 2010		September 22, 2009
	(in thousands)
Minimum rentals	$	519	$	685
Contingent payments		—		10
	$	519	$	695

16

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE C — LEASED PROPERTY (CONTINUED)

The capital lease used in Big Boy operations is for land on which a Big Boy restaurant opened for business in July 2010. Under the terms of the lease, the Company is required to purchase the land in fee simple estate after the tenth year. Delivery and other equipment is held under capitalized leases expiring during various periods extending into fiscal year 2019.

An analysis of the capitalized leased property is shown in the following table. Amortization of capitalized delivery and other equipment is based on the straight-line method over the primary terms of the leases.

	Asset balances at
	September 21, 2010			June 1, 2010
	(in thousands)
Restaurant property (land)	$	825		$	825
Delivery and other equipment		1,505			1,334
Less accumulated amortization		(1,049	)		(995	)
	$	1,281		$	1,164

Future minimum lease payments under capitalized leases and operating leases in the table below. The column for capitalized leases includes the requirement to acquire land, currently leased by the Company, in fee simple estate after the tenth year of the lease.

Period ending September 21,	Capitalized leases			Operating leases
	(in thousands)
2011	$	344		$	1,640
2012		200			1,577
2013		93			1,505
2014		93			1,517
2015		93			1,368
2016 to 2027		1,363			11,551
Total		2,186		$	19,158
Amount representing interest		(837	)
Present value of obligations		1,349
Portion due within one-year		(252	)
Long-term obligations	$	1,097

NOTE D — CAPITAL STOCK

The Company has two equity compensation plans adopted respectively in 1993 and 2003.

2003 Stock Option and Incentive Plan

Shareholders approved the 2003 Stock Option and Incentive Plan ((the 2003 Incentive Plan) or (Plan)) in October 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 is in full compliance with the American Jobs Creation Act of 2004 and Section 409A of the Internal Revenue Code (IRC).

17

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE D — CAPITAL STOCK (CONTINUED)

No award shall be granted under the Plan on or after October 6, 2013 or after such earlier date on which the Board of Directors may terminate the Plan. The maximum number of shares of common stock that the Plan may issue is 800,000, subject, however, to proportionate and equitable adjustments determined by the Compensation Committee of the Board of Directors (the Committee) as deemed necessary following the event of any equity restructuring that may occur.

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 members of the Board of Directors are eligible to be selected to participate in the Plan. Participation is based on selection by the Committee. Although there is no limitation on the number of participants in the Plan, approximately 40 persons have historically participated. However, the Committee limited stock options granted in June 2010 to ten executive officers of the Company (not including the President and Chief Executive Officer).

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 ten 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. The option price and obligatory withholding taxes may be paid pursuant to a “cashless” exercise/sale procedure involving the simultaneous sale by a broker of shares that are covered by the option.

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 ten years.

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 21, 2010, options to purchase 330,250 shares had been cumulatively granted under the Plan, including 23,000 that belong to the President and Chief Executive Officer (CEO). The outstanding options belonging to the CEO that were granted before October 2009 (20,000) vested six months from the date of grant. Beginning in October 2009, options granted to the CEO pursuant to the terms of his employment (3,000) will vest one year from the date of the grant. Outstanding options granted to other key employees vest in three equal annual installments, while outstanding options granted to non-employee members of the Board of Directors vest one year from the date of grant. The Committee may, in its sole discretion, accelerate the vesting of all or any part of any awards held by a terminated participant, excluding, however, any participant who is terminated for cause.

As of September 21, 2010, 526,084 shares remain available to be optioned, including 56,334 shares granted that were subsequently forfeited, which are again available to be granted in accordance with the “Re-use of Shares” provision of the Plan. There were 259,504 options outstanding as of September 21, 2010.

18

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE D — CAPITAL STOCK (CONTINUED)

No other awards — stock appreciation rights, restricted stock award, unrestricted stock award or performance award—had been granted under the 2003 Incentive Plan as of September 21, 2010. On October 6, 2010, restricted stock awards, equivalent to $40,000 in shares of the Company’s common stock, were granted to non-employee members of the Board of Directors. Each award will vest in full on October 6, 2011. Also on October 6, 2010, in accordance with the terms of his employment agreement, the CEO was granted options to purchase 3,000 shares of common stock.

1993 Stock Option Plan

The 1993 Stock Option Plan was not affected by the adoption of the 2003 Stock Option and Incentive Plan. The 1993 Stock Option Plan authorized the grant of stock options for up to 562,432 shares (as adjusted for subsequent changes in capitalization from the original authorization of 500,000 shares) of the common stock of the Company for a ten-year period that began 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. The Amended Plan is in compliance with the American Jobs Creation Act of 2004 and section 409A of the Internal Revenue Code.

Options to purchase 556,228 shares were cumulatively granted under the 1993 Stock Option Plan and the Amended Plan before granting authority expired October 4, 2008. As of September 21, 2010, 205,336 shares granted remain outstanding, including 150,000 that belong to the CEO.

All outstanding options under the 1993 Stock Option Plan and the Amended Plan were granted at fair market value and expire ten years from the date of grant. Final expirations will occur in June 2014. Outstanding options to the CEO vested after six months, while options granted to non-employee members of the Board of Directors vested after one year. Outstanding options granted to other key employees vested in three equal annual installments.

Outstanding and Exercisable Options

The changes in outstanding and exercisable options involving both the 1993 Stock Option Plan and the 2003 Stock Option and Incentive Plan are shown below as of September 21, 2010:

	No. of shares			Weighted avg. price per share		Weighted avg. Remaining Contractual Term			Aggregate Intrinsic Value (in thousands)
Outstanding at beginning of year		503,069		$	21.64
Granted		40,000		$	20.55
Exercised		(63,478	)	$	10.62
Forfeited or expired		(14,751	)	$	25.13
Outstanding at end of quarter		464,840		$	22.94		5.16	years	$	346
Exercisable at end of quarter		366,007		$	22.70		4.09	years	$	346

The intrinsic value of stock options exercised during the sixteen weeks ended September 21, 2010 and September 22, 2009 was $612,000 and $36,000, respectively. Options exercised during the sixteen weeks ended September 21, 2010 included 61,478 by the CEO, the intrinsic value of which was $595,000.

19

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE D — CAPITAL STOCK (CONTINUED)

Stock options outstanding and exercisable as of September 21, 2010 for the 1993 Stock Option Plan and the 2003 Stock Option and Incentive Plan are shown below:

Range of Exercise Prices per Share	No. of shares		Weighted average price per share		Weighted average remaining life in years
Outstanding:
$13.43 to $18.00		49,167	$	13.80		0.81 years
$18.01 to $24.20		209,085	$	20.60		5.11 years
$24.21 to $31.40		206,588	$	27.49		6.26 years
$13.43 to $31.40		464,840	$	22.94		5.16 years
Exercisable:
$13.43 to $18.00		49,167	$	13.80		0.81 years
$18.01 to $24.20		162,585	$	20.49		3.86 years
$24.21 to $31.40		154,255	$	27.88		5.38 years
$13.43 to $31.40		366,007	$	22.70		4.09 years

Employee Stock Purchase Plan

Shareholders approved the Employee Stock Option Plan (elsewhere referred to as Employee Stock Purchase Plan) in 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 measured at 85 percent of the fair market value of shares at the beginning of the offering period or at the end of the offering period, whichever is lower. 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, 2010 (latest available data), 149,995 shares had been cumulatively purchased through the Plan. Shares purchased through the Plan are held by the Plan’s custodian until withdrawn or distributed. As of April 30, 2010, the custodian held 39,651 shares on behalf of employees.

Frisch’s Executive Savings Plan

Common shares totaling 58,492 (as adjusted for subsequent changes in capitalization from the original authorization of 50,000 shares) were reserved for issuance under the non-qualified Frisch’s Executive Savings Plan (FESP) (see Benefit Plans in Note A — Accounting Policies) when it was established in 1993. As of September 21, 2010, 39,249 shares remained in the FESP reserve, including 10,436 shares allocated but not issued to participants.

There are no other outstanding options, warrants or rights.

Treasury Stock

As of September 21, 2010, the Company’s treasury held 2,518,765 shares of the Company’s common stock. Most of the shares were acquired through a modified “Dutch Auction” self-tender offer in 1997, and in a series of intermittent repurchase programs that began in 1998.

The current repurchase program was authorized by the Board of Directors on January 6, 2010, under which the Company may repurchase up to 500,000 shares of its common stock in the open market or through block trades over a two year period that will expire January 6, 2012. Since its inception, the Company has acquired 105,038 shares at a cost of $2,127,000, which includes 58,570 shares acquired during the quarter ended September 21, 2010 at a cost of $1,118,000.

20

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

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.

Sixteen weeks ended	Basic earnings per share				Stock equivalents		Diluted earnings per share
	Weighted average shares outstanding		EPS				Weighted average shares outstanding		EPS
September 21, 2010		5,093,981	$	.54		28,295		5,122,276	$	.54
September 22, 2009		5,102,482		.59		121,497		5,223,979		.57

Stock options to purchase 295,000 shares in the quarter ended September 21, 2010 and 90,000 in the quarter ended September 22, 2009 were excluded from the calculation because the effect was anti-dilutive.

Share-Based Payment (Compensation Cost)

The fair value of stock options granted is recognized as compensation cost in the consolidated statement of earnings on a straight-line basis over the vesting period of the award. Compensation costs arising from stock options granted are shown below:

	September 21, 2010			September 22, 2009
	(in thousands)
Charged to administrative and advertising expense	$	95		$	81
Tax benefit		(32	)		(28	)
Total share-based compensation cost, net of tax	$	63		$	53
Effect on basic earnings per share	$	.01		$	.01
Effect on diluted earnings per share	$	01		$	.01

The fair value of each option award is estimated on the date of the grant using the modified Black-Scholes option pricing model, developed with the following assumptions:

	September 21, 2010		September 22, 2009
Weighted average fair value of options	$	5.49	$	8.14
Dividend yield		2.5%		1.9%
Expected volatility		32%		32%
Risk free interest rate		2.72%		3.31%
Expected lives		6.0 years		6.0 years

Dividend yield is based on the Company’s current dividend yield, which is considered the best estimate of projected dividend yields within the contractual life of the options. Expected volatility is based on the historical volatility of the Company’s stock using the month end closing price of the previous six years. Risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected life of the option. Expected life represents the period of time the options are expected to be outstanding.

21

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE D — CAPITAL STOCK (CONTINUED)

As of September 21, 2010, there was $416,000 of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted average period of 1.17 years.

Compensation cost is also recognized in connection with the Company’s Employee Stock Purchase Plan (described elsewhere in Note D — Capital Stock). Compensation costs related to the Employee Stock Purchase Plan are determined at the end of each semi-annual offering period — October 31 and April 30.

NOTE E — PENSION PLANS

As discussed more fully under Benefit Plans in Note A — Accounting Policies, the Company sponsors two qualified defined benefit plans (DB Plans) plus an unfunded non-qualified Supplemental Executive Retirement Plan (SERP) for “highly compensated employees” (HCE’s). Net periodic pension cost for all three retirement plans is summarized below:

	Sixteen weeks ended
Net periodic pension cost components	September 21, 2010			September 22, 2009
	(in thousands)
Service cost	$	592		$	466
Interest cost		582			561
Expected return on plan assets		(520	)		(484	)
Amortization of prior service cost		3			3
Recognized net actuarial loss		274			165
Settlement loss		95			51
Curtailment cost		—			49
Net periodic pension cost	$	1,026		$	811
Weighted average discount rate		5.50	%		6.50	%
Weighted average rate of compensation increase		4.00	%		4.00	%
Weighted average expected long-term rate of return on plan assets		7.50	%		8.00	%

Net periodic pension cost for fiscal year 2011 is currently expected in the range of $3,300,000 to 3,400,000. Net periodic pension cost in fiscal year 2010 was $2,818,000. Most of the expected increase is attributable to lowering the discount rate from 6.5 percent to 5.5 percent, which has added approximately $500,000 to pension cost in fiscal year 2011. Another $100,000 is included in the increased pension costs in fiscal year 2011 because of lowering the long-term rate of return on plan assets from 8.0 percent to 7.5 percent.

Contributions to the DB Plans for fiscal year 2011 are currently anticipated at a level of $1,600,000, which includes $50,000 that had been contributed before September 21, 2010. Obligations to participants in the SERP are satisfied in the form of a lump sum distribution upon retirement of the participants.

Future funding of the DB Plans largely depends upon the performance of investments that are held in trusts that have been established for the plans. Equity securities comprise 70 percent of the target allocation of the plans’ assets. Although the market for equity securities made a significant rebound in fiscal year 2010, which has continued into the first quarter of fiscal year 2011, the market declines experienced in fiscal year 2009 continue to adversely affect funding, and will likely require the continued recognition of significantly higher net periodic pension costs than had been incurred prior to the market declines in fiscal year 2009.

22

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE E — PENSION PLANS (CONTINUED)

Underfunded pension obligations included in “Long-Term Obligations” in the consolidated balance sheet represent projected benefit obligations in excess of the fair value of plan assets. The change in underfunded status is re-measured at the end of each fiscal year, effected through an increase or decrease in “Accumulated other comprehensive loss” in the equity section of the consolidated balance sheet. The projected benefit obligation, which includes a projection of future salary increases, was measured at June 1, 2010 using a weighted average discount rate of 5.5 percent. The projected benefit obligation will increase approximately $975,000 for each decrease of 25 basis points in the discount rate.

