MORRISON RESTAURANTS INC/, PRER14A, 1996-01-17

MORRISON RESTAURANTS INC/
PRER14A, 1996-01-17
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<PAGE>

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)

Filed by the Registrant [X]

Filed by a party other than the Registrant

Check the appropriate box:

[X]Preliminary Proxy Statement

[_]Confidential, for use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

MORRISON RESTAURANTS INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

MORRISON RESTAURANTS INC.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.

[_]$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth amount on which the
filing fee is calculated and state how it was determined).

(4) Proposed maximum aggregate value of transaction:

(5) Total Fee Paid:

[X]Fee paid previously with preliminary materials.

[_]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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REVISED PRELIMINARY PROXY STATEMENT DATED JANUARY 17, 1996,
SUBJECT TO COMPLETION

[MORRISON LOGO]

January , 1996

Dear Stockholders:

You are cordially invited to attend a Special Meeting of Stockholders on
February , 1996, at 10:30 a.m., local time, at the Stouffer Concourse Hotel,
1 Hartsfield Center Parkway, Atlanta, Georgia 30354.

At the Special Meeting, you will be asked to consider and vote upon a group
of separate but related proposals to divide the Company into its three
separate businesses: (i) casual dining; (ii) family dining; and (iii) health
care food and nutrition services.

These important proposals provide for the proposed distribution to Company
stockholders of all the shares of Common Stock of Morrison Fresh Cooking, Inc.
("MFCI"), which is a wholly-owned subsidiary of the Company, and all the
shares of Common Stock of Morrison Health Care, Inc. ("MHCI"), which also is a
wholly-owned subsidiary of the Company. The distribution would separate the
Company into three publicly-owned companies. In addition, in connection with
the distribution, the Company (which is now a Delaware corporation) also
proposes to reincorporate in Georgia, effect a one-for-two reverse stock split
and change its name to "Ruby Tuesday, Inc." ("RTI"). After the distribution,
RTI would continue to conduct the casual dining business of the Company, MFCI
would continue to conduct the cafeteria business of the Company and MHCI would
continue to conduct the health care food and nutrition services business of
the Company.

In the distribution, holders of shares of Company Common Stock would receive
one share of MFCI Common Stock for every four Company shares now held; one
share of MHCI Common Stock for every three shares of Company Common Stock now
held; and, as a result of the reverse stock split, one share of RTI Common
Stock for every two Company shares they currently hold.

After considerable study and detailed analysis, the Board of Directors
concluded that the Company's three main businesses had reached the stage of
maturity where they will be best positioned as independent, publicly-owned
companies.

Noting that the Company's three businesses operate under different market
and competitive conditions with unique management and capital needs, the Board
of Directors determined that the new structure will allow the management of
each company to focus more intensively on its own business and provide each
company flexibility to grow in a manner best suited for its business and its
market. The planned separation will also enable the management of each company
to design corporate policies and strategies that will be based primarily on
the characteristics of its own business and to concentrate its financial
resources wholly on its own operations. Each company will be in a position to
access directly the capital markets and will not compete with each other for
allocation of the Company's financial resources.

The creation of a public market for each of the three businesses will
establish a value for each company that is independent of the other
businesses. This will enhance the ability of each company to attract, motivate
and retain qualified executives and key employees by designing effective
incentive-based compensation programs based solely on each company's
performance.
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The Board of Directors also concluded that the new structure will provide
investors and securities analysts a clearer basis on which to understand and
analyze the three businesses. The separate businesses will be more accurately
valued, based on their respective performance and prospects. The stock of each
of the three companies will also appeal to investors with differing investment
objectives, risk tolerance and dividend expectations and will allow potential
investors to focus their investments more directly to the areas of their
primary interest.

The Board of Directors of the Company approved the distribution and the
related proposals to be presented at the Special Meeting and recommends that
stockholders vote FOR each of the proposals. If any of the proposals is not
approved, the Board of Directors of the Company will reevaluate its intention
to effect the distribution. After such review, the Board could determine to
revise the terms of the distribution, effect the distribution essentially as
proposed or as revised despite such lack of approval or abandon the
distribution. The Board has further retained discretion, even if stockholder
approval of the proposals is obtained and the other conditions to the
distribution are satisfied, to abandon, defer or modify the distribution or
the reincorporation. The proposals are more fully described in the
accompanying proxy statement, which you should review carefully.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
DISTRIBUTION AND THE RELATED PROPOSALS.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING
WHETHER OR NOT YOU ARE ABLE TO ATTEND PERSONALLY. YOU ARE, THEREFORE, URGED TO
SIGN, DATE AND MAIL THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. PLEASE DO NOT SEND IN YOUR STOCK
CERTIFICATES WITH YOUR PROXY CARD.

Sincerely,

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

MORRISON RESTAURANTS INC.

P.O. Box 160266 . 4721 Morrison Drive . Mobile, Alabama 36625-0001
. (334) 344-3000 . Telefax (334) 344-3066
<PAGE>

MORRISON RESTAURANTS INC.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD

FEBRUARY , 1996

NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of
Morrison Restaurants Inc., a Delaware corporation (the "Company"), will be
held at the Stouffer Concourse Hotel, 1 Hartsfield Center Parkway, Atlanta,
Georgia 30354 on February , 1996, at 10:30 a.m., local time, for the
following purposes:

1. To consider and vote upon five separate but related proposals
(collectively, the "Distribution Proposals") described in the accompanying
Proxy Statement providing for:

Proposal One: Approval of the distribution by the Company of all the
outstanding shares of common stock of Morrison Fresh Cooking, Inc., a
wholly-owned subsidiary of the Company and a Georgia corporation ("MFCI"),
and of all the outstanding shares of common stock of Morrison Health Care,
Inc., a wholly-owned subsidiary of the Company and a Georgia corporation
("MHCI"), on the basis described in the attached Proxy Statement
(collectively, the "Distribution");

Proposal Two: Approval and adoption of an Agreement and Plan of Merger
(the "Merger Agreement") between the Company and Ruby Tuesday (Georgia),
Inc. ("RTI"), a newly formed Georgia corporation and a wholly-owned
subsidiary of the Company, providing for (i) the reincorporation (the
"Reincorporation") of the Company in Georgia pursuant to a statutory merger
of the Company into RTI and (ii) a one-for-two reverse stock split (the
"Reverse Stock Split"), to be effective only if the Distribution occurs;

Proposal Three: Approval of amendments to the Company's Stock Incentive
Plan to (i) increase the number of shares reserved for issuance thereunder,
(ii) permit grants of equity-based awards to non-employee directors, and
(iii) permit adjustments to outstanding stock options in connection with
the Distribution;

Proposal Four: Approval of amendments to (i) the Company's Stock
Incentive and Deferred Compensation Plan for Directors, (ii) the Company's
1987 Stock Bonus and Non-Qualified Stock Option Plan, and (iii) the
Company's 1984 Long Term Incentive Plan to permit adjustments to
outstanding awards in connection with the Distribution;

Proposal Five: Approval of the adoption (i) by MFCI of the MFCI 1996
Stock Incentive Plan, and (ii) by MHCI of the MHCI 1996 Stock Incentive
Plan, each to be effective only if the Distribution occurs.

2. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.

THE EFFECTIVENESS OF EACH OF THE DISTRIBUTION PROPOSALS IS CONDITIONED UPON
THE APPROVAL OF ALL OF THE DISTRIBUTION PROPOSALS. IF ANY OF THE DISTRIBUTION
PROPOSALS IS NOT APPROVED, THE BOARD OF DIRECTORS OF THE COMPANY WILL
REEVALUATE ITS INTENTION TO EFFECT THE DISTRIBUTION. AFTER SUCH REVIEW, THE
BOARD COULD DETERMINE TO REVISE THE TERMS OF THE DISTRIBUTION, EFFECT THE
DISTRIBUTION ESSENTIALLY AS PROPOSED OR AS REVISED DESPITE SUCH LACK OF
APPROVAL OR ABANDON THE DISTRIBUTION.

The Board of Directors has further retained discretion, even if stockholder
approval of the Distribution Proposals is obtained and the other conditions to
the Distribution are satisfied, to abandon, defer or modify the Distribution
or the Reincorporation.

Pursuant to the Bylaws of the Company, the Board of Directors has fixed the
close of business on January 17, 1996, as the record date for the
determination of stockholders entitled to notice of, and to vote at, the
Special Meeting or any adjournment thereof. Only stockholders of record at the
close of business on such date will be entitled to notice of, and to vote at,
the Special Meeting.
<PAGE>

ALL STOCKHOLDERS ARE INVITED TO ATTEND THE SPECIAL MEETING IN PERSON, BUT
EVEN IF YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING YOU ARE REQUESTED TO
MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION. ANY PERSON
WHO HAS EXECUTED A PROXY AND IS PRESENT AT THE SPECIAL MEETING MAY VOTE IN
PERSON INSTEAD OF BY PROXY, THEREBY CANCELLING ANY PROXY PREVIOUSLY GIVEN.
ONLY STOCKHOLDERS OF RECORD OR THOSE HOLDING A PROXY OF A STOCKHOLDER OF
RECORD ENTITLED TO VOTE WILL BE ADMITTED. PLEASE DO NOT SEND IN YOUR STOCK
CERTIFICATES WITH YOUR PROXY CARD.

By Order of the Board of Directors,

Pfilip G. Hunt
Senior Vice President,
General Counsel
and Secretary

January , 1996
Mobile, Alabama
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TABLE OF CONTENTS

<TABLE>
<S> <C>
PROXY STATEMENT SUMMARY................................................... 1
INTRODUCTION.............................................................. 14
THE DISTRIBUTION.......................................................... 20
THE REINCORPORATION....................................................... 27
AMENDMENTS TO COMPANY STOCK INCENTIVE PLAN................................ 30
AMENDMENTS TO COMPANY DIRECTORS' PLAN, 1987 STOCK PLAN AND
1984 INCENTIVE PLAN...................................................... 35
APPROVAL OF MFCI STOCK INCENTIVE PLAN AND MHCI STOCK INCENTIVE PLAN....... 39
EMPLOYEE BENEFITS AND COMPENSATION MATTERS................................ 43
RELATIONSHIP AMONG RTI, MFCI AND MHCI AFTER THE DISTRIBUTION.............. 49
DIVIDEND POLICIES......................................................... 52
DIVIDENDS AND PRICE RANGE OF COMPANY COMMON STOCK......................... 53
COMPANY (RTI) SELECTED FINANCIAL DATA..................................... 54
MFCI SELECTED FINANCIAL DATA.............................................. 55
MHCI SELECTED FINANCIAL DATA.............................................. 56
COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................... 57
MFCI MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................... 65
MHCI MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................... 70
BUSINESS OF RTI AFTER THE DISTRIBUTION.................................... 75
BUSINESS OF MFCI AFTER THE DISTRIBUTION................................... 79
BUSINESS OF MHCI AFTER THE DISTRIBUTION................................... 83
RTI MANAGEMENT AND EXECUTIVE COMPENSATION................................. 87
MFCI MANAGEMENT AND EXECUTIVE COMPENSATION................................ 98
MHCI MANAGEMENT AND EXECUTIVE COMPENSATION................................ 105
DESCRIPTION OF RTI CAPITAL STOCK.......................................... 112
DESCRIPTION OF MFCI CAPITAL STOCK......................................... 116
DESCRIPTION OF MHCI CAPITAL STOCK......................................... 119
COMPARISON OF STOCKHOLDERS RIGHTS......................................... 120
INDEPENDENT AUDITORS...................................................... 128
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING............................. 128
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 128
REPORTS OF MFCI AND MHCI.................................................. 129
AVAILABLE INFORMATION..................................................... 129
GENERAL................................................................... 130
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES............................... F-1
ANNEX A AGREEMENT AND PLAN OF MERGER BETWEEN THE COMPANY AND RUBY TUESDAY
(GEORGIA), INC................................................... A-1
ANNEX B ARTICLES OF INCORPORATION OF RUBY TUESDAY (GEORGIA), INC......... B-1
ANNEX C BYLAWS OF RUBY TUESDAY (GEORGIA), INC............................ C-1
</TABLE>

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<PAGE>

PROPOSALS

The following identifies the captions under which the discussion relating to
each of the Distribution Proposals is presented in the Proxy Statement and the
pages on which such sections appear.

<TABLE>
<CAPTION>
DISTRIBUTION
PROPOSAL SECTION PAGES
------------ ------- -----
<C> <S> <C>
Proposal One The Distribution 14 - 27
Proposal Two The Reincorporation; 27 - 30; 110 - 114; 118 - 126
Description of RTI Capital
Stock; Comparison of
Stockholders Rights
Proposal Three Amendments to Company Stock 30 - 34
Incentive Plan
Proposal Four Amendments to Company 35 - 38
Directors' Plan, 1987 Stock
Plan and 1984 Incentive Plan
Proposal Five Approval of MFCI Stock 39 - 42
Incentive Plan and MHCI Stock
Incentive Plan
</TABLE>

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<PAGE>

PROXY STATEMENT SUMMARY

The following is a summary of certain information contained in this Proxy
Statement. This summary is included for convenience only and should not be
considered complete. This summary is qualified in its entirety by the more
detailed information and financial statements contained elsewhere in this Proxy
Statement. Throughout this Proxy Statement (i) the term "RTI" refers to
Morrison Restaurants Inc. after the Distribution and its successor following
the Reincorporation, renamed "Ruby Tuesday, Inc.," and (ii) the term "RTI
Common Stock" refers to the Common Stock of Morrison Restaurants Inc. following
the Distribution and of RTI following the Reincorporation, in each case unless
the context otherwise requires. Capitalized terms used but not defined in the
summary shall have the meanings ascribed to them elsewhere in this Proxy
Statement.

THE SPECIAL MEETING

DATE, TIME AND PLACE OF SPECIAL MEETING

A Special Meeting of the Stockholders of Morrison Restaurants Inc. (the
"Company") will be held at the Stouffer Concourse Hotel, 1 Hartsfield Center
Parkway, Atlanta, Georgia 30354 at 10:30 a.m., local time, on February , 1996.
This Proxy Statement and the accompanying form of proxy are first being mailed
to stockholders of the Company on or about January , 1996.

PURPOSE OF THE SPECIAL MEETING

At the Special Meeting, stockholders of the Company will be asked to consider
and vote upon five separate but related proposals (collectively, the
"Distribution Proposals") providing for:

Proposal Two: Approval and adoption of an Agreement and Plan of Merger
(the "Merger Agreement") between the Company and Ruby Tuesday (Georgia),
Inc. ("RTI"), a newly formed Georgia corporation and a wholly-owned
subsidiary of the Company, providing for (i) the reincorporation (the
"Reincorporation") of the Company in Georgia pursuant to a statutory merger
of the Company into RTI, and (ii) a one-for-two reverse stock split (the
"Reverse Stock Split"), all to be effective only if the Distribution
occurs;

Proposal Four: Approval of amendments to (i) the Company's Stock
Incentive and Deferred Compensation Plan for Directors (the "Company
Directors' Plan"), (ii) the Company's 1987 Stock Bonus and Non-Qualified
Stock Option Plan (the "1987 Stock Plan"), and (iii) the Company's 1984
Long Term Incentive Plan (the "1984 Incentive Plan") to permit adjustments
to outstanding awards in connection with the Distribution;

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The Board has further retained discretion, even if stockholder approval of
the Distribution Proposals is obtained and the other conditions to the
Distribution are satisfied, to abandon, defer or modify the Distribution or the
Reincorporation.

Although the Company believes that stockholder approval of the Distribution
is not required under Delaware law because the Distribution is a dividend for
purposes of Section 170(a) of the General Corporation Law of the State of
Delaware ("DGCL"), the Board of Directors of the Company made stockholder
approval of the Distribution (along with stockholder approval of each of the
other Distribution Proposals) a condition to the Distribution because of the
importance of the Distribution to the Company and its stockholders. Although
stockholder approval of Proposal One may not prevent a stockholder from
subsequently seeking to challenge the Distribution or the actions of the Board
of Directors in approving the Distribution, the Company and its directors may
assert stockholder approval of the Distribution as one of their defenses
against any such challenge. Under the doctrine of estoppel, stockholders who
voted in favor of the Distribution may be precluded from challenging the
Distribution or seeking equitable relief following the consummation thereof.
However, the Company cannot determine in advance the position it would take
with respect to any such challenge. In addition, approval of Proposal Two is
being sought because the provisions of the applicable state corporate law
require such approval. Accordingly, if Proposal Two is not approved by
stockholders, the proposed Reincorporation and the Reverse Stock Split could
not occur. Approval of Proposals Three and Four is being sought to preserve
RTI's ability to deduct, for Federal income tax purposes, compensation expense
attributable to stock options and stock awards. Under Section 162(m) of the
Internal Revenue Code, stockholder approval of performance-based compensation
plans (including material amendments thereto) is necessary to qualify for the
performance-based compensation exception to the limitation on a company's
ability to deduct compensation paid to certain specified individuals in excess
of $1 million. Approval of Proposals Three and Four is also being sought
because of Rule 16b-3 under the Exchange Act which requires stockholder
approval under certain circumstances of material amendments to stock option
plans. Although the Company does not believe the contemplated amendments to the
Company Directors' Plan, the 1987 Stock Plan and the 1984 Incentive Plan (see
"Amendments to Company Directors' Plan, 1987 Stock Plan and 1984 Incentive
Plan") proposed to be made to permit adjustments to outstanding awards in
connection with the Distribution are material, it is seeking stockholder
approval to avoid any potential uncertainty that arguably might exist if such
approval were not obtained. Approval of Proposal Five is being sought to
establish MFCI's and MHCI's ability, as applicable, to deduct, for Federal
income tax purposes, compensation expense attributable to stock options and
other stock awards, including stock options and awards that may be granted in
connection with adjustments to outstanding stock options and awards in
connection with the Distribution. As noted above, under Section 162(m) of the
Internal Revenue Code, stockholder approval of performance-based compensation
plans is necessary to qualify for the performance-based compensation exception
to the limitation on a company's ability to deduct compensation paid to certain
specified individuals in excess of $1 million. Approval of Proposal Five is
also being sought because of Rule 16b-3 under the Exchange Act which provides
an exemption from Section 16(b) of the Exchange Act for certain transactions by
an officer or director of a company pursuant to an employee benefit plan
satisfying certain specified conditions, including stockholder approval.

See "Introduction--Purpose of the Special Meeting."

VOTING

Only holders of record of Company Common Stock at the close of business on
January 17, 1996 (the "Special Meeting Record Date"), are entitled to notice
of, and to vote at, the Special Meeting. Each of the shares

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of Company Common Stock outstanding at the close of business on the Special
Meeting Record Date is entitled to one vote at the Special Meeting. The
presence in person or by proxy of stockholders holding of record a majority of
the shares of Company Common Stock outstanding and entitled to vote at the
Special Meeting will constitute a quorum for the transaction of business at the
Special Meeting.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
ALL OF THE DISTRIBUTION PROPOSALS.

Approval of each of Proposals One, Three, Four and Five requires the
affirmative vote of the holders of a majority of shares of Company Common Stock
present or represented by proxy at the Special Meeting and entitled to vote
thereat. Approval of Proposal Two requires the affirmative vote of the holders
of a majority of the shares of Company Common Stock outstanding and entitled to
vote at the Special Meeting.

All of the directors and executive officers of the Company, other than E.
Eugene Bishop, have indicated that they intend to vote all of the 3,855,088
shares of Company Common Stock over which they have voting power (representing
approximately 11.0% of the shares of Company Common Stock outstanding as of the
Special Meeting Record Date) in favor of the Distribution and each of the other
Distribution Proposals.

See "Introduction--Voting."

NO APPRAISAL RIGHTS

Stockholders of the Company will not be entitled to appraisal rights in
connection with the Distribution Proposals.

BUSINESS OF RTI, MFCI AND MHCI AFTER THE DISTRIBUTION

RTI

Following the Distribution, RTI will own and operate substantially all of the
specialty restaurant business currently owned and operated by the Company.
References herein to "RTI" include, where appropriate, the historical business
and operations of the Company's Ruby Tuesday Group prior to the Distribution.

RTI operates three separate and distinct casual dining concepts comprised of
Ruby Tuesday, Mozzarella's and Tia's. As of December 2, 1995, RTI operated 367
casual dining restaurants in 33 states and Washington, D.C.

Ruby Tuesday

Ruby Tuesday's are casual, full-service restaurants with mahogany woods and
whimsical artifacts, classic brass and Tiffany lamps which create a
comfortable, nostalgic look and feel. Ruby Tuesday's menu is based on variety,
with something for just about everyone. Some of Ruby Tuesday's most popular
entree items, which are prepared fresh daily, are: fajitas, baby-back ribs,
chicken entrees, soups, sandwiches, salad bar, and signature "Tallcake"
desserts in strawberry and chocolate-Oreo varieties. Entree selections range in
price from $4.99 to $11.99. Servers are dressed in black pants, starched white
shirts, colorful ties, and white bistro aprons.

Mozzarella's Cafe

Mozzarella's is a company-developed, full-service restaurant with a menu that
features a variety of pastas and thin-crust gourmet pizzas, along with made-
from-scratch soups, entree salads and sandwiches, fresh seafood selections,
prime steak and grilled chicken, all prepared with signature recipes. Entree
selections range in price from $4.99 to $13.99.

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<PAGE>

appeal of the restaurant. Servers approach the guests dressed in white button-
down shirts accented with a colorful bow tie, black trousers and a red bistro
apron.

Tia's Tex-Mex

Tia's, RTI's newest concept, is a full-service, casual dining restaurant. The
decor is reminiscent of an authentic Mexican restaurant, with chandeliers
replicating those of an old Mexican hotel, and colors, textures and artifacts
that reflect the restaurants' genuine Southwestern heritage. Tortillas are made
by hand in a display station which contributes to Tia's unique atmosphere.

Tia's menu items, which are all fresh and made from scratch, include an array
of traditional Tex-Mex favorites such as: fajitas, enchiladas, tacos, nachos
and quesadillas and a selection of unique grilled and sauteed dishes. The menu
also provides the guest with a variety of appetizers and desserts. Entree items
range in price from $4.50 to $11.95. Chips are cooked fresh throughout the day
and served with just-made salsa to every guest. Each guest is greeted by a
casually dressed server wearing a camp shirt, in various colors, with the Tia's
logo, blue jeans and short black aprons.

See "Business of RTI After the Distribution."

MFCI

Following the Distribution, MFCI will own and operate substantially all of
the family dining business currently owned and operated by the Company.
References herein to "MFCI" include, where appropriate, the historical business
and operations of the Family Dining Division of the Company's Morrison Group.

MFCI, with 140 traditional cafeterias, seven small cafeterias, 25 small food
court units, four buffets and one free standing quick-service restaurant,
located in 18 states, is the premier cafeteria company in the Southeast. MFCI
operates in the "home-meal replacement" (also known as "comfort" food) segment
of the restaurant industry. MFCI's services appeal to customers seeking
complete meals at affordable prices in a convenient and home-like setting.
While industry observers have labeled "home-meal replacement" as a trend of the
1990s, MFCI has been operating in this market segment for over 75 years.

MFCI serves in excess of 50 million meals a year to a customer base in the
Southeast and Mid-Atlantic regions. In the 1995 American Bus Association's
annual survey of tour operators, MFCI was rated as one of the Association's
most favorite restaurant chains. MFCI's meals are classic, all-American and
freshly prepared and are made from scratch according to MFCI's time tested
recipes. Each day's menu offers the customer a wide variety of selections:
fresh salads, home-style entrees, freshly prepared vegetables, daily baked
breads, and home-baked pie or other desserts.

MFCI's units offer a tremendous variety of menu items including 8-11 salads,
12 entrees, 12-15 vegetables, six types of breads and 12-15 desserts. Complete
or "bundled" meals can be purchased at prices ranging from $3.99 to $5.89 per
meal. In excess of 70% of MFCI's customers select bundled meals. Menus are
rotated daily to provide a varied dining experience and are adjusted to include
seasonal favorites. This variety encourages customer loyalty and repeat
business. MFCI's typical customer visits MFCI restaurants an average of 3.8
times a month.

See "Business of MFCI After the Distribution."

MHCI

Following the Distribution, MHCI will own and operate substantially all of
the health care food and nutrition services business currently owned and
operated by the Company. References herein to "MHCI" include, where
appropriate, the historical business and operations of the Health Care Division
of the Company's Morrison Group.

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<PAGE>

MHCI operates the food and nutrition service departments of hospitals and
other health care facilities. These departments typically include retail
outlets for staff and visitors and patient food and nutrition services. MHCI
had 278 health care accounts in 32 states and Washington, DC as of December 2,
1995, ranging in size from 100 bed specialty hospitals to facilities with over
2,000 beds. Of these accounts, approximately 75% were hospitals.

Since acquiring its first health care account over 40 years ago, MHCI has
grown to service some of the largest and most prestigious hospitals in the
country including Los Angeles County/University of Southern California Medical
Center in Los Angeles, California; Jackson Memorial Hospital in Miami, Florida;
University Hospital-SUNY in Stonybrook, New York; Northwestern Memorial
Hospital in Chicago, Illinois; and BJC Health System in Missouri. MHCI provides
food and nutrition services to 16 of the 50 largest acute care and teaching
hospitals in the United States.

MHCI offers its clients systems and programs designed to reduce cost and
increase customer (patients and staff) satisfaction. To better serve its
clients and provide them with specialized expertise, MHCI's staff is organized
into regional service teams. Each regional service team includes a regional
vice president, nutrition services specialist, culinary specialist, human
resources director, support services coordinator and a director of business
development. The regional service team members provide clients expertise and
access to the best industry practices and performance improvement ideas. The
regional service teams are supported by a corporate staff that includes
nutrition and culinary services, purchasing, marketing, sales, human resources,
legal, finance and development.

See "Business of MHCI After the Distribution."

THE DISTRIBUTION

SHARES TO BE DISTRIBUTED

The Distribution will be made to holders of record on the Distribution Record
Date of issued and outstanding shares of Company Common Stock. Based on
34,995,603 shares of Company Common Stock outstanding as of January 17, 1996,
the Distribution will consist of 8,748,900 shares of MFCI Common Stock and
11,665,201 shares of MHCI Common Stock and, as a result of the Reincorporation
and the Reverse Stock Split, stockholders will hold after the Distribution an
aggregate of 17,497,801 shares of RTI Common Stock. Each holder of Company
Common Stock will receive as a dividend one share of MFCI Common Stock for
every four shares of Company Common Stock held and one share of MHCI Common
Stock for every three shares of Company Common Stock held. In addition, in
connection with the Distribution and as a result of the Reverse Stock Split,
Company stockholders will receive, following the Distribution and the
Reincorporation, one share of RTI Common Stock for every two shares of Company
Common Stock held on the Distribution Record Date.

The Company will issue new stock certificates in connection with the
Distribution and the Reincorporation. Accordingly, stockholders must submit
their certificates representing shares of Company Common Stock to be exchanged
for (i) certificates bearing the name "Ruby Tuesday, Inc." representing their
continuing ownership interest in the Company, (ii) certificates bearing the
name "Morrison Fresh Cooking, Inc." representing the shares of MFCI Common
Stock to which they are entitled as a result of the Distribution and (iii)
certificates bearing the name "Morrison Health Care, Inc." representing the
shares of MHCI Common Stock to which they are entitled as a result of the
Distribution. Certificates for RTI, MFCI and MHCI Common Stock will not be
issued until such submission. If stockholders do not submit their certificates
representing Company Common Stock, they may be prevented from transferring
their interests in RTI, MFCI and MHCI after the Distribution because they will
not have separate certificates representing such interests.

5
<PAGE>

instructions for use in surrendering such stockholder's certificates
representing shares of Company Common Stock. Each stockholder should
immediately complete and sign the letter of transmittal and return it, along
with such stockholder's certificates representing shares of Company Common
Stock, to the Transfer Agent at the address set forth on the letter of
transmittal. Upon receipt from each stockholder of a letter of transmittal,
properly completed, and the stockholder's certificates representing shares of
Company Common Stock, the Transfer Agent will issue, in accordance with the
directions contained in the completed letter of transmittal, three separate
certificates representing shares of RTI, MFCI and MHCI, respectively.
STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE A
TRANSMITTAL FORM.

The Company currently has a stockholders rights plan which will be continued
following the Reincorporation as the RTI Rights Plan. Certificates evidencing
shares of RTI Common Stock issued in the Reincorporation will therefore also
represent the RTI Rights issued under the RTI Rights Plan. In addition, it is
expected that the Board of Directors of each of MFCI and MHCI will adopt a
stockholders rights plan. Certificates evidencing shares of MFCI and MHCI
Common Stock issued in the Distribution will therefore also represent the same
number of MFCI and MHCI Rights issued under the MFCI and MHCI Rights Plan,
respectively. See "Description of RTI Capital Stock--RTI Rights Plan,"
"Description of MFCI Capital Stock--MFCI Rights Plan" and "Description of MHCI
Capital Stock--MHCI Rights Plan."

Stockholders will not have to make any payment to receive their pro rata
share of the Distribution, although any stockholder submitting certificates
representing shares of Company Common Stock for exchange who is not the record
holder of the shares represented, or who requests that certificates for any of
RTI Common Stock, MFCI Common Stock or MHCI Common Stock be issued to any other
person, must provide evidence of payment of all applicable transfer taxes. See
"The Distribution--Manner of Effecting the Distribution."

No certificates representing fractional shares of RTI Common Stock will be
issued in the Reincorporation merger and no certificates for fractional shares
of MFCI Common Stock or MHCI Common Stock will be delivered in the
Distribution. The Transfer Agent will aggregate fractional shares into whole
shares of RTI Common Stock, MFCI Common Stock and MHCI Common Stock, as
applicable, and an independent agent retained by the Company will sell them in
the open market at prevailing prices on behalf of holders who otherwise would
be entitled to receive fractional share interests. Such persons will then
receive a cash payment for the amount of their allocable share of the total
sale proceeds. The amount of such payment will depend on the prices at which
the aggregated fractional shares are sold by the independent agent in the open
market shortly after the Distribution Date. Such sales are expected to be made
as soon as practicable after the Distribution. RTI, MFCI and MHCI, as
appropriate, will bear the cost of any commission incurred in connection with
such sales.

DISTRIBUTION RECORD DATE

The "Distribution Record Date" will be established by the Board of Directors
of the Company shortly before the Distribution. The Distribution Record Date
will be the same date as the Distribution Date or, if the Distribution Date is
not a business day, the close of business on the last business day prior to the
Distribution Date.

DISTRIBUTION DATE

The "Distribution Date" will be established by the Board of Directors of the
Company and is presently expected to be on or about , 1996. On or about
the first business day following the Distribution Date, the Company will effect
the Distribution by making available certificates for all outstanding shares of
MFCI Common Stock and MHCI Common Stock to the Transfer Agent for transfer and
distribution to the holders of record of Company Common Stock on the
Distribution Record Date. At the same time, the Company will also make
available certificates for shares of RTI Common Stock to the Transfer Agent.
The Company will also instruct the Transfer Agent to mail letters of
transmittal for the exchange of certificates to stockholders of

6
<PAGE>

the Company on or about the first business day following the Distribution Date.
See "The Distribution--Manner of Effecting the Distribution."

TRANSFER AGENT AND REGISTRAR

AmSouth Bank of Alabama is expected to be the Transfer Agent and Registrar
(the "Transfer Agent") for the Distribution and for the RTI Common Stock, the
MFCI Common Stock and MHCI Common Stock following the Distribution.

CONDITIONS TO THE DISTRIBUTION

The Distribution is subject to (i) approval of the Distribution Proposals by
stockholders of the Company; (ii) receipt of a favorable ruling from the
Internal Revenue Service as to certain Federal income tax consequences of the
Distribution; (iii) receipt of all necessary consents of any third parties and
receipt of any necessary opinions of counsel or other experts; (iv) receipt of
all necessary consents of any governmental or regulatory bodies; (v) the
Registration Statement on Form 10 under the Exchange Act, to be filed by MFCI
with the SEC in respect of the MFCI Common Stock, having become effective; (vi)
the Registration Statement on Form 10 under the Exchange Act, to be filed by
MHCI with the SEC in respect of the MHCI Common Stock, having become effective;
(vii) the shares of MFCI Common Stock and MHCI Common Stock to be issued or
initially reserved for issuance having been approved for listing on a national
securities exchange or the Nasdaq Stock Market, subject to official notice of
issuance; (viii) consummation of the Reincorporation substantially
simultaneously with the Distribution; and (ix) there not being in effect any
statute, rule, regulation or order of any court, governmental or regulatory
body which prohibits or makes illegal the transactions contemplated by the
Distribution. The Board has retained discretion, even if stockholder approval
of the Distribution Proposals is obtained and the other conditions to the
Distribution are satisfied, to abandon, defer or modify the Distribution. The
terms of the Distribution thus may be modified or conditions thereto may be
waived by the Board of Directors of the Company. However, the Board will not
waive the requirement of receipt of a favorable ruling from the Internal
Revenue Service unless, in the Board's judgment, based on the opinion of
counsel, the Distribution will qualify for non-recognition treatment (except to
the extent of any cash received in lieu of fractional shares) to both the
holders of Company Common Stock and the Company, MFCI and MHCI under the
provisions of Sections 355 and 368(a)(1)(D) of the Internal Revenue Code.

See "The Distribution--Conditions to the Distribution."

REASONS FOR THE DISTRIBUTION

The Board of Directors believes that the Distribution is in the best
interests of the Company and its stockholders because the separation of the
Company's three lines of business will, among other things, (i) allow
management of each of the three companies to concentrate its full attention on
its business and allow each company to reward management and employees based on
the performance of its business; (ii) allow each company to access the capital
markets directly to raise capital; (iii) establish a value for each company
that is independent of the other businesses and provide investors and
securities analysts a clearer basis on which to understand and analyze the
three businesses; and (iv) allow MFCI and MHCI to establish equity-based
benefit plans which can hold MFCI Common Stock and MHCI Common Stock,
respectively.

See "The Distribution--Reasons for the Distribution."

FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION

It is intended that the Distribution will qualify as a tax-free spin-off
under the provisions of Sections 355 and 368(a)(1)(D) of the Internal Revenue
Code. Under Section 355 of the Internal Revenue Code, in general, no

7
<PAGE>

income, gain or loss will be recognized by holders of Company Common Stock or
by RTI, MFCI or MHCI on the Distribution. It is a condition to the Distribution
that the Company receive a ruling from the Internal Revenue Service that
Sections 355 and 368(a)(1)(D) of the Internal Revenue Code will apply to the
Distribution. The Board of Directors of the Company has reserved the right to
waive the receipt of such ruling as a condition to consummation of the
Distribution. The Board will not waive such condition unless, in the Board's
judgment, based on opinion of counsel, Sections 355 and 368(a)(1)(D) of the
Internal Revenue Code will apply to the Distribution.

If the Distribution were not to qualify under Section 355 of the Internal
Revenue Code, then, in general, a corporate tax (which would be very
substantial), equal to the applicable corporate tax rate (both Federal and
state) times the difference between (x) the fair market value of the MFCI
Common Stock and the MHCI Common Stock and (y) the adjusted basis of such MFCI
Common Stock and MHCI Common Stock, would be payable by the consolidated group,
of which the Company is the common parent. Under the consolidated return rules,
each member of the consolidated group (including MFCI and MHCI) would be
jointly and severally liable for such tax liability. If the Distribution
occurred and it were not to qualify as a tax-free spin-off under Section 355 of
the Internal Revenue Code, the resulting tax liability would have a material
adverse effect on the financial position, results of operation and cash flows
of each of RTI, MFCI and MHCI.

Furthermore, if the Distribution were not to qualify as a tax-free spin-off,
each Company stockholder receiving shares of MFCI Common Stock and MHCI Common
Stock in the Distribution would be treated as if such stockholder had received
a distribution in an amount equal to the fair market value of MFCI Common Stock
and MHCI Common Stock received, which would (x) first be taxable as a dividend
to the extent of such stockholder's pro rata share of the Company's current and
accumulated earnings and profits, (y) then be considered a reduction in such
stockholder's basis in Company Common Stock to the extent the amount received
exceeds such stockholder's share of earnings and profits, and (z) finally, be
considered a gain from the exchange of Company Common Stock to the extent the
amount received exceeds both such stockholder's share of earnings and profits
and such stockholder's basis in Company Common Stock. Any dividend income
considered received by the Company's stockholders who are not exempt from
taxation as a result of the Distribution would be subject to federal income
taxation at rates (in the case of a taxpayer that is not a corporation) of up
to 39.6% currently, plus any applicable state income tax rate. The Company
estimates that substantially all, if not all, of the Distribution will be
treated as a dividend if the Distribution does not qualify as a tax-free spin-
off under the provisions of Section 355 of the Internal Revenue Code.

See "The Distribution--Federal Income Tax Consequences of the Distribution."

STOCK EXCHANGE LISTINGS

There is not currently a public market for either the MFCI Common Stock or
the MHCI Common Stock. Application will be made to list the MFCI Common Stock
and the MHCI Common Stock on the NYSE under the symbols "MFC" and "MHI,"
respectively. In addition, it is expected that the RTI Common Stock would be
traded on the NYSE following the Distribution under the symbol "RI," the
current trading symbol for the Company Common Stock. It is currently
anticipated that MFCI Common Stock and MHCI Common Stock will be approved for
listing on the NYSE prior to the Distribution Date, and it is possible that
trading may commence on a "when-issued" basis prior to the Distribution. It is
also possible that RTI Common Stock would be traded on a "when-distributed"
basis prior to the Distribution. On the first NYSE trading day following the
Distribution Date, "when-distributed" or "when-issued" trading, as applicable,
in respect of each of the RTI Common Stock, MFCI Common Stock and the MHCI
Common Stock would end and "regular-way" trading would begin. See "The
Distribution--Listing and Trading of RTI Common Stock, MFCI Common Stock and
MHCI Common Stock."

8
<PAGE>

TREATMENT OF INDEBTEDNESS

In connection with the Distribution, the Company intends to restructure and
allocate the consolidated indebtedness of the Company among RTI and MHCI. The
Company anticipates that it will allocate an aggregate of $32.1 million of its
indebtedness outstanding at December 2, 1995 to MHCI and $85.6 million to RTI.

See "The Distribution--Treatment of Indebtedness."

LIMITED RELATIONSHIPS AMONG THE COMPANIES AFTER THE DISTRIBUTION

After the Distribution, none of RTI, MFCI or MHCI will have any ownership
interest in the other two companies except for any ownership interest held for
the benefit of employees under or in connection with employee benefit plans.
Each of RTI, MFCI and MHCI will be an independent public company. RTI, MFCI and
MHCI will enter into certain agreements governing their relationship subsequent
to the Distribution and providing for certain employee benefits matters and for
the allocation of tax and certain other liabilities and obligations arising
from periods prior to the Distribution. See "Relationship Among RTI, MFCI and
MHCI After the Distribution." There will be individuals on the Boards of
Directors of RTI, MFCI and MHCI who will also serve on the Board of Directors
of one of the other companies. See "RTI Management and Executive Compensation,"
"MFCI Management and Executive Compensation" and "MHCI Management and Executive
Compensation."

DIVIDEND POLICIES

RTI does not intend to pay cash dividends on RTI Common Stock for the
foreseeable future after the Distribution.

The payment and level of dividends by MFCI after the Distribution will be
subject to the discretion of the MFCI Board of Directors. Although it is
anticipated that MFCI will initially pay quarterly cash dividends of $0.09 per
share, dividend decisions will be based on, and affected by, a number of
factors, including the operating results and financial requirements of MFCI on
a stand-alone basis.

The payment and level of cash dividends by MHCI after the Distribution will
be subject to the discretion of the MHCI Board of Directors. Although it is
anticipated that MHCI will initially pay quarterly cash dividends of $0.205 per
share, dividend decisions will be based on, and affected by, a number of
factors, including the operating results and financial requirements of MHCI on
a stand-alone basis.

See "Dividend Policies."

CORPORATE GOVERNANCE; RIGHTS PLANS

The Articles of Incorporation of each of RTI, MFCI and MHCI will contain
certain provisions that may deter or prevent certain business combinations with
RTI, MFCI and MHCI, respectively. See "Description of RTI Capital Stock--
Provisions of RTI Articles of Incorporation Affecting Change in Control,"
"Description of MFCI Capital Stock--Provisions of MFCI Articles of
Incorporation Affecting Change in Control" and "Description of MHCI Capital
Stock--Provisions of MHCI Articles of Incorporation Affecting Change in
Control."

It is intended that each of RTI, MFCI and MHCI will have a stockholders
rights plan following the Distribution. A stockholders rights plan is designed
to protect stockholders of a company in the event of an unsolicited offer and
other takeover tactics that, in the opinion of such company's board of
directors, could impair its ability fairly to represent stockholders'
interests. The provisions of the stockholders rights plans may render an
unsolicited takeover of RTI, MFCI or MHCI, respectively, more difficult. See
"Description of RTI

9
<PAGE>

Capital Stock--RTI Rights Plan," "Description of MFCI Capital Stock--MFCI
Rights Plan" and "Description of MHCI Capital Stock--MHCI Rights Plan."

COMPARATIVE RIGHTS OF STOCKHOLDERS

As a result of the Distribution and the Reincorporation, the current
stockholders of the Company, a Delaware corporation governed by Delaware law
and the Company's Certificate of Incorporation and Bylaws, will obtain shares
of each of RTI, MFCI and MHCI, each a Georgia corporation governed by Georgia
law and its Articles of Incorporation and Bylaws. Holders of Company Common
Stock should be aware that certain differences exist between the rights of a
stockholder of a Delaware corporation and the rights of a stockholder of a
Georgia corporation. See "Comparison of Stockholders Rights."

THE REINCORPORATION

In connection with the Distribution, the Company would be reincorporated in
Georgia and the Company Common Stock would be combined to effect the Reverse
Stock Split. RTI would succeed to all the business, properties, assets and
liabilities of the Company, and the stockholders of the Company would
automatically become stockholders of RTI. Pursuant to the Reincorporation, each
outstanding share of Company Common Stock will automatically be converted into
one-half of one share of RTI Common Stock. After the Reincorporation, the
rights of RTI stockholders will be governed by Georgia law and by RTI Articles
of Incorporation and Bylaws, rather than by Delaware law and the Company's
existing Certificate of Incorporation and Bylaws. See "The Reincorporation--
Other Changes Affecting Stockholders."

If Proposal Two is approved, it is expected that the Reincorporation will be
consummated substantially simultaneously with the Distribution. In addition,
substantially concurrently with the Distribution and the Reincorporation, the
name of the corporation surviving the Reincorporation merger will be changed to
"Ruby Tuesday, Inc." (see "The Distribution--Certain Organizational Matters").

REASON FOR THE REINCORPORATION

The Reincorporation is being proposed because the Company estimates that RTI
would save approximately $145,000 annually in franchise taxes by changing its
state of incorporation from Delaware to Georgia. See "The Reincorporation--
Principal Reason for Reincorporation."

THE REVERSE STOCK SPLIT

The Reverse Stock Split would be effected through the merger effecting the
Reincorporation. See "The Reincorporation--The Reverse Stock Split."

FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION

No gain or loss will be recognized by the Company or its stockholders upon
the Reincorporation, except to the extent cash is received by stockholders on
account of fractional interests. See "The Reincorporation--Federal Income Tax
Consequences of the Reincorporation."

10
<PAGE>

MORRISON RESTAURANTS INC.

(RUBY TUESDAY, INC. AFTER THE DISTRIBUTION)

SUMMARY FINANCIAL DATA

The following table summarizes certain selected financial information with
respect to the Company (RTI following the Distribution) and is derived from the
Consolidated Financial Statements of the Company. The Distribution has been
recorded as a discontinuance of the businesses of MFCI and MHCI in the
Consolidated Financial Statements of the Company. The consolidated statements
of income data for the years ended June 5, 1993, June 4, 1994 and June 3, 1995
and the consolidated balance sheet data as of June 4, 1994 and June 3, 1995 are
derived from the Audited Consolidated Financial Statements of the Company. The
consolidated statements of income data for the twenty-six weeks ended December
3, 1994 and December 2, 1995 and the consolidated balance sheet data as of June
5, 1993, December 3, 1994 and December 2, 1995 are derived from the Unaudited
Consolidated Financial Statements of the Company and, in the opinion of
management, include all adjustments, consisting of normal recurring accruals,
which the Company considers necessary for a fair presentation of the
consolidated financial position and the results of operations for these
periods. The financial information presented below may not be indicative of the
Company's future performance independent of discontinued businesses. The
information set forth below should be read in conjunction with "Company
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business of RTI After the Distribution," and the Consolidated
Financial Statements of the Company and notes thereto and the Unaudited Pro
Forma Consolidated Financial Information of the Company included elsewhere
herein.

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX
FISCAL YEAR WEEKS ENDED
---------------------------- -------------------------
1993 1994 1995 DEC. 3, 1994 DEC. 2, 1995
-------- -------- -------- ------------ ------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Consolidated Statement
of Income Data:
Revenues............... $378,693 $459,039 $515,312 $234,062 $297,965
======== ======== ======== ======== ========
Income From Continuing
Operations Before
Income Taxes and
Cumulative Effect of
Accounting Changes.... $ 25,683 $ 27,814 $ 16,112 $ (2,962) $ 9,336
Provision for Federal
and State Income
Taxes................. 9,400 9,707 5,027 (1,839) 3,038
-------- -------- -------- -------- --------
Income from Continuing
Operations............ 16,283 18,107 11,085 (1,123) 6,298
Income from
Discontinued
Operations, net of
applicable income
taxes................. 21,151 26,577 51,086 37,764 9,892
-------- -------- -------- -------- --------
Income before
Cumulative Effect of
Accounting Changes,
net................... 37,434 44,684 62,171 36,641 16,190
Cumulative Effect of
Accounting Changes,
net:
Postretirement
benefits............. (18)
Income taxes.......... 559
-------- -------- -------- -------- --------
Net Income............. $ 37,975 $ 44,684 $ 62,171 $ 36,641 $ 16,190
======== ======== ======== ======== ========
Earnings per Common and
Common
Equivalent Share:
Continuing Operations.. $ 0.43 $ 0.49 $ 0.31 $ (0.03) $ 0.18
Discontinued
Operations............ 0.56 0.71 1.42 1.04 0.28
Cumulative Effect of
Accounting Changes,
net................... 0.01
-------- -------- -------- -------- --------
Earnings per Common and
Common Equivalent
Share.................. $ 1.00 $ 1.20 $ 1.73 $ 1.01 $ 0.46
======== ======== ======== ======== ========
All fiscal years are
composed of 52 weeks.
Consolidated Balance
Sheet Data (at end of
period):
Total Assets........... $382,620 $408,453 $484,051 $436,948 $545,977
Long-Term Debt......... $ 7,392 $ 5,467 $ 32,003 $ 20,529 $ 69,136
Stockholders' Equity... $219,624 $221,136 $245,493 $216,118 $256,584
Working Capital
(Deficiency).......... $ 1,906 $(43,007) $(44,780) $(51,033) $(41,831)
Current Ratio.......... 1.0:1 0.6:1 0.6:1 0.6:1 0.7:1
</TABLE>
- --------
Note: See information relating to the conversion/closing of the L&N Seafood
Grill Concept under the caption "Company Management's Discussion and Analysis
of Financial Condition and Results of Operations" for factors that affect the
comparability of the information reflected above.

11
<PAGE>

MORRISON FRESH COOKING, INC.

SUMMARY FINANCIAL DATA

The following table summarizes certain selected financial information with
respect to MFCI and is derived from the Financial Statements of MFCI. The
Financial Statements of MFCI are presented as if MFCI had been a separate
entity for all periods presented. The statements of income data for the years
ended June 5, 1993, June 4, 1994 and June 3, 1995 and the balance sheet data as
of June 4, 1994 and June 3, 1995 are derived from the Audited Financial
Statements of MFCI. The statements of income data for the twenty-six weeks
ended December 3, 1994 and December 2, 1995 and the balance sheet data as of
June 5, 1993, December 3, 1994 and December 2, 1995 are derived from the
Unaudited Financial Statements of MFCI and, in the opinion of management,
include all adjustments, consisting of normal recurring accruals, which MFCI
considers necessary for a fair presentation of the financial position and the
results of operations for these periods. The financial information presented
below may not be indicative of MFCI's future performance as an independent
company. The information set forth below should be read in conjunction with
"MFCI Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business of MFCI After the Distribution," and the Financial
Statements of MFCI and notes thereto and the Unaudited Pro Forma Financial
Information of MFCI included elsewhere herein. Historical earnings per share
and dividend data have not been presented as MFCI was not a separate publicly-
held company during the periods presented below.

12
<PAGE>

MORRISON HEALTH CARE, INC.

SUMMARY FINANCIAL DATA

The following table summarizes certain selected financial information with
respect to MHCI and is derived from the Financial Statements of MHCI. The
Financial Statements of MHCI are presented as if MHCI had been a separate
entity for all periods presented. The statements of income data for the years
ended June 5, 1993, June 4, 1994 and June 3, 1995 and the balance sheet data as
of June 4, 1994 and June 3, 1995 are derived from the Audited Financial
Statements of MHCI. The statements of income data for the twenty-six weeks
ended December 3, 1994 and December 2, 1995 and the balance sheet data as of
June 5, 1993, December 3, 1994 and December 2, 1995 are derived from the
Unaudited Financial Statements of MHCI and, in the opinion of management,
include all adjustments, consisting of normal recurring accruals, which MHCI
considers necessary for a fair presentation of the financial position and the
results of operations for these periods. The financial information presented
below may not be indicative of MHCI's future performance as an independent
company. The information set forth below should be read in conjunction with
"MHCI Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business of MHCI After the Distribution," and the Financial
Statements of MHCI and notes thereto and the Unaudited Pro Forma Financial
Information of MHCI included elsewhere herein. Historical earnings per share
and dividend data have not been presented as MHCI was not a separate publicly-
held company during the periods presented below.

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX
FISCAL YEAR WEEKS ENDED
--------------------------- -------------------------
1993 1994 1995 DEC. 3, 1994 DEC. 2, 1995
-------- -------- -------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues................ $430,145 $461,780 $225,392 $110,549 $112,881
======== ======== ======== ======== ========
Income Before Provision
for Income Taxes and
Cumulative Effect of
Accounting Changes..... $ 18,122 $ 21,588 $ 65,295 $ 56,203 $ 10,504
Provision for Federal
and State Income
Taxes.................. 6,980 8,351 28,469 24,786 4,424
-------- -------- -------- -------- --------
Income Before Cumulative
Effect of Accounting
Changes................ 11,142 13,237 36,826 31,417 6,080
Cumulative Effect of
Accounting Changes,
net:
Postretirement
benefits............... (640)
Income taxes............ 426
-------- -------- -------- -------- --------
Net Income.............. $ 10,928 $ 13,237 $ 36,826 $ 31,417 $ 6,080
======== ======== ======== ======== ========
All fiscal years are
composed of 52 weeks.
Balance Sheet Data (at
end of period):
Total Assets............ $109,434 $107,942 $ 70,422 $ 75,595 $ 62,963
Long-Term Debt.......... $ 4,686 $ 3,128 $ 19,245 $ 45 $ 32,054
Owner's Equity.......... $ 56,807 $ 51,164 $ 9,015 $ 11,504 $ (5,204)
Working Capital
(Deficiency)........... $ 21,524 $ 11,217 $ 14,712 $ (4,017) $ 14,658
Current Ratio........... 1.6:1 1.3:1 1.6:1 0.9:1 1.7:1
</TABLE>
- --------
Note: See information relating to the sale of B&I contracts and assets under
the caption "MHCI Management's Discussion and Analysis of Financial Condition
and Results of Operations" for factors that affect the comparability of the
information reflected above.

13
<PAGE>

MORRISON RESTAURANTS INC.

4721 MORRISON DRIVE
POST OFFICE BOX 160266
MOBILE, ALABAMA 36625

PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY , 1996

INTRODUCTION

The following Proxy Statement and the accompanying proxy card, first mailed
to stockholders on or about January , 1996, are furnished in connection with
the solicitation by the Board of Directors of Morrison Restaurants Inc. (the
"Company") of proxies to be used in voting at the Special Meeting of
Stockholders of the Company to be held on February , 1996, at the Stouffer
Concourse Hotel, 1 Hartsfield Center Parkway, Atlanta, Georgia 30354 and at
any adjournment(s) thereof (the "Special Meeting").

PURPOSE OF SPECIAL MEETING

At the Special Meeting, the stockholders of the Company will be asked to
consider and vote upon five separate but related proposals (collectively, the
"Distribution Proposals") providing for:

Proposal Two: Approval and adoption of an Agreement and Plan of Merger
(the "Merger Agreement") between the Company and Ruby Tuesday (Georgia),
Inc. ("RTI"), a newly formed Georgia corporation and a wholly-owned
subsidiary of the Company, providing for (i) the reincorporation (the
"Reincorporation") of the Company in Georgia pursuant to a statutory merger
of the Company into RTI, and (ii) a one-for-two reverse stock split (the
"Reverse Stock Split"), all to be effective only if the Distribution
occurs;

Proposal Three: Approval of amendments to the Company's Stock Incentive
Plan (the "Company Incentive Plan") to (i) increase the number of shares
reserved for issuance thereunder, (ii) permit the grant of equity-based
awards to non-employee directors, and (iii) permit adjustments to
outstanding stock options in connection with the Distribution;

Proposal Five: Approval of the adoption (i) by MFCI of the MFCI 1996
Stock Incentive Plan (the "MFCI Incentive Plan"), and (ii) by MHCI of the
MHCI 1996 Stock Incentive Plan (the "MHCI Incentive Plan"), each to be
effective only if the Distribution occurs.

14
<PAGE>

The Board of Directors of the Company has further retained discretion, even
if stockholder approval of the Distribution Proposals is obtained and the
other conditions to the Distribution are satisfied, to abandon, defer or
modify the Distribution or the Reincorporation. See "The Distribution--
Conditions to the Distribution."

Although the Company believes that stockholder approval of the Distribution
is not required under Delaware law because the Distribution is a dividend for
the purposes of Section 170(a) of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors made stockholder approval of the
Distribution (along with stockholder approval of all the other Distribution
Proposals) a condition to the Distribution because of the importance of the
Distribution to the Company and its stockholders. Although stockholder
approval of Proposal One may not prevent a stockholder from subsequently
seeking to challenge the Distribution or the actions of the Board of Directors
in approving the Distribution, the Company and its directors may assert
stockholder approval of the Distribution as one of their defenses against any
such challenge. Under the doctrine of estoppel, stockholders who voted in
favor of the Distribution may be precluded from challenging the Distribution
or seeking equitable relief following the consummation thereof. However, the
Company cannot determine in advance the position it would take with respect to
any such challenge. In addition, approval of Proposal Two is being sought
because the provisions of applicable state corporate law require such
approval. Accordingly, if Proposal Two is not approved by stockholders, the
proposed Reincorporation and Reverse Stock Split could not occur. Approval of
Proposals Three and Four is being sought to preserve RTI's ability to deduct,
for Federal income tax purposes, compensation attributable to stock options
and other stock awards. Under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), stockholder approval of
performance-based compensation plans (including material amendments thereto)
is necessary to qualify for the performance-based compensation exception to
the limitation on a company's ability to deduct compensation paid to certain
specified individuals in excess of $1 million. Approval of Proposals Three and
Four is also being sought because of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which requires stockholder
approval under certain circumstances of material amendments to stock option
plans as a condition to the availability of the exemption provisions of Rule
16b-3 to certain transactions under such plans. Although the Company does not
believe the contemplated amendments to the Company Directors' Plan, the 1987
Stock Plan and the 1984 Incentive Plan (see "Amendments to Company Directors'
Plan, 1987 Stock Plan and 1984 Incentive Plan") proposed to be made to permit
adjustments to outstanding awards in connection with the Distribution are
material, it is seeking stockholder approval to avoid any potential
uncertainty that arguably might exist if such approval were not obtained.
Approval of Proposal Five is being sought to establish MFCI's and MHCI's
ability, respectively, to deduct, for Federal income tax purposes,
compensation attributable to stock options and other stock awards that may be
granted under the MFCI Stock Incentive Plan and the MHCI Stock Incentive Plan,
respectively, including stock options and awards that may be granted in
connection with adjustments to outstanding stock options and awards in
connection with the Distribution (see "Approval of MFCI Incentive Plan and
MHCI Incentive Plan" and "Employee Benefits and Compensation Matters--Equity-
Based Compensation Plans"). As noted above, under Section 162(m) of the
Internal Revenue Code, stockholder approval of performance-based compensation
plans is necessary to qualify for the performance-based compensation exception
to the limitation on a company's ability to deduct compensation paid to
certain specified individuals in excess of $1 million. Approval of Proposal
Five is also being sought because of Rule 16b-3 under the Exchange Act which
provides an exemption from Section 16(b) of the Exchange Act for certain
transactions pursuant to an employee benefit plan satisfying certain specified
conditions, including stockholder approval.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors of the Company approved the Distribution and
recommends that the stockholders vote FOR adoption of all the Distribution
Proposals.

VOTING

The Board of Directors of the Company fixed January 17, 1996 as the record
date (the "Special Meeting Record Date") for determination of stockholders
entitled to notice of and to vote at the Special Meeting and,

15
<PAGE>

accordingly, only holders of shares of common stock, $.01 par value ("Company
Common Stock"), of record at the close of business on that date will be
entitled to notice of and to vote at the Special Meeting. The presence in
person or by proxy of stockholders holding of record a majority of the shares
of Company Common Stock outstanding and entitled to vote at the Special
Meeting will constitute a quorum for the transaction of business at the
Special Meeting.

The number of shares of outstanding stock entitled to vote at the Special
Meeting is 34,995,603 shares of Company Common Stock, each of which is
entitled to one vote. The participants in the Company's Salary Deferral Plan
(the "Salary Deferral Plan") will be provided with a proxy in respect of the
Distribution Proposals in their capacities as beneficial owners of Company
Common Stock. Pursuant to the terms of the Salary Deferral Plan, shares are
voted by the trustee in accordance with the directions of the employees to
whom such shares have been allocated.

If you are a participant in Company's Stock Purchase Plan or the Company's
Dividend Reinvestment Plan, the accompanying proxy indicates the number of
full shares credited to your account in such plans.

APPROVAL OF EACH OF PROPOSALS ONE, THREE, FOUR AND FIVE REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF SHARES OF COMPANY COMMON
STOCK PRESENT OR REPRESENTED BY PROXY AT THE SPECIAL MEETING AND ENTITLED TO
VOTE THEREAT. APPROVAL OF PROPOSAL TWO REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE SHARES OF COMPANY COMMON STOCK OUTSTANDING AND
ENTITLED TO VOTE AT THE SPECIAL MEETING.

Abstentions and broker non-votes are counted as shares present for
determination of a quorum. For purposes of determining whether the
Distribution Proposals are approved by the stockholders, (i) abstentions will
have the same effect as votes against Proposals One, Three, Four and Five but
broker non-votes will have no effect on the outcome of the voting on any such
proposal, and (ii) abstentions and broker non-votes will have the same effect
as votes against Proposal Two.

All of the directors and executive officers of the Company, other than E.
Eugene Bishop, have indicated that they intend to vote all of the 3,855,088
shares of Company Common Stock over which they have voting power (representing
approximately 11.0% of the shares of Company Common Stock outstanding as of
the Special Meeting Record Date) in favor of the Distribution and each of the
other Distribution Proposals.

PROXIES

All shares of Company Common Stock represented by properly executed proxies
will, unless such proxies have previously been revoked, be voted at the
Special Meeting in accordance with the directions on the proxies. If no
direction is indicated on a properly executed proxy, the shares will be voted
in favor of the Distribution Proposals. If any other matters are properly
presented at the Special Meeting for action, which is not anticipated, the
proxy holders will vote the proxies (which confer authority to such holders to
vote on such matters) in accordance with their best judgment. A Company
stockholder returning a proxy may revoke it at any time before it is voted by
communicating such revocation in writing to the Secretary of the Company or by
executing and delivering a later-dated proxy. In addition, any person who has
executed a proxy and is present at the Special Meeting may vote in person
instead of by proxy, thereby cancelling any proxy previously given, whether or
not written revocation of such proxy has been given. Any written notice
revoking a proxy should be sent to Morrison Restaurants Inc., 4721 Morrison
Drive, Post Office Box 160266, Mobile, Alabama 36625, Attention: Secretary.

NO APPRAISAL RIGHTS

Stockholders of the Company will not be entitled to appraisal rights in
connection with the Distribution Proposals.

16
<PAGE>

COSTS OF SOLICITATION

The Company will bear the costs of the solicitation of proxies in connection
with the Special Meeting. In addition to solicitation by mail, the Company
will request banks, brokers and other custodian nominees and fiduciaries to
supply proxy material to the beneficial owners of Company Common Stock of whom
they have knowledge, and will reimburse them for their expenses in so doing;
and certain directors, officers and other employees of the Company, not
specially employed for the purpose, may solicit proxies, without additional
remuneration therefor, by personal interview or telephone. In addition, the
Company has retained to assist in the solicitation for a fee of
$ , plus reimbursement for its reasonable out-of-pocket expenses and for
payments made to brokers and other nominees for their expenses in forwarding
soliciting material. will distribute proxy materials to beneficial
owners and solicit proxies by personal interview, mail, telephone and
telegram, and will request brokerage houses and other custodians, nominees and
fiduciaries to forward soliciting material to the beneficial owners of Company
Common Stock held on the Special Meeting Record Date by such persons.

BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK

The following table sets forth certain information as of January 17, 1996
(except as otherwise noted) regarding the amount of Company Common Stock
beneficially owned by (i) all persons known to the Company who beneficially
own more than five percent of the outstanding Company Common Stock, (ii) each
individual who will be a director of RTI, MFCI or MHCI, (iii) each executive
named in the RTI, MFCI or MHCI Summary Compensation Table, and (iv) all those
individuals who will be directors and executive officers of RTI, MFCI and
MHCI, respectively, as a group. An asterisk indicates beneficial ownership of
less than one percent of the outstanding Company Common Stock.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT
NAME OR GROUP OWNED(1) OF CLASS(2)
- ------------- ---------------- -----------
<S> <C> <C>
5% STOCKHOLDERS:
Heine Securities Corporation(3)................. 3,671,200(3) 10.5
A.R. Outlaw (4)................................. 3,651,165(5) 10.4
Shawmut National Corporation(5)................. 1,763,564(6) 5.0
DIRECTORS AND EXECUTIVE OFFICERS:
Ruby Tuesday, Inc.:
C. L. Arnold.................................... 7,674 *
S. E. Beall, III................................ 796,330(7) 2.2
J. B. McKinnon.................................. 10,695(8) *
A. R. Outlaw (4)................................ 3,651,165(5) 10.4
B. F. Payton.................................... 7,818 *
D. Ratajczak.................................... 16,380(9) *
D. W. von Arx................................... 9,945(10) *
R. D. McClenagan................................ 161,503 *
A. R. Johnson................................... 44,742 *
P. G. Hunt...................................... 110,385(11) *
J. R. Mothershed................................ 43,478 *
All future directors and
executive officers of RTI
as a group (12 persons)........................ 4,895,469 13.6
Morrison Fresh Cooking, Inc.:
E. E. Bishop.................................... 1,396,704(12) 3.9
J. V. Biggins................................... 0 *
C. P. Elliott................................... 0 *
A. R. Outlaw (4)................................ 3,651,165(5) 10.4
D. Ratajczak.................................... 16,380(9) *
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT
NAME OR GROUP OWNED(1) OF CLASS(2)
- ------------- ---------------- -----------
<S> <C> <C>
R. L. Tatum.................................. 84,687 *
D. W. von Arx................................ 9,945(10) *
C. D. Nelson................................. 13,176 *
S. Lee, III.................................. 7,462 *
All future directors and executive officers
of MFCI as a group
(10 persons)................................ 5,179,520 14.3
Morrison Health Care, Inc.:
C. L. Arnold................................. 7,674 *
E. E. Bishop................................. 1,396,704(12) 3.9
G. A. Davenport.............................. 42,333(13) *
J. B. McKinnon............................... 10,695(8) *
B. F. Payton................................. 7,818 *
A. R. Outlaw, Jr. ........................... 313,966 *
J. D. Underhill.............................. 20,381 *
G. L. Anderson............................... 493 *
C. L. Kolesar................................ 1,441 *
K. W. Engwall................................ 21,626 *
All future directors and executive officers
of MHCI as a group
(12 persons)................................ 1,846,715 5.1
</TABLE>
- --------

(1) Includes (i) shares subject to options exercisable within 60 days after
January 17, 1996 held by the named persons and groups as follows: Ms.
Arnold, 1,764; Mr. Beall, 697,500; Mr. McKinnon, 5,385; Dr. Payton,
1,764; Dr. Ratajczak, 5,385; Mr. von Arx, 5,385; Mr. McClenagan, 156,966;
Mr. Johnson, 34,587; Mr. Hunt, 83,267; Mr. Mothershed, 38,482; all future
directors and executive officers of RTI as a group, 1,059,928; Mr.
Bishop, 1,062,612; Mr. Tatum, 73,002; Mr. Nelson, 9,507; Mr. Lee, 6,579;
all future directors and executive officers of MFCI as a group,
1,162,470; Mr. Davenport, 34,471; Mr. Underhill, 18,564; Mr. Engwall,
19,445; and all future executive officers of MHCI as a group, 1,159,359;
and (ii) shares held in the Company's Salary Deferral Plan as follows:
Mr. Beall, 7,063; Mr. Mothershed, 112; all directors and executive
officers of RTI as a group, 7,175; Mr. Davenport, 643; Ms. Kolesar, 322;
Mr. Engwall, 318; and all future directors and executive officers of MHCI
as a group, 4,732.

(2) "Percent of Class" has been calculated by taking into account all shares
as to which the indicated person has sole or shared voting or investment
power (including shares subject to options exercisable within 60 days
after January 17, 1996), without regard to any disclaimers of beneficial
ownership by the person indicated.