Compensation expense (not included in the net periodic pension cost described above) relating to the Non Deferred Cash Balance Plan (see Benefit Plans in Note A — Accounting Policies) was $157,000 and $76,000 respectively, during the sixteen weeks ended September 21, 2010 and September 22, 2009. Although the contribution to the Non-Deferred Cash Balance Plan for fiscal year 2011 has yet to be determined, it is expected to be higher than fiscal year 2010. In addition, the President and Chief Executive Officer (CEO) has an employment agreement that calls for additional annual contributions to be made to the trust established for the benefit of the CEO under the Non Deferred Cash Balance Plan (see Benefit Plans in Note A — Accounting Policies) when certain levels of annual pretax earnings are achieved.

The Company also sponsors two 401(k) defined contribution plans and a non-qualified Executive Savings Plan (FESP) for certain HCE’s who have been disqualified from participation in the 401(k) plans (see Benefit Plans in Note A — Accounting Policies). In the sixteen weeks ended September 21, 2010 and September 22, 2009, matching contributions to the 401(k) plans amounted to $68,000 and $50,000 respectively. Matching contributions to the Executive Savings Plan were $10,000 in each of the sixteen week periods ended September 21, 2010 and September 22, 2009.

The Company does not sponsor post retirement health care benefits.

NOTE F — COMPREHENSIVE INCOME

	September 21, 2010			September 22, 2009
	(in thousands)
Net earnings	$	2,741		$	2,988
Amortization of amounts included in net periodic pension cost		372			268
Tax effect		(127	)		(91	)
Comprehensive income	$	2,986		$	3,165

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Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE G — 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 21, 2010			September 22, 2009
	(in thousands)
Sales
Big Boy	$	60,006		$	57,453
Golden Corral		32,920			31,529
	$	92,926		$	88,982
Earnings before income taxes
Big Boy	$	5,939		$	5,545
Opening expense		(548	)		(14	)
Total Big Boy		5,391			5,531
Golden Corral		1,241			1,391
Opening expense		—			—
Total Golden Corral		1,241			1,391
Total restaurant level profit		6,632			6,922
Administrative expense		(2,526	)		(2,390	)
Franchise fees and other revenue		399			392
Operating profit		4,505			4,924
Interest expense		(474	)		(531	)
Earnings before income taxes	$	4,031		$	4,393
Depreciation and amortization
Big Boy	$	2,791		$	2,519
Golden Corral		1,771			1,702
	$	4,562		$	4,221
Capital expenditures
Big Boy	$	6,163		$	6,884
Golden Corral		350			625
	$	6,513		$	7,509
	As of
	September 21, 2010			June 1, 2010
Identifiable assets
Big Boy	$	120,561		$	116,486
Golden Corral		71,016			72,767
	$	191,577		$	189,253

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Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE H — COMMITMENTS AND CONTINGENCIES

Commitments

In the ordinary course of business, purchase commitments are entered into with certain of the Company’s suppliers. Most of these agreements are typically for periods of one year or less in duration; however, longer term agreements are also in place. Future minimum payments under these arrangements are $8,392,000, $5,147,000, $3,382,000 and $56,000 respectively, for the periods ending September 21, 2011, 2012, 2013 and 2014. These agreements are intended to secure favorable pricing while ensuring availability of desirable products. Management does not believe such agreements expose the Company to any significant risk.

Litigation

The Company is subject to various claims and suits that arise from time to time in the ordinary course of business. Management does not presently believe that the resolution of any claims currently outstanding will materially affect the Company’s earnings, cash flows or financial position. Exposure to loss contingencies from pending or threatened litigation is continually evaluated by management, which believes that adequate provisions for losses are already included in the consolidated financial statements.

Other Contingencies

The Company self-insures a significant portion of expected losses under its workers’ compensation program in the state of Ohio. Insurance coverage is purchased from an insurance company for individual claims that may exceed $300,000. (See Self Insurance in Note A – Accounting Policies.) Insurance coverage is maintained for various levels of casualty and general and product liability.

Outstanding letters of credit maintained by the Company totaled $126,500 as of September 21, 2010.

As of September 21, 2010, the Company operated 22 restaurants on non-owned properties. (See Note C – Leased Properties.) Certain of the leases provide for contingent rental payments, typically based on a percentage of the leased restaurant’s sales in excess of a fixed amount.

The Company is secondarily liable for the performance of a ground lease that has been assigned to a third party. The annual obligation of the lease approximates $48,000 through 2020. Since there is no reason to believe that the third party will default, no provision has been made in the consolidated financial statements for amounts that would be payable by the Company. In addition, the Company has the right to re-assign the lease in the event of the third party’s default.

NOTE I — RELATED PARTY TRANSACTIONS

The Chief Executive Officer of the Company (Craig F. Maier), who also serves as a director of the Company, owns a Big Boy restaurant licensed to him by the Company. Another officer and director of the Company (Karen F. Maier) is a part owner of a Big Boy restaurant that is licensed to her and her siblings (excluding Craig F. Maier). Until her death in September 2009, Blanche F. Maier (the mother of Craig F. Maier and Karen F. Maier) served as a director of the Company. Certain other family members of Mrs. Maier’s also own a licensed Big Boy restaurant.

These three restaurants are operated by the Company and they 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 $1,491,000 and $1,477,000 respectively, during the sixteen weeks ended September 21, 2010 and September 22, 2009. The amount owed to the Company from these restaurants was $71,000 and $85,000 respectively, as of September 21, 2010 and June 1, 2010. Amounts due are generally settled within 28 days of billing.

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

25

Frisch’s Restaurants, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

First Quarter Fiscal 2011, Ended September 21, 2010

NOTE I — RELATED PARTY TRANSACTIONS (CONTINUED)

The Chairman of the Board of Directors from 1970 to 2005 (Jack C. Maier, deceased February 2005) had an employment agreement that contained a provision for deferred compensation. The agreement provided that upon its expiration or upon the Chairman’s retirement, disability, death or other termination of employment, the Company would become obligated to pay the Chairman or his survivors for each of the next ten years the amount of $214,050, adjusted annually to reflect 50 percent of the annual percentage change in the Consumer Price Index (CPI). Monthly payments of $17,838 to the Chairman’s widow (Blanche F. Maier), a director of the Company until her death in September 2009, commenced in March 2005. On March 1, 2010, the monthly payment was increased to $19,006 from $18,753 in accordance with the CPI provision of the agreement. The present value of the long-term portion of the obligation to Mrs. Maier’s Estate, approximating $727,000, is included in the consolidated balance sheet under the caption “Deferred compensation and other.” The present value of the current portion of the obligation, approximating $180,000, is included in current liabilities in the consolidated balance sheet.

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ITEM 2. MANAGEMENT’S DISCUSSION and ANALYSIS of FINANCIAL CONDITION and RESULTS of OPERATIONS

SAFE HARBOR STATEMENT under the PRIVATE SECURITIES LITIGATION REFORM ACT of 1995

Forward-looking statements are included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A). Such statements may generally express management’s expectations with respect to its plans, or its assumptions and beliefs concerning future developments and their potential effect on the Company. There can be no assurances that such expectations will be met or that future developments will not conflict with management’s current beliefs and assumptions, which are inherently subject to risks and other uncertainties. Factors that could cause actual results and performance to differ materially from anticipated results that may be expressed or implied in forward-looking statements are included in, but not limited to, the discussion in this Form 10-Q under Part II, Item 1A. “Risk Factors.”

Sentences that contain words such as “should,” “would,” “could,” “may,” “plan(s),” “anticipate(s),” “project(s),” “believe(s),” “will,” “expect(s),” “estimate(s),” “intend(s),” “continue(s),” “assumption(s),” “goal(s),” “target” and similar words (or derivatives thereof) are generally used to distinguish “forward-looking statements” from historical or present facts.

All forward-looking information in this MD&A is provided by the Company pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of all risk factors. Except as may be required by law, the Company disclaims any obligation to update any of the “forward-looking statements” that may be contained in this MD&A.

This MD&A should be read in conjunction with the consolidated financial statements. The Company has no off-balance sheet arrangements other than operating leases that are entered from time to time in the ordinary course of business. The Company does not use special purpose entities.

CORPORATE OVERVIEW

The operations of Frisch’s Restaurants, Inc. and Subsidiaries (Company) consist of two reportable segments within the restaurant industry: full service family-style “Big Boy” restaurants and grill buffet-style “Golden Corral” restaurants. As of September 21, 2010, 93 Big Boy restaurants and 35 Golden Corral restaurants were owned and operated by the Company, located in various regions of Ohio, Kentucky and Indiana, plus smaller regions in Pennsylvania and West Virginia.

The Company’s First Quarter of Fiscal 2011 consists of the sixteen weeks ended September 21, 2010. It compares with the sixteen weeks ended September 22, 2009, which constituted the First Quarter of Fiscal 2010. 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. References to Fiscal 2011 refer to the 52 week year that will end on May 31, 2011. References to Fiscal 2010 refer to the 52 week year that ended June 1, 2010.

Net earnings for the First Quarter of Fiscal 2011 were $2,741,000, or diluted earnings per share (EPS) of $.54, compared with $2,988,000, or diluted EPS of $.57 in the First Quarter of Fiscal 2010.

Significant factors accounting for the change:

• Consolidated restaurant sales increased $3,994,000.

- Total Big Boy sales increased $2,553,000, the result of more restaurants in operation

- Big Boy same store sales decreased 0.8 percent

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- Golden Corral same store sales increased 4.4 percent

• Opening expenses (all for the Big Boy segment) were $534,000 higher.

• As a percentage of sales, consolidated food cost was 34.4 percent in the First Quarter of Fiscal 2011, up from 34.0 percent in the First Quarter of Fiscal 2010.

• As a percentage of sales, consolidated payroll and related cost was 33.1 percent in the First Quarter of Fiscal 2011, down from 33.4 percent in the First Quarter of Fiscal 2010. The decrease was largely achieved in the Golden Corral segment.

RESULTS of OPERATIONS

Sales

The Company’s sales are primarily generated through the operation of Big Boy restaurants and Golden Corral restaurants. Big Boy sales also include wholesale sales from the Company’s commissary to restaurants licensed to other Big Boy operators and the sale of Big Boy’s signature brand tartar sauce to grocery stores. Same store sales comparisons are a key metric that management uses in the operation of the business. Same store sales are affected by changes in customer counts and menu price increases. Changes in sales also occur as new restaurants are opened and older restaurants are closed. Below is the detail of consolidated restaurant sales:

	1st Quarter
	2011		2010
	(in thousands)
Big Boy restaurants	$	57,001	$	54,517
Wholesale sales to licensees		2,733		2,672
Wholesale sales to grocery stores		272		264
Total Big Boy sales		60,006		57,453
Golden Corral restaurants		32,920		31,529
Consolidated restaurant sales	$	92,926	$	88,982

The Company operated 93 Big Boy restaurants as of September 21, 2010. The count of 93 includes the following openings and closings since the beginning of Fiscal 2010 (June 2009), when 88 Big Boy restaurants were in operation:

September 2009 — closed original unit in Lawrenceburg, Indiana (Cincinnati market)

September 2009 — replacement unit opened in Lawrenceburg, Indiana (Cincinnati market) — no sales interruption

November 2009 — new unit opened near Hamilton, Ohio (Cincinnati market)

April 2010 — new unit opened in Independence, Kentucky (Cincinnati market)

May 2010 — new unit opened in Shepherdsville, Kentucky (Louisville market)

July 2010 — new unit opened in Louisville, Kentucky

August 2010 — new unit opened in Beavercreek, Ohio (Dayton market)

Two Big Boy restaurant buildings were under construction as of September 21, 2010. Openings are scheduled for October 2010 in Elizabethtown, Kentucky (Louisville market) and December 2010 in Heath, Ohio (Columbus market). Besides these two openings, no other new Big Boy restaurants are planned to open before the end of Fiscal 2011.

Big Boy same store sales decreased 0.8 percent during the First Quarter of Fiscal 2011. The same store decrease reflects a 2.5 percent decline in customer counts, which was offset by three menu price increases of 1.0 percent, implemented respectively in September 2009, February 2010 and September 2010. Another increase will likely be implemented in February 2011.

Golden Corral same store sales increased 4.4 percent in the First Quarter of Fiscal 2011. The same store sales increase reflects a 3.3 percent increase in customer counts. The Golden Corral same store sales comparisons include average menu price increases of 0.5 percent implemented in February 2010 and 1.3 percent that went into effect in

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September 2010. The Company currently operates 35 Golden Corral restaurants, all of which are included in the same store sales comparison. No new Golden Corral restaurants are currently being planned.

The Payment Card Industry Security Standards Council has a data security standard with which all organizations that process card payments must comply. The standard is intended to prevent credit card fraud by focusing on the internal controls of processing and storage of such data. While the Company has adhered to this standard for some time, a new requirement recently introduced by MasterCard requires an independent audit of these controls. This independent audit must certify compliance with Payment Card Industry Security Standards no later than July 2011. A finding of non-compliance could restrict the Company’s ability to accept credit cards as a form of payment. The Company has established an action plan to ensure that any issues that may arise as a result of the independent audit are foreseen and corrected in a timely fashion.

Gross Profit

Gross profit for the Big Boy segment includes wholesale sales and cost of wholesale sales. Gross profit differs from restaurant level profit discussed in Note G (Segment Information) to the consolidated financial statements, as advertising expense is charged against restaurant level profit. Gross profit for both operating segments is shown below:

	1st Quarter
	2011		2010
	(in thousands)
Big Boy gross profit	$	6,835	$	6,912
Golden Corral gross profit		2,083		2,074
Total gross profit	$	8,918	$	8,986

The operating percentages shown in the following table are percentages of total sales, including Big Boy wholesale sales. The table supplements the discussion that follows, which addresses cost of sales for both the Big Boy and Golden Corral reporting segments, including food cost, payroll and other operating costs.

	1st Quarter 2011						1st Quarter 2010
	Total		Big Boy		GC		Total		Big Boy		GC
Sales		100.0		100.0		100.0		100.0		100.0		100.0
Food and Paper		34.4		32.5		37.9		34.0		32.3		37.2
Payroll and Related		33.1		35.8		28.2		33.4		35.8		28.9
Other Operating Costs (including opening costs)		22.9		20.3		27.5		22.5		19.8		27.3
Gross Profit		9.6		11.4		6.4		10.1		12.1		6.6

Food cost began to rise in the last half of Fiscal 2010, and has continued to rise during the First Quarter of Fiscal 2011. Higher prices were experienced during the summer of 2010 for beef, pork, poultry and dairy products, driven by much higher costs for corn, the principal feed ingredient for cattle, hogs and poultry. These elevated prices are expected to continue well into 2011. 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, and because steak is featured daily on the buffet line. Although the Company does not use financial instruments as a hedge against changes in commodity pricing, purchase contracts for some commodities may contain contractual provisions that limit the price the Company will pay.

Food safety poses a major risk to the Company. Management rigorously emphasizes and enforces established food safety policies in all of the Company’s restaurants and in its commissary and food manufacturing plant. To ensure continued safety, management has initiated an assessment of its current food handling, processing and storage practices that are used at the commissary and food manufacturing plant. The assessment is being conducted near the end of October 2010.

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Despite the improvement in payroll and related costs as seen in the above table, the Company’s operating margins continue to be adversely affected by mandated increases in the minimum wage.

• In Ohio, where more than two-thirds of the Company’s payroll costs are incurred, the minimum wage for non-tipped employees was increased 33 percent from $5.15 per hour to $6.85 per hour beginning January 1, 2007. It was increased to $7.00 per hour on January 1, 2008 and to $7.30 per hour on January 1, 2009. While there was no increase on January 1, 2010, non-tipped employees will begin receiving a minimum of $7.40 per hour on January 1, 2011.

• The Ohio minimum wage for tipped employees increased 61 percent from $2.13 per hour to $3.43 per hour beginning January 1, 2007. It was increased to $3.50 per hour on January 1, 2008 and to $3.65 per hour on January 1, 2009. While there was no increase on January 1, 2010, tipped employees will begin receiving a minimum of $3.70 per hour on January 1, 2011.

• Federal minimum wage statutes currently apply to substantially all other (non-Ohio) employees. The federal minimum wage for non-tipped employees increased from $5.15 per hour to $5.85 per hour in July 2007. It was increased to $6.55 per hour in July 2008 and to $7.25 per hour in July 2009. The rate for tipped employees (non-Ohio) was not affected by the federal legislation, remaining at $2.13 per hour.

The effects of paying the required higher hourly rates of pay have been effectively countered through the combination of higher menu prices charged to customers and reductions in the number of scheduled labor hours. Additional reductions in hours will be implemented if necessary to offset the effect of the scheduled increase in Ohio’s minimum wage on January 1, 2011. The reduction in the payroll and related cost percentage shown for the Golden Corral segment was achieved by holding steady the number of hours worked, despite higher customer counts that resulted in a 4.4 percent same store sales increase.

Despite the savings that come from reductions in hours worked and higher menu prices charged to customers, other factors add to payroll and related costs. These factors include higher costs associated with benefit programs offered by the Company, including significant increases in medical insurance premiums and pension related costs.

Medical insurance premiums escalated by almost 15 percent for the plan year that ran January 1, 2009 through December 31, 2009, with premiums rising to over $9,400,000. Premium cost for the plan year that runs January 1, 2010 through December 31, 2010 is expected to be 6.5 percent higher, with total premium payments likely to exceed $10,000,000. The Company typically absorbs 75 to 80 percent of the cost, with employees contributing the remainder. The medical insurance program for the 2011 plan year is currently being negotiated. Management continues to evaluate federal health care reform legislation that was enacted in March 2010 to determine the future short and long term effects on the Company.

Net periodic pension cost was $1,026,000 and $811,000 respectively, in the First Quarter of Fiscal 2011 and the First Quarter of 2010. Net periodic pension cost for Fiscal 2011 is currently expected to be in the range of $3,300,000 to $3,400,000. The final total in Fiscal 2010 was $2,818,000. The increase over Fiscal 2010 is primarily due to lowering actuarial rate assumptions used in Fiscal 2011. The discount rate was lowered from 6.5 percent to 5.5 percent and the expected return on plan assets was lowered from 8.0 percent to 7.5 percent. Net periodic pension cost for both the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010 are much higher than historical levels. The higher costs continue to be driven by significant market losses in equity securities in Fiscal 2009, which greatly lowered the fair value of plan assets in the pension trusts. This loss is amortized through pension cost and it has created a lower credit for the expected return on plan assets that flows through pension cost.

Pension accounting standards require the overfunded or underfunded status of defined benefit pension plans to be recognized as an asset or liability in the Company’s consolidated balance sheet. The Company’s underfunded status as of September 21, 2010 — $11,352,000 — was measured as the difference between plan assets at fair value and projected benefit obligations. Significant reductions in the Company’s equity, net of tax, were required over the last two fiscal years to establish the underfunded pension obligation shown on the consolidated balance sheet. The reductions in equity were effected through charges to “Accumulated other comprehensive loss.”

Payroll and related expenses are also affected by adjustments that result each quarter when management performs a comprehensive review of the Company’s self-insured Ohio workers’ compensation program and adjusts its reserves as deemed appropriate based on claims experience. Increases to the self-insured reserves result in charges to payroll and related expenses, while decreases to the reserves result in credits to payroll and related expenses. Charges of

30

$93,000 and $208,000 respectively, were recorded in payroll and related expenses during the First Quarter of Fiscal 2011 and the First Quarter of Fiscal 2010.

Other operating costs include occupancy costs such as maintenance, rent, depreciation, property tax, insurance and utilities, plus costs relating to field supervision, accounting and payroll preparation costs, franchise fees for Golden Corral restaurants, new restaurant opening costs and many other restaurant operating expenses. Opening costs were $548,000 for Big Boy restaurants and zero for Golden Corral restaurants during the First Quarter of Fiscal 2011. During the First Quarter of Fiscal 2010, opening costs were $14,000 for Big Boy and zero for Golden Corral. As most of the other typical expenses charged to other operating costs tend to be more fixed in nature, the percentages shown in the above table can be greatly affected by changes in same store levels. The increase in Golden Corral from 27.3 percent to 27.5 percent is the result of higher depreciation charges and higher costs incurred for maintaining buildings and equipment. Other operating costs for the Golden Corral segment are a much higher percentage of sales than Big Boy because the physical facility of a Golden Corral restaurant is almost twice as large as a Big Boy restaurant and Golden Corral sales volumes have generally remained well below management’s original long-term expectations for the concept.

Operating Profit

To arrive at the measure of operating profit, administrative and advertising expense is subtracted from gross profit, while franchise fees and other revenue is added to it. Gains and losses from the sale of real property (if any) are then respectively added or subtracted. Charges for impairment of assets (if any) are also subtracted from gross profit to arrive at the measure of operating profit.

Administrative and advertising expense increased $358,000 during the First Quarter of Fiscal 2011, eight percent higher than the First Quarter of Fiscal 2010. Most of the increase is attributable to higher advertising expense associated with higher sales levels. Stock based compensation expense included in administrative and advertising expense was $95,000 during the First Quarter of Fiscal 2011, and was $81,000 in the First Quarter of Fiscal 2010.

Revenue from franchise fees is based on sales volumes generated by Big Boy restaurants that are licensed to other operators. The fees are based principally on percentages of sales and are recorded on the accrual method as earned. As of September 21, 2010, 25 Big Boy restaurants were licensed to other operators and paying franchise fees to the Company, a reduction of one restaurant from a year ago. Other revenue also includes certain other fees from restaurants licensed to others along with minor amounts of rent and investment income.

There were no sales of real property during the First Quarter of Fiscal 2011 or the First Quarter of Fiscal 2010. No charges for impairment of assets were recorded during either the First Quarter of Fiscal 2011 or the First Quarter of Fiscal 2010.

Interest Expense

Interest expense in the First Quarter of Fiscal 2011 was $57,000 lower than the First Quarter of Fiscal 2010, a reduction of 10.8 percent. The reduction is the result of lower debt levels than a year ago, a lower weighted average interest rate on fixed rate financing, and lower variable rates on debt awaiting conversion to a fixed rate term loan.

Income Tax Expense

Income tax expense as a percentage of pretax earnings was estimated at 32 percent in the First Quarter of Fiscal 2011 and in the First Quarter of Fiscal 2010. These rates have been kept consistently low through the Company’s use of tax credits, especially the federal credit allowed for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips. These tax credits are generally less favorable to the effective tax rate when pretax income increases.

LIQUIDITY and CAPITAL RESOURCES

Sources of Funds

Food sales to restaurant customers provide the Company’s principal source of cash. The funds from sales are immediately available for the Company’s use, as substantially all sales to restaurant customers are received in currency or are settled by debit or credit cards. The primary source of cash provided by operating activities is net earnings plus depreciation and impairment of assets, if any. Other sources of cash may include borrowing against credit lines, proceeds received when stock options are exercised 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.

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Working Capital Practices

The Company has historically maintained a strategic negative working capital position, which is a common practice in the restaurant industry. As significant cash flows are consistently provided by operations, and credit lines remain 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 shown in the following table.

Aggregated Information about Contractual Obligations and Commercial Commitments

September 21, 2010

		Payments due by period (in thousands)
		Total		year 1		year 2		year 3		year 4		year 5		more than 5 years
	Long-Term Debt	$	30,289	$	7,845	$	9,555	$	5,073	$	3,483	$	2,471	$	1,862
	Interest on Long-Term Debt (estimated)		3,851		1,405		1,027		666		408		217		128
	Rent Due under Capital Lease Obligations		2,186		344		200		93		93		93		1,363
1	Rent Due under Operating Leases		19,158		1,640		1,577		1,505		1,517		1,368		11,551
2	Unconditional Purchase Obligations		16,977		8,392		5,147		3,382		56		—		—
3	Other Long-Term Obligations		1,036		230		233		235		238		100		—
	Total Contractual Cash Obligations	$	73,497	$	19,856	$	17,739	$	10,954	$	5,795	$	4,249	$	14,904

1 Operating leases may include option periods yet to be exercised, when exercise is determined to be reasonably assured.

2 Primarily consists of commitments for certain food and beverage items, plus capital projects including commitments to purchase real property, if any. Does not include agreements that are cancellable without penalty.

3 Deferred compensation liability (undiscounted).

The working capital deficit was $19,095,000 as of September 21, 2010. The deficit was $18,152,000 as of June 1, 2010.

A financing package of unsecured credit facilities has been in place for many years with the same lending institution, which was amended and restated in October 2010 (2010 Loan Agreement). The 2010 Loan Agreement increased the amount available to be borrowed to finance construction to $15,000,000, up $14,000,000 from the $1,000,000 that had been remaining available from the previous renewal cycle. The 2010 Loan Agreement also renewed the $5,000,000 Revolving Loan, which provides financing to fund temporary working capital if needed (unused as of September 21, 2010). In addition, the 2010 Loan Agreement provides a new $10,000,000 Stock Repurchase Loan. All funds provided by these credit facilities are readily available to be borrowed through April 2012. The Company is in full compliance with the covenants contained in the 2010 Loan Agreement.

Operating Activities

Operating cash flows were $8,678,000 in the First Quarter of Fiscal 2011, which compares with $7,517,000 in the First Quarter of Fiscal 2010. The increase is primarily attributable to normal changes in assets and liabilities such as prepaid expenses, inventories, accounts payable and prepaid, accrued and deferred income taxes, all of which can and do often fluctuate widely from quarter to quarter. The Small Business Jobs Act, federal tax legislation that was signed into law in September 2010, extended bonus depreciation through December 31, 2010, which had previously expired December 31, 2009. For tax purposes, bonus depreciation allows the Company to immediately write-off 50 percent of the cost of capital expenditures. The legislation allowed the Company to reduce its first quarter tax deposit by over $1,000,000, when compared to last year’s first quarter tax deposit.

Management measures cash flows from the operation of the business by simply adding to net earnings certain non-cash expenses such as depreciation, losses (net of any gains) on dispositions of assets, charges for impairment of assets (if any), stock based compensation cost and pension costs in excess of plan contributions. The result of this

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approach is reflected as a sub-total in the consolidated statement of cash flows: $8,417,000 in the First Quarter of Fiscal 2011 and $8,047,000 in the First Quarter of Fiscal 2010.

Contributions to the two defined benefit pension plans sponsored by the Company are currently anticipated at a level of $1,600,000 in Fiscal 2011, including $50,000 that was contributed during the First Quarter of Fiscal 2011.