(3) The holder's address is 51 John F. Kennedy Parkway, Short Hills, New
Jersey 07078. The information presented is based on the holder's Schedule
13G dated November 10, 1995.

(4) Mr. Outlaw's address is 4721 Morrison Drive, Mobile, Alabama 36609.

(5) Includes (i) 2,569,204 shares held by Mr. Outlaw as executor or trustee
of various estates and trusts for the benefit of relatives, and (ii)
49,711 shares owned by Mr. Outlaw's spouse.

(6) The holder's address is 777 Main Street, Hartford, Connecticut 06115. The
information presented is based on the holder's amendment to Schedule 13G
dated January 20, 1995 which reports beneficial ownership with respect to
the indicated shares as follows: (i) sole voting power, 1,691,889 shares;
(ii) shared voting power, 11,500 shares; (iii) sole dispositive power,
1,529,364 shares; (iv) shared dispositive power, 234,200 shares; and (v)
aggregate amount beneficially owned, 1,763,564 shares.

(7) Includes 56,800 shares held by the Beall Family Ltd. Partnership, a
limited partnership of which Mr. Beall is a General Partner.

(8) Includes 2,250 shares owned by Mr. McKinnon and his spouse as tenants in
common.

(9) Includes 6,750 shares held in a KEOGH account for the benefit of Dr.
Ratajczak.

18
<PAGE>

(10) Includes 2,838 shares held by the von Arx Family Foundation, a charitable
organization. Mr. von Arx may be deemed to share voting and dispositive
power with respect to such shares by virtue of his position as a member
of the Board of Directors of the foundation.

(11) Includes 17,275 shares held by Mr. Hunt's spouse. Mr. Hunt disclaims
beneficial ownership of these shares.

(12) Includes 6,160 shares owned by Mr. Bishop's spouse.

(13) Includes (i) 325 shares held in an Individual Retirement Account for the
benefit of Mr. Davenport and (ii) 88 shares held in an Individual
Retirement Account for the benefit of Mr. Davenport's spouse.

19
<PAGE>

THE DISTRIBUTION

GENERAL

The Board of Directors of the Company approved (subject to the satisfaction
of the conditions to the Distribution discussed under "--Conditions to the
Distribution" below and the actual declaration of the dividend in respect of
the Distribution) a plan to distribute all the outstanding shares of common
stock, $.01 par value, of MFCI ("MFCI Common Stock"), and all the outstanding
shares of common stock, $.01 par value, of MHCI ("MHCI Common Stock") to all
holders of outstanding Company Common Stock. In the Distribution, each holder
of Company Common Stock will receive as a dividend one share of MFCI Common
Stock for every four shares of Company Common Stock held and one share of MHCI
Common Stock for every three shares of Company Common Stock held. In addition,
in connection with the Distribution, the Company Common Stock will be combined
to effect the Reverse Stock Split and, as a consequence, Company stockholders
will receive following the Distribution one share of common stock, $.01 par
value, of RTI ("RTI Common Stock") for every two shares of Company Common
Stock held prior to the Distribution.

MANNER OF EFFECTING THE DISTRIBUTION

On or about the first business day following the Distribution Date, the
Company will effect the Distribution by providing for the delivery of
replacement certificates for all outstanding shares of MFCI Common Stock and
replacement certificates for all outstanding shares of MHCI Common Stock to
the Transfer Agent for the transfer and distribution to the holders of record
on the Distribution Record Date of Company Common Stock. At the same time, the
Company will also provide for the delivery of replacement certificates for
shares of RTI Common Stock to the Transfer Agent.

As a result of the Distribution, the Reincorporation and the Reverse Stock
Split each holder of Company Common Stock will become the holder of (i) one
share of MFCI Common Stock for every four shares of Company Common Stock held
of record on the Distribution Record Date, (ii) one share of MHCI Common Stock
for every three shares of Company Common Stock held of record on the
Distribution Record Date, and (iii) one share of RTI Common Stock for every
two shares of Company Common Stock held of record on the Distribution Record
Date. The RTI Common Stock will represent the Company stockholders' continuing
ownership interest in the Company.

After the Distribution Date and until an outstanding certificate that
represented shares of Company Common Stock before the Distribution is
exchanged pursuant to the procedures described below, such certificate will be
deemed to represent a number of shares of RTI Common Stock equal to one-half
of the number of shares of Company Common Stock reflected on the face of such
certificate, a number of shares of MHCI Common Stock equal to one-third of
such number and a number of shares of MFCI Common Stock equal to one-fourth of
such number. As in the case of the shares of Company Common Stock (RTI Common
Stock after the Distribution), the shares of MFCI Common Stock and MHCI Common
Stock will be fully paid and nonassessable, and the holders thereof will not
be entitled to preemptive rights. See "Description of RTI Capital Stock,"
"Description of MFCI Capital Stock" and "Description of MHCI Capital Stock."

To avoid confusion, the Company will issue new stock certificates in
connection with the Distribution and the Reincorporation. Accordingly, in
order to receive their certificates for MFCI Common Stock and MHCI Common
Stock, stockholders must submit their certificates representing shares of
Company Common Stock to be exchanged for (i) certificates bearing the name
"Ruby Tuesday, Inc." representing their continuing ownership interest in the
Company, (ii) certificates bearing the name "Morrison Fresh Cooking, Inc."
representing the shares of MFCI Common Stock to which they are entitled as a
result of the Distribution, and (iii) certificates bearing the name "Morrison
Health Care, Inc." representing the shares of MHCI Common Stock to which they
are entitled as a result of the Distribution. Certificates for MFCI Common
Stock and MHCI Common Stock will not be issued until such submission. If
stockholders do not submit their certificates representing shares of Company
Common Stock, they may be prevented from transferring their interests in RTI,
MFCI and MHCI after the Distribution because they will not have separate
certificates representing such interests.

20
<PAGE>

On or about the first business day following the Distribution Date, the
Company will instruct the Transfer Agent to mail to each stockholder of record
on the Distribution Record Date a letter of transmittal and instructions for
use in surrendering such stockholder's certificates representing shares of
Company Common Stock. Each stockholder should immediately complete and sign
the letter of transmittal and return it, along with such stockholder's
certificates representing shares of Company Common Stock, to the Transfer
Agent at the address set forth on the letter of transmittal. Upon receipt from
each stockholder of a letter of transmittal, properly completed, and the
stockholder's certificates representing shares of Company Common Stock, the
Transfer Agent will issue in accordance with the directions contained in the
completed letter of transmittal three separate certificates representing
shares of RTI, MFCI and MHCI, respectively. Brokerage firms and other
designees holding shares of Company Common Stock in street name should
complete a letter of transmittal with respect to the stock so held on behalf
of each of their customers. COMPANY STOCKHOLDERS SHOULD NOT SEND IN THEIR
CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM.

The Company currently has a stockholders rights plan (the "Company Rights
Plan"). Certificates evidencing shares of Company Common Stock also represent
the same number of Company Rights issued under the Company Rights Plan. It is
anticipated that the Company Rights Plan will be continued following the
Reincorporation. (The Company Rights Plan, as in effect following the
Reincorporation, is hereinafter referred to as the "RTI Rights Plan.")
Accordingly, after the Distribution, certificates evidencing shares of RTI
Common Stock will also represent RTI Rights associated therewith and
outstanding under the RTI Rights Plan. It is expected that the Board of
Directors of MFCI will adopt a stockholders rights plan (the "MFCI Rights
Plan"). Certificates evidencing shares of MFCI Common Stock issued in the
Distribution will therefore also represent the same number of MFCI Rights
issued under the MFCI Rights Plan. It is also expected that the Board of
Directors of MHCI will adopt a stockholders rights plan (the "MHCI Rights
Plan"). Certificates evidencing shares of MHCI Common Stock issued in the
Distribution will therefore also represent the same number of MHCI Rights
issued under the MHCI Rights Plan. See "Description of RTI Capital Stock--RTI
Rights Plan," "Description of MFCI Capital Stock--MFCI Rights Plan" and
"Description of MHCI Capital Stock--MHCI Rights Plan." Unless the context
otherwise requires, references herein to Company Common Stock include the
associated Company Rights; references herein to RTI Common Stock include the
associated RTI Rights; references herein to MFCI Common Stock include the
associated MFCI Rights; and references herein to MHCI Common Stock include the
associated MHCI Rights.

Company stockholders will not have to make any payment to receive their pro
rata share of the Distribution. However, any stockholder submitting
certificates representing shares of Company Common Stock for exchange who is
not the record holder of the shares represented by such certificate, or who
requests that certificates for any shares of RTI Common Stock, MFCI Common
Stock or MHCI Common Stock be issued to any other person, must provide
evidence of payment of all applicable transfer taxes.

Stockholders of the Company having inquiries relating to the Distribution
prior to the Distribution Date should contact Margie Naman, Director, Investor
Relations, telephone number (334) 344-3000. Written

21
<PAGE>

inquiries may be directed to Morrison Restaurants Inc., 4721 Morrison Drive,
Post Office Box 160266, Mobile, Alabama 36625, Attention: J. Russell
Mothershed, Senior Vice President, Finance.

CONDITIONS TO THE DISTRIBUTION

The Distribution is subject to (i) approval of the Distribution Proposals by
stockholders of the Company; (ii) receipt of a favorable ruling from the
Internal Revenue Service as to certain Federal income tax consequences of the
Distribution; (iii) receipt of all necessary consents of any third parties and
receipt of any necessary opinions of counsel and other experts; (iv) receipt
of all necessary consents of any governmental or regulatory bodies; (v) the
Registration Statement on Form 10 under the Exchange Act, to be filed by MFCI
with the Securities and Exchange Commission (the "SEC") in respect of the MFCI
Common Stock, having become effective; (vi) the Registration Statement on Form
10 under the Exchange Act, to be filed by MHCI with the SEC in respect of the
MHCI Common Stock, having become effective; (vii) the shares of MFCI Common
Stock and MHCI Common Stock to be issued or initially reserved for issuance
having been approved for listing on a national securities exchange or the
Nasdaq Stock Market, subject to official notice of issuance; (viii)
consummation of the Reincorporation substantially simultaneous with the
Distribution; and (ix) there not being in effect any statute, rule, regulation
or order of any court, governmental or regulatory body which prohibits or
makes illegal the transactions contemplated by the Distribution. The Board of
Directors of the Company has retained discretion, even if stockholder approval
of the Distribution Proposals is obtained and the other conditions to the
Distribution are satisfied, to abandon, defer or modify the Distribution or
the Reincorporation. The terms of the Distribution thus may be modified or
conditions thereto may be waived by the Board of Directors of the Company.
However, the Board of Directors of the Company will not waive the requirement
of receipt of a favorable ruling from the Internal Revenue Service unless in
the Board's judgment, based on the opinion of counsel, the Distribution will
qualify for non-recognition treatment (except to the extent of any cash
received in lieu of fractional shares) to both the holders of Company Common
Stock, and the Company, MFCI and MHCI under the provisions of Sections 355 and
368(a)(1)(D) of the Internal Revenue Code.

CERTAIN ORGANIZATIONAL MATTERS

Prior to the Distribution, the Company will transfer substantially all of
the assets and liabilities of the Family Dining Division of its Morrison Group
to MFCI and substantially all of the assets and liabilities of the Health Care
Division of its Morrison Group to MHCI. In addition, substantially
concurrently with the Distribution and the Reincorporation, Ruby Tuesday,
Inc., an existing wholly-owned subsidiary of the Company incorporated in
Delaware, will be merged with and into RTI pursuant to a short-form statutory
merger and, in such merger, the name of RTI will be changed from "Ruby Tuesday
(Georgia), Inc." to "Ruby Tuesday, Inc." Neither the transfers of assets and
liabilities described above nor the short-form statutory merger require
approval by the stockholders of the Company under applicable corporate law.
Stockholder approval for the transfers and the short-form merger is not being
sought.

REASONS FOR THE DISTRIBUTION

Management of the Company is continuously seeking to enhance stockholder
value and has considered from time to time various ideas and opportunities,
including new business and financial strategies, internal restructurings,
acquisitions and divestitures and other possible transactions. In the context
of an overall analysis of the Company's strategic direction during 1991, the
Board of Directors considered on a preliminary basis the advantages and
disadvantages of modifying the Company's structure by effecting a spin-off of
one or more of its operations. The Board of Directors determined not to pursue
a spin-off at that time. In June 1995, the Board of Directors again considered
on a preliminary basis the possibility of separating the Company's businesses
into two or three independent companies. At that meeting, the Board of
Directors authorized the Executive Committee of the Board of Directors to
evaluate the strategic benefits of a sale or spin-off of one or two of its
businesses, and directed the Executive Committee to make a recommendation to
the Board of Directors for consideration. At a meeting held on September 26,
1995, the Board of Directors considered the Distribution and transactions
related thereto and approved the Distribution by a vote of six to two (with
one director absent). The director who was absent subsequently reviewed the
material presented to the Board of Directors in connection with its
consideration of the Distribution and expressed his support for the
Distribution and his assent to the Board of

22
<PAGE>

Directors' actions in connection therewith. At its regular meeting on January
10, 1996, the Board of Directors, with one director abstaining, ratified the
Distribution and ratified and approved each of the Distribution Proposals.

The Board of Directors of the Company believes that the Distribution is in
the best interests of the Company and its stockholders for the following
reasons:

Management, Business Focus and Growth. The separation of the Company's
three lines of business into three independent companies will:

1. allow the management and employees of each of the three businesses
to concentrate their full attention on their separate operations and to
independently establish priorities and strategies for growth to
maximize return on invested capital; and

2. permit each company to reward management and employees based on
the performance of their respective business and to design equity-based
incentive compensation that will reflect the results of each of the
companies' independent operations, including the establishment by MFCI
and MHCI of equity-based benefit plans which can hold MFCI Common Stock
and MHCI Common Stock, respectively. This will increase management's
accountability and align the interests of management and employees more
directly with those of the stockholders.

Capital Market Accessibility. As a single company, the Company's three
businesses had no or very limited ability to independently access the
capital markets to finance expansion or to pursue growth opportunities. The
separation of the Company's three lines of business into three independent
companies will:

1. allow the use of equity of the independent business units to be
issued in connection with strategic acquisitions that may be considered
by such units; and

2. permit direct access to the equity and debt markets to raise
capital to finance expansion or other operating needs.

Direct access to the capital markets and the ability to use equity of the
independent business units will provide a more accurate cost and more
efficient use of the independent businesses' capital because it will
reflect the independent results of each businesses' operations.

Valuation and Investor Understanding. The creation of a public market for
each of the three businesses will:

1. establish a value for each company that is independent of the
other businesses and facilitate development by enhancing the ability of
each company to enter into merger and acquisition transactions using
its own stock;

2. provide investors and securities analysts a clearer basis on which
to understand and analyze the three businesses; and

3. allow potential investors with differing investment objectives,
risk tolerance and dividend expectations to direct their investments
more directly to the areas of their primary interest.

FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION

The Company has requested a ruling from the Internal Revenue Service
substantially to the effect that, among other things, the Distribution will
qualify as a tax-free spin-off under Sections 355 and 368(a)(1)(D) of the
Internal Revenue Code. Under Section 355 of the Internal Revenue Code, in
general:

1. Holders of Company Common Stock will not recognize any income, gain or
loss as a result of the Distribution except that holders of Company Common
Stock that receive cash in lieu of fractional shares of MFCI Common Stock
or MHCI Common Stock will recognize gain or loss equal to the difference
between such cash and the tax basis allocated to such fractional shares.
Any such gain or loss will constitute capital gain or loss if the MFCI
and/or MHCI Common Stock are capital assets in the hands of the holder on
the Distribution Date.

2. Holders of Company Common Stock will apportion the tax basis of their
Company Common Stock among such Company Common Stock and any MFCI Common
Stock and MHCI Common Stock (including fractional shares of MFCI Common
Stock or MHCI Common Stock) received by such holder in the Distribution in
proportion to the relative fair market values of such Common Stock on the
Distribution Date.

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<PAGE>

3. The holding period for the MFCI Common Stock and MHCI Common Stock
received in the Distribution by holders of Company Common Stock will
include the period during which such holder held the Company Common Stock
with respect to which the Distribution was made, provided that such Company
Common Stock is held as a capital asset by such holder on the Distribution
Date.

4. The Distribution will not be treated as a taxable disposition of MFCI
or MHCI by the Company.

Current Treasury regulations require each holder of Company Common Stock who
receives MFCI Common Stock or MHCI Common Stock pursuant to the Distribution
to attach to his or her Federal income tax return for the year in which the
Distribution occurs a detailed statement setting forth such data as may be
appropriate in order to show the applicability of Section 355 of the Internal
Revenue Code to the Distribution. RTI will convey the appropriate information
to each holder of record of Company Common Stock as of the Distribution Record
Date.

The receipt of a ruling from the Internal Revenue Service, substantially to
the foregoing effect, is a condition to the Distribution. The Board of
Directors of the Company has reserved the right to waive the receipt of such
ruling as a condition to consummation of the Distribution. The Board of
Directors of the Company will not waive the requirement of receipt of a
favorable ruling from the Internal Revenue Service unless in the Board's
judgment, based on the opinion of counsel, the Distribution will qualify for
nonrecognition treatment (except to the extent of any cash received in lieu of
fractional shares) to both the holders of Company Common Stock, and the
Company, MFCI, and MHCI under the provisions of Sections 355 and 368(a)(1)(D)
of the Internal Revenue Code.

Such a ruling, while generally binding upon the Internal Revenue Service, is
subject to certain factual representations and assumptions. If such factual
representations and assumptions were incorrect in a material respect, such
ruling could become invalid. The Company is not aware of any facts or
circumstances which would cause such representations and assumptions to be
untrue. Each of the Company, MFCI, and MHCI has agreed to certain restrictions
on its future actions to provide further assurances that Section 355 of the
Internal Revenue Code will apply to the Distribution. See "Relationship Among
RTI, MFCI, and MHCI After the Distribution." If the Distribution were not to
qualify under Section 355 of the Internal Revenue Code, then, in general, a
corporate tax (which would be very substantial) equal to the applicable tax
rate (both federal and state) times the excess of (x) the fair market value of
the MFCI Common Stock and the MHCI Common Stock over (y) the adjusted basis of
such MFCI Common Stock and MHCI Common Stock would be payable by the
consolidated group, of which the Company is the common parent. Under the
consolidated return rules, each member of the consolidated group (including
MFCI and MHCI) is jointly and severally liable for such tax liability. If the
Distribution occurred and it were not to qualify as a tax-free spin-off under
Section 355 of the Internal Revenue Code, the resulting tax liability would
have a material adverse effect on the financial position, results of
operations and cash flows of each of RTI, MFCI and MHCI.

Furthermore, if the Distribution were not to qualify as a tax-free spin-off,
each Company stockholder receiving shares of MFCI Common Stock and MHCI Common
Stock in the Distribution would be treated as if such stockholder had received
a distribution in an amount equal to the fair market value of MFCI Common
Stock and MHCI Common Stock received, which would (x) first be taxable as a
dividend to the extent of such stockholder's pro rata share of the Company's
current and accumulated earnings and profits, (y) then be considered a
reduction in such stockholder's basis in Company Common Stock to the extent
the amount received exceeds such stockholder's share of earnings and profits,
and (z) finally, result in the recognition of a gain from the exchange of
Company Common Stock to the extent the amount received exceeds both such
stockholder's share of earnings and profits and such stockholder's basis in
Company Common Stock. Any dividend income considered received by the Company's
stockholders who are not exempt from taxation as a result of the Distribution
would be subject to federal income taxation at rates (in the case of a
taxpayer that is not a corporation) of up to 39.6% currently, plus any
applicable state income tax rate. The Company estimates that substantially
all, if not all, of the Distribution will be treated as a dividend if the
Distribution does not qualify as a tax-free spin-off under the provisions of
Section 355 of the Internal Revenue Code.

Additional taxes may be asserted against RTI, MFCI and MHCI in the course of
audits by the Internal Revenue Service or state, local or foreign taxing
authorities with respect to ongoing business operations or these

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<PAGE>

restructurings of the Company. Assertions of additional tax liability in the
course of such audits are a routine matter, and the Company believes that it
has adequately provided for any such assertions. The Company, MFCI and MHCI
have entered into an agreement providing for an equitable allocation of any
such liability that may be asserted. See "Relationship Among RTI, MFCI and
MHCI After the Distribution."

The foregoing summary of the anticipated Federal income tax consequences of
the Distribution is for general information only. COMPANY STOCKHOLDERS SHOULD
CONSULT THEIR OWN ADVISERS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE
DISTRIBUTION, INCLUDING THE APPLICATION AND EFFECT OF FOREIGN, STATE AND LOCAL
TAX LAWS.

LISTING AND TRADING OF RTI COMMON STOCK, MFCI COMMON STOCK AND MHCI COMMON
STOCK

It is anticipated that the RTI Common Stock will trade on the New York Stock
Exchange ("NYSE") under the symbol "RI," the current trading symbol for the
Company Common Stock. As is noted below under "--Certain Factors Affecting
Trading Prices," the trading prices for RTI Common Stock will be affected by
the Distribution and the Reverse Stock Split. In addition, the prices for RTI
Common Stock will be determined in the marketplace and may be influenced by
many factors, including (i) the depth and liquidity of the market for RTI
Common Stock, (ii) developments affecting the business of RTI, (iii) investor
perception of RTI and (iv) general economic and market conditions.

Prior to the date hereof, there has not been any established trading market
for MFCI Common Stock or MHCI Common Stock. Each of MFCI and MHCI will make
application to the NYSE for the listing, as applicable, of the MFCI Common
Stock and MHCI Common Stock under the symbols "MFC" and "MHI," respectively.
It is possible that MFCI Common Stock and MHCI Common Stock will be approved
for listing on the NYSE prior to the Distribution Date, and trading may
commence on a "when-issued" basis prior to the Distribution. It is also
possible that RTI Common Stock would be traded on a "when-distributed" basis
prior to the Distribution. On the first NYSE trading day following the
Distribution Date, "when-distributed" or "when-issued" trading, as applicable,
in respect of each of the RTI Common Stock, MFCI Common Stock and MHCI Common
Stock would end and "regular-way" trading would begin. The NYSE will not
approve any trading in respect of the MFCI Common Stock or MHCI Common Stock
until the SEC has declared effective the Registration Statement on Form 10 of
MFCI in respect of the MFCI Common Stock and the Registration Statement on
Form 10 of MHCI in respect of the MHCI Common Stock. It is expected that each
of MFCI and MHCI will file with the SEC a Registration Statement on Form 10,
respectively, prior to the Special Meeting and request effectiveness of such
Registration Statements prior to the Distribution Date.

There can be no assurance as to the prices at which the Company Common Stock
(RTI Common Stock after the Distribution), MFCI Common Stock and MHCI Common
Stock will trade before, on or after the Distribution Date. Until each of the
MFCI Common Stock and MHCI Common Stock is fully distributed and an orderly
market develops in the MFCI Common Stock and MHCI Common Stock, the respective
price at which each such stock trades may fluctuate significantly and may be
lower than the respective price that would be expected for a fully distributed
issue. Prices for each of the MFCI Common Stock and MHCI Common Stock will be
determined in the marketplace and may be influenced by many factors, including
(i) the depth and liquidity of the market for MFCI Common Stock and MHCI
Common Stock, as applicable, (ii) developments affecting the respective
businesses of MFCI and MHCI generally, (iii) investor perception of MFCI and
MHCI, respectively, and (iv) general economic and market conditions.

Shares of MFCI Common Stock and MHCI Common Stock distributed to Company
stockholders will be freely transferable, except for shares of MFCI Common
Stock received by persons who may be deemed to be "affiliates" of MFCI under
the Securities Act of 1933, as amended (the "Securities Act"), and shares of
MHCI Common Stock received by persons who may be deemed to be "affiliates" of
MHCI under the Securities Act. Persons who may be deemed to be affiliates of
MFCI or MHCI after the Distribution generally include individuals or entities
that control, are controlled by, or are under common control with, MFCI or
MHCI, as applicable, and will include directors and certain officers of MFCI
or MHCI, as applicable, as well as principal stockholders of MFCI or MHCI, as
applicable. Persons who are affiliates of MFCI will be permitted to sell their
shares of MFCI Common Stock only pursuant to an effective registration
statement under the Securities Act or

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<PAGE>

an exemption from the registration requirements of the Securities Act, such as
the exemption afforded by Section 4(1) of the Securities Act or Rule 144
thereunder. Similarly, persons who are affiliates of MHCI will be permitted to
sell their shares of MHCI Common Stock only pursuant to an effective
registration statement under the Securities Act or an exemption from the
registration requirements of the Securities Act, such as the exemption
afforded by Section 4(1) of the Securities Act or Rule 144 thereunder.

CERTAIN FACTORS AFFECTING TRADING PRICES

As a result of the Distribution, it is expected that the trading price of
RTI Common Stock will be lower immediately following the Distribution as
compared to the trading price of the Company Common Stock immediately prior to
the Distribution Date, although the Reverse Stock Split is expected to offset
somewhat such effect. The aggregate market values of RTI Common Stock, MFCI
Common Stock and MHCI Common Stock after the Distribution may be less than,
equal to, or greater than the market value of Company Common Stock prior to
the Distribution Record Date.

TREATMENT OF INDEBTEDNESS

In connection with the Distribution, the Company intends to restructure and
allocate the consolidated indebtedness of the Company among RTI, MFCI and
MHCI. This allocation of indebtedness is expected to reflect, among other
factors, the cash flows available from each company after payment of
anticipated dividends and the debt levels appropriate upon consideration of
each company's growth plans. The Company (RTI after the Distribution), MFCI
and MHCI will agree in the Distribution Agreement to use their respective
commercially reasonable efforts to achieve the allocation of indebtedness of
the Company reflected in the capital structure of the Company (RTI after the
Distribution), MFCI and MHCI set forth in their respective historical
financial statements included elsewhere herein. See "Relationship Among RTI,
MFCI and MHCI After the Distribution--Distribution Agreement."

The Company expects that it will allocate an aggregate of $32.1 million of
its indebtedness outstanding at December 2, 1995 to MHCI, with the balance of
$85.6 million to be assumed by RTI. This allocation of indebtedness is
reflected in the historical financial statements of the Company, MFCI and MHCI
included elsewhere herein.

Management of the Company believes that there is sufficient financing
capability in respect of RTI, MFCI and MHCI to accomplish the contemplated
allocation of indebtedness and to permit each of RTI, MFCI and MHCI to operate
its business as currently contemplated. See "Company Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," "MFCI Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"MHCI Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources."

The Company expects to establish credit facilities for each of RTI, MFCI and
MHCI in advance of the Distribution. Although management of the Company has
not completed formal negotiations with potential lenders, the Company received
non-binding term sheets from potential lenders and expects that such credit
facilities would provide sufficient liquidity for each of the RTI, MFCI and
MHCI's respective funding needs and would reflect terms customary in the
commercial bank credit market at the relevant time. In connection with
establishing the credit facilities for MHCI, potential lenders are requiring
that MHCI maintains positive equity after the Distribution. To meet this
anticipated requirement, the Company expects to transfer the cash necessary
(currently estimated to not exceed $8,100,000) at the time of Distribution.
Such cash transfer has been reflected in the accompanying Unaudited Pro Forma
Financial Statements.

INTEREST OF CERTAIN PERSONS IN THE DISTRIBUTION

As a result of the Distribution, individuals who are directors and executive
officers of the Company and certain individuals who will be directors and
executive officers of RTI, MFCI or MHCI will receive MFCI Common Stock and
MHCI Common Stock in respect of the Company Common Stock held by such
individuals. The beneficial ownership of Company Common Stock for such
individuals is reflected above under "Introduction--Beneficial Ownership of
Common Stock."

Stock options held by individuals who are directors and executive officers
of the Company and certain individuals who will be directors and executive
officers of RTI, MFCI or MHCI will be substituted in connection with the
Distribution with stock options of RTI, MFCI and MHCI, as set forth in detail
under "Employee

26
<PAGE>

Benefits and Compensation Matters--Equity-Based Compensation Plans" and "--
Company Directors' Plan." RTI expects to continue the existing employee
benefit plans maintained by the Company. Also, employee benefit plans for the
benefit of such individuals and others will be adopted by each of MFCI and
MHCI effective as of the Distribution Date to provide benefits and incentives
similar to those currently provided by the Company.

Each of the current members of the Board of Directors of the Company, other
than Samuel E. Beall, III, is expected to become a director of two of the
three companies after the Distribution. Mr. Beall will continue to serve as
Chairman of the Board of Directors of RTI but is not expected to serve on the
Board of Directors of either of MFCI or MHCI. Dolph W. von Arx and John B.
McKinnon, current members of the Board of Directors of the Company, are
expected to serve as Chairmen of the Board of Directors of MFCI and MHCI,
respectively, and it is anticipated that they would provide additional
services to MFCI and MHCI, respectively, for which they would be compensated
on a per diem basis.

Information concerning the management and executive and director
compensation arrangements of RTI, MFCI and MHCI, respectively, after the
Distribution is set forth under "RTI Management and Executive Compensation,"
"MFCI Management and Executive Compensation" and "MHCI Management and
Executive Compensation."

ACCOUNTING TREATMENT

The Distribution has been recorded as a discontinuance of the businesses of
MFCI and MHCI in the consolidated financial statements of the Company included
elsewhere herein. The historical financial statements of MFCI and MHCI
contained in this Proxy Statement are presented as if MFCI and MHCI were
separate entities for all periods presented. This Proxy Statement contains
certain pro forma financial information for each of the Company, MFCI and MHCI
that gives effect to the Distribution as of the beginning of fiscal years 1995
and 1996 for purposes of presentation of operating results and as of December
2, 1995 for purposes of presentation of financial position.

After the Distribution, the date of the fiscal year end for both MFCI and
MHCI will be the first Saturday after May 30. The date of the fiscal year end
for RTI will remain the first Saturday after May 30.

THE REINCORPORATION

Subject to the conditions summarized below, the Company will be
reincorporated in Georgia by merging into RTI pursuant to an Agreement and
Plan of Merger (the "Merger Agreement") between the Company and RTI. In
addition, pursuant to the Merger Agreement, the Company Common Stock will be
combined to effect the Reverse Stock Split. RTI will succeed to all the
business, properties, assets and liabilities of the Company (giving effect to
the Distribution) and the stockholders of the Company will automatically
become stockholders of RTI. After the Reincorporation, the rights of the RTI
stockholders will be governed by Georgia law and by the RTI Articles of
Incorporation and Bylaws, rather than by Delaware law and the Company's
existing Certificate of Incorporation and Bylaws.

If Proposal Two is approved, it is expected that the Reincorporation will be
consummated substantially simultaneously with the Distribution.

PRINCIPAL REASON FOR REINCORPORATION

The State of Delaware requires a Delaware corporation to pay an annual
franchise tax based on either (i) the number of shares of capital stock
authorized in its Certificate of Incorporation or (ii) the assumed par value
of its authorized shares of capital stock. The minimum franchise tax is $30
and the maximum tax is $150,000. Based on the number of shares of capital
stock authorized in the Company's Certificate of Incorporation, the Company
would be required to pay $150,000 per year in franchise taxes as a Delaware
corporation. The assumed par value alternative currently produces a tax in
excess of this amount.

In contrast, the State of Georgia requires a Georgia corporation to pay
franchise taxes based on the corporation's net worth. Net worth consists of
total capital stock issued (including treasury stock), paid-in capital,

27
<PAGE>

and retained earnings. The minimum tax is $10 and the maximum tax is $5,000,
which is reached when net worth exceeds $22 million. Because RTI's net worth
will exceed this threshold, RTI would be required to pay the maximum tax per
year in franchise taxes as a Georgia corporation. As a result, RTI would save
approximately $145,000 annually in franchise taxes by changing its state of
incorporation from Delaware to Georgia.

MERGER AGREEMENT

The following is a summary of certain provisions of the Merger Agreement and
related matters. The text of the Merger Agreement is attached as Annex A
hereto.

RTI Common Stock. Upon the effectiveness of the Reincorporation merger, each
outstanding share of Company Common Stock will be automatically converted into
one-half of one share of RTI Common Stock. No fractional shares of RTI Common
Stock will be issued in the Reincorporation. The Transfer Agent will aggregate
fractional shares into whole shares of RTI Common Stock and an independent
agent retained by the Company will sell them in the open market at prevailing
prices on behalf of holders who would be entitled to receive fractional share
interests. Such person will then receive a cash payment for the amount of
their allocable share of the total sale proceeds. See "The Distribution--
Manner of Effecting the Distribution." RTI Common Stock will be entitled to
the same rights, powers, qualifications, limitations and restrictions as the
presently outstanding Company Common Stock, although some differences will
arise as a result of the application of Georgia law. See "Comparison of
Stockholders Rights."

Stockholders Rights Plan. Certificates evidencing shares of Company Common
Stock also represent Company Rights issued under the Company Rights Plan. It
is anticipated that the Company Rights Plan will be continued following the
Reincorporation as the RTI Rights Plan. In the Reincorporation, Company Rights
will be automatically converted into RTI Rights. See "Description of RTI
Capital Stock--RTI Rights Plan."

Exchange of Stock Certificates. The Company will issue new stock
certificates in connection with the Distribution and the Reincorporation. See
"The Distribution--Manner of Effecting the Distribution" for information
concerning the procedure for exchanging stock certificates. COMPANY
STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE A
TRANSMITTAL FORM.

Conditions to the Reincorporation. The Reincorporation is subject to (i) the
approval of Proposal Two by stockholders of the Company; and (ii) the
Distribution occurring.

Termination; Amendment. The Merger Agreement may be terminated or abandoned
by the Board of Directors of the Company or RTI at any time prior to the
filing of the appropriate certificate of merger with the Secretary of State of
Georgia or Delaware. The Board of Directors of the Company and RTI may jointly
amend, modify and supplement the Merger Agreement prior to the effective time
of the Reincorporation merger in such manner as they may deem appropriate at
any time before approval or adoption of the Merger Agreement by the Company
stockholders. Any amendment, modification or supplement to the Merger
Agreement after the approval or adoption by the Company stockholders but prior
to the effective time of the Reincorporation merger shall require the approval
or adoption thereof by the Company stockholders; provided, however, that the
approval or adoption thereof by the Company stockholders shall not be required
with respect to any amendment, modification or supplement to the Merger
Agreement that (i) does not alter (a) the amount or kinds of shares,
securities, cash, property and/or rights to be received thereunder in exchange
for any of the shares of Company Common Stock, or (b) any term of the Articles
of Incorporation of the surviving corporation as provided for in the Merger
Agreement, or (ii) otherwise alters any of the terms and conditions of the
Merger Agreement if such alteration would not adversely affect the holders of
Company Common Stock.

THE REVERSE STOCK SPLIT

General. If the Reincorporation is approved by the stockholders of the
Company, upon the effectiveness of the Reincorporation merger, the Reverse
Stock Split will also become effective, and each certificate representing
shares of Company Common Stock outstanding immediately prior to the
Reincorporation will be

28
<PAGE>

deemed automatically, without any action on the part of the holder of such
certificate, to represent one-half the number of shares of Company Common
Stock represented by such certificate prior to the Reincorporation. See "The
Distribution--Manner of Effecting the Distribution" for information concerning
the procedure for exchanging stock certificates.

Purposes of the Reverse Stock Split. The Board of Directors of the Company
expects that the shares of RTI Common Stock following the Distribution would
trade at prices significantly lower than the price level at which the Company
Common Stock traded prior to the Distribution. The Board of Directors of the
Company believes that the expected per share price of the RTI Common Stock
following Distribution would reduce the effective marketability of the shares
because of the reluctance of many leading institutional investors to trade in
low-priced stocks and because brokerage firms are reluctant to recommend low-
priced stocks to their clients.

Certain institutional investors also have internal policies and practices
which tend to discourage individual brokers within those firms from dealing in
low-priced stocks. Some of those policies and practices pertain to the payment
of brokers' commissions and to time consuming procedures that function to make
the handling of low-priced stocks unattractive to brokers from an economic
standpoint. In addition, the structure of trading commissions also tends to
have an adverse impact upon holders of low-priced stocks because the brokers'
commission on a sale of low-priced stock generally represents a higher
percentage of the sales price than the commission on a relatively higher-
priced stock. The Reverse Stock Split should result in an increased quoted
market price of the RTI Common Stock following the Distribution.

The Board of Directors believes that the decrease in the number of shares of
RTI Common Stock outstanding following the Distribution as a consequence of
the Reverse Stock Split (as compared to the shares that would be outstanding
in the absence of the Reverse Stock Split) will result in a quoted market
price of the RTI Common Stock at a level which the Board believes is a more
readily accepted trading price in the capital markets. There can be no
assurance, however, that any such increase would be in proportion to the one-
for-two reverse stock split ratio, or that the per share price level of the
RTI Common Stock immediately after the Reverse Stock Split will be maintained
for any period of time.

Effects of the Reverse Stock Split. The Reverse Stock Split will decrease by
50% the number of shares of RTI Common Stock that would be issued and
outstanding following the Distribution. The Reverse Stock Split will not
affect any stockholder's proportionate equity interest in RTI (other than as a
result of the treatment of fractional interests) or the rights, preferences,
privileges or priorities of the RTI Common Stock. Furthermore, the Reverse
Stock Split will not affect the stockholders' equity in RTI as reflected in
the financial statements of the Company included elsewhere herein except to
change the number of issued and outstanding shares of Company Common Stock
(RTI Common Stock following the Distribution and the Reincorporation). The
adjustments in the exercise price of, and number of shares issuable under, the
Company's outstanding stock options to reflect the Distribution will also
reflect the Reverse Stock Split. See "Employee Benefits and Compensation
Matters--Equity-Based Compensation Plans."

OTHER CHANGES AFFECTING STOCKHOLDERS

Differences between Delaware and Georgia law would result in certain changes
affecting stockholders. For a discussion of certain significant differences
between Delaware and Georgia law, see "Comparison of Stockholders Rights."

The Articles of Incorporation of RTI after the Reincorporation would be the
same as the Certificate of Incorporation of the Company in all material
respects, except that the range of the number of directors would be changed
from nine to 12 to three to 12 to provide more flexibility for the Board of
Directors of RTI in fixing the number of directors. A copy of the Articles of
Incorporation of RTI is included as Annex B hereto.

The Bylaws of RTI would be the same as the Bylaws of the Company in all
material respects, except for changes necessary to conform to Georgia law. A
copy of the Bylaws of RTI is included as Annex C hereto.

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<PAGE>

FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION

The following is a summary of the material Federal income tax consequences
of the Reincorporation and the Reverse Stock Split to the Company and its
stockholders.

The merger of the Company into RTI, as described above, will constitute a
tax-free reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code. The Reverse Stock Split should qualify as a tax-free
recapitalization under Section 368(a)(1)(E) of the Internal Revenue Code to
the extent that shares of Company Common Stock held prior to the Reverse Stock
Split are exchanged for shares of RTI Common Stock following the Reverse Stock
Split. In addition, for Federal income tax purposes:

(1) Neither the Company nor its stockholders will recognize any gain or
loss by reason of the conversion of Company Common Stock into RTI Common
Stock or the transfer of assets (subject to liabilities) by the Company to
RTI in connection with the Reincorporation merger.

(2) The shares of RTI Common Stock issued as a result of the
Reincorporation merger in the hands of a stockholder will have an aggregate
basis for computing gain or loss equal to the aggregate basis of shares of
Company Common Stock (less that portion, if any, allocable to fractional
shares) held by that stockholder immediately prior to the Reincorporation
merger.

(3) The holding period of the shares of RTI Common Stock issued as a
result of the Reincorporation in the hands of a stockholder will include
the period during which the stockholder held the shares of Company Common
Stock prior to the Reincorporation provided the shares of Company Common
Stock were held as a capital asset on the date of conversion.

(4) The payment of cash in lieu of fractional shares of RTI Common Stock
will be treated for Federal income tax purposes as if the fractional shares
were distributed as part of the recapitalization and then redeemed by RTI.
Consequently, a stockholder will recognize capital gain or loss equal to
the difference between the cash received and the stockholder's tax basis in
the fractional share surrendered if the RTI Common Stock is a capital asset
in the hands of the stockholder on the date of Reincorporation.

AMENDMENTS TO COMPANY STOCK INCENTIVE PLAN

In connection with the Distribution, the Company, MFCI and MHCI intend to
agree to cause all outstanding stock options granted under the Company Stock
Incentive Plan to be adjusted as described under "Employee Benefits and
Compensation Matters--Equity-Based Compensation Plans."

The Company Stock Incentive Plan provides that in the event of a merger,
consolidation or other reorganization of the Company, the Committee
administering the Company Stock Incentive Plan (the "Committee") may make such
adjustments with respect to awards and take such other action as it deems
necessary or appropriate to reflect the event or in anticipation of such
merger, consolidation or reorganization, including without limitation, the
substitution of new awards, the termination or adjustment of outstanding
awards, the acceleration of awards or the removal of restrictions on
outstanding awards.

While the Distribution is the type of event contemplated by the adjustment
provisions of the Company Stock Incentive Plan, a spin-off is not one of the
transactions specifically listed in those adjustment provisions. The Board of
Directors believes that the adjustments proposed to be made in connection with
the Distribution are fair and equitable to the optionees and the stockholders.
The Board of Directors believes that the amendments proposed are consistent
with the existing provisions of the Company Stock Incentive Plan.
Nevertheless, the Board of Directors will adopt amendments to the Company
Stock Incentive Plan to provide the Committee with the express authority under
the Company Stock Incentive Plan to make appropriate adjustments to
outstanding awards to reflect the Distribution as described under "Employee
Benefits and Compensation Matters--Equity-Based Compensation Plans" and to
state affirmatively that the awards outstanding under the Company Stock

30
<PAGE>

Incentive Plan will not expire prematurely due to an individual's termination
of employment with the Company in connection with the Distribution provided
that the individual continues in the employ of MFCI or MHCI following the
Distribution.

The Company Stock Incentive Plan is also proposed to be amended to add
directors as a class of individuals eligible for awards. The Board of
Directors believes it is desirable to provide the Committee with the capacity
to grant equity-based awards to non-employee members of the Board of Directors
who provide additional services to RTI.

As amended, the relevant portions of the Company Stock Incentive Plan would
read as follows:

"Stock Incentives may be granted only to officers, employees and
directors of the Company or an affiliate; provided, however, that
directors who serve on the Committee shall not be eligible to receive
awards that are subject to Section 16 of the Securities Exchange Act of
1934 while they are members of the Committee and that an Incentive
Stock Option may only be granted to an employee of the Company or any
Parent or Subsidiary."

"Except as otherwise provided by Plan Section 3.2(e), any award under
this Plan to a Participant who suffers a Termination of Service may be
cancelled, accelerated, paid or continued, as provided in the Stock
Incentive Agreement or Stock Incentive Program or, in the absence of
such provision, as the Committee may determine; provided that, a
Participant who continues in the service of Morrison Fresh Cooking,
Inc. or Morrison Health Care, Inc. immediately following a spin-off of
either such Subsidiary shall not be deemed to have incurred a
Termination of Service solely by reason of the spin-off."

"In the event of any merger, consolidation, extraordinary dividend
(including a spin-off), reorganization or other change in the corporate
structure of the Company or its Stock, the Committee, in its sole
discretion, may make such adjustments with respect to awards and take
such other action as it deems necessary or appropriate to reflect or in
anticipation of such merger, consolidation, extraordinary dividend,
reorganization, other change in corporate structure or tender offer,
including, without limitation, the substitution of new awards, the
termination or adjustment of outstanding awards, the acceleration of
awards or the removal of restrictions on outstanding awards. Any
adjustment pursuant to this Section 5.2 may provide, in the Committee's
discretion, for the elimination without payment therefor of any
fractional shares that might otherwise become subject to any Stock
Incentive."

In addition, in connection with the Distribution, the Company Stock
Incentive Plan will be amended to change the name thereof to the "Ruby
Tuesday, Inc. 1996 Stock Incentive Plan" and to increase the number of shares
authorized for issuance thereunder by 250,000 (as adjusted for the Reverse
Stock Split). The number of shares originally reserved for issuance under the
Company Stock Incentive Plan was 750,000 (as adjusted for the Reverse Stock
Split) of which approximately 450,000 (as adjusted for the Reverse Stock
Split) are expected to be subject to stock options that will be outstanding
following the Distribution and approximately 40,000 (as adjusted for the
Reverse Stock Split) were previously issued under the Company Stock Incentive
Plan.

31
<PAGE>

The following table sets forth information regarding stock options granted
under the Company Stock Incentive Plan during fiscal 1995 to each of the RTI
named executives (see "RTI Management and Executive Compensation--Compensation
of RTI Executive Officers"), all persons who will serve as executive officers
of RTI following the Distribution as a group, and to all other persons who
will continue as employees of RTI following the Distribution as a group.

<TABLE>
<CAPTION>
OPTIONS TO
PURCHASE
COMPANY
COMMON
NAME AND POSITION WITH RTI OR GROUP STOCK (#)(1)
- ----------------------------------- ------------
<S> <C>
S. E. Beall, III................................................... -0-
Chairman of the Board
and Chief Executive Officer
R. D. McClenagan................................................... -0-
President, Ruby Tuesday Division
A. R. Johnson...................................................... 2,190
Senior Vice President, Strategy, Planning and Marketing
P. G. Hunt......................................................... 783
Senior Vice President,
General Counsel and Secretary
J. R. Mothershed................................................... 5,037
Senior Vice President, Finance
All executive officers of RTI as a group........................... 8,793
All other employees of RTI as a group.............................. -0-
</TABLE>
- --------

(1) Not adjusted for the Reverse Stock Split. See "RTI Management and
Executive Compensation--Compensation of RTI Executive Officers--Option
Grants in Fiscal 1995" for additional information concerning the stock
options set forth above which are held by RTI named executives. The stock
options reflected above will be adjusted in connection with the
Distribution as described under "Employee Benefits and Compensation
Matters--Equity-Based Compensation Plans."

The Board of Directors believes that the amendments to the Company Stock
Incentive Plan to increase the number of authorized shares and to add
directors as a new class of eligible award recipients are material amendments.
As a result, under Section 162(m) of the Internal Revenue Code, stockholder
approval of this performance-based compensation plan, as so amended, is
necessary to qualify for the performance-based exception to the limitation on
RTI's ability to deduct compensation paid to certain specified individuals in
excess of $1 million. Stockholder approval of these amendments is also being
sought because of Rule 16b-3 under the Exchange Act which provides an
exemption from Section 16(b) of the Exchange Act for certain transactions by
an officer or director of the Company pursuant to an employee benefit plan
satisfying certain specified conditions, including stockholder approval. While
the Board of Directors believes that the remaining amendments to the Company
Stock Incentive Plan are not material, it is nevertheless seeking stockholder
approval with respect to all of the amendments described to avoid any
potential uncertainty that arguably might exist if such approval were not
obtained for all such amendments.

If the amendments to the Company Stock Incentive Plan are not approved by
stockholders, awards issued and outstanding under the Company Stock Incentive
Plan could under certain circumstances give rise to short-swing profits
liability for certain officers and directors under Section 16(b) of the
Exchange Act and, under certain circumstances following the Distribution, RTI
could be denied deductions for compensation, including compensation
attributable to the exercise of option awards, paid to certain executive
officers.

The Company Stock Incentive Plan, as amended as summarized above, is
hereinafter referred to as the "RTI Stock Incentive Plan."

The following is a description of the RTI Stock Incentive Plan.

Reserved Shares. The shares of RTI Common Stock reserved for issuance
pursuant to awards made or that may be made under the RTI Stock Incentive Plan
is 1,000,000 (adjusted for the Reverse Stock Split) of which approximately
40,000 shares were previously issued and approximately 450,000 will be subject
to stock

32
<PAGE>

options that will be outstanding following the Distribution. The maximum
number of shares of RTI Common Stock with respect to which options or stock
appreciation rights may be granted during any fiscal year of RTI to any
eligible recipient who is a "covered employee," within the meaning of Section
162(m) of the Internal Revenue Code, shall not exceed 100,000. The RTI Stock
Incentive Plan provides for further adjustments to the number of shares
reserved for issuance in the event of certain recapitalizations.

Disinterested Administration. Awards under the RTI Stock Incentive Plan will
be determined by a committee of the RTI Board of Directors (the "Committee"),
the members of which will be selected by the RTI Board of Directors. Only
persons who satisfy the criteria of "disinterested persons" set forth in Rule
16b-3(c) under the Exchange Act may be members of the Committee. The Committee
shall have at least two members. The RTI Board of Directors intends to
designate the Compensation and Stock Option Committee as the Committee.

Awards. The RTI Stock Incentive Plan permits the Committee to make awards of
shares of RTI Common Stock, awards of derivative securities related to the
value of the RTI Common Stock and certain cash awards to directors, officers
and employees of RTI or its affiliates ("Eligible Persons"). These
discretionary awards may be made on an individual basis, or pursuant to a
program approved by the Committee for the benefit of a group of Eligible
Persons. The RTI Stock Incentive Plan permits the Committee to make awards of
a variety of RTI Stock Incentives (as defined below), including (but not
limited to) stock awards, options to purchase shares of RTI Common Stock,
stock appreciation rights, so-called "cashout" or "limited stock appreciation
rights" (which the Committee may make exercisable in the event of a Change in
Control of RTI (as defined therein) or other event, phantom shares,
performance incentive rights, dividend equivalent rights and similar rights
(together, "RTI Stock Incentives"). Outstanding RTI Stock Incentives may be
adjusted by the Committee to reflect certain corporate events such as
corporate reorganizations.

RTI anticipates that most stock awards will be restricted for some period of
time, although the Committee does have the discretion to make such awards
freely transferable at the time of grant. RTI Stock Incentives may be made
exercisable or settled at such prices and will terminate under such terms as
will be established by the Committee. For example, options may be made
exercisable at a price equal to, less than or more than, the fair market value
of the RTI Common Stock on the date that the option is awarded, or based upon
an average fair market value of the RTI Common Stock at the time the option is
awarded or at the time the option is exercised. The Committee may permit an
option exercise price to be paid in cash or by the delivery of previously-
owned shares of RTI Common Stock, or to be satisfied through a cashless
exercise executed through a broker or by having a number of shares of RTI
Common Stock otherwise issuable at the time of exercise withheld. The RTI
Stock Incentive Plan permits the grant of both incentive and nonqualified
stock options.

Stock appreciation rights may be granted separately or in connection with
another RTI Stock Incentive, and the Committee may provide that they are
exercisable at the discretion of the holder or that they will be paid at a
time or times certain or upon the occurrence or non-occurrence of certain
events. Stock appreciation rights may be settled in shares of RTI Common Stock
or in cash, according to terms established by the Committee with respect to
any particular award. The Committee may make cash awards designed to cover tax
obligations of employees that result from the receipt or exercise of a RTI
Stock Incentive.

The terms of particular RTI Stock Incentives may provide that they terminate
or expire upon the occurrence of one or more events, including (but not
limited to) the holder's termination of employment or other status with
respect to RTI, passage of a specified period of time, the holder's death or
disability, or the occurrence of a Change in Control of RTI. RTI Stock
Incentives may include exercise, conversion or settlement rights to a holder's
estate or legal representative in the event of the holder's death or
disability. At the Committee's discretion, RTI Stock Incentives that are held
by an employee who suffers a termination of employment may be cancelled,
accelerated, paid or continued. The RTI Board of Directors at any time may
amend or terminate the RTI Stock Incentive Plan in any respect without
stockholder approval. No such termination or amendment

33
<PAGE>

without the consent of the holder of a RTI Stock Incentive shall adversely
affect the rights of the holder under such RTI Stock Incentive. The RTI Board
also may condition any such amendment upon stockholder approval if stockholder
approval is deemed necessary or appropriate in consideration of tax,
securities or other laws.

Tax Consequences. A participant will not recognize income upon the grant of
an option or at any time prior to the exercise of the option or a portion
thereof. At the time the participant exercises a nonqualified option or
portion thereof, he or she will recognize compensation taxable as ordinary
income in an amount equal to the excess of the fair market value of the RTI
Common Stock on the date the option is exercised over the price paid for the
RTI Common Stock, and RTI will then be entitled to a corresponding deduction.

A participant who exercises an incentive stock option will not be taxed at
the time he or she exercises his or her option or a portion thereof. Instead,
he or she will be taxed at the time he or she sells the RTI Common Stock
purchased pursuant to the option. The participant will be taxed on the
difference between the price he or she paid for the stock and the amount for
which he or she sells the stock. If the participant does not sell the stock
prior to two years from the date of grant of the option and one year from the
date the stock is transferred to him or her, the gain will be capital gain and
RTI will not get a corresponding deduction. If the participant sells the stock
at a gain prior to that time, the difference between the amount the
participant paid for the stock and the lesser of the fair market value on the
date of exercise or the amount for which the stock is sold will be taxed as
ordinary income and RTI will be entitled to a corresponding deduction. If the
stock is sold for an amount in excess of the fair market value on the date of
exercise, the excess amount is taxed as capital gain. If the participant sells
the stock for less than the amount he or she paid for the stock prior to the
one or two year periods indicated, no amount will be taxed as ordinary income
and the loss will be taxed as a capital loss. Exercise of an incentive option
may subject a participant to, or increase a participant's liability for, the
alternative minimum tax.

A participant generally will not recognize income upon the grant of a stock
appreciation right, dividend equivalent right, performance unit award or
phantom share (the "RTI Equity Incentives"). At the time a participant
receives payment under any RTI Equity Incentive, he or she generally will
recognize compensation taxable as ordinary income in an amount equal to the
cash or the fair market value of the RTI Common Stock received, and RTI will
then be entitled to a corresponding deduction.

A participant will not be taxed upon the grant of a stock award if such
award is not transferable by the participant or is subject to a "substantial
risk of forfeiture," as defined in the Internal Revenue Code. However, when
the shares of RTI Common Stock that are subject to the stock award are
transferable by the participant and are no longer subject to a substantial
risk of forfeiture, the participant will recognize compensation taxable as
ordinary income in an amount equal to the fair market value of the stock
subject to the stock award, less any amount paid for such stock, and RTI will
then be entitled to a corresponding deduction. However, if a participant so
elects at the time of receipt of a stock award, he or she may include the fair
market value of the stock subject to the stock award, less any amount paid for
such stock, in income at that time and RTI also will be entitled to a
corresponding deduction at that time.

The RTI Stock Incentive Plan is not qualified under Section 401(a) of the
Internal Revenue Code.

34
<PAGE>

AMENDMENTS TO COMPANY DIRECTORS' PLAN,
1987 STOCK PLAN AND 1984 INCENTIVE PLAN

In connection with the Distribution, the Company, MFCI and MHCI intend to
agree to cause all outstanding options, including stock options granted under
the Company Directors' Plan, the 1987 Stock Plan and the 1984 Incentive Plan,
to be adjusted as described under "Employee Benefits and Compensation
Matters--Equity-Based Compensation Plans." The Board of Directors adopted
certain amendments to the Company Directors' Plan, the 1987 Stock Plan and the
1984 Incentive Plan to implement such adjustments and otherwise reflect the
Distribution and the Reincorporation.

COMPANY DIRECTORS' PLAN

The Company Directors' Plan provides that in the event of a merger,
consolidation or other reorganization of the Company, an appropriate
adjustment will be made with respect to each award such that the participant
will be entitled to receive the number and class of securities to which a
holder of Company Common Stock subject to such award would have been entitled
to receive as a result of the transaction, and a corresponding adjustment will
be made to the exercise price of any stock option outstanding under the
Company Directors' Plan.

While the Distribution is the type of event contemplated by the adjustment
provisions of the Company Director's Plan, a spin-off is not one of the
transactions specifically listed in those adjustment provisions. The Board of
Directors believes that the adjustments proposed to be made in connection with
the Distribution are fair and equitable to the director-optionees and
stockholders. The Board of Directors believes that the adjustments proposed
are consistent with the provisions of the Company Directors' Plan.
Nevertheless, the Board of Directors will adopt amendments to the Company
Directors' Plan to provide the Committee with the express authority under the
Company Directors' Plan to make appropriate adjustments to outstanding awards
to reflect the Distribution and to state affirmatively that a director who
ceases to serve upon the Board of Directors, but who continues to serve as a
director of either MFCI or MHCI following the Distribution, will not be
considered as having experienced a termination of his or her relationship with
the Company for purposes of determining the vesting of restricted stock awards
outstanding as of the Distribution or for purposes of determining the timing
of the payment of his or her deferred compensation account under the Company
Directors' Plan.

While the Board of Directors believes that these amendments to the Company
Directors' Plan are not material, it is nevertheless seeking stockholder
approval with respect to all of the amendments described to avoid any
potential uncertainty that arguably might exist if such approval were not
obtained for all such amendments because of Rule 16b-3 under the Exchange Act
which provides an exemption from Section 16(b) of the Exchange Act for certain
transactions by a director of the Company pursuant to an employee benefit plan
satisfying certain specified conditions, including stockholder approval.

As amended, the relevant portion of the Company Directors' Plan would read
as follows:

"For purposes of this Section 3.2, a Participant shall not suffer a
forfeiture of unvested shares and shall continue to vest in any such
unvested shares as if he or she remained on the Board of Directors for
any period of time following the effective date of the distributions of
the common stock of Morrison Fresh Cooking, Inc. ("MFCI') and of
Morrison Health Care, Inc. ("MHCI') to the stockholders of the Company
(the "Distribution') during which the Participant continuously serves
as a member of the board of directors of the Company, MFCI or MHCI."

35
<PAGE>

during which the Participant continuously serves as a member of the
board of directors of the Company, MFCI or MHCI."

"(a) The number of shares of Stock reserved with respect to Stock
Incentives, the number of shares of Stock reserved for issuance upon
the exercise of each outstanding Option and upon the vesting of each
outstanding Restricted Stock Award and the exercise price of each
outstanding Option shall be adjusted by the Committee for any increase
or decrease in the number of issued shares of Stock resulting from a
subdivision or combination of shares or for the payment of a stock
dividend (including, but not limited to, an extraordinary stock
dividend such as a spin-off) to holders of outstanding shares of Stock
or for any other increase or decrease in the number of shares of Stock
outstanding effected without receipt of consideration by the Company,
with such adjustment to be made in such manner as the Committee
determines, in its sole discretion, appropriately reflects the event."

In addition, in connection with the Distribution, the Company Directors'
Plan will be amended to reflect the Reincorporation and the change of name of
the Company to "Ruby Tuesday, Inc."

If the amendments to the Company Directors' Plan are not approved by the
stockholders and stockholder approval is required, the restricted stock
awards, stock awards and options could, under certain circumstances, give rise
to short-swing profit liability for the directors under Section 16(b) of the
Exchange Act.

The Company Directors' Plan, as amended as described above, is hereinafter
referred to as the "RTI Directors' Plan." For a description of the RTI
Directors' Plan, see "RTI Management and Executive Compensation--RTI
Directors' Compensation."

Approval of Proposal Four will constitute approval of the amendments
described above.

1987 STOCK PLAN

The 1987 Stock Plan provides that in the event of a merger, consolidation or
other reorganization of the Company, the Committee administering the 1987
Stock Plan (the "Committee") shall make appropriate adjustments with respect
to awards to reflect the event or in anticipation of any stock dividend, a
merger or consolidation, or other like changes in the nature of Company Common
Stock.

While the Distribution is the type of event contemplated by the adjustment
provisions of the 1987 Stock Plan, a spin-off is not one of the transactions
specifically listed in those adjustment provisions. The Board of Directors of
the Company believes that the adjustments proposed to be made in connection
with the Distribution are fair and equitable to the optionees and the
stockholders. The Board of Directors believes that the amendments proposed are
consistent with the existing provisions of the 1987 Stock Plan. Nevertheless,
the Board of Directors will adopt amendments to the 1987 Stock Plan to provide
the Committee with the express authority under the 1987 Stock Plan to make
appropriate adjustments to outstanding awards to reflect the Distribution and
to state affirmatively that the awards outstanding under the 1987 Stock Plan
will not expire prematurely due to an individual's termination of employment
with the Company in connection with the Distribution provided that the
individual continues in the employ of MFCI or MHCI following the Distribution.

The Board of Directors believes that the amendments to the 1987 Stock Plan
described above are not material amendments. However, under Section 162(m) of
the Internal Revenue Code, stockholder approval of any material amendment to a
performance-based compensation plan is necessary to qualify for the
performance-based exception to the limitation on RTI's ability to deduct
compensation paid to certain specified individuals in excess of $1 million.
Stockholder approval of these amendments is also being sought because of Rule
16b-3 under the Exchange Act which provides an exemption from Section 16(b) of
the Exchange Act for certain transactions by an officer or director of the
Company pursuant to an employee benefit plan satisfying certain

36
<PAGE>

specified conditions, including stockholder approval of material amendments.
Thus, while the Board of Directors believes that the amendments to the 1987
Stock Plan are not material, it is nevertheless seeking stockholder approval
with respect to all of the amendments described to avoid any potential
uncertainty that arguably might exist if such approval were not obtained for
all such amendments.

If the amendments to the 1987 Stock Plan are not approved by stockholders
and stockholder approval is required, awards issued and outstanding under the
plan could, under certain circumstances, give rise to short-swing profits
liability for certain officers and directors under Section 16(b) of the
Exchange Act and, under certain circumstances following the Distribution, RTI
could be denied deductions for compensation, including compensation
attributable to the exercise of option awards, paid to certain executive
officers.

As amended, the relevant portions of the 1987 Stock Plan will read as
follows:

"The total number of Shares reserved for issuance under this Plan
and, in the case of Shares subject to outstanding Options, the option
price per Share, shall be adjusted for any increase or decrease in the
number of outstanding shares resulting from the payment of a stock
dividend (including, but not limited to, an extraordinary stock
dividend such as a spin-off), from a subdivision or combination of
Shares, from a reclassification of the Shares or from any other
increase or decrease in the number of Shares outstanding effected
without receipt of consideration by the Company, with such adjustment
to be made in such manner as the Committee determines, in its sole
discretion, appropriately reflects the event."

"For purposes of this Section 6, an Eligible Employee shall not be
considered to have suffered a termination of employment with the
Company for any period of time following the effective date of the
distributions of the common stock of Morrison Fresh Cooking, Inc.
("MFCI') and of Morrison Health Care, Inc. ("MHCI') to the stockholders
of the Company during which the Eligible Employee continuously serves
as an employee of the Company, MFCI or MHCI."

In addition, in connection with the Distribution, the 1987 Stock Plan will
be amended to reflect the Reincorporation and the change in name of the
Company to "Ruby Tuesday, Inc."

Approval of Proposal Four will constitute approval of the amendments
described above.

1984 INCENTIVE PLAN

The 1984 Incentive Plan provides that in the event of a reorganization,
recapitalization, stock split, reverse stock split, stock dividend,
combination of shares, merger, consolidation or any like change in the capital
structure of the Company, the Committee administering the 1984 Incentive Plan
(the "Committee") shall make such adjustments with respect to awards and take
such other action as it deems necessary or appropriate to reflect or in
anticipation of such reorganization, recapitalization, stock split, reverse
stock split, stock dividend, combination of shares, merger, consolidation or
any like change in the capital structure of the Company.

While the Distribution is the type of event contemplated by the adjustment
provisions of the 1984 Incentive Plan, a spin-off is not one of the
transactions specifically listed in those adjustment provisions. The Board of
Directors of the Company believes that the adjustments proposed to be made in
connection with the Distribution are fair and equitable to the optionees and
the stockholders. The Board of Directors believes that the amendments proposed
are consistent with the existing provisions of the 1984 Incentive Plan.
Nevertheless, the Board of Directors will adopt amendments to the 1984
Incentive Plan to provide the Committee with the express authority under the
1984 Incentive Plan to make appropriate adjustments to outstanding awards to
reflect the Distribution and to state affirmatively that the awards
outstanding under the 1984 Incentive Plan will not expire prematurely due to
an individual's termination of employment with the Company in connection with
the Distribution provided that the individual continues in the employ of MFCI
or MHCI following the Distribution.

37
<PAGE>

The Board of Directors believes that the amendments to the 1984 Incentive
Plan described above are not material amendments. However, under Section
162(m) of the Internal Revenue Code, stockholder approval of any material
amendment to a performance-based compensation plan is necessary to qualify for
the performance-based exception to the limitation on RTI's ability to deduct
compensation paid to certain specified individuals in excess of $1 million.
Stockholder approval of these amendments is also being sought because of Rule
16b-3 under the Exchange Act which provides an exemption from Section 16(b) of
the Exchange Act for certain transactions by an officer or director of the
Company pursuant to an employee benefit plan satisfying certain specified
conditions, including stockholder approval of material amendments. Thus, while
the Board of Directors believes that the amendments to the 1984 Incentive Plan
are not material, it is nevertheless seeking stockholder approval with respect
to all of the amendments described to avoid any potential uncertainty that
arguably might exist if such approval were not obtained for all such
amendments.

If the amendments to the 1984 Incentive Plan are not approved by
stockholders and stockholder approval is required, awards issued and
outstanding under the plan could under certain circumstances give rise to
short-swing profits liability for certain officers and directors under Section
16(b) of the Exchange Act and, under certain circumstances following the
Distribution, RTI could be denied deductions for compensation, including
compensation attributable to the exercise of option awards, paid to certain
executive officers.

As amended, the relevant portion of the 1984 Incentive Plan would read as
follows:

"For purposes of this Section 12, a participant shall not be
considered to have suffered a termination of employment with the
Company for any period of time following the effective date of the
distributions of the common stock of Morrison Fresh Cooking, Inc.
("MFCI') and of Morrison Health Care, Inc. ("MHCI') to the stockholders
of the Company during which the Eligible Employee continuously serves
as an employee of the Company, MFCI or MHCI."