Investing Activities

Capital spending is the principal component of investing activities. Capital spending was $6,513,000 during the First Quarter of Fiscal 2011, which consisted of $6,163,000 for Big Boy restaurants and $350,000 for Golden Corral restaurants. These capital expenditures consisted of new restaurant construction, plus on-going reinvestments in existing restaurants, which included remodelings, routine equipment replacements and other maintenance capital outlays.

There were no proceeds from the disposition of real property during the First Quarter of Fiscal 2011 or the First Quarter of Fiscal 2010.

Financing Activities

Borrowing against credit lines amounted to $1,000,000 during the First Quarter of Fiscal 2011. Scheduled and other payments of long-term debt and capital lease obligations amounted to $2,082,000 during the First Quarter of Fiscal 2011. Borrowing is expected to exceed scheduled payments over the remainder of Fiscal 2011. Regular quarterly cash dividends paid to shareholders during the First Quarter of Fiscal 2011 totaled $658,000. In addition, the Board of Directors declared a $.15 per share dividend (two cents per share or 15 percent higher than the previous $.13 per share dividend) on September 8, 2010 that totaled $760,000 when it was paid on October 8, 2010. The Company expects to continue its 50 year practice of paying regular quarterly cash dividends.

During the First Quarter of Fiscal 2011, 63,478 shares of the Company’s common stock were re-issued pursuant to the exercise of stock options, yielding proceeds to the Company of approximately $674,000. The President and Chief Executive Officer (CEO) acquired 61,478 of the shares that were re-issued from the Company’s treasury. As of September 21, 2010, 464,840 shares granted under the Company’s two stock option plans remain outstanding, including 366,007 fully vested shares at a weighted average exercise price per share of $22.70. The closing price of the Company’s stock on September 21, 2010 was $19.74. As of September 21, 2010, approximately 526,000 shares remained available to be granted under the 2003 Stock Option and Incentive Plan, which is net of 40,000 options that were granted to executive officers (excluding the CEO) in June 2010. On October 6, 2010, 12,036 shares of restricted stock were granted to non-employee members of the Board of Directors and an option to acquire 3,000 shares was granted to the CEO pursuant to the terms of his employment agreement.

The current stock repurchase program was authorized by the Board of Directors on January 6, 2010, which authorized the Company to repurchase up to 500,000 shares of its common stock in the open market or through block trades over a two year period that will expire January 6, 2012. Since its inception, the Company has acquired 105,038 shares at a cost of $2,127,000, which includes 58,570 shares acquired during the First Quarter of Fiscal 2011 at a cost of $1,118,000.

Other Information

Two new Big Boy restaurants opened for business during the First Quarter of Fiscal 2011. Two Big Boy restaurant buildings were under construction as of September 21, 2010. The first one opened for business on October 11, 2010 and the second one is currently on schedule to open in December 2010. Construction of one other new Big Boy restaurant is currently scheduled to begin in March 2011, which will open in the following fiscal year. Four of these five restaurants are on land acquired in fee simple estate in Fiscal 2010. One of the restaurants that opened during the First Quarter of Fiscal 2011 was built on land that the Company leases. As of September 21, 2010, any contracts that existed to acquire sites for future development were cancellable at the Company’s sole discretion while due diligence is being pursued under the inspection period provisions of the contracts.

Including land and land improvements, the cash required to build and equip each new Big Boy restaurant currently ranges from $2,500,000 to $3,400,000. The actual cost depends greatly on the price paid for the land and the cost of land improvements, which can vary widely from location to location, and whether the land is purchased or leased. Costs also depend on whether the new restaurant is constructed using plans for the original 2001 building prototype (5,700 square feet with seating for 172 guests) or its smaller adaptation, the 2010 building prototype (5,000 square feet with seating for 146 guests), which is used in smaller trade areas. The smaller 2010 building prototype was used to design all five new Big Boy restaurants discussed in the preceding paragraph.

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Approximately one-fifth of the Big Boy restaurants are routinely renovated or decoratively updated each year. The renovations not only refresh and upgrade interior finishes, but are also designed to synchronize the interiors and exteriors of older restaurants with newly constructed restaurants. The current average cost to renovate a typical older restaurant ranges from $140,000 to $160,000. Restaurants opened with the 2001 building prototype also receive updates when they reach five years of age, the cost of which currently approximates $120,000. The Fiscal 2011 remodeling budget for Big Boy restaurants is $2,100,000. In addition, certain high-volume Big Boy restaurants are regularly evaluated to determine whether their kitchens should be redesigned for increased efficiencies and whether an expansion of the dining room is warranted. A typical kitchen redesign costs approximately $125,000 while a dining room expansion can cost up to $750,000. One Big Boy restaurant is scheduled to receive a dining room expansion in Fiscal 2011.

Although the Company possesses development rights to open up to twelve more Golden Corrals through December 31, 2011, no further development is currently planned and there is no active search for sites on which to build. Three Golden Corral restaurant locations that were determined to have an impairment of long-lived assets at the end of Fiscal 2008 remained in operation as of September 21, 2010. Nine Golden Corral restaurants are scheduled to be renovated in Fiscal 2011. In addition, carpeting is typically replaced in each restaurant every two and a half years on average. The Fiscal 2011 remodeling budget, including carpeting costs, is approximately $1,675,000.

Although part of the Company’s strategic plan entails owning the land on which it builds new restaurants, it is sometimes necessary to enter ground leases to obtain desirable land on which to build. Seven of the 35 Golden Corral restaurants now in operation and four Big Boy restaurants opened since 2003 were built on leased land. As of September 21, 2010, 22 restaurants were in operation on non-owned premises, 21 of which are being accounted for as operating leases with one treated as a capital lease.

APPLICATION of CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to use estimates and assumptions to measure certain items that affect the amounts reported in the financial statements and accompanying footnotes. These judgments are based on knowledge and experience about past and current events, and assumptions about future events. Accounting estimates can and do change as new events occur and additional information becomes available. Actual results may differ markedly from current judgment.

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 management’s most difficult, subjective or complex judgments. The Company believes the following to be its critical accounting policies.

Self Insurance

The Company self-insures a significant portion of expected losses from its workers’ compensation program in the state of Ohio. The Company purchases coverage from an insurance company for individual claims in excess of $300,000. Reserves for claims expense include a provision for incurred but not reported claims. Each quarter, management reviews claims valued by its third party administrator (TPA) and then applies experience and judgment to determine the most probable future value of incurred claims. As the TPA submits additional new information, management reviews it in light of historical claims for similar injuries, probability of settlement, and any other facts that might provide guidance in determining ultimate value of individual claims. Unexpected changes in any of these or other factors could result in actual costs differing materially from initial projections or values currently carried in the self-insurance reserves.

Pension Plans

Pension plan accounting requires rate assumptions for future compensation increases and the long-term investment return on plan assets. A discount rate is also applied to the calculations of net periodic pension cost and projected benefit obligations. An informal committee consisting of executives from the Company’s Finance Department and the Human Resources Department, with guidance provided by an actuarial consulting firm, develops these assumptions each year. The consulting firm also provides services in calculating estimated future obligations and net periodic pension cost.

To determine the long-term rate of return on plan assets, the committee reviews the target asset allocation of plan assets and determines the expected return on each asset class. The expected returns for each asset class are

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combined and rounded to the nearest 25 basis points to determine the overall expected rate of return on assets. The committee determines the discount rate by looking at the projected future benefit payments and matching them to spot rates based on yields of high-grade corporate bonds. A single discount rate is selected and rounded to the nearest 25 basis points, which produces the same present value as the various spot rates.

Assets of the pension plans are targeted to be invested 70 percent in equity securities, as these investments have historically provided the greatest long-term returns. Poor performance in equity securities markets can significantly lower the market values of the plans’ investment portfolios, which, in turn, can result in a) material increases in future funding requirements, b) much higher net periodic pension costs to be recognized in future years, and c) the plans reaching underfunded status requiring the Company’s equity to be reduced.

Long-Lived Assets

Long-lived assets include property and equipment, goodwill and other intangible assets. Property and equipment typically approximates 85 to 90 percent of the Company’s total assets. Judgments and estimates are used to determine the carrying value of long-lived assets. This includes the assignment of appropriate useful lives, which affect depreciation and amortization expense. Capitalization policies are continually monitored to assure they remain appropriate.

Management considers a history of cash flow losses on a restaurant-by-restaurant basis to be the primary indicator of potential impairment. Carrying values of property and equipment are tested for impairment at least annually, and whenever events or circumstances indicate that the carrying value may be impaired. When undiscounted expected future cash flows are less than carrying values, an impairment loss is recognized for the amount by which carrying values exceed the greater of the net present value of the future cash flow stream or a floor value. Future cash flows can be difficult to predict. Changing neighborhood demographics and economic conditions, and many other factors may influence operating performance, which affect cash flows. Floor values are generally determined by opinions of value provided by real estate brokers and/or management’s judgment as developed through its experience in disposing of property.

Sometimes it becomes necessary to cease operating a certain restaurant due to poor operating performance. The ultimate loss can be significantly different from the original impairment charge, particularly if the eventual market price received from the disposition of the property differs materially from initial estimates of floor values.

Acquired goodwill and other intangible assets are tested for impairment annually or whenever an impairment indicator arises.

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ITEM 3. QUANTITATIVE and QUALITATIVE DISCLOSURES about MARKET RISKS

The Company has no significant market risk exposure to interest rate changes as substantially all of its debt is currently financed with fixed interest rates, or will be converted to fixed rate term loans in the near term. The Company does not currently use derivative financial instruments to manage its exposure to changes in interest rates. Any cash equivalents maintained by the Company have original maturities of three months or less. The Company does not use foreign currency.

Operations in the Big Boy segment are vertically integrated, utilizing centralized purchasing and food preparation, provided through the Company’s commissary and food manufacturing plant. Management believes the commissary operation ensures uniform product quality and safety, timeliness of distribution to restaurants and creates efficiencies that ultimately result in lower food and supply costs. The commissary operation does not supply Golden Corral restaurants.

Commodity pricing affects the cost of many of the Company’s food products. Commodity pricing can be extremely volatile, affected by many factors outside the Company’s control, including import and export restrictions, the influence of currency markets relative to the U.S. dollar, supply versus demand, production levels and the impact that adverse weather conditions may have on crop yields. Certain commodities purchased by the commissary, 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. These contracts are normally for periods of one year or less but may have longer terms if favorable long-term pricing becomes available. Food supplies are generally plentiful and may be obtained from any number of suppliers, which mitigates the Company’s overall commodity cost risk. Quality, timeliness of deliveries and price are the principal determinants of source. The Company does not use financial instruments as a hedge against changes in commodity pricing.

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

ITEM 4. CONTROLS and PROCEDURES

a) Effectiveness of Disclosure Controls and Procedures. The Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 240.15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of September 21, 2010, the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that the Company files under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) would be accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.

b) Changes in Internal Control over Financial Reporting. There were no significant changes in the Company’s internal control over financial reporting (as defined in Exchange Act rules 240.13a-15 or 240.15d-15) during the fiscal quarter ended September 21, 2010 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 subject to various claims and suits that arise from time to time in the ordinary course of business. Management does not presently believe that the resolution of any claims currently outstanding will result in a material effect on the Company’s earnings, cash flows or financial position. Exposure to loss contingencies from pending or threatened litigation is continually evaluated by management, which believes that adequate provisions for losses have been included in the consolidated financial statements.

ITEM 1A. RISK FACTORS

The Company continually takes reasonable preventive measures to reduce its risks and uncertainties. However, the nature of some risks and uncertainties provides little, if any, control to the Company. The materialization of any of the operational and other 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 any affected restaurant(s) with an impairment of assets charge taken against earnings, and could adversely affect the price at which shares of the Company’s common stock trade.

In addition to operating results, other factors can influence the volatility and price at which the Company’s common stock trades. The Company’s stock is thinly traded on the NYSE Amex market. Thinly traded stocks can be susceptible to sudden, rapid declines in price, especially when holders of large blocks of shares seek exit positions. Rebalancing of stock indices in which the Company’s shares may be placed can also influence the price of the Company’s stock.

Food Safety

Food safety is the most significant risk to any company that operates in the restaurant industry. It is the focus of increased government regulatory initiatives at the local, state and federal levels. 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, 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 be certified in ServSafe Training and are required to be re-certified every five years.

Failure to protect the Company’s food supplies could result in food borne illnesses and/or injuries to customers. Publicity of such events in the past has caused irreparable damages to the reputations of certain operators in the restaurant industry. If any of the Company’s customers become ill from consuming the Company’s products, the affected restaurants may be forced to close. An instance of food contamination originating at the commissary operation could have far-reaching effects, as the contamination would affect substantially all Big Boy restaurants.

Economic Factors

Economic recessions can negatively influence discretionary consumer spending in restaurants and result in lower customer counts, as consumers become more price conscious, tending to conserve their cash as unemployment and economic uncertainty mount. The effects of higher gasoline prices can also negatively affect discretionary consumer spending in restaurants. Increasing costs for energy affect profit margins in many other ways. Petroleum based material is often used to package certain products for distribution. In addition, suppliers may add surcharges for fuel to their invoices. The cost to transport products from the commissary to restaurant operations will rise with each increase in fuel prices. Higher costs for electricity and natural gas result in much higher costs to heat and cool restaurant facilities and to refrigerate and cook food.