"18. Change in Capitalization. In the event of reorganization,
recapitalization, stock split, reverse stock split, stock dividend
(including, but not limited to, an extraordinary stock dividend such as
a spin-off), combination of shares, merger, consolidation or any change
in the capital structure of the Company (other than the creation of or
an increase in authorized securities of any class of the Company or the
issuance of securities of any class of the Company or of securities
convertible into such securities), the Committee shall make adjustments
(a) in the number of shares of Common Stock available for the granting
of stock options under the Plan, (b) in the number of shares of Common
Stock as to which outstanding stock options (or the portions thereof)
then unexercised shall be exercisable, (c) in the option price per
share, (d) in the number of performance units available for issuance
under the Plan and (e) in the number of performance units outstanding,
all in such manner as the Committee determines, in its sole discretion,
appropriately reflects the event. The adjustment in outstanding stock
options shall be made without change in the total price applicable to
the unexercised portion of the stock options but with an appropriate
adjustment in the option price per share."

In addition, in connection with the Distribution, the 1984 Incentive Plan
will be amended to reflect the Reincorporation and the change of name of the
Company to "Ruby Tuesday, Inc."

Approval of Proposal Four will constitute approval of the amendments
described above.

38
<PAGE>

APPROVAL OF MFCI STOCK INCENTIVE PLAN
AND MHCI STOCK INCENTIVE PLAN

In connection with the Distribution, the Company, MFCI and MHCI intend to
agree to cause all outstanding stock options, including stock options granted
under the Company Stock Incentive Plan, to be adjusted, as described under
"Employee Benefits and Compensation Matters--Equity-Based Compensation Plans."

The Board of Directors of MFCI is expected to adopt the Morrison Fresh
Cooking, Inc. 1996 Stock Incentive Plan (the "MFCI Stock Incentive Plan")
prior to the Distribution. The MFCI Stock Incentive Plan will permit MFCI to
grant to directors, officers and employees of MFCI and its affiliates,
including RTI and MHCI, awards in the form of stock options, stock
appreciation rights, performance incentive rights and similar equity-based
rights, as well as substitute stock options in connection with the
Distribution.

The Board of Directors of MHCI is expected to adopt the Morrison Health
Care, Inc. 1996 Stock Incentive Plan (the "MHCI Stock Incentive Plan") prior
to the Distribution. The MHCI Stock Incentive Plan will permit MHCI to grant
to directors, officers and employees of MHCI and its affiliates, including RTI
and MFCI, awards in the form of stock options, stock appreciation rights,
performance incentive rights and similar equity-based rights, as well as
substitute stock options in connection with the Distribution.

MFCI STOCK INCENTIVE PLAN

The MFCI Stock Incentive Plan will be substantially identical with the RTI
Stock Incentive Plan (see "Amendments to Company Stock Incentive Plan") except
that it will provide for equity-based incentives relating to MFCI Common
Stock. MFCI will reserve 500,000 shares of MFCI Common Stock for issuance
pursuant to awards that may be made under the MFCI Stock Incentive Plan,
subject to adjustment in the event of certain changes in MFCI's
capitalization, mergers, consolidations and similar events.

The stock options currently outstanding under the Company's stock plans will
be adjusted in connection with the Distribution as described under "Employee
Benefits and Compensation Matters--Equity-Based Compensation Plans." The MFCI
adjustment options with respect to options outstanding under Company stock
plans held by persons who are expected to become executives of MFCI following
the Distribution will be issued under the MFCI Stock Incentive Plan. The
Company anticipates that MFCI would issue adjustment options to purchase
approximately 45,000 shares of MFCI Common Stock.

The MFCI Board of Directors intends to designate the Compensation and Stock
Option Committee as the Committee following the Distribution. The maximum
number of shares of MFCI Common Stock with respect to which options or stock
appreciation rights may be granted during any fiscal year of MFCI to any
eligible recipient who is a "covered employee," within the meaning of Section
162(m) of the Internal Revenue Code, shall not exceed 100,000.

The following table sets forth information regarding stock options granted
under Company stock plans to each of the MFCI named executives (see "MFCI
Management and Executive Compensation--Compensation of MFCI Executive
Officers"), all persons who will serve as executive officers of MFCI following
the Distribution as a group, and all other persons who will become employees
of MFCI following the Distribution as a group.

<TABLE>
<CAPTION>
OPTIONS TO
PURCHASE COMPANY
NAME AND POSITION WITH MFCI OR GROUP COMMON STOCK (#)(1)
- ------------------------------------ -------------------
<S> <C>
R. L. Tatum................................................. 2,007
Chief Executive Officer
C. D. Nelson................................................ 801
Vice President, Finance
S. Lee, III................................................. 870
Vice President, Resources
All executive officers of MFCI as a group................... 170,368
All other employees of MFCI as a group...................... 446,161
</TABLE>
- --------

(1) Not adjusted for the Reverse Stock Split. See "MFCI Management and
Executive Compensation--Compensation of MFCI Executive Officers--Option
Grants in Fiscal 1995" for additional information concerning the stock
options set forth above which are held by MFCI named executives. The stock
options set forth above will be adjusted in connection with the
Distribution as described under "Employee Benefits and Compensation
Matters--Equity-Based Compensation Plans."

39
<PAGE>

Stockholder approval for the MFCI Stock Incentive Plan is being sought to
establish MFCI's ability to deduct, for Federal income tax purposes,
compensation expense attributable to stock options and other awards issued
thereunder, including stock options issued as a result of adjustments and
replacement of Company stock options in the Distribution. Under Section 162(m)
of the Internal Revenue Code, stockholder approval of a performance-based
compensation plan is necessary to qualify for the performance-based exception
to the limitation on MFCI's ability to deduct compensation paid to certain
specified individuals in excess of $1 million. Stockholder approval of the
MFCI Stock Incentive Plan is also being sought because of Rule 16b-3 under the
Exchange Act which provides an exemption from Section 16(b) of the Exchange
Act for certain transactions by an officer or director of MFCI pursuant to an
employee benefit plan satisfying certain specified conditions, including
stockholder approval.

If the MFCI Stock Incentive Plan is not approved by stockholders and
stockholder approval is required, awards issued and outstanding under the MFCI
Stock Incentive Plan could under certain circumstances give rise to short-
swing profits liability for certain officers and directors under Section 16(b)
of the Exchange Act, and under certain circumstances following the
Distribution, MFCI could be denied deductions for compensation, including
compensation attributable to the exercise of option awards, paid to certain
executive officers.

Approval of Proposal Five will constitute approval of the adoption of the
MFCI Stock Incentive Plan.

MHCI STOCK INCENTIVE PLAN

The MHCI Stock Incentive Plan will be substantially identical to the RTI
Stock Incentive Plan (see "Amendments to Company Stock Incentive Plan") except
that it will provide for equity-based incentives relating to MHCI Common
Stock. MHCI will reserve 500,000 shares of MHCI Common Stock for issuance
pursuant to awards that may be made under the MHCI Stock Incentive Plan,
subject to adjustment in the event of certain changes in MHCI's
capitalization, mergers, consolidations and similar events.

The stock options currently outstanding under the Company's stock incentive
plans will be adjusted in connection with the Distribution as described under
"Employee Benefits and Compensation Matters--Equity-Based Compensation Plans."
The MHCI adjustment options with respect to options outstanding under Company
stock plans held by persons who are expected to become executive officers of
MHCI following the Distribution will be issued under the MHCI Stock Incentive
Plan. The Company anticipates that MHCI would issue adjustment options to
purchase approximately 55,000 shares of MHCI Common Stock.

The MHCI Board of Directors intends to designate the Compensation and Stock
Option Committee as the Committee following the Distribution. The maximum
number of shares of MHCI Common Stock with respect to which options or stock
appreciation rights may be granted during any fiscal year of MHCI to any
eligible recipient who is a "covered employee," within the meaning of Section
162(m) of the Internal Revenue Code, shall not exceed 100,000.

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<PAGE>

The following table sets forth information regarding stock options granted
under Company stock plans to each of the MHCI named executives (see "MHCI
Management and Executive Compensation--Compensation of MHCI Executive
Officers"), all persons who will serve as executive officers of MHCI following
the Distribution as a group, and all other persons who will become employees
of MHCI following the Distribution as a group.

<TABLE>
<CAPTION>
OPTIONS TO
PURCHASE
COMPANY
COMMON
NAME AND POSITION WITH MHCI OR GROUP STOCK (#)(1)
------------------------------------ ------------
<S> <C>
G. A. Davenport.................................................... 11,292
President and Chief Executive Officer
J. D. Underhill.................................................... 1,605
Senior Vice President, Retail Development
G. L. Anderson..................................................... 5,771
Senior Vice President
C. L. Kolesar...................................................... 5,771
Senior Vice President
K. W. Engwall...................................................... -0-
Senior Vice President, Finance
All executive officers of MHCI as a group.......................... 164,057
All other employees of MHCI as a group............................. 505,870
</TABLE>
- --------

(1) Not adjusted for the Reverse Stock Split. See "MHCI Management and
Executive Compensation--Compensation of MHCI Executive Officers--Option
Grants in Fiscal 1995" for additional information concerning the stock
options set forth above which are held by MHCI named executives. The stock
options set forth above will be adjusted in connection with the
Distribution as described under "Employee Benefits and Compensation
Matters--Equity-Based Compensation Plans."

Stockholder approval for the MHCI Stock Incentive Plan is being sought to
establish MHCI's ability to deduct, for Federal income tax purposes,
compensation expense attributable to stock options and other awards issued
thereunder, including stock options issued as a result of adjustments and
replacement of Company stock options in the Distribution. Under Section 162(m)
of the Internal Revenue Code, stockholder approval of a performance-based
compensation plan is necessary to qualify for the performance-based exception
to the limitation on MHCI's ability to deduct compensation paid to certain
specified individuals in excess of $1 million. Stockholder approval of the
MHCI Stock Incentive Plan is also being sought because of Rule 16b-3 under the
Exchange Act which provides an exemption from Section 16(b) of the Exchange
Act for certain transactions by an officer or director of MHCI pursuant to an
employee benefit plan satisfying certain specified conditions, including
stockholder approval.

If the MHCI Stock Incentive Plan is not approved by stockholders and
stockholder approval is required, awards issued and outstanding under the MHCI
Stock Incentive Plan could, under certain circumstances, give rise to short-
swing profits liability for certain officers and directors under Section 16(b)
of the Exchange Act, and under certain circumstances following the
Distribution, MHCI could be denied deductions for compensation, including
compensation attributable to the exercise of option awards, paid to certain
executive officers.

Approval of Proposal Five will constitute approval of the adoption of the
MHCI Stock Incentive Plan.

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<PAGE>

EMPLOYEE BENEFITS AND COMPENSATION MATTERS

In connection with the Distribution, all of the Company's existing employee
benefit and incentive compensation plans and programs (other than the
performance-based stock rights award made to the Chief Executive Officer and
approved by the stockholders at the 1993 Annual Meeting (see "RTI Management
and Executive Compensation--Compensation of RTI Executive Officers") which
will be cancelled upon the Distribution (see "--Performance-Based Rights
Award" below)), will be amended as necessary to reflect the Distribution and
continued as plans and programs of RTI. All outstanding stock options to
purchase Company Common Stock will be replaced with stock options to purchase
RTI Common Stock, MFCI Common Stock and MHCI Common Stock. MFCI and MHCI will
each adopt employee benefit and incentive compensation plans and programs that
will be substantially similar with the Company's existing plans and programs,
adjusted to reflect the Distribution. In addition, the terms of the
replacement stock options will be designed to preserve to the fullest extent
possible the economic benefit inherent in such options prior to the
Distribution.

The following describes the proposed treatment of each of the Company's
existing material employee benefit and incentive plans and programs in
connection with the Distribution. THE COMPANY'S OVERALL OBJECTIVE IS FOR RTI,
MFCI AND MHCI, RESPECTIVELY, TO PROVIDE TO THE FULLEST EXTENT POSSIBLE THE
SAME EMPLOYEE BENEFITS AND INCENTIVES CURRENTLY PROVIDED BY THE COMPANY.

The matters described below are not subject to approval by the stockholders
unless specifically included in a Distribution Proposal.

SALARY DEFERRAL PLAN

The Company currently maintains the Morrison Restaurants Inc. Salary
Deferral Plan (the "Salary Deferral Plan") under which each eligible employee
may elect to make pre-tax contributions to a trust fund in amounts ranging
from 2% to 10% of his or her annual earnings. Employees contributing a pre-tax
contribution of at least 2% may elect to make after-tax contributions not in
excess of 10% of annual earnings. The Company makes contributions to the plan
based on each employee's pre-tax contribution and years of service.

Prior to the Distribution the Company will amend the Salary Deferral Plan to
clarify that the Distribution will not constitute a termination of employment
for benefit distribution or other related purposes under the Salary Deferral
Plan so long as a participant remains continuously employed by RTI, MFCI or
MHCI from and after the Distribution Date. Prior to the Distribution Date,
MFCI and MHCI will adopt the Salary Deferral Plan but, effective as of the
Distribution Date, MFCI and MHCI will withdraw from the Salary Deferral Plan,
and the Salary Deferral Plan will be renamed the "Ruby Tuesday, Inc. Salary
Deferral Plan" (the "RTI Salary Deferral Plan") and thereafter will be
maintained for the benefit of RTI employees.

MFCI and MHCI will each establish as of the Distribution Date a defined
contribution savings plan designed to qualify under Sections 401(a), 401(k)
and 4975(e)(7) of the Internal Revenue Code, and to preserve "protected
benefits," within the meaning of Section 411(d)(6) of the Internal Revenue
Code, accrued by participants under the Salary Deferral Plan as of the
Distribution Date (the "MFCI Salary Deferral Plan" and the "MHCI Salary
Deferral Plan" and, collectively, the "Replacement Salary Deferral Plans").
Those participants of the Salary Deferral Plan who become employees of either
MFCI or MHCI as of the Distribution Date will be given the opportunity to
participate in the Replacement Salary Deferral Plans, with full credit for
their service with the Company prior to the Distribution Date for purposes of
determining the level of each participant's matching contributions. As of the
Distribution Date, MFCI and MHCI will withdraw from the Salary Deferral Plan
and, thereafter, MFCI and MHCI may each request that RTI, as successor to the
Company, cause a spin-off and transfer from the Salary Deferral Plan trust to
the appropriate Replacement Salary Deferral Plan trust an amount in kind equal
to the aggregate account balances, as of the date of any such transfer, of
those Salary Deferral Plan

42
<PAGE>

participants who, as of the Distribution Date, will have become employees of
the requesting party. If either MFCI or MHCI, or both, request such a spin-
off, then the transfer of assets will occur as soon as practicable following
(a) the Distribution Date, (b) the establishment and designation of the
appropriate Replacement Salary Deferral Plan, (c) either (i) the receipt of a
favorable determination letter issued by the Internal Revenue Service with
respect to such plan or (ii) the filing of a favorable determination letter
application with the Internal Revenue Service and a written commitment from
MFCI or MHCI, as applicable, to exert its best efforts to obtain such a
favorable determination letter and (d) the expiration of 30 days after RTI and
the requesting party have filed Form 5310-A, if necessary, with the Internal
Revenue Service. Upon receipt of such an asset transfer by the Replacement
Salary Deferral Plan trust, MFCI or MHCI, as the case may be, will cause such
plan to assume and fully perform, pay and discharge all obligations and
liabilities of RTI and the RTI Salary Deferral Plan to and with respect to
those Salary Deferral Plan participants whose account balances were so
received.

Consistent with the purpose of enhancing the equity-based incentive
compensation of their respective employees, each of MFCI and MHCI has agreed
to cause its Replacement Salary Deferral Plans to hold at least 3% of its
outstanding shares of Common Stock as soon as practicable after the
Distribution Date. Such ownership target will be achieved by causing each of
the Replacement Salary Deferral Plans, if necessary, to acquire a sufficient
number of shares directly from MFCI or MHCI, as appropriate, in exchange for a
promissory note to be repaid over a period of up to ten years.

RETIREMENT PLAN

The Company currently maintains the "Morrison Restaurants Inc. Retirement
Plan" (the "Retirement Plan") under which participants are entitled to receive
benefits based upon salary and length of service. The Retirement Plan was
"frozen" as of December 31, 1987, so that no additional benefits accrue and no
new participants were covered by the Retirement Plan after such date.

Following the Distribution Date, RTI will continue as the Retirement Plan's
"primary sponsor" and MFCI and MHCI will continue as "adopting affiliates"
until the earlier of (a) the termination of the Retirement Plan, which
termination will be initiated at the sole discretion of RTI and will
necessarily result in cessation of the collective sponsorship of the
Retirement Plan, or (b) as to the individual sponsorship by RTI, MFCI or MHCI,
until final payment of all benefits accrued in favor of Retirement Plan
participants allocated to that sponsor. If any sponsor seeks to withdraw from
the Retirement Plan at an earlier date, the parties shall arrange for a spin-
off in accordance with applicable Treasury regulations or for other
arrangements addressing the withdrawing sponsor's share of future funding
obligations. Retirement Plan participants will be allocated among RTI, MFCI
and MHCI based upon the following rules: (i) active employees who are
participants will be allocated on the basis of who their employer is on the
Distribution Date, (ii) former employees who are participants will be
allocated on the basis of the line of business for whom they performed the
majority of their services at the time of their termination of employment and
(iii) former corporate personnel who are participants, but who are former
employees, will be allocated to RTI. Each sponsor will share future funding
obligations under the Retirement Plan in the same proportion that the accrued
benefit liabilities of the participants allocated to it bear to the total
accrued benefit liabilities of all participants, as determined by the
Retirement Plan actuary. RTI, MFCI and MHCI will share the annual
administrative costs of maintaining the Retirement Plan for expenses incurred
during the period that each continues as a sponsor of the Retirement Plan
based upon the ratio of its annual funding obligation compared to the entire
annual funding obligation for the Retirement Plan. RTI or its designee will
serve as the Retirement Plan's "plan administrator" until the Retirement Plan
is terminated or, if earlier, should its individual sponsorship cease as
described in clause (b) above. The parties will agree to maintain such records
and provide such information as necessary to assist the plan administrator in
the discharge of its duties.

NON-QUALIFIED PENSION PLANS

The Company currently maintains the Morrison Restaurants Inc. Executive
Supplemental Pension Plan (the "ESP") and the Morrison Restaurants Inc.
Management Retirement Plan (the "MRP") (collectively, the "Non-Qualified
Pension Plans") under which selected employees are entitled to certain
retirement benefits based on

43
<PAGE>

salary and length of service and offset by social security benefits and
benefits payable under the Retirement Plan, in the case of the ESP, and the
Retirement Plan and the ESP, in the case of the MRP.

The Non-Qualified Pension Plans will be amended prior to the Distribution
Date to clarify that the Distribution will not constitute a termination of
employment for purposes of determining the commencement of benefit payments
under the Non-Qualified Pension Plans so long as a participant remains
continuously employed by RTI, MFCI or MHCI from and after the Distribution
Date and to clarify further that benefit accruals under the Non-Qualified
Pension Plans will cease as of the Distribution Date for those participants
who do not continue in the employ of RTI thereafter. MFCI and MHCI will adopt
the Non-Qualified Pension Plans prior to the Distribution Date but will
withdraw from these plans effective as of the Distribution Date.

As of the Distribution Date, MFCI and MHCI each will establish retirement
plans substantially similar to the Non-Qualified Pension Plans (collectively,
the "Replacement Plans") and a related grantor trust. Those participants in
the Non-Qualified Pension Plans who become employees of either MFCI or MHCI
following the Distribution Date will be given the opportunity to participate
in the appropriate Replacement Plans, with full credit for benefit accrual
purposes for their service with the Company prior to the Distribution Date,
but subject to the condition that such a participant deliver to RTI an
appropriate release, in form satisfactory to RTI, releasing RTI and its
affiliates (other than MFCI or MHCI, as the case may be) from primary
liability for benefits accrued by that participant as of the Distribution Date
under the Non-Qualified Pension Plans. With respect to each such release
delivered to RTI, RTI will cause to be transferred to a grantor trust to be
established by MFCI or MHCI, as the case may be, a proportionate share of the
assets of the grantor trust which the Company currently maintains in
conjunction with the Non-Qualified Pension Plans. That portion of the assets
earmarked for the payment of benefits under the ESP or MRP, as the case may
be, to be delivered to each recipient grantor trust will be in the same
proportion that the accrued benefit liabilities of those participants in the
corresponding Replacement Plan who have delivered acceptable releases to RTI
bear to the total accrued benefit liabilities of all participants in the ESP
or MRP, as applicable.

RTI, MFCI and MHCI shall each indemnify and hold harmless the other parties
from all liabilities attributable to benefits accrued under the Non-Qualified
Pension Plans or Replacement Plans which it maintains. However, in the event
of the insolvency of RTI, MFCI or MHCI whereby all or a portion of the assets
of the grantor trust maintained by the insolvent party to provide benefits
under the Non-Qualified Pension Plans or Replacement Plans, as the case may be
(the "Affected Plans"), are paid to the insolvent party's creditors, each
other party shall be obligated to pay directly to each participant of an
Affected Plan a proportionate share of the benefit that such a participant had
accrued under the Non-Qualified Pension Plan (in which the participant had the
greater accrued benefit) as of the Distribution Date.

NON-QUALIFIED DEFERRED COMPENSATION PLAN FOR EMPLOYEES

The Company currently maintains the Morrison Restaurants Inc. Deferred
Compensation Plan (the "DCP") for certain selected employees. The DCP is
similar to the Salary Deferral Plan except for eligibility requirements and
different limitations on deferral elections that may be made by participants.

The DCP will be amended prior to the Distribution Date to clarify that the
Distributions will not constitute a termination of employment for purposes of
determining the commencement of benefit payments under the DCP so long as the
participant remains continuously employed by RTI, MFCI or MHCI from and after
the Distribution Date and to clarify further that active participation under
the DCP will cease as of the Distribution Date for those participants who do
not continue in the employ of RTI thereafter. MFCI and MHCI will adopt the DCP
prior to the Distribution Date but will withdraw from the DCP as a plan
sponsor effective as of the Distribution Date.

As of the Distribution Date, MFCI and MHCI each will establish a non-
qualified deferred compensation plan substantially similar to the DCP (a
"Replacement DCP") and related grantor trust. MFCI and MHCI employees who are
participants in the DCP will be given the opportunity to participate in the
appropriate Replacement DCP, with full credit for their service with the
Company prior to the Distribution Date for purposes of determining the level
of a participant's matching credits, but subject to the condition any such
participant

44
<PAGE>

deliver to RTI an appropriate release, in form satisfactory to RTI, releasing
RTI and its affiliates (other than MFCI or MHCI, as the case may be) from any
liability for benefits under the DCP. With respect to each such release
delivered to RTI, RTI will cause to be transferred to a grantor trust
established by MFCI or MHCI, as the case may be, a proportionate share of the
assets of the grantor trust which the Company currently maintains in
conjunction with the DCP. That portion of the assets earmarked for the payment
of benefits under the DCP to be delivered to each recipient grantor trust will
be in the same proportion that the accrued benefit liabilities of those
participants in the corresponding Replacement DCP who have delivered
acceptable releases to RTI bear to the total accrued benefit liabilities of
all participants in the DCP.

WELFARE BENEFIT PLANS

The Company currently maintains various "employee welfare benefit plans,"
within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended (collectively, the "Company Welfare Plans"), for the
benefit of its employees and the employees of its affiliates. RTI or, where
appropriate, the Company Welfare Plans, will retain liability for and will pay
when due all benefits attributable to claims incurred prior to the
Distribution Date. RTI, or where appropriate, the Company Welfare Plans that
are "group health plans," will retain liability for and will pay when due all
benefits attributable to "qualified beneficiaries" who became entitled to
"continuation coverage" (as those terms in quotations are defined in Code
Section 4980B) at any time immediately prior to the Distribution Date. MFCI
and MHCI will establish, as of the Distribution Date, employee welfare benefit
plans substantially similar to the Company Welfare Plans as then in effect.
Employees of the Company, MFCI or MHCI who retire prior to the Distribution
Date and are eligible for retiree benefits under one or more of the Company
Welfare Plans will continue to be eligible for benefits under each such plan
following the Distribution Date pursuant to the terms of the plan, as the same
may be amended from time to time thereafter and until such time as such plan
may be terminated. MFCI and MHCI shall reimburse RTI annually for the employer
portion of the cost of retiree health benefits of each retiree who performed
the majority of his or her services for their respective lines of business
during the calendar year in which the retiree retired prior to the
Distribution.

The parties have agreed to make an adjustment in the event either an
overfunding or underfunding is determined to exist as of the Distribution Date
in the trust (or portion thereof) which serves as the source of benefits under
the MRI Welfare Plans providing major medical coverage. In the case of
overfunding, RTI shall directly pay to MFCI and MHCI their proportionate share
of the overfunding and, in the case of underfunding, MFCI and MHCI shall each
pay their proportionate share of the underfunding directly to RTI.

EQUITY-BASED COMPENSATION PLANS

The Company currently maintains and has outstanding option awards to
purchase Company Common Stock under its Company Stock Incentive Plan and
programs thereunder, the 1993 Non-Executive Stock Incentive Plan and programs
thereunder, the 1987 Stock Plan, the 1984 Incentive Plan and the Company
Directors' Plan (collectively, the "Stock Plans"). Amendments to the Company's
1993 Non-Executive Stock Incentive Plan will be adopted, similar to those
described for the Company Stock Incentive Plan, 1987 Stock Plan and the 1984
Incentive Plan, to state affirmatively that option awards outstanding under
that plan may be adjusted to reflect the events contemplated by the
Distribution. The 1993 Non-Executive Stock Incentive Plan is similar to the
design of the Company Stock Incentive Plan, except that the former does not
contemplate the issuance of incentive stock options authorized by Section 422
of the Internal Revenue Code. The following is a discussion of the steps that
will be taken with respect to awards under the Stock Plans that are
outstanding at the time of the Distribution.

An option award to purchase Company Common Stock shall convert into option
awards to purchase an equivalent number of shares of RTI, MFCI, and MHCI using
the same exchange ratios as the exchange ratios used to effect the
Distribution or, as to RTI options, the Reincorporation. Thus, for example, an
option award to

45
<PAGE>

purchase 100 shares of Company Common Stock held by an optionee shall convert
into separate option awards to purchase 50 shares of RTI Common Stock, 25
shares of MFCI Common Stock, and 33 shares of MHCI Common Stock.

The exercise price per share of the option to purchase shares of Company
Common Stock that has been adjusted shall be allocated to the separate option
awards by using ratios of the "Post-Distribution Per Share Stock Price" of the
RTI Common Stock, the MFCI Common Stock, or the MHCI Common Stock, as the case
may be, to the total of the "Post-Distribution Per Share Stock Price" of the
RTI, MFCI, and MHCI Common Stocks and then dividing the result by the exchange
ratio used to effect the Distribution or, as to RTI options, the
Reincorporation. Thus, for example, the exercise price per share allocated to
the separate option award to acquire RTI Common Stock issued in connection
with the adjustment shall be computed by first multiplying the exercise price
per share under the option award for the Company Common Stock immediately
prior to the Distribution times a ratio of the "Post-Distribution Per Share
Stock Price" of RTI Common Stock to the total of the "Post-Distribution Per
Share Stock Price" of the RTI Common Stock, the MFCI Common Stock, and the
MHCI Common Stock, and then dividing that result by the exchange ratio of 0.5-
to-1, which was used to effect the Reincorporation. The "Post-Distribution Per
Share Stock Price" means the composite volume weighted average price for the
stock under determination (i.e., RTI, MFCI or MHCI) as advised for the
exchange ratio used to effect the Distribution or the Reincorporation, as the
case may be, for the first ten trading days following the Distribution Date.

Adjustment options to purchase shares of MFCI Common Stock will be issued
under the MFCI Stock Incentive Plan or, in the case of adjustment options to
be issued to persons who are not reporting persons under Section 16(b) of the
Exchange Act, under a stock incentive plan substantially similar to the 1993
Non-Executive Stock Incentive Plan. Adjustment options to purchase shares of
MHCI Common Stock will be issued under the MHCI Stock Incentive Plan or, in
the case of adjustment options to be issued to persons who are not reporting
persons under Section 16(b) of the Exchange Act, under a stock incentive plan
substantially similar to the 1993 Non-Executive Stock Incentive Plan.

COMPANY DIRECTORS' PLAN

The Company Directors' Plan will be amended prior to the Distribution Date
to state affirmatively that the Distribution will not constitute a termination
of service for purposes of determining that portion of a director's shares of
restricted Company Common Stock that are vested and for purposes of
determining the commencement of benefit payments so long as the director
continues to serve on the Board of Directors of RTI, MFCI or MHCI from and
after the Distribution Date (see "Amendments to Company Directors' Plan, 1987
Stock Plan and 1984 Incentive Plan"). Shares of MFCI Common Stock and MHCI
Common Stock received in the Distribution on account of shares of restricted
Company Common Stock awarded to a director under the Company Directors' Plan,
and the shares of RTI Common Stock into which such restricted Company Common
Stock are converted in the Reincorporation merger, will remain subject to the
vesting schedule and transfer restrictions applicable to the restricted
Company Common Stock prior to the Distribution and the Reincorporation. Stock
options outstanding under the Company's Directors' Plan will be adjusted as
described under "--Equity-Based Compensation Plans" above. In addition, as of
the Distribution Date, MFCI and MHCI each will establish a non-qualified
deferred compensation plan substantially similar to the Company Directors'
Plan (the "MFCI Directors' Plan" and the "MHCI Directors' Plan," respectively,
and collectively, the "Replacement Directors' Plans"). MFCI and MHCI directors
who are participants in the Company Directors' Plan, but who cease to serve on
the Board of Directors of RTI as of the Distribution Date, will be given the
opportunity to transfer their account balances under the Company Directors'
Plan to any Replacement Directors' Plan in which they participate following
the Distribution Date, but subject to the condition that the participant
deliver to RTI an appropriate release, in form satisfactory to RTI, releasing
RTI and its affiliates (other than MFCI or MHCI, as the case may be) from any
liability for benefits under the Company Directors' Plan. With respect to each
such release delivered to RTI, RTI shall transfer to MFCI or MHCI, as the case
may be, assets equal in value to the amount of any account balance so
transferred and the recipient shall assume the corresponding liabilities. A
director of the Company immediately prior to the Distribution Date who ceases
to serve upon the Board of Directors of RTI following the Distribution Date
will remain eligible to participate in the RTI Directors' Plan through the
third quarter of the Company's fiscal year ending March 2, 1996.

46
<PAGE>

PERFORMANCE-BASED RIGHTS AWARD

The Compensation and Stock Option Committee of the Board of Directors made
an award of performance-based stock rights to Samuel E. Beall, III, the Chief
Executive Officer of the Company, which was approved by the stockholders at
the 1993 Annual Meeting. The award provided for the issuance of up to 75,000
shares of Company Common Stock over a five-year period based on achievement of
predetermined stock price levels. The Company issued to Mr. Beall 30,000
shares of Company Common Stock under this program. Mr. Beall agreed to the
cancellation of all performance stock rights remaining outstanding as of the
Distribution Date. It is expected that Mr. Beall and RTI will enter into a new
equity-based compensation agreement.

EMPLOYEE STOCK PURCHASE PLAN

Eligible Company employees who continue in the employ of either MFCI or MHCI
following the Distribution Date will cease participation in the Company
employee stock purchase plan as of the last payroll period ending immediately
preceding the Distribution Date. It is expected that MFCI and MHCI will
establish their own employee stock purchase plans.

EXECUTIVE ANNUAL BONUS PROGRAM

MFCI and MHCI, as the case may be, will assume any obligations for bonuses
otherwise payable for fiscal 1996 to those executives who continue in its
employ after the Distribution Date.

MANAGEMENT STOCK OPTION PROGRAM

The Company has a Management Stock Option Program (the "MSOP") under the
Company Stock Incentive Plan and the 1993 Non-Executive Stock Incentive Plan,
which permits eligible employees to purchase shares of Company Common Stock up
to established annual limits and, if such purchases are made, provides for the
award of stock bonuses and stock options based on formulas set forth in the
MSOP. Eligible employees of MFCI or MHCI (other than those occupying the
position of general manager or above) immediately prior to the Distribution
Date who continue employment with that entity immediately following the
Distribution Date will remain eligible to participate in the MSOP through the
third quarter of the Company's fiscal year ending March 2, 1996. RTI, MFCI and
MHCI will establish programs similar to the MSOP effective as of the
Distribution Date.

CREDIT FOR PAST SERVICE WITH THE COMPANY

An employee of MFCI or MHCI immediately prior to the Distribution Date who
continues in the employment with that entity immediately following the
Distribution will be given credit for all years of service with the Company
performed prior to the Distribution Date with respect to matters of employment
generally, including participation in employee benefit plans or fringe benefit
arrangements, except as the Company, MFCI and MHCI otherwise agree.

REIMBURSEMENTS

MFCI and MHCI shall reimburse RTI for those expenses incurred or accrued
through the Distribution Date attributable to the cost of contributions and
expenses related to the maintenance of employee benefit plans and the cost of
compensating those Company employees who become employed by MFCI or MHCI.

47
<PAGE>

RELATIONSHIP AMONG RTI, MFCI AND MHCI
AFTER THE DISTRIBUTION

MFCI and MHCI are each wholly-owned by the Company, and their respective
results of operations historically have been included in the Company's
consolidated financial results. After the Distribution, RTI, MFCI and MHCI
will not have any ownership interest in each other except for such ownership
interest held for the benefit of employees under or in connection with
employee benefits plans. Each of RTI, MFCI and MHCI will be an independent
public company. Furthermore, except as described below and except for
commercial relationships in the ordinary course of business RTI, MFCI and/or
MHCI will not have any material or other contractual relationships following
the Distribution.

Prior to the Distribution, the Company, MFCI and MHCI will enter into
certain agreements, described below, governing their relationship subsequent
to the Distribution (at which time RTI, by operation of law as a result of the
Reincorporation merger, will have succeeded to the rights and obligations of
the Company) and providing for the allocation of tax and certain other
liabilities and obligations arising from periods prior to the Distribution.
The Company believes that the agreements are fair to the parties to the
relevant agreements and contain terms which generally are comparable to those
which would have been reached in arms-length negotiations with unaffiliated
parties (although such comparisons are difficult to make with respect to
certain agreements which relate to the specific circumstances of the
Distribution and the transactions contemplated thereby). The terms of these
agreements will have been reviewed by individuals who will be included at a
senior management level of RTI, MFCI and MHCI.

Copies of the forms of such agreements will be filed as exhibits to the
Registration Statements on Form 10 of each of MFCI and MHCI in respect of the
registration of the MFCI Common Stock and the MHCI Common Stock under the
Exchange Act. In addition, the Company intends to file a Current Report on
Form 8-K in connection with the Distribution, and the agreements either will
be filed as exhibits to such Report or will be included in a later filing by
the Company under the Exchange Act. See "Available Information." The following
description summarizes such agreements.

DISTRIBUTION AGREEMENT

The Company, MFCI and MHCI will enter into a Distribution Agreement
providing, among other things, for certain corporate transactions required to
effect the Distribution and other arrangements among RTI, MFCI and MHCI
subsequent to the Distribution.

The Distribution Agreement will provide, among other things, for assumptions
of liabilities and cross-indemnities designed to allocate generally, among
RTI, MFCI and MHCI, effective as of the Distribution Date, the Company's
financial responsibility for liabilities (other than indebtedness to financial
institutions) arising out of or in connection with business activities prior
to the Distribution. The Distribution Agreement will also provide for (i) the
allocation generally of the financial responsibility for the liabilities
arising out of or in connection with former businesses of the Company to or
among RTI, MFCI and MHCI and (ii) the allocation of indebtedness of the
Company to financial institutions as of the Distribution Date (see "The
Distribution--Treatment of Indebtedness").

The Distribution Agreement will also provide that, except as otherwise set
forth therein or in any other agreement, all costs or expenses incurred on or
prior to the Distribution Date in connection with the Distribution will be
charged to the party for whose benefit the expenses are incurred or, if that
cannot be determined, on an equitable basis. Except as set forth in the
Distribution Agreement or any related agreement, each party will bear its own
costs and expenses incurred after the Distribution Date.

INTELLECTUAL PROPERTY AGREEMENTS

The Company, MFCI and MHCI will enter into Intellectual Property License
Agreements (collectively, "IP Agreements") which will provide for licensing to
or among these companies of rights under trademarks, service marks, trade
secrets and certain other intellectual property (collectively, "Intellectual
Property") owned by the Company (RTI after the Distribution), MFCI or MHCI as
of the Distribution Date. The purpose of these IP

48
<PAGE>

Agreements is to provide RTI, MFCI and MHCI with those continuing rights and
licenses under such Intellectual Property following the Distribution Date
necessary for the continued conduct of their respective businesses in
accordance with existing practice.

TAX ALLOCATION AND INDEMNIFICATION AGREEMENT

Pursuant to an Amended and Restated Tax Allocation and Indemnification
Agreement (the "Tax Indemnification Agreement"), the Company (RTI after the
Distribution), MFCI and MHCI will indemnify each other for their respective
share of certain tax costs resulting from audits or other tax assessments by
the Internal Revenue Service or other taxing authorities for any period prior
to the Distribution Date. The Company (RTI after the Distribution), MFCI
and/or MHCI will in turn receive their respective shares of any tax benefits
that arise subsequent to the Distribution Date as a result of all or a portion
of these audit or other tax assessments. The Tax Indemnification Agreement
also allocates responsibility for certain taxes ("Restructuring Taxes")
resulting from the transfer of assets and liabilities by the Company pursuant
to the Distribution Agreement and the distribution of shares in the
Distribution. In general, the Company (RTI after the Distribution), MFCI
and/or MHCI will indemnify each other for their allocable share of
Restructuring Taxes and any liability resulting from a decision that the
Company is liable to Company stockholders because the Distribution failed to
meet the requirements of Section 355 of the Internal Revenue Code for
nonrecognition of gain or loss. If such taxes or liability arise from (i) a
breach of any representation or covenant made by one of the parties in
connection with the qualification of the Distribution as a tax-free spin-off
under applicable Internal Revenue Code provisions or (ii) a direct or indirect
change of control of such a party within the meaning of such provisions, then
the indemnifying party or parties will be responsible for all taxes or
liability arising from such breach. The latter requirement may have the effect
of discouraging third parties from making proposals involving an acquisition
or change of control of the Company (RTI after the Distribution), MFCI or
MHCI. See "The Distribution--Federal Income Tax Consequences." If it is
determined that the Distribution fails to meet the requirements of Section 355
of the Internal Revenue Code for nonrecognition of gain or loss for reasons
other than those described above, then the liability of the Company (RTI after
the Distribution), MFCI and MHCI, as the case may be, arising from such
determination for any taxes or to the Company stockholders will be borne one-
third by the Company (RTI after the Distribution), one-third by MFCI and one-
third by MHCI.

EMPLOYEE BENEFITS AGREEMENT

The Company, MFCI and MHCI will enter into an Agreement Respecting Employee
Benefit Matters providing for the allocation of retirement, medical,
disability and other employee welfare benefit obligations among RTI, MFCI and
MHCI. See "Employee Benefits and Compensation Matters."

COOPERATIVE PURCHASING ARRANGEMENT

MRT Purchasing, LLC, a Georgia limited liability company ("MRT"), has been
organized to serve as a purchasing cooperative to enable RTI, MFCI and MHCI to
pool their collective purchasing power and to coordinate the purchase of
certain food, equipment and services. Pursuant to MRT's Operating Agreement,
MRT will serve as the purchasing agent for the three companies by arranging
for the purchase of products to be made directly between each of the three
companies and suppliers. MRT will have complete discretion to select vendors
and brands for certain designated products ("core products") and to negotiate
terms of purchasing arrangements for core products, including long-term
contracts. To the extent feasible, MRT will conclude purchasing arrangements
under which each of the three companies has independent rights and
obligations. With respect to any arrangement where each company's liabilities
are not independent, RTI, MFCI and MHCI will cross indemnify MRT and each
other with respect to their allocated share of liability for obligations to be
performed and payment for goods purchased.

RTI, MFCI and MHCI will be obligated to purchase all core products through
MRT arrangements; non-core products may be purchased independently. RTI, MFCI
and MHCI will be committed to these purchasing arrangements for an initial
term of five years from the Distribution Date, which will automatically renew
for five

49
<PAGE>

year terms. Any of RTI, MFCI and MHCI may terminate its participation in these
purchasing arrangements upon six months prior notice, provided, however, that
it will continue to honor its commitments under any then existing contract
extending beyond the termination date. Approximately 75%, 85% and 75% of the
total products purchased by RTI, MFCI and MHCI, respectively, during fiscal
1995 would have constituted "core products" under the MRT purchasing
cooperative.

Each of RTI, MFCI and MHCI will have an equal equity interest in MRT. It is
not intended, however, that MRT will generate income or profits. Employees
will be loaned by one of the three companies and all expenses incurred in
connection with operating MRT will be shared among the three companies pro
rata based on the relative value of time spent and expenses incurred by MRT on
behalf of each of the companies.

Existing long term purchasing arrangements will be managed through MRT, who
will act as agent for RTI, MFCI and MHCI. In each case, purchasing obligations
will be allocated among the RTI, MFCI and MHCI based on past practice. To the
extent feasible, MRT will seek to amend such arrangements to formalize the
allocation of responsibilities and liabilities. In particular, the Company is
negotiating to amend its existing agreement ("Supply Agreement") with
PYA/Monarch, Inc. ("PYA") to allocate to the appropriate company certain
divisional obligations to purchase from PYA a minimum percentage of produce,
foodstuff and other supplies. In addition, the aggregate annual minimum dollar
amount of purchases under the Supply Agreement would be allocated among the
three companies.

DIRECTORS

After the Distribution Date, there will be individuals on the Boards of
Directors of RTI, MFCI and MHCI who will also serve on the Board of Directors
of one of the other two companies. See "RTI Management and Executive
Compensation--RTI Board of Directors," "MFCI Management and Executive
Compensation--MFCI Board of Directors" and "MHCI Management and Executive
Compensation--MHCI Board of Directors."

DIVIDEND POLICIES

RTI DIVIDEND POLICY

RTI does not intend to pay cash dividends on RTI Common Stock for the
foreseeable future after the Distribution.

MFCI DIVIDEND POLICY

The payment and level of cash dividends by MFCI after the Distribution will
be subject to the discretion of the Board of Directors of MFCI. Although it is
anticipated that MFCI will initially declare quarterly dividends of $0.09 per
share, dividend decisions will be based on, and affected by, a number of
factors, including the operating results and financial requirements of MFCI on
a stand-alone basis. Although there can be no assurance that dividends will be
paid, and no dividends have been declared, management of MFCI believes that
its cash flows after the Distribution should be sufficient, after giving
effect to the Distribution, that, barring unforeseen circumstances, the
initial dividend rate can be maintained for the foreseeable future. MFCI
anticipates that its agreements with future lenders will contain customary
covenants restricting its ability to pay cash dividends under certain
circumstances but such covenants will not materially impede its ability to pay
cash dividends under the intended dividend policy.

MHCI DIVIDEND POLICY

The payment and level of cash dividends by MHCI after the Distribution will
be subject to the discretion of the Board of Directors of MHCI. Although it is
anticipated that MHCI will initially declare quarterly dividends of $0.205 per
share, dividend decisions will be based on, and affected by, a number of
factors, including the operating results and financial requirements of MHCI on
a stand-alone basis. Although there can be no assurance that dividends will be
paid, and no dividends have been declared, management of MHCI believes that
its cash flows after the Distribution should be sufficient, after giving
effect to the Distribution, that, barring unforeseen circumstances, the
initial dividend rate can be maintained for the foreseeable future. MHCI
anticipates that its agreements with future lenders will contain customary
covenants restricting its ability to pay cash dividends under certain
circumstances but such covenants will not materially impede its ability to pay
cash dividends under the intended dividend policy.

50
<PAGE>

DIVIDENDS AND PRICE RANGE OF COMPANY COMMON STOCK

The Company Common Stock is listed and traded on the NYSE under the ticker
symbol "RI." The following table sets forth for the periods indicated the high
and low sales prices per share of Company Common Stock as reported on the NYSE
Composite Tape and the cash dividends paid per share of Company Common Stock
in the periods actually paid.

<TABLE>
<CAPTION>
PRICE RANGE CASH
------------- DIVIDENDS
HIGH LOW PAID
------ ------ ---------
<S> <C> <C> <C>
Fiscal 1994
First Quarter......................................... $22.50 $19.13 $.0800
Second Quarter........................................ 26.13 21.13 .0833
Third Quarter......................................... 27.50 21.75 .0833
Fourth Quarter........................................ 27.00 22.00 .0833
Fiscal 1995
First Quarter......................................... 25.88 20.88 .0833
Second Quarter........................................ 29.75 24.88 .0875
Third Quarter......................................... 27.88 22.88 .0875
Fourth Quarter........................................ 26.88 20.88 .0875
Fiscal 1996
First Quarter......................................... 25.75 19.13 .0875
Second Quarter........................................ 20.63 15.50 .0920
Third Quarter (through January 11, 1996).............. 14.75 12.50 n/a
</TABLE>

On September 26, 1995, the last trading day before the Company announced
that, subject to the satisfaction or waiver of the conditions to the
Distribution and the actual declaration of the dividend in respect of the
Distribution, its Board of Directors had approved the Distribution, the high
and low sales prices for the Company Common Stock on the NYSE Composite Tape
were $17.88 and $17.63, respectively. On January , 1996, the last trading day
for which quotations were available at the time of the printing of this Proxy
Statement, the closing price for the Company Common Stock on the NYSE
Composite Tape was $ . STOCKHOLDERS ARE URGED TO OBTAIN CURRENT TRADING
PRICE INFORMATION.

For a discussion of the impact of the Distribution and the Reverse Stock
Split on the trading price of the RTI Common Stock following the Distribution,
see "The Distribution--Certain Factors Affecting Trading Prices." For a
discussion of the dividend policy of RTI, MFCI and MHCI after the
Distribution, see "Dividend Policies."

There has not been any established public trading market for MFCI Common
Stock or MHCI Common Stock. For a discussion of certain matters in respect
thereof, see "The Distribution--Listing and Trading of RTI Common Stock, MFCI
Common Stock and MHCI Common Stock."

51
<PAGE>

COMPANY (RTI) SELECTED FINANCIAL DATA

The following table summarizes certain selected financial information with
respect to the Company (RTI after the Distribution) and is derived from the
Consolidated Financial Statements of the Company. The Distribution has been
recorded as a discontinuance of the businesses of MFCI and MHCI in the
Consolidated Financial Statements of the Company. The consolidated statements
of income data for the years ended June 5, 1993, June 4, 1994 and June 3, 1995
and the consolidated balance sheet data as of June 4, 1994 and June 3, 1995
are derived from the Audited Consolidated Financial Statements of the Company.
The consolidated statements of income data for the years ended June 1, 1991,
June 6, 1992 and the twenty-six weeks ended December 3, 1994 and December 2,
1995 and the consolidated balance sheet data as of June 1, 1991, June 6, 1992,
June 5, 1993, December 3, 1994 and December 2, 1995, are derived from the
Unaudited Consolidated Financial Statements of the Company and, in the opinion
of management, include all adjustments, consisting of normal recurring
accruals, which the Company considers necessary for a fair presentation of the
consolidated financial position and the results of operations for these
periods. The financial information presented below may not be indicative of
the Company's future performance independent of discontinued businesses. The
information set forth below should be read in conjunction with "Company
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business of RTI After the Distribution," and the Consolidated
Financial Statements of the Company and notes thereto and the Unaudited Pro
Forma Consolidated Financial Information of the Company included elsewhere
herein.

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX
FISCAL YEAR WEEKS ENDED
----------------------------------------------- -------------------------
1991 1992 1993 1994 1995 DEC. 3, 1994 DEC. 2, 1995
-------- -------- -------- -------- -------- ------------ ------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Income Data:
Revenues............... $281,134 $335,116 $378,693 $459,039 $515,312 $234,062 $297,965
======== ======== ======== ======== ======== ======== ========
Income From Continuing
Operations Before
Income Taxes and
Cumulative Effect of
Accounting Changes.... $ 14,971 $ 21,137 $ 25,683 $ 27,814 $ 16,112 $ (2,962) $ 9,336
Provision for Federal
and State Income
Taxes................. 5,245 7,465 9,400 9,707 5,027 (1,839) 3,038
-------- -------- -------- -------- -------- -------- --------
Income from Continuing
Operations............ 9,726 13,672 16,283 18,107 11,085 (1,123) 6,298
Income from
Discontinued
Operations, net of
applicable income
taxes................. 16,902 18,999 21,151 26,577 51,086 37,764 9,892
-------- -------- -------- -------- -------- -------- --------
Income before
Cumulative Effect of
Accounting Changes,
net................... 26,628 32,671 37,434 44,684 62,171 36,641 16,190
Cumulative Effect of
Accounting
Changes, net:
Postretirement
benefits.............. (18)
Income taxes........... 559
-------- -------- -------- -------- -------- -------- --------
Net Income............. $ 26,628 $ 32,671 $ 37,975 $ 44,684 $ 62,171 $ 36,641 $ 16,190
======== ======== ======== ======== ======== ======== ========
Earnings per Common and
Common Equivalent
Share:
Continuing Operations.. $ 0.26 $ 0.36 $ 0.43 $ 0.49 $ 0.31 $ (0.03) $ 0.18
Discontinued
Operations............ 0.45 0.51 0.56 0.71 1.42 1.04 0.28
Cumulative Effect of
Accounting Changes,
net................... 0.01
-------- -------- -------- -------- -------- -------- --------
Earnings per Common and
Common Equivalent
Share.................. $ 0.71 $ 0.87 $ 1.00 $ 1.20 $ 1.73 $ 1.01 $ 0.46
======== ======== ======== ======== ======== ======== ========
All fiscal years are composed of 52 weeks except 1992 which contains 53 weeks.
Consolidated Balance
Sheet Data (at end of
period):
Total Assets........... $331,402 $369,732 $382,620 $408,453 $484,051 $436,948 $545,977
Long-Term Debt......... $ 33,864 $ 21,757 $ 7,392 $ 5,467 $ 32,003 $ 20,529 $ 69,136
Stockholders' Equity... $181,240 $203,577 $219,624 $221,136 $245,493 $216,118 $256,584
Working Capital
(Deficiency).......... $(12,028) $ 22,852 $ 1,906 $(43,007) $(44,780) $(51,033) $(41,831)
Current Ratio.......... 1.2:1 1.3:1 1.0:1 0.6:1 0.6:1 0.6:1 0.7:1
</TABLE>
- --------
Note: See information relating to the conversion/closing of the L&N Seafood
Grill Concept under the caption "Company Management's Discussion and Analysis
of Financial Condition and Results of Operations" for factors that affect the
comparability of the information reflected above.

52
<PAGE>

MFCI SELECTED FINANCIAL DATA

The following table summarizes certain selected financial information with
respect to MFCI and is derived from the Financial Statements of MFCI. The
Financial Statements of MFCI are presented as if MFCI had been a separate
entity for all periods presented. The statements of income data for the years
ended June 5, 1993, June 4, 1994 and June 3, 1995 and the balance sheet data
as of June 4, 1994 and June 3, 1995 are derived from the Audited Financial
Statements of MFCI. The statements of income data for the years ended June 1,
1991 and June 6, 1992 and the twenty-six weeks ended December 3, 1994 and
December 2, 1995 and the balance sheet data as of June 1, 1991, June 6, 1992,
June 5, 1993, December 3, 1994 and December 2, 1995 are derived from the
Unaudited Financial Statements of MFCI and, in the opinion of management,
include all adjustments, consisting of normal recurring accruals, which MFCI
considers necessary for a fair presentation of the financial position and the
results of operations for these periods. The financial information presented
below may not be indicative of MFCI's future performance as an independent
company. The information set forth below should be read in conjunction with
"MFCI Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business of MFCI After the Distribution," and the
Financial Statements of MFCI and notes thereto and the Unaudited Pro Forma
Financial Information of MFCI included elsewhere herein. Historical earnings
per share and dividend data have not been presented as MFCI was not a separate
publicly-held company during the periods presented below.

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX
FISCAL YEAR WEEKS ENDED
----------------------------------------------------- -------------------------
1991 1992 1993 1994 1995 DEC. 3, 1994 DEC. 2, 1995
--------- --------- --------- --------- --------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Revenues............... $ 311,485 $ 304,448 $ 291,032 $ 292,493 $ 294,587 $149,161 $138,018
========= ========= ========= ========= ========= ======== ========
Income Before Provision
for Income Taxes and
Cumulative Effect of
Accounting Changes.... $ 9,783 $ 10,513 $ 13,110 $ 16,724 $ 19,108 $ 8,801 $ 4,268
Provision for Federal
and State Income
Taxes................. 3,659 3,932 4,898 6,646 7,734 3,624 1,761
--------- --------- --------- --------- --------- -------- --------
Income Before
Cumulative Effect of
Accounting Changes.... 6,124 6,581 8,212 10,078 11,374 5,177 2,507
Cumulative Effect of
Accounting Changes,
net:
Postretirement
benefits.............. (1,921)
Income taxes........... 1,409
--------- --------- --------- --------- --------- -------- --------
Net Income.............. $ 6,124 $ 6,581 $ 7,700 $ 10,078 $ 11,374 $ 5,177 $ 2,507
========= ========= ========= ========= ========= ======== ========
All fiscal years are composed of 52 weeks except 1992 which contains 53 weeks.
Balance Sheet Data (at
end of period):
Total Assets........... $ 95,456 $ 91,184 $ 82,077 $ 77,461 $ 90,122 $ 85,602 $ 92,625
Long-Term Debt......... $ 3,860 $ 1,111 $ 1,008 $ 931 $ 848 $ 892 $ 803
Owner's Equity......... $ 43,211 $ 48,200 $ 32,623 $ 29,303 $ 47,465 $ 38,480 $ 52,170
Working Capital
(Deficiency).......... $ (12,046) $ (10,393) $ (18,131) $ (20,667) $ (14,916) $(19,550) $(13,795)
Current Ratio.......... 0.5:1 0.7:1 0.5:1 0.4:1 0.4:1 0.4:1 0.5:1
</TABLE>

53
<PAGE>

MHCI SELECTED FINANCIAL DATA

The following table summarizes certain selected financial information with
respect to MHCI and is derived from the Financial Statements of MHCI. The
Financial Statement of MHCI are presented as if MHCI had been a separate
entity for all periods presented. The statements of income data for the years
ended June 5, 1993, June 4, 1994 and June 3, 1995 and the balance sheet data
as of June 4, 1994 and June 3, 1995 are derived from the Audited Financial
Statements of MHCI. The statements of income data for the years ended June 1,
1991 and June 6, 1992 and the twenty-six weeks ended December 3, 1994 and
December 2, 1995 and the balance sheet data as of June 1, 1991, June 6, 1992,
June 5, 1993, December 3, 1994 and December 2, 1995 are derived from the
Unaudited Financial Statements of MHCI and, in the opinion of management,
include all adjustments, consisting of normal recurring accruals, which MHCI
considers necessary for a fair presentation of the financial position and the
results of operations for these periods. The financial information presented
below may not be indicative of MHCI's future performance as an independent
company. The information set forth below should be read in conjunction with
"MHCI Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business of MHCI After the Distribution," and the
Financial Statements of MHCI and notes thereto and the Unaudited Pro Forma
Financial Information of MHCI included elsewhere herein. Historical earnings
per share and dividend data have not been presented as MHCI was not a separate
publicly-held company during the periods presented below.

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX
FISCAL YEAR WEEKS ENDED
-------------------------------------------------- -------------------------
1991 1992 1993 1994 1995 DEC. 3, 1994 DEC. 2, 1995
--------- --------- --------- --------- --------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Revenues............... $ 379,162 $ 399,634 $ 430,145 $ 461,780 $ 225,392 $110,549 $112,881
========= ========= ========= ========= ========= ======== ========
Income Before Provision
for Income Taxes and
Cumulative Effect of
Accounting Changes.... $ 12,939 $ 15,620 $ 18,122 $ 21,588 $ 65,295 $ 56,203 $ 10,504
Provision for Federal
and State Income
Taxes................. 4,981 6,014 6,980 8,351 28,469 24,786 4,424
--------- --------- --------- --------- --------- -------- --------
Income Before
Cumulative Effect of
Accounting Changes.... 7,958 9,606 11,142 13,237 36,826 31,417 6,080
Cumulative Effect of
Accounting Changes,
net:
Postretirement
benefits.............. (640)
Income taxes........... 426
--------- --------- --------- --------- --------- -------- --------
Net Income.............. $ 7,958 $ 9,606 $ 10,928 $ 13,237 $ 36,826 $ 31,417 $ 6,080
========= ========= ========= ========= ========= ======== ========
All fiscal years are composed of 52 weeks except 1992 which contains 53 weeks.
Balance Sheet Data (at
end of period):
Total Assets........... $ 97,360 $ 106,043 $ 109,434 $ 107,942 $ 70,422 $ 75,595 $ 62,963
Long-Term Debt......... $ 281 $ 13,051 $ 4,686 $ 3,128 $ 19,245 $ 45 $ 32,054
Owner's Equity......... $ 52,273 $ 55,080 $ 56,807 $ 51,164 $ 9,015 $ 11,504 $ (5,204)
Working Capital
(Deficiency).......... $ 27,244 $ 27,493 $ 21,524 $ 11,217 $ 14,712 $ (4,017) $ 14,658
Current Ratio.......... 2.0:1 1.9:1 1.6:1 1.3:1 1.6:1 0.9:1 1.7:1
</TABLE>
- --------
Note: See information relating to the sale of B&I contracts and assets under
the caption "MHCI Management's Discussion and Analysis of Financial Condition
and Results of Operations" for factors that affect the comparability of the
information reflected above.

54
<PAGE>

COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the business
information and the Consolidated Financial Statements of the Company and
related notes included elsewhere in this Proxy Statement.

GENERAL

On September 26, 1995, the Board of Directors of the Company approved a plan
to spin-off the Company's family dining and health care businesses to
stockholders to create three separate publicly-held corporations. The name of
the Company will be changed to "Ruby Tuesday, Inc." in connection with the
Distribution and its operations after the Distribution will consist of the
casual dining restaurant business currently conducted by the Ruby Tuesday
Group. See "The Distribution." As a result of the Board's decision, all
previously reported financial statements of the Company have been restated to
reflect the activities of MFCI and MHCI as discontinued operations.

RESULTS OF OPERATIONS

The following table sets forth selected restaurant operating data as a
percentage of revenues for the periods indicated. All information is derived
from the consolidated financial statements of the Company included elsewhere
in this Proxy Statement.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------- -------------------------
1993 1994 1995 DEC. 3, 1994 DEC. 2, 1995
----- ----- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Operating Costs and Expenses:
Cost of merchandise........... 29.3 27.9 26.9 26.9 27.5
Payroll and related costs..... 31.8 33.0 33.0 32.2 34.3
Other......................... 20.5 20.5 20.6 20.3 22.0
Selling, general and
administrative............... 6.7 7.4 7.3 8.5 7.0
Depreciation and
amortization................. 4.9 5.1 5.2 5.1 5.6
L&N conversion/closing costs.. 0.0 0.0 3.8 8.4 0.0
Interest expense, net......... 0.0 0.0 0.1 (0.1) 0.5
----- ----- ----- ----- -----
Total Operating Cost and
Expenses....................... 93.2 93.9 96.9 101.3 96.9
Income (loss) from continuing
operations before income taxes
and cumulative effect of
accounting changes............. 6.8 6.1 3.1 (1.3) 3.1
Provision (benefit) for income
taxes.......................... 2.5 2.2 0.9 (0.8) 1.0
----- ----- ----- ----- -----
Income (loss) from continuing
operations .................... 4.3 3.9 2.2 (0.5) 2.1
Income from discontinued
operations, net of applicable
income taxes................... 5.6 5.8 9.9 16.2 3.3
----- ----- ----- ----- -----
Income before cumulative effect
of accounting changes.......... 9.9 9.7 12.1 15.7 5.4
Cumulative effect of accounting
changes........................ 0.1 0.0 0.0 0.0 0.0
----- ----- ----- ----- -----
Net Income...................... 10.0% 9.7% 12.1% 15.7% 5.4%
===== ===== ===== ===== =====
</TABLE>

During fiscal 1995, the Board of Directors approved a plan to phase out the
L&N Seafood Grill ("L&N") concept. This business generated $63.3 million of
sales and ($0.6) million of operating profit in fiscal 1994. Management
believed that it was not likely to achieve dominance in the casual seafood
restaurant business and thus decided to close or convert all L&N units into
other concepts. Also, in January 1995, the Company acquired the common stock
of Tias, Inc. The effects of these transactions on fiscal 1995 results are
also discussed below.

55
<PAGE>

TWENTY-SIX WEEKS ENDED DECEMBER 2, 1995 COMPARED TO TWENTY-SIX WEEKS ENDED
DECEMBER 3, 1994

Revenues

The Company's revenues increased to $298.0 million for the twenty-six weeks
ended December 2, 1995 from $234.1 million for the twenty-six weeks ended
December 3, 1994. The revenue increase was the result of the net addition of
77 units including 46 Ruby Tuesdays, 14 Mozzarella's, and 17 Tia's as of
December 2, 1995.

Operating Profits

Pre-tax income increased $12.3 million for the twenty-six weeks ended
December 2, 1995 compared to the twenty-six weeks ended December 3, 1994. The
increase results from the $19.7 million charge recorded in the first quarter
of fiscal 1995 to reflect the estimated cost to convert or close L&N units.
(See further discussion of L&N below).

Cost of merchandise as a percentage of revenues increased 0.6% from the
prior year due to new menu variations in the second quarter of fiscal 1995
which included more value items. Additionally, the percentage of revenues
generated from sales of lower-margin menu items increased during the period.

Payroll and related costs increased 2.1% as a percentage of revenues. The
increase is due to additional staffing levels and service programs at Ruby
Tuesdays designed to improve guest service and the fixed nature of
Mozzarella's management and kitchen payroll coupled with decreasing same store
sales. These increases were offset by an improvement in the Company's workers'
compensation claims experience as well as a decrease in other fringes.

Other operating expenses as a percentage of revenues increased due to an
increase in insurance expense and supplies expense. Insurance expense
increased due to an increase in general liability rates. Supplies expense
increased due to the addition of new units which have higher supply expenses
than existing units.

Selling, general and administrative expenses decreased 1.5% as a percentage
of revenues. The decrease resulted from the Company's objective of keeping
general and administrative expenses flat for the year.

Depreciation as a percentage of revenues increased due to the Company's
focus on expansion with freestanding units which are typically owned as
opposed to mall or strip units which are leased.

Net interest expense (income) increased from ($0.2 million) for the twenty-
six weeks ended December 3, 1994 to $1.5 million for the twenty-six weeks
ended December 2, 1995 due to the addition of $65.7 million in borrowings
under the Company's revolving credit facility and other bank lines of credit
offset by the retirement of the Life Insurance Co. of Georgia note of $7.4
million during the thirteen weeks ended September 4, 1994.

The increase in income from continuing operations from the prior year
primarily relates to the conversion/closing costs which resulted from the June
27, 1994 decision to phase out the L&N concept. In fiscal 1995, the Company
accrued approximately $19.7 million for costs to be incurred to phase out the
L&N concept. As of December 2, 1995, $18.8 million of expenses related to
operating losses, the write-offs of inventories, intangibles and other assets,
severance pay and other expenses had been charged against the accrual. The
remaining $0.9 million accrual relates primarily to cash outlays anticipated
to be incurred to settle the three remaining lease obligations on units
closed. The increase from the original plan in the number of units to be
closed did not result in a material increase to the $11.6 million closing cost
estimate as the increases necessary for the six additional units ultimately
closed were offset by decreases in estimates for the other units closed and
the decrease which resulted from the decision to continue to operate the four
units discussed below.

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<PAGE>

The increase in provision for income taxes is related to the L&N charge
discussed above which contributed to a $3.0 million loss for the first twenty-
six weeks of fiscal 1995 as compared to the $9.3 million profit generated in
the first twenty-six weeks of fiscal 1996.

Income from Discontinued Operations

Included in the results of operations for the twenty-six weeks ended
December 3, 1994 and December 2, 1995 is income from discontinued operations
of $37.8 million and $9.9 million, respectively. The decline in income from
discontinued operations is due to a $46.8 million gain ($25.8 million net of
tax) on the sale of certain of MHCI's business and industry contracts and
assets in the first quarter of fiscal 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

Overview

During fiscal year 1995, the Company opened 48 Ruby Tuesdays, five
Mozzarella's and two Tia's. In addition to these openings, 21 L&N units were
converted into nine Ruby Tuesdays units and 12 Mozzarella's units. As
previously mentioned, in January 1995, the Company acquired the common stock
of Tias, Inc. Twelve Tia's Tex-Mex restaurants were operational at the time of
acquisition. The Company's openings were offset by the closing of five Ruby
Tuesdays, one Mozzarella's and 13 L&N's (in addition to the 21 units converted
to Ruby Tuesdays or Mozzarella's). Three Snapp's units were transferred to the
Company's Morrison Group. The Company focused new unit development efforts
during the year on freestanding units as opposed to the Company's traditional
mall or strip-based units.

The Company's plans call for moderate expansion both in the traditional
Eastern U.S. markets and in new markets in the Western U.S. The Company plans
to open 36 Ruby Tuesday units in fiscal 1996. Moderate expansion of Tia's and
Mozzarella's is also planned. The Company is currently in the process of
considering pursuing the opportunity of expanding through franchising which
would permit growth with minimal capital outlay.

Revenues

The Company's sales reached $515.3 million in fiscal 1995, an increase of
12.3% over the prior year. Excluding the L&N concept, which contributed sales
of $63.3 million in 1994, the sales gain was 30.2%. The revenue increase was
the result of the net addition of 45 units. Same store sales increased 0.6% in
fiscal 1995 while the same store average check increased 1.1%.