Inflationary pressure, particularly on food costs, labor costs (especially associated with increases in the minimum wage) and health care benefits, can negatively affect the operation of the business. Shortages of qualified labor are

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sometimes experienced in certain local economies. In addition, the loss of a key executive could pose a significant adverse effect on the Company.

Future funding requirements of the two qualified defined benefit pension plans that are sponsored by the Company largely depend upon the performance of investments that are held in trusts that have been established for the plans. Equity securities comprise 70 percent of the target allocation of the plans’ assets. Poor performance in equity securities markets can significantly lower the market values of the plans’ investment portfolios, which, in turn, can result in a) material increases in future funding requirements, b) much higher net periodic pension costs to be recognized in future years, and c) the plans reaching underfunded status, requiring reductions in the Company’s equity to be recognized.

Competition

The restaurant industry is highly competitive and many of the Company’s competitors are substantially larger and possess greater financial resources than does the Company. Both the Big Boy and Golden Corral operating segments have numerous competitors, including national chains, regional and local chains, as well as independent operators. None of these competitors, in the opinion of the Company’s management, presently dominates the family-style sector of the restaurant industry in any of the Company’s operating markets. That could change at any time due to:

• changes in economic conditions

• changes in demographics in neighborhoods where the Company operates restaurants

• changes in consumer perceptions of value, food and service quality

• changes in consumer preferences, particularly based on concerns with nutritional content of food on the Company’s menus

• new competitors that enter the Company’s markets from time to time

• increased competition from supermarkets and other non-traditional competitors

• increased competition for quality sites on which to build restaurants

Development Plans and Financing Arrangements

The Company’s business strategy and development plans also face risks and uncertainties. These include the inherent risk of poor quality decisions in the selection of sites on which to build restaurants, the ever rising cost and availability of desirable sites and increasingly rigorous requirements on the part of local governments to obtain various permits and licenses. Other factors that could impede plans to increase the number of restaurants operated by the Company include saturation in existing markets and limitations on borrowing capacity and the effects of higher interest rates.

In addition, the Company’s loan agreements include financial and other covenants with which compliance must be met or exceeded each quarter. Failure to meet these or other restrictions could result in an event of default under which the lender may accelerate the outstanding loan balances and declare them immediately due and payable.

The Supply and Cost of Food

Food purchases can be subject to significant price fluctuations that can considerably affect results of operations from quarter to quarter and year to year. Price fluctuations can be due to seasonality or any number of factors. The market for beef, in particular, continues to be highly volatile due in part to import and export restrictions. Beef costs can also be affected by bio-fuel initiatives and other factors that influence the cost to feed cattle. The Company depends on timely deliveries of perishable food and supplies. Any interruption in the continuing supply would harm the Company’s operations.

Litigation and Negative Publicity

Employees, customers and other parties bring various claims against the Company from time to time. Defending such claims can distract the attention of senior level management away from the operation of the business. Legal proceedings can result in significant adverse effects to the Company’s financial condition, especially if other potentially responsible parties lack the financial wherewithal to satisfy a judgment against them or the Company’s insurance coverage proves to be inadequate. Also, see “Legal proceedings” elsewhere in Part II, Item 1of this Form 10-Q.

In addition, negative publicity associated with legal claims against the Company, whether or not such complaints are valid, could harm the Company’s reputation, which, in turn, could adversely affect operating results. The Company’s reputation and brand can also be harmed by operational problems experienced by other operators of Big Boy and Golden Corral restaurants, especially from issues relating to food safety. Other negative publicity such as

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that arising from rumor and innuendo spread though social internet media and other sources can create adverse effects on the Company’s results of operations.

Governmental and Other Rules and Regulations

Governmental and other rules and regulations can pose significant risks to the Company. Examples include:

• General exposure to penalties or other costs associated with the potential for violations of numerous government regulations, including:

^¡ immigration (I-9) and labor regulations regarding the employment of minors

^¡ minimum wage and overtime requirements

^¡ employment discrimination and sexual harassment

^¡ health, sanitation and safety regulations

^¡ facility issues, such as meeting the requirements of the Americans with Disabilities Act of 1990 or liabilities to remediate unknown environmental conditions

• changes in existing environmental regulations that would significantly add to the Company’s costs

• any future imposition by OSHA of costly ergonomics regulations on workplace safety

• climate change legislation that adversely affects the cost of energy

• legislative changes affecting labor law, especially increases in the federal or state minimum wage requirements

• compliance with recently enacted legislation to reform the U.S. health care system could adversely affect the Company’s health care costs

• nutritional labeling on menus — compliance with recently enacted legislation requiring nutritional labeling on menus and the Company’s reliance on the accuracy on information obtained from third party suppliers

• nutritional labeling on menus — potential effect on sales and profitability if customers’ buying habits change

• legislation or court rulings that result in changes to tax codes that are adverse to the Company

• changes in accounting standards imposed by governmental regulators or private governing bodies could adversely affect the Company’s financial position

• estimates used in preparing financial statements and the inherent risk that future events affecting them may cause actual results to differ markedly

Catastrophic Events

Unforeseen catastrophic events could disrupt the Company’s operations, the operations of the Company’s suppliers and the lives of the Company’s customers. The Big Boy segment’s dependency on the commissary operation in particular could present an extensive disruption of products to restaurants should a catastrophe impair its ability to operate. Examples of catastrophic events include but are not limited to:

• adverse winter weather conditions

• natural disasters such as earthquakes or tornadoes

• fires or explosions

• widespread power outages

• criminal acts, including bomb threats, robberies, hostage taking, kidnapping and other violent crimes

• acts of terrorists or acts of war

• civil disturbances and boycotts

• disease transmitted across borders that may enter the food supply chain

Technology and Information Systems

The strategic nature of technology and information systems is of vital importance to the operations of the Company. Events that could pose threats to the operation of the business include:

• catastrophic failure of certain information systems

• difficulties that may arise in maintaining existing systems

• difficulties that may occur in the implementation of and transition to new systems

• financial stability of technology vendors to support software over the long-term

In addition, security violations such as unauthorized access to information systems, including breaches on third party servers, could result in the loss of proprietary data. Should consumer privacy be compromised, consumer confidence may be lost, which could adversely affect sales and profitability.

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ITEM 2. UNREGISTERED SALES of EQUITY SECURITIES and USE of PROCEEDS

(c) Issuer Purchases of Equity Securities

In January 2010, the Board of Directors authorized a program to repurchase up to 500,000 shares of the Company’s common stock in the open market or through block trades over a two year time frame that expires January 6, 2012. The following table shows information pertaining to the Company’s repurchases of its common stock during the first quarter of fiscal year 2011, which ended September 21, 2010:

Period	Total Number Of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
June 2, 2010 to June 29, 2010		—	$	—		—		—
June 30, 2010 to July 27, 2010		—	$	—		—		—
July 28, 2010 to Aug. 24, 2010		3,001	$	19.04		3,001		450,531
Aug. 25, 2010 to Sep. 21, 2010		55,569	$	19.09		55,569		394,962
Total		58,570	$	19.09		58,570		394,962

ITEM 3. DEFAULTS upon SENIOR SECURITIES

Not applicable.

ITEM 4. (Removed and Reserved)

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

Articles of Incorporation and Bylaws

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

3.2 Amended and Restated Code of Regulations effective October 2, 2006, which was filed as Exhibit A to the Registrant’s Definitive Proxy Statement dated September 1, 2006, is incorporated herein by reference.

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Material Contracts

10.1 Amended and Restated Loan Agreement between the Registrant and US Bank NA dated October 21, 2010, is filed herewith.

10.2 Agreement to Purchase Stock between the Registrant and Frisch West Chester, Inc. dated June 1, 1988, which was filed as Exhibit 10 (f) to the Registrant’s Form 10-Q Quarterly Report for September 19, 2006, is incorporated herein by reference.

10.3 Agreement to Purchase Stock between the Registrant and Frisch Hamilton West, Inc. dated February 19, 1988, which was filed as Exhibit 10 (g) to the Registrant’s Form 10-Q Quarterly Report for September 19, 2006, is incorporated herein by reference.

Material Contracts — Compensatory Plans or Agreements

10.50 Employment Agreement between the Registrant and Craig F. Maier effective June 3, 2009, dated April 10, 2009, which was filed as Exhibit 10.16 to the Registrant’s Form 10-Q Quarterly Report for March 10, 2009, is incorporated herein by reference.

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

10.52 Amendment No. 1 to Frisch’s Executive Retirement Plan (SERP) (see Exhibit 10.51 above) effective January 1, 2000, which was filed as Exhibit 10 (k) to the Registrant’s form 10-K Annual Report for 2003, is incorporated herein by reference.

10.53 2003 Stock Option and Incentive Plan, which was filed as Appendix A to the Registrant’s Proxy Statement dated August 28, 2003, is incorporated herein by reference.

10.54 Amendment # 1 to the 2003 Stock Option and Incentive Plan (see Exhibit 10.53 above) effective September 26, 2006, which was filed as Exhibit 10 (q) to the Registrant’s Form 10-Q Quarterly Report for September 19, 2006, is incorporated herein by reference.

10.55 Amendments to the 2003 Stock Option and Incentive Plan (see Exhibits 10.53 and 10.54 above) effective December 19, 2006, which was filed as Exhibit 99.2 to the Registrant’s Form 8-K Current Report dated December 19, 2006, is incorporated herein by reference.

10.56 Amendments to the 2003 Stock Option and Incentive Plan (see Exhibits 10.53, 10.54 and 10.55 above) adopted October 7, 2008, which was filed as Exhibit 10.21 to the Registrant’s Form 10-Q Quarterly Report for September 23, 2008, is incorporated herein by reference.

10.57 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 (see Exhibits 10.53, 10.54, 10.55 and 10.56 above), which was filed as Exhibits 99.1 and 99.2 to the Registrant’s Form 8-K dated October 1, 2004, are incorporated herein by reference.

10.58 Restricted Stock Agreement to be used for restricted stock granted to non-employee members of the Board of Directors under the Registrant’s 2003 Stock option and Incentive Plan (see Exhibits 10.53, 10.54, 10.55 and 10.56 above), is filed herewith.

10.59 Amended and Restated 1993 Stock Option Plan, which was filed as Exhibit A to the Registrant’s Proxy Statement dated September 9, 1998, is incorporated herein by reference.

10.60 Amendments to the Amended and Restated 1993 Stock Option Plan (see Exhibit 10.59 above) effective December 19, 2006, which was filed as Exhibit 99.1 to the registrant’s Form 8-K Current Report dated December 19, 2006, is incorporated herein by reference.

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10.61 Employee Stock Option Plan, which was filed as Exhibit B to the Registrant’s Proxy Statement dated September 9, 1998, is incorporated herein by reference.

10.62 Change of Control Agreement between the Registrant and Craig F. Maier dated November 21, 1989, which was filed as Exhibit (10) (g) to the Registrant’s Form 10-K Annual Report for 1990, is incorporated herein by reference. It was also filed as Exhibit 99.2 to the Registrant’s Form 8-K Current Report dated March 17, 2006, which is also incorporated herein by reference.

10.63 First Amendment to Change of Control Agreement (see Exhibit 10.62 above) between the Registrant and Craig F. Maier dated March 17, 2006, which was filed as Exhibit 99.1 to the Registrant’s Form 8-K Current Report dated March 17, 2006, is incorporated herein by reference.

10.64 Second Amendment to Change of Control Agreement (see Exhibits 10.62 and 10.63 above) between the Registrant and Craig F. Maier dated October 7, 2008, which was filed as Exhibit 99.1 to the Registrant’s Form 8-K Current Report dated October 7, 2008, is incorporated herein by reference.

10.65 Frisch’s Nondeferred Cash Balance Plan effective January 1, 2000, which was 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 the Plan’s Trustee and Donald H. Walker (Grantor). There are identical Trust Agreements between the Plan’s Trustee and Craig F. Maier, Rinzy J. Nocero, Karen F. Maier, Michael E. Conner, Louie Sharalaya, Lindon C. Kelley, Michael R. Everett, James I. Horwitz, William L. Harvey and certain other “highly compensated employees” (Grantors).

10.66 First Amendment (to be effective June 6, 2006) to the Frisch’s Nondeferred Cash Balance Plan that went into effect January 1, 2000 (see Exhibit 10.65 above), which was filed as Exhibit 99.2 to the Registrant’s Form 8-K Current Report dated June 7, 2006, is incorporated herein by reference.

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

10.68 Non-Qualified Deferred Compensation Plan, Basic Plan Document to Restate Frisch’s Executive Savings Plan (FESP) effective December 31, 2008, (also see Exhibits 10.69, 10.70 and 10.71), which was filed as Exhibit 10.32 to the Registrant’s Form 10-Q Quarterly Report for September 23, 2008, is incorporated herein by reference.

10.69 Non-Qualified Deferred Compensation Plan, Adoption Agreement (Stock) to Restate Frisch’s Executive Savings Plan (FESP) effective December 31, 2008, (also see Exhibits 10.68, 10.70 and 10.71), which was filed as Exhibit 10.33 to the Registrant’s Form 10-Q Quarterly Report for September 23, 2008, is incorporated herein by reference.

10.70 Non-Qualified Deferred Compensation Plan, Adoption Agreement (Mutual Funds) to Restate Frisch’s Executive Savings Plan (FESP) effective December 31, 2008, (also see Exhibits 10.68, 10.69 and 10.71), which was filed as Exhibit 10.34 to the Registrant’s Form 10-Q Quarterly Report for September 23, 2008, is incorporated herein by reference.

10.71 Non-Qualified Deferred Compensation Plan, Adoption Agreement to Restate Frisch’s Executive Savings Plan (FESP) effective July 1, 2009 (also see Exhibits 10.68, 10.69 and 10.70), which was filed as Exhibit 10.36 to the Registrant’s Form 10-K Annual Report for 2009, is incorporated herein by reference.

Other Exhibits

14 Code of Ethics for Chief Executive Officer and Financial Professionals, which was filed as Exhibit 14 to the Registrant’s Form 10-K Annual Report for 2003, is incorporated herein by reference.

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

31.1 Certification of Chief Executive Officer pursuant to rule 13a -14(a)/15d – 14(a), is filed herewith.

42

31.2 Certification of Chief Financial Officer pursuant to rule 13a - 14(a)/15d – 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.

43

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 15, 2010
	BY     /s/ Donald H. Walker     Donald H. Walker Vice President and Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

44

EX-10.1

EXHIBIT 10.1

AMENDED AND RESTATED LOAN AGREEMENT

THIS AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”) is made and entered into as of the 21 day of October, 2010 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, and its successors and assigns (the “Bank”), and amends and restates (a) the Second Amended and Restated Loan Agreement [Golden Corral] made and entered into as of October 21, 2009 by and between the Borrower and the Bank, as amended and (b) the Third Amended and Restated Loan Agreement [Revolving and Bullet Loans] made and entered into as of October 21, 2009 by and between the Borrower and the Bank, as amended (collectively the “Prior Loan Agreements”).

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

Exhibit 10.1

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.

(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 (“Capital Leases”), 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.

- 2 -

Exhibit 10.1

(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, 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) Purpose of Loans. Proceeds of the Revolving Loan shall be used to fund temporary working capital needs and general corporate purposes. The Construction Loans shall be used only for the purpose of financing the construction and opening and/or the refurbishing of Golden Corral Restaurants and Big Boy Restaurants (collectively, the “Restaurants”). The Stock Repurchase Loans shall be used only for the purpose of financing the repurchase of Borrower’s shares of stock from its shareholders. The 2009 Term Loan refinanced certain borrowings that were outstanding under the Revolving Loan in 2009. The Revolving Loan, Construction Loans, Stock Repurchase Loans and the 2009 Term Loan are collectively referred to herein as the “Loans”. None of the Loans are nor shall be 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.

- 3 -

Exhibit 10.1

(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 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 Borrower’s 2006 fiscal year end. Federal income tax returns of the Borrower and its Subsidiaries for the Borrower’s 2007 fiscal year end and all years thereafter 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

- 4 -

Exhibit 10.1

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; (iv) as soon as practicable and in any event within ten (10) days of last day of each of the Borrower’s fiscal months, a report providing the number of shares of common stock of the Borrower repurchased by the Borrower during the immediately preceding month and the repurchase price(s) paid for the same; and (v) 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 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, 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 EBITDA information) for each of the Borrower’s Golden Corral Restaurants.

(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

- 5 -

Exhibit 10.1

($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. The Borrower shall cause the Bank to be named as lender loss payee and/or additional insured, as applicable, on its policies of insurance.

(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.

(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 property owned or operated by the Borrower or any of its Subsidiaries (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, 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

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Exhibit 10.1

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 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.

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Exhibit 10.1

(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 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.

(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 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.

(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 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,

- 8 -

Exhibit 10.1

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(l), “property” shall mean those components of the real estate (such as walls, electrical and plumbing) which are removed during a remodeling.

(m) Maximum Annual Lease Expense. The Borrower’s operating lease expense shall not exceed Nine Million Five Hundred Thousand Dollars ($9,500,000) for any immediately preceding 12 month period.

(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 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 and wholesaling food and related products.

(q) 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

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Exhibit 10.1

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.

(r) Deposit Accounts. The Borrower will maintain its primary deposit accounts at the Bank so long as any obligations to the Bank, whether under the Loans or otherwise, remain outstanding.

(s) Acquisitions. The Borrower shall not acquire equity (except for repurchases of Borrower’s stock from Borrower’s shareholders) or assets (except for the acquisition of land and equipment in the ordinary course of business) of any one or more entities or persons during any fiscal year that exceeds One Million Dollars ($1,000,000) in the aggregate.

(t) 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.

(d) Resolutions. The Borrower shall have delivered to the Bank copies of the resolutions of the Borrower’s Board of Directors authorizing (i) the Borrower to repurchase up to 500,000 shares of the common stock of Borrower and (ii) 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.

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Exhibit 10.1

(f) Notes. The Borrower shall have delivered each of (a) the Construction Period Construction Note (as hereinafter defined), (b) the Revolving Note, and (c) the Short-Term Stock Repurchase Note (as hereinafter defined), to the Bank with all blanks appropriately completed and each of the Notes duly executed on behalf of the Borrower. The Construction Notes, the Revolving Note, the Stock Repurchase Notes, the 2009 Term Note, and any other note currently or hereafter issued by the Borrower to the Bank, all as may be amended, restated, supplemented and/or modified from time to time, are referred to herein as the “Notes”.

(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) Commitment Fee. The Borrower shall have paid to the Bank in immediately available funds a $10,000 commitment fee as well as all out-of-pocket costs and expenses of the Bank and its employees (including, without limitation, costs and expenses of legal counsel) incurred by the Bank in entering into this Agreement and preparing the documentation in connection herewith.

(i) Continuing Reimbursement Agreement. The Borrower shall have delivered to the Bank that certain Continuing Reimbursement Agreement for Letters of Credit dated as of even date herewith by and between the Borrower and the Bank, as may be amended, restated, supplemented, or modified from time to time (the “Continuing Reimbursement Agreement”), 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) Construction 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) hereunder, the Bank agrees to make loans to the Borrower in an aggregate amount not to exceed the lesser of (A) One Hundred Six Million Five Hundred Thousand Dollars ($106,500,000) (the “Total Construction

- 11 -

Exhibit 10.1

Loan Commitment Amount”) or (B) the amount necessary to construct and open the Restaurants (collectively, the “Construction Loans”).

The Borrower shall provide the Bank notice of the Borrower’s desire to obtain Construction Loan proceeds for the purpose of constructing and opening any particular Restaurant, which notice shall state the amount of the Construction 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 Construction Loans shall be effectuated by the Bank crediting an account maintained by the Borrower at the Bank. No repayment or prepayment of the Construction Loans shall be reason for any relending or additional lending of proceeds of the Construction Loans to the Borrower, and no Construction Loan proceeds shall be disbursed after April 15, 2012. The outstanding principal balance of each Construction Loan which has not been converted into a Construction Term Loan (as hereinafter defined) in accordance with the next paragraph hereof (such Construction Loans which have not been so converted being collectively referred to herein as “Construction Period Construction Loans”) shall mature and be payable in full on April 15, 2012 (the “Construction Loan Maturity Date”), unless the maturity thereof is accelerated as described herein. As of October 21 2010, as a result of the prior draws by the Borrower under the Construction Loans and prior conversions of Construction Period Construction Loans to Construction Term Loans, of the maximum One Hundred Six Million Five Hundred Thousand Dollars ($106,500,000) Construction Loan facility, (i) Ninety One Million Five Hundred Thousand Dollars ($91,500,000) has been drawn by the Borrower under the Construction Loans and already been converted to Construction Term Loans or currently remains outstanding as Construction Period Construction Loans and (ii) a maximum of Fifteen Million Dollars ($15,000,000) still remains available to be drawn by the Borrower under the Construction Period Construction 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 Period Construction Note”). The Construction Period Construction Note shall replace the Ninth Amended and Restated Promissory Note dated as of October 21, 2009 given by the Borrower to the Bank (the “Prior Construction Note”), and amounts outstanding under the Prior Construction Note shall not be deemed cancelled or satisfied, but shall be evidenced by the Construction Period Construction Note instead of by the Prior Construction Note.

Upon the substantial completion of construction of each Restaurant the construction or opening of which has been financed with Construction 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 Construction Loans obtained for the purpose of constructing or opening of such Restaurant to a term loan with a maturity date that is not less than seven (7) years nor greater than twelve (12) years after the Construction Loan Conversion Date (each such Loan being referred to herein as a “Construction 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 “Construction Loan 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 Construction Term Loan (each, a “Construction Term

- 12 -

Exhibit 10.1

Loan Maturity Date”; which Construction Term Loan Maturity Date shall be no later than the date which is twelve (12) years after the Construction Loan Conversion Date, (iii) if the Borrower desires that such Construction 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 Construction Term Loan Maturity Date of such Construction Term Loan or as otherwise expressly provided herein, and (iv) if the Borrower desires that such Construction Term Loan be a LIBOR Rate Loan (as hereinafter defined), its election of such LIBOR Rate Loan and election of one of the 1, 2 or 3 month LIBOR rate as described in Section 4(b)(i). Notwithstanding the foregoing, the Borrower shall have the option to extend the Construction Term Loan Maturity Date of any Construction Term Loan having both a Construction Loan Conversion Date after December 3, 2007 and an original Construction Term Loan Maturity Date of less than twelve (12) years from the Construction Loan Conversion Date once during the term thereof to a date not later than twelve (12) years after the Construction Conversion Date, by providing no less than thirty (30) days’ written notice to the Bank of its intent to exercise such option.

Each Construction 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 Construction Term Loan which does not bear interest at the Cost of Funds-Based 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 “Construction Term Note”; the Construction Term Notes and the Construction Period Construction Note are sometimes collectively referred to herein as the “Construction Notes”).

(ii) 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) 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) April 15, 2012, 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 “Revolver Commitment Termination Date”), a principal sum of up to Five Million Dollars ($5,000,000) (the “Total Revolver 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 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 Revolver 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 Nineteenth Amended and Restated Revolving Credit Promissory Note given by the Borrower to the Bank in substantially the form of Exhibit H 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 April 15, 2012, unless accelerated or extended as described herein. The Revolving Note shall replace the Eighteenth Amended and Restated Revolving Credit Promissory Note dated as of October 21, 2009 given by the Borrower to the Bank (the “Prior Note”), and amounts

- 13 -

Exhibit 10.1

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 Revolver Commitment Amount, the Borrower shall immediately, without notice or demand, reduce the outstanding principal balance of the Revolving Loan such that the Total Revolver Commitment Amount is not exceeded.

Upon request by the Borrower, the Bank may consider extensions of the Revolver 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 Revolver 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, having commenced with the Borrower’s fiscal year beginning on June 3, 2002.

(iii) 2009 Term Loan. As of October 21, 2009, the Bank agreed to make to the Borrower, and the Borrower borrowed from the Bank, a term loan in the aggregate amount of Four Million Dollars ($4,000,000) (the “2009 Term Loan”). As of the date hereof, the remaining unpaid principal amount of the 2009 Term Loan is Three Million Fifty Two Thousand Twenty Dollars and 66/100 ($3,052,020.66). The maturity date of the 2009 Term Note is October 21, 2013, unless accelerated or extended as described herein (the “2009 Term Loan Maturity Date”). The 2009 Term Loan is evidenced by that certain Promissory Note in the original principal amount of Four Million Dollars ($4,000,000) dated October 21, 2009 issued by the Borrower to the Bank, as the same may be amended and/or restated from time to time (the “2009 Term Note”). The 2009 Term Note is subject to the terms and conditions of this Agreement.

(iv) Stock Repurchase 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) hereunder, the Bank agrees to make loans to the Borrower in an aggregate amount not to exceed the lesser of (A) Ten Million Dollars ($10,000,000) (the “Stock Repurchase Loan Commitment Amount”) or (B) the aggregate repurchase price of the aggregate number of shares of the Borrower’s common stock to be to repurchased authorized by the board of directors of the Borrower (collectively, the “Stock Repurchase Loans”).

For each request to the Bank to make a Stock Repurchase Loan, the Borrower shall provide the Bank (A) written notice of the Borrower’s desire to obtain Stock Repurchase Loan proceeds for the purpose of repurchasing shares of the Borrower’s common stock, which notice shall state the amount of the Stock Repurchase Loan requested, the number of shares of common stock of the Borrower to be repurchased, and the repurchase price(s) per share of the common stock of the Borrower and (B) if the Borrower repurchases (in the aggregate) more than 500,000 shares of its common stock, copies of resolutions of the Borrower’s Board of Directors authorizing such repurchase of shares of the Borrower’s common stock. The Stock Repurchase Loans shall be effectuated by the Bank crediting an account maintained by the Borrower at the

- 14 -

Exhibit 10.1

Bank. No repayment or prepayment of the Stock Repurchase Loans shall be reason for any relending or additional lending of proceeds of the Stock Repurchase Loans to the Borrower, and no Stock Repurchase Loan proceeds shall be disbursed after April 15, 2012. The outstanding principal balance of each Stock Repurchase Loan which has not been converted into a Stock Repurchase Term Loan (as hereinafter defined) in accordance with the next paragraph hereof (such Stock Repurchase Loans which have not been so converted being collectively referred to herein as “Short-Term Stock Repurchase Loans”) shall mature and be payable in full on April 15, 2012 (the “Stock Repurchase Loan Maturity Date”), unless the maturity thereof is accelerated as described herein. The Short-Term Stock Repurchase Loans shall be evidenced by a Promissory Note in substantially the form of Exhibit I attached hereto, as the same may be amended and/or restated from time to time (the “Short-Term Stock Repurchase Note”).