Operating Profits

Pre-tax income decreased 42.1% to $16.1 million from $27.8 million in fiscal
1994. The decrease resulted from a $19.7 million charge recorded to reflect
the estimated cost to convert or close the L&N units. Without the charge, pre-
tax income would have increased to $35.8 million, or 28.9%. This increase in
operating profit is due to continued expansion coupled with a 0.9% operating
margin increase. Excluding L&N's results from the fiscal 1994 amount, the
operating margin remained at 7.0% in fiscal 1995.

Cost of merchandise as a percentage of revenues decreased from the prior
year due to continuing efforts to control food costs at the unit level and
increased vendor discounts.

Payroll and related costs as a percentage of revenues remained flat.
Increases due to additional staffing levels at Ruby Tuesdays and higher
training costs associated with rapid expansion of the Mozzarella's concept
were

57
<PAGE>

offset by an improvement in the Company's workers' compensation claims
experience as well as a decrease in other fringes.

Other operating expenses as a percentage of revenues increased slightly due
to an increase in general liability rates.

Selling, general and administrative expenses as a percentage of revenues
remained relatively flat in fiscal 1995. Decreases in fiscal 1995 due to the
fixed nature of certain general and administrative expenses were offset by
increased costs for advertising and brand awareness for Ruby Tuesday and
Mozzarella's.

Depreciation as a percentage of revenues increased slightly due to the
increased depreciation resulting from the Company's focus on expansion with
freestanding units which are typically owned as opposed to mall or strip units
which are leased.

Net interest expense increased from $160,000 in fiscal 1994 to $744,000 in
fiscal 1995 due to the addition of $30.8 million in borrowings under the
Company's revolving credit facility offset by the retirement of the Life
Insurance Co. of Georgia note of $7.4 million.

In fiscal 1995, the Company accrued approximately $19.7 million for costs to
be incurred as a result of the decision announced on June 27, 1994, to phase
out the L&N concept. This amount, originally accrued to cover the costs to
convert 30 L&N units and close the remaining eight, consisted primarily of the
following: losses on disposal of fixed assets net of anticipated proceeds and
the net cost of related lease obligations for the units to be closed
(approximately $11.6 million), expected operating losses during the phase out
period (approximately $4.8 million), severance pay (approximately $1.1
million) and other losses on the conversion of units, consisting primarily of
the write-off of fixed assets, inventory, and unamortized cost in excess of
net assets acquired (approximately $2.2 million). The Company originally
estimated that, of the $19.7 million charge, asset write-offs (including
inventory, fixed assets and goodwill) would total $9.2 million. Cash proceeds
from disposal of the properties were anticipated to be $0.7 million. The
remaining $11.2 million represented the estimated cash outlay for lease
settlements, severance pay and other operating expenditures. The original plan
assumed that no units would be sublet and that buyout of leases could occur.
Determination of the number of months assumed in which buyouts could occur was
made on an individual unit basis.

Subsequent to the June 1994 announcement, the Company reacquired three
additional L&N units as a result of a default on a licensing agreement. These
three units were closed. Based on favorable operating results, in the third
quarter of fiscal 1995, management decided to continue to operate four of the
L&N units as L&N's through the remainder of their lease terms. The sales and
earnings of these four units have been included in the operating results of
the Ruby Tuesday Group since the beginning of third quarter. During the year,
21 of the L&N units were converted and are operating as other Ruby Tuesday
Group restaurants. One additional unit was converted and reopened as a Tia's
shortly after year-end. Another unit was in the process of being converted to
a Tia's. The remaining 11 units were closed.

As of June 3, 1995, $13.7 million of expenses related to fiscal 1995 L&N
operating losses, write-offs of inventories, intangibles and other assets,
severance pay and other expenses had been charged against the reserve. The
majority of the remaining $6.0 million accrual relates to remaining asset
write-offs ($4.8 million) and costs anticipated to be incurred to settle lease
obligations on units closed ($1.2 million). The Company is actively pursuing
settlement of all lease obligations and expects to make the necessary cash
payments and complete the associated write-offs early in fiscal 1996.

The Company anticipates that the L&N units which were converted will operate
at a similar or higher sales volume than before conversion, with improved
profits.

The effective income tax rate decreased to 31.2% in fiscal 1995 from 34.9%
in fiscal 1994 due to the increased tax credit for FICA taxes paid on tips in
excess of the minimum wage and also due to increased levels of Targeted Jobs
Tax Credit.

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<PAGE>

Income from Discontinued Operations

The $24.5 million increase in income from discontinued operations is
primarily due to the gain on the sale of certain of MHCI's business and
industry contracts and assets of $46.8 million ($25.8 million net of tax) in
fiscal 1995.

FISCAL 1994 COMPARED TO FISCAL 1993

Overview

During fiscal 1994, the Company repositioned the former Silver Spoon Cafe
concept into Mozzarella's, an American cafe with an Italian accent. The
Company opened 42 Ruby Tuesdays, one L&N, three Snapp's and four Mozzarella's
during the year. These openings were offset by the closing of four Ruby
Tuesdays and five L&N's. The three Snapp's were closed in fiscal 1995.

Revenues

The Company's sales reached $459.0 million in fiscal 1994, an increase of
21.2% over the prior year. The revenue increase was primarily the result of a
net of 41 additional units. Same store sales increased 1.0% in fiscal 1994
while the same store average check increased 0.2%.

Operating Profits

Pre-tax profit increased 8.3% from fiscal 1993. The increase in profit is
due to continued expansion coupled with a 0.7% operating margin decrease. The
operating margin decrease is the result of the investment of funds within the
Ruby Tuesday concept for items such as remodeling, expanded advertising, and
the operating and sales performance of the L&N concept.

Cost of merchandise as a percentage of revenues decreased from the prior
year due to continuing efforts to control food costs at the unit level, staple
food prices and a reduction in the cost/sales ratio of new menu items.

Payroll and related costs increased due to increased staffing levels at Ruby
Tuesdays, increased training costs for rapid expansion of the Mozzarella's
concept and the result of fixed management labor on declining sales in the L&N
concept.

Selling, general and administrative expenses as a percentage of revenues
increased in fiscal 1994 due to an increase in training due to new unit
openings in Mozzarella's and Ruby Tuesdays and increased costs for radio and
television advertising for Ruby Tuesdays.

Depreciation as a percentage of revenues increased due to increased
depreciation resulting from the Company's increase in freestanding units which
are typically owned as opposed to mall or strip units which are leased.

Net interest expense increased from $60,000 in fiscal 1993 to $160,000 due
to borrowings on the Company's lines of credit during fiscal 1994.

The effective income tax rate on continuing operations decreased to 34.9% in
fiscal 1994 from 36.6% in fiscal 1993 due to the tax credit for FICA taxes
paid on tips in excess of the minimum wage commencing January 1994 and also
due to increased levels of Targeted Jobs Tax Credit following the extension of
the program in the Omnibus Budget Reconciliation Act of 1993, offset by a 1%
increase in the corporate income tax rate, which went into effect January 1,
1993, and an increase in the effective state income tax rate due to the
Company's expansion into states with higher statutory income tax rates.

Income from Discontinued Operations

The $5.4 million increase in income from discontinued operations from $21.2
million to $26.6 million is primarily due to growth in sales for MHCI, as well
as improved operational efficiencies for both MFCI and MHCI.

59
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

Cash provided by continuing operations was $67.3 million in fiscal 1995 and
$24.3 million for the twenty-six weeks ended December 2, 1995. Capital
expenditures exceeded cash provided by continuing operations by $41.1 million
and $52.3 million for the year ended June 3, 1995 and the twenty-six weeks
ended December 2, 1995, respectively. In addition, $30.8 million and $37.2
million of cash was provided through incremental borrowing under the Company's
lines of credit for those same periods. Pursuant to the Company's financial
strategy approved by the Board during fiscal 1994, $39.8 million, $45.7
million, and $0.4 million of the Company's stock was reacquired during 1994,
1995 and the twenty-six weeks ended December 2, 1995, respectively, from cash
available after the Company's investments in new units. Amounts for fiscal
years 1994 and 1995 include $2.3 million for stock acquired in connection with
the Company's Deferred Compensation Plan. See the Consolidated Statements of
Cash Flows for more information.

Capital Expenditures

The Company requires capital principally for new restaurants, equipment
replacement and remodeling of existing units. Property and equipment
expenditures for fiscal 1995 were $108.5 million for new units and capitalized
costs of existing units, 54.5% higher than the prior year. During fiscal 1995,
67 new Ruby Tuesday Group restaurants were opened, including 12 units which
were added upon the acquisition of Tias, Inc. In addition, 21 L&N units were
converted to other Company concepts as a result of the phase out of L&N.
Capital expenditures for fiscal 1996 are projected to be $106.6 million,
including $76.6 million incurred in the first two quarters. Projected openings
for the remainder of fiscal year 1996 include 14 Ruby Tuesday Group
restaurants. Openings during first half of fiscal 1996 included 30 Ruby
Tuesdays, five Mozzarella's and two Tia's. In addition, one L&N was converted
to a Tia's.

Borrowings and Credit Facilities

Cash flow from operations, transfers from MFCI and MHCI, the Company's
discontinued operations, and nominal debt have historically financed the
Company's capital investments. The debt and interest levels prior to the
Distribution do not represent and may not be indicative of future financing
sources and interest costs of the Company as an entity independent of MFCI and
MHCI.

At December 2, 1995, the Company had committed lines of credit amounting to
$32.0 million (of which $14.3 million remain available at December 2, 1995)
and non-committed lines of credit amounting to $94.0 million with various
banks at various interest rates. All of these lines are subject to periodic
review by each bank and may be cancelled by the Company at any time. The
Company utilized its lines of credit to meet operational cash needs during
fiscal 1995. Borrowings on these lines of credit were $17.4 million, $12.6
million and $17.7 million at June 4, 1994, June 3, 1995, and December 2, 1995,
respectively. In addition to these lines of credit, the Company entered into a
five-year revolving line of credit with various banks which will allow the
Company to borrow up to $200.0 million over the next five years. The Company
had $30.8 and $68.0 million of borrowings outstanding under this agreement at
June 3, 1995 and December 2, 1995 classified by the Company as long-term debt.
An additional $19.2 and $32.0 million of borrowings outstanding under this
agreement at June 3, 1995 and December 2, 1995 have been allocated to MHCI.
The credit facility provides for certain restrictions on incurring additional
indebtedness and to certain funded debt, net worth, and fixed charge coverage
requirements. At June 3, 1995, retained earnings in the amount of $39.4
million were available for cash dividends and stock repurchases under the debt
restrictions.

The Company entered into an interest rate swap agreement to control its
fiscal 1996 interest costs relating to the borrowings outstanding under the
revolving line of credit agreement and other bank lines of credit. This swap
agreement which has a notional amount accreting from $85.0 to $115.0 million
effectively limits the interest rate to a maximum of 7.02% per annum for a one
year period commencing June 5, 1995. The swap agreement is short-term in
nature and is intended to limit the interest rate fluctuation risk associated
with the Company's variable rate debt. No other derivative activities have
occurred or are expected to occur.

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<PAGE>

The Company is currently negotiating with lenders for a five-year credit
facility which will replace borrowings outstanding under the Company's current
revolver shortly after the Distribution. It is expected that the covenants in
the Company's new credit facility will result in restrictions similar to those
imposed on the Company under the current revolving credit agreement and will
not impose any material restrictions on the operations of the Company. The
Company will also enter into an interest rate swap agreement relating to the
new revolving credit agreement that is expected to fix the interest rate at an
amount below the current rate of 7.02%. A reasonably likely change in the
interest rate on the Company's variable rate debt would not have a significant
impact on the Company's financial position or results of operations.

The Company typically carries current liabilities in excess of current
assets because cash generated by operating activities is reinvested in capital
expenditures.

During fiscal 1996 the Company expects to fund operations and capital
expansion from operating cash flows, bank lines of credit and its five-year
revolving line of credit. See Note 5 of Notes to Consolidated Financial
Statements for a detailed discussion of borrowings and credit facilities.
Long-term debt increased a net $24.1 million in fiscal 1995 due to borrowings
on the revolving credit facility, offset by the early retirement of the note
payable to Life Insurance Company of Georgia. The Company anticipates the need
for additional borrowings on the revolving line of credit and other bank lines
of approximately $1.6 million during the third quarter of fiscal year 1996.

Dividends

The Company does not intend to pay cash dividends for the foreseeable future
after the Distribution. It is expected that the combined dividend level of
MFCI and MHCI will approximate that currently paid by the Company.

KNOWN EVENTS, UNCERTAINTIES AND TRENDS

New Accounting Standards

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (FAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
FAS 121 establishes accounting standards that require an entity to review
long-lived assets and certain identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Long-lived assets and certain identifiable
intangibles to be disposed of are generally to be reported at the lower of
carrying amount or fair value less cost to sell. Historically the Company
recognized such impairment upon the decision to close a unit. On January 10,
1996, the Company announced that it will adopt FAS 121 in the third quarter of
fiscal 1996. In accordance with the adoption of FAS 121, a pre-tax charge of
$25.4 million will be recorded comprised of the following: impairment to be
recognized on 16 units approved for closure within one year by the Board of
Directors on January 10, 1996, $9.9 million; impairment on in-unit computer
equipment ($0.7 million) and write-offs resulting from management's decision
to abandon an information technology plan ($3.8 million) approved on that same
date; and impairment on units remaining open, $11.0 million. See Note 13 of
Notes to Consolidated Financial Statements for more information.

During October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 "Accounting for Stock-
Based Compensation" (FAS 123). FAS 123 establishes financial accounting and
reporting standards for stock-based employee compensation plans. The Statement
defines a fair value based method of accounting for an employee stock option
or similar equity instrument. The Statement allows an entity to continue to
measure compensation cost for those plans using the intrinsic value based
method of accounting prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees." The Company intends to continue to measure compensation
cost following the principles of APB Opinion No. 25 and will therefore be
required to present pro forma disclosures of net income and earnings per share
as if the fair value based method had been applied beginning in fiscal 1997.

61
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Impact of Inflation

Historically the Company has been able to recover inflationary cost
increases to items such as food and beverage costs through increased menu
prices. There have been, and there may be in the future, delays in the
implementation of such menu price increases. Competitive pressures may also
limit the Company's ability to recover such cost increases in their entirety.
Historically, the effects of inflation on the Company's net income have not
been materially adverse.

Management's Outlook

The Company has made many significant advances to position itself for
strategic growth via a diversified group of casual dining concepts. Ruby
Tuesday, with its menu of burgers, ribs, fajitas, chicken, soups, salads and
sandwiches, will maintain its aggressive posture. The Mozzarella's concept
will follow a year of moderate expansion with a concentration primarily on
improved sales at existing units. The concept specializes in pizzas, pastas,
soups, salads and sandwiches, with a $9 average check. Tia's, the Tex-Mex
concept recently acquired with freshly prepared menu items, offers the Company
an attractive opportunity to enter a high growth segment of the industry. The
Company's focus for Tia's is to expand from the base acquired while
maintaining the new unit sales volumes. Management believes that it is
positioned to take advantage of growth opportunities well into the future.

Special Charges

In addition to the $25.4 million charge to be recognized in the third
quarter relating to the adoption of FAS 121, the Company announced that it
anticipates recording restructuring expenses of $5.5 million in the third
quarter relating to the estimated cost of lease settlements on the 16 units to
be closed ($3.5 million), estimated professional and other fees to be incurred
in connection with the Distribution ($1.1 million), severance pay for staff
reductions expected during the quarter ($0.6 million) and other miscellaneous
asset write-offs ($0.3 million). See Note 13 of Notes to Consolidated
Financial Statements for more information.

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MFCI MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the business information
and the Financial Statements of MFCI and related notes included elsewhere in
this Proxy Statement.

RESULTS OF OPERATIONS

The following table sets forth selected restaurant operating data as a
percentage of sales for the periods indicated. All information is derived from
the historical financial statements of MFCI included elsewhere in this Proxy
Statement.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------- -------------------------
1993 1994 1995 DEC. 3, 1994 DEC. 2, 1995
----- ----- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues....................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating Costs and Expenses:
Cost of merchandise.......... 26.8 27.2 26.8 26.6 28.5
Payroll and related costs.... 38.3 38.2 35.8 36.3 37.6
Other........................ 21.7 20.0 20.6 20.7 20.7
Selling, general and
administrative.............. 4.9 5.4 6.9 7.2 6.3
Depreciation and
amortization................ 3.9 3.6 3.5 3.4 3.9
Interest income.............. (0.1) (0.1) (0.1) (0.1) (0.1)
----- ----- ----- ----- -----
Total Operating Costs and
Expenses...................... 95.5 94.3 93.5 94.1 96.9
----- ----- ----- ----- -----
Income from operations before
income taxes.................. 4.5 5.7 6.5 5.9 3.1
Provision for Income Taxes..... 1.7 2.3 2.6 2.4 1.3
----- ----- ----- ----- -----
Income from Operations......... 2.8 3.4 3.9 3.5 1.8
Cumulative effect of accounting
changes....................... (0.2) 0.0 0.0 0.0 0.0
----- ----- ----- ----- -----
Net Income..................... 2.6% 3.4% 3.9% 3.5% 1.8%
===== ===== ===== ===== =====
</TABLE>

TWENTY-SIX WEEKS ENDED DECEMBER 2, 1995 COMPARED TO TWENTY-SIX WEEKS ENDED
DECEMBER 3, 1994

Overview

Pre-tax income for the twenty-six weeks ended December 2, 1995 decreased
51.5% from the same period of the prior year primarily due to disappointing
sales and profits of MFCI's Quick Service Restaurants (QSRs). QSRs are MFCI's
600 to 3,200 square foot dining facilities located primarily in mall food
courts. Management will selectively close 15 QSRs and seven traditional
cafeterias which have not performed to management's standards over the next
several months in order to improve profit margins. Management will closely
monitor the performance of other units and continually evaluate methods to
improve results on a case-by-case basis.

Revenues

Revenues decreased 7.5% in the first two quarters of fiscal 1996 from the
same period of the prior year due to the closing of seven cafeterias, offset
partially by the addition of seven QSRs and three small cafeterias. Same store
check averages were up 1.2% in the first quarter and 0.6% in the second
quarter of fiscal 1996; however, same store sales decreased 8.1% and 9.6%,
respectively, from the same periods of the prior year due to a 9.8% and 10.7%
decrease in customer counts, respectively. The decrease in customer counts is
attributed to two separate price increases instituted in June and September
1994, collectively representing a 3.5% price increase, decreased advertising
and marketing, and the intrusion of competition.

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Operating Profits

Cost of merchandise as a percent of revenues increased 1.9% to 28.5% due to
upgraded menu items with the new three-tiered menu pricing structure, the
addition of outside meal service accounts, and a decrease in total operating
revenues. Payroll and related expenses increased 1.3% to 37.6% of revenues due
to wage rate inflationary pressures and training costs associated with small
cafeteria openings. Other restaurant expenses remained flat for the quarter.
Selling, general and administrative expenses decreased 0.9% to 6.3% of
revenues due to decreased radio and newsprint advertising, offset partially by
an increase in general and administrative expenses as the result of lower
capitalized development expenses associated with a decrease in planned unit
openings.

The effective income tax rate decreased slightly to 41.3% compared to 41.2%
in the same quarter of the prior year.

Effects of Distribution on Results of Operations

Management believes that the Distribution will have a material impact on the
results of operations due to the added separate company costs that will be
incurred by MFCI following the Distribution. The anticipated effect of the
Distribution on the results of operations of MFCI for the twenty-six weeks
ended December 2, 1995 and the fiscal year ended June 3, 1995 are presented in
the Unaudited Pro Forma Financial Information included elsewhere in this Proxy
Statement. Such pro forma financial information is presented as if the
Distribution had been effected as of the dates indicated.

FISCAL 1995 COMPARED TO FISCAL 1994

Overview

During fiscal 1995, MFCI continued the growth of its operations outside of
its core cafeteria base by opening several new small cafeterias and QSRs. The
small cafeterias feature enhanced lines and a contemporary dining area that is
intended to appeal to a broader, younger market. Based on positive results to
date, MFCI intends to open additional units in future years. The QSRs, located
primarily in the Mid-Atlantic States and the Northeast, achieved mixed results
during the year.

MFCI also began a modernization program for its existing core of cafeterias
in order to improve their appeal to a larger customer base and increase the
efficiency and customer-friendliness of the cafeteria service lines. MFCI
intends to continue remodeling efforts over the next year by concentrating on
its units in demographic areas where this enhanced atmosphere would achieve
the greatest results. During the year, MFCI opened three small cafeterias, ten
mall food court QSRs and one Snapp's restaurant. Six cafeteria units were
closed in fiscal 1995.

Net income increased 12.9% in fiscal 1995 over fiscal 1994, despite
relatively flat sales volume. Management began a series of intensive guest
satisfaction studies in the cafeterias during the year to ensure MFCI is
providing the quality and value customers want.

Revenues

Revenues increased $2,094,000 or 0.7% in fiscal 1995 compared to fiscal
1994. A 3.0% menu price increase effective June 12, 1994 led to a 2.9% same
store average check increase; however, same store sales decreased 1.1% in
fiscal 1995 due to a 4.1% decline in customers. MFCI anticipates controlled
new unit growth in fiscal 1996, primarily in its small cafeteria concept.

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Operating Profits

Pre-tax income increased $2,384,000, or 14.3% in fiscal 1995 compared to
fiscal 1994. As a percentage of revenues, food costs decreased 0.4% to 26.8%
from the prior year due to the June 1994 price increase, offset by nominal
inflationary pressures on product costs. Payroll and related costs decreased
2.4% in fiscal 1995 to 35.8% of revenues due to savings attendant to changes
in employee benefit plans and positive workers' compensation claims
experience. Other restaurant expenses increased 0.6% in fiscal 1995 to 20.6%
due to a procedural change to expense paper goods and cleaning supplies rather
than carry the items in inventory, along with the increased expenses
associated with new unit openings. Selling, general and administrative
expenses increased 1.5% in fiscal 1995 to 6.9% of revenues due to increased
promotional advertising in local markets to accentuate the competitive pricing
of the core cafeterias and the inherent value of their bundled meal program.
General and administrative expenses also increased due to the addition of
operations support personnel. Depreciation and amortization declined slightly
as a percentage of revenues to 3.5%, as expected, due to a number of existing
unit assets becoming fully depreciated. See "--Liquidity and Capital
Resources" below for a discussion of investment arrangements for MFCI.

The combined federal and state effective tax rate increased to 40.5% in
fiscal 1995 from 39.7% in fiscal 1994 due to a decline in Targeted Jobs Tax
Credit associated with that program's expiration on December 31, 1994.

FISCAL 1994 COMPARED TO FISCAL 1993

Overview

MFCI opened ten new units during fiscal 1994, consisting of one small
cafeteria and nine QSRs. MFCI also closed nine cafeterias during the year.
During fiscal 1994, MFCI began a program of strategic price rollbacks and
bundled-meal promotions in an effort to increase the value perception of its
core cafeterias. Bundled meals accounted for approximately 75% of all meals
sold by MFCI, and were supported with aggressive advertising and in-store
promotion. MFCI experienced both customer count increases and higher customer
check averages associated with these promotions. MFCI began positioning itself
to compete within the family dining market segment rather than just other
cafeterias.

Net income before the cumulative effect of accounting changes increased
22.7% in fiscal 1994 over fiscal 1993, due to positive same store sales and
positive customer counts in existing stores as the result of the price
rollbacks and bundled meal promotions, plus cost savings attendant to the
closing of unprofitable units.

Revenues

Revenues increased $1,461,000 or 0.5% in fiscal 1994 over fiscal 1993,
despite the closing of nine core units. This increase was the result of a 2.3%
increase in same store sales and a slight increase in same store check
averages. MFCI credits these increases to its bundled meal promotions and
price rollbacks.

Operating Profits

Pre-tax income increased $3,614,000 or 27.6% in fiscal 1994 compared to
fiscal 1993. Food costs increased 0.4% to 27.2% of revenues in fiscal 1994 due
to overall inflationary pressures without corresponding price increases.
Payroll and related costs, at 38.2%, remained relatively flat as a percentage
of revenues compared to the prior year. Increased unit performance bonuses
increased payroll and related costs, but was more than offset by decreases
associated with the wage rate decrease for dining room staff implemented in
fiscal 1993. Other restaurant expenses decreased 1.7% as the result of a
decrease in unit closing expenses. MFCI accrued for the costs associated for
its current year unit closings in the prior fiscal year when the original
decision was made to close the units. Selling, general and administrative
expenses increased 0.5% as a percentage of revenues over the prior year due to
increased advertising of MFCI's bundled meal program. MFCI also added
additional support service functions in its Atlanta Headquarters to better
serve its expanded operations. Additional general and

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administrative costs were also incurred by MFCI in relation to its QSR concept
development and in development efforts to modernize the core cafeterias to
increase the efficiency of cafeteria line service and the appeal of dining area
atmosphere.

The combined federal and state effective income tax rate increased to 39.7%
from 37.4% in the prior year due to an increase in the Federal income tax rate
on January 1, 1993, and an increase in the overall effective state tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow, Capital Expenditures and Financing

Cash flow from operations has historically financed MFCI's capital
investments. The debt and interest levels prior to the Distribution do not
represent and may not be indicative of future financing sources and interest
costs of MFCI as an independent entity.

MFCI plans for controlled expansion of its proven concepts only over the next
several years, and anticipates that cash flow from operations will be
sufficient to provide for this expansion. As such, MFCI does not anticipate the
need for large lines of outside credit. MFCI will secure lines of credit from
financial institutions in the event that it requires these funds for day-to-day
operating activities.

MFCI has typically carried current liabilities in excess of current assets
because cash generated from operations has been transferred to its parent. The
seasonal variation in net working capital is not material.

MFCI requires capital principally for new restaurants, remodeling of existing
units, equipment replacement and dividends. Cash provided by operating
activities was $6.2 million for the first twenty-six weeks of fiscal 1996.
Capital expenditures were $7.7 million for the same period. Capital
expenditures are estimated to be approximately $17.5 million in fiscal 1996.
This amount is expected to be financed through internally generated funds.

Dividends

MFCI anticipates that it will pay approximately $3.0 million in annual
dividends. See "Dividend Policies."

Deferred Tax Assets

The recognition of deferred tax assets depends on the anticipated existence
of taxable income in future periods in amounts sufficient to realize the
assets. A valuation allowance must be used to reduce the deferred tax asset if
such future income is not likely to be generated. Management believes that
future taxable income should be sufficient to realize all of MFCI's deferred
tax assets based on historical earnings of MFCI and, therefore, a valuation
allowance has not been established.

Effects of Distribution on Financial Position

MFCI has historically generated operating cash flows in excess of the amounts
necessary to fund operations and capital expansion. As such, management does
not anticipate that the Distribution will have a material impact on MFCI's
financial position. There will be no significant management changes as a result
of the Distribution. See "Special Charges" which follows for a discussion of
certain costs to be incurred in the third quarter primarily in conjunction with
unit closings.

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KNOWN EVENTS, UNCERTAINTIES AND TRENDS

New Accounting Standards

In March 1995, the Financial Accounting Standards Board issued FAS 121. FAS
121 establishes accounting standards that require an entity to review long-
lived assets and certain identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Long-lived assets and certain identifiable
intangibles to be disposed of are generally to be reported at the lower of
carrying amount or fair value less cost to sell. On January 10, 1996, the
Company announced that MFCI will adopt FAS 121 in the third quarter of fiscal
1996. In accordance with the adoption of FAS 121, a pre-tax charge of $11.8
million will be recorded comprised of the following: impairment to be
recognized on 22 units approved for closure within one year by the Board of
Directors on January 10, 1996, $6.7 million, and impairment on units remaining
open, $5.1 million. See Note 9 of Notes to Financial Statements for more
information.

During October 1995, the Financial Accounting Standards Board issued FAS
123. FAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. FAS 123 defines a fair value based
method of accounting for an employee stock option or similar equity
instrument. FAS 123 allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees."
MFCI intends to continue to measure compensation cost following the principles
of APB Opinion No. 25 and will therefore be required to present pro forma
disclosures of net income and earnings per share as if the fair value based
method had been applied beginning in fiscal 1997.

Impact of Inflation

In the past, MFCI has been able to recover inflationary cost increases
through increased menu prices. There have been, and there may be in the
future, delays in implementing such menu price increases and competitive
pressures may limit MFCI's ability to recover such cost increases in their
entirety. Historically, the effects of inflation on MFCI's net income have not
been materially adverse.

Seasonality of Business

MFCI has many restaurants located in shopping malls and other retail
locations. As such, sales for these units increase over the holiday season.
Overall, the seasonal variation of MFCI's business is not material.

Special Charges

In addition to the $11.8 million charge to be recognized in the third
quarter relating to the adoption of FAS 121, the Company anticipates that MFCI
will record restructuring expenses of $9.5 million in the third quarter
relating to the estimated cost of lease settlements on the 22 units to be
closed ($8.3 million), estimated professional and other fees to be incurred in
connection with the Distribution ($1.0 million), and miscellaneous other asset
write-offs ($0.2 million). The Company stated that a charge of $0.6 million
was expected to be taken by MFCI for relocation costs anticipated for
personnel moving during the quarter.

Management's Outlook

MFCI is exploring alternative advertising vehicles to expand its customer
base and create greater top-of-mind awareness in order to increase customers.
MFCI will continue to be the proactive leader among cafeteria chains with the
development of its small cafeteria and drive-through outlets. In addition,
MFCI will continue to strengthen its restaurant management and target its
various short-term and long-term incentive programs toward providing superior
customer satisfaction and producing outstanding business results.

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MHCI MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the business
information and the Financial Statements of MHCI and related notes included
elsewhere in this Proxy Statement.

RESULTS OF OPERATIONS

The following table sets forth the selected MHCI operating data as a
percentage of revenues for the periods indicated. All information is derived
from the historical financial statements of MHCI included elsewhere in this
Proxy Statement.

TWENTY-SIX WEEKS ENDED DECEMBER 2, 1995 COMPARED TO TWENTY-SIX WEEKS ENDED
DECEMBER 3, 1994

The increase in revenues for the twenty-six weeks ended December 2, 1995 as
compared to the twenty-six weeks ended December 3, 1994 is the result of the
addition of new accounts subsequent to December 3, 1994. The sale of certain
Business and Industry ("B&I") contracts, as described below, took place during
the first quarter of fiscal 1994 and the gain realized on this sale is
reflected in the results of operations for the twenty-six weeks ended December
3, 1994. As a percentage of revenues, operating expense has decreased 2.3%. The
decrease is due to improved cost controls and a greater percentage of MHCI's
accounts remaining after the sale of the B&I accounts, which pay food and
payroll costs directly rather than through MHCI. For the twenty-six weeks ended
December 2, 1995 compared to the twenty-six weeks ended December 3, 1994, the
provision for income taxes decreased approximately $20.4 million. The 1994
amount includes approximately $21.0 million for taxes resulting from the gain
on sale of the B&I accounts. MHCI had 278 health care accounts at December 2,
1995 compared to 276 health care accounts at December 3, 1994.

Effects of Distribution on Results of Operations

Management believes that the Distribution will have a material impact on the
results of operations due to the added separate company costs that will be
incurred by MHCI. The anticipated effect of the Distribution on the results of
operations of MHCI for the twenty-six weeks ended December 2, 1995 and the
fiscal year ended June 3, 1995 are presented in the Unaudited Pro Forma
Financial Information included elsewhere in this Proxy Statement. Such pro
forma financial information is presented as if the Distribution had been
effected as of the dates indicated.

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FISCAL 1995 COMPARED TO FISCAL 1994

Overview

On August 8, 1994, MHCI sold certain B&I contracts and assets to Gardner
Merchant Food Service, Inc., a wholly-owned subsidiary of Gardner Merchant
Services Group Ltd., for $100 million in cash. B&I accounts not sold were
subsequently closed. The sale, net of related transaction expenses and closing
costs of approximately $11.1 million, resulted in a net pre-tax gain of $46.8
million.

Revenues

Due to the sale of the B&I contracts and assets, sales decreased 51.2% in
fiscal 1995 compared to fiscal 1994. Excluding fiscal 1994 B&I sales of $250.7
million, sales increased 6.8% in fiscal 1995 over fiscal 1994. This increase
reflects the addition of larger accounts to MHCI's customer base and a net
addition of nine accounts as compared to fiscal 1994. At June 3, 1995, MHCI
had 291 health care accounts compared to 282 health care accounts at June 4,
1994.

Operating Profits

Operating profit, excluding the $46.8 million gain on the sale of B&I,
decreased 14.2% for fiscal 1995 compared to fiscal 1994. Excluding fiscal 1994
B&I operating profit of $6.3 million, operating profit for fiscal 1995
increased 21.1% due to increased sales and a 1.4% operating margin increase.
Because of the sale of B&I, the client mix changed in fiscal 1995 resulting in
a larger number of clients that pay for food, payroll and other costs directly
rather than indirectly through MHCI. During the year MHCI implemented food
cost control programs aimed at increased food preparation efficiency and waste
reduction, coupled with higher value-added menu offerings. Payroll costs also
decreased due to improved experience for health and workers' compensation
claims, and a change in vacation policy. Selling, general and administrative
expenses increased to 8.4% of revenues from 6.4% of revenues in fiscal 1994,
due to increased spending. The changes discussed above resulted in the
improved margin.

MHCI's interest income prior to the Distribution results from an allocation
of the Company's interest income based on MHCI's cash flow. See "--Liquidity
and Capital Resources" below for a discussion of financing and investment
arrangements for MHCI.

The combined federal and state effective tax rate increased to 43.6% in
fiscal 1995 from 38.7% in fiscal 1994 due to the non-deductibility for tax of
acquired goodwill disposed of in connection with the divestiture of the B&I
accounts.

FISCAL 1994 COMPARED TO FISCAL 1993

Overview

During fiscal 1994, after extensive research, interviews, and dialogue with
clients and customers, MHCI undertook a redeployment of resources that
resulted in value-added services and stronger client relationships. MHCI
organized regional teams that work hand-in-hand with clients to tailor
services to their needs and to respond to their demand for high quality food
and dietary services at lower costs.

Fiscal year 1993 income included the cumulative effect of adjustments due to
new accounting standards relating to postretirement benefits and income taxes.
The net effect on income of the adoption of the two standards was a decrease
of approximately $214,000 for fiscal 1993.

Revenues

Revenues increased $31.6 million or 7.4% in fiscal 1994 over fiscal 1993.
The increase was due to the addition of numerous contracts and the results
achieved from the redeployment of resources described above. MHCI increased
the number of contracts from 274 health care accounts at June 5, 1993 to 282
health care accounts at June 4, 1994.

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Operating Profit

Operating profit increased 19.1% due to increased sales and a slight
improvement in profit margin due to food cost control programs.

Operating expense decreased 0.9% as a percentage of revenues over the prior
year due to food cost control programs combined with stable food prices.

Selling, general and administrative expenses increased as a percentage of
revenues over the prior year due to management and training payroll increases
to better serve its expanded operations. In addition, opening costs increased
due to a change in policy requiring that MHCI expense rather than capitalize
these costs.

The combined federal and state effective income tax rate increased slightly
to 38.7% from 38.5% in the prior year due to a 1% increase in the federal
income tax rate offset by a loss on the sale of Morrison Crothall Support
Services.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow, Capital Expenditures and Financing

Cash flow from operations has historically financed MHCI's capital
investments. The debt and interest levels prior to the distribution do not
represent and may not be indicative of future financing sources and interest
costs of MHCI as an independent entity.

MHCI plans for controlled expansion over the next several years, and
anticipates that cash flow from operations will be sufficient to provide for
this expansion. As such, MHCI does not anticipate the need for large lines of
outside credit. MHCI will secure lines of credit from financial institutions in
the event that it requires these funds for day-to-day operating activities.

As part of the Distribution, the Company will allocate approximately $32.1
million of its December 2, 1995 debt balance to MHCI. MHCI is currently
negotiating with lenders for a five-year credit facility which will replace its
allocated borrowings outstanding under the Company's current revolver. It is
expected that the covenants in MHCI's new credit facility will result in
restrictions similar to those imposed on the Company under the current
revolving credit facility and will not impose any material restrictions on
MHCI.

In order to control its fiscal 1996 interest costs on its five-year revolving
line of credit and other bank lines of credit, the Company entered into an
interest rate swap agreement during the fourth quarter of fiscal 1995. This
swap agreement, which has a notional amount accreting from $85.0 to $115.0
million, effectively limits the interest rate to a maximum of 7.02% per annum
for the one year period commencing June 5, 1995. In order to control the market
and credit risk related to the swap, the Company limited its term to one year.

Although the interest rate to be charged on the new five-year credit facility
has yet to be finalized, management does not expect the change from the current
rate to have a material effect on the financial position or results of
operations of MHCI.

Trade accounts receivable make up the majority of MHCI's total current
assets. Historically, the average days outstanding in trade accounts receivable
is less than one month and bad debt expense has been minimal.

MHCI requires capital principally for dividend payments, new accounts,
equipment replacement, and remodeling of existing accounts. Cash provided by
operating activities was approximately $8.8 million for the first twenty-six
weeks of fiscal 1996. Capital expenditures were approximately $1.4 million for
the same period. Capital expenditures are estimated to be approximately $4.8
million in fiscal 1996. This amount is expected to be financed through
internally generated funds.

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Dividends

MHCI anticipates that it will pay approximately $9 million in annual
dividends. See "Dividend Policies."

Deferred Tax Assets

The recognition of deferred tax assets depends on the anticipated existence
of taxable income in future periods in amounts sufficient to realize the
assets. A valuation allowance must be used to reduce the deferred tax asset if
such future income is not likely to be generated. Management believes that
future taxable income should be sufficient to realize all of MHCI's deferred
tax assets based on historical earnings of MHCI, and therefore, a valuation
allowance has not been established.

Effects of Distribution on Financial Position

MHCI has historically generated operating cash flows in excess of the
amounts necessary to fund operations. As such, management does not anticipate
that the Distribution will have a material impact on MHCI's financial
position. There will be no significant management changes as a result of the
Distribution. See "Special Charges" which follows for a discussion of certain
costs expected to be recorded in the third quarter.

KNOWN EVENTS, UNCERTAINTIES AND TRENDS

New Accounting Standards

During March 1995, the Financial Accounting Standards Board issued FAS 121.
FAS 121 requires that, beginning in fiscal years starting after December 15,
1995, long-lived assets and certain identifiable intangibles to be held and
used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Long-lived assets and certain identifiable intangibles to be
disposed of are generally to be reported at the lower of carrying amount or
fair value less cost to sell. Currently, MHCI recognizes such impairment upon
the decision to close a contract. Subsequent to December 2, 1995, MHCI
completed its analysis of the financial statement impact of adoption of FAS
121 and determined that there will be no material impact on MHCI's financial
position or results of operations.

During October 1995, the Financial Accounting Standards Board issued FAS
123. FAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. FAS 123 defines a fair value based
method of accounting for an employee stock option or similar equity
instrument. FAS 123 allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees."
MHCI intends to continue to measure compensation cost following the principles
of APB Opinion No. 25 and will therefore be required to present pro forma
disclosures of net income and earnings per share as if the fair value based
method had been applied beginning in fiscal 1997.

Impact of Inflation

In the past, MHCI has been able to recover inflationary cost increases
through increased productivity, menu changes and contract inflation
adjustments. There have been, and there may be in the future, delays in
contract inflation adjustments and competitive pressures may also limit MHCI's
ability to recover such cost increases in their entirety. Historically, the
effects of inflation on MHCI's net income have not been materially adverse.

Management's Outlook

MHCI has grown dramatically in both profit and sales and management intends
to enhance growth further through the expansion of the sales teams and
maintenance of outstanding performance.

During fiscal 1995, MHCI signed the largest contract in the history of
health-care food service, becoming a long-term partner to increase quality and
lower costs for BJC Health System in St. Louis. During the upcoming year, MHCI
believes that additional investments in people and programs designed to
enhance its aggressive sales drive should add new clients while building
stronger relationships with current accounts. MHCI plans to continue to grow
by adding to its current base with new accounts and by minimizing the number
of closed accounts.

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As of the Distribution Date, MHCI anticipates to incur additional expenses
due to being a stand-alone entity. Examples of additional costs include
separate company audits, annual reports, proxy statements and registration of
stock in connection with employee benefit plans. MHCI will also add additional
financial personnel to perform additional duties related to being a separate
company. See the MHCI Unaudited Pro Forma Financial Information contained
elsewhere in this proxy for the estimated effects of the Distribution on
results of operations for the year ended June 3, 1995 and the twenty-six weeks
ended December 2, 1995.

Special Charges

On January 10, 1996, the Company announced that MHCI expects to incur charges
in the third quarter of $1.6 million consisting primarily of estimated
professional and other fees to be incurred in connection with the Distribution
($1.1 million), relocation costs for personnel moving in connection with the
Distribution during the quarter ($0.3 million) and miscellaneous other asset
write-offs ($0.2 million). See Note 11 of Notes to Financial Statements for
more information.

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BUSINESS OF RTI AFTER THE
DISTRIBUTION

GENERAL

Following the Distribution, RTI will own and operate substantially all of
the specialty restaurant business currently owned and operated by the Company.
The Company entered the casual dining market in 1982 by acquiring Ruby Tuesday
and expanded its specialty restaurant operations through internally developed
concepts such as Mozzarella's Cafes and by acquiring Tia's, a Tex-Mex
restaurant concept, in January 1995. References herein to "RTI" include, where
appropriate, the historical business and operations of the Company's Ruby
Tuesday Group prior to the Distribution.

The first Ruby Tuesday restaurant was opened near the campus of the
University of Tennessee, Knoxville in 1972. The Ruby Tuesday concept, with 16
operational units, was acquired by the Company in 1982. During the following
years, RTI added other casual dining concepts, including the internally
developed Mozzarella's Cafe ("Mozzarella's," formerly "Silver Spoon") and L&N
Seafood Grill ("L&N"). In June 1994, the Company's Board of Directors approved
the plan to phase out the L&N concept in an attempt to align all of the
concepts into the strategic focus of "feeding America for under $10." A
majority of the L&N units were converted primarily to either Ruby Tuesday or
Mozzarella's and the remaining locations were either sold or closed. Based on
favorable operating results, RTI subsequently decided to continue to operate
four of the L&N units as L&N's through the remainder of their lease terms. In
January 1995, RTI completed the acquisition of Tia's, a chain of Tex-Mex
restaurants, which allowed RTI to enter one of the fastest growing segments of
the casual dining market.

RTI is guided by five key business strategies that support a mission
statement that directs the company to "make our restaurants our guests' first
choice, a great place to work and a great investment." They are: a consumer
strategy to increase guest frequency and share through "wow" points of food,
service and value; a management strategy based on planning, focus, monitoring
and measuring, and accountability; an investment strategy with lower real
estate and construction costs; a franchise development strategy with regional
operating partners; and an information and communication strategy that is
technology based and relies on "just-in-time" information.

OPERATIONS

Ruby Tuesday

Ruby Tuesday's are casual, full-service restaurants with mahogany woods and
whimsical artifacts, classic brass and Tiffany lamps which create a
comfortable, nostalgic look and feel. Ruby Tuesday's menu is based on variety,
with something for just about everyone. Some of Ruby Tuesday's most popular
entree items, which are prepared fresh daily, are: fajitas, baby-back ribs,
chicken entrees, soups, sandwiches, salad bar, and signature "Tallcake"
desserts in strawberry and chocolate-Oreo varieties. Entree selections range
in price from $4.99 to $11.99. Servers are dressed in black pants, starched
white shirts, colorful ties, and white bistro aprons.

Ruby Tuesday, with 302 units as of December 2, 1995 concentrated primarily
in the Northeast, Southeast, Mid-Atlantic and the Midwest, is RTI's primary
growth vehicle. RTI intends to open at least 13 additional units in fiscal
1996, with the majority of the new units to be opened in existing markets.
While the concept has historically been primarily mall-based, current
development plans call for 75% of new units to be freestanding. Existing
prototypes range from 4,250 to 5,200 square feet with seating for 160 to 185
guests. A new prototype measuring slightly below 4,000 square feet is being
tested, in order to enable Ruby Tuesday to more efficiently fill-in existing
markets and penetrate additional smaller markets. Management expects there is
a potential for

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more than 1,000 Ruby Tuesday locations throughout the continental U.S. Other
than population and traffic volume, site criteria requirements for new units
include annual household incomes ranging from $30,000 to $50,000 and
accessibility and visibility of location.

Mozzarella's Cafe

Mozzarella's is a company-developed, full-service restaurant with a menu
that features a variety of pastas and thin-crust gourmet pizzas, along with
made-from-scratch soups, entree salads and sandwiches, fresh seafood
selections, prime steak and grilled chicken, all prepared with signature
recipes. Entree selections range in price from $4.99 to $13.99.

Mozzarella's decor is upbeat and colorful with polished wood trim and
paneling, European poster art, strings of overhead lights and tile floors.
Displays of olive oil, tomatoes, pasta and other food products contribute to
the appeal of the restaurant. Servers approach the guests dressed in white
button-down shirts accented with a colorful bow tie, black trousers and a red
bistro apron.

With 48 company-owned establishments as of December 2, 1995, Mozzarella's
are primarily located in the Mid-Atlantic and the Southeast with particular
concentration in the Washington, D.C. area, Florida and Atlanta. RTI intends
to open only two additional units during the remainder of fiscal 1996 to
concentrate on improving the operational efficiency and effectiveness of
existing units. New restaurants typically range from 4,200 to 4,500 square
feet and seat 140 to 160 guests.

Tia's Tex-Mex

Tia's, RTI's newest concept, is a full-service, casual dining restaurant.
The decor is reminiscent of an authentic Mexican restaurant, with chandeliers
replicating those of an old Mexican hotel, and colors, textures and artifacts
that reflect the restaurants' genuine Southwestern heritage. Tortillas are
made by hand in a display station which contributes to Tia's unique
atmosphere.

Tia's menu items, which are all fresh and made from scratch, include an
array of traditional Tex-Mex favorites such as: fajitas, enchiladas, tacos,
nachos and quesadillas and a selection of unique grilled and sauteed dishes.
The menu also provides the guest with a variety of appetizers and desserts.
Entree items range in price from $4.50 to $11.95. Chips are cooked fresh
throughout the day and served with just-made salsa to every guest. Each guest
is greeted by a casually dressed server wearing a camp shirt, with the Tia's
logo, blue jeans and a short black apron.

RTI had 17 Tia's operational as of December 2, 1995, and plans to open two
additional units during the remainder of fiscal 1996. New and existing units
are to be located in the Southwest, Southeast and Mid-Atlantic regions. New
units will have approximately 6,100 to 6,200 square feet with seating capacity
for 180 visitors. New Tia's restaurants are considered in areas with annual
household incomes from $40,000 to $50,000, with sites which are visible,
accessible and provide at least 125 dedicated parking spaces, and meet certain
population and traffic criteria.

RESEARCH AND DEVELOPMENT

RTI does not engage in any material research and development activities.
RTI, however, engages in on-going studies in connection with the development
of menu items for all of its restaurant concepts. Additionally, it conducts
consistent consumer research to determine guest preferences, trends, and
opinions.

RAW MATERIALS

Raw materials essential to the operation of RTI's business are obtained
principally through national food distributors. RTI negotiates directly with
primary suppliers to obtain competitive prices. RTI uses purchase-commitment
contracts to stabilize the potentially volatile pricing associated with
certain commodities. Because

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of the relatively short storage life of inventories, limited storage
facilities at the restaurants themselves, and RTI's requirement for freshness
and the numerous sources of goods, a minimum amount of inventory is maintained
at the units. If necessary, all essential food, beverage and operational
products are available and can be obtained from alternative suppliers in all
cities in which RTI operates. RTI will enter into a purchasing arrangement
with MFCI and MHCI to maintain the volume purchasing bargaining position
enjoyed by the Company prior to the Distribution. See "Relationship Among RTI,
MFCI and MHCI After the Distribution--Cooperative Purchasing Arrangement."

TRADEMARKS AND SERVICE MARKS

RTI has registered certain trademarks and service marks with the United
States Patent and Trademark Office, including Ruby Tuesday(R),
Mozzarella's(R), and Tia's(R). RTI believes that these and other related marks
are of material importance to RTI's business. Registrations of the trademarks
listed above expire from 2004 to 2005, unless renewed. See also "Relationship
Among RTI, MFCI and MHCI After the Distribution--Intellectual Property
Agreements."

SEASONALITY

RTI's business is moderately seasonal. Average restaurant sales of RTI are
slightly higher during the winter months than during the summer months as RTI
is currently concentrated in mall-based units. Freestanding restaurants sales
are higher in the summer months whereas mall based restaurants have higher
sales in the winter months, generally peaking during the holiday season.

CUSTOMER DEPENDENCE

No material part of the business of RTI is dependent upon a single customer,
or a very few customers, the loss of any one of which would have a material
adverse effect on RTI.

COMPETITION

RTI's activities in the restaurant industry are subject to vigorous
competition relating to restaurant location and service, as well as quality,
variety and value perception of the food products offered. RTI is in
competition with other food service operations, with locally-owned operations
as well as national and regional chains that offer the same type of services
and products as RTI.

GOVERNMENT COMPLIANCE

RTI is subject to various licensing and regulations at both the state and
local levels for items such as zoning, land use, sanitation, alcoholic
beverage control, health and fire safety, all of which could delay the opening
of a new restaurant or the operation of an existing unit. RTI's business is
subject to various other regulations at the federal level such as health care,
minimum wage, and fair labor standards. Compliance with these regulations has
not had, and is not expected to have, a material adverse effect on RTI's
operations.

There is no material portion of RTI's business that is subject to
renegotiation of profits or termination of contracts or sub-contracts at the
election of the Government.

ENVIRONMENTAL COMPLIANCE

Compliance with federal, state and local laws and regulations which have
been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, is
not expected to have a material effect upon the capital expenditures, earnings
or competitive position of RTI.

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PERSONNEL

RTI employed approximately 12,800 full-time and 13,400 part-time employees
as of December 31, 1995. RTI believes that working conditions are favorable
and employee compensation is comparable with its competition. None of RTI's
employees are covered by a collective bargaining agreement.

INTERNATIONAL OPERATIONS

All of company-owned operations are located within the United States. On
March 30, 1995, RTI entered into a development agreement (the "Agreement")
with Jardine Pacific Restaurants Group Limited (the "Developer") to open a
minimum of eight, 20, and 38 Ruby Tuesday restaurants in the Asia-Pacific
region by the end of the third, sixth, and tenth anniversaries of the date of
the Agreement, respectively. Under the terms of the Agreement, RTI is to
receive a licensing fee on the first seven Ruby Tuesday restaurants opened by
the Developer in the Asia-Pacific region and royalties from all units derived
as applicable from sales or profits as defined in the Agreement. RTI does not
expect this Agreement to have a material effect on future operations, nor is
it currently engaged in material operations in foreign countries.

PROPERTIES

Information regarding the locations of RTI's Ruby Tuesday Group operations
is shown in the list below. Of the 367 company-operated restaurants at
December 2, 1995, RTI owned the buildings and held long-term land leases for
31 restaurants, owned the land and buildings for 33 restaurants, and held
leases covering land and buildings for 303 restaurants. The administrative
personnel of RTI are located in the executive and administrative headquarters
building in Mobile, Alabama. The administrative headquarters has a lease term
ending in 1998 and provides for an option to purchase for a nominal amount at
the end of the initial lease term. This building was financed through the sale
of Industrial Development Revenue Bonds from the Industrial Development Board
of the City of Mobile, Alabama.

Additional information concerning the properties of RTI and the lease
obligations of RTI is incorporated herein by reference to Note 6 of the Notes
to Consolidated Financial Statements of the Company included elsewhere herein.

As of December 2, 1995, the Company operated 367 restaurants, including 302
Ruby Tuesday, 48 Mozzarella's Cafe and 17 Tia's Tex-Mex restaurants in the
following locations:

<TABLE>
<S> <C> <C> <C>
Alabama (19) Iowa (1) Minnesota (3) Pennsylvania (18)
Arkansas (3) Illinois (10) Missouri (6) Rhode Island (1)
Arizona (3) Indiana (4) Mississippi (5) South Carolina (8)
Colorado (3) Kentucky (5) North Carolina (6) Tennessee (26)
Connecticut (7) Louisiana (3) Nebraska (2) Texas (13)
District of Columbia
(1) Massachusetts (5) New Jersey (11) Virginia (37)
Delaware (3) Maryland (17) New York (24) Wisconsin (2)
Florida (57) Maine (1) Ohio (13)
Georgia (35) Michigan (14) Oklahoma (1)
</TABLE>

LEGAL PROCEEDINGS

RTI is, from time to time, a party to ordinary, routine litigation
incidental to its business. In the opinion of management, the ultimate
resolution of all pending legal proceedings will not have a material adverse
effect on RTI's business, financial condition, results of operations or
liquidity.

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<PAGE>

BUSINESS OF MFCI AFTER THE
DISTRIBUTION

GENERAL

Following the Distribution, MFCI will own and operate substantially all of
the family dining business currently owned and operated by the Company. Prior
to the Distribution, the Company will contribute to MFCI substantially all of
the assets and liabilities of the Family Dining Division of its Morrison
Group. References herein to "MFCI" include, where appropriate, the historical
business and operations of the Family Dining Division of the Company's
Morrison Group.

The Company opened its first cafeteria in 1920 in Mobile, Alabama and during
the past 75 years has grown its family dining business into 177 restaurant
operations throughout the Southeastern United States. MFCI, with 140
traditional cafeterias, seven small cafeterias, 25 small food court units,
four buffets and one free-standing quick-service restaurant, located in 18
states, is the premier cafeteria company in the Southeast. MFCI was
incorporated in Georgia in October 1995 and its corporate headquarters will be
located at 4893 Riverdale Road, Suite 260, Atlanta, Georgia 30337.

INDUSTRY OVERVIEW

MFCI operates in the "home-meal replacement" (also known as "comfort" food)
segment of the restaurant industry. MFCI's services appeal to customers
seeking complete meals at affordable prices in a convenient and home-like
setting. While industry observers have labeled "home-meal replacement" as a
trend of the 1990s, MFCI has been operating in this market segment for over 75
years.

STRATEGY

MFCI's business strategy is to:

. Emphasize future growth beyond existing mall-based units into convenient
free-standing locations. New units will generally be smaller, more labor
and energy efficient, and will be designed to evoke a contemporary and
comfortable environment.

. Re-engineer its cost-structure through state-of-the-art technology in
information services, cooking equipment and quality control.

. Emphasize more health-conscious and contemporary menu items without
losing focus on traditional southern menu favorites.

. Achieve operational excellence through competitive pricing, variety of
menu items and employee training.

. Focus growth in Southeast and Mid-Atlantic regions to capitalize on
existing brand-equity and name-recognition.

OPERATIONS

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<PAGE>

to provide a varied dining experience and are adjusted to include seasonal
favorites. This variety encourages customer loyalty and repeat business.
MFCI's typical customer visits MFCI restaurants an average of 3.8 times a
month.

A variety of price alternatives are also offered, catering to both the
budget minded customer looking for fried chicken, meat loaf and fresh
vegetables and those seeking a higher-end experience, including hand carved
roast beef, hand battered shrimp, New Zealand whitefish almondine and other
specialty items. Fresh desserts include apple dumplings, cobblers and cakes.
Fresh vegetables include both traditional southern selections and more health
conscious alternatives such as zucchini marinara, steamed mixed vegetables and
fresh steamed broccoli.

The traditional cafeteria, located in a shopping mall or on a free-standing
site, is approximately 10,000 square feet and seats approximately 250
customers. The new, smaller, contemporary cafeteria offers a roadhouse style
appearance featuring a new serpentine serving area that creates an open, airy
environment to enhance viewing of the menu items by the customer. The small
cafeterias are typically free-standing and are built in a contemporary design
ranging from 5,500 to 7,500 square feet and seating approximately 225 guests.
The contemporary dining area, accompanied by booths and wooden tables and
chairs, creates a comfortable at-home atmosphere. The small cafeterias are
designed to provide convenient, customer-friendly take-out services and many
of the new units will offer drive-through services. MFCI is opening small
cafeterias in proven trade areas primarily in the Southeast.

The mall food court units, also known as QSRs, feature many traditional menu
selections along with some new items such as rotisserie chicken, sandwiches
and snack foods including chicken fingers and french fries, as well as a
selection of the entrees and vegetables for which MFCI is more commonly known.
The QSRs offer several bundled value meal combinations in addition to a la-
carte pricing for selected items. MFCI opened its first free-standing (with
drive-through) location in Marietta, Georgia in July 1995.

MARKETING

MFCI's marketing strategy is to increase customer and potential customers'
awareness of MFCI's strengths including variety, fresh cooking, bundled meals,
value-based pricing and money-back satisfaction guarantee. MFCI's marketing
efforts focus on active advertising in television, radio and print media and
local store promotions. In addition, MFCI is committing resources to increase
marketing staff, develop marketing manuals for each of its restaurants and
increase its community involvement to become more of a part of the
neighborhood in which its restaurants are located.

RESEARCH AND DEVELOPMENT

MFCI does not engage in any material research and development activities.
Numerous studies are made, however, on a continuing basis, to improve menus,
equipment, and methods of operations, including planning for new food-service
concepts. MFCI tracks customer satisfaction through surveys of statistically
relevant samples of customers at each unit (approximately 90,000 customers
each year). The surveys are conducted each quarter and track 21 different
attributes to monitor and increase customer satisfaction. In addition, MFCI
holds regular "focus group" discussions with existing, former and potential
customers to determine ways to exceed customer expectations and increase
customer satisfaction.

RAW MATERIALS

Raw materials essential to the operation of MFCI's business are obtained
principally through national food distributors. MFCI negotiates directly with
primary suppliers to obtain competitive prices. MFCI uses short-term purchase
commitment contracts to stabilize the potentially volatile pricing associated
with certain commodities. Because of the relatively short storage life of
inventories, limited storage facilities at the restaurants themselves, MFCI's
requirement for freshness and the numerous sources of goods, a minimum amount
of inventory is

78
<PAGE>

maintained at the units. If necessary, all essential food, beverage and
operational products are available and can be obtained from alternative
suppliers in all cities in which MFCI operates. MFCI will enter into a
purchasing arrangement with RTI and MHCI to maintain the volume purchasing
bargaining position enjoyed by the Company prior to the Distribution. See
"Relationship Among RTI, MFCI and MHCI After the Distribution--Cooperative
Purchasing Arrangement."

TRADEMARKS AND SERVICE MARKS

MFCI has registered certain trademarks and service marks with the United
States Patent and Trademark Office, including the "Morrison's(R) trademark."
MFCI believes that this and other related marks are important to MFCI's
business. Registration of the trademark Morrison's(R) expires in 2005, unless
renewed. In addition, approval is pending for the registration of the
trademark "Morrison's Fresh Cooking" by MFCI. See also "Relationship Among
RTI, MFCI and MHCI After the Distribution--Intellectual Property Agreements."

SEASONALITY

MFCI's business is moderately seasonal. Average restaurant sales of MFCI are
slightly higher during the winter months than during the summer months due to
MFCI's current concentration of units located within shopping malls and in the
State of Florida.

CUSTOMER DEPENDENCE

No material part of the business of MFCI is dependent upon a single
customer, or a very few customers, the loss of any one of which would have a
material adverse effect on MFCI.

COMPETITION

MFCI's activities in the restaurant industry are subject to vigorous
competition. MFCI is in competition with other food service operations, with
locally-owned operations as well as national and regional chains that offer
the same type of services and products as MFCI. MFCI's largest competitors
include Shoney's, Cracker Barrel, Piccadilly, Ryan's Steak House, Old Country
Buffet and Golden Corral. Management believes that competition in the "home-
meal replacement" or "comfort food" market segment is based on price, food
quality, variety and convenience. Management believes it compares favorably
with its competition in these areas.

GOVERNMENT COMPLIANCE

MFCI is subject to various licensing and regulations at both the state and
local levels for items such as zoning, land use, sanitation, health and fire
safety, none of which could inordinately delay the opening of a new restaurant
or the operation of an existing unit. MFCI's business is subject to various
other regulations at the federal level such as health care, minimum wage and
fair labor standards. Compliance with these regulations historically has not
had a material adverse effect on MFCI's operations.

GOVERNMENT CONTRACTS

There is no material portion of MFCI's business that is subject to
renegotiation of profits or termination of contracts or sub-contracts at the
election of the Government.

ENVIRONMENTAL COMPLIANCE

Compliance with federal, state and local laws and regulations which have
been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, is
not expected to have a material adverse effect upon the capital expenditures,
earnings or competitive position of MFCI.

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<PAGE>

PERSONNEL

MFCI employed approximately 6,400 full-time and 2,300 part-time employees as
of December 31, 1995. MFCI believes that its relationship with its employees
is good, that working conditions are favorable and employee compensation is
comparable with its competition. None of MFCI's employees are subject to a
collective bargaining agreement.

PROPERTIES

Of the 177 company-operated restaurants, MFCI owns the building and holds
long-term land leases for ten restaurants, owns the land and building for 14
restaurants, holds leases covering land and building for 152 restaurants and
owns the land and leases the building for one unit. These leases have terms
that expire on various dates over the next 20 years and generally provide for
options to renew, in some cases at adjusted rentals. The leases may provide
for escalation of rent during the lease term and generally provide for
additional contingent lease payments based upon sales volume. See Note 4 to
the MFCI Financial Statements for additional information concerning MFCI's
lease commitments. MFCI shares with MHCI approximately 10,000 square feet of
office space in Atlanta, Georgia for use as its corporate headquarters. The
lease has a term ending in 1997 and provides for annual lease payments of
approximately $100,000.

As of December 2, 1995, MFCI operated 177 locations in the following states:

<TABLE>
<S> <C> <C> <C>
Alabama (20) Kentucky (5) New Jersey (2) Tennessee (7)
Connecticut (2) Louisiana (3) New York (2) Virginia (18)
Florida (56) Maryland (4) North Carolina (5) West Virginia (1)
Georgia (29) Massachusetts (2) Ohio (2)
Indiana (1) Mississippi (10) South Carolina (8)
</TABLE>

LEGAL PROCEEDINGS

MFCI is, from time to time, a party to ordinary, routine litigation
incidental to its business. In the opinion of management, the ultimate
resolution of all pending legal proceedings will not have a material adverse
effect on MFCI's business, financial condition, results of operations or
liquidity.

80
<PAGE>

BUSINESS OF MHCI AFTER THE
DISTRIBUTION

GENERAL

Following the Distribution, MHCI will own and operate substantially all of
the health care food and nutrition services business currently owned and
operated by the Company. Prior to the Distribution, the Company will
contribute to MHCI substantially all the assets and liabilities of the Health
Care Division of its Morrison Group. References herein to "MHCI" include,
where appropriate, the historical business and operations of the Health Care
Division of the Company's Morrison Group.

The Company's food service business has its origin in the health care food
service operations developed by it in the early 1950s. The Company expanded
this business by acquiring various food service businesses and combining them
with internally-generated operations. In August 1994, the Company sold certain
of its education, business and industry ("B&I") contracts and assets and
closed the remaining B&I accounts to concentrate on food service accounts in
the health care industry. MHCI, with 278 accounts in 30 states and Washington,
DC as of December 2, 1995, is one of the leading providers of food and
nutrition services to hospitals and other health care facilities across North
America. MHCI was incorporated in Georgia in October 1995 and its corporate
headquarters will be located at 4893 Riverdale Road, Suite 260, Atlanta,
Georgia 30337.

MARKET OVERVIEW

MHCI markets its services to hospitals and other facilities in the health
care industry. Management estimates that the United States health care
industry represents a $12 billion market for contract food and nutrition
services of which approximately 12% are currently provided by outside sources.
This market includes the approximately 6,500 hospitals operating in the United
States, of which management estimates that approximately two-thirds do not yet
outsource their food and nutrition services. Management believes that there is
significant opportunity for growth in the health care market as continued cost
pressures on the health care industry cause more and more facilities to
outsource various services to experts.

Management believes that outsourcing is becoming a more and more attractive
alternative to self-operated food and nutrition services because outsourcing
enables health care facilities to reduce costs, utilize resources not
available internally, improve business focus and share the risks associated
with such operations.

STRATEGY

MHCI's business strategy is to:

. Focus its business development efforts on food and nutrition services in
the health care industry;

. Become the low-cost provider of quality food and nutrition services to
health care facilities;

. Focusing on patient satisfaction through quality, service and value by
adapting to patient preferences and nutrition needs and by bringing a
retail approach to an institutional setting;

. Provide clients fully-qualified, highly-motivated on-site management and
clinical teams;

. Provide its clients and on-site teams with ready access to nutrition,
culinary and human resources specialists and expertise.

OPERATIONS

MHCI operates the food and nutrition services departments of hospitals and
other health care facilities. These departments typically include retail
outlets for staff and visitors and patient food and nutrition services. MHCI
had 278 health care accounts in 30 states and Washington, DC as of December 2,
1995, ranging in size from 100 bed specialty hospitals to facilities with over
2,000 beds. Of these accounts, approximately 75% were hospitals.

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<PAGE>

Since acquiring its first health care account over 40 years ago, MHCI has
grown to service some of the largest and most prestigious hospitals in the
country, including Los Angeles County/University of Southern California
Medical Center in Los Angeles, California; Jackson Memorial Hospital in Miami,
Florida; University Hospital-SUNY in Stonybrook, New York; Northwestern
Memorial Hospital in Chicago, Illinois; and BJC Health System in Missouri.
MHCI provides food and nutrition services to 16 of the 50 largest acute care
and teaching hospitals in the United States.

MHCI performs its services pursuant to three general types of contracts: (i)
profit and loss (or guaranteed cost) contract, under which MHCI enjoys the
benefit and assumes the risk of profit or loss, respectively, of the operation
of the food and nutrition services department; (ii) management fee contract
pursuant to which the client reimburses MHCI for all costs incurred in
providing the services contracted for and a negotiated fixed management fee
for supervising the client's food and nutrition services operations; and (iii)
management fee contract with incentives and penalties under which MHCI manages
the client's food and nutrition operations on a management fee basis, with the
amount of the management fee determined based on the achievement of pre-
determined goals. Approximately 50% of MHCI's accounts are operated pursuant
to management fee contracts, although management fee contracts with incentives
and penalties are becoming more common. Substantially all of MHCI's contracts
were awarded following a bidding process.

In addition, MHCI operates "branded concept" restaurants such as Morrison
Fresh Cooking, Pizza Hut and Taco Bell, on client premises. These branded
concept units are operated pursuant to license arrangements with the
appropriate restaurant company. Currently MHCI has 12 license arrangements
with nationally-recognized restaurant companies.

NEW BUSINESS DEVELOPMENT

MHCI markets its services nationwide through its business development
specialists and business development directors. Each business development
specialist focuses on potential clients in a specific territory pursuant to a
marketing plan. The business development specialists report to and are
supported by business development directors. The business development
directors also market MHCI's services to large national accounts such as
hospital systems. In addition, MHCI personnel market to existing clients to
cross-sell additional services and increase sales of existing services to
complement the facility's food services department.

RESEARCH AND DEVELOPMENT

MHCI does not engage in any material research and development activities.
Numerous studies are made, however, on a continuing basis, to improve menus,
equipment and methods of operations.

RAW MATERIALS

Raw materials essential to the operation of MHCI's business are obtained
principally through national food distributors. MHCI negotiates directly with
primary suppliers to obtain high quality products and services at competitive
prices. MHCI uses short-term purchase commitment contracts to stabilize the
potentially volatile pricing associated with certain commodities. Because of
the relatively short storage life of inventories, limited storage facilities
at customer locations, MHCI's requirement for freshness and the numerous
sources of goods, a

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<PAGE>

minimum amount of inventory is maintained at customer locations. If necessary,
all essential food, beverage and operational products are available and can be
obtained from alternative suppliers in all cities in which MHCI operates. MHCI
will enter into a purchasing arrangement with RTI and MFCI to maintain the
volume purchasing bargaining position enjoyed by the Company prior to the
Distribution. See "Relationship Among RTI, MFCI and MHCI After the
Distribution--Cooperative Purchasing Arrangement."

TRADEMARKS AND SERVICE MARKS

MHCI has registered certain trademarks and service marks with the United
States Patent and Trademark Office including the Pro-Health Dining(R)
trademark. MHCI believes that this and other related marks are important to
its business. Registrations of trademarks expire from 2000 to 2009, unless
renewed. See also "Relationship Among RTI, MFCI and MHCI After the
Distribution--Intellectual Property Agreements."

SEASONALITY

MHCI's revenues are not seasonal to any significant degree.

CUSTOMER DEPENDENCE

No material part of the business of MHCI is dependent upon a single
customer, or a very few customers, the loss of any one of which would have a
material adverse effect on MHCI.

GOVERNMENT CONTRACTS

There is no material portion of MHCI's business that is subject to
renegotiation of profits or termination of contracts or sub-contracts at the
election of the Government.

COMPETITION

The health care food and nutrition services business is highly competitive.
MHCI competes with national food contract companies that offer the same type
of services as MHCI in addition to other contract services, as well as
regional operations. Management believes that competition in the health care
food and nutrition services market is based on pricing, quality of services
and reputation. Management believes it compares favorably with its competition
in these areas.

GOVERNMENT COMPLIANCE

MHCI is subject to various licensing and regulations at both the state and
local levels for items such as sanitation, health and fire safety, all of
which could affect the operation of an existing account. MHCI's business is
also subject to various other regulations at the federal level such as fair
labor standards, occupational safety and health regulations. Compliance with
these regulations has not had, and is not expected to have, a material adverse
effect on MHCI's operations.

ENVIRONMENTAL COMPLIANCE

Compliance with federal, state and local laws and regulations which have
been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, is
not expected to have a material adverse effect upon the capital expenditures,
earnings or competitive position of MHCI.

PERSONNEL

MHCI employed approximately 2,400 full-time and 830 part-time employees as
of December 2, 1995, including 855 managerial and professional (registered
dietitians) employees. In addition, under most of MHCI's contracts, non-
managerial employees remain on clients' payrolls but are supervised by MHCI
personnel. MHCI

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believes that relations with employees are good. Employees at a limited number
of locations are subject to collective bargaining agreements.

PROPERTIES

MHCI professionally manages food service departments on client-owned
property and, therefore, does not own any significant amounts of property.
Under the terms of certain of its contracts, MHCI is required to make rent
payments to its clients. See Note 4 to MHCI Financial Statements for
information concerning MHCI's rental commitments. In addition, MHCI shares
with MFCI approximately 10,000 square feet of office space in Atlanta, Georgia
for use as its corporate headquarters. The lease has a term ending in 1997 and
provides for annual lease payments of approximately $150,000.

LEGAL PROCEEDINGS

MHCI is, from time to time, a party to ordinary, routine litigation
incidental to its business. In the opinion of management, the ultimate
resolution of all pending legal proceedings will not have a material adverse
effect on MHCI's business, financial condition, results of operations or
liquidity.

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<PAGE>

RTI MANAGEMENT AND
EXECUTIVE COMPENSATION

RTI DIRECTORS AND EXECUTIVE OFFICERS

Immediately after the Distribution, it is expected that RTI will have a
board of directors (the "RTI Board of Directors") consisting of seven members
divided into three classes with staggered terms. It is expected that (i)
Arthur R. Outlaw and Dr. Benjamin F. Payton will serve in Class I for a term
expiring at the annual meeting of the RTI stockholders to be held in 1996,
(ii) Samuel E. Beall, III, Dr. Donald Ratajczak and Claire L. Arnold will
serve in Class II for a term expiring at the annual meeting of the RTI
stockholders to be held in 1997, and (iii) John B. McKinnon and Dolph W. von
Arx will serve in Class III for a term expiring at the annual meeting of the
RTI stockholders to be held in 1998. The members of one class will be elected
each year for a three-year term. It is expected that Samuel E. Beall, III will
serve as Chairman of the Board of Directors of RTI. The RTI executive officers
will be appointed by and will serve at the discretion of RTI's Board of
Directors.

The following sets forth, as of January 17, 1996, certain information with
respect to the persons who are expected to serve as directors and/or executive
officers of RTI following the Distribution.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH RTI
- ---- --- -----------------
<S> <C> <C>
Samuel E. Beall, III.... 45 Chairman of the Board and Chief Executive Officer
Claire L. Arnold........ 49 Director
John B. McKinnon........ 61 Director
Arthur R. Outlaw........ 69 Vice Chairman of the Board
Dr. Benjamin F. Payton.. 63 Director
Dr. Donald Ratajczak.... 53 Director
Dolph W. von Arx........ 61 Director
Robert D. McClenagan.... 47 President,
Ruby Tuesday Division
Pfilip G. Hunt.......... 60 Senior Vice President,
General Counsel and Secretary
J. Russell Mothershed... 47 Senior Vice President, Finance
Ronald P. Vilord........ 60 Senior Vice President, Human Resources
A. Richard Johnson...... 44 Senior Vice President, Strategy, Planning and Marketing
</TABLE>
- --------

Arthur R. Outlaw has an understanding with the Company pursuant to which he
will be nominated for re-election as a director for a three-year term at the
annual meeting of RTI stockholders to be held in 1996.

Samuel E. Beall, III has been Chairman of the Board and Chief Executive
Officer of the Company since May 1995. Mr. Beall served as President and Chief
Executive Officer of the Company from June 1992 to May 1995 and President and
Chief Operating Officer of the Company from September 1986 to June 1992. Mr.
Beall has served as a director of the Company since 1982. Mr. Beall also is a
director of First American Corporation.

Claire L. Arnold is currently a private investor. Ms. Arnold served as
President and Chief Executive Officer of Nicotiana Enterprises, Inc., a family
holding company holding stock in NCC L.P., from August 1979 to February 1995
and was Chief Executive Officer of NCC L.P., a major distributor of grocery,
tobacco, candy, health and beauty, and allied products to retail stores, from
November 1992 to April 1994. Prior thereto, Ms. Arnold was Chairman and Chief
Executive Officer of NCC L.P. from August 1979 to November 1992. Ms. Arnold
has served as a director of the Company since 1994. Ms. Arnold also is a
director of Schweitzer-Mauduit International, Inc. and is expected to serve as
a director of MHCI following the Distribution.

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<PAGE>

director of the Company since 1989. Mr. McKinnon also is a director of Premark
International and Integon Corporation and is expected to serve as Chairman of
the Board of Directors of MHCI following the Distribution.

Arthur R. Outlaw has been Vice Chairman of the Board of the Company since
December 1984. From October 1985 to October 1989, he was Mayor, City of
Mobile, Alabama. Mr. Outlaw has served as a director of the Company since
1959. Mr. Outlaw is expected to serve as Vice Chairman and director of MFCI
following the Distribution.

Dr. Benjamin F. Payton has been the President of Tuskegee University since
1981. Dr. Payton has served as a director of the Company since 1993. Dr.
Payton also is a director of AmSouth Bank, N.A., AmSouth Bancorporation, The
ITT Corporation, The Liberty Corporation, Sonat, Inc. and Praxair, Inc. and is
expected to serve as a director of MHCI following the Distribution.

Dr. Donald Ratajczak is Professor and Director, Economic Forecasting Center,
Georgia State University. Dr. Ratajczak has served as a director of the
Company since 1981. Dr. Ratajczak also is a director of Morgan Keegan Inc. and
CIM High Yield Securities Fund and is expected to serve as a director of MFCI
following the Distribution.

Dolph W. von Arx was Chairman of the Board, President and Chief Executive
Officer of Planters LifeSavers Company, an affiliate of RJR Nabisco, Inc.
until his retirement in 1991. Mr. von Arx has served as a director of the
Company since 1992. Mr. von Arx also is a director of Cree Research, Inc. and
is expected to serve as Chairman of the Board of Directors of MFCI following
the Distribution.

Robert D. McClenagan was appointed President of the Ruby Tuesday Division of
the Company in March 1994. He served as President of the Company's Ruby
Tuesday Group from April 1990 to March 1994 and as Senior Vice President of
the Company's Specialty Restaurant Division from March 1985 to April 1990.

Pfilip G. Hunt joined the Company in June 1968 and was named Senior Vice
President, General Counsel and Secretary in September 1985. From December 1984
to September 1985, he served as Vice President, General Counsel and Secretary
of the Company.

J. Russell Mothershed joined the Company in July 1972 and was named Senior
Vice President, Finance in March 1994. He served as Vice President, Controller
and Treasurer of the Company from March 1989 until March 1994.

Ronald P. Vilord joined the Company in April 1988 and was named Senior Vice
President of Human Resources in June 1993. He served as Vice President of
Purchasing of the Company from October 1989 until June 1993.

A. Richard Johnson was named Senior Vice President, Strategy, Planning and
Marketing of the Company in September 1995. Prior thereto, he served as
President, Specialty Division of the Company from March 1994 to September
1995, as Senior Vice President, Marketing of the Company from June 1993 to
March 1994 and as Vice President, Marketing of the Company's Ruby Tuesday
Group from November 1992 to June 1993. Prior to joining the Company in
November 1992, Mr. Johnson was a consultant to the Ruby Tuesday Group.

RTI DIRECTORS' COMPENSATION

RTI will continue the policy of the Company that directors who are employees
of RTI, other than Mr. Outlaw, receive no directors' fees. Non-management
directors will receive a $10,000 annual retainer and $1,000 per Board meeting
attended. Mr. Outlaw, who serves as Vice Chairman of the Board and is an
employee of the Company, will continue to serve as Vice Chairman of the Board
and be an employee of RTI. Mr. Outlaw will receive fees of $250 per RTI Board
meeting attended. Mr. Outlaw, however, will not receive a retainer.

RTI non-management directors who will serve on the Audit Committee, the
Executive Committee, the Compensation and Stock Option Committee or the
Nominating Committee (other than the Chairmen of such

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<PAGE>

committees) will receive a fee of $1,000 for each committee meeting attended.
Mr. Outlaw will receive the same fees as non-management directors for
attending meetings of the committees on which he serves. Committee Chairmen
will receive a fee of $2,000 for each committee meeting attended. Non-
management directors serving on any committee will be compensated at a rate of
$200 an hour for services performed on special assignments.

The Company Directors' Plan, currently maintained by the Company for the
benefit of its non-management directors, will be amended at or prior to the
Distribution Date to reflect the Distribution and related matters (see
"Amendments to the Company Directors' Plan") and will be continued as the
"Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for
Directors" (the "RTI Directors' Plan") following the Distribution.

The RTI Directors' Plan will permit non-management directors to defer all or
a portion (in 25 percent increments) of their retainer (other than any portion
of the retainer allocated to RTI Stock Awards, as described below) and/or any
additional meeting and committee fees to a deferred compensation account.
Deferred compensation accounts will be credited as of the last day of each
fiscal quarter with an assumed rate of income equal to 90-day U.S. Treasury
bills, based on the weighted average balance of that account during that
fiscal quarter. Amounts credited to a director's deferred compensation account
will be distributed not sooner than the earlier of the first January 15 or
July 15 following (i) the date of the director's seventieth birthday, or (ii)
the date the director ceases to be a member of the RTI Board.

The RTI Directors' Plan will provide that each non-management director who
has not attained the "Target Ownership Level," as defined below, will be
deemed to have elected to direct that 60 percent of his or her retainer
payable for each fiscal quarter be allocated to the purchase of RTI Common
Stock on his or her behalf. Each non-management director who has attained the
Target Ownership Level may elect to direct, in 10 percent increments and
subject to such other conditions prescribed by the RTI Directors' Plan, that
up to 60 percent of his or her retainer for each fiscal quarter be allocated
to the purchase of RTI Common Stock on his or her behalf (collectively, the
"RTI Stock Awards"). A deemed election will continue in effect until that
director, after attaining the Target Ownership Level, modifies or revokes the
election in the manner allowed for discretionary elections.

An RTI director will be treated as having attained the "Target Ownership
Level" for a fiscal quarter if he or she owns, on the first day of that fiscal
quarter, at least a number of shares of RTI Common Stock with a fair market
value, as determined by the closing price on the last trading date prior to
such date ("Fair Market Value"), equal to 10 multiplied by that director's
annual retainer.

Each RTI director who has elected, or who has been deemed to have elected,
to purchase RTI Stock Awards for a fiscal quarter, will be issued the number
of shares of RTI Common Stock equal to the amount of the retainer elected to
be so allocated, multiplied by 1.15 and divided by the Fair Market Value of a
share of RTI Common Stock. RTI Common Stock so purchased may not be
transferred within three years of the date of purchase, except in the event of
death, disability, retirement on or after age 70 or unless this restriction is
waived.

The RTI Directors' Plan will provide that each non-management director who
receives RTI Stock Awards, whether through a deemed election or a
discretionary election, will be awarded an option to purchase shares of RTI
Common Stock (the "RTI Options") equal to three times the number of shares
issued pursuant to the discretionary election or deemed election, as the case
may be.

RTI Options issued under the RTI Directors' Plan will be granted on the
first day of each fiscal quarter for which an election for an RTI Stock Award
is in effect; will become fully exercisable six months following the date of
grant; and will be exercisable at the Fair Market Value of the RTI Common
Stock. Each RTI Option shall expire generally upon the fifth anniversary of
the date on which it was granted.

Under the RTI Directors' Plan, a one-time restricted stock award of 5,000
shares of RTI Common Stock will be made to each of RTI's non-management
directors first elected as a director on or after the Distribution

87
<PAGE>

Date and who was not a director of the Company prior to the Distribution. One-
third of the RTI Common Stock subject to any restricted stock award will vest
on each of the first three anniversary dates of the date the director was
first elected to the Board of Directors of RTI if the individual is a non-
management director on the applicable anniversary date. However, shares
subject to the restricted stock award shall become 100 percent vested on any
earlier to occur of the following additional vesting dates: the date the
individual ceases to be a non-management director on account of death,
disability, attainment of age 70 or upon a Change in Control (as defined in
the RTI Directors' Plan).

See "Employee Benefits and Compensation Matters--Company Directors' Plan"
for information concerning the treatment of restricted stock and certain
benefits accrued under the Company Directors' Plan.

COMMITTEES OF THE RTI BOARD

The Company currently has four standing committees: Executive, Audit,
Compensation and Stock Option and Nominating. It is expected that the RTI
Board of Directors will have the same committees following the Distribution.

Executive Committee. The Executive Committee makes recommendations to the
Board of Directors and may exercise all of the powers of the Board of
Directors to the extent permitted by applicable law. The members of the
Executive Committee are expected to be John B. McKinnon (Chairman), Samuel E.
Beall, III, Arthur R. Outlaw, Dr. Donald Ratajczak and Dolph W. von Arx.

Audit Committee. The Audit Committee will be comprised solely of non-
management directors. The Audit Committee maintains communications with the
independent auditors as to the nature of the auditors' services, fees and such
other matters as the auditors believe may require the attention of the Board.
The Audit Committee reviews RTI's internal control procedures and makes
recommendations to the Board with respect thereto. The members of the Audit
Committee are expected to be John B. McKinnon (Chairman), Claire L. Arnold,
Dr. Benjamin F. Payton, Dr. Donald Ratajczak, and Dolph W. von Arx.

Compensation and Stock Option Committee. The Compensation and Stock Option
Committee will be comprised solely of non-management directors. The
Compensation and Stock Option Committee makes recommendations to the Board of
Directors with respect to compensation of officers and with respect to the
granting of stock options. The members of the Compensation and Stock Option
Committee are expected to be Dolph W. von Arx (Chairman), Claire L. Arnold,
John B. McKinnon, Dr. Benjamin F. Payton and Dr. Donald Ratajczak.

Nominating Committee. The Nominating Committee recommends individuals to the
Board of Directors for consideration as nominees for directors of RTI. The
members of the Nominating Committee are expected to be Dr. Donald Ratajczak
(Chairman), Claire L. Arnold, Samuel E. Beall, III, John B. McKinnon, Arthur
R. Outlaw, Dr. Benjamin F. Payton and Dolph W. von Arx. Alternatively, notice
of nominations to be made by any stockholder at a meeting must be submitted in
the manner and within the time periods prescribed in the Articles of
Incorporation. Any such notice should be directed to the Secretary at the
following address: Ruby Tuesday, Inc., P. O. Box 160266, Mobile, Alabama
36625.

COMPENSATION OF RTI EXECUTIVE OFFICERS

The following discloses compensation awarded, paid to, or earned by the
person who is expected to serve as RTI's Chief Executive Officer following the
Distribution and each of the four other persons who are expected to serve as
executive officers of RTI following the Distribution who were most highly
compensated in fiscal 1995 for services rendered to the Company during each of
the three fiscal years in the three-year period ended June 3, 1995 (together,
these five persons are sometimes referred to as the "RTI named executives").

88
<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------- ---------- ------------ ALL OTHER
OPTIONS/ LTIP COMPENSATION
NAME AND POSITION WITH THE COMPANY YEAR SALARY($) BONUS($) SARS(#) PAYOUTS($) ($)(1)
- ---------------------------------- ---- ---------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
S. E. Beall, III........ 1995 564,900 588,626 -0- 393,750(2) 3,564
Chairman of the Board 1994 525,000 630,000 -0- 360,000(2) 8,396
and Chief Executive 1993 400,000 214,240 45,000 -0- 8,939
Officer
R. D. McClenagan........ 1995 248,184 124,242 -0- -0- 5,870
President, Ruby Tuesday 1994 236,400 295,500 46,950 -0- 9,548
Division 1993 200,000 85,900 18,451 -0- 6,836
A. R. Johnson (3)....... 1995 213,165 91,231 2,190 -0- -0-
Senior Vice President, 1994 200,045 178,800 32,712 -0- -0-
Strategy, Planning and 1993 N/A N/A N/A N/A N/A
Marketing
P. G. Hunt.............. 1995 169,630 134,276 783 -0- 7,611
Senior Vice President, 1994 160,000 155,400 26,142 -0- 8,400
General Counsel and 1993 160,000 68,557 11,851 -0- 8,262
Secretary
J. R. Mothershed........ 1995 162,708 137,133 5,037 -0- 6,143
Senior Vice President, 1994 128,300 135,600 20,727 -0- 7,016
Finance 1993 100,580 32,322 2,251 -0- 4,815
</TABLE>
- --------
(1) The amounts in this column include the following: (a) Company
contributions to the Deferred Compensation Plan for 1995, 1994 and 1993,
respectively: S. E. Beall, III, $0, $1,567 and $3,821; R. D. McClenagan,
$3,616, $3,699 and $3,613; P. G. Hunt, $4,438, $3,696 and $5,077; and
J. R. Mothershed, $4,726, $3,869 and $2,311; (b) executive group life and
accidental death and dismemberment insurance plan premiums paid for 1995,
1994 and 1993, respectively: S. E. Beall, III, $822, $5,729 and $5,118; R.
D. McClenagan, $814, $5,271 and $3,223; P. G. Hunt, $628, $3,672 and
$3,185; and J. R. Mothershed, $621, $2,834 and $2,504; and (c) employee
portion of split-dollar life insurance premiums paid by the Company for
1995 and 1994, respectively:S. E. Beall, III, $2,742, $1,100; R. D.
McClenagan, $1,440 and $578; P. G. Hunt, $2,545 and $1,032; and J. R.
Mothershed, $796 and $313.

(2) Represents the value of 15,000 shares of Company Common Stock earned by
Mr. Beall in each of fiscal 1995 and 1994 pursuant to the performance
stock rights awarded to him by the Company in July 1993 and approved by
the stockholders at the 1993 Annual Meeting of Stockholders. Under this
award, payouts of 15,000 shares each are made to Mr. Beall over a five-
year period ending in 1998 if the Company Common Stock reaches a pre-
established per share price for a period of 22 consecutive trading days
during the period ending May 31 of each year in the five-year period. Such
pre-established per share prices were $23.00 in 1994, and $26.45 in 1995,
and are $30.42 in 1996, $34.98 in 1997 and $40.23 in 1998. Shares not
earned in any given year may be earned in a subsequent year if the stated
price level for the subsequent year is obtained. The value of such shares
has been calculated based on the market price of the Company Common Stock
on the date of issuance of the shares. Mr. Beall has agreed to the
cancellation of all performance stock rights remaining outstanding as of
the Distribution Date. See "Employee Benefits and Compensation Matters--
Performance-Based Rights Award."

(3) Mr. Johnson was elected as an executive officer of the Company effective
June 6, 1993.

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<PAGE>

OPTIONS GRANTS IN FISCAL 1995

The following table presents information regarding fiscal 1995 grants of
options to purchase Company Common Stock to the RTI named executives. The
Company has no outstanding SARs and granted no SARs during fiscal 1995.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
% OF TOTAL
OPTIONS/SARS EXERCISE
OPTIONS/ GRANTED TO OR BASE
SARS GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR(2) ($/SHARE) DATE
- ---- ------------ -------------- --------- ----------
<S> <C> <C> <C> <C>
S. E. Beall,
III............ -0- N/A N/A N/A
R. D.
McClenagan..... -0- N/A N/A N/A
A. R. Johnson... 2,190 0.66% 23.63 04-Jun-99
P. G. Hunt...... 399 0.12% 25.75 03-Sep-99
384 0.12% 26.75 04-Mar-00
J. R.
Mothershed..... 3,672 1.11% 22.75 30-Jun-99
582 0.18% 23.63 04-Jun-99
399 0.12% 25.75 03-Sep-99
384 0.12% 26.75 04-Mar-00
<CAPTION>
POTENTIAL REALIZABLE VALUE(3) AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION FOR OPTION TERM
-----------------------------------------------------------------
5% 10%
-------------------------------- --------------------------------
MARKET MARKET
PRICE PRICE
REQUIRED REQUIRED
TO REALIZE TO REALIZE
DOLLAR DOLLAR DOLLAR DOLLAR
NAME GAINS($) GAINS($/SHARE) GAINS($) GAINS($/SHARE)
- ---- -------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
S. E. Beall,
III............ -0- N/A -0- N/A
R. D.
McClenagan..... -0- N/A -0- N/A
A. R. Johnson... 14,294 30.15 31,587 38.05
P. G. Hunt...... 2,839 32.86 6,273 41.47
2,838 34.14 6,271 43.08
J. R.
Mothershed..... 23,080 29.04 51,001 36.64
3,799 30.15 8,394 38.05
2,839 32.86 6,273 41.47
2,838 34.14 6,271 43.08
</TABLE>
- --------
(1) The indicated options have a term of five years and were granted pursuant
to the Company's Stock Incentive Plan (formerly, the 1989 Non-Qualified
Stock Option Plan). Those options with an exercise price of $22.75 and
$23.63 on the date of grant become exercisable after three years. All
other options listed in the table above become exercisable after two
years. In the event of a change in control of the Company, the Committee
administering the plan may accelerate vesting, otherwise adjust the
options or terminate the options. Option holders also have certain rights
with respect to those options pursuant to their Change of Control
Agreements. See "Contracts with Executives."

(2) Based on an aggregate of 331,405 options granted in fiscal 1995.

(3) The Potential Realizable Values are calculated as follows: [[Market Price
at Grant X (1 + Stock Price Appreciation Rate)]-Exercise Price] X Number
of Underlying Shares. Because these Potential Realizable Values are based
on annualized compound rates of increase over a five-year term, the total
potential appreciation on annual appreciation rates of 5% and 10% is 27.6%
and 61.1%, respectively.

In connection with the Distribution, all outstanding Company stock options
will be replaced with stock options to purchase RTI Common Stock, MFCI Common
Stock and MHCI Common Stock, as discussed in more detail under "Employee
Benefits and Compensation Matters--Equity-Based Compensation Plans."

90
<PAGE>

AGGREGATED OPTION EXERCISES IN
FISCAL 1995 AND FISCAL YEAR-END VALUES

The following table presents information regarding options exercised for
shares of Company Common Stock during fiscal 1995 by RTI named executives and
the value of unexercised options held at June 3, 1995. There were no SARs
outstanding during Fiscal 1995.

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-
UNEXERCISED THE-
OPTIONS AT FY- MONEY OPTIONS AT
END(#) FY-END($)(2)
SHARES VALUE -------------- -----------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- --------- -------------- -----------------
<S> <C> <C> <C> <C>
S. E. Beall, III......... 200,000 4,053,000 686,250/45,000 6,507,912/356,252
R. D. McClenagan......... -0- -0- 95,558/83,684 1,169,148/457,484
A. R. Johnson............ -0- -0- -0-/42,402 -0-/122,376
P. G. Hunt............... 5,178 115,745 51,349/66,020 630,408/406,821
J. R. Mothershed......... 188 3,269 16,629/35,844 208,690/144,609
</TABLE>
- --------
(1) Value Realized is calculated as follows: [(Per Share Closing Price on date
of exercise) - (Per Share Exercise Price)] X Number of Shares for which
the Option was exercised.

(2) Value of Unexercised, In-the-Money Options at June 3, 1995 is calculated
as follows: [(Per Share Closing Sale Price of the Company Common Stock on
June 2, 1995) - (Per Share Exercise Price)] X Number of Shares Subject to
Unexercised Options. The per share closing sale price of the Company
Common Stock on June 2, 1995, the last trading day of fiscal 1995, was
$22.25.

RETIREMENT PLAN

The Morrison Restaurants Inc. Retirement Plan (the "Retirement Plan") was
frozen as of December 31, 1987, so that no additional benefits have accrued,
and no new participants have been permitted since that date. The Retirement
Plan is a tax-qualified, funded, defined benefit plan, which covers employees
of the Company who had attained age 21 and had completed at least one year of
full-time service by July 1, 1987. A participant's accrued annual benefit is
determined generally by adding A and B below, as applicable:

(A) 1/4 percent of pay up to that year's Social Security Wage Base, plus 1
1/4 percent of pay over the Social Security Wage Base for each credited
year of service (as defined in the Retirement Plan) commencing on or
after January 1, 1986; and

(B) 1/4 percent of average pay for the highest consecutive five years from
1976 through 1985 up to $14,400, plus 1 1/4 percent of such pay in
excess of $14,400, multiplied by the number of credited years of
service up to January 1, 1986.

Normal retirement for purposes of the Retirement Plan is age 65, although a
participant with at least five years of service may retire with a reduced
benefit as early as age 55. Generally, benefits are paid in the form of a
single life annuity if the participant is unmarried or a joint and survivor
annuity if the participant is married, unless an alternative form of benefit
payment is selected by the participant from among a range of options made
available under the Retirement Plan. A participant's accrued benefit becomes
vested upon completion of five years of service after age 18.

91
<PAGE>

Benefits payable under the Retirement Plan reduce the amount of benefit
payable to a participant in the ESP or the MRP, described below.

See "Employee Benefits and Compensation Matters -- Retirement Plan" for a
description of amendments to the Retirement Plan expected to be made in
connection with the Distribution and the responsibility for retirement
benefits payable thereunder subsequent to the Distribution.

EXECUTIVE SUPPLEMENTAL PENSION PLAN

The Morrison Restaurants Inc. Executive Supplemental Pension Plan (the
"ESP") is a nonqualified, unfunded, defined benefit retirement plan for
selected employees. As a condition of entry, future participants must complete
five years of consecutive service in one or more qualifying job positions and
must have achieved a minimum salary threshold, as described in the ESP. A
participant's accrued benefit in the ESP equals 2.5 percent of the
participant's highest five-year average base salary multiplied by the
participant's years and fractional years of continuous service (as defined in
the ESP) not in excess of 20 years; plus 1 percent of the participant's
highest five-year average base salary multiplied by the participant's years
and fractional years of continuous service in excess of 20 years, but not in
excess of 30 years of such service. Base salary includes commissions but
excludes bonuses and other forms of remuneration other than salary. Benefits
are paid to a participant in the same manner as benefits paid to the
participant under the Retirement Plan and become vested if the participant has
completed ten years of service. Normal retirement for purposes of the ESP is
age 65, although a participant with at least five years of service may retire
with a reduced benefit as early as age 55. Early retirement provisions allow
designated participants to receive reduced benefits as early as age 55 and
unreduced benefits as early as age 55 depending upon criteria specified in the
ESP. A participant's receipt of unreduced early retirement benefits is
conditioned upon not competing with the Company for a period of two years
following retirement.

Estimated annual benefits payable upon retirement to persons in specified
remuneration and years of continuous service classifications are shown in the
following table. All amounts shown are for a single life annuity and assume
that active participation in the ESP continues until age 65. In accordance
with the ESP, the amounts shown are subject to reduction for Social Security
benefits and benefits received under the Retirement Plan.

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<PAGE>

EXECUTIVE SUPPLEMENTAL PENSION PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO AGE 65

<TABLE>
<CAPTION>
ANNUAL AVERAGE 30 OR
BASE SALARY 10 15 20 25 MORE
- -------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 75,000........................... $ 18,750 $ 28,125 $ 37,500 $ 41,250 $ 45,000
100,000........................... 25,000 37,500 50,000 55,000 60,000
125,000........................... 31,250 46,875 62,500 68,750 75,000
150,000........................... 37,500 56,250 75,000 82,500 90,000
175,000........................... 43,750 65,625 87,500 96,250 105,000
200,000........................... 50,000 75,000 100,000 110,000 120,000
225,000........................... 56,250 84,375 112,500 123,750 135,000
250,000........................... 62,500 93,750 125,000 137,500 150,000
275,000........................... 68,750 103,125 137,500 151,250 165,000
300,000........................... 75,000 112,500 150,000 165,000 180,000
325,000........................... 81,250 121,875 162,500 178,750 195,000
350,000........................... 87,500 131,250 175,000 192,500 210,000
375,000........................... 93,750 140,625 187,500 206,250 225,000
400,000........................... 100,000 150,000 200,000 220,000 240,000
425,000........................... 106,250 159,375 212,500 233,750 255,000
450,000........................... 112,500 168,750 225,000 247,500 270,000
475,000........................... 118,750 178,125 237,500 261,250 285,000
500,000........................... 125,000 187,500 250,000 275,000 300,000
525,000........................... 131,250 196,875 262,500 288,750 315,000
550,000........................... 137,500 206,250 275,000 302,500 330,000
575,000........................... 143,750 215,625 287,500 316,250 345,000
</TABLE>

Years of continuous service, to the nearest year, and current remuneration
covered by the ESP (base salary) for the eligible RTI named executives are:
Mr. Beall, 23 years, $564,900; Mr. McClenagan, 23 years, $248,184; Mr. Hunt,
27 years, $169,630; and Mr. Mothershed, 22 years, $162,708.

The ESP will be maintained by RTI following the Distribution for the benefit
of selected employees who remain employees of RTI following the Distribution.
See "Employee Benefits and Compensation Matters--Non-Qualified Pension Plans"
for information concerning the treatment of the ESP in the Distribution.

MANAGEMENT RETIREMENT PLAN

The Morrison Restaurants Inc. Management Retirement Plan (the "MRP") is a
nonqualified, unfunded, defined benefit retirement plan for employees with 15
or more years of credited service (as defined in the MRP) and whose average
compensation over a three-year period equals or exceeds $40,000, which amount
may be adjusted by the Company from time to time. A participant's accrued
benefit in the MRP equals 1.5 percent of the participant's average
compensation determined over the five-year period immediately preceding
termination of employment multiplied by the participant's years of credited
service not in excess of 20 years; plus 2 percent of the participant's average
compensation determined over the five-year period immediately preceding
termination of employment multiplied by the participant's years of credited
service in excess of 20 years, but not in excess of 30 years. For purposes of
determining a participant's accrued benefit, a year's compensation includes
commissions and bonuses, but generally no form of remuneration is counted in
excess of $100,000, which amount may be adjusted by the Company from time to
time.

Normal retirement for purposes of the MRP is age 65, although a participant
may retire with a benefit as early as age 55. Generally, benefits are paid in
the form of a single life annuity if the participant is unmarried or a joint
and survivor annuity if the participant is married. If the participant is also
entitled to benefits under the Retirement Plan, benefits payable under the MRP
must be in the same form as those payable under the

93
<PAGE>

Retirement Plan. A participant's accrued benefit under the MRP is forfeited if
the participant terminates employment before he is eligible for early
retirement under the MRP. Effective March 29, 1995, the Company amended the
MRP to allow payment of a participant's accrued benefit, commencing as early
as age 55, even if the participant terminated employment prior to attainment
of age 55.

Estimated annual benefits payable upon retirement to persons in specified
remuneration and years of credited service classifications are shown in the
following table. All amounts shown are for a single life annuity and assume
that active participation continues in the MRP until age 65. In accordance
with the MRP, the amounts shown are subject to reduction for Social Security
benefits, benefits received under the Retirement Plan and the ESP. A
participant is ineligible for benefits under the MRP while receiving any long-
term disability benefits.

MANAGEMENT RETIREMENT PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO AGE 65

<TABLE>
<CAPTION>
FINAL AVERAGE 30 OR
SALARY 15 20 25 MORE
------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
$ 40,000..................................... $ 9,000 $12,000 $16,000 $20,000
60,000..................................... 13,500 18,000 24,000 30,000
80,000..................................... 18,000 24,000 32,000 40,000
100,000..................................... 22,500 30,000 40,000 50,000
</TABLE>

Years of credited service and salary covered by the MRP for the eligible RTI
named executives are: Mr. Beall, 23 years, $100,000; Mr. McClenagan, 23 years,
$100,000; Mr. Hunt, 27 years, $100,000; and Mr. Mothershed, 22 years,
$100,000.

The MRP will be maintained by RTI following the Distribution for the benefit
of executives who remain employees of RTI following the Distribution. See
"Employee Benefits and Compensation Matters--Non-Qualified Pension Plans" for
information concerning the treatment of the MRP in the Distribution.

CONTRACTS WITH EXECUTIVES

The Company entered into a Change of Control Agreement (the "Change of
Control Agreement") with each of the executives in positions with the Company
specified by the Compensation Committee (currently 23 executives), including
the persons named in the Summary Compensation Table. The Change of Control
Agreement is designed to diminish the distraction of executives by virtue of
the personal uncertainties and risks created by a threatened or pending Change
of Control (as defined in the Change of Control Agreement) and to encourage
their full attention and dedication to the Company currently and in the event
of any pending or threatened Change of Control.

Under the Change of Control Agreement, a "Change of Control" is defined as
either (i) certain changes in the composition of more than 20 percent of the
Board of Directors, or (ii) with certain exceptions, any "Business
Combination" (as defined in the Change of Control Agreement) that has not been
approved by the holders of 80 percent or more of the Company's outstanding
voting stock. Events that do not constitute a Change in Control include (a)
any Business Combination approved by at least 80 percent of the Continuing
Directors (as defined in the Agreement), (b) any Business Combination
transaction that satisfies certain price and procedural requirements specified
in the Company's Certificate of Incorporation, and (c) any acquisition by the
Company, any of its subsidiaries, or any employee benefit plan of the Company
or any of its subsidiaries.

Under the Change of Control Agreement, the "Effective Date" means the first
date on which a Change of Control occurs. Prior to the Effective Date, each
covered executive remains an at-will employee, except as may be provided in
any other agreement, and any termination of his employment will terminate his
rights under the Agreement. If and when the Effective Date occurs, the Company
has agreed to continue the employment of the

94
<PAGE>

executive, and the executive has agreed to remain in the employ of the
Company, for a three-year period (the "Employment Period") commencing on the
Effective Date. During the Employment Period, the executive (a) shall receive
an annual base salary no less than that received prior to the Effective Date
and an annual bonus no less than the average of the last three annual bonuses
received prior to the Effective Date, and (b) generally shall be entitled to
continuation of retirement, savings and welfare benefit plan participation and
practices, expense reimbursements and other fringe benefits on a basis at
least comparable to that obtaining prior to the Effective Date.

If during the Employment Period the Company terminates the executive's
employment other than for cause, death or disability, or if the executive
terminates his employment for "good reason" (as defined in the Change of
Control Agreement), or if the executive terminates his employment for any
reason during the 30-day period immediately following the first anniversary of
the Effective Date, the executive becomes entitled to receive (i) any unpaid
portion of his accrued annual base salary plus a pro rata portion of his
highest annual bonus paid or payable for the three fiscal years immediately
preceding his date of termination, (ii) an amount equal to either three, two
or one times the sum of his annual base salary and his highest annual bonus,
depending upon the particular multiplier stipulated in his Change of Control
Agreement, (iii) any other accrued obligations, (iv) rights with respect to
any outstanding stock options granted to him prior to his date of termination
or a cash amount equal to the difference between the option price and the then
value of Company stock for which any such option was granted, and (v) certain
employee benefits consisting of retirement, savings and various health and
welfare insurance benefits. If this package of compensation and benefits
constitutes "excess parachute payments" as defined under the Internal Revenue
Code, the Company will pay an additional amount sufficient to reimburse the
executive for all taxes payable by the executive with respect to the parachute
payments. The Company estimates that its obligations to the RTI named
executives if a Change of Control had occurred and the employment termination
provisions of the Change of Control Agreement were to take effect immediately
would be approximately as follows: Mr. Beall, $8,235,000; Mr. McClenagan,
$3,881,000; Mr. Hunt, $1,740,000; Mr. Mothershed, $2,624,000; and Mr. Johnson,
$2,823,000. THE DISTRIBUTION, THE REINCORPORATION, THE REVERSE STOCK SPLIT AND
THE RELATED CHANGE IN COMPOSITION OF THE BOARD OF DIRECTORS OF THE COMPANY DO
NOT, EITHER INDIVIDUALLY OR IN THE AGGREGATE, CONSTITUTE A CHANGE OF CONTROL
OF THE COMPANY UNDER THE CHANGE OF CONTROL AGREEMENTS.

RTI will assume the Company's Change of Control Agreements with Company
executives who will continue as executives of RTI effective as of the
Distribution Date.

95
<PAGE>

MFCI MANAGEMENT AND EXECUTIVE
COMPENSATION

MFCI DIRECTORS AND EXECUTIVE OFFICERS

Immediately after the Distribution, it is expected that MFCI will have a
board of directors (the "MFCI Board of Directors") consisting of seven members
divided into three classes with staggered terms. It is expected that (i) E.
Eugene Bishop, Christopher P. Elliott and Arthur R. Outlaw will serve in Class
I for a term expiring at the annual meeting of the MFCI stockholders to be
held in 1996, (ii) J. Veronica Biggins and Ronnie L. Tatum will serve in Class
II for a term expiring at the annual meeting of the MFCI stockholders to be
held in 1997, and (iii) Dr. Donald Ratajczak and Dolph W. von Arx will serve
in Class III for a term expiring at the annual meeting of the MFCI
stockholders to be held in 1998. The members of one class will be elected each
year for a three-year term. It is expected that Dolph W. von Arx will serve as
Chairman of the Board of Directors of MFCI. The MFCI executive officers will
be appointed by and will serve at the discretion of MFCI's Board of Directors.

The following sets forth, as of January 17, 1996, certain information with
respect to the persons who are expected to serve as directors and/or executive
officers of MFCI following the Distribution.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH MFCI
- ---- --- ------------------
<S> <C> <C>
Dolph W. von Arx.............. 61 Chairman of the Board
Ronnie L. Tatum............... 55 Chief Executive Officer and Director
Christopher P. Elliot......... 41 President and Director
J. Veronica Biggins........... 49 Director
E. Eugene Bishop.............. 65 Director
Arthur R. Outlaw.............. 69 Vice Chairman of the Board
Dr. Donald Ratajczak.......... 53 Director
Craig D. Nelson............... 42 Vice President, Finance
Scears Lee, III............... 39 Vice President, Human Resources
Mitchell S. Block............. 42 Vice President, General Counsel and Secretary
</TABLE>
- --------

Arthur R. Outlaw has an understanding with MFCI pursuant to which he will be
nominated for re-election as a director for a three-year term at the annual
meeting of MFCI stockholders to be held in 1996.

Dolph W. von Arx was Chairman of the Board, President and Chief Executive
Officer of Planters LifeSavers Company, an affiliate of RJR Nabisco, Inc.
until his retirement in 1991. Mr. von Arx has been a director of the Company
since 1992. Mr. von Arx also is a director of Cree Research, Inc. and is
expected to serve as a director of RTI following the Distribution.

Ronnie L. Tatum has been President of the Family Dining Division of the
Company's Morrison Group since March 1994. Mr. Tatum served as President of
the Company's Family Dining Group from March 1993 to March 1994 and as Senior
Vice President of the Company's Family Dining Group from 1990 to March 1993.

Christopher P. Elliott has been Senior Vice President, Operations of the
Family Dining Division of the Company's Morrison Group since January 1995.
Prior thereto he was employed by Pizza Hut of America from 1981 to 1995. He
was Regional Manager from 1986 to 1992 and Senior Director of Operations of
Pizza Hut of America from 1992 to 1995.

96
<PAGE>

J. Veronica Biggins has been Executive Search Consultant in the Atlanta,
Georgia office of Heidrick & Struggles since February 1995. Prior thereto, Ms.
Biggins served as Assistant to the President of the United States and Director
of Presidential Personnel from February 1994 to February 1995 and in various
capacities with NationsBank Corporation from 1974 to February 1994, most
recently as Executive Vice President-Director of Corporate Community Affairs.
Ms. Biggins also is a director of National Data Corporation.

E. Eugene Bishop was Chairman of the Board of the Company from June 1992
until his retirement in May 1995. From June 1986 to June 1992, he was Chairman
of the Board and Chief Executive Officer of the Company. Mr. Bishop has been a
director of the Company since 1963. Mr. Bishop also is a director of
Delchamps, Inc. and is expected to serve as a director of MHCI following the
Distribution.

Arthur R. Outlaw has been Vice Chairman of the Board of the Company since
December 1984. From October 1985 to October 1989, he was Mayor, City of
Mobile, Alabama. Mr. Outlaw has been a director of the Company since 1959. Mr.
Outlaw is expected to serve as Vice Chairman and a director of RTI following
the Distribution.

Dr. Donald Ratajczak is Professor and Director, Economic Forecasting Center,
Georgia State University. Dr. Ratajczak has been a director of the Company
since 1981. Dr. Ratajczak also is a director of Morgan Keegan Inc. and CIM
High Yield Securities Fund and is expected to serve as a director of RTI
following the Distribution.

Craig D. Nelson has been Vice President, Controller of the Company's
Morrison Group since July 1994. He served as Vice President/Controller-Family
Dining from November 1990 to July 1994. Mr. Nelson joined the Company in 1976.

Scears Lee, III has been Vice President, Human Resources of the Company's
Family Dining Division since August 1993. He served as Director of Human
Resources of the Family Dining Division from 1985 to August 1993. Prior
thereto he served in the following positions since joining the Company in
1978: Assistant/Associate Manager of Morrison Cafeteria unit, Management
Recruiter and Director of Training.

Mitchell S. Block has been Real Estate Attorney of the Company's Ruby
Tuesday Group since April 1993. Prior thereto he was Vice President, Real
Estate, General Counsel for Wyatt Cafeterias, Inc. in Dallas, Texas from March
1986 to April 1993.

MFCI DIRECTORS' COMPENSATION

MFCI will continue the policy of the Company that directors who are
employees of MFCI receive no directors' fees. Non-management directors will
receive a $10,000 annual retainer and $1,000 per Board meeting attended.

MFCI non-management directors who will serve on the Audit Committee, the
Executive Committee, the Compensation and Stock Option Committee or the
Nominating Committee (other than the Chairmen of such committees) will receive
a fee of $1,000 for each committee meeting attended. Committee Chairmen will
receive a fee of $2,000 for each committee meeting attended. Non-management
directors serving on any committee will be compensated at a rate of $200 an
hour for services performed on special assignments.

At or prior to the Distribution Date, the MFCI Board of Directors will take
all action necessary to adopt the MFCI Directors' Plan which will have terms
and conditions substantially identical to those of the RTI Directors' Plan
(see "Employee Benefits and Compensation Matters--Company Directors' Plan"),
except that stock awards under the MFCI Directors' Plan will relate to MFCI
Common Stock. See "RTI Management--RTI Directors' Compensation" for a
description of the RTI Directors' Plan.

It is anticipated that Mr. von Arx, who is expected to serve as Chairman of
MFCI's Board of Directors following the Distribution, will provide strategic
planning, investor relations and management consulting services to MFCI on a
regular basis. It is anticipated that Mr. von Arx generally will dedicate one
day per week to

97
<PAGE>

providing such services and will be compensated at a rate of $2,000 per day.
It is also anticipated that Mr. von Arx will be eligible to participate in a
program under the MFCI Stock Incentive Plan that will permit Mr. von Arx to
elect to direct that up to 60 percent of his non-retainer compensation for
each fiscal quarter be allocated to the purchase of MFCI Common Stock on his
behalf. Under this program, Mr. von Arx would be awarded bonus shares and
stock options based on formulas and subject to terms and conditions
substantially identical to awards that would be made under the MFCI Directors'
Plan to a participant who elects to allocate a portion of his or her retainer
for the purchase of MFCI Common Stock.

See "Employee Benefits and Compensation Matters--Company Directors' Plan"
for information concerning the treatment in the Distribution of restricted
stock, stock options and benefits accrued under the Company Directors' Plan.

COMMITTEES OF THE MFCI BOARD

The Company currently has four standing committees: Executive, Audit,
Compensation and Stock Option and Nominating. It is expected that the MFCI
Board of Directors will have the same committees following the Distribution.

Executive Committee. The Executive Committee makes recommendations to the
Board of Directors and may exercise all of the powers of the Board of
Directors to the extent permitted by applicable law. The members of the
Executive Committee are expected to be Dolph W. von Arx (Chairman), Ronnie L.
Tatum, Dr. Donald Ratajczak and E. Eugene Bishop.

Audit Committee. The Audit Committee will be comprised solely of non-
management directors. The Audit Committee maintains communications with the
independent auditors as to the nature of the auditors' services, fees and such
other matters as the auditors believe may require the attention of the Board.
The Audit Committee reviews MFCI's internal control procedures and makes
recommendations to the Board with respect thereto. The members of the Audit
Committee are expected to be E. Eugene Bishop (Chairman), J. Veronica Biggins
and Arthur R. Outlaw.

Compensation and Stock Option Committee. The Compensation and Stock Option
Committee will be comprised solely of non-management directors. The
Compensation and Stock Option Committee makes recommendations to the Board of
Directors with respect to compensation of officers and with respect to the
granting of stock options. The members of the Compensation and Stock Option
Committee are expected to be Dr. Donald Ratajczak (Chairman), J. Veronica
Biggins and E. Eugene Bishop.

Nominating Committee. The Nominating Committee recommends individuals to the
Board of Directors for consideration as nominees for directors of MFCI. The
members of the Nominating Committee are expected to be Dolph W. von Arx
(Chairman), J. Veronica Biggins, E. Eugene Bishop, Christopher P. Elliott,
Arthur R. Outlaw, Dr. Donald Ratajczak and Ronnie L. Tatum. Alternatively,
notice of nominations to be made by any stockholder at a meeting must be
submitted in the manner and within the time periods prescribed in the Articles
of Incorporation. Any such notice should be directed to the Secretary at the
following address: Morrison Fresh Cooking, Inc., 4893 Riverdale Road, Suite
260, Atlanta, Georgia 30337.

COMPENSATION OF MFCI EXECUTIVE OFFICERS

The following discloses compensation awarded, paid to, or earned by the
person who is expected to serve as MFCI's Chief Executive Officer following
the Distribution and each of the other persons who are expected to serve as
executive officers of MFCI following the Distribution who were most highly
compensated and whose salary and bonus exceeded $100,000 in fiscal 1995 for
services rendered to the Company during each of the three fiscal years in the
three-year period ended June 3, 1995 (together, these persons are sometimes
referred to as the "MFCI named executives").

98
<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------- ------------ ------------
ALL OTHER
NAME AND POSITION OPTIONS/ LTIP COMPENSATION
WITH THE COMPANY YEAR SALARY($) BONUS($) SARS(#) PAYOUTS($) ($)(1)
- ----------------- ---- ---------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. L. Tatum............ 1995 200,400 104,454 2,007 -0- 7,008
President, Family 1994 170,100 217,125 38,394 -0- 7,698
Dining 1993 120,000 180,000 7,051 -0- 7,151
Division
C. D. Nelson (2)....... 1995 94,000 40,961 801 -0- 3,092
Vice President, 1994 N/A N/A N/A N/A N/A
Controller, 1993 N/A N/A N/A N/A N/A
Morrison Group
S. Lee, III (2)........ 1995 94,325 17,248 870 -0- 2,927
Vice President, Human 1994 N/A N/A N/A N/A N/A
Resources, Family 1993 N/A N/A N/A N/A N/A
Dining
Division
</TABLE>
- --------

(1) The amounts in this column include the following: (a) Company
contributions to the Deferred Compensation Plan for 1995, 1994 and 1993,
respectively: R. L. Tatum, $3,696, $3,696 and $4,621; C. D. Nelson,
$3,092, N/A and N/A; and S. Lee, III, $2,927, N/A and N/A; (b) executive
group life and accidental death and dismemberment insurance plan premiums
paid for 1995, 1994 and 1993: R. L. Tatum, $704, $2,937 and $2,530; C. D.
Nelson; N/A, N/A and N/A; and S. Lee, III, N/A, N/A and N/A; and
(c) employee portion of split-dollar life insurance premiums paid by the
Company for 1995 and 1994: R. L. Tatum, $2,608 and $1,065.

(2) In accordance with the executive compensation disclosure rules adopted by
the SEC, the compensation of Mr. Nelson and Mr. Lee for fiscal 1994 and
1993 is not disclosed as MFCI was not a reporting company under the
Exchange Act for such years and such compensation information has not been
provided by the Company in prior SEC filings.

99
<PAGE>

OPTION GRANTS IN FISCAL 1995

The following table presents information regarding fiscal 1995 grants of
options to purchase shares of the Company Common Stock to the MFCI named
executives. The Company has no outstanding SARs and granted no SARs during
fiscal 1995.

(1) The indicated options have a term of five years and were granted pursuant
to the Company's Stock Incentive Plan (formerly, the 1989 Non-Qualified
Stock Option Plan) or the Company's 1993 Non-Executive Stock Incentive
Plan. All options listed above become exercisable after two years. In the
event of a change in control of the Company, the Committee administering
the plan may accelerate vesting, otherwise adjust the options or terminate
the options. Option holders also have certain rights with respect to these
options pursuant to their Change of Control Agreements. See "Contracts
with Executives."

(2) Based on an aggregate of 331,405 options granted in fiscal 1995.

(3) The Potential Realizable Values are calculated as follows: [(Market Price
at Grant X (1 + Stock Price Appreciation Rate)]--Exercise Price] X Number
of Underlying Shares. Because these Potential Realizable Values are based
on annualized compound rates of increase over a five-year term, the total
potential appreciation on annual appreciation rates of 5% and 10% is 27.6%
and 61.1%, respectively.

100
<PAGE>

AGGREGATED OPTION EXERCISES IN
FISCAL 1995 AND FISCAL YEAR-END VALUES

The following table presents information regarding options exercised for
shares of Company Common Stock during fiscal 1995 by MFCI named executives and
the value of unexercised options held at June 3, 1995. There were no SARs
outstanding during fiscal 1995.

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-
UNEXERCISED THE-
OPTIONS AT MONEY OPTIONS AT
FY-END(#) FY-END($)(2)
------------- ----------------
SHARES VALUE
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
R. L. Tatum................. -0- -0- 30,595/81,608 362,325/475,765
C. D. Nelson................ -0- -0- 2,250/15,482 24,500/82,002
S. Lee, III................. 2,250 33,501 -0-/7,449 -0-/11,963
</TABLE>
- --------
(1) Value Realized is calculated as follows: [(Per Share Closing Price on date
of exercise)-(Per Share Exercise Price)] X Number of Shares for which the
Option was Exercised.

(2) Value of Unexercised, In-the-Money Options at June 3, 1995 is calculated
as follows: [(Per Share Closing Sale Price of the Company Common Stock on
June 2, 1995)-(Per Share Exercise Price)] X Number of Shares Subject to
Unexercised Options. The per share closing sale price of the Company
Common Stock on June 2, 1995, the last trading day of fiscal 1995, was
$22.25.

RETIREMENT PLAN

MFCI named executives who were employees of the Company prior to December
31, 1987, are entitled to retirement benefits payable under the Company's
Retirement Plan. See "RTI Management and Executive Compensation--Retirement
Plan" for a description of the Retirement Plan and "Employee Benefits and
Compensation Matters--Retirement Plan" for a description of amendments to the
Retirement Plan expected to be made in connection with the Distribution and
the responsibility for retirement benefits payable thereunder subsequent to
the Distribution.

EXECUTIVE SUPPLEMENTAL PENSION PLAN

Eligible MFCI named executives participate in the Company's ESP. See "RTI
Management and Executive Compensation--Executive Supplemental Pension Plan"
for a description of the ESP. Years of continuing service, to the nearest
year, and current remuneration covered by the ESP (base salary) for the
eligible MFCI named executives are: Mr. Tatum, over 30 years, $200,400; Mr.
Nelson, 19 years, $94,000; and Mr. Lee, 16 years, $94,325.

See "Employee Benefits and Compensation Matters--Non-Qualified Pension
Plans" for information concerning the treatment of the ESP in the Distribution
and the MFCI Executive Supplemental Pension Plan that is expected to be
adopted by MFCI to provide substantially the same benefits to MFCI executives
following the Distribution as those currently provided by the ESP to Company
executives.

MANAGEMENT RETIREMENT PLAN

Eligible MFCI named executives participate in the Company's MRP. See "RTI
Management and Executive Compensation--Management Retirement Plan" for a
description of the MRP. Years of credited service and

101
<PAGE>

salary covered by the MRP for eligible MFCI named executives are: Mr. Tatum,
over 30 years, $100,000; Mr. Nelson, 19 years, $100,000; and Mr. Lee, 16
years, $100,000.

See "Employee Benefits and Compensation Matters--Non-Qualified Pension
Plans" for information concerning the treatment of the MRP in the Distribution
and the MFCI Management Retirement Plan that is expected to be adopted by MFCI
to provide substantially the same benefits to MFCI executives following the
Distribution as those currently provided by the MRP to Company executives.

CONTRACTS WITH EXECUTIVES

Each of the MFCI named executives (other than Mr. Lee) has a Change of
Control Agreement with the Company. See "RTI Management and Executive
Compensation--Contracts with Executives" for a description of the material
terms and conditions of the Change of Control Agreement. The Company estimates
that its obligations to the MFCI named executives if a Change of Control had
occurred and the employment termination provisions of the Change of Control
Agreement were to take effect immediately would be approximately as follows:
Mr. Tatum, $2,891,000; and Mr. Nelson, $1,042,000. THE DISTRIBUTION, THE
REINCORPORATION, THE REVERSE STOCK SPLIT AND THE RELATED CHANGE IN THE
COMPOSITION OF THE BOARD OF DIRECTORS OF THE COMPANY DO NOT, INDIVIDUALLY OR
IN THE AGGREGATE, CONSTITUTE A CHANGE OF CONTROL OF THE COMPANY UNDER THE
CHANGE OF CONTROL AGREEMENTS.

It is expected that MFCI will enter into a Change of Control Agreement (the
"MFCI Change of Control Agreement") with each of its executive officers,
effective as of the Distribution Date. The terms and conditions of the MFCI
Change of Control Agreement will be substantially the same as those of the
Change of Control Agreement. See "RTI Management and Executive Compensation--
Contracts with Executives" for a description of the Company Change of Control
Agreement.

102
<PAGE>

MHCI MANAGEMENT AND EXECUTIVE
COMPENSATION

MHCI DIRECTORS AND EXECUTIVE OFFICERS

Immediately after the Distribution, it is expected that MHCI will have a
board of directors (the "MHCI Board of Directors") consisting of six members
divided into three classes with staggered terms. It is expected that (i) E.
Eugene Bishop and Arthur R. Outlaw, Jr. will serve in Class I for a term
expiring at the annual meeting of the MHCI stockholders to be held in 1996,
(ii) Claire L. Arnold and Glenn A. Davenport will serve in Class II for a term
expiring at the annual meeting of the MHCI stockholders to be held in 1997,
and (iii) John B. McKinnon and Dr. Benjamin F. Payton will serve in Class III
for a term expiring at the annual meeting of the MHCI stockholders to be held
in 1998. The members of one class will be elected each year for a three-year
term. It is expected that John B. McKinnon will serve as Chairman of the Board
of Directors of MHCI. The MHCI executive officers will be appointed by and
will serve at the discretion of MHCI's Board of Directors.

The following sets forth, as of January 17, 1996, certain information with
respect to the persons who are expected to serve as directors and/or executive
officers of MHCI following the Distribution.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH MHCI
- ---- --- ------------------
<S> <C> <C>
John B. McKinnon........... 61 Chairman of the Board
Glenn A. Davenport......... 42 President, Chief Executive Officer and Director
Claire L. Arnold........... 49 Director
E. Eugene Bishop........... 65 Director
Arthur R. Outlaw, Jr. ..... 41 Director
Dr. Benjamin F. Payton..... 63 Director
K. Wyatt Engwall........... 48 Senior Vice President, Finance
John E. Fountain........... 45 Vice President, General Counsel and Secretary
Jerry D. Underhill......... 50 Senior Vice President, Retail Development
Gregory L. Anderson........ 40 Senior Vice President
Carolyn L. Kolesar......... 43 Senior Vice President
Frances G. Michels......... 57 Senior Vice President, Support Services
</TABLE>
- --------

Arthur R. Outlaw, Jr. has an understanding with MHCI pursuant to which he
will be nominated for re-election as a director for a three-year term at the
annual meeting of MHCI stockholders to be held in 1996.

John B. McKinnon was Dean, Babcock Graduate School of Management, Wake
Forest University until his retirement in May 1995. Prior thereto, he was
President, Sara Lee Food Service from July 1988 through June 1989, and
President, Sara Lee Corporation from July 1986 through June 1988. Mr. McKinnon
served as a director of the Company since 1989. Mr. McKinnon also is a
director of Premark International and Integon Corporation and is expected to
serve as a director of RTI following the Distribution.

Glenn A. Davenport has been President of the Health Care Division of the
Company's Morrison Group since November 1993. Prior thereto, he served as
Senior Vice President, Hospitality Group from February 1990 through November
1993 and in various other capacities since joining the Company in November
1973.

103
<PAGE>

Ms. Arnold has been a director of the Company since 1994. Ms. Arnold also is a
director of Schweitzer-Mauduit International, Inc. and is expected to serve as
a director of RTI following the Distribution.

Arthur R. Outlaw, Jr. currently serves as Chairman of the Board and Chief
Executive Officer of Marshall Biscuit Company, which he founded in 1985. Mr.
Outlaw worked in Cafeteria Management and Finance for the Company from 1978
through 1985.

Dr. Benjamin F. Payton has been the President of Tuskegee University since
1981. Dr. Payton has been a director of the Company since 1993. Dr. Payton
also is a director of AmSouth Bank, N.A., AmSouth Bancorporation, The ITT
Corporation, The Liberty Corporation, Sonat, Inc. and Praxair, Inc. and is
expected to serve as a director of RTI following the Distribution.

K. Wyatt Engwall has been Vice President, Controller of the Company's Ruby
Tuesday Group since January 1994. He served as Vice President of Financial
Planning from January 1993 through January 1994, Vice President and Controller
of the Company's Contract Dining Division from October 1991 through January
1993 and as Controller of the Company's former MMS (Contract Dining) Division
from October 1986 through October 1991. Mr. Engwall joined the Company in 1983
as a Financial Systems Analyst.

John E. Fountain has been Vice President--Legal of the Morrison Group since
August 1994. He served as Senior Attorney from December 1991 through August
1994. Prior thereto, he served as Staff Attorney from October 1978 through
December 1991.

Jerry D. Underhill has been Senior Vice President of Retail Development of
the Health Care Division of the Company's Morrison Group since September 1995.
Prior thereto, he was Senior Vice President of Development of the Family
Dining Division of the Morrison Group from March 1993 to September 1995. Mr.
Underhill was President of Mid-Continent Restaurants (currently known as Bravo
Restaurants) from July 1988 to March 1993.

Gregory L. Anderson has been Division Vice President of the Health Care
Division of the Company's Morrison Group since April 1995. He was Vice
President, Human Resources of the Health Care Division from July 1994 to April
1995. Prior thereto, Mr. Anderson served as Senior Director of Employee
Relations of the KFC Division of PepsiCo ("KFC") from June 1994 to July 1994,
Director of Human Resources of KFC from October 1992 to June 1994 and Region
Manager of Human Resources of KFC from February 1990 to October 1992 and as
Zone Manager of Human Resources of the Taco Bell Division of PepsiCo from May
1988 to February 1990.

Carolyn L. Kolesar has been Division Vice President of the Health Care
Division of the Company's Morrison Group since April 1995. Prior thereto, she
served as Regional Vice President of the Health Care Division from July 1988
to April 1995.

Frances G. Michels has been Senior Vice President of Support Services of the
Health Care Division of the Company's Morrison Group since January 1996. Prior
thereto, she served the Health Care Division in various capacities, including
as Vice President of Nutrition Services from December 1984 through January
1996, Area Manager for Operations and Nutrition Services from January 1982
through December 1984, Consulting Dietitian for the Health Care Division from
June 1974 through January 1982, Food Service Director from July 1973 through
June 1974, and Chief Therapeutic Dietitian from June 1970 through July 1973.

104
<PAGE>

MHCI DIRECTORS' COMPENSATION

MHCI will continue the policy of the Company that directors who are
employees of MHCI receive no directors' fees. Non-management directors will
receive a $10,000 annual retainer and $1,000 per Board meeting attended.

MHCI non-management directors who will serve on the Audit Committee, the
Executive Committee, the Compensation and Stock Option Committee or the
Nominating Committee (other than the Chairmen of such committees) will receive
a fee of $1,000 for each committee meeting attended. Committee Chairmen will
receive a fee of $2,000 for each committee meeting attended. Non-management
directors serving on any committee will be compensated at a rate of $200 an
hour for services performed on special assignments.

At or prior to the Distribution Date, the MHCI Board of Directors will take
all action necessary to adopt the MHCI Directors' Plan which will have with
terms and conditions substantially identical to those of the RTI Directors'
Plan (see "Employee Benefits and Compensation Matters--Company Directors'
Plan") except that stock awards under the MHCI Directors' Plan will relate to
MHCI Common Stock. See "RTI Management--RTI Directors' Compensation" for a
description of the RTI Directors' Plan.

It is anticipated that Mr. McKinnon, who is expected to serve as Chairman of
MHCI's Board of Directors following the Distribution, will provide strategic
planning, investor relations and management consulting services to MHCI on a
regular basis. It is anticipated that Mr. McKinnon generally will dedicate one
day per week to provide such services and will be compensated at a rate of
$2,000 per day. It is also anticipated that Mr. McKinnon will be eligible to
participate in a program under the MHCI Stock Incentive Plan that will permit
Mr. McKinnon to elect to direct that up to 60 percent of his non-retainer
compensation for each fiscal quarter be allocated to the purchase of MHCI
Common Stock on his behalf. Under this program, Mr. McKinnon would be awarded
bonus shares and stock options based on formulas and subject to terms and
conditions substantially identical to awards that would be made under the MHCI
Directors' Plan to a participant who elects to allocate a portion of his or
her retainer for the purchase of MHCI Common Stock.

COMMITTEES OF THE MHCI BOARD

The Company currently has four standing committees: Executive, Audit,
Compensation and Stock Option and Nominating. It is expected that the MHCI
Board of Directors will have the same committees following the Distribution.

Executive Committee. The Executive Committee makes recommendations to the
Board of Directors and may exercise all of the powers of the Board of
Directors to the extent permitted by applicable law. The members of the
Executive Committee are expected to be John B. McKinnon (Chairman), Claire L.
Arnold, E. Eugene Bishop and Glenn A. Davenport.

Audit Committee. The Audit Committee will be comprised solely of non-
management directors. The Audit Committee maintains communications with the
independent auditors as to the nature of the auditors' services, fees and such
other matters as the auditors believe may require the attention of the Board.
The Audit Committee reviews MHCI's internal control procedures and makes
recommendations to the Board with respect thereto. The members of the Audit
Committee are expected to be E. Eugene Bishop (Chairman), Claire L. Arnold,
Arthur R. Outlaw, Jr. and Dr. Benjamin F. Payton.