The outstanding principal balance of each Short-Term Stock Repurchase Loan shall be converted to a term loan with a maturity date (each, a “Stock Repurchase Term Loan Maturity Date” that is seven (7) years after the Stock Repurchase Loan Conversion Date (each such Stock Repurchase Loan being referred to herein as a “Stock Repurchase 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 “Stock Repurchase Loan 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 date of issuance of such Short-Term Stock Repurchase Loan, (ii) if the Borrower desires that such Stock Repurchase 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 Stock Repurchase Term Loan Maturity Date of such Stock Repurchase Term Loan or as otherwise expressly provided herein, and (iv) if the Borrower desires that such Stock Repurchase Term Loan be a LIBOR Rate Loan (as hereinafter defined), its election of such LIBOR Rate Loan and election of one of the 1, 2 or 3 month LIBOR rate as described in Section 4(b)(i).

Each Stock Repurchase 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 Stock Repurchase Term Loan which does not bear interest at the Cost of Funds-Based 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 “Stock Repurchase Term Note”; the Stock Repurchase Term Notes and the Short-Term Stock Repurchase Note are sometimes collectively referred to herein as the “Stock Repurchase Notes”).

(b) Interest.

(i) Construction Loan, Stock Repurchase Loan. Interest on each advance of the Construction Loans and/or the Stock Repurchase Loans hereunder (prior to conversion to a Construction Term Loan or a Stock Repurchase Term Loan as applicable) shall accrue at an annual rate equal to the LIBOR Rate 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 (A) commencement of the advance or (B) the end of each Loan Period (as hereinafter defined)), adjusted for any reserve

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Exhibit 10.1

requirement and any subsequent costs arising from a change in government regulation (a “LIBOR 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.

In the event the Borrower does not timely select an interest rate option at least two New York Banking Days before the end of the Loan Period for a Construction Loan and/or a Stock Repurchase Loan that is a LIBOR Rate Loan, the funds advanced under such Construction Loan and/or Stock Repurchase Loan shall, beginning on the first day of the new Loan Period, accrue interest at the 1 month LIBOR rate in effect two New York Banking Days prior to commencement such Loan Period.

The term “Loan Period” means the period commencing on the advance date (or the Conversion Date) of the applicable LIBOR 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, (A) 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 (B) 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 Construction Period Construction Loan may extend beyond the Construction Loan Maturity Date. No Stock Repurchase Loan may extend beyond the Short-Term Stock Repurchase Loan Maturity Date. In any event, if the Loan Period for a Construction Period Construction Loan should happen to extend beyond the Construction Loan Maturity Date, such Construction Period Construction Loans must be prepaid at the Construction Loan Maturity Date. Likewise, if the Loan Period for a Short-Term Stock Repurchase Loan should happen to extend beyond the Short-Term Stock Repurchase Loan Maturity Date, such Short-Term Stock Repurchase Loans must be prepaid at the Short-Term Stock Repurchase Loan Maturity Date. Each Construction Loan and each Stock Repurchase 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 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) 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

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Exhibit 10.1

short-term nature of the LIBOR Rate Loans, the Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of a LIBOR Rate Loan shall be in an amount equal to the remaining entire principal balance of such loan. The term “Money Markets” refers to one or more wholesaling 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.

The “LIBOR Rate Margin” is currently one hundred fifty-five (155) 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 Adjusted 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 Adjusted 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 Adjusted EBITDA is 1.50 to 1.0 or greater, the LIBOR Rate Margin shall be one hundred eighty (180) basis points; if the Borrower’s ratio of Senior Bank Debt to Adjusted EBITDA is less than 1.50 to 1.0 but equal to or greater than 1.00 to 1.0, the LIBOR Rate Margin shall be one hundred fifty-five (155) basis points; and if the Borrower’s ratio of Senior Bank Debt to Adjusted EBITDA is less than 1.00 to 1.0, the LIBOR Rate Margin shall be one hundred thirty-five (135) basis points. Such adjustments shall be based upon the Borrower’s ratio of Senior Bank Debt to Adjusted 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.

Upon conversion of a Construction Period Construction Loan to a Construction Term Loan and/or the conversion of a Short-Term Stock Repurchase Loan to a Stock Repurchase Term Loan (the Construction Term Loan and the Stock Repurchase Term Loan each hereinafter referred to as a “Term Loan” and collectively referred to as the “Term Loans” and the Construction Loan Conversion Date and the Stock Repurchase Loan Conversion Date shall be each referred to as a “Conversion Date”), 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 as a LIBOR Rate Loan at the then applicable LIBOR Rate 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 (i) commencement of the Variable Rate Term Loan or (ii) the end of each Loan 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

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Exhibit 10.1

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, the funds advanced under the LIBOR Rate Loan shall, beginning on the first day of the new Loan Period, accrue interest at the 1 month LIBOR rate in effect two New York Banking Days prior to commencement of such Loan Period. No Variable Rate Term Loan may extend beyond the Construction Term Loan Maturity Date or Stock Repurchase Term Loan Maturity Date, as applicable, for such Variable Rate Term Loan. In any event, if the Loan Period (as defined below) for a Variable Rate Term Loan should happen to extend beyond the applicable maturity date for such Variable Rate Term Loan, such Variable Rate Term Loan must be prepaid at its Construction Term Loan Maturity Date or Stock Repurchase Term Loan Maturity Date, as applicable. Each Variable Rate Term 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.

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.

(ii) Revolving Loan. Interest on each advance of the Revolving Note hereunder shall accrue at an annual rate equal to the LIBOR Rate Margin plus at the 1 month LIBOR rate quoted by the Bank from Telerate Page 3750 or any successor their, which shall be that one-month LIBOR rate in effect to New York Banking Days prior to the beginning of each calendar month, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, such rate to be reset at the beginning of each succeeding month. If the initial advance under this Note occurs other than on the first day of the month, the initial 1 month LIBOR rate shall be that 1 month LIBOR rate in effect two New York Banking Days prior to the date of the initial advance; such 1-month LIBOR rate to be reset at the beginning of each succeeding month (the “Revolving Note LIBOR Rate;” provided, however, the Borrower may elect at any time to the convert a portion of the outstanding advances of the Revolving Note to a LIBOR Rate Loan as set forth in Section 4(b)(i). In the event the Borrower does not timely select an interest rate option at least two New York Banking Days before the end of the Loan Period for outstanding advances of the Revolving Note that are a LIBOR Rate Loan, such outstanding advances, shall, beginning on the first day of the new Loan Period, accrue interest at the Revolving Note LIBOR Rate.

No Revolving Loan may extend beyond the Revolving Commitment Termination Date. In any event, if the Loan Period for a Revolving Loan should happen to extend beyond the Revolving Commitment Termination Date, such loan must be prepaid at the Revolving Commitment Termination Date. Each Revolving Loan shall be in a minimum principal amount of Five Hundred Thousand Dollars ($500,000) and in increments of Five Hundred Thousand

- 18 -

Exhibit 10.1

Dollars ($500,000) thereafter. The Borrower may, at its option, from time to time repay or prepay part or all of the outstanding principal balance of the Revolving Loan bearing interest based on the Revolving Note LIBOR Rate without premium

(iii) 2009 Term Loan. The unpaid balance of the 2009 Term Loan shall bear interest at a rate of 3.47% per annum. The 2009 Term Loan is a Cost of Funds Rate Term Loan.

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. The Bank’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

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 rate that would otherwise be in effect for such Loans from time to time as set forth in this Section 4(b) 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.

(c) Payments.

(i) Payments on Construction Loans and Stock Repayment Loans. Interest on any Variable Rate Term 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). Interest on any Prime Rate (as defined below) priced Loan shall be payable, in arrears, on the last day of each month, 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 Period Construction Loan and/or Short-Term Stock Repayment Loan on the Conversion Date of such Construction Period Construction Loan or Short-Term Stock Repayment Loan to a Construction Term Loan or a Stock Repurchase Term Loan, as applicable.

The principal of each Construction Loan and/or Stock Repayment Loan which has not been converted into a Construction Term Loan or a Stock Repurchase Term Loan, as applicable, shall be due and payable in full on the Construction Loan Maturity Date or Stock Repayment Loan Maturity Date, as applicable.

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

- 19 -

Exhibit 10.1

on the first day of each calendar month thereafter through and including the Construction Term Loan Maturity Date or Stock Repurchase Term Loan Maturity Date, as applicable, 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 applicable Construction Term Loan Maturity Date or Stock Repurchase 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 Construction Term Loan Maturity Date or Stock Repurchase Term Loan Maturity Date, as applicable, 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 Construction Term Loan Maturity Date or Stock Repurchase Term Loan Maturity Date, as applicable.

(ii) Revolving Loan Payments. Interest on the Revolving Loan shall be payable, in arrears, on the first day of each month for advances bearing interest at the Revolving Note LIBOR Rate, on the last day of the Loan Period applicable thereto for such portions of the advances that are a LIBOR Rate Loan, and when such Revolving Loan is due (whether by reason of acceleration or otherwise).

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

(iii) Payment on 2009 Term Loan. The principal balance of the Term Loan and interest accrued thereon shall be repaid by the Borrower to the Bank by consecutive monthly payments in the amount of $89,459.47 each on the twenty first day of each calendar month, commencing on November 21, 2009, and by a final payment on the 2009 Term Loan Maturity Date in the amount of the unpaid principal and interest balance of the 2009 Term Loan. No repayment or prepayment of the 2009 Term Loan by the Borrower shall be reason for any relending or additional lending of the 2009 Term Loan to the Borrower.

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.

(d) Changes in Laws and Circumstances; Illegality. In the event of (A) any change in the reserve requirements and/or the assessment rates of the FDIC which are applicable

- 20 -

Exhibit 10.1

to the Bank in making any or all of the Loans or (B) any change in circumstances affecting the interbank market, or (C) any adoption of any law or any governmental or quasi-governmental rules, regulation, policy, guideline or directive (whether or not having the force of law) or any change in the interpretation, promulgation, implementation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with interpretation or administration thereof, including, without limitation, all requests, rules, guidelines or directives in connection with Dodd-Frank Wall Street Reform and Consumer Protection Act regardless of the date enacted, adopted or issued, and the result of any such event described in clause (A), (B), or (C) 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.

(i) 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 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 or Cost of Funds-Based Rate, as applicable.

(ii) 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 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 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 or Cost of Funds-Based Rate, as applicable, shall cease to bear interest at the LIBOR based rate or Cost of Funds-Based Rate, as applicable, and shall bear interest based on the Prime Rate. The “Prime Rate” is the rate announced from time to time by the Bank as its prime rate. The Prime 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 corporate, commercial, or other loans.

(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 or the Revolving Note LIBOR Rate without premium. The Borrower may, at its option, from time to time repay or prepay part or all of the outstanding principal balance of any of the Revolving Loans bearing interest based on the LIBOR Rate, Construction Loans and/or the Stock Repurchase Loans at the end of a Loan Period without premium.

If any LIBOR Rate Loan (including, without limitation, any advances of Revolving Loans that Borrower has elected to be a LIBOR 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

- 21 -

Exhibit 10.1

LIBOR 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. Notwithstanding the foregoing, if prior to the conversion of a Construction Period Construction Loan or a Short-Term Stock Repurchase Loan to a Cost of Funds Rate Term Loan, the Bank and the Borrower mutually agree that the Cost of Funds-Based Rate will include a premium as payment to the Bank for waiver by the Bank of any Prepayment Fee (determined by the Bank in its sole discretion) over the then applicable Cost of Funds-Based Rate and such premium is expressly described in the applicable Promissory Note, then the Borrower may prepay such Cost of Funds Rate Term Loan without incurring a Prepayment Fee. If the Borrower initially elects less than a 12 year maturity for a Construction Term Loan that is also a Cost of Funds Rate Term Loan and later the Borrower exercises its option to extend the maturity up to 12 years from the Construction Conversion Date, if the Borrower did not pay a premium to the Bank for waiver by the Bank of any Prepayment Fee at the Construction Conversion Date, then the Borrower will be subject to a Prepayment Fee at the time the Borrower elects to extend the maturity date of such Construction Term Loan; provided, however, the Bank shall waive any Prepayment Fee that would otherwise apply to any Cost of Funds Rate Term Loan issued on or after September 1, 2007 and prior to October 21, 2010.

“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.

- 22 -

Exhibit 10.1

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 as a LIBOR Rate Loan 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 (a) the unused Total Revolver Commitment Amount plus (b) the unused Construction Loan 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. The unused portion of the Stock Repurchase Loan Commitment Amount shall not be subject to any unused credit fee.

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 (a) the Total Revolver Commitment Amount, (b) the Construction Loan Commitment Amount, (c) the Stock Repurchase Loan Commitment Amount and/or (d) any other Loan proceeds have not yet been used or fully drawn on by the Borrower, terminate any obligation of the Bank 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

(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

- 23 -

Exhibit 10.1

(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 Continuing Reimbursement 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

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

- 24 -

Exhibit 10.1

(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) 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:	Shawn Masterson
		Vice President
With a copy to:	Jeffrey S. Schloemer, Esq.
	Taft, Stettinius & Hollister LLP
	425 Walnut Street, Suite 1800
	Cincinnati, Ohio 45202

- 25 -

Exhibit 10.1

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
	Donald A. Bodner
	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 shall pay all reasonable out-of-pocket expenses incurred by the Bank, including the reasonable fees, charges and disbursements of outside-counsel for the Bank (determined on the basis of such counsel’s generally applicable rates, which may be higher than the rates such counsel charges the Bank in certain matters) and/ or the allocated costs of in-house counsel incurred from time to time 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 attorneys’ 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 the Cost of Funds Loans.