105
<PAGE>

granting of stock options. The members of the Compensation and Stock Option
Committee are expected to be Claire L. Arnold (Chairman), E. Eugene Bishop,
Arthur R. Outlaw, Jr. and Dr. Benjamin F. Payton.

Nominating Committee. The Nominating Committee recommends individuals to the
Board of Directors for consideration as nominees for directors of MHCI. The
members of the Nominating Committee are expected to be John B. McKinnon
(Chairman), Claire L. Arnold, E. Eugene Bishop, Glenn A. Davenport, Arthur R.
Outlaw, Jr. and Dr. Benjamin F. Payton. Alternatively, notice of nominations
to be made by any stockholder at a meeting must be submitted in the manner and
within the time periods prescribed in the Articles of Incorporation. Any such
notice should be directed to the Secretary at the following address: Morrison
Health Care, Inc., 4893 Riverdale Road, Suite 260, Atlanta, Georgia 30337.

COMPENSATION OF MHCI EXECUTIVE OFFICERS

The following discloses compensation awarded, paid to, or earned by the
person who is expected to serve as MHCI's Chief Executive Officer following
the Distribution and each of the other persons who are expected to serve as
executive officers of MHCI following the Distribution who were most highly
compensated and whose salary and bonus exceeded $100,000 in fiscal 1995 for
services rendered to the Company during each of the three fiscal years in the
three-year period ended June 3, 1995 (together, these persons are sometimes
referred to as the "MHCI named executives").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION OTHER AWARDS PAYOUTS ALL OTHER
-------------------- ANNUAL ------------ ------------ COMPEN-
NAME AND POSITION COMPEN- OPTIONS/ LTIP SATION
WITH THE COMPANY YEAR SALARY($) BONUS($) SATION($) SARS(#) PAYOUTS($) ($)(1)
----------------- ---- ---------- --------- --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
G. A. Davenport (2).... 1995 181,432 229,040 N/A 11,292 -0- 6,140
President, Health Care 1994 143,000 182,800 N/A 26,220 -0- 6,559
Division 1993 N/A N/A N/A N/A N/A N/A
J. D. Underhill (3).... 1995 138,810 72,593 N/A 1,605 -0- -0-
Senior Vice President, 1994 N/A N/A N/A N/A N/A N/A
Retail Development, 1993 N/A N/A N/A N/A N/A N/A
Health Care Division
G. L. Anderson (3)..... 1995 117,846 77,600 N/A 5,771 -0- -0-
Division Vice
President, 1994 N/A N/A N/A N/A N/A N/A
Health Care Division 1993 N/A N/A N/A N/A N/A N/A
C. L. Kolesar (3)...... 1995 115,181 57,500 17,535(4) 5,771 -0- 3,026
Division Vice
President, 1994 N/A N/A N/A N/A N/A N/A
Health Care Division 1993 N/A N/A N/A N/A N/A N/A
K. W. Engwall (3)...... 1995 97,335 36,987 N/A -0- -0- 1,729
Vice President, 1994 N/A N/A N/A N/A N/A N/A
Controller, Ruby 1993 N/A N/A N/A N/A N/A N/A
Tuesday Group
</TABLE>
- --------

(1) The amounts in this column include the following: (a) Company
contributions to the Deferred Compensation Plan for 1995, 1994 and 1993,
respectively: G. A. Davenport, $4,947, $3,189 and N/A;C. L. Kolesar,
$1,944, N/A and N/A; and K. W. Engwall, $1,729, N/A and N/A; (b) executive
group life and accidental death and dismemberment insurance plan premiums
paid for 1995, 1994 and 1993:G. A. Davenport, $660, $3,161 and N/A; C. L.
Kolesar, $505, N/A and N/A; and K. W. Engwall, $0, N/A and N/A; and (c)
employee portion of split-dollar life insurance premiums paid by the
Company for 1995 and 1994: G. A. Davenport, $533 and $209; and C. L.
Kolesar, $577 and N/A.
(2) Mr. Davenport was elected as an executive officer of the Company effective
November 1, 1993.
(3) In accordance with the executive compensation disclosure rules adopted by
the SEC, the compensation of Mr. Underhill, Mr. Anderson, Ms. Kolesar and
Mr. Engwall for fiscal 1994 and 1993 is not disclosed as MHCI was not a
reporting company under the Exchange Act for such years and such
compensation information has not been provided by the Company in prior SEC
filings.

(4) Represents a one-time housing allowance related to Ms. Kolesar's
relocation.

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<PAGE>

The following table presents information regarding fiscal 1995 grants of
options to purchase shares of the Company Common Stock to the MHCI named
executives. The Company has no outstanding SARs and granted no SARs during
fiscal 1995.

OPTION GRANTS IN FISCAL 1995

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE(3) AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR OPTION TERM
-------------------------------------------------
INDIVIDUAL GRANTS 5% 10%
------------------------------------------------ ----------------------- ------------------------
MARKET MARKET
PRICE PRICE
% OF TOTAL REQUIRED REQUIRED
OPTIONS/SARS EXERCISE TO REALIZE TO REALIZE
OPTIONS/ GRANTED TO OR BASE DOLLAR DOLLAR
SARS GRANTED EMPLOYEES IN PRICE EXPIRATION DOLLAR GAINS DOLLAR GAINS
NAME (#)(1) FISCAL YEAR(2) ($/SHARE) DATE GAINS($) ($/SHARE) GAINS($) ($/SHARE)
- ---- ------------ -------------- --------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. A. Davenport......... 9,360 2.82% 22.75 30-Jun-99 58,831 29.04 130,002 36.64
1,932 0.58% 26.75 04-Mar-00 14,279 34.14 31,552 43.08
J. D. Underhill......... 1,605 0.48% 25.75 03-Sep-99 11,418 32.86 25,232 41.47
G. L. Anderson.......... 5,000 1.51% 22.63 14-Jul-99 31,254 28.88 69,064 36.44
771 0.23% 26.75 04-Mar-00 5,698 34.14 12,591 43.08
C. L. Kolesar........... 5,000 1.51% 24.38 18-Jan-00 33,672 31.11 74,406 39.26
771 0.23% 26.75 04-Mar-00 5,698 34.14 12,591 43.08
K. W. Engwall........... 0 N/A N/A N/A 0 N/A 0 N/A
</TABLE>
- --------

(1) The indicated options have a term of five years and were granted pursuant
to the Company's Stock Incentive Plan (formerly, the 1989 Non-Qualified
Stock Option Plan) or pursuant to the Company's 1993 Non-Executive Stock
Incentive Plan. Those options with an exercise price of $22.75, $22.63 and
$24.38 on the date of grant become exercisable after three years. All
other options listed in the table above become exercisable after two
years. In the event of a change in control of the Company, the Committee
administering the plan may accelerate vesting, otherwise adjust the
options or terminate the options. Option holders also have certain rights
with respect to these options pursuant to their Change of Control
Agreements. See "Contracts with Executives."

(2) Based on an aggregate of 331,405 options granted in fiscal 1995.

(3) The Potential Realizable Values are calculated as follows: [[Market Price
at Grant X (1 + Stock Price Appreciation Rate)] - Exercise Price] X Number
of Underlying Shares. Because these Potential Realizable Values are based
on annualized compound rates of increase over a five-year term, the total
potential appreciation on annual appreciation rates of 5% and 10% is 27.6%
and 61.1%, respectively.

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<PAGE>

AGGREGATED OPTION EXERCISES IN
FISCAL 1995 AND FISCAL YEAR-END VALUES

The following table presents information regarding options exercised for
shares of the Company Common Stock during fiscal 1995 by the MHCI named
executives and the value of unexercised options held at June 3, 1995. There
were no SARs outstanding during fiscal 1995.

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT FY- OPTIONS AT
END(#) FY-END($)(2)
-------------- ---------------
SHARES VALUE
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- -------------- ---------------
<S> <C> <C> <C> <C>
G. A. Davenport............. -0- -0- 5,906/54,861 64,115/216,377
J. D. Underhill............. -0- -0- -0-/27,669 -0-/63,553
G. L. Anderson.............. -0- -0- -0-/5,771 -0-/-0-
C. L. Kolesar............... -0- -0- -0-/8,359 -0-/16,606
K. W. Engwall............... 2,012 35,322 8,018/18,693 80,662/87,131
</TABLE>
- --------
(1) Value Realized is calculated as follows: [(Per Share Closing Price on date
of exercise) (Per Share Exercise Price)] X Number of Shares for which the
Option was Exercised.

(2) Value of Unexercised, In-the-Money Options at June 3, 1995 is calculated
as follows: [(Per Share Closing Sale Price of the Company Common Stock on
June 2, 1995)--(Per Share Exercise Price)] X Number of Shares Subject to
Unexercised Options. The per share closing sale price of the Company
Common Stock on June 2, 1995, the last trading day of fiscal 1995, was
$22.25.

RETIREMENT PLAN

MHCI named executives who were employees of the Company prior to December
31, 1987, are entitled to retirement benefits payable under the Company's
Retirement Plan. See "RTI Management and Executive Compensation--Retirement
Plan" for a description of the Retirement Plan and "Employee Benefits and
Compensation Matters--Retirement Plan" for a description of amendments to the
Retirement Plan expected to be made in connection with the Distribution and
the responsibility for retirement benefits payable thereunder subsequent to
the Distribution.

EXECUTIVE SUPPLEMENTAL PENSION PLAN

Eligible MHCI named executives participate in the Company's Supplemental
Plan. See "RTI Management and Executive Compensation--Executive Supplemental
Pension Plan" for a description of the ESP. Years of continuing service, to
the nearest year, and current remuneration covered by the ESP (base salary)
for the eligible MHCI named executives are: Mr. Davenport, 21 years, $181,432;
Ms. Kolesar, 16 years, $115,181; and Mr. Engwall, 11 years, $97,335.

See "Employee Benefits and Compensation Matters--Non-Qualified Pension
Plans" for information concerning the treatment of the ESP in the Distribution
and the MHCI Executive Supplemental Pension Plan that is expected to be
adopted by MHCI to provide substantially the same benefits to MHCI executives
following the Distribution as those currently provided by the ESP to Company
executives.

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<PAGE>

MANAGEMENT RETIREMENT PLAN

Eligible MHCI named executives participate in the Company's MRP. See "RTI
Management and Executive Compensation--Management Retirement Plan" for a
description of the MRP. Years of credited service and salary covered by the
MRP for eligible MHCI named executives are: Mr. Davenport, 21 years, $100,000;
and Ms. Kolesar, 16 years, $100,000.

See "Employee Benefits and Compensation Matters--Non-Qualified Pension
Plans" for information concerning the treatment of the MRP in the Distribution
and the MHCI Management Retirement Plan that is expected to be adopted by MHCI
to provide substantially the same benefits to MHCI executives following the
Distribution as those currently provided by the MRP to Company executives.

CONTRACTS WITH EXECUTIVES

Each of the MHCI named executives, other than Mr. Anderson and Ms. Kolesar,
has a Change of Control Agreement with the Company. See "RTI Management and
Executive Compensation--Contracts with Executives" for a description of the
material terms and conditions of the Change of Control Agreement. The Company
estimates that its obligations to the MHCI named executives if a Change of
Control had occurred and the employment termination provisions of the Change
of Control Agreement were to take effect immediately would be approximately as
follows: Mr. Davenport, $3,480,000; Mr. Underhill, $1,565,000; and Mr.
Engwall, $839,000. THE DISTRIBUTION, THE REINCORPORATION, THE REVERSE STOCK
SPLIT AND THE RELATED CHANGE IN THE COMPOSITION OF THE BOARD OF DIRECTORS OF
THE COMPANY DO NOT, INDIVIDUALLY OR IN THE AGGREGATE, CONSTITUTE A CHANGE OF
CONTROL OF THE COMPANY UNDER THE CHANGE OF CONTROL AGREEMENTS.

It is expected that MHCI will enter into a Change of Control Agreement (the
"MHCI Change of Control Agreement") with each of its executive officers,
effective as of the Distribution Date. The terms and conditions of the MHCI
Change of Control Agreement will be substantially the same as those of the
Change of Control Agreement. See "RTI Management and Executive Compensation--
Contracts with Executives" for a description of the Company Change of Control
Agreement.

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<PAGE>

DESCRIPTION OF RTI CAPITAL STOCK

After the Distribution and the effectiveness of the Reincorporation merger,
the authorized capital stock of RTI will consist of 100,000,000 shares of RTI
Common Stock, $.01 par value per share, and 250,000 shares of preferred stock,
$.01 par value per share (the "RTI Preferred Stock").

RTI COMMON STOCK

The shares of RTI Common Stock to be issued in the Reincorporation merger
will be legally issued, fully-paid and nonassessable. The holders of shares of
RTI Common Stock are entitled to one vote per share on all matters on which
stockholders are entitled or permitted to vote. The holders of shares of RTI
Common Stock are entitled to receive such dividends, if any, as may be
declared from time to time by the RTI Board of Directors in its discretion
from funds legally available therefor after payment or provision for payment
of dividends on any series of RTI Preferred Stock then outstanding. In the
event of the liquidation, dissolution or winding up of RTI, holders of RTI
Common Stock are entitled to share ratably in all assets remaining after
payment of all debts and other liabilities of RTI and any liquidation
preference of the holders of RTI Preferred Stock. Holders of RTI Common Stock
have no subscription, redemption, conversion or preemptive rights.

RTI PREFERRED STOCK

The Articles of Incorporation authorize the RTI Board of Directors to
designate and issue from time to time one or more series of RTI Preferred
Stock without stockholder approval. The holders of RTI Preferred Stock are
entitled to receive cash dividends at the annual rate fixed and determined by
the RTI Board of Directors from funds legally available therefor, and no more,
before any dividend on the RTI Common Stock shall be made. In the event of the
liquidation, dissolution or winding up of RTI, holders of RTI Preferred Stock
shall be entitled to receive cash in an amount fixed by the Board of Directors
after payment of all debts and other liabilities of RTI, plus any dividends
owed on the RTI Preferred Stock, prior to any distribution to the holders of
RTI Common Stock. The RTI Board of Directors may fix and determine the
relative rights, preferences and privileges of each class or series of RTI
Preferred Stock so issued. Because the RTI Board of Directors has the power to
establish the preferences and rights of each class or series of RTI Preferred
Stock, it may afford the holders of any series or classes of RTI Preferred
Stock preferences, powers and rights with respect to voting, liquidation or
other matters, senior to the rights of holders of RTI Common Stock.

RTI SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

The RTI Board of Directors has established a series of RTI Preferred Stock
designated "Series A Junior Participating Preferred Stock" ("RTI Series A
Preferred Stock") consisting of 50,000 authorized shares. The shares of RTI
Series A Preferred Stock will be reserved for issuance upon the exercise of
RTI Rights under the RTI Rights Plan described below. See "--RTI Rights Plan"
below.

RTI RIGHTS PLAN

The Company currently has a stockholders rights plan (the "Company Rights
Plan") pursuant to which the Board of Directors of the Company declared a
dividend of one preferred share purchase right (a "Company Right") for each
outstanding share of Company Common Stock to its stockholders of record on
April 10, 1987. Each Company Right, as adjusted for stock splits subsequent to
April 10, 1987, entitles the registered holder thereof to purchase from the
Company one third of one one-thousandth of a share of Series A Junior
Participating Preferred Stock of the Company at a price of $75 per one one-
thousandth of a share. The Company Rights are set forth in a Rights Agreement
between the Company and AmSouth Bank of Alabama as the Company Rights Agent
(the "Company Rights Agreement"). The Company Rights are attached to all
Company Common Stock certificates outstanding, and no separate certificates
representing Company Rights have been distributed.

Upon the effectiveness of the Reincorporation merger, the Company Rights
will automatically be converted into rights to purchase shares of RTI Series A
Preferred Stock (the "RTI Rights"). The Company Rights

110
<PAGE>

Agreement by its own terms will become the Rights Agreement of the corporation
surviving the Reincorporation merger (the "RTI Rights Agreement"). The Company
Rights Plan as in effect following the Reincorporation and the Reverse Stock
Split is hereinafter referred to as the "RTI Rights Plan."

The RTI Rights will attach initially to all RTI Common Stock certificates
issued in the Reincorporation merger and no separate certificates representing
RTI Rights will be distributed following the Reincorporation.

Each RTI Right, as adjusted for the Reverse Stock Split, will entitle the
registered holder thereof to purchase from RTI two thirds of one one-
thousandth of a share of RTI Series A Preferred Stock at a price of $75 per
one one-thousandth of a share (the "RTI Rights Purchase Price"), subject to
adjustment. The RTI Rights will be exercisable upon the earlier to occur of
(i) ten (10) days (or such later date as may be determined by action of a
majority of the RTI Continuing Directors (hereinafter defined)) following a
public announcement that a person or group of affiliated or associated persons
("RTI Acquiring Person") have acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of RTI Common
Stock, or (ii) ten (10) days (or such later date as may be determined by
action of a majority of the RTI Continuing Directors) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer, the consummation of which would result in the beneficial
ownership by a person or group of 30% or more of such outstanding shares of
RTI Common Stock (the earlier of such dates being called the "RTI Rights
Distribution Date").

The RTI Rights Agreement provides that until the RTI Rights Distribution
Date, the RTI Rights will be transferred with, and only with, the shares of
RTI Common Stock. Until the RTI Rights Distribution Date (or earlier
redemption or expiration of the RTI Rights), RTI Common Stock certificates
issued in the Reincorporation merger or thereafter upon transfer or new
issuance of shares of RTI Common Stock will contain a notation incorporating
the RTI Rights Agreement by reference. Until the RTI Rights Distribution Date
(or earlier redemption or expiration of the RTI Rights), the transfer of any
certificates for shares of RTI Common Stock will also constitute the transfer
of the RTI Rights associated with the shares of RTI Common Stock represented
by such certificate. As soon as practicable following the RTI Rights
Distribution Date, separate certificates evidencing the RTI Rights ("RTI
Rights Certificates") will be mailed to holders of record of RTI Common Stock
as of the close of business on the RTI Rights Distribution Date and such
separate RTI Rights Certificates alone will evidence the RTI Rights.

The RTI Rights will not be exercisable until the RTI Rights Distribution
Date. The RTI Rights will expire on April 9, 1997, unless the expiration date
is extended or unless the RTI Rights are earlier redeemed by RTI, in each
case, as described below.

The RTI Rights Purchase Price, and the number of shares of RTI Series A
Preferred Stock or other securities or property issuable upon exercise of the
RTI Rights, will be subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the RTI Series A Preferred Stock, (ii)
upon the grant to holders of the shares of RTI Series A Preferred Stock of
certain rights or warrants to subscribe for or purchase shares of RTI Series A
Preferred Stock at a price, or securities convertible into RTI Series A
Preferred Stock with a conversion price, less than the then current market
price of the RTI Series A Preferred Stock or (iii) upon the distribution to
holders of the shares of RTI Series A Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in RTI Series A Preferred
Stock) or of subscription rights or warrants (other than those referred to
above).

The number of outstanding RTI Rights and the number of one one-thousandths
of a share of RTI Series A Preferred Stock issuable upon exercise of each RTI
Right will also be subject to adjustment in the event of a

111
<PAGE>

stock split of the shares of RTI Common Stock or a stock dividend on the RTI
Common Stock payable in shares of RTI Common Stock or subdivisions,
consolidations or combinations of the shares of RTI Common Stock occurring, in
any such case, prior to the RTI Rights Distribution Date.

Each share of RTI Series A Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $100 per share but will be entitled
to an aggregate dividend of 1,000 times the dividend declared per share of RTI
Common Stock. In the event of liquidation, the holders of the shares of RTI
Series A Preferred Stock will be entitled to a minimum preferential
liquidation payment of $1,000 per share but will be entitled to an aggregate
payment of 1,000 times the payment made per share of RTI Common Stock. Each
share of RTI Series A Preferred Stock will have 1,000 votes (and each one one-
thousandth of a share of RTI Series A Preferred Stock will have one vote),
voting together with the shares of RTI Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which shares of RTI Common
Stock are exchanged, each share of RTI Series A Preferred Stock will be
entitled to receive 1,000 times the consideration received per share of RTI
Common Stock. These rights will be protected by customary antidilution
provisions.

In the event that RTI is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a RTI Right, other
than RTI Rights that are beneficially owned by the RTI Acquiring Person or
transferee thereof, will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the RTI Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of
the RTI Right. In the event that RTI is the surviving corporation in a merger
and the shares of RTI Common Stock are not changed or exchanged, or in the
event that a RTI Acquiring Person engages in one of a number of self-dealing
transactions specified in the RTI Rights Agreement, or acquires 50% of the
outstanding voting stock of RTI, proper provision will be made so that each
holder of a RTI Right, other than RTI Rights that are beneficially owned by
the RTI Acquiring Person or transferee thereof, will thereafter have the right
to receive upon exercise that number of shares of RTI Common Stock having a
market value of two times the then current exercise price of the RTI Right.

With certain exceptions, no adjustment in the RTI Rights Purchase Price will
be required until cumulative adjustments equal at least 1% in such RTI Rights
Purchase Price. No fractional shares of RTI Series A Preferred Stock will be
issued (other than fractions which are integral multiples of one one-
thousandth of a share of RTI Series A Preferred Stock, which may, at the
election of RTI, be evidenced by depositary receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of the shares of RTI
Series A Preferred Stock on the last trading day prior to the date of
exercise.

At any time prior to the RTI Rights Distribution Date, the RTI Board of
Directors may redeem the RTI Rights in whole, but not in part, at a price, as
adjusted for the Reverse Stock Split, of one third of one cent ($.0033) per
RTI Right (the "RTI Redemption Price"). At any time thereafter, the RTI
Continuing Directors may redeem the RTI Rights, in whole, but not in part, at
the RTI Redemption Price. Immediately upon the action of the RTI Board of
Directors or RTI Continuing Directors, as the case may be, ordering redemption
of the RTI Rights, the right to exercise the RTI Rights will terminate and the
only right of the holders of RTI Rights will be to receive the RTI Redemption
Price. As used herein, the term "RTI Continuing Director" shall mean any
individual who was a director prior to the RTI Rights Distribution Date, and
who remains a director after the RTI Rights Distribution Date.

The terms of the RTI Rights may be amended by the RTI Board of Directors
without the consent of the holders of the RTI Rights, including an amendment
to extend the expiration date of the RTI Rights provided at the time of such
amendment there is no RTI Acquiring Person, and if there is at such time a RTI
Acquiring Person, by the RTI Continuing Directors, to extend the period during
which the RTI Rights may be redeemed, except that no such amendment may
adversely affect the interests of the holders of the RTI Rights (other than
the RTI Acquiring Person).

Until a RTI Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of RTI, including, without limitation, the right to
vote or to receive dividends.

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<PAGE>

CERTAIN EFFECTS OF THE RTI RIGHTS PLAN

The RTI Rights Plan is designed to protect stockholders of RTI in the event
of unsolicited offers to acquire RTI or other coercive takeover tactics which,
in the opinion of the RTI Board of Directors, could impair its ability to
fairly represent stockholder interests. The provisions of the RTI Rights Plan
may render an unsolicited takeover of RTI more difficult or less likely to
occur or might prevent such a takeover, even though such takeover may offer
RTI stockholders the opportunity to sell their stock at a price above the
prevailing market rate and may be favored by a majority of the stockholders of
RTI.

PROVISIONS OF RTI ARTICLES OF INCORPORATION AFFECTING CHANGE IN CONTROL

General. Certain provisions of the RTI Articles of Incorporation may delay
or make more difficult unsolicited acquisitions or changes of control of RTI.
These provisions are included in the Articles of Incorporation in order to
better enable RTI to develop its business in a manner that will foster its
long-term growth without disruption caused by the threat of a takeover which
the Board of Directors does not deem to be in the best interests of RTI and
its stockholders. See also "RTI Rights Plan." These provisions include (i)
staggered terms for directors, (ii) directors having the right to remove
directors for cause and to fill vacancies, (iii) directors having the right to
amend the Bylaws, (iv) super-majority vote of stockholders needed to amend
provisions of the Articles of Incorporation dealing with the Board of
Directors, and (v) super-majority vote of stockholders needed for certain
business combinations.

Authorized but Unissued Capital Stock. The RTI Articles of Incorporation
authorize the issuance of 100,000,000 shares of RTI Common Stock and 250,000
shares of RTI Preferred Stock; however, based on the number of shares of
Company Common Stock outstanding as of January 17, 1996, only 17,497,802
shares of RTI Common Stock will be issued and outstanding following the
Distribution and the Reincorporation. The existence of a large number of
authorized but unissued shares may enable the Board of Directors of RTI to
issue shares to persons who are friendly to current management, which issuance
could render more difficult or discourage an attempt to obtain control of RTI
by means of a tender offer, proxy contest or otherwise, and thereby protect
the continuity of RTI's management, as well as possibly deprive the RTI
stockholders of opportunities to sell their shares of RTI Common Stock at
prices higher than prevailing market prices.

Number and Election of Directors; Removal; Vacancies. The RTI Articles of
Incorporation provide that the RTI Board of Directors shall consist of not
less than three and not more than twelve members, with the exact number of
directors fixed from time to time by resolution of a majority of the Board of
Directors or by a vote of at least 80% of the stockholders entitled to vote on
the election of Directors, which Board shall be divided into three classes
with staggered three-year terms. RTI Directors may be removed only for cause
and only upon the vote of at least 80% of the voting power of all of the
outstanding shares of RTI Common Stock and any series of RTI Preferred Stock
entitled to vote on the matter, voting together as a single class. Any vacancy
on the Board of Directors caused by such a removal, or by death, disability or
otherwise, shall be filled by the vote of a majority of Directors remaining in
office at such time. These provisions render it more difficult to change the
composition of the RTI Board of Directors, which may discourage an attempt by
a person or group to obtain control of RTI.

Nomination of Directors. The RTI Articles of Incorporation provide that
nominations for the election of directors may be made by the Board of
Directors or any committee appointed by the Board of Directors, or by any
stockholder of RTI entitled to vote on the election of directors; provided,
however, that any stockholder entitled to vote on the election of directors
may nominate one or more persons for election as directors only if written
notice of such stockholder's intent to make such nominations is given to the
Secretary of RTI in accordance with the terms of the Articles of Incorporation
at least 90 days prior to an election held at an annual meeting, or within
seven days of receipt of notice of an election to be held at a special
meeting.

Amendment to Bylaws. The RTI Articles of Incorporation provide that the
Board of Directors shall have the right to amend the Bylaws of RTI, and shall
have the right to establish the rights, powers and duties of the Board of
Directors, including without limitation, to establish the vote required for
any action, including the

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election of directors. In addition, the Articles of Incorporation prevent the
stockholders of RTI from adopting any Bylaw which would impair the
implementation of the foregoing provision.

Amendment to Articles of Incorporation. The Articles of Incorporation of RTI
provide that any amendment to Article VII of such Articles, which deals with
the rights, powers and duties of the Board of Directors of RTI, will require
the vote of at least 80% of the stockholders entitled to vote thereon;
provided that such 80% stockholder voting requirements will not apply in the
event such amendment is recommended by at least 80% of the members of the RTI
Board of Directors.

Stockholder Vote on Business Combination. The RTI Articles of Incorporation
will require that, in addition to any affirmative vote required by law, the
Articles of Incorporation or the Bylaws, the affirmative vote of the holders
of at least 80% of the voting power of the outstanding shares of RTI Common
Stock and any series of RTI Preferred Stock entitled to vote on the matter
presented, voting together as a single class, will be required to approve
certain business combinations and other transactions involving an Interested
Stockholder (as defined below) unless the proposal either (i) satisfies
certain fair price and procedural requirements or (ii) receives the approval
of 80% of the directors not affiliated with the Interested Stockholder. An
"Interested Stockholder" is a stockholder who (i) beneficially owns 10% or
more of the capital stock entitled to vote ("Voting Stock"); (ii) is an
"affiliate" or "associate" (as such terms are defined in Rule 12b-2
promulgated under the Exchange Act) of RTI who at any time within two years
prior to the date in question beneficially owned 10% or more of the Voting
Stock; or (iii) is an assignee of or has otherwise succeeded to any shares of
capital stock of RTI that were beneficially owned by an Interested Stockholder
within two years prior to the date in question. The affirmative vote of the
holders of not less than 80% of the votes entitled to be cast by the holders
of the outstanding Voting Stock, voting together as a single class, is
required to amend or repeal the foregoing voting requirement unless the
amendment or repeal is recommended by at least 80% of the members of the RTI
Board of Directors. The voting requirement described above may discourage or
make more difficult a change in control of RTI.

DESCRIPTION OF MFCI CAPITAL STOCK

After the Distribution, the authorized capital stock of MFCI will consist of
100,000,000 shares of MFCI Common Stock, $.01 par value per share, and 250,000
shares of preferred stock, $.01 par value per share (the "MFCI Preferred
Stock").

MFCI COMMON STOCK

The shares of MFCI Common Stock to be issued in the Distribution will be
legally issued, fully paid and nonassessable. The holders of shares of MFCI
Common Stock are entitled to one vote per share on all matters on which
stockholders are entitled or permitted to vote. The holders of shares of MFCI
Common Stock are entitled to receive such dividends, if any, as may be
declared from time to time by the MFCI Board of Directors in its discretion
from funds legally available therefor after payment or provision for payment
of dividends on any series of MFCI Preferred Stock then outstanding. In the
event of the liquidation, dissolution or winding up of MFCI, holders of MFCI
Common Stock are entitled to share ratably in all assets remaining after
payment of all debts and other liabilities of MFCI and any liquidation
preference of the holders of MFCI Preferred Stock. Holders of MFCI Common
Stock have no subscription, redemption, conversion or preemptive rights.

MFCI PREFERRED STOCK

The Articles of Incorporation authorize the MFCI Board of Directors to
designate and issue from time to time one or more series of MFCI Preferred
Stock without stockholder approval. The holders of MFCI Preferred Stock are
entitled to receive cash dividends at the annual rate fixed and determined by
the MFCI Board of Directors from funds legally available therefor, and no
more, before any dividend on the MFCI Common Stock shall be made. In the event
of the liquidation, dissolution or winding up of MFCI, holders of MFCI
Preferred Stock shall be entitled to receive cash in an amount fixed by the
Board of Directors after payment of all debts and other liabilities of MFCI,
plus any dividends owed on the MFCI Preferred Stock, prior to any distribution
to the holders of MFCI Common Stock. The MFCI Board of Directors may fix and
determine the relative rights,

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preferences and privileges of each class or series of MFCI Preferred Stock so
issued. Because the MFCI Board of Directors has the power to establish the
preferences and rights of each class or series of MFCI Preferred Stock, it may
afford the holders of any series or classes of MFCI Preferred Stock
preferences, powers and rights, with respect to voting, liquidation or other
matters, senior to the rights of holders of MFCI Common Stock.

MFCI SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

The MFCI Board of Directors has established a series of MFCI Preferred Stock
designated "Series A Junior Participating Preferred Stock" ("MFCI Series A
Preferred Stock") consisting of 50,000 authorized shares. The shares of MFCI
Series A Preferred Stock will be reserved for issuance upon the exercise of
MFCI Rights under the MFCI Rights Plan described below. See "--MFCI Rights
Plan" below.

MFCI RIGHTS PLAN

It is anticipated that the MFCI Board of Directors will declare a dividend
of one preferred share purchase right ("MFCI Right") for each outstanding
share of MFCI Common Stock effective on or prior to the Distribution Date.
Each MFCI Right will entitle the registered holder to purchase from MFCI one
one-thousandth of a share of MFCI Series A Preferred Stock at a price to be
determined (which price will be substantially above the expected trading value
of MFCI) (the "MFCI Rights Purchase Price"), subject to adjustment. The terms
of the MFCI Rights will be set forth in a Rights Agreement (the "MFCI Rights
Agreement") between MFCI and AmSouth Bank of Alabama, as MFCI Rights Agent.
The MFCI Rights will attach initially to all MFCI Common Stock certificates
issued in the Distribution and no separate certificates representing MFCI
Rights will be distributed. The MFCI Rights will be exercisable upon the
earlier to occur of (i) ten (10) days (or such later date as may be determined
by action of a majority of the MFCI Continuing Directors (as hereinafter
defined)) following a public announcement that a person or group of affiliated
or associated persons ("MFCI Acquiring Person") have acquired, or obtained the
right to acquire, beneficial ownership of 20% or more of the outstanding
shares of MFCI Common Stock or (ii) ten (10) days (or such later date as may
be determined by action of a majority of the MFCI Continuing Directors)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 30% or more of such outstanding
shares of MFCI Common Stock (the earlier of such dates being called the "MFCI
Rights Distribution Date").

The MFCI Rights Agreement will provide that until the MFCI Rights
Distribution Date, the MFCI Rights will be transferred with and only with the
shares of MFCI Common Stock. Until the MFCI Rights Distribution Date (or
earlier redemption or expiration of the MFCI Rights), MFCI Common Stock
certificates issued in the Distribution or thereafter upon transfer or new
issuance of shares of MFCI Common Stock will contain a notation incorporating
the MFCI Rights Agreement by reference. Until the MFCI Rights Distribution
Date (or earlier redemption or expiration of the MFCI Rights), the transfer of
any certificates for shares of MFCI Common Stock will also constitute the
transfer of the MFCI Rights associated with the shares of MFCI Common Stock
represented by such certificate. As soon as practicable following the MFCI
Rights Distribution Date, separate certificates evidencing the MFCI Rights
("MFCI Rights Certificates") will be mailed to holders of record of MFCI
Common Stock as of the close of business on the MFCI Rights Distribution Date
and such separate MFCI Rights Certificates alone will evidence the MFCI
Rights.

The MFCI Rights will not be exercisable until the MFCI Rights Distribution
Date. The MFCI Rights will expire March 1, 2006 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the MFCI Rights are
earlier redeemed by MFCI, in each case, as described below.

The MFCI Rights Purchase Price, and the number of shares of MFCI Series A
Preferred Stock or other securities or property issuable upon exercise of the
MFCI Rights, will be subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of,

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the MFCI Series A Preferred Stock, (ii) upon the grant to holders of the
shares of MFCI Series A Preferred Stock of certain rights or warrants to
subscribe for or purchase shares of MFCI Series A Preferred Stock at a price,
or securities convertible into MFCI Series A Preferred Stock with a conversion
price, less than the then current market price of the MFCI Series A Preferred
Stock or (iii) upon the distribution to holders of the shares of MFCI Series A
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in MFCI Series A Preferred Stock) or of subscription rights or
warrants (other than those referred to above).

The number of outstanding MFCI Rights and the number of one one-thousandths
of a share of MFCI Series A Preferred Stock issuable upon exercise of each
MFCI Right will also be subject to adjustment in the event of a stock split of
the shares of MFCI Common Stock or a stock dividend on the MFCI Common Stock
payable in shares of MFCI Common Stock or subdivisions, consolidations or
combinations of the shares of MFCI Common Stock occurring, in any such case,
prior to the MFCI Rights Distribution Date.

Each share of MFCI Series A Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $100 per share but will be entitled
to an aggregate dividend of 1,000 times the dividend declared per share of
MFCI Common Stock. In the event of liquidation, the holders of the shares of
MFCI Series A Preferred Stock will be entitled to a minimum preferential
liquidation payment of $1,000 per share but will be entitled to an aggregate
payment of 1,000 times the payment made per share of MFCI Common Stock. Each
share of MFCI Series A Preferred Stock will have 1,000 votes (and each one
one-thousandth of a share of MFCI Series A Preferred Stock will have one
vote), voting together with the shares of MFCI Common Stock. Finally, in the
event of any merger, consolidation or other transaction in which shares of
MFCI Common Stock are exchanged, each share of MFCI Series A Preferred Stock
will be entitled to receive 1,000 times the consideration received per share
of MFCI Common Stock. These rights will be protected by customary antidilution
provisions.

In the event that MFCI is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a MFCI Right, other
than MFCI Rights that are beneficially owned by the MFCI Acquiring Person or
transferee thereof, will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the MFCI Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of
the MFCI Right. In the event that MFCI is the surviving corporation in a
merger and the shares of MFCI Common Stock are not changed or exchanged, or in
the event that a MFCI Acquiring Person engages in one of a number of self-
dealing transactions specified in the MFCI Rights Agreement, or acquires 50%
of the outstanding voting stock of MFCI, proper provision will be made so that
each holder of a MFCI Right, other than MFCI Rights that are beneficially
owned by the MFCI Acquiring Person or transferee thereof, will thereafter have
the right to receive upon exercise that number of shares of MFCI Common Stock
having a market value of two times the then current exercise price of the MFCI
Right.

With certain exceptions, no adjustment in the MFCI Rights Purchase Price
will be required until cumulative adjustments result in an adjustment of at
least 1% in such MFCI Rights Purchase Price. No fractional shares of MFCI
Series A Preferred Stock will be issued (other than fractions which are
integral multiples of one one-thousandth of a share of MFCI Series A Preferred
Stock, which may, at the election of MFCI, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the shares of MFCI Series A Preferred Stock on the last
trading day prior to the date of exercise.

At any time prior to the MFCI Rights Distribution Date, the MFCI Board of
Directors may redeem the MFCI Rights in whole, but not in part, at a price of
one half cent ($.005) per MFCI Right (the "MFCI Redemption Price"). At any
time thereafter, the MFCI Continuing Directors may redeem the MFCI Rights, in
whole, but not in part, at the MFCI Redemption Price. Immediately upon the
action of the MFCI Board of Directors or MFCI Continuing Directors, as the
case may be, ordering redemption of the MFCI Rights, the right to exercise the
MFCI Rights will terminate and the only right of the holders of MFCI Rights
will be to receive the MFCI Redemption Price. As used herein, the term "MFCI
Continuing Director" shall mean any individual who was a director prior to the
MFCI Rights Distribution Date, and who remains a Director after the MFCI
Rights Distribution Date.

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The terms of the MFCI Rights may be amended by the MFCI Board of Directors
without the consent of the holders of the MFCI Rights at such time as there is
no MFCI Acquiring Person in any respect and at such time as there is a MFCI
Acquiring Person, by the MFCI Continuing Directors, except that no such
amendment following such time as there is a MFCI Acquiring Person may
adversely affect the interests of the holders of the MFCI Rights (other than
the MFCI Acquiring Person).

Until a MFCI Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of MFCI, including, without limitation, the right to
vote or to receive dividends.

A copy of the MFCI Rights Agreement will be filed as an exhibit to the
Registration Statement on Form 10 to be filed by MFCI to register the MFCI
Common Stock and the MFCI Rights under the Exchange Act. Unless the context
otherwise requires, references herein to MFCI Common Stock include the related
MFCI Rights.

CERTAIN EFFECTS OF THE MFCI RIGHTS PLAN

The MFCI Rights Plan is designed to protect stockholders of MFCI in the
event of unsolicited offers to acquire MFCI or other coercive takeover tactics
which, in the opinion of the MFCI Board of Directors, could impair its ability
to fairly represent stockholder interests. The provisions of the MFCI Rights
Plan may render an unsolicited takeover of MFCI more difficult or less likely
to occur or might prevent such a takeover, even though such takeover may offer
MFCI stockholders the opportunity to sell their stock at a price above the
prevailing market rate and may be favored by a majority of the stockholders of
MFCI.

PROVISIONS OF MFCI ARTICLES OF INCORPORATION AFFECTING CHANGE IN CONTROL

The MFCI Articles of Incorporation contain the same provisions that may
affect change of control as the RTI Articles of Incorporation. See
"Description of RTI Capital Stock--Provisions of RTI Articles of Incorporation
Affecting Change in Control."

DESCRIPTION OF MHCI CAPITAL STOCK

After the Distribution, the authorized capital stock of MHCI will consist of
100,000,000 shares of MHCI Common Stock, $.01 par value per share, and 250,000
shares of preferred stock, $.01 par value per share (the "MHCI Preferred
Stock").

MHCI COMMON STOCK

The shares of MHCI Common Stock to be issued in the Distribution will be
legally issued, fully-paid and nonassessable. The holders of shares of MHCI
Common Stock are entitled to one vote per share on all matters on which
stockholders are entitled or permitted to vote. The holders of shares of MHCI
Common Stock are entitled to receive such dividends, if any, as may be
declared from time to time by the MHCI Board of Directors in its discretion
from funds legally available therefor after payment or provision for payment
of dividends on any series of MHCI Preferred Stock then outstanding. In the
event of the liquidation, dissolution or winding up of MHCI, holders of MHCI
Common Stock are entitled to share ratably in all assets remaining after
payment of all debts and other liabilities of MHCI and any liquidation
preference of the holders of MHCI Preferred Stock. Holders of MHCI Common
Stock have no subscription, redemption, conversion or preemptive rights.

MHCI PREFERRED STOCK

The Articles of Incorporation authorize the MHCI Board of Directors to
designate and issue from time to time one or more series of MHCI Preferred
Stock without stockholder approval. The holders of MHCI Preferred Stock are
entitled to receive cash dividends at the annual rate fixed and determined by
the MHCI Board of Directors from funds legally available therefor, and no
more, before any dividend on the MHCI Common Stock shall be made. In the event
of the liquidation, dissolution or winding up of MHCI, holders of MHCI
Preferred

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Stock shall be entitled to receive cash in an amount fixed by the Board of
Directors after payment of all debts and other liabilities of MHCI, plus any
dividends owed on the MHCI Preferred Stock, prior to any distribution to the
holders of MHCI Common Stock. The MHCI Board of Directors may fix and
determine the relative rights, preferences and privileges of each class or
series of MHCI Preferred Stock so issued. Because the MHCI Board of Directors
has the power to establish the preferences and rights of each class or series
of MHCI Preferred Stock, it may afford the holders of any series or classes of
MHCI Preferred Stock preferences, powers and rights, with respect to voting,
liquidation or other matters, senior to the rights of holders of MHCI Common
Stock.

MHCI SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

The MHCI Board of Directors has established a series of MHCI Preferred Stock
designated "Series A Junior Participating Preferred Stock" ("MHCI Series A
Preferred Stock") consisting of 50,000 authorized shares. The shares of MHCI
Series A Preferred Stock will be reserved for issuance upon the exercise of
MHCI Rights under the MHCI Rights Plan described below. See "--MHCI Rights
Plan" below.

MHCI RIGHTS PLAN

It is anticipated that the MHCI Board of Directors will declare a dividend
of one preferred share purchase right ("MHCI Right") for each outstanding
share of MHCI Common Stock effective on or prior to the Distribution Date.
Each MHCI Right will entitle the registered holder to purchase from MHCI one
one-thousandth of a share of MHCI Series A Preferred Stock at a price to be
determined (which price will be substantially above the expected trading value
of MHCI) (the "MHCI Rights Purchase Price"), subject to adjustment. The
description and terms of the MHCI Rights will be set forth in a Rights
Agreement (the "MHCI Rights Agreement") between MHCI and AmSouth Bank of
Alabama, as MHCI Rights Agent. The terms of the MHCI Plan will be identical to
the terms of the MFCI Rights Plan except for such terms as will relate to the
MHCI Rights and the MHCI Series A Preferred Stock. See "Description of MFCI
Capital Stock--MFCI Rights Plan."

CERTAIN EFFECTS OF THE MHCI RIGHTS PLAN

The MHCI Rights Plan is designed to protect stockholders of MHCI in the
event of unsolicited offers to acquire MHCI and other coercive takeover
tactics which, in the opinion of the MHCI Board of Directors, could impair its
ability to fairly represent stockholder interests. The provisions of the MHCI
Rights Plan may render an unsolicited takeover of MHCI more difficult or less
likely to occur or might prevent such a takeover, even though such takeover
may offer MHCI stockholders the opportunity to sell their stock at a price
above the prevailing market rate and may be favored by a majority of the
stockholders of MHCI.

PROVISIONS OF MHCI ARTICLES OF INCORPORATION AFFECTING CHANGE OF CONTROL

The MHCI Articles of Incorporation contain the same provisions that may
affect change of control as the RTI Articles of Incorporation. See
"Description of RTI Capital Stock--Provisions of RTI Articles of Incorporation
Affecting Change of Control."

COMPARISON OF STOCKHOLDERS RIGHTS

Corporate Case Law. It is generally recognized that Delaware has the most
extensive, progressive and well-defined body of corporate case law in the
United States. Because many corporations are incorporated in Delaware, the
Delaware judiciary has acquired considerable expertise in dealing with
corporate issues and a substantial number of decisions have been rendered
construing Delaware law and establishing public policies for Delaware
corporations. Although Georgia courts have also rendered many decisions in the
area of corporate law, these cases are not litigated so frequently in Georgia
as they are in Delaware. Consequently, if the Company was to remain a Delaware
corporation, and it was to reorganize by creating two new Delaware
corporations, each such corporation would have the benefit of a more
established and refined body of case law interpreting the DGCL (including
corporate control issues) than exists for the GBCC, and, in many instances
there could be

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greater predictability with respect to the legal affairs of such corporations
as Delaware corporations rather than as Georgia corporations.

General Quorum and Voting Requirements. The DGCL allows a corporation's
certificate of incorporation or bylaws to specify the number of shares and/or
the amount of other securities having voting power, the holders of which shall
be present or represented by proxy at any meeting in order to constitute a
quorum for, and the votes that shall be necessary for, the transaction of any
business, but the DGCL requires the quorum to consist of at least one-third of
the shares entitled to a vote at the meeting. Absent such specification in the
certificate of incorporation or bylaws of a corporation, (i) a majority of the
shares entitled to vote, present in person or represented by proxy,
constitutes a quorum at a stockholders' meeting, and (ii) where a separate
vote by class or classes is required, a majority of the outstanding shares of
such class or classes, present in person or represented by proxy, constitutes
a quorum entitled to take action with respect to a vote on that matter. The
affirmative vote of a majority of the shares present in person or represented
by proxy and entitled to vote will constitute stockholder approval, except
that directors will be elected by a plurality of the votes of the shares
present in person or by proxy and entitled to vote.

The Company's Bylaws provide that a majority of the shares outstanding and
entitled to vote, present in person or by proxy, will constitute a quorum and,
unless a different vote is required by the DGCL, the Company's Certificate of
Incorporation or another Bylaw provision, a majority of the shares entitled to
vote and present thereat will be required to approve any matter brought before
the stockholders.

According to the GBCC, unless a corporation's articles of incorporation or
the GBCC provides otherwise, a majority of the votes entitled to be cast on a
particular matter by a voting group constitutes a quorum of that voting group
for action on that matter. The articles of incorporation or a bylaw adopted
according to the GBCC may provide for a greater or lesser quorum (but not less
than one-third of the votes entitled to be cast) or a greater voting
requirement for stockholders (or voting groups of stockholders) than is
provided for in the GBCC; however, an amendment to the articles of
incorporation or bylaws that changes or deletes a greater quorum or voting
requirement must meet the same quorum requirement and be adopted by the same
vote and voting groups required to take action under the quorum and voting
requirements prescribed in the provision being amended. Unless the articles of
incorporation or a bylaw adopted by the stockholders or the GBCC requires a
greater number of affirmative votes, action on a matter (other than the
election of directors) will be approved if the votes cast favoring the action
exceed the votes cast opposing the action. Directors are elected by a
plurality of the votes cast by the shares entitled to vote unless the articles
of incorporation provide otherwise.

The Bylaws of each of RTI, MFCI and MHCI will provide that a majority of the
shares outstanding and entitled to vote, present in person or represented by
proxy, will constitute a quorum, and that the affirmative vote of a majority
of the shares present and entitled to vote will be required to approve any
matters unless state corporate law, the corporation's Articles of
Incorporation or another Bylaw provision requires a different vote.

Vote Required for Certain Transactions. Under the DGCL, a merger,
consolidation or sale of all or substantially all of a corporation's assets
generally must be approved by the stockholders of each constituent corporation
by the affirmative vote of the holders of a majority of the outstanding shares
entitled to vote on the transaction. Stockholders of the surviving corporation
need not approve a merger if: (i) the corporation's certificate of
incorporation will not be amended as a result of the merger; (ii) each share
of the corporation's stock outstanding immediately prior to the effective date
of the merger will be an identical outstanding or treasury share of the
corporation after the effective date of the merger; and (iii) either no shares
of the corporation's common stock and no securities convertible into such
stock will be issued pursuant to the merger or the authorized unissued shares
or treasury shares of the corporation's common stock to be issued pursuant to
the merger plus those initially issuable upon conversion of any other
securities to be issued in the merger do not exceed 20% of the shares of the
corporation's common stock outstanding immediately prior to the effective date
of the merger.

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In connection with the approval of proposed mergers and share exchanges, the
GBCC generally requires the affirmative vote of a majority of all votes
entitled to be cast on the plan for such transaction by all shares entitled to
vote on the plan, voting as a single group, and the affirmative vote of a
majority of the votes entitled to be cast by holders of shares of each voting
group entitled to vote as a group under the corporation's articles of
incorporation. The sale of all or substantially all of the assets of a
corporation must be approved by the affirmative vote of a majority of all the
votes entitled to be cast on the matter, regardless of voting groups.
Stockholders of the surviving corporation need not approve a merger if the
number and kind of shares outstanding immediately after the merger, plus the
number and kind of shares issuable as a result of the merger, do not exceed
the total number and kind of shares of the surviving corporation authorized by
its articles of incorporation immediately before the merger.

Both the DGCL and the GBCC permit corporations to require higher votes for
approval of the transactions described above in their charters or bylaws. The
Certificate of Incorporation of the Company requires super-majority votes for
certain business combinations. See "--Business Combination Provisions" and "--
Fair Price Provisions" below.

Stockholder Action Without a Meeting. Under the DGCL, unless a corporation's
certificate of incorporation provides otherwise, any action which may be taken
at a meeting of the stockholders of a corporation may be taken without a
meeting by the execution of a written consent by the holders of outstanding
stock having not less than the minimum amount of votes necessary to take such
action at a meeting where all stockholders entitled to vote on such action are
present. The Certificate of Incorporation of the Company, however, requires
that the stockholders of the Company may only take action without a meeting
through a consent in writing if such written consent action is signed by all
of the holders of the stock entitled to vote on such action.

Under the GBCC, unless a corporation's articles of incorporation provide
otherwise, any action which may be taken at a meeting of the stockholders of a
corporation may be taken without a meeting if such action is taken by all of
the stockholders entitled to vote on such action executing a written consent
action.

The Articles of Incorporation of each of RTI, MFCI and MHCI will not contain
a provision allowing stockholder action by less than unanimous written
consent.

Business Combination Provisions. The Company's Certificate of Incorporation
requires the affirmative vote of 80% of its voting stock to approve (i) a
merger or consolidation with an Interested Stockholder (as defined below),
(ii) a sale, lease, exchange, pledge or other disposition of 25% or more of
the Company's assets or securities with or to an Interested Stockholder, (iii)
liquidation or dissolution of the Company by or on behalf of an Interested
Stockholder, or (iv) any reclassification of securities, recapitalization, or
other transaction which increases an Interested Stockholder's proportionate
share of securities of the Company or of a subsidiary of the Company, unless
the proposal either (a) satisfies certain fair price and procedural
requirements or (b) receives the approval of 80% of the directors not
affiliated with the Interested Stockholder. An "Interested Stockholder" is a
stockholder who (i) beneficially owns 10% or more of the capital stock
entitled to vote ("Voting Stock"); (ii) is an "affiliate" or "associate" (as
such terms are defined in Rule 12b-2 promulgated under the Exchange Act) of
the Company who at any time within two years prior to the date in question
beneficially owned 10% or more of the Voting Stock; or (iii) is an assignee of
or has otherwise succeeded to any shares of capital stock of the Company that
were beneficially owned by an Interested Stockholder within two years prior to
the date in question.

These provisions in the Company's Certificate of Incorporation were adopted
in 1987, prior to the effective date of Section 203 of the DGCL, which is
described below. A Delaware corporation may "opt out" of the requirements of
Section 203 if a majority of the outstanding shares entitled to vote adopt an
amendment to the corporation's certificate of incorporation or bylaws
expressly electing not to be governed by Section 203. Because the Company has
not "opted out" of Section 203, it is governed by its provisions in addition
to the business combination provisions contained in its Certificate of
Incorporation.

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Section 203 of the DGCL prohibits a corporation that does not opt out of its
provisions from entering into certain business combination transactions with
any "interested stockholder" (generally defined as any person, other than the
corporation or any majority-owned subsidiary, beneficially owning at least 15%
of the voting stock of the corporation) for a period of three years from the
time such stockholder becomes an "interested stockholder" unless certain
super-majority votes are obtained. The prohibition will not apply if (i) the
board of directors has approved either the proposed business combination or
the transaction resulting in interested stockholder status prior to the date
on which the interested stockholder became an interested stockholder (the
"Determination Date"); (ii) the interested stockholder obtains at least 85% of
the shares not held by such stockholder, the corporation or an affiliate of
the corporation in a single transaction; or (iii) the interested stockholder
obtains the approval of two-thirds of the shares outstanding that are not held
by the interested stockholder.

Unlike the Delaware provisions, the provisions of the GBCC regarding
transactions with "interested stockholders" do not apply to a Georgia
corporation unless it has affirmatively elected in its bylaws to be governed
by them. The provisions of the GBCC concerning "Business Combinations with
Interested Stockholders" (the "Business Combination Provisions"), also require
certain super-majority votes for transactions with any "interested
stockholders" (generally defined as any person, other than the corporation or
any subsidiary, beneficially owning at least 10% of the voting stock of the
corporation). Repeal or amendment of such a bylaw must be approved by at least
two-thirds of the directors who are not affiliates of the interested
stockholder and by a majority of the votes entitled to be cast by the holders
of shares not beneficially owned by the interested stockholder.

The GBCC's Business Combination Provisions generally prohibit Georgia
corporations from entering into certain business combination transactions with
any interested stockholder for a period of five years from the time such
stockholder becomes an interested stockholder unless: (i) the corporation's
board of directors has approved the business combination or the transaction
resulting in interested stockholder status prior to the Determination Date;
(ii) the interested stockholder acquires 90% or more of the outstanding voting
stock of the corporation (excluding "affiliated shares" held by affiliates,
subsidiaries or benefit plans) as part of the transaction in which it becomes
an interested stockholder; or (iii) after the Determination Date, the
interested stockholder acquires 90% or more of the outstanding voting stock of
the corporation (excluding affiliated shares) and a majority of the remaining
outstanding voting stock (excluding affiliated shares) approve the business
combination.

Neither RTI, MFCI nor MHCI plans to adopt the Business Combination
Provisions of the GBCC. These corporations will, instead, rely on provisions
in their Articles of Incorporation regarding interested stockholders which
mirror the provision regarding interested stockholders contained in the
Company's Certificate of the Incorporation.

Fair Price Provisions. Although the DGCL does not contain any specific fair
price provisions, the Certificate of Incorporation of the Company requires the
vote of 80% of its outstanding voting stock to approve certain business
combinations with interested stockholders, unless the per share fair market
value of the consideration issued to the holders of Company Common Stock in
the combination is at least equal to the higher of: (i) the highest price per
share for Company Common Stock paid by the interested stockholder within the
two-year period prior to the announcement of the combination (the
"Announcement Date") or in the transaction in which the interested stockholder
became an interested stockholder, whichever is higher; plus interest
compounded annually or (ii) the fair market value of a share of Company Common
Stock on the Announcement Date or on the Determination Date, whichever is
higher. Similar provisions apply to the consideration to be issued to any
holders of other classes of capital stock. The consideration must be paid in
cash or in the same form provided by the interested stockholder. After the
Determination Date and prior to the consummation of the proposed business
combination, the Company cannot eliminate or reduce dividends or fail to
proportionately increase them to reflect a reclassification or similar
transaction affecting the number of outstanding shares of stock, and the
interested stockholder may not acquire beneficial ownership of any additional
capital stock of the Company except as a part of the same transaction that
resulted in the determination of interested stockholder

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<PAGE>

status. In addition, the Company may not directly or indirectly provide the
interested stockholder with any loan, financial assistance, tax advantage or
other special benefit. The Company must provide all of its stockholders a
proxy or information statement describing the proposed combination at least 30
days prior to its consummation. Repeal or amendment of the foregoing provision
of the Certificate of Incorporation requires the vote of 80% of the
outstanding shares entitled to vote.

The Articles of Incorporation of each of RTI, MFCI and MHCI will contain the
fair price provisions described above.

Unlike the DGCL, the GBCC contains fair price provisions that will apply to
any corporation electing to be governed by such provisions. These provisions
are identical to those contained in the Certificate of Incorporation of the
Company, except that: (i) the interested stockholder may increase its
percentage ownership of the corporation's outstanding shares by up to 1% in
any 12-month period after the Determination Date but before the consummation
of the proposed transaction; (ii) the corporation is not required to furnish a
proxy or information statement to its stockholders regarding the proposed
combination; and (iii) the repeal or amendment of the fair price provisions in
the Bylaws requires the approval of two-thirds of the directors not affiliated
with the interested stockholder and a majority of the votes entitled to be
cast by stockholders not affiliated with the interested stockholder.

Neither RTI, MFCI nor MHCI intends to adopt the fair price provisions of the
GBCC. RTI, MFCI and MHCI intend instead to adopt the fair price provisions
contained in their respective Articles of Incorporation and thereby avoid any
potential conflict which could be created if such corporations were to "opt
in" to the GBCC fair price provisions as well.

Conflicting Interest Transactions. The DGCL states that contracts and
transactions between a Delaware corporation and one or more of its directors
or officers, or organizations in which they serve in such capacities or have a
financial interest, will not be void or voidable solely because such director
or officer acts or participates in a board or committee meeting authorizing
the contract or transaction if: (i) the material facts of the relationship or
interest and as to the contract or transaction are disclosed or known to the
Board or committee and the Board or committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of the
disinterested directors (even if the disinterested directors are less than a
quorum); or (ii) the material facts as to the relationship or interest and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon and the contract or transaction is specifically
approved in good faith by the stockholders; or (iii) the contract or
transaction is fair to the corporation as of the time that it is authorized by
the Board, a committee thereof or the stockholders.

The GBCC states that a director has a conflicting interest with respect to a
transaction effected or proposed by the corporation (or any other entity in
which the corporation has a controlling interest) if (i) whether or not the
transaction is brought before the board for action, to the knowledge of the
director at the "time of commitment" (as defined in the GBCC) the director or
a related person is a party to the transaction or has a beneficial financial
interest in or so closely linked to the transaction and of such financial
significance to the director or a related person that it would reasonably be
expected to exert an influence on the director's judgment if he or she were
called upon to vote on the transaction, or (ii) the transaction is brought (or
is of such character and significance to the corporation that it would in the
normal course be brought) before the Board for action, and to the knowledge of
the director at the time of commitment any of the following persons is either
a party to the transaction or has a beneficial financial interest so closely
linked to the transaction and of such financial significance to such person
that it would reasonably be expected to exert an influence on the director's
judgment if he or she were called upon to vote on the transaction: (a) an
entity (other than the corporation) of which the director is a director,
general partner, agent or employee; (b) a person that controls one or more of
the entities specified in subparagraph (a) above or an entity that is
controlled by, or is under common control with, one or more of the entities
specified in subparagraph (a) above; or (c) an individual who is a general
partner, principal or employer of the director. A director's conflicting
interest transaction may not be enjoined, set aside, or give

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rise to an award of damages or other sanctions, in an action by a stockholder
or by or in the right of the corporation, on the ground of an interest in the
transaction of such director or any person with whom such director has a
personal, economic or other association, if (i) the transaction receives the
affirmative vote of a majority (but not less than two) of the disinterested
directors or a committee thereof who voted on the transaction after required
disclosure to them to the extent the information is not known by them; (ii) a
majority of the votes entitled to be cast by disinterested stockholders were
cast in favor of the transaction after (A) notice to the stockholders
describing the conflicting interest transaction, (B) disclosure by such
director, prior to the stockholders' vote, to the Secretary of the Company of
the number, and identity of the persons holding or controlling the vote, of
all shares that to the knowledge of the director are beneficially owned (or
the voting of which is controlled) by such director or by a related person of
the director, or both, and (C) required disclosure to the stockholders who
voted on the transaction to the extent the required information was not known
by them; or (iii) the transaction, judged in the circumstances at the time of
commitment, is established to have been fair to the corporation. The
provisions of the GBCC that are applicable to directors also apply to
officers.

Appraisal Rights. Under the DGCL, stockholders entitled to vote on a merger
or consolidation have the right to serve upon the corporation a written demand
for appraisal of their shares when the stockholders receive any form of
consideration for their shares other than (i) shares of the surviving
corporation, (ii) shares of any other corporation listed on a national
securities exchange or held of record by more than 2,000 stockholders, or
(iii) cash (or stock and cash) in lieu of fractional shares or any combination
thereof. Stockholders entitled to appraisal rights subsequently receive cash
from the corporation equal to the value of their shares as established by
judicial appraisal.

The GBCC grants stockholders the right to dissent and receive payment of the
fair value of their shares in the event of: (i) amendments to the articles of
incorporation materially and adversely affecting their rights or interests as
stockholders; (ii) sales of all or substantially all of the corporation's
assets (unless the sale is pursuant to a court order and the proceeds are
distributed to the stockholders within one year after the sale); or (iii)
mergers or share exchanges on which the stockholders are entitled to vote.
This right is not available when the affected shares are listed on a national
securities exchange or held of record by more than 2,000 stockholders unless
(i) the articles of incorporation or a resolution of the board of directors
approving the transaction provides otherwise or (ii) in a plan of merger or
share exchange, the holders of such shares are required to accept anything
other than shares of the surviving corporation or another publicly-held
corporation listed on a national securities exchange or held of record by more
than 2,000 stockholders, except for cash in lieu of fractional shares.

Special Meetings of Stockholders. Under the DGCL, special meetings of
stockholders may be called by the board of directors or those persons
authorized by the corporation's certificate of incorporation or bylaws.
Written notice of the time, place and specific purposes of such meeting must
be given by mail to each stockholder entitled to vote at the meeting not less
than 10 nor more than 60 days prior to the scheduled date of the special
meeting, unless such notice is waived as the bylaws stipulate.

The GBCC permits the board of directors or any person specified in the
corporation's articles of incorporation or bylaws to call special meetings of
stockholders. A special meeting may also be called by the owners of at least
25%, or such greater or lesser percentages as the articles of incorporation or
bylaws provide, of the votes entitled to be cast on any issue proposed to be
considered at the special meeting. The provisions of the GBCC regarding notice
of meetings are essentially the same as the provisions of the DGCL.

The Bylaws of the Company state that special meetings of stockholders may be
called by the Board of Directors, the Chairman of the Board of Directors, or
the President. Each of RTI, MFCI and MHCI intends to include a similar
provision in its Bylaws to similarly restrict those entitled to call a special
meeting under the GBCC.

Record Date. Under the DGCL, a corporation may fix the record date at not
more than 60 nor less than 10 days before a meeting, nor more than 60 days
prior to any other action. Under the GBCC, the record date is to be fixed not
more than 70 nor less than 10 days before a meeting, nor more than 70 days
prior to any other action.

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Stockholder List. Under the DGCL, the stockholders of a corporation have the
right to examine the list of stockholders entitled to vote during ordinary
business hours, for a period beginning at least 10 days prior to the meeting
at the place where the meeting will be held or, if specified in the notice for
the meeting, at a place in the city where the meeting will be held. Under the
GBCC, stockholders have the right to examine the stockholder list only at the
time and place of the meeting.

Duration of Proxy. Under the DGCL, no proxy may be voted after three years
from its date, unless the proxy provides for a longer period. Under the GBCC,
no proxy may be voted after 11 months from its effective date, unless the
proxy provides for a longer period.

Preemptive Rights. Both the DGCL and the GBCC do not automatically confer
preemptive rights on stockholders; therefore, stockholders have no preemptive
rights unless and except to the extent the corporation's certificate or
articles of incorporation expressly grant such rights. The Articles of
Incorporation and Bylaws of each of RTI, MFCI and MHCI will be silent as to
preemptive rights.

Removal of Directors. The DGCL permits any director or the entire board of
directors to be removed, with or without cause, by the holders of a majority
of the stock entitled to vote for directors, except that: (i) directors
elected to staggered terms may be removed only for cause unless the
certificate of incorporation provides otherwise; or (ii) if the corporation's
board of directors is elected by cumulative voting and less than the entire
board is to be removed, no director may be removed without cause if the votes
cast against his removal would be sufficient to elect him if then cumulatively
voted at an election of the entire board of directors, or, if there are
classes of directors, at an election of the class of directors of which he is
a part. The Certificate of Incorporation of the Company does not contain any
contrary provisions.

Under the GBCC, unless the articles of incorporation provide otherwise, a
corporation's stockholders may remove any director, with or without cause, by
the vote of the holders of a majority of the outstanding shares of the
corporation entitled to vote. Directors elected to staggered terms may be
removed only for cause, unless the articles of incorporation or a bylaw
adopted by the stockholders provide otherwise. No contrary provisions
regarding removal of directors will be included in the Articles of
Incorporation or Bylaws of either RTI, MFCI or MHCI.

Indemnification of Directors and Officers. Under both the DGCL and the GBCC,
a corporation is required to indemnify a director to the extent that the
director has been successful, on the merits or otherwise, in the defense of
any proceeding to which he was a party because of his status as a director of
the corporation. It may indemnify any director or officer made a party to a
proceeding if such director or officer acted in a manner he believed in good
faith to be in or not opposed to the best interests of the corporation and, in
the case of any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. A corporation may not indemnify a director in a
proceeding by or in the right of the corporation in which the director is
adjudged liable to the corporation unless the court determines that such
indemnification is fair, or (under the GBCC only) in connection with any other
proceeding in which he is adjudged liable on the basis that he improperly
received a personal benefit.

The Certificate of Incorporation of the Company provides that directors and
officers will be indemnified under all circumstances for which indemnification
is permitted under Delaware law. The Articles of Incorporation and Bylaws of
each RTI, MFCI and MHCI will require indemnification under all circumstances
for which indemnification is permitted under Georgia law.

Both the DGCL and the GBCC allow a corporation to enter into indemnification
agreements with its officers and directors. The Company entered into
Indemnification Agreements with each of its directors and executive officers,
pursuant to which the Company has agreed to indemnify each such individual for
any losses suffered due to any investigations, claims or proceedings brought
against such individual because he or she served as a director or officer of
the Company. RTI, MFCI and MHCI intend to enter into similar agreements with
their respective directors and executive officers.

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<PAGE>

Amendments to Certificate or Articles of Incorporation. The DGCL permits a
corporation to amend its certificate of incorporation so long as the amended
certificate of incorporation contains only provisions that could be lawfully
and properly included in an original certificate of incorporation filed at the
time the amendment is filed. Amendments must be adopted by the Board of
Directors and approved by a majority of the outstanding stock entitled to vote
thereon and by a majority of the outstanding stock of each class entitled to
vote as a class with respect to the amendment. Class voting will be permitted
when a proposed amendment would increase or decrease the number or par value
of the authorized shares of a class or adversely affect the powers,
preferences or rights of the shares of a class. If, however, the certificate
of incorporation permits the number of authorized shares of a class to be
increased or decreased without the separate approval of the affected class,
such amendment may be approved by the affirmative vote of the holders of a
majority of the stock entitled to vote on the amendment, voting as a single
class. The Certificate of Incorporation of the Company does not modify these
provisions, but does state that any provisions in the Certificate of
Incorporation relating to the classification and composition of the Board and
business combinations may only be amended or repealed by the affirmative vote
of at least 80% of the votes entitled to be cast by the holders of all then
outstanding shares of capital stock, voting together as a single class, unless
such amendment is recommended by 80% of the members of the Board of Directors.

Under the GBCC, the board of directors may amend the articles of
incorporation to take the following actions without obtaining stockholder
approval: (i) delete the names and addresses of the initial directors, initial
registered agent or registered office, (ii) change each issued and unissued
authorized share of an outstanding class of stock into a greater number of
whole shares if the corporation has only shares of that class outstanding,
(iii) change the corporate name, (iv) extend the corporation's duration if it
was incorporated at a time the law required limited duration, or (v) change or
eliminate the par value of each issued and unissued share of an outstanding
class if the corporation has only shares of that class outstanding. Other
amendments must be approved by the board of directors and by the stockholders
by a majority of the votes entitled to be cast on the amendment by each voting
group entitled to vote on the amendment unless the articles of incorporation,
the board of directors or another provision of the GBCC requires a higher
vote. Class voting on an amendment will be permitted if the amendment would
change the number of authorized shares of a class (unless the articles of
incorporation provide otherwise) or adversely affect the rights, powers or
preferences of the shares of a class.

The Articles of Incorporation of each of RTI, MFCI and MHCI will incorporate
the same special provisions regarding approval of specified types of
amendments as are contained in the Company's Certificate of Incorporation and
described above.

Amendments to Bylaws. Under the DGCL, the power to adopt, amend or repeal
bylaws rests with those stockholders entitled to vote on such matters,
provided, however, a corporation's certificate of incorporation may
additionally confer such power upon the directors. Conferring the power to
adopt, amend or repeal bylaws upon the directors shall not divest, nor shall
it limit, the stockholders' power to adopt, amend or repeal bylaws.

The Certificate of Incorporation of the Company authorizes the Board of
Directors to amend the Bylaws, but requires the affirmative vote of the
holders of at least 80% of the outstanding shares of capital stock, voting as
a single class, to amend a bylaw in a manner inconsistent with the provisions
of the Certificate of Incorporation dealing with the classification and
composition of the Board and business combinations. The Bylaws of the Company
state that unless the DGCL, the Certificate of Incorporation or the Bylaws
provide otherwise, the Bylaws may be amended or repealed: (i) at a
stockholders' meeting by vote of a majority of the shares entitled to vote on
the amendments; or (ii) at a board meeting by a majority vote of the directors
present, provided that the notice of the meeting states the substance of the
proposed amendment or repeal.

The GBCC permits a corporation's board of directors to amend, repeal or
adopt bylaws, unless (i) the articles of incorporation reserve this power
exclusively to the stockholders in whole or in part or (ii) the stockholders,
in amending or repealing a particular bylaw, expressly reserve the power to
amend or repeal that particular bylaw. The stockholders alone may amend,
repeal or adopt bylaws limiting the authority of the board of directors or
establishing staggered terms for directors; in addition, the board of
directors may not amend, repeal or adopt a bylaw fixing a greater stockholder
quorum or voting requirement unless the bylaw relates to

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<PAGE>

the GBCC's business combination or fair practice provisions. Unless provided
otherwise in a corporation's articles of incorporation or bylaws, a bylaw
fixing a greater quorum or voting requirement for the board of directors may
be adopted, amended or repealed by the affirmative vote of a majority of the
votes entitled to be cast by the stockholders or by a majority of the
directors.

The Articles of Incorporation and Bylaws of each of RTI, MFCI and MHCI will
incorporate the same special provisions regarding approval of certain
specified types of amendments as are set forth in the Certificate of
Incorporation and Bylaws of the Company as described above.

INDEPENDENT AUDITORS

The firm of Ernst & Young LLP serves as the Company's independent auditors
and will be independent auditors for each of RTI, MFCI and MHCI after the
Distribution. Representatives of Ernst & Young LLP will be present at the
Special Meeting to respond to appropriate questions and will have an
opportunity to make a statement if they so desire.

STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING

Any stockholder of the Company wishing to submit a proposal for action at
the Company's 1996 Annual Meeting of Stockholders and desiring the proposal to
be considered for inclusion in the Company's proxy materials must provide a
written copy of the proposal to the management of the Company at its principal
executive office not later than April 27, 1996, and must otherwise comply with
rules of the Securities and Exchange Commission relating to stockholder
proposals.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Securities and
Exchange Commission (the "SEC") are incorporated herein by referenced:

1. Annual Report on Form 10-K for the fiscal year ended June 3, 1995.

2. Quarterly Report on Form 10-Q for the quarterly period ended September
2, 1995.

3. Quarterly Report on Form 10-Q for the quarterly period ended December
2, 1995.

4. Current Report on Form 8-K dated October 5, 1995.

5. Current Report on Form 8-K dated December 14, 1995.

The Company will provide without charge to each person to whom a copy of
this Proxy Statement is delivered, on the telephone or written request of any
such person, by first class mail or other equally prompt means within one
business day of receipt of such request, a copy of any or all of the foregoing
documents incorporated herein by reference (other than any exhibits to such
documents which are not specifically incorporated herein by reference).
Requests should be directed to:

Morrison Restaurants Inc.
4721 Morrison Drive
Mobile, Alabama 36609
Telephone No. 334/344-3000

Attention: Corporate Secretary.

All documents filed by the Company with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
date of the Special Meeting or any adjournment thereof shall be deemed to be
incorporated by reference herein.

Any statements contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed document
that also is incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall be deemed to
constitute a part hereof except as so modified or superseded.

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<PAGE>

REPORTS OF MFCI AND MHCI

After the Distribution, both MFCI and MHCI will be required to comply with
the reporting requirements of the Exchange Act and, in accordance therewith,
to file reports, proxy statements and other information with the SEC.

After the Distribution, such reports, proxy statements and other information
may be inspected and copied at the public reference facilities of the SEC
listed below under "Available Information" and obtained by mail from the SEC
as described below under "Available Information." Application will be made to
list the shares of MFCI Common Stock (and related MFCI Rights) and MHCI Common
Stock (and related MHCI Rights) on the NYSE and, if and when such shares of
MFCI Common Stock (and related MFCI Rights) and MHCI Common Stock (and related
MHCI Rights), as applicable, commence trading on the NYSE, such reports, proxy
statements and other information will be available for inspection at the
offices of the NYSE listed below under "Available Information."

Additionally, each of MFCI and MHCI intend to provide annual reports,
containing audited financial statements, to its stockholders in connection
with its annual meetings of stockholders.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and the rules and regulations promulgated thereunder and in accordance
therewith file reports, proxy statements and other information with the SEC.
Reports, proxy statements and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the SEC at Seven World Trade Center, Suite 1300, New York,
New York 10048 and in the Citicorp Center, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661-2551. Copies of such information may be
obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Reports and other
information concerning the Company may also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.

MFCI and MHCI will file with the SEC a Registration Statement on Form 10
with respect to the shares of MFCI Common Stock (and related MFCI Rights) and
MHCI Common Stock (and related MHCI Rights) to be received by the stockholders
of the Company in the Distribution. It is expected that MFCI and MHCI will
file with the SEC a Registration Statement on Form 10 prior to the Special
Meeting and request effectiveness of such Registration Statements prior to the
Distribution Date. The respective Registration Statements and the exhibits
thereto, once filed by MFCI and MHCI, may be inspected and copied at the
public reference facilities of the SEC listed above.

GENERAL

A list of stockholders entitled to be present and vote at the Special
Meeting will be available at the offices of the Company, 4721 Morrison Drive,
Mobile, Alabama 36609, for inspection by stockholders during regular business
hours from , 1996, to the date of the Special Meeting.

By Order of the Board of Directors,

Pfilip G. Hunt
Senior Vice President,
General Counsel
and Secretary

January , 1996
Mobile, Alabama

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INDEX OF FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<S> <C>
MORRISON RESTAURANTS INC.
Consolidated Financial Statements--Years Ended June 5, 1993, June 4,
1994 and June 3, 1995 and the Twenty-Six Weeks Ended December 3, 1994
and December 2, 1995:
Report of Independent Auditors.......................................... F-2
Consolidated Statements of Income....................................... F-3
Consolidated Balance Sheets............................................. F-4
Consolidated Statements of Stockholders' Equity......................... F-6
Consolidated Statements of Cash Flows................................... F-7
Notes to Consolidated Financial Statements.............................. F-8
MORRISON FRESH COOKING, INC.
(A wholly-owned business of Morrison Restaurants Inc.)
Financial Statements--Years Ended June 5, 1993, June 4, 1994 and June 3,
1995 and the Twenty-Six Weeks Ended December 3, 1994 and December 2,
1995:
Report of Independent Auditors.......................................... F-23
Statements of Income.................................................... F-24
Balance Sheets.......................................................... F-25
Statements of Owner's Equity............................................ F-26
Statements of Cash Flows................................................ F-27
Notes to Financial Statements........................................... F-28
MORRISON HEALTH CARE, INC.
(A wholly-owned business of Morrison Restaurants Inc.)
Financial Statements--Years Ended June 5, 1993, June 4, 1994 and June 3,
1995 and the Twenty-Six Weeks Ended December 3, 1994 and December 2,
1995:
Report of Independent Auditors.......................................... F-39
Statements of Income.................................................... F-40
Balance Sheets.......................................................... F-41
Statements of Owner's Equity............................................ F-42
Statements of Cash Flows................................................ F-43
Notes to Financial Statements........................................... F-44
Schedule II--Valuation and Qualifying Accounts.......................... F-56
MORRISON RESTAURANTS INC.
Unaudited Pro Forma Consolidated Financial Information:
Introductory Note....................................................... F-57
Unaudited Pro Forma Consolidated Statements of Income................... F-58
Unaudited Pro Forma Consolidated Balance Sheet.......................... F-60
Notes to Unaudited Pro Forma Consolidated Financial Information......... F-62
MORRISON FRESH COOKING, INC.
(A wholly-owned business of Morrison Restaurants Inc.)
Unaudited Pro Forma Financial Information:
Introductory Note....................................................... F-63
Unaudited Pro Forma Statements of Income................................ F-64
Unaudited Pro Forma Balance Sheet....................................... F-66
Notes to Unaudited Pro Forma Financial Information...................... F-68
MORRISON HEALTH CARE, INC.
(A wholly-owned business of Morrison Restaurants Inc.)
Unaudited Pro Forma Financial Information:
Introductory Note....................................................... F-69
Unaudited Pro Forma Statements of Income................................ F-70
Unaudited Pro Forma Balance Sheet....................................... F-72
Notes to Unaudited Pro Forma Financial Information...................... F-74
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Morrison Restaurants Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Morrison
Restaurants Inc. and Subsidiaries as of June 3, 1995 and June 4, 1994, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three fiscal years in the period ended June 3, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Morrison
Restaurants Inc. and Subsidiaries at June 3, 1995 and June 4, 1994, and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended June 3, 1995, in conformity with
generally accepted accounting principles.

As discussed in Notes 7 and 9 to the consolidated financial statements, in
fiscal 1993 Morrison Restaurants Inc. changed its method of accounting for
income taxes and postretirement benefits other than pensions.

Ernst & Young LLP

Atlanta, Georgia

November 17, 1995, except
for Notes 1 and 13, as to which
the date is January 10, 1996

F-2
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
--------------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales and operating
revenues................. $377,755 $458,451 $514,292 $233,675 $296,355
Other revenues............ 938 588 1,020 387 1,610
-------- -------- -------- -------- --------
378,693 459,039 515,312 234,062 297,965
-------- -------- -------- -------- --------
Operating costs and
expenses:
Cost of merchandise....... 110,801 127,862 138,665 62,924 82,031
Payroll and related
costs.................... 120,454 151,270 169,881 75,266 101,893
Other..................... 77,559 94,330 106,028 47,614 65,525
Selling, general and
administrative........... 25,420 34,250 37,521 19,788 20,861
Depreciation and
amortization............. 18,716 23,353 26,634 11,873 16,797
L&N conversion/closing
costs.................... 19,727 19,727
Interest expense, net of
interest income, totaling
$1,097 in 1993, $660 in
1994, $736 in 1995 and
$460 and $178 for the
twenty-six weeks ended
December 3, 1994 and
December 2, 1995,
respectively............. 60 160 744 (168) 1,522
-------- -------- -------- -------- --------
353,010 431,225 499,200 237,024 288,629
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes and
cumulative effect of
accounting changes........ 25,683 27,814 16,112 (2,962) 9,336
Provision for federal and
state income taxes........ 9,400 9,707 5,027 (1,839) 3,038
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before cumulative effect
of accounting changes..... 16,283 18,107 11,085 (1,123) 6,298
Income from discontinued
operations, net of
applicable income taxes... 21,151 26,577 51,086 37,764 9,892
-------- -------- -------- -------- --------
Income before cumulative
effect of accounting
changes................... 37,434 44,684 62,171 36,641 16,190
Cumulative effect of
accounting changes, net:
Postretirement benefits... (18)
Income taxes.............. 559
-------- -------- -------- -------- --------
Net income................. $ 37,975 $ 44,684 $ 62,171 $ 36,641 $ 16,190
======== ======== ======== ======== ========
Earnings (loss) per common
and common equivalent
share:
Continuing operations..... $ 0.43 $ 0.49 $ 0.31 $ (0.03) $ 0.18
Discontinued operations... 0.56 0.71 1.42 1.04 0.28
Cumulative effect of
accounting changes, net.. 0.01
-------- -------- -------- -------- --------
Earnings per common and
common equivalent share... $ 1.00 $ 1.20 $ 1.73 $ 1.01 $ 0.46
======== ======== ======== ======== ========
Weighted average common and
common equivalent shares.. 38,078 37,367 35,922 36,324 35,416
======== ======== ======== ======== ========
</TABLE>

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

F-3
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
-------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments............. $ 4,420 $ 5,957 $ 9,617
Receivables:
Trade..................................... 194 115 213
Other..................................... 1,769 2,360 2,960
Inventories:
Merchandise............................... 4,359 4,989 5,847
China, silver and supplies................ 1,933 2,495 3,021
Prepaid expenses............................ 9,006 8,043 9,494
Deferred income tax benefits................ 2,159 3,758 1,848
Current assets of discontinued operations... 55,776 52,481 47,045
-------- --------- ---------
Total current assets.................... 79,616 80,198 80,045
-------- --------- ---------
Property and equipment--at cost:
Land........................................ 9,545 17,511 24,095
Buildings................................... 29,757 38,728 50,273
Improvements................................ 112,431 149,405 182,134
Restaurant equipment........................ 96,956 116,275 131,605
Other equipment............................. 21,269 26,206 29,775
Construction in progress.................... 18,348 38,945 40,427
-------- --------- ---------
288,306 387,070 458,309
Less accumulated depreciation and
amortization............................... (98,064) (117,068) (132,620)
-------- --------- ---------
190,242 270,002 325,689
Costs in excess of net assets acquired........ 10,688 22,298 21,981
Non-current assets of discontinued
operations................................... 119,235 102,726 108,543
Other assets.................................. 8,672 8,827 9,719
-------- --------- ---------
Total assets............................ $408,453 $ 484,051 $ 545,977
======== ========= =========
</TABLE>

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

F-4
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................... $ 13,865 $ 26,393 $ 28,182
Short-term borrowings...................... 17,416 12,638 17,720
Accrued liabilities:
Taxes, other than income taxes........... 6,303 9,097 10,505
Payroll and related costs................ 7,146 6,394 5,113
Insurance................................ 6,767 6,396 6,808
Rent and other........................... 3,416 11,287 7,275
Current portion of long-term debt.......... 2,483 87 91
Current liabilities of discontinued
operations................................ 65,227 52,686 46,182
--------- --------- ---------
Total current liabilities.............. 122,623 124,978 121,876
--------- --------- ---------
Long-term debt............................... 5,467 32,003 69,136
Deferred income taxes........................ 15,392 16,864 16,955
Other deferred liabilities................... 14,518 18,672 18,985
Non-current liabilities of discontinued oper-
ations...................................... 29,317 46,041 62,441
Stockholders' equity:
Common stock, $0.01 par value; (authorized:
100,000 shares; issued: 43,644 shares).... 436 436 436
Capital in excess of par value............. 77,656 84,515 84,752
Retained earnings.......................... 248,044 298,181 308,169
--------- --------- ---------
326,136 383,132 393,357
Less cost of treasury stock................ (105,000) (137,639) (136,773)
--------- --------- ---------
221,136 245,493 256,584
--------- --------- ---------
Total liabilities and stockholders'
equity................................ $ 408,453 $ 484,051 $ 545,977
========= ========= =========
</TABLE>

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

F-5
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
CAPITAL IN TOTAL
COMMON STOCK ISSUED TREASURY STOCK EXCESS OF RETAINED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS EQUITY
---------- --------- ------ --------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 6, 1992... 29,097 $ 291 (4,450) $ (59,252) $73,413 $189,125 $203,577
Net income............. 37,975 37,975
Shares issued under
stock bonus and stock
option plans.......... 241 2,981 1,768 4,749
Cash dividends of $0.32
per common share...... (11,874) (11,874)
Purchase of treasury
stock including
deferred compensation
plan.................. (514) (14,803) (14,803)
---------- -------- ------ --------- ------- -------- --------
Balance, June 5, 1993... 29,097 291 (4,723) (71,074) 75,181 215,226 219,624
Net income............. 44,684 44,684
3-for-2 stock split.... 14,547 145 (2,415) (145) 0
Shares issued under
stock bonus and stock
option plans.......... 484 5,844 2,620 8,464
Cash dividends of
$0.3299 per common
share................. (11,866) (11,866)
Purchase of treasury
stock including
deferred compensation
plan.................. (1,681) (39,770) (39,770)
---------- -------- ------ --------- ------- -------- --------
Balance, June 4, 1994... 43,644 436 (8,335) (105,000) 77,656 248,044 221,136
Net income............. 62,171 62,171
Shares issued under
stock bonus and stock
option plans.......... 562 7,792 3,132 10,924
Shares issued pursuant
to Tias, Inc. acquisi-
tion.................. 355 5,273 3,727 9,000
Cash dividends of
$0.3458 per common
share................. (12,034) (12,034)
Purchase of treasury
stock including
deferred compensation
plan.................. (1,701) (45,704) (45,704)
---------- -------- ------ --------- ------- -------- --------
Balance, June 3, 1995... 43,644 436 (9,119) (137,639) 84,515 298,181 245,493
Net income (unau-
dited)................ 16,190 16,190
Shares issued under
stock bonus and stock
option plans
(unaudited)........... 82 1,219 237 1,456
Cash dividends of
$0.1795 per common
share (unaudited)..... (6,202) (6,202)
Purchase of treasury
stock including
deferred compensation
plan (unaudited)...... (19) (353) (353)
---------- -------- ------ --------- ------- -------- --------
Balance, December 2,
1995 (unaudited)....... 43,644 $ 436 (9,056) $(136,773) $84,752 $308,169 $256,584
========== ======== ====== ========= ======= ======== ========
</TABLE>

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

F-6
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
---------------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Income (loss) from
continuing operations... $ 16,283 $ 18,107 $ 11,085 $ (1,123) $ 6,298
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Cumulative effect of
change in accounting
principles............. (541)
Depreciation and
amortization........... 18,716 23,353 26,634 11,873 16,797
Amortization of
intangibles............ 480 485 607 218 333
Other, net.............. 117 (78)
Deferred income taxes... 3,258 4,909 2,501 (6,263) 1,107
Loss on disposition of
assets................. 256 523 4,419 102 3,404
Changes in operating
assets and liabilities:
(Increase)/decrease in
receivables............ (889) 878 (213) (2,457) (698)
(Increase)/decrease in
inventories............ (1,055) (862) (1,059) (850) (1,384)
(Increase)/decrease in
prepaid and other
assets................. (1,940) (2,116) 3,355 3,771 (615)
Increase/(decrease) in
accounts payable,
accrued and other
liabilities............ 8,091 6,677 18,810 21,674 (1,370)
Increase/(decrease) in
income taxes payable... (1,777) (1,947) 1,205 4,509 550
-------- -------- -------- -------- --------
Cash provided by
continuing operations... 40,882 50,007 67,344 31,571 24,344
Cash provided (used) by
discontinued
operations.............. 62,346 58,514 (11,128) (11,316) 16,099
-------- -------- -------- -------- --------
Net cash provided by
operating activities.... 103,228 108,521 56,216 20,255 40,443
-------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Purchases of property and
equipment............... (47,748) (70,189) (108,452) (49,079) (76,626)
Proceeds from disposal of
assets.................. 449 67 153 58 386
Other, net............... (657) (779) 2,701 (988) (972)
Discontinued operations
investment activities,
net..................... (17,911) (22,826) 71,693 81,797 (9,463)
-------- -------- -------- -------- --------
Net cash provided (used)
by investing
activities.............. (65,867) (93,727) (33,905) 31,788 (86,675)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES:
Proceeds from long-term
debt.................... 559 30,800 20,000 37,180
Net change in short-term
borrowings.............. 17,416 (11,828) (17,416) 5,082
Principal payments on
long-term debt and
capital leases ......... (14,878) (7,438) (7,402) (43)
Proceeds from issuance of
stock, including
treasury stock.......... 4,749 8,464 10,924 6,349 1,456
Stock repurchases........ (14,803) (39,770) (45,704) (42,117) (353)
Dividends paid........... (11,874) (11,866) (12,034) (6,008) (6,202)
Discontinued operations
financing activities.... (8,893) (147) 14,506 (4,656) 12,772
-------- -------- -------- -------- --------
Net cash provided (used)
by financing
activities.............. (45,699) (25,344) (20,774) (51,250) 49,892
-------- -------- -------- -------- --------
Increase/(decrease) in
cash and short-term
investments............. (8,338) (10,550) 1,537 793 3,660
Cash and short-term
investments:
Beginning of period..... 23,308 14,970 4,420 4,420 5,957
-------- -------- -------- -------- --------
End of period........... $ 14,970 $ 4,420 $ 5,957 $ 5,213 $ 9,617
======== ======== ======== ======== ========
Supplemental disclosure
of cash flow
information--cash paid
for:
Interest (net of amount
capitalized)........... $ 1,643 $ 656 $ 1,547 $ 168 $ 1,522
Income taxes, net....... $ 12,258 $ 9,678 $ 5,200 $ 0 $ 737
</TABLE>

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

F-7
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 3, 1995

(INFORMATION PERTAINING TO THE TWENTY-SIX WEEKS ENDED DECEMBER 3, 1994 AND
DECEMBER 2, 1995 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Morrison Restaurants Inc. (The "Company" or "Morrison") operates three
businesses in the foodservice industry. These businesses are organized into
two operating groups, the Ruby Tuesday Group, consisting of the Ruby Tuesdays,
Mozzarella's Cafes and Tia's Tex-Mex concepts, and the Morrison Group, which
is comprised of the Company's family dining restaurant and health care
contract food and nutrition businesses. On September 27, 1995, Morrison
announced a plan to spin-off ("the Distribution") its family dining restaurant
and health care contract food and nutrition businesses to its shareholders.
The spin-off will result in the family dining restaurant and health care
contract food and nutrition businesses operating as two separate stand-alone,
publicly traded companies. The spin-off is subject to shareholder approval and
receipt of a ruling from the Internal Revenue Service that the transaction
will be tax free to Morrison and its shareholders. As part of the spin-off,
Morrison intends to reincorporate in Georgia and change its name to Ruby
Tuesday, Inc. Concurrent with the reincorporation, the spin-off provides for a
one-for-two reverse stock split.

Following the spin-off, the Company will consist of Morrison's casual dining
restaurant operations. The accompanying financial statements have been
prepared to reflect the operations of the family dining restaurant and health
care contract food and nutrition businesses as discontinued operations for all
periods presented, as if Morrison's casual dining restaurant operations had
operated as a stand-alone entity, thus all disclosures except for the
information relating to discontinued operations as presented in Note 2 of
Notes to the Consolidated Financial Statements relate to continuing operations
only.

Fiscal Year

The Company's fiscal year ends on the first Saturday after May 30. The
fiscal years ended June 5, 1993, June 4, 1994, and June 3, 1995 were comprised
of 52 weeks.

Cash and Short-Term Investments

The Company's cash management program provides for the investment of excess
cash balances in short- term money market instruments. Short-term investments
are stated at cost, which approximates market. The Company considers
marketable securities with a maturity of three months or less when purchased
to be short-term investments.

Inventories

Inventories consist of materials, food supplies, china and silver and are
stated at the lower of cost (first in- first out) or market.

Property and Equipment and Depreciation

Depreciation for financial reporting purposes is computed using the
straight-line method over the estimated useful lives of the assets or, for
capital lease property, over the term of the lease, if shorter. Annual rates
of depreciation range from 3% to 5% for buildings and from 8% to 34% for
restaurant and other equipment.

F-8
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

During March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (FAS 121). FAS
121 requires that, beginning in fiscal years starting after December 15, 1995,
long-lived assets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Long-lived assets and certain identifiable intangibles to be
disposed of are generally to be reported at the lower of carrying amount or
fair value less cost to sell. Currently, the Company recognizes such
impairment upon the decision to close a unit. Subsequent to December 2, 1995,
the Company completed its analysis of the financial statement impact of
adoption of FAS 121. A charge of $25.4 million will be taken in the third
quarter of fiscal 1996. See Note 13 of Notes to Consolidated Financial
Statements for more information.

Income Taxes

Deferred income taxes are determined utilizing a liability approach. This
method gives consideration to the future tax consequences associated with
differences between financial accounting and tax bases of assets and
liabilities.

Pre-Opening Expenses

Salaries, personnel training costs and other expenses of opening new
facilities are charged to expense as incurred.

Intangible Assets

Excess of costs over the fair value of net assets acquired of purchased
businesses generally is amortized on a straight-line basis over 40 years. The
carrying value of goodwill is reviewed if facts and circumstances suggest that
it may be impaired. At June 4, 1994, June 3, 1995 and December 2, 1995,
accumulated amortization for costs in excess of net assets acquired was $4.3
million, $4.7 million and $5.0 million, respectively. Other intangibles are
amortized over their specified lives, varying from five to 20 years. For the
years ending June 4, 1994, June 3, 1995 and December 2, 1995, accumulated
amortization for other intangibles was $2.2 million, $0.4 million and $0.4
million, respectively.

The carrying value of goodwill and other intangibles is evaluated
periodically in relation to the operating performance and future undiscounted
cash flows of each operating business acquired. Adjustments are made if the
sum of expected future undiscounted net cash flows is less than net book
value. The Company affirmed that the remaining amounts of these assets have
continuing value.

Fair Value of Financial Instruments

The Company's financial instruments at June 4, 1994, June 3, 1995, and
December 2, 1995 consisted of cash and short-term investments, short-term
borrowings and long-term debt. The fair value of these financial instruments
approximated the carrying amounts reported in the consolidated balance sheets.

Earnings Per Share

Earnings per share are based on the weighted average number of shares
outstanding during each year and are adjusted for the assumed exercise of
options, after the assumed repurchase of shares with the related proceeds and
after the adjustment for stock splits and stock dividends through December 2,
1995.

F-9
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Stock-Based Employee Compensation Plans

During October, 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 "Accounting for Stock-
Based Compensation" (FAS 123). FAS 123 establishes financial
accounting and reporting standards for stock-based employee compensation
plans. The Statement defines a fair value based method of accounting for an
employee stock option or similar equity instrument. The Statement allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value based method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees". The Company intends to continue to
measure compensation cost following the principles of APB Opinion No. 25 and
will therefore be required to present pro forma disclosures of net income and
earnings per share as if the fair value based method had been applied
beginning in fiscal 1997.

2. DISCONTINUED OPERATIONS

As previously mentioned, Morrison intends to distribute the common stock of
its family dining restaurant business (Morrison Fresh Cooking, Inc., or "MFC")
and its health care contract food and nutrition business (Morrison Health
Care, Inc., or "MHC") to its shareholders. Morrison shareholders will receive
one share of MFC for every four shares of Morrison stock then held and one
share of MHC for every three shares of Morrison stock then held. In accordance
with Accounting Principles Board Opinion No. 30, the financial results of the
two businesses, together referred to as the Morrison Group, are reported as
discontinued operations in the accompanying consolidated financial statements
and the results of prior periods have been restated.

The condensed results presented below include an allocation of general
expenses of Morrison, such as legal, data processing and interest on a
specific identification method, where appropriate. Management believes the
allocation methods used are reasonable. Condensed results of the discontinued
operations are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
--------------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $721,152 $754,351 $519,777 $259,711 $250,810
======== ======== ======== ======== ========
Income before provision
for income taxes and
cumulative effect of
accounting changes..... $ 35,202 $ 43,344 $ 88,600 $ 66,778 $ 16,569
Provision for federal
and state income
taxes.................. 13,326 16,767 37,514 29,014 6,677
-------- -------- -------- -------- --------
Income before cumulative
effect of accounting
changes................ 21,876 26,577 51,086 37,764 9,892
Cumulative effect of
accounting changes..... (725)
-------- -------- -------- -------- --------
Net income.............. $ 21,151 $ 26,577 $ 51,086 $ 37,764 $ 9,892
======== ======== ======== ======== ========
</TABLE>

Included in the June 3, 1995 income before provision for income taxes and
cumulative effect of accounting changes is a $46.8 million gain on sale of
certain business and industry contracts and assets of MHC.

After the Distribution, the Company will not have any ownership interest in
either MFC or MHC, except for stock held within the rabbi trust associated
with the Company's Deferred Compensation Plan. See Note 8 of Notes to
Consolidated Financial Statements for more information. Prior to the spin-off
Morrison will enter into certain agreements with both MFC and MHC governing
certain operating relationships among the Company, MFC and MHC subsequent to
the Distribution including (i) an agreement providing for assumptions of
liabilities

F-10
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. DISCONTINUED OPERATIONS--(CONTINUED)

and cross-indemnities to allocate responsibilities for liabilities arising out
of or in connection with business activities prior to the Distribution; (ii) a
tax indemnity agreement which will provide that none of the three companies
will take any action that would jeopardize the intended tax consequences of
the Distribution; (iii) a tax allocation agreement to the effect that MFC and
MHC will pay their respective shares of Morrison's consolidated tax liability
for the tax years that MFC and MHC were included in Morrison's consolidated
federal income tax return; (iv) a shared services agreement pursuant to which
each of the three companies will agree to provide to the other parties certain
services, subject to certain conditions, on an "as needed" basis; (v)
intellectual property license agreements which will provide for the licensing
of rights currently owned by Morrison to the three companies; and (vi) an
agreement providing for the allocation of employee benefit rights and
responsibilities among the three companies.

3. ACQUISITION OF TIAS, INC.

On January 17, 1995, the Company acquired all of the outstanding common
stock of Tias, Inc., a twelve- unit Tex-Mex restaurant concept based in
Dallas, Texas, for $9.0 million in common stock (354,673 shares). The
acquisition has been accounted for as a purchase. Accordingly, the purchase
price was allocated on the basis of the estimated fair value of the assets
acquired and liabilities assumed. This treatment resulted in goodwill of $12.2
million which is being amortized on a straight-line basis over 40 years.

4. PHASE OUT OF THE L&N SEAFOOD GRILL CONCEPT

On June 27, 1994, plans to phase out the L&N Seafood Grill concept were
announced by the Company. The original plan, as approved by the Board of
Directors, called for the conversion of 30 L&N units into other Company
concepts. All remaining units were to be sold or closed. The Company accrued
$19.7 million for costs to be incurred as a result of the phase out. This
amount, originally accrued to cover the costs to convert 30 L&N units and
close the remaining eight, consisted primarily of the following: losses on
disposal of fixed assets net of anticipated proceeds and the net cost of
related lease obligations for the units to be closed (approximately $11.6
million), expected operating losses during the phase out period (approximately
$4.8 million), severance pay (approximately $1.1 million) and other losses on
the conversion of units, consisting primarily of the write-off of fixed
assets, inventory, and unamortized cost in excess of net assets acquired
(approximately $2.2 million). The Company originally estimated that, of the
$19.7 million charge, asset write-offs (including inventory, fixed assets and
goodwill) would total $9.2 million. Cash proceeds from disposal of the
properties were anticipated to be $0.7 million. The remaining $11.2 million
represented the estimated cash outlay for lease settlements, severance pay and
other operating expenditures. The original plan assumed that no units would be
sublet and that buyout of leases could occur. Determination of the number of
months assumed in which buyouts could occur was made on an individual unit
basis.

Subsequent to the June, 1994 announcement, the Company reacquired three
additional L&N units as a result of a default on a licensing agreement. These
three units were closed. Based on favorable operating results, in the third
quarter of fiscal 1995, management decided to continue to operate four of the
L&N units as L&N's through the remainder of their lease terms. During the
year, 21 of the L&N units were converted and are operating as other Ruby
Tuesday Group restaurants. One additional unit was converted and reopened as a
Tia's shortly after year-end. Another unit is in the process of being
converted to a Tia's. The remaining 11 units were closed.

The increase from the original plan in the number of units to be closed did
not result in a material increase to the $11.6 million closing cost estimate
as the increases necessary for the six additional units ultimately closed were
offset by decreases in estimates for the other units closed and the decrease
which resulted from the decision to continue to operate the four units
discussed above.

F-11
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. PHASE OUT OF THE L&N SEAFOOD GRILL CONCEPT--(CONTINUED)

Of the original $19.7 million accrued to phase out the concept, $6.0 and
$0.9 million of reserves remain outstanding as of June 3, 1995 and December 2,
1995, respectively. The $6.0 million of reserves remaining at June 3, 1995
related to costs anticipated to be incurred to settle lease obligations on
closed units ($2.3 million) and property and equipment write-offs which were
delayed until settlement of the corresponding lease obligations ($3.7
million). As of December 2, 1995 negotiations for settlement of the three
remaining lease obligations were in process. Management hopes to have each of
these settled with the landlords by the date of the Distribution and believes
the original estimates are still appropriate. Any lease obligations remaining
as of the date of Distribution will be the sole responsibility of the Company.

5. NOTES AND MORTGAGES PAYABLE

Notes and mortgages payable consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit facility......................... $ $30,800 $67,980
8.88% Senior promissory notes payable to Life
Insurance Company of Georgia..................... 7,392
Other notes and mortgages......................... 558 1,290 1,247
------ ------- -------
7,950 32,090 69,227
Less current maturities........................... 2,483 87 91
------ ------- -------
$5,467 $32,003 $69,136
====== ======= =======
</TABLE>

<TABLE>
<S> <C> <C> <C>
Annual maturities of notes and mortgages at June 3, 1995
are as follows (in thousands):
1996.................................................... $ 87
1997.................................................... 95
1998.................................................... 103
1999.................................................... 112
2000.................................................... 30,880
Subsequent years........................................ 813
-------
Total................................................. $32,090
=======
</TABLE>

During the quarter ended September 3, 1994, the Company retired the 8.88%
Senior Promissory Note payable to Life Insurance Company of Georgia.

On September 30, 1994, the Company entered into a five-year revolving line
of credit with various banks which allows the Company to borrow up to $200.0
million under various interest rate options. Commitment fees ranging from
0.0625% to 0.15% per annum are payable on the unused portion of the credit
facility. At June 3, 1995, the Company had $30.8 million of allocated
borrowings outstanding with various banks under the terms of the agreement at
interest rates ranging from 6.32% to 6.44% per annum. Such borrowings (with
maturities up to 180 days) have been classified as long-term based on the
Company's ability and intent to refinance such borrowings under the revolving
facility. Based on the intended allocation of debt as of the date of the
Distribution, a pro rata percentage of Morrison's December 2, 1995 outstanding
balance under the revolving line of credit was allocated to MHC. This amount,
which totaled $32.0 million, is to be assumed by MHC at that date.

The credit facility provides for certain restrictions on incurring
additional indebtedness and to certain funded debt, net worth, and fixed
charge coverage requirements. At June 3, 1995, retained earnings in the amount
of $39.4 million were available for distribution under the debt restrictions.

F-12
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. NOTES AND MORTGAGES PAYABLE--(CONTINUED)

The Company is currently negotiating with lenders for a five-year credit
facility which will replace allocated borrowings outstanding under Morrison's
current revolver shortly after the Distribution. It is expected that the
covenants in the Company's new credit facility will result in restrictions
similar to these imposed under the current revolving credit facility and will
not impose any material restrictions on the Company.

In addition, at December 2, 1995, the Company had committed lines of credit
amounting to $32.0 million (of which $14.3 million remain available at
December 2, 1995) and non-committed lines of credit amounting to $94.0 million
with various banks at various interest rates. All of these lines are subject
to periodic review by each bank and may be canceled by the Company at any
time. The Company utilized its lines of credit to meet operational cash needs
during fiscal 1995. Borrowings on these lines of credit were $17.4 million,
$12.6 million and $17.7 million at June 4, 1994, June 3, 1995, and December 2,
1995, respectively.

In order to control its fiscal 1996 interest costs on its five-year
revolving line of credit and other bank lines of credit, the Company entered
into an interest rate swap agreement during the fourth quarter of fiscal 1995.
This swap agreement, which has a notional amount accreting from $85.0 to
$115.0 million, effectively limits the interest rate to a maximum of 7.02% per
annum for the one year period commencing June 5, 1995.

Interest expense capitalized in connection with financing additions to
property and equipment amounted to approximately $1.0, $1.0 and $1.0 million
for the years ended June 4, 1994 and June 3, 1995, and the twenty-six weeks
ended December 2, 1995, respectively.

6. LEASES

Various operations of the Company are conducted in leased premises. Initial
lease terms expire at various dates over the next 24 years and may provide for
escalation of rent during the lease term. Most of these leases provide for
additional contingent rents based upon sales volume and contain options to
renew (at adjusted rentals for some leases). The administrative headquarters
has a lease term ending in 1998 and provides an option to purchase at a
nominal amount at the end of the initial lease term.

Assets recorded under capital leases (included in Property and Equipment in
the accompanying consolidated balance sheets) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Buildings........................................ $4,500 $4,500 $4,500
Other equipment.................................. 50 50 50
------ ------ ------
4,550 4,550 4,550
Less accumulated amortization.................... 2,033 2,149 2,209
------ ------ ------
$2,517 $2,401 $2,341
====== ====== ======
</TABLE>

At June 3, 1995, the future minimum lease payments under operating leases
for the next five years and in the aggregate are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996.......................................................... $ 32,133
1997.......................................................... 32,730
1998.......................................................... 32,643
1999.......................................................... 32,151
2000.......................................................... 31,134
Subsequent years.............................................. 253,546
--------
Total minimum lease payments................................ $414,337
========
</TABLE>

F-13
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. LEASES--(CONTINUED)

Rental expense pursuant to operating leases is summarized as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
----------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Minimum rent................. $20,529 $24,732 $30,337 $13,496 $15,801
Contingent rent.............. 1,733 1,677 1,416 900 1,944
------- ------- ------- ------- -------
$22,262 $26,409 $31,753 $14,396 $17,745
======= ======= ======= ======= =======
</TABLE>

7. INCOME TAXES

The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" in fiscal 1993. The cumulative effect of this
change in accounting principle increased fiscal 1993 net income by $0.6
million, and is reported separately in the statement of income for the fiscal
year ended June 5, 1993.

The components of income tax expense (benefit) are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
----------------------- ------------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal.............. $5,093 $3,835 $1,959 $ 3,487 $1,430
State................ 1,049 963 567 937 501
------ ------ ------ ------- ------
6,142 4,798 2,526 4,424 1,931
Deferred:
Federal.............. 2,714 4,105 2,313 (5,250) 993
State................ 544 804 188 (1,013) 114
------ ------ ------ ------- ------
3,258 4,909 2,501 (6,263) 1,107
------ ------ ------ ------- ------
$9,400 $9,707 $5,027 $(1,839) $3,038
====== ====== ====== ======= ======
</TABLE>

Deferred tax assets and liabilities are comprised of the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets
Employee benefits......... $3,164 $ 3,609 $ 4,075
Insurance reserves........ 3,185 3,124 3,734
Unit closing reserve...... 2,626 555
Escalating rents.......... 2,100 2,348 2,840
Acquired net operating
losses................... 2,629 2,202
Other..................... (4) 245 694
------ ------- -------
Total deferred tax
assets................. 8,445 14,581 14,100
------ ------- -------
</TABLE>

F-14
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. INCOME TAXES--(CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax liabilities
Depreciation............................... $ 20,492 $ 24,534 $ 25,592
Retirement plans........................... 155 624 165
Prepaid deductions......................... 1,174 1,593 2,034
Other...................................... (143) 936 1,416
-------- -------- --------
Total deferred tax liabilities........... 21,678 27,687 29,207
-------- -------- --------
Net deferred tax asset (liability)........... $(13,233) $(13,106) $(15,107)
======== ======== ========
</TABLE>

At June 3, 1995, the Company had net operating loss carryforwards for tax
purposes of approximately $6.7 million as a result of the acquisition of Tias,
Inc., which expire through 2002. The Company's net operating loss
carryforwards are subject to an annual limitation for tax reporting purposes
due to changes in ownership of the acquired company.

A reconciliation from the statutory federal income tax expense (benefit) to
the reported income tax expense is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------- ---------------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Statutory federal income
taxes.................. $8,835 $ 9,735 $ 5,639 $(1,037) $3,268
State income taxes net
of federal income tax
benefit................ 1,088 1,128 549 (49) 394
Tax credits............. (462) (1,579) (2,964) (1,293) (1,265)
Other, net.............. (61) 423 1,803 540 641
------ ------- ------- ------- ------
$9,400 $ 9,707 $ 5,027 $(1,839) $3,038
====== ======= ======= ======= ======
</TABLE>

The effective income tax rate was 36.6%, 34.9%, 31.2%, 62.1%, and 32.5% in
1993, 1994, 1995, and the twenty-six weeks ended December 3, 1994 and December
2, 1995, respectively. The increase in the effective tax rate for the twenty-
six weeks ended December 3, 1994 is attributable to the tax effect of the
$19.7 million L&N conversion/closing costs.

8. EMPLOYEE BENEFIT PLANS

Salary Deferral Plan

Under the Morrison Restaurants Inc. Salary Deferral Plan each eligible
employee, as defined in the Plan, may elect to make pre-tax contributions to a
trust fund in amounts ranging from 2% to 10% of their annual earnings.
Employees contributing a pre-tax contribution of at least 2% may elect to make
after-tax contributions not in excess of 10% of annual earnings. The Company
contribution to the Plan is based on the employee's pre-tax contribution and
years of service. After three years of service the Company contributes 20% of
the employee's pre-tax contribution, 30% after ten years of service and 40%
after 20 years of service. Normally, the full amount of each participant's
interest in the trust fund is paid upon retirement or total disability.
However, the Plan allows participants to make early withdrawals of pre-tax and
after-tax contributions, subject to certain restrictions. The Plan may be
terminated by the Company at any time. The Company's contributions to the
trust fund approximated $70,000, $72,000, $73,000, $38,000, and $37,000 for
1993, 1994, 1995, and the twenty-six weeks ended December 3, 1994 and December
2, 1995, respectively.

F-15
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS--(CONTINUED)

Deferred Compensation Plan

The Company maintains the Morrison Restaurants Inc. Deferred Compensation
Plan for certain selected employees. The provisions of this non-qualified Plan
are similar to those of the Salary Deferral Plan except for the employees who
are eligible to participate. The Company's contributions under the Plan
approximated $139,000, $151,000, $146,000, $77,000, and $72,000 for 1993,
1994, 1995, and the twenty-six weeks ended December 3, 1994 and December 2,
1995, respectively. Assets of the Plan are held by a rabbi trust. Under
current accounting rules, assets of a rabbi trust must be accounted for as if
they are assets of the Company, therefore, all earnings and expenses are
recorded in the Company's financial statements. The net of the rabbi trust's
earnings and losses is recorded as additional liability to the participants
and is considered to be interest expense to the Company. The Company recorded
$127,000, $177,000, $327,000, $75,000, and $90,000 of interest expense for
this Plan in 1993, 1994, 1995, and the twenty-six weeks ended December 3, 1994
and December 2, 1995, respectively. Assets of the Plan approximated $4.9
million, $6.1 million, and $6.6 million at June 4, 1994, June 3, 1995, and
December 2, 1995.

Retirement Plan

Effective December 31, 1987, the Morrison Restaurants Inc. Retirement Plan
was amended so that no additional benefits will accrue and no new participants
will enter the Plan after that date. Participants will receive benefits based
upon salary and length of service. No contribution was made in 1993, 1994 or
1995. The Company recorded net pension expense of $2,000 in each of 1993,
1994, and 1995.

Executive Supplemental Pension Plan

Under the unfunded Executive Supplemental Pension Plan, selected employees
become eligible to receive supplemental retirement payments based upon salary
and length of service, reduced by social security benefits and amounts
otherwise receivable under the Retirement Plan. Expenses under the Plan
approximated $321,000, $399,000, $466,000, $234,000 and $224,000 for 1993,
1994, 1995 and the twenty-six weeks ended December 3, 1994 and December 2,
1995, respectively.

Management Retirement Plan

Under the unfunded Morrison Restaurants Inc. Management Retirement Plan,
individuals actively employed by the Company as of June 1, 1989, or
thereafter, who have 15 years of credited service and whose average annual
compensation for the immediately preceding three calendar years equaled or
exceeded $40,000, become participants. Participants will receive benefits
based upon salary and length of service, reduced by social security benefits
and benefits payable under the Retirement Plan and Executive Supplemental
Pension Plan. Expenses recognized approximated $35,000, $90,000, $95,000,
$70,000 and $70,000 in 1993, 1994, 1995, and for the twenty-six weeks ended
December 3, 1994 and December 2, 1995, respectively.

To provide a funding source for the payments of benefits under the Executive
Supplemental Pension Plan and the Management Retirement Plan, the Company owns
whole-life insurance contracts on some of the participants. The cash value of
these policies net of policy loans allocated to the Company is $1,001,000 at
June 3, 1995. The Company has established a rabbi trust to hold the policies
and death benefits as they are received.

The following table details the components of pension expense, the funded
status and amounts recognized in the Company's Consolidated Financial
Statements for the Management Retirement Plan, the Executive Supplemental
Pension Plan, and the Retirement Plan. Amounts presented are in thousands.

F-16
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS--(CONTINUED)

<TABLE>
<CAPTION>
ACCUMULATED BENEFITS EXCEED ASSETS--
ASSETS EXCEED ACCUMULATED BENEFITS-- EXECUTIVE SUPPLEMENTAL PENSION
RETIREMENT PLAN PLAN AND MANAGEMENT RETIREMENT PLAN
-------------------------------------- --------------------------------------
JUNE 5, 1993 JUNE 4, 1994 JUNE 3, 1995 JUNE 5, 1993 JUNE 4, 1994 JUNE 3, 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Components of pension
expense (income):
Service cost.......... $ $ $ $ 69 $ 71 $ 73
Interest cost......... 34 31 31 217 247 276
Actual return on plan
assets............... (42) (46) (10)
Amortization and
deferral............. 6 13 (23) 70 171 123
Other................. 89
---- ---- ---- ------- ------- -------
$ (2) $ (2) $ (2) $ 356 $ 489 $ 561
==== ==== ==== ======= ======= =======
Plan assets at fair
value.................. $427 $446 $382 $ 0 $ 0 $ 0
---- ---- ---- ------- ------- -------
Actuarial present value
of projected benefit
obligations:
Accumulated benefit
obligations:
Vested.............. 354 435 374 1,280 2,088 3,434
Nonvested........... 430 598 8
Provision for future
salary increases..... 789 1,515 883
---- ---- ---- ------- ------- -------
Total projected benefit
obligations............ 354 435 374 2,499 4,201 4,325
---- ---- ---- ------- ------- -------
Excess (deficit) of plan
assets over projected
benefit obligations.... 73 11 8 (2,499) (4,201) (4,325)
Unrecognized net loss
(gain)................. ( 7) 67 74 (1,297) 160 (265)
Unrecognized prior
service cost........... 1 273 211 665
Unrecognized net
transition
obligations............ 51 47 41 1,403 1,291 993
Additional minimum
liability.............. (129) (343) (578)
---- ---- ---- ------- ------- -------
Prepaid (accrued)
pension cost........... $118 $125 $123 $(2,249) $(2,882) $(3,510)
==== ==== ==== ======= ======= =======
</TABLE>

F-17
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS--(CONTINUED)

The Retirement Plan's assets include common stock, fixed income securities,
short-term investments and cash. The weighted-average discount rate for all
three plans is 9.5%, 7.5%, and 8.5% for 1993, 1994 and 1995, respectively. The
rate of increase in compensation levels for the Executive Supplemental Pension
Plan and Management Retirement Plan is 5% for 1993 and 1994 and 4% for 1995.
The expected long-term rate of return on plan assets for the Retirement Plan
is 10% for all three years.

9. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company provides health care benefits to substantially all retired
employees and life insurance benefits to certain retirees. Benefits are funded
as medical claims and life insurance premiums are incurred. Retirees become
eligible for retirement benefits if they have met certain service and minimum
age requirements at date of retirement. The Company accrues expenses related
to postretirement health care and life insurance benefits during the years an
employee provides services. The total postretirement benefit costs for 1993,
1994 and 1995 were $11,000, $14,000 and $17,000, respectively.

In 1993, the Company adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"
(FAS 106). The cumulative effect of this change in accounting for years prior
to 1993 resulted in a charge of approximately $18,000.

The actuarial present value of accumulated postretirement benefit
obligations and the amounts recognized in the Company's consolidated balance
sheet are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------
JUNE 4, JUNE 3,
1994 1995
------- -------
<S> <C> <C>
Retirees..................................................... $ 113 $ 123
Fully eligible active plan participants...................... 23 19
Other active plan participants............................... 17 13
----- -----
Accumulated postretirement benefit obligation................ 153 155
Unrecognized net loss........................................ (45) (35)
----- -----
Accrued postretirement benefit cost.......................... $ 108 $ 120
===== =====
</TABLE>

The postretirement benefit cost is as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------
FISCAL YEAR ENDED
-----------------------
JUNE 5, JUNE 4, JUNE 3,
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Service cost......................................... $ 1 $ 1 $ 1
Interest cost........................................ 10 10 12
Amortization of unrecognized net loss................ 3 4
--- --- ---
Postretirement benefit cost.......................... $11 $14 $17
=== === ===
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 0% because at the time of adoption of
FAS 106, the Company amended its plan to fix current and future contribution
levels at the rates in place at that time. Increases in health care cost due
to factors such as inflation, changes in health care utilization or delivery
patterns, technological advances, and changes in the health status of plan
participants will be borne by the participants. Measurement of the accumulated
Postretirement benefit obligation was based on an assumed 7.5% discount rate
for fiscal 1994 and 8.5% for 1995.

F-18
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. PREFERRED STOCK

Under its Certificate of Incorporation the Company is authorized to issue
preferred stock with a par value of $0.01 in an amount not to exceed 250,000
shares which may be divided into and issued in designated series, with
dividend rates, rights of conversion, redemption, liquidation prices and other
terms or conditions as determined by the Board of Directors. No preferred
shares have been issued as of June 3, 1995. The Board of Directors has
designated 50,000 of such shares as Series A Junior Participating Preferred
Stock and has issued rights to acquire such shares, upon certain events, with
an exercise price of $75.00 per one one-thousandth of a share, subject to
adjustment. The rights expire on April 9, 1997, and may be redeemed prior to
ten days after the acquisition of 20% or more of the Company's common stock.

11. CAPITAL STOCK, OPTIONS AND BONUS PLANS

The Morrison Restaurants Inc. Stock Incentive Plan

In September, 1992, the shareholders approved The Morrison Restaurants Inc.
Stock Incentive Plan which is an amendment and restatement of the Morrison
Restaurants Inc. 1989 Non-Qualified Stock Option Plan. A Committee, appointed
by the Board, administers the Plan on behalf of the Company and has complete
discretion to determine participants and the terms and provisions of Stock
Incentives, subject to the Plan. The Plan permits the Committee to make awards
of shares of common stock, awards of derivative securities related to the
value of the common stock, and certain cash awards to eligible persons. These
discretionary awards may be made on an individual basis or pursuant to a
program approved by the Committee for the benefit of a group of eligible
persons. The Plan permits the Committee to make awards of a variety of stock
incentives, including (but not limited to) dividend equivalent rights,
incentive stock options, non-qualified stock options, performance unit awards,
phantom shares, stock appreciation rights and stock awards. All shares and
grants awarded under the Plan have been at the prevailing market value at the
time of issue or grant. During 1995, 17,000 shares were issued under the Plan.
At June 3, 1995, the Company had reserved a total of 1,182,000 shares of
common stock for this Plan.

The Morrison Restaurants Inc. Stock Incentive and Deferred Compensation Plan
for Directors

In September, 1994, the shareholders approved the Morrison Restaurants Inc.
Stock Incentive and Deferred Compensation Plan for Directors, which is an
amendment and restatement of a similarly titled 1992 plan. In general, the
Plan sets a target ownership level for non-management directors. To facilitate
attaining the target ownership level, the Plan provides that the directors
must use 60% of their retainer to purchase shares of the Company. Each
director purchasing stock receives an additional 15% of the shares purchased
and three times the total shares in options which after six months are
exercisable for five years from the grant date. During 1995, 2,000 shares were
issued under the Plan. Pursuant to this Plan, a one-time restricted stock
award totaling 10,000 shares was made in fiscal 1995 to non-management
directors who were elected after September, 1993. All options awarded under
the Plan have been at the prevailing market value at the time of issue or
grant. A Committee, appointed by the Board, administers the Plan on behalf of
the Company. At June 3, 1995, the Company had reserved 195,000 shares of
common stock for the Directors' Plan.

The Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive Plan

In October, 1993, the Board of Directors approved the Morrison Restaurants
Inc. 1993 Non-Executive Stock Incentive Plan. A committee, appointed by the
Board, administers the Plan on behalf of the Company and has full authority in
its discretion to determine the officers and key employees to whom stock
incentives are granted and the terms and provisions of stock incentives,
subject to the Plan. All shares and grants awarded under the Plan have been at
the prevailing market value at the time of issue or grant. During 1995, 69,000
shares were issued under the Plan. At June 3, 1995, the Company had reserved a
total of 1,322,000 shares of common stock for this Plan.

In addition to the above plans, stock options remain outstanding on two
terminated plans, the Morrison Restaurants Inc. Long-Term Incentive Plan,
which was effective from 1984 to 1989, and the Morrison Restaurants Inc. Stock
Bonus and Non-Qualified Stock Option Plan, which was effective from 1986 to
1992.

F-19
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. CAPITAL STOCK, OPTIONS AND BONUS PLANS--(CONTINUED)

Options to purchase 26,000 and 1,040,000 shares, respectively, remain
outstanding under the terms of these two plans at June 3, 1995.

The following table summarizes the activity in options under these stock
option plans prior to consideration of the effect of the Distribution:

<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------------------
NUMBER OF SHARES UNDER OPTION
------------------------------------------
1993 1994 1995
------------ ------------- -------------
<S> <C> <C> <C>
Beginning of year................ 2,258 2,386 2,717
Granted.......................... 492 755 343
Exercised........................ (267) (313) (258)
Forfeited........................ (97) (111) (107)
------------ ------------- -------------
End of year...................... 2,386 2,717 2,695
============ ============= =============
Exercisable...................... 558 958 971
============ ============= =============
Outstanding options' prices...... $5.40-$16.75 $ 5.40-$25.38 $ 7.61-$28.75
============ ============= =============
Exercised options' prices........ $5.40-$11.50 $ 5.40-$11.36 $5.40-$25.38
============ ============= =============
Granted options' prices.......... $8.17-$16.75 $11.88-$25.38 $14.01-$28.75
============ ============= =============
</TABLE>

12. CONTINGENCIES

At June 3, 1995, the Company was contingently liable for approximately $10.2
million in letters of credit, issued primarily in connection with its workers'
compensation and casualty insurance programs.

The Company is presently, and from time to time, subject to pending claims
and lawsuits arising in the ordinary course of its business. In the opinion of
management, the ultimate resolution of these pending legal proceedings will
not have a material adverse effect on the Company's operations or consolidated
financial position.

13. SUBSEQUENT EVENTS

On January 10, 1996 the Company announced that it will adopt Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (FAS 121) in the third
quarter of fiscal 1996. Also at that time, the Company will recognize charges
associated with the spin-off of MFC and MHC and other costs associated with
the closing of 16 restaurants that have not met management's financial
performance requirements.

In accordance with the adoption of FAS 121, a pre-tax charge of $25.4
million will be recorded comprised of the following: impairment to be
recognized on the 16 units approved for closure within one year by the Board
of Directors on January 10, 1996, $9.9 million; impairment on in-unit computer
equipment ($0.7 million) and write-offs resulting from management's decision
to abandon parts of an information technology plan ($3.8 million) approved on
that same date; and impairment on units remaining open, $11.0 million.

Based upon its review of negative cash flow and operating loss units and
other considerations, management presented to the Board a list consisting of
ten Ruby Tuesdays, four Mozzarella's and two Tia's restaurants for approval
for closure. The expected loss on disposal of the long-term assets, net of an
assumed salvage value of $0.6 million, was $9.9 million. Included in this
amount is $0.6 million which represents the goodwill associated with the two
Tia's units to be closed. Negative cash flow and operating loss units not
recommended for closure were reviewed for impairment. Management believed that
these units might have been impaired based upon poor

F-20
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. SUBSEQUENT EVENTS--(CONTINUED)

operating performance. Accordingly, management estimated the undiscounted
future net cash flows to be generated by these units and determined that
certain of them would not likely generate net cash flows in excess of carrying
value. Management then estimated the fair value of those units using
discounted net cash flow as a measure of fair value. This will result in a
write-down of $11.0 million on those units.

Prior to the announcement of the spin-off on September 27, 1995, the Company
was undertaking an information technology project intended, among other
things, to update or replace certain accounting and human resource systems for
all of Morrison. Upon announcement of the intended spin-off, management of the
Company initiated a project by project review of the information technology
plan. Upon completion of its review, management has decided to abandon certain
of the projects in development, including the project to update or replace
certain accounting and human resource systems. In connection therewith, the
Company also plans to dispose of certain in-unit computer equipment and to
replace that equipment with computers more technologically advanced. At the
January 10, 1996 Board meeting, such actions were approved by the Board of
Directors. Accordingly, the Company anticipates recording a charge of $3.8
million for the write-off of certain information technology projects and $0.7
million for the remaining carrying value of the equipment, in the third
quarter.

In addition to the write-down of fixed assets to occur on the 16 units to be
closed, the Company will accrue charges of $3.5 million relating to the
settlement of the related lease obligations. Management estimates that it can
negotiate lease settlements on units within 36 months and does not expect to
sublease any units. One of the units to be closed is company-owned.

Other charges of $2.0 million anticipated to be recorded consist primarily
of estimated professional and other fees to be incurred in accordance with the
Distribution, ($1.1 million), severance pay for staff reductions expected
during the quarter, ($0.6 million), and miscellaneous other asset write-offs
($0.3 million).

14. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial results for the years ended June 4, 1994 and June 3,
1995, are summarized below. All quarters are composed of 13 weeks. Amounts
presented are in thousands.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
For the year ended June 4,
1994:
Revenues.................... $107,250 $110,597 $122,737 $118,455 $459,039
======== ======== ======== ======== ========
Gross profit*............... $ 19,776 $ 19,798 $ 25,674 $ 20,329 $ 85,577
======== ======== ======== ======== ========
Income before income taxes.. $ 6,371 $ 5,450 $ 10,164 $ 5,829 $ 27,814
Provision for federal and
state income taxes......... 2,224 1,902 3,548 2,033 9,707
-------- -------- -------- -------- --------
Net income from continuing
operations................. 4,147 3,548 6,616 3,796 18,107
Net income from discontinued
operations................. 3,962 8,490 5,684 8,441 26,577
-------- -------- -------- -------- --------
Net income.................. $ 8,109 $ 12,038 $ 12,300 $ 12,237 $ 44,684
======== ======== ======== ======== ========
Earnings per common and
common equivalent share:
Continuing operations..... $ 0.11 $ 0.10 $ 0.18 $ 0.10 $ 0.49
Discontinued operations... 0.11 0.22 0.15 0.23 0.71
-------- -------- -------- -------- --------
$ 0.22 $ 0.32 $ 0.33 $ 0.33 $ 1.20
======== ======== ======== ======== ========
</TABLE>

F-21
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)--(CONTINUED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
For the year ended June 3,
1995:
Revenues................ $113,284 $120,778 $142,094 $139,156 $515,312
======== ======== ======== ======== ========
Gross profit*........... $ 24,026 $ 24,232 $ 28,626 $ 23,854 $100,738
======== ======== ======== ======== ========
Income before income
taxes.................. $(11,229)** $ 8,267 $ 12,293 $ 6,781 $ 16,112
Provision for federal
and state income
taxes.................. (4,784) 2,945 4,425 2,441 5,027
-------- -------- -------- -------- --------
Net income from
continuing operations.. (6,445) 5,322 7,868 4,340 11,085
Net income from
discontinued
operations............. 30,955 *** 6,809 5,274 8,048 51,086
-------- -------- -------- -------- --------
Net income.............. $ 24,510 $ 12,131 $ 13,142 $ 12,388 $ 62,171
======== ======== ======== ======== ========
Earnings per common and
common equivalent
share:
Continuing
operations........... $ (0.18) $ 0.15 $ 0.22 $ 0.12 $ 0.31
Discontinued
operations........... 0.85 0.19 0.15 0.23 1.42
-------- -------- -------- -------- --------
$ 0.67 $ 0.34 $ 0.37 $ 0.35 $ 1.73
======== ======== ======== ======== ========
</TABLE>
- --------
* The Company defines gross profit as revenue less cost of merchandise,
payroll, and related costs and other operating costs and expenses.

** Includes a pre-tax loss of $19.7 million recognized upon the decision to
phase out the L&N Seafood Grill concept.

*** Includes a pre-tax gain of $46.8 million ($25.8 million net of tax)
realized upon the sale of certain business and industry contracts and
assets of MHC.

F-22
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Morrison Restaurants Inc.

We have audited the accompanying balance sheets of Morrison Fresh Cooking,
Inc. (a wholly-owned business of Morrison Restaurants Inc.) as of June 3, 1995
and June 4, 1994, and the related statements of income, owner's equity and
cash flows for each of the three fiscal years in the period ended June 3,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Morrison Fresh Cooking,
Inc. at June 3, 1995 and June 4, 1994, and the results of its operations and
its cash flows for each of the three fiscal years in the period ended June 3,
1995, in conformity with generally accepted accounting principles.

As discussed in Notes 3 and 5 to the financial statements, in fiscal 1993
Morrison Fresh Cooking, Inc. changed its method of accounting for income taxes
and postretirement benefits other than pensions.