(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.

- 26 -

Exhibit 10.1

(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 Agreements and amounts outstanding under the Prior Loan Agreements shall not be deemed cancelled or satisfied, but shall be evidenced by this Agreement instead of by the Prior Loan Agreements.

(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.

[SIGNATURES ON FOLLOWING PAGE]

- 27 -

Exhibit 10.1

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.

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

- 28 -

Exhibit 10.1

LIST OF EXHIBITS

A-	Financial Information and Reports
B-	Actions
C-	Permitted Liens
D-	Financial Covenants
E-	Permitted Indebtedness
F-	Construction Period Construction Note
G-1-	Form of Term Note (Cost of Funds Rate Term Loan)
G-2-	Form of Term Note (Variable Rate Term Loan)
H-	Revolving Note
I-	Short-Term Stock Repurchase Note

Exhibit 10.1

EXHIBIT A

FINANCIAL INFORMATION AND REPORTS

1. Annual Report for the year ended June 1, 2010.

2. Projections for the Borrower for the year ending June, 2011.

A-1

Exhibit 10.1

EXHIBIT B

ACTIONS

Intentionally Deleted

B-1

Exhibit 10.1

EXHIBIT C

PERMITTED LIENS

All obligations of the Borrower incurred in connection with any existing or future lease transactions capitalized or required to be capitalized on the Borrower’s books.

C-1

Exhibit 10.1

EXHIBIT D

FINANCIAL COVENANTS

The Borrower agrees that it shall:

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

“Senior Bank Debt” for purposes hereof shall mean the sum of all of the Borrower’s indebtedness for borrowed money that in accordance with generally accepted accounting principles would be considered as a liability, and all obligations of the Borrower incurred in connection with any existing or future lease transactions capitalized or required to be capitalized on the Borrower’s books.

“Adjusted EBITDA” for purposes hereof shall mean the Borrower’s consolidated gross (before interest, taxes, depreciation and amortization) earnings; plus losses on disposition of assets (net of abandonment losses); less gains on disposition of assets, net of abandonment losses; plus net cash proceeds from the disposition of property; less cash and non-cash unusual gains; plus cash and non-cash unusual losses, all calculated in accordance with generally accepted accounting principals and consistently applied in accordance with past practices on a rolling four (4) quarter basis.

(b) Cash Flow Coverage Ratio. Not permit the ratio of (i) the Borrower’s Adjusted EBITDA plus operating lease payments less maintenance capital expenditures equal to (50%) of depreciation less cash dividends to the Borrower’s shareholders less cash income taxes paid, to (ii) the sum of the Borrower’s scheduled principal payments on long term debt and capital lease obligations (excluding Revolving Loan principal payments) plus interest expense plus operating lease payments (in each case for the same period that the Borrower’s Adjusted 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 1.10 to 1.0, measured quarterly on a rolling twelve month basis.

D-1

Exhibit 10.1

EXHIBIT E

PERMITTED INDEBTEDNESS

			Balance October 21, 2010
Indebtedness to US Bank NA
2009 Term Loan			$	3,052,021
Revolving Loan (up to $5,000,000 may be borrowed)			$	0
		0
Stock Repurchase Loan Credit Facility:
Interest Only Period	$	0
Term Loans	$	0
(up to $10,000,000 more may be borrowed)			$	0
Construction Loan Credit Facility
Construction Phase	$	3,000,000
Term Loans	$	23,559,270
(up to $15,000,000 more may be borrowed)			$	26,559,270
			$	29,611,291

Capitalized Leases
All obligations of the Borrower incurred in connection with any existing or future lease transactions capitalized or required to be capitalized on the Borrower’s books
Contingent liability as assignor/guarantor of the following leases:
Location				Assignee		Remaining Lease Term
Covington, KY (Riverview Hotel) (renewal options aggregating 50 years)			$48,072 per year		Remington Hotel Corporation		04/30/2020
Lease liability for closed restaurants & other non-operating property (lease not presently assigned)
	Location			Remaining Lease Term		Rent Per Month
		None

E-1

Exhibit 10.1

EXHIBIT F

TENTH AMENDED AND RESTATED PROMISSORY NOTE

$106,500,000 Cincinnati, Ohio October 21, 2010

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 April 15, 2012, the principal sum of One Hundred Six Million Five Hundred Thousand Dollars ($106,500,000), 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 Amended and Restated Loan Agreement dated as of October 21, 2010 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.

As of October 21, 2010, as a result of the prior draws by the Borrower under the Loans and prior conversions of Construction Loans to Term Loans, of the maximum One Hundred Six Million Five Hundred Thousand Dollar ($106,500,000) Construction Loan facility, (i) Ninety One Million Five Hundred Thousand Dollars ($91,500,000) has been drawn by the Borrower under the Construction Loans and already been converted to Term Loans or currently remains outstanding as Construction Loans and (ii) a maximum of Fifteen Million Dollars ($15,000,000) still remains available to be drawn by the Borrower under the Construction Loans.

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

F-1

Exhibit 10.1

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.

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 Ninth Amended and Restated Promissory Note dated as of October 21, 2009 given by the Borrower to the Bank, and evidences all amounts outstanding as of the date hereof under said Ninth Amended and Restated Promissory Note.

[remainder of page intentionally left blank]

F-2

Exhibit 10.1

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

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

F-3

Exhibit 10.1

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 Amended and Restated Loan Agreement dated as of October 21, 2010 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 rate that would otherwise be in effect for such Loans from time to time as set forth in the Loan Agreement 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

G-1-1

Exhibit 10.1

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.

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.

The per annum rate of this Note includes a premium of             % over the otherwise applicable Cost of Funds-Based Rate so that the Borrower may prepay this Note in whole or in part at any time without incurring a “Prepayment Fee” as specified in and calculated in accordance with the terms 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 10.1

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 10.1

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 Amended and Restated Loan Agreement dated as of October 21, 2010 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 10.1

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

Exhibit 10.1

EXHIBIT H

NINETEENTH AMENDED AND RESTATED

REVOLVING CREDIT PROMISSORY NOTE

$5,000,000.00 Cincinnati, Ohio

October 21, 2010

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 April 15, 2012, 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 Amended and Restated Loan Agreement dated as of October 21, 2010 between the Borrower and the Bank, as the same 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.

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

H-1

Exhibit 10.1

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 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 Eighteenth Amended and Restated Revolving Credit Promissory Note dated as of October 21, 2009 given by the Borrower to the Bank, and evidences all amounts outstanding as of the date hereof under said Eighteenth 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:
	Donald H. Walker, Vice President Finance
Address:  2800 Gilbert Avenue Cincinnati, Ohio 45206

H-2

Exhibit 10.1

EXHIBIT I

PROMISSORY NOTE

$10,000,000 Cincinnati, Ohio

October 21, 2010

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 April 15, 2012, the principal sum of Ten Million Dollars ($10,000,000), or such portion thereof as may be outstanding from time to time, together with interest thereon as hereinafter provided.

This is the Stock Repurchase 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 October 21, 2010 between the Borrower and the Bank, as the same 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 Stock Repurchase 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 Stock Repurchase 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.

I-1

Exhibit 10.1

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.

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

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

I-2

EX-10.58

EXHIBIT 10.58

FRISCH’S RESTAURANTS, INC.

2003 STOCK OPTION AND INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

(for non-employee directors)

This Restricted Stock Agreement (the “Agreement”) is dated as of                     , 20     (the “Grant Date”), and is entered into between Frisch’s Restaurants, Inc., an Ohio corporation (the “Company”), and                      (“Director”). Capitalized terms not defined herein have the meaning given such terms in the Company’s 2003 Stock Option and Incentive Plan (the “Plan”).

1. Grant. Subject to the terms and conditions of this Agreement and of the Plan, which are incorporated herein by reference, the Company hereby grants to Director              shares of Restricted Stock (the “Shares”) in consideration for services to be performed by Director on behalf of the Company as a member of its Board of Directors (the “Board”).

2. Vesting. Unless earlier vested, forfeited or modified in accordance with the terms and conditions of the Plan, Director’s right to the Shares shall become nonforfeitable on                     , 20     (the “Scheduled Vesting Date”).

3. Stock Certificates. A certificate for the Shares, registered in Director’s name, shall be issued and delivered to the Secretary of the Company and held by him/her in custody and shall not be delivered to Director until such Shares have fully vested in accordance with Section 2 above. The stock certificate will contain a legend evidencing the vesting condition of Section 2 above and the transferability restriction of Section 7 below.

4. Effect of Termination of Service. In the event of Director’s termination of service on the Board before the Scheduled Vesting Date, Director shall forfeit any and all rights he/she may have to the Shares unless vesting is accelerated pursuant to Section 11.1 or another provision of the Plan.

5. Taxes. Director shall be solely responsible for paying and shall pay all applicable U.S. federal, state and local taxes resulting from the grant or vesting of the Shares. Director acknowledges that he/she has been advised that he/she may elect to be taxed for U.S. federal income tax purposes in accordance with Section 83(b) of the Internal Revenue Code and advised of the consequences that may result from such an election. Any election under Section 83(b) must be filed with both the Internal Revenue Service and the Company on or before                     , 20     (i.e., within 30 days from the Grant Date).

6. Rights as Shareholder. Except to the extent limited by the terms of this Agreement or the Plan, Director shall have all rights of a shareholder prior to the vesting of the Shares, including the right to vote the Shares and receive all dividends and other distributions paid or made with respect thereto.

7. Holding Period/Transferability. Director agrees that the Shares granted pursuant to this Agreement may not be sold, transferred, assigned or made subject to any encumbrance, pledge or charge until such time as Director’s service on the Board terminates, except that, after the Shares have vested, Director may sell the minimum number of Shares (rounded down to a

Exhibit 10.58

whole number) that is sufficient to satisfy Director’s federal, state and local taxes attributable to the Shares.

8. No Right to Continue as a Director. Nothing in this Agreement will confer upon Director any right to be nominated for reelection by the Company’s shareholders or any right to continue as a member of the Board for any period of time or at any particular rate of compensation.

9. Severability. If any part of this Agreement is declared by any court or government authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement not declared to be unlawful or invalid. Any Section of this Agreement so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms of such Section to the fullest extent possible while remaining lawful and valid.

10. Construction. The Shares are being issued pursuant to the Plan and are subject to the terms and condition of the Plan, as it may be amended from time to time. In the event there is any conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan shall control. Subject to the provisions of the Plan, the Committee may modify this Agreement. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto. Notwithstanding the foregoing, no amendment of the Plan or this Agreement shall materially impair Director’s rights under this Agreement with respect to the Shares without the consent of Director unless such amendment is otherwise required by law or integrally related to a requirement of law. A copy of the Plan and the prospectus for the Plan have been given to Director.

11. Entire Understanding. This Agreement embodies the entire understanding and agreement of the parties in relation to the subject matter hereof, and no promise, condition, representation or warranty, expressed or implied, not stated herein or in the Plan, shall bind either party.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the Grant Date.

DIRECTOR	FRISCH’S RESTAURANTS, INC.
[name]	[name] [title]

- 2 -

EX-15

EXHIBIT 15

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Frisch’s Restaurants, Inc.

We have reviewed the accompanying interim consolidated balance sheet of Frisch’s Restaurants, Inc. (an Ohio Corporation) and subsidiaries as of September 21, 2010, and the related consolidated statements of earnings, shareholders’ equity and cash flows for each of the sixteen week periods ended September 21, 2010 and September 22, 2009. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews 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 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 reviews, we are not aware of any material modifications that should be made to the accompanying interim 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 June 1, 2010, and the related consolidated statements of earnings, shareholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated July 30, 2010, we expressed an unqualified opinion on those consolidated financial statements.

/s/ Grant Thornton LLP

Cincinnati, Ohio

October 26, 2010

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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

d) Disclosed in this Quarterly Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting;

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

DATE October 25, 2010

              /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 and Chief Financial 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

d) Disclosed in this Quarterly Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting;

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

DATE October 15, 2010

                  /s/ Donald H. Walker                   

Donald H. Walker, Vice President-Finance and

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION of CHIEF EXECUTIVE OFFICER

PURSUANT to SECTION 1350 of CHAPTER 63 of TITLE 18 of the UNITED STATES CODE,

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, 2010 (the “Report”), the undersigned officer of the Registrant certifies, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, 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 Registrant.

October 25, 2010	By:	/s/ Craig F. Maier
		Craig F. Maier Chief Executive Officer

This certification is being furnished as required by Rule 13a – 14(b) under the Securities Exchange Act of 1934 (“Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as other otherwise stated in such filing.

EX-32.2

EXHIBIT 32.2

CERTIFICATION of CHIEF FINANCIAL OFFICER

PURSUANT to SECTION 1350 of CHAPTER 63 of TITLE 18 of the UNITED STATES CODE,

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, 2010 (the “Report”), the undersigned officer of the Registrant certifies, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, 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 Registrant.

October 15, 2010	By:	/s/ Donald H. Walker
		Donald H. Walker Vice President-Finance and Chief Financial Officer

This certification is being furnished as required by Rule 13a – 14(b) under the Securities Exchange Act of 1934 (“Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as other otherwise stated in such filing.