Ernst & Young LLP

Atlanta, Georgia

November 17, 1995, except

for Notes 1 and 9, as to

which the date is January 10, 1996

F-23
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

STATEMENTS OF INCOME
(IN THOUSANDS)

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

F-24
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments............ $ 1,398 $ 1,632 $ 1,819
Receivables:
Trade.................................... 443 434 484
Other.................................... 631 1,119 1,155
Inventories:
Merchandise.............................. 1,392 1,518 1,670
China, silver and supplies............... 1,387 1,717 1,594
Prepaid expenses........................... 2,078 2,727 2,478
Deferred income tax benefits............... 3,921 2,304 2,275
--------- --------- ---------
Total current assets................... 11,250 11,451 11,475
--------- --------- ---------
Property and equipment--at cost:
Land....................................... 5,749 6,636 6,636
Buildings.................................. 16,888 20,273 20,073
Improvements............................... 68,810 73,011 73,203
Restaurant equipment....................... 68,046 74,081 77,353
Other equipment............................ 14,326 16,153 16,763
Construction in progress................... 3,917 8,959 8,906
--------- --------- ---------
177,736 199,113 202,934
Less accumulated depreciation and
amortization................................ (120,484) (129,714) (131,401)
--------- --------- ---------
57,252 69,399 71,533
Deferred income tax benefits................. 2,046 2,039 1,874
Other assets................................. 6,913 7,233 7,743
--------- --------- ---------
Total assets........................... $ 77,461 $ 90,122 $ 92,625
========= ========= =========
LIABILITIES AND OWNER'S EQUITY
Current liabilities:
Accounts payable........................... $ 8,590 $ 9,581 $ 10,008
Accrued liabilities:
Taxes, other than income taxes........... 3,952 3,181 2,770
Payroll and related costs................ 7,249 4,522 3,850
Insurance................................ 6,946 4,889 4,901
Rent and other........................... 5,105 4,111 3,650
Current portion of capital lease
obligations............................... 75 83 91
--------- --------- ---------
Total current liabilities.............. 31,917 26,367 25,270
--------- --------- ---------
Capital lease obligations.................... 931 848 803
Reserve for unit closings.................... 4,782 1,799 657
Other deferred liabilities................... 10,528 13,643 13,725
Owner's equity:
Investment by and advances from Morrison
Restaurants Inc........................... 29,303 47,465 52,170
--------- --------- ---------
Total liabilities and owner's equity... $ 77,461 $ 90,122 $ 92,625
========= ========= =========
</TABLE>

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

F-25
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

STATEMENTS OF OWNER'S EQUITY
(IN THOUSANDS)

<TABLE>
<S> <C>
Balance, June 6, 1992................................................. $ 48,200
Net income.......................................................... 7,700
Net transfers to Morrison Restaurants Inc. ......................... (23,277)
--------
Balance, June 5, 1993................................................. 32,623
Net income.......................................................... 10,078
Net transfers to Morrison Restaurants Inc. ......................... (13,398)
--------
Balance, June 4, 1994................................................. 29,303
Net income.......................................................... 11,374
Net transfers from Morrison Restaurants Inc. ....................... 6,788
--------
Balance, June 3, 1995................................................. 47,465
Net income (unaudited).............................................. 2,507
Net transfers from Morrison Restaurants Inc. (unaudited)............ 2,198
--------
Balance, December 2, 1995 (unaudited)................................. $ 52,170
========
</TABLE>

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

F-26
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
-------------------------------------- ---------------------------------
JUNE 5, 1993 JUNE 4, 1994 JUNE 3, 1995 DECEMBER 3, 1994 DECEMBER 2, 1995
------------ ------------ ------------ ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............. $ 7,700 $ 10,078 $ 11,374 $ 5,177 $ 2,507
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Cumulative effect of
change in accounting
principles............ 512
Depreciation and
amortization.......... 11,460 10,504 10,277 5,106 5,342
Deferred income taxes.. (5,137) (171) 1,624 451 194
Loss on disposition of
assets................ 1,011 1,333 605 333 164
Changes in operating
assets and
liabilities:
(Increase)/decrease in
receivables........... (180) (60) (450) (98) (74)
(Increase)/decrease in
inventories........... (183) 199 (456) (869) (29)
(Increase)/decrease in
prepaid and other
assets................ 1,664 878 (311) (506) 250
Increase/(decrease) in
accounts payable,
accrued and other
liabilities........... 9,136 (971) (5,426) (1,525) (2,165)
Increase/(decrease) in
income taxes payable.. (115) (919) (338) (743) (11)
-------- -------- -------- ------- -------
Net cash provided by
operating activities... 25,868 20,871 16,899 7,326 6,178
-------- -------- -------- ------- -------
INVESTING ACTIVITIES:
Purchases of property
and equipment.......... (7,308) (10,957) (19,422) (14,579) (7,705)
Proceeds from disposal
of assets.............. 385 64 154 127 65
Other, net.............. (245) (312) (4,110) (314) (512)
-------- -------- -------- ------- -------
Net cash used by
investing activities... (7,168) (11,205) (23,378) (14,766) (8,152)
-------- -------- -------- ------- -------
FINANCING ACTIVITIES:
Principal payments on
capital leases......... (102) (106) (75) (37) (37)
Net transfers (to) from
Morrison
Restaurants Inc........ (23,277) (13,398) 6,788 6,177 2,198
-------- -------- -------- ------- -------
Net cash provided (used)
by financing
activities............. (23,379) (13,504) 6,713 6,140 2,161
-------- -------- -------- ------- -------
Increase/(decrease) in
cash and short-term
investments............ (4,679) (3,838) 234 (1,300) 187
Cash and short-term
investments at the
beginning of the
period................. 9,915 5,236 1,398 1,398 1,632
-------- -------- -------- ------- -------
Cash and short-term
investments at the end
of the period.......... $ 5,236 $ 1,398 $ 1,632 $ 98 $ 1,819
======== ======== ======== ======= =======
Supplemental Disclosure
of Cash Flow
Information--Cash Paid
for:
Interest, net.......... $ 0 $ 0 $ 82 $ 80 $ 0
Income taxes, net...... $ 6,534 $ 6,882 $ 8,901 $ 2,274 $ 400
</TABLE>

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

F-27
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS

JUNE 3, 1995

(INFORMATION PERTAINING TO THE TWENTY-SIX WEEKS ENDED DECEMBER 3, 1994 AND
DECEMBER 2, 1995 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Morrison Fresh Cooking, Inc. (the "Company") is a wholly-owned family dining
restaurant business of Morrison Restaurants Inc. ("Morrison"). The
accompanying financial statements have been prepared as if Morrison's family
dining business had operated as a stand-alone entity for all periods
presented. Such statements include the assets, liabilities, revenues and
expenses that are directly related to the Company's operations. They also
include an allocation of certain assets, liabilities and general corporate
expenses of Morrison, such as executive payroll, legal, data processing and
interest, which are related to the Company. Amounts were allocated using a
specific identification method where appropriate and on a pro rata basis
otherwise. Management believes the allocation methods used are reasonable.

On September 27, 1995, Morrison announced a plan to spin-off ("the
Distribution") its family dining business and health care contract food and
nutrition business (another division of Morrison, to be known as Morrison
Health Care, Inc.) to Morrison's shareholders. The spin-off will result in the
family dining and health care contract food and nutrition businesses operating
as two separate stand-alone, publicly traded companies. As part of the spin-
off, Morrison intends to reincorporate in the state of Georgia and change its
name to Ruby Tuesday, Inc. ("RTI"). The spin-off is subject to shareholder
approval and receipt of a ruling from the Internal Revenue Service that the
transaction will be tax free to Morrison and its shareholders. Subsequent to
December 2, 1995, the Company was established as a wholly-owned corporate
subsidiary of Morrison.

Prior to the spin-off the Company will enter into a shared services
agreement with RTI and Morrison Health Care, Inc. ("MHC") pursuant to which
each of the three companies will agree to provide to the other parties certain
services, subject to certain conditions, on an "as needed" basis.

Fiscal Year

The Company's fiscal year ends on the first Saturday after May 30. The
fiscal years ended June 5, 1993, June 4, 1994, and June 3, 1995 were comprised
of 52 weeks.

Cash and Short-Term Investments

Inventories

Inventories consist of materials, food supplies, china and silver and are
stated at the lower of cost (first in- first out) or market.

Property and Equipment and Depreciation

F-28
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

During March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (FAS 121). FAS
121 requires that, beginning in fiscal years starting after December 15, 1995,
long-lived assets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Long-lived assets and certain identifiable intangibles to be
disposed of are generally to be reported at the lower of carrying amount or
fair value less cost to sell. Currently, the Company recognizes such
impairment upon the decision to close a unit. Subsequent to December 2, 1995,
the Company completed its analysis of the financial statement impact of
adoption of FAS 121. A charge of $11.8 million will be taken in the third
quarter. See Note 9 of Notes to Consolidated Financial Statements for more
information.

Income Taxes

The accompanying statements of income reflect an income tax expense
representing the Company's allocated share of Morrison's tax expense. The
allocated income tax expense approximates the tax expense of the Company on a
stand-alone basis.

Pre-Opening Expenses

Salaries, personnel training costs and other expenses of opening new
facilities are charged to expense as incurred.

Fair Value of Financial Instruments

The Company's financial instruments at June 4, 1994 and June 3, 1995
consisted of cash and short-term investments. The fair value of these
financial instruments approximated the carrying amounts reported in the
balance sheets.

Owner's Equity

Prior to the Distribution, the Company's Certificate of Incorporation will
provide that authorized capital stock will consist of 100,000,000 shares of
common stock ($0.01 par value) and 250,000 shares of preferred stock ($0.01
par value). All of the shares of Morrison Fresh Cooking, Inc. common stock
distributed by Morrison will be fully paid and non-assessable. Following the
Distribution there will be approximately 8,630,000 shares of Morrison Fresh
Cooking, Inc. common stock outstanding. None of the shares of preferred stock
will be issued or outstanding at the Distribution Date.

Stock-Based Employee Compensation Plans

F-29
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

allows an entity to continue to measure compensation cost for those plans
using the intrinsic value based method of accounting prescribed by APB Opinion
No. 25, "Accounting for Stock Issued to Employees". The Company intends to
continue to measure compensation cost following the principles of APB Opinion
No. 25 and will therefore be required to present pro forma disclosures of net
income and earnings per share as if the fair value based method had been
applied beginning in fiscal 1997.

2. LEASES

Various operations of the Company are conducted in leased premises. Initial
lease terms expire at various dates over the next 20 years and may provide for
escalation of rent during the lease term. Most of these leases provide for
additional contingent rents based upon sales volume and contain options to
renew (at adjusted rentals for some leases).

Assets recorded under capital leases (included in Property and Equipment in
the accompanying balance sheets) are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Buildings........................................ $1,542 $1,542 $1,542
Other equipment.................................. 19 4 4
------ ------ ------
1,561 1,546 1,546
Less accumulated amortization.................... 1,019 1,062 1,091
------ ------ ------
$ 542 $ 484 $ 455
====== ====== ======
</TABLE>

At June 3, 1995, the future minimum lease payments under operating leases
for the next five years and in the aggregate are as follows (in thousands):

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1996..................................................... $ 186 $12,071
1997..................................................... 185 11,727
1998..................................................... 185 10,986
1999..................................................... 185 9,968
2000..................................................... 185 8,992
Subsequent years......................................... 704 33,314
------ -------
Total minimum lease payments............................. 1,630 $87,058
=======
Less amount representing interest........................ 699
------
Present value of minimum lease payments under capital
leases (including current maturities of $83)............ $ 931
======
</TABLE>

F-30
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. LEASES--(CONTINUED)

Rental expense pursuant to operating leases is summarized as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
----------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Minimum rent................. $11,551 $11,823 $12,173 $6,080 $6,409
Contingent rent.............. 4,431 4,390 3,913 1,862 1,605
------- ------- ------- ------ ------
$15,982 $16,213 $16,086 $7,942 $8,014
======= ======= ======= ====== ======
</TABLE>

3. INCOME TAXES

The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (FAS 109) in fiscal 1993. The cumulative effect
of adoption was an increase in fiscal 1993 net income of $1.4 million.

The components of income tax expense are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------- ------------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal.............. $ 8,289 $5,665 $5,047 $2,531 $1,299
State................ 1,746 1,152 1,063 642 268
------- ------ ------ ------ ------
10,035 6,817 6,110 3,173 1,567
Deferred:
Federal.............. (4,235) (139) 1,445 380 163
State................ (902) (32) 179 71 31
------- ------ ------ ------ ------
(5,137) (171) 1,624 451 194
------- ------ ------ ------ ------
$ 4,898 $6,646 $7,734 $3,624 $1,761
======= ====== ====== ====== ======
</TABLE>

F-31
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. INCOME TAXES--(CONTINUED)

Deferred tax assets and liabilities are comprised of the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets
Employee benefits.............................. $ 3,755 $4,173 $4,486
Insurance reserves............................. 4,198 3,360 3,449
Unit closing reserve........................... 2,617 988 410
Escalating rents............................... 266 307 324
Other.......................................... 520 526 901
------- ------ ------
Total deferred tax assets........................ 11,356 9,354 9,570
Deferred tax liabilities
Depreciation................................... 3,379 2,460 2,456
Retirement plans............................... 1,227 1,410 1,270
Prepaid deductions............................. 328 701 999
Other.......................................... 455 440 696
------- ------ ------
Total deferred tax liabilities................... 5,389 5,011 5,421
------- ------ ------
Net deferred tax asset........................... $ 5,967 $4,343 $4,149
======= ====== ======
</TABLE>

FAS 109 specifies that deferred tax assets are to be reduced by a valuation
allowance if it is more likely than not that some portion of the deferred tax
assets will not be realized. Management believes that future taxable income
should be sufficient to realize all of the Company's deferred tax assets based
on historical earnings of the Company, and therefore, a valuation allowance
has not been established.

A reconciliation from the statutory federal income tax expense to the
reported income tax expense is shown below:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statutory federal income
taxes.................. $4,510 $5,853 $6,688 $3,080 $1,494
State income taxes net
of federal income tax
benefit................ 555 728 807 369 186
Tax credits............. (195) (174) (346) (160) (97)
Other, net.............. 28 239 585 335 178
------ ------ ------ ------ ------
$4,898 $6,646 $7,734 $3,624 $1,761
====== ====== ====== ====== ======
</TABLE>

The effective income tax rate was 37.4%, 39.7%, 40.5%, 41.2% and 41.3% in
1993, 1994, 1995 and the twenty-six weeks ended December 3, 1994 and December
2, 1995, respectively.

Prior to the Distribution, the Company intends to enter into a tax
allocation agreement with Morrison Health Care, Inc. and Ruby Tuesday, Inc.
which will provide that the Company will pay its share of Ruby Tuesday, Inc.'s
consolidated tax liability for the tax years that the Company was included in
Morrison's consolidated federal income tax return and also provide for
sharing, where appropriate, of state, local and foreign taxes attributable to
periods prior to the date of Distribution.

F-32
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. EMPLOYEE BENEFIT PLANS

As part of Morrison, employees of the Company participated in various
Morrison employee benefit plans including the Salary Deferral Plan and
Deferred Compensation Plan (both of which are defined contribution plans) and
the Retirement Plan, Executive Supplemental Pension Plan, and Management
Retirement Plan (all of which are defined benefit plans). The Company has been
allocated a certain portion of the matching contributions made by Morrison to
the Salary Deferral Plan and the Deferred Compensation Plan. Contributions
allocated for the Salary Deferral Plan totaled $289,000, $296,000, $303,000,
$156,000, and $154,000 for 1993, 1994, 1995 and the twenty-six weeks ended
December 3, 1994 and December 2, 1995, respectively. Contributions allocated
for the Deferred Compensation Plan totaled $107,000, $109,000, $102,000,
$55,000, and $45,000 for the same periods.

In addition, the Company has been allocated a portion of the net pension
expense incurred in connection with the Retirement Plan, Executive
Supplemental Pension Plan, and Management Retirement Plan. The following table
details the allocation of the components of pension expense, as well as the
allocation of funded status and amounts recognized in the Company's financial
statements for the Retirement Plan, the Executive Supplemental Pension Plan,
and the Management Retirement Plan. Amounts presented are in thousands.

<TABLE>
<CAPTION>
ACCUMULATED BENEFITS EXCEED ASSETS--
ASSETS EXCEED ACCUMULATED BENEFITS-- EXECUTIVE SUPPLEMENTAL PENSION PLAN
RETIREMENT PLAN AND MANAGEMENT RETIREMENT PLAN
-------------------------------------- --------------------------------------
JUNE 5, 1993 JUNE 4, 1994 JUNE 3, 1995 JUNE 5, 1993 JUNE 4, 1994 JUNE 3, 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Components of pension
expense (income):
Service cost.......... $ $ $ $ 56 $ 58 $ 66
Interest cost......... 928 825 820 178 202 250
Actual return on plan
assets............... (1,152) (1,228) (263)
Amortization and
deferral............. 177 347 (622) 58 140 111
Other................. 81
------- ------- ------- ------- ------- -------
$ (47) $ (56) $ (65) $ 292 $ 400 $ 508
======= ======= ======= ======= ======= =======
Plan assets at fair
value.................. $11,704 $11,728 $10,066 $ 0 $ 0 $ 0
------- ------- ------- ------- ------- -------
Actuarial present value
of projected benefit
obligations:
Accumulated benefit
obligations:
Vested.............. 9,696 11,463 9,846 1,054 1,713 3,108
Nonvested........... 355 491 7
Provision for future
salary increases..... 650 1,242 799
------- ------- ------- ------- ------- -------
Total projected benefit
obligations............ 9,696 11,463 9,846 2,059 3,446 3,914
------- ------- ------- ------- ------- -------
Excess (deficit) of plan
assets over projected
benefit obligations.... 2,008 265 220 (2,059) (3,446) (3,914)
Unrecognized net loss
(gain)................. (194) 1,765 1,960 (1,069) 131 (239)
Unrecognized prior
service cost........... 29 12 225 173 602
Unrecognized net
transition
obligations............ 1,403 1,238 1,077 1,156 1,059 899
Additional minimum
liability.............. (106) (281) (524)
------- ------- ------- ------- ------- -------
Prepaid (accrued)
pension cost........... $ 3,246 $ 3,280 $ 3,257 $(1,853) $(2,364) $(3,176)
======= ======= ======= ======= ======= =======
</TABLE>

F-33
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. EMPLOYEE BENEFIT PLANS--(CONTINUED)

The Retirement Plan was frozen by Morrison Restaurants Inc. on December 31,
1987 and will remain part of Morrison. The Company will continue to share in
future expenses of the Plan. The Plan's assets include common stock, fixed
income securities, short-term investments and cash. The weighted-average
discount rate for all three plans is 9.5%, 7.5%, and 8.5% for 1993, 1994 and
1995, respectively. The rate of increase in compensation levels for the
Executive Supplemental Pension Plan and Management Retirement Plan is 5% for
1993 and 1994 and 4% for 1995. The expected long-term rate of return on plan
assets for the Retirement Plan is 10% for all three years.

Prior to the spin-off the Company will enter into an agreement with RTI and
MHC providing for the allocation of employee benefit rights and
responsibilities among the three companies.

The following benefit plans will be established by the Company as of the
spin-off date. These plans will replace the plans discussed above and will be
designed as a mirror image of the Morrison Restaurants Inc. plans and will be
initially created by a transfer of assets from those Morrison Restaurants Inc.
plans.

Salary Deferral Plan

Under the Morrison Fresh Cooking, Inc. Salary Deferral Plan each eligible
employee, as defined in the Plan, may elect to make pre-tax contributions to a
trust fund in amounts ranging from 2% to 10% of their annual earnings.
Employees contributing a pre-tax contribution of at least 2% may elect to make
after-tax contributions not in excess of 10% of annual earnings. The Company
contribution to the Plan will be based on the employee's pre-tax contribution
and years of service. After three years of service (including service as part
of Morrison Restaurants Inc.) the Company will contribute 20% of the
employee's pre-tax contribution, 30% after ten years of service and 40% after
20 years of service. Normally, the full amount of each participant's interest
in the trust fund will be paid upon retirement or total disability. However,
the Plan will allow participants to make early withdrawals of pre-tax and
after-tax contributions, subject to certain restrictions. The Plan may be
terminated by the Company at any time.

Deferred Compensation Plan

The Company will maintain the Morrison Fresh Cooking, Inc. Deferred
Compensation Plan for certain selected employees. The provisions of this non-
qualified Plan are similar to those of the Salary Deferral Plan except for the
employees who are eligible to participate. Assets of the Plan will be held by
a rabbi trust similar to the one currently maintained by Morrison. Under
current accounting rules, assets of a rabbi trust must be accounted for as if
they are assets of the Company, therefore, all earnings and expenses are
recorded in the Company's financial statements. The net of the rabbi trust's
earnings and losses is recorded as additional liability to the participants
and is considered to be interest expense to the Company.

Executive Supplemental Pension Plan

Under the unfunded Executive Supplemental Pension Plan, selected employees
will become eligible to receive supplemental retirement payments based upon
salary and length of service (including service as part of Morrison
Restaurants Inc.), reduced by social security benefits and amounts otherwise
receivable under the Morrison Restaurants Inc. Retirement Plan.

Management Retirement Plan

Under the unfunded Morrison Fresh Cooking, Inc. Management Retirement Plan,
individuals actively employed by Morrison as of June 1, 1989, or thereafter,
who have 15 years of credited service and whose average

F-34
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. EMPLOYEE BENEFIT PLANS--(CONTINUED)

annual compensation for the immediately preceding three calendar years equaled
or exceeded $40,000, will become participants. Participants will receive
benefits based upon salary and length of service, reduced by social security
benefits and benefits payable under the Retirement Plan and Executive
Supplemental Pension Plan.

To provide a funding source for the payment of benefits under the Executive
Supplemental Pension Plan and the Management Retirement Plan, Morrison owns
whole-life insurance contracts on some of the participants. Certain of these
policies will be transferred to the Company and placed in a rabbi trust which
will be established to hold the policies and death benefits as they are
received.

As of December 2, 1995 the Company has not performed actuarial calculations
regarding the status of its plans as if Morrison Fresh Cooking, Inc. were a
stand-alone entity. Management does not believe the pension cost amounts
allocated are materially different from amounts that would be calculated
historically on a stand-alone basis.

5. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

As a part of Morrison, the Company provides health care benefits to
substantially all retired employees and life insurance benefits to certain
retirees. Benefits are funded as medical claims and life insurance premiums
are incurred. Retirees become eligible for retirement benefits if they have
met certain service and minimum age requirements at date of retirement. The
Company accrues expenses related to postretirement health care and life
insurance benefits during the years an employee provides services. The cost of
these benefits allocated to the Company for 1993, 1994, and 1995 were
$293,000, $394,000, and $424,000, respectively.

In 1993, the Company adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions
(FAS 106)". The cumulative effect of this change in accounting for years prior
to 1993 resulted in a charge of $1.9 million.

The actuarial present value of accumulated postretirement benefit
obligations and the amounts recognized in the Company's balance sheet are as
follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------------
JUNE 4, 1994 JUNE 3, 1995
------------ ------------
<S> <C> <C>
Retirees.......................................... $ 3,134 $3,116
Fully eligible active plan participants........... 635 492
Other active plan participants.................... 483 333
------- ------
Accumulated postretirement benefit obligation..... 4,252 3,941
Unrecognized net loss............................. (1,258) (896)
------- ------
Accrued postretirement benefit cost............... $ 2,994 $3,045
======= ======
</TABLE>

The postretirement benefit cost is as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------
FOR THE FISCAL YEAR ENDED
------------------------------
JUNE 5, JUNE 4, JUNE 3,
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Service cost................................ $ 21 $ 27 $ 22
Interest cost............................... 272 273 307
Amortization of unrecognized net loss....... 94 95
-------- -------- --------
Postretirement benefit cost................. $293 $394 $424
======== ======== ========
</TABLE>

F-35
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--(CONTINUED)

The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 0% because at the time of adoption of
FAS 106, the Company amended its plans to fix current and future contribution
levels at the rates in place at that time. Increases in health care cost due
to factors such as inflation, changes in health care utilization or delivery
patterns, technological advances, and changes in the health status of plan
participants will be borne by the participants. Measurement of the accumulated
postretirement benefit obligation was based on an assumed 7.5% discount rate
for fiscal 1994 and 8.5% for fiscal 1995.

6. PREFERRED STOCK

Under its Certificate of Incorporation the Company will be authorized to
issue preferred stock with a par value of $0.01 in an amount not to exceed
250,000 shares which may be divided into and issued in designated series, with
dividend rates, rights of conversion, redemption, liquidation prices and other
terms or conditions as determined by the Board of Directors. No preferred
shares have been issued as of September 2, 1995. The Board of Directors will
be authorized to designate 50,000 of such shares as Series A Junior
Participating Preferred Stock and will issue rights to acquire such shares,
upon certain events, with an exercise price to be determined, but
substantially above the expected trading price. The rights will expire ten
years after the date such rights are issued, and may be redeemed prior to ten
days after the acquisition of 20% or more of the Company's common stock.

7. CAPITAL STOCK, OPTIONS AND BONUS PLANS

The Company intends to adopt plans similar to the Morrison Restaurants Inc.
Stock Incentive Plan, the Morrison Restaurants Inc. Stock Incentive and
Deferred Compensation Plan for Directors and the Morrison Restaurants Inc.
1993 Non-Executive Stock Incentive Plan. As a part of Morrison, employees and
directors of the Company participated in the above plans which are discussed
in more detail below.

The Morrison Restaurants Inc. Stock Incentive Plan

In September, 1992, the shareholders of Morrison approved The Morrison
Restaurants Inc. Stock Incentive Plan which is an amendment and restatement of
the Morrison Restaurants Inc. 1989 Non-Qualified Stock Option Plan. A
Committee, appointed by the Board, administers the Plan on behalf of Morrison
and has complete discretion to determine participants and the terms and
provisions of Stock Incentives, subject to the Plan. The Plan permits the
Committee to make awards of shares of common stock, awards of derivative
securities related to the value of the common stock, and certain cash awards
to eligible persons. These discretionary awards may be made on an individual
basis or pursuant to a program approved by the Committee for the benefit of a
group of eligible persons. The Plan permits the Committee to make awards of a
variety of stock incentives, including (but not limited to) dividend
equivalent rights, incentive stock options, non-qualified stock options,
performance unit awards, phantom shares, stock appreciation rights and stock
awards. All shares and grants awarded under the Plan have been at the
prevailing market value at the time of issue or grant.

The Morrison Restaurants Inc. Stock Incentive and Deferred Compensation Plan
for Directors

In September, 1994, Morrison's shareholders approved the Morrison
Restaurants Inc. Stock Incentive and Deferred Compensation Plan for Directors,
which is an amendment and restatement of a similarly titled 1992 plan. In
general, the Plan sets a target ownership level for non-management directors.
To facilitate attaining the target ownership level, the Plan provides that the
directors must use 60% of their retainer to purchase shares of Morrison. Each
director purchasing stock receives an additional 15% of the shares purchased
and three times the total shares in options which after six months are
exercisable for five years from the grant date. All options awarded under the
Plan have been at the prevailing market value at the time of issue or grant. A
Committee, appointed by the Board, administers the Plan on behalf of Morrison.

F-36
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. CAPITAL STOCK, OPTIONS AND BONUS PLANS--(CONTINUED)

The Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive Plan

In October, 1993, the Board of Directors approved the Morrison Restaurants
Inc. 1993 Non-Executive Stock Incentive Plan. A committee, appointed by the
Board, administers the Plan on behalf of Morrison and has full authority in
its discretion to determine the officers and key employees to whom stock
incentives are granted and the terms and provisions of stock incentives,
subject to the Plan. All shares and grants awarded under the Plan have been at
the prevailing market value at the time of issue or grant.

In addition to the above plans, certain employees of the Company hold vested
stock options outstanding on two terminated plans, the Morrison Restaurants
Inc. Long-Term Incentive Plan, which was effective from 1984 to 1989, and the
Morrison Restaurants Inc. Stock Bonus and Non-Qualified Stock Option Plan,
which was effective from 1986 to 1992.

Under the terms of the Plan of Distribution, employees of the Company who
are current holders of Morrison stock options will receive adjusted,
substitute options which, in the aggregate, will preserve the economic value
as well as the material terms, such as option period, vesting provisions and
payment terms, the optionee had in his or her original Morrison option prior
to the Distribution. To the extent an optionee holds vested stock options,
original Morrison options will be adjusted by granting new option rights to
acquire Ruby Tuesday, Inc. and Morrison Health Care, Inc. stock in addition to
Company stock. In addition, each Company optionee holding vested Morrison
options, to the extent vested, will be given the opportunity to consent to the
receipt of an option to acquire only Company stock under the same terms as
above. To the extent an optionee employed by the Company holds unvested
options, original Morrison options will be adjusted by granting new option
rights to acquire Company stock, with that option having the same economic
value as the unvested portion of the Morrison option. Retirees and others
holding Morrison options will receive Ruby Tuesday, Inc., Morrison Health
Care, Inc. and Company options that, in the aggregate, will have an economic
value equal to the value of their Morrison options.

8. CONTINGENCIES

At June 3, 1995, the Company (as part of Morrison) was contingently liable
for approximately $8.5 million in letters of credit, issued primarily in
connection with its workers' compensation and casualty insurance programs.

Prior to the Distribution, the Company intends to enter into an agreement
with Morrison Health Care, Inc. and Ruby Tuesday, Inc. providing for
assumptions of liabilities and cross-indemnities designed to allocate
generally, among the three companies, effective as of the Distribution date,
financial responsibility for liabilities arising out of or in connection with
business activities prior to the Distribution.

9. SUBSEQUENT EVENTS

On January 10, 1996, the Company announced that it will adopt Financial
Accounting Standards No. 121 (FAS 121) "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" in the third quarter
of fiscal 1996. Also at that time, the Company anticipates recording charges
associated with its spin-off from Morrision and other costs associated with
the closing of 22 restaurants that have not met management's financial
performance requirements.

In accordance with the adoption of FAS 121, a pre-tax charge of $11.8
million will be recorded comprised of the following: impairment to be
recognized on the 22 units approved for closure within one year by the Board
of Directors on January 10, 1996, $6.7 million, and impairment on units
remaining open, $5.1 million.

F-37
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Based upon its review of negative cash flow and operating loss units and
other considerations, management presented to the Board a list consisting of
seven traditional cafeterias and 15 Quick Service Restaurant (QSRs) for
approval for closure. The expected loss on disposal of the long-term assets,
net of an assumed salvage value of $0.8 million, was $6.7 million. Negative
cash flow and operating loss units not recommended for closure were reviewed
for impairment. Management believed that these units might have been impaired
based upon poor operating performance. Accordingly, management estimated the
undiscounted future net cash flows to be generated by these units and
determined that certain of them would not likely generate net cash flows in
excess of carrying value. Management then estimated the fair value of those
units using discounted net cash flow as a measure of fair value. This will
result in a write-down of $5.1 million on those units.

In addition to the write-down of fixed assets to occur on the 22 units to be
closed, the Company will accrue charges of $8.3 million relating to the
settlement of the related lease obligations. Management estimates that it can
negotiate lease settlements on units within 48 months and does not expect to
sublease any units.

In connection with the Distribution and the unit closings, the Company
announced that it expects to incur relocation costs of approximately $0.6
million for personnel moving during the third quarter.

Other charges of $1.2 million anticipated to be recorded consist primarily
of estimated professional and other fees to be incurred in accordance with the
Distribution ($1.0 million), and miscellaneous other asset write-offs ($0.2
million).

10. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial results for the years ended June 4, 1994 and June 3,
1995, are summarized below. All quarters are composed of 13 weeks. Amounts
presented are in thousands.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
For the year ended June 4, 1994:
Revenues........................ $72,031 $73,420 $72,742 $74,300 $292,493
======= ======= ======= ======= ========
Gross profit*................... $ 9,471 $10,685 $10,575 $12,027 $ 42,758
======= ======= ======= ======= ========
Income before income taxes...... $ 3,127 $ 4,198 $ 4,104 $ 5,295 $ 16,724
Provision for federal and state
income taxes................... 1,243 1,668 1,631 2,104 6,646
------- ------- ------- ------- --------
Net income...................... $ 1,884 $ 2,530 $ 2,473 $ 3,191 $ 10,078
======= ======= ======= ======= ========
For the year ended June 3, 1995:
Revenues........................ $74,005 $75,156 $73,485 $71,941 $294,587
======= ======= ======= ======= ========
Gross profit*................... $11,222 $13,174 $12,225 $12,889 $ 49,510
======= ======= ======= ======= ========
Income before income taxes...... $ 3,922 $ 4,879 $ 4,322 $ 5,985 $ 19,108
Provision for federal and state
income taxes................... 1,679 1,945 1,724 2,386 7,734
------- ------- ------- ------- --------
Net income...................... $ 2,243 $ 2,934 $ 2,598 $ 3,599 $ 11,374
======= ======= ======= ======= ========
</TABLE>
- --------
* The Company defines gross profit as revenue less cost of merchandise,
payroll and related costs and other operating costs and expenses.

F-38
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Morrison Restaurants Inc.

We have audited the accompanying balance sheets of Morrison Health Care,
Inc. (a wholly-owned business of Morrison Restaurants Inc.) as of June 3, 1995
and June 4, 1994, and the related statements of income, owner's equity and
cash flows for each of the three fiscal years in the period ended June 3,
1995. Our audits also included the financial statement schedule listed in the
Index at page F-56. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Morrison Health Care, Inc.
at June 3, 1995 and June 4, 1994, and the results of its operations and its
cash flows for each of the three fiscal years in the period ended June 3,
1995, in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement schedule when considered in
relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

As discussed in Notes 5 and 7 to the financial statements, in fiscal 1993
Morrison Health Care, Inc. changed its method of accounting for income taxes
and postretirement benefits other than pensions.

Ernst & Young LLP

Atlanta, Georgia

November 17, 1995, except

for Notes 1 and 11, as to

which the date is January 10, 1996

F-39
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

STATEMENTS OF INCOME
(IN THOUSANDS)

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

F-40
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
-------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments............... $ 5,276 $ 732 $ 750
Receivables:
Trade, less allowance for doubtful accounts
of $2,622 at June 4, 1994, $1,641 at June
3, 1995, and $1,359 at December 2, 1995.... 27,760 18,100 19,304
Other....................................... 2,262 6,915 4,609
Inventories................................... 7,325 2,880 2,846
Prepaid expenses.............................. 2,241 6,721 4,705
Deferred income tax benefits.................. 5,734 5,682 3,356
-------- ------- -------
Total current assets...................... 50,598 41,030 35,570
-------- ------- -------
Property and equipment--at cost:
Buildings and improvements.................... 8,175 3,656 3,980
Equipment..................................... 33,566 10,874 11,416
-------- ------- -------
41,741 14,530 15,396
Less accumulated depreciation and
amortization................................. (21,577) (8,767) (9,546)
-------- ------- -------
20,164 5,763 5,850
Deferred income tax benefits.................... 2,274 3,298 2,131
Cost in excess of net assets acquired........... 11,884 4,888 4,812
Notes receivable................................ 9,282 5,299 5,237
Client construction allowances.................. 7,552 3,746 2,619
Other assets.................................... 6,188 6,398 6,744
-------- ------- -------
Total assets.............................. $107,942 $70,422 $62,963
======== ======= =======
LIABILITIES AND OWNER'S EQUITY
Current liabilities:
Accounts payable.............................. $ 14,018 $10,000 $ 8,460
Accrued liabilities:
Taxes, other than income taxes.............. 4,315 1,848 1,680
Payroll and related costs................... 8,330 3,439 2,820
Insurance................................... 9,512 6,834 5,924
Rent and other.............................. 1,659 4,186 2,017
Current portion of long-term debt............. 1,547 11 11
-------- ------- -------
Total current liabilities................. 39,381 26,318 20,912
-------- ------- -------
Long-term debt:
Notes and mortgage payable.................... 3,128 19,245 32,054
Other deferred liabilities...................... 14,269 15,844 15,201
Owner's equity:
Investment by and advances from (to)
Morrison Restaurants Inc..................... 51,164 9,015 (5,204)
-------- ------- -------
Total liabilities and owner's equity...... $107,942 $70,422 $62,963
======== ======= =======
</TABLE>

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

F-41
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

STATEMENTS OF OWNER'S EQUITY
(IN THOUSANDS)

<TABLE>
<S> <C>
Balance, June 6, 1992................................................ $ 55,079
Net income......................................................... 10,928
Net transfers to Morrison Restaurants Inc.......................... (9,200)
--------
Balance, June 5, 1993................................................ 56,807
Net income......................................................... 13,237
Net transfers to Morrison Restaurants Inc.......................... (18,880)
--------
Balance, June 4, 1994................................................ 51,164
Net income......................................................... 36,826
Net transfers to Morrison Restaurants Inc.......................... (78,975)
--------
Balance, June 3, 1995................................................ 9,015
Net income (unaudited)............................................. 6,080
Net transfers to Morrison Restaurants Inc. (unaudited)............. (20,299)
--------
Balance, December 2, 1995 (unaudited)................................ $ (5,204)
========
</TABLE>

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

F-42
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

STATEMENTS OF CASH FLOW
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
---------------------------- ---------------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............. $ 10,928 $ 13,237 $ 36,826 $ 31,417 $ 6,080
Adjustments to reconcile
net income to net cash
provided (used) by
operating activities:
Cumulative effect of
change in accounting
principles............ 214
Depreciation and amor-
tization.............. 5,274 5,914 2,238 1,008 1,252
Amortization of intan-
gibles................ 568 557 153 76 77
Gain on sale of B&I
contracts and assets.. (46,782) (46,782)
Other, net............. 1,995 1,702 (3,088) (3,739) 424
Deferred income taxes.. (323) 225 (972) (3,612) 3,492
(Gain)/Loss on disposi-
tion of assets........ (24) (556) 4,372 3,653 (14)
Changes in operating
assets and liabili-
ties:
(Increase)/decrease in
receivables........... (2,660) (2,096) 2,094 (3,901) 1,164
(Increase)/decrease in
inventories........... (532) (231) 564 401 34
(Increase)/decrease in
prepaid and other as-
sets.................. (1,770) 1,949 1,149 298 237
Increase/(decrease) in
accounts payable,
accrued and other
liabilities........... 10,207 4,874 (26,072) (19,344) (6,049)
Increase/(decrease) in
income taxes payable.. (853) (923) (5,703) 14,372 2,122
-------- -------- -------- -------- --------
Net cash provided (used)
by operating activi-
ties................... 23,024 24,652 (35,221) (26,153) 8,819
-------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Purchases of property
and equipment.......... (7,930) (9,184) (3,482) (2,371) (1,436)
Proceeds from disposal
of assets.............. 316 1,381 674 471 155
Proceeds from sale of
B&I contracts and as-
sets................... 100,000 100,000
Other, net.............. (3,129) (3,818) (2,121) (1,537) (30)
-------- -------- -------- -------- --------
Net cash provided (used)
by investing activi-
ties................... (10,743) (11,621) 95,071 96,563 (1,311)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES:
Proceeds from long-term
debt................... 19,200 12,820
Principal payments on
long-term debt and cap-
ital leases............ (8,791) (41) (4,619) (4,619) (11)
Net transfers to Morri-
son Restaurants Inc.... (9,200) (18,880) (78,975) (70,832) (20,299)
-------- -------- -------- -------- --------
Net cash used by financ-
ing activities......... (17,991) (18,921) (64,394) (75,451) (7,490)
-------- -------- -------- -------- --------
Increase/(decrease) in
cash and short-term in-
vestments.............. (5,710) (5,890) (4,544) (5,041) 18
Cash and short-term in-
vestments at the begin-
ning of the period..... 16,876 11,166 5,276 5,276 732
-------- -------- -------- -------- --------
Cash and short-term in-
vestments at the end of
the period............. $ 11,166 $ 5,276 $ 732 $ 235 $ 750
======== ======== ======== ======== ========
Supplemental disclosure
of cash flow informa-
tion--cash paid for:
Interest (net of amount
capitalized).......... $ 823 $ 313 $ 776 $ 0 $ 759
Income Taxes, net...... $ 9,311 $ 8,648 $ 32,764 $ 15,554 $ 950
</TABLE>

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

F-43
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS

JUNE 3, 1995

(INFORMATION PERTAINING TO THE TWENTY-SIX WEEKS ENDED DECEMBER 3, 1994 AND
DECEMBER 2, 1995 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Morrison Health Care, Inc. (the "Company") is a wholly-owned health care
contract food and nutrition business of Morrison Restaurants Inc.
("Morrison"). Prior to August 8, 1994, the Company's operations included
education, business, and industry ("B&I") contracts and assets. The B&I
contracts and assets were sold on that date to Gardner Merchant Food Services,
Inc. See Note 2 of Notes to Financial Statements for more information. The
accompanying financial statements have been prepared as if Morrison's health
care contract food and nutrition and B&I businesses had operated as a stand-
alone entity for all periods presented. Such statements include the assets,
liabilities, revenues and expenses that are directly related to the Company's
operations. They also include an allocation of certain assets, liabilities,
and general corporate expenses of Morrison, such as executive payroll, legal,
data processing, and interest, which are related to the Company. Amounts were
allocated on a specific identification method where appropriate and on a pro
rata basis otherwise. Management believes the allocation methods used are
reasonable.

On September 27, 1995, Morrison announced a plan to spin-off (the
"Distribution") its family dining restaurant business (another division of
Morrison, to be known as Morrison Fresh Cooking, Inc.) and its health care
contract food and nutrition businesses to Morrison's shareholders. The spin-
off will result in the family dining and health care contract food and
nutrition businesses operating as two separate stand-alone, publicly traded
companies. As part of the spin-off, Morrison intends to reincorporate in the
state of Georgia and change its name to Ruby Tuesday, Inc. ("RTI"). The spin-
off is subject to shareholder approval and receipt of a ruling from the
Internal Revenue Service that the transaction will be tax free to Morrison and
its shareholders. Subsequent to December 2, 1995, the Company was established
as a wholly-owned corporate subsidiary of Morrison.

Prior to the spin-off the Company will enter into a shared services
agreement with RTI and Morrison Fresh Cooking, Inc. ("MFC") pursuant to which
each of the three companies will agree to provide to the other parties certain
services, subject to certain conditions, on an "as needed" basis.

Fiscal Year

The Company's fiscal year ends on the first Saturday after May 30. The
fiscal years ended June 5, 1993, June 4, 1994, and June 3, 1995 were comprised
of 52 weeks.

Cash and Short-Term Investments

Inventories

Inventories consist of materials, food supplies, china and silver and are
stated at the lower of cost (first in- first out) or market.

F-44
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Property and Equipment and Depreciation

Depreciation for financial reporting purposes is computed using the
straight-line method over the estimated useful lives of the assets. Annual
rates of depreciation range from 3% to 5% for buildings and from 8% to 34% for
restaurant and other equipment.

During March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (FAS 121). FAS
121 requires that, beginning in fiscal years starting after December 15, 1995,
long-lived assets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Long-lived assets and certain identifiable intangibles to be
disposed of are generally to be reported at the lower of carrying amount or
fair value less cost to sell. Currently, the Company recognizes such
impairment upon the decision to close a contract. The ultimate impact of FAS
121 on the Company's financial statements has been analyzed and will not have
a material impact on the Company's financial position or results of
operations.

Income Taxes

Pre-Opening Expenses

Salaries, personnel training costs and other expenses of opening new
facilities are charged to expense as incurred.

Intangible Assets

Financial Instruments

The Company's financial instruments at June 4, 1994, June 3, 1995, and
December 2, 1995 consisted of cash and short-term investments, accounts and
notes receivable and long-term debt. The fair value of these financial
instruments approximated the carrying amounts reported in the balance sheets.

Although substantially all of the Company's accounts receivable are due are
from health care institutions, management believes that concentrations of
credit risk are limited due to the geographic diversity of the Company's
customer base. The Company performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral.
Historically, the Company has not experienced significant losses related to
trade receivables from individual customers or from groups of customers in any
geographic area.

F-45
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Owner's Equity

Prior to the Distribution, the Company's Certificate of Incorporation will
provide that authorized capital stock will consist of 100,000,000 shares of
common stock ($0.01 par value) and 250,000 shares of preferred stock ($0.01
par value). All of the shares of Morrison Health Care, Inc. common stock
distributed by Morrison will be fully paid and non-assessable. Following the
Distribution there will be approximately 11,508,000 shares of Morrison Health
Care, Inc. common stock outstanding. None of the shares of preferred stock
will be issued or outstanding at the Distribution Date.

Stock-Based Employee Compensation Plans

During October, 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 "Accounting for Stock-
Based Compensation" (FAS 123). FAS 123 establishes financial accounting and
reporting standards for stock-based employee compensation plans. The Statement
defines a fair value based method of accounting for an employee stock option
or similar equity instrument. The Statement allows an entity to continue to
measure compensation cost for those plans using the intrinsic value based
method of accounting prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees". The Company intends to continue to measure compensation
cost following the principles of APB Opinion No. 25 and will therefore be
required to present pro forma disclosures of net income and earnings per share
as if the fair value based method had been applied beginning in fiscal 1997.

2. SALE OF THE EDUCATION, BUSINESS AND INDUSTRY CONTRACTS AND ASSETS

On August 8, 1994, the Company sold certain education, business and industry
(B&I) contracts and assets to Gardner Merchant Food Services, Inc., a wholly-
owned subsidiary of Gardner Merchant Ltd., for a cash payment of $100.0
million. The remaining B&I accounts were closed. The sale of the B&I accounts
and the discontinuance of the remaining accounts resulted in a pre-tax gain of
$46.8 million, or $25.8 million after applicable taxes.

Sales from B&I contracts in fiscal year 1994 were $250.7 million, with
operating profits of $6.3 million (after allocation of corporate overhead of
$1.0 million).

3. NOTES AND MORTGAGES PAYABLE

Notes and mortgages payable allocated to the Company consists of the
following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit facility...................... $ 0 $19,200 $32,020
8.88% Senior promissory notes payable to Life
Insurance Company of Georgia.................. 4,608
Other notes and mortgages...................... 67 56 45
------ ------- -------
4,675 19,256 32,065
Less current maturities........................ 1,547 11 11
------ ------- -------
$3,128 $19,245 $32,054
====== ======= =======
</TABLE>

F-46
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. NOTES AND MORTGAGES PAYABLE--(CONTINUED)

Annual maturities of notes and mortgages at June 3, 1995 are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996.......................................................... $ 11
1997.......................................................... 11
1998.......................................................... 11
1999.......................................................... 11
2000.......................................................... 19,212
-------
Total....................................................... $19,256
=======
</TABLE>

During the quarter ended September 3, 1994, Morrison retired the 8.88%
Senior Promissory Note payable to Life Insurance Company of Georgia.

On September 30, 1994, Morrison entered into a five-year revolving line of
credit with various banks which allows Morrison to borrow up to $200.0 million
under various interest rate options. Commitment fees ranging from 0.0625% to
0.15% per annum are payable on the unused portion of the credit facility. At
June 3, 1995, the Company had $19.2 million of allocated borrowings of
Morrison outstanding with various banks under the terms of the agreement at
interest rates ranging from 6.32% to 6.44% per annum. Such borrowings (with
maturities up to 180 days) have been classified as long-term based on the
Company's ability and intent to refinance such borrowings under the revolving
facility. For the purpose of these financial statements the Company's
allocation was determined by applying the pro rata percentage intended to be
allocated and to be assumed by the Company at the date of Distribution to the
outstanding Morrison corporate debt at each balance sheet date.

The credit facility provides for certain restrictions on incurring
additional indebtedness and to certain funded debt, net worth, and fixed
charge coverage requirements. The Company is currently negotiating with
lenders for a five-year credit facility which will replace allocated
borrowings outstanding under Morrison's current revolver shortly after the
Distribution. It is expected that the covenants in the Company's new credit
facility will result in restrictions similar to those imposed on Morrison
under the current revolving credit facility and will not impose any material
restrictions on the Company.

In order to control its fiscal 1996 interest costs on its five-year
revolving line of credit and other bank lines of credit, Morrison entered into
an interest rate swap agreement during the fourth quarter. This swap
agreement, which has a notional amount accreting from $85.0 to $115.0 million,
effectively limits the interest rate to a maximum of 7.02% per annum for the
one year period commencing June 5, 1995.

4. RENTS

Under the terms of certain of its contracts, the Company is required to make
rent payments to its health- care institution customers. These contracts may
provide for additional contingent rents based upon sales volume and contain
options to renew.

Rental expense pursuant to contracts is summarized as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
----------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Minimum rent................. $ 5,425 $ 6,571 $1,585 $1,213 $311
Contingent rent.............. 4,956 6,595 2,497 1,911 490
------- ------- ------ ------ ----
$10,381 $13,166 $4,082 $3,124 $801
======= ======= ====== ====== ====
</TABLE>

F-47
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. INCOME TAXES

The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" in fiscal 1993. The cumulative effect of
adoption was an increase in fiscal 1993 net income of approximately $426,000.

The components of income tax expense are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------ -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal................... $6,051 $6,870 $24,486 $23,648 $ 755
State..................... 1,252 1,256 4,955 4,750 177
------ ------ ------- ------- ------
7,303 8,126 29,441 28,398 932
Deferred:
Federal................... (266) 188 (812) (2,701) 2,967
State..................... (57) 37 (160) (911) 525
------ ------ ------- ------- ------
(323) 225 (972) (3,612) 3,492
------ ------ ------- ------- ------
$6,980 $8,351 $28,469 $24,786 $4,424
====== ====== ======= ======= ======
</TABLE>

Deferred tax assets and liabilities are comprised of the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
JUNE 4, JUNE 3, DECEMBER 2,
1994 1995 1995
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets
Employee benefits.............................. $ 4,157 $ 4,266 $4,483
Insurance reserves............................. 5,069 4,001 3,787
Bad debt reserve............................... 1,028 644 533
Account closing reserve........................ 47 3,225 324
Other.......................................... 714 115 230
------- ------- ------
Total deferred tax assets.................... 11,015 12,251 9,357
------- ------- ------
Deferred tax liabilities
Depreciation................................... 1,623 286 113
Retirement plans............................... 787 567 740
Prepaid deductions............................. 157 195 503
B&I related and other.......................... 440 2,223 2,514
------- ------- ------
Total deferred tax liabilities............... 3,007 3,271 3,870
------- ------- ------
Net deferred tax asset........................... $ 8,008 $ 8,980 $5,487
======= ======= ======
</TABLE>

F-48
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. INCOME TAXES--(CONTINUED)

A reconciliation from the statutory federal income tax expense to the
reported income tax expense is shown below:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------------------------
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
------------------------- -----------------------
JUNE 5, JUNE 4, JUNE 3, DECEMBER 3, DECEMBER 2,
1993 1994 1995 1994 1995
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statutory federal income
taxes.................. $6,234 $7,559 $22,853 $19,671 $3,676
State income taxes net
of federal income tax
benefit................ 784 908 2,868 2,495 456
Tax credits............. (195) (174) (346) (215) (40)
B&I divestiture items... 2,575 2,841
Other, net.............. 157 58 519 (6) 332
------ ------ ------- ------- ------
$6,980 $8,351 $28,469 $24,786 $4,424
====== ====== ======= ======= ======
</TABLE>

The effective income tax rate was 38.5%, 38.7%, 43.6%, 44.1% and 42.1% in
1993, 1994, 1995, and the twenty-six weeks ended December 3, 1994 and December
2, 1995, respectively. The effective income tax rate increase in fiscal year
1995 was due to the nondeductibility of acquired goodwill disposed of in
connection with the divestiture of the B&I accounts.

Prior to the Distribution, the Company intends to enter into a tax
allocation agreement with Morrison Fresh Cooking, Inc. and Ruby Tuesday, Inc.
which will provide that the Company will pay its share of Ruby Tuesday, Inc.'s
consolidated tax liability for the tax years that the Company was included in
Morrison's consolidated federal income tax return and also provide for
sharing, where appropriate, of state, local and foreign taxes attributable to
periods prior to the date of Distribution.

6. EMPLOYEE BENEFIT PLANS

As part of Morrison, employees of the Company participated in various
Morrison employee benefit plans including the Salary Deferral Plan and
Deferred Compensation Plan (both of which are defined contribution plans) and
the Retirement Plan, Executive Supplemental Pension Plan, and the Management
Retirement Plan (all of which are defined benefit plans). The Company has been
allocated a certain portion of the matching contributions made by Morrison to
the Salary Deferral Plan and the Deferred Compensation Plan. Contributions
allocated for the Salary Deferral Plan totaled $333,000, $342,000, $349,000,
$180,000, and $178,000 for 1993, 1994, 1995 and the twenty-six weeks ended
December 3, 1994 and December 2, 1995, respectively. Contributions allocated
for the Deferred Compensation Plan totaled $256,000, $223,000, $196,000,
$109,000, and $91,000 for the same periods.

F-49
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. EMPLOYEE BENEFIT PLANS--(CONTINUED)

<TABLE>
<CAPTION>
ACCUMULATED BENEFITS EXCEED ASSETS--
ASSETS EXCEED ACCUMULATED BENEFITS-- EXECUTIVE SUPPLEMENTAL PENSION PLAN
RETIREMENT PLAN AND MANAGEMENT RETIREMENT PLAN
-------------------------------------- --------------------------------------
JUNE 5, 1993 JUNE 4, 1994 JUNE 3, 1995 JUNE 5, 1993 JUNE 4, 1994 JUNE 3, 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Components of pension
expense (income):
Service cost.......... $ $ $ $ 70 $ 74 $ 82
Interest cost......... 596 539 544 221 256 315
Actual return on plan
assets............... (741) (802) (174)
Amortization and
deferral............. 115 226 (413) 72 178 141
Curtailment loss...... 288
Settlement loss
(gain)............... 115 (162)
Other................. 102
------ ------ ------ ------- ------- -------
$ (30) $ (37) $ 72 $ 363 $ 508 $ 766
====== ====== ====== ======= ======= =======
Plan assets at fair
value.................. $7,522 $7,658 $6,679 $ 0 $ 0 $ 0
Actuarial present value
of projected benefit
obligations:
Accumulated benefit
obligations:
Vested.............. 6,231 7,485 6,532 1,306 2,172 3,919
Nonvested........... 440 622 9
Provision for future
salary increases..... 804 1,575 1,009
------ ------ ------ ------- ------- -------
Total projected benefit
obligations............ 6,231 7,485 6,532 2,550 4,369 4,937
------ ------ ------ ------- ------- -------
Excess (deficit) of plan
assets over projected
benefit obligations.... 1,291 173 147 (2,550) (4,369) (4,937)
Unrecognized net loss
(gain)................. (124) 1,153 1,300 (1,323) 166 (302)
Unrecognized prior
service cost........... 19 7 279 220 760
Unrecognized net
transition
obligations............ 901 808 714 1,431 1,343 1,133
Additional minimum
liability.............. (131) (356) (660)
------ ------ ------ ------- ------- -------
Prepaid (accrued)
pension cost........... $2,087 $2,141 $2,161 $(2,294) $(2,996) $(4,006)
====== ====== ====== ======= ======= =======
</TABLE>

The Retirement Plan was frozen by Morrison Restaurants Inc. on December 31,
1987 and will remain part of Morrison. The Company will continue to share in
future expenses of the Plan. The Plan's assets include common stock, fixed
income securities, short-term investments and cash. The weighted-average
discount rate for all three plans is 9.5%, 7.5%, and 8.5% for 1993, 1994, and
1995, respectively. The rate of increase in compensation levels for the
Executive Supplemental Pension Plan and Management Retirement Plan is 5% for
1993 and 1994, and 4% for 1995. The expected long-term rate of return on plan
assets for the Retirement Plan is 10% for all three years.

Prior to the spin-off, the Company will enter into an agreement with RTI and
MFC providing for the allocation of employee benefit rights and
responsibilities among the three companies.

F-50
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. EMPLOYEE BENEFIT PLANS--(CONTINUED)

Salary Deferral Plan

Under the Morrison Health Care, Inc. Salary Deferral Plan each eligible
employee, as defined in the Plan, may elect to make pre-tax contributions to a
trust fund in amounts ranging from 2% to 10% of their annual earnings.
Employees contributing a pre-tax contribution of at least 2% may elect to make
after-tax contributions not in excess of 10% of annual earnings. The Company
contribution to the Plan will be based on the employee's pre-tax contribution
and years of service. After three years of service (including service as part
of Morrison Restaurants Inc.) the Company will contribute 20% of the
employee's pre-tax contribution, 30% after ten years of service and 40% after
20 years of service. Normally, the full amount of each participant's interest
in the trust fund will be paid upon retirement or total disability. However,
the Plan will allow participants to make early withdrawals of pre-tax and
after-tax contributions, subject to certain restrictions. The Plan may be
terminated by the Company at any time.

Deferred Compensation Plan

The Company will maintain the Morrison Health Care, Inc. Deferred
Compensation Plan for certain selected employees. The provisions of this non-
qualified Plan are similar to those of the Salary Deferral Plan except for the
employees who are eligible to participate. Assets of the Plan will be held by
a rabbi trust similar to the one currently maintained by Morrison. Under
current accounting rules, assets of a rabbi trust must be accounted for as if
they are assets of the Company, therefore, all earnings and expenses will be
recorded in the Company's financial statements. The net of the Morrison rabbi
trust's earnings and losses is recorded as additional liability to the
participants and is considered to be interest expense to the Company.

Executive Supplemental Pension Plan

Management Retirement Plan

Under the unfunded Morrison Health Care, Inc. Management Retirement Plan,
individuals actively employed by the Company as of June 1, 1989, or
thereafter, who have 15 years of credited service and whose average annual
compensation for the immediately preceding three calendar years equaled or
exceeded $40,000, will become participants. Participants will receive benefits
based upon salary and length of service, reduced by social security benefits
and benefits payable under the Retirement Plan and Executive Supplemental
Pension Plan.

As of December 2, 1995 the Company has not performed actuarial calculations
regarding the status of its plans as if Morrison Health Care, Inc. were a
stand-alone entity. Management does not believe the pension cost amounts
allocated are materially different from amounts that would be calculated
historically on a stand-alone basis.

F-51
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

As a part of Morrison, the Company provides health care benefits to
substantially all retired employees and life insurance benefits to certain
retirees. Benefits are funded as medical claims and life insurance premiums
are incurred. Retirees become eligible for retirement benefits if they have
met certain service and minimum age requirements at date of retirement. The
Company accrues expenses related to postretirement health care and life
insurance benefits during the years an employee provides services. The total
postretirement benefit costs for 1993, 1994, and 1995 were $103,000, $140,000,
and $143,000, respectively.

In 1993, the Company adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions".
The cumulative effect of this change in accounting for years prior to 1993
resulted in a charge of $640,000.

The actuarial present value of accumulated postretirement benefit
obligations and the amounts recognized in the Company's balance sheet are as
follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------------
JUNE 4, 1994 JUNE 3, 1995
------------ ------------
<S> <C> <C>
Retirees.......................................... $1,108 $1,061
Fully eligible active plan participants........... 224 167
Other active plan participants.................... 171 114
------ ------
Accumulated postretirement benefit obligation..... 1,503 1,342
Unrecognized net loss............................. (444) (305)
------ ------
Accrued postretirement benefit cost............... $1,059 $1,037
====== ======
</TABLE>

The postretirement benefit cost allocated to the Company is as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------
FOR THE FISCAL YEAR ENDED
------------------------------
JUNE 5, JUNE 4, JUNE 3,
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Service cost................................ $ 7 $ 10 $ 7
Interest cost............................... 96 97 104
Amortization of unrecognized net loss....... 33 32
-------- -------- --------
Postretirement benefit cost................. $ 103 $ 140 $ 143
======== ======== ========
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 0% because at the time of adoption of
FAS 106, the Company amended its plans to fix current and future contributions
levels at the rates in place at that time. Increases in health care cost due
to factors such as inflation, changes in health care utilization or delivery
patterns, technological advances, and changes in the health status of plan
participants will be borne by the participants. Measurement of the accumulated
postretirement benefit obligation was based on an assumed 9.5%, 7.5% and 8.5%
discount rate for fiscal 1993, 1994 and 1995, respectively.

8. PREFERRED STOCK

F-52
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. PREFERRED STOCK--(CONTINUED)

but substantially above the expected trading price. The rights will expire ten
years after the date such rights are issued, and may be redeemed prior to ten
days after the acquisition of 20% or more of the Company's common stock.

9. CAPITAL STOCK, OPTIONS AND BONUS PLANS

The Morrison Restaurants Inc. Stock Incentive Plan

The Morrison Restaurants Inc. Stock Incentive and Deferred Compensation Plan
for Directors

The Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive Plan

In October, 1993, the Board of Directors approved the Morrison Restaurants
Inc. 1993 Non-Executive Stock Incentive Plan. A committee, appointed by the
Board, administers the Plan on behalf of Morrison and has full authority in
its discretion to determine the officers and key employees to whom stock
incentives are granted and the terms and provisions of stock incentives,
subject to the Plan. All shares and grants awarded under the Plan have been at
the prevailing market value at the time of issue or grant.

F-53
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
9. CAPITAL STOCK, OPTIONS AND BONUS PLANS--(CONTINUED)

as well as the material terms, such as option period, vesting provisions and
payment terms, the optionee had in his or her original Morrison option prior
to the Distribution. To the extent an optionee holds vested stock options,
original Morrison options will be adjusted by granting new option rights to
acquire Ruby Tuesday, Inc. and Morrison Fresh Cooking, Inc. stock in addition
to Company stock. In addition, each Company optionee holding vested Morrison
options, to the extent vested, will be given the opportunity to consent to the
receipt of an option to acquire only Company stock under the same terms as
above. To the extent an optionee employed by the Company holds unvested
options, original Morrison options will be adjusted by granting new option
rights to acquire Company stock, with that option having the same economic
value as the unvested portion of the Morrison option. Retirees and others
holding Morrison options will receive Ruby Tuesday, Inc., Morrison Fresh
Cooking, Inc. and Company options that, in the aggregate, will have an
economic value equal to the value of their Morrison options.

10. CONTINGENCIES

At June 3, 1995, the Company (as part of Morrison) was contingently liable
for approximately $11.0 million in letters of credit, issued primarily in
connection with its workers' compensation and casualty insurance programs.

Prior to the Distribution, the Company intends to enter into an agreement
with Morrison Fresh Cooking, Inc. and Ruby Tuesday, Inc. providing for
assumptions of liabilities and cross-indemnities designed to allocate
generally, among the three companies, effective as of the Distribution date,
financial responsibility for liabilities arising out of or in connection with
business activities prior to the Distribution.

11. SUBSEQUENT EVENTS

On January 10, 1996, the Company announced that it anticipates to record
charges in the third quarter of $1.6 million consisting primarily of estimated
professional and other fees to be incurred in accordance with the Distribution
($1.1 million), relocation costs for personnel moving in connection with the
Distribution expected during the quarter ($0.3 million) and miscellaneous
other asset write-offs ($0.2 million).

F-54
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

12. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial results for the years ended June 4, 1994 and June 3,
1995, are summarized below. All quarters are composed of 13 weeks. Amounts
presented are in thousands.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
For the year ended June 4,
1994:
Revenues.................. $102,857 $126,288 $114,518 $118,117 $461,780
======== ======== ======== ======== ========
Gross profit*............. $ 9,442 $ 15,402 $ 12,545 $ 13,774 $ 51,163
======== ======== ======== ======== ========
Income before income
taxes.................... $ 2,456 $ 8,627 $ 4,414 $ 6,091 $ 21,588
Provision for federal and
state income taxes....... 951 3,336 1,708 2,356 8,351
-------- -------- -------- -------- --------
Net income................ $ 1,505 $ 5,291 $ 2,706 $ 3,735 $ 13,237
======== ======== ======== ======== ========
For the year ended June 3,
1995:
Revenues.................. $ 53,971 $ 56,578 $ 56,578 $ 58,265 $225,392
======== ======== ======== ======== ========
Gross profit*............. $ 8,594 $ 9,585 $ 8,857 $ 10,930 $ 37,966
======== ======== ======== ======== ========
Income before income
taxes.................... $ 50,898** $ 5,305 $ 3,345 $ 5,747 $ 65,295
Provision for federal and
state income taxes....... 22,637 2,149 1,355 2,328 28,469
-------- -------- -------- -------- --------
Net income................ $ 28,261 $ 3,156 $ 1,990 $ 3,419 $ 36,826
======== ======== ======== ======== ========
</TABLE>
- --------
* The Company defines gross profit as revenue less operating expenses.
** Includes a pre-tax gain of $46,782 realized upon the sale of B&I.

F-55
<PAGE>

SCHEDULE II

MORRISON HEALTH CARE, INC.

VALUATION AND QUALIFYING ACCOUNTS
FOR THE PERIODS ENDED JUNE 3, 1995, JUNE 4, 1994 AND JUNE 5, 1993
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D (A) COLUMN E
-------- ---------- ------------------- ------------ ----------
ADDITIONS
-------------------
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ---------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 3, 1995:
Trade receivables:
Allowance for doubtful
accounts............. $2,622 $ 0 $0 $981 $1,641
====== ==== === ==== ======
YEAR ENDED JUNE 4, 1994:
Trade receivables:
Allowance for doubtful
accounts............. $3,087 $ 4 $ 0 $469 $2,622
====== ==== === ==== ======
YEAR ENDED JUNE 5, 1993:
Trade receivables:
Allowance for doubtful
accounts............. $3,021 $551 $ 0 $485 $3,087
====== ==== === ==== ======
</TABLE>
- --------
Notes:
(A) Write-off of trade receivables determined to be uncollectible against the
allowance for doubtful accounts.

F-56
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following Unaudited Pro Forma Consolidated Financial Statements have
been prepared to illustrate certain estimated effects of the Distribution and
related transactions. These statements include adjustments to revenues,
expenses, assets and liabilities and for the recapitalization which might have
occurred had the Distribution been effected as of the dates indicated.
Adjustments are based on the assumptions set forth below and in the notes to
the Unaudited Pro Forma Consolidated Financial Statements. The pro forma
consolidated statements of income for the year ended June 3, 1995 and the
twenty-six weeks ended December 2, 1995 are prepared assuming the Distribution
had occurred as of June 5, 1994 and June 4, 1995, respectively. The pro forma
consolidated balance sheet as of December 2, 1995 is prepared assuming that
the Distribution had occurred as of that date.

The Unaudited Pro Forma Consolidated Financial Statements and accompanying
notes should be read in conjunction with the historical consolidated financial
statements, including the notes thereto, and other financial data of the
Company contained elsewhere in this Proxy Statement. The pro forma
consolidated financial information is presented for informational purposes
only and may not necessarily reflect the future earnings, results of
operations or financial position of the Company or what the earnings, results
of operations or financial position would have been had Morrison's three
businesses been operated separately for the periods indicated.

F-57
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX WEEKS ENDED
DECEMBER 2, 1995
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 1) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues.. $296,355 $ $296,355
Other revenues.................... 1,610 (198)(a) 1,412
-------- ------ --------
297,965 (198) 297,767
-------- ------ --------
Operating costs and expenses (Note
3):
Cost of merchandise............... 82,031 82,031
Payroll and related costs......... 101,893 (333)(a) 101,560
Other............................. 65,525 (203)(a) 65,322
Selling, general and administra-
tive............................. 20,861 (616)(a) 20,245
Depreciation and amortization..... 16,797 (104)(a) 16,693
Interest expense, net............. 1,522 1,522
-------- ------ --------
288,629 (1,256) 287,373
-------- ------ --------
Income from continuing operations
before income taxes................ 9,336 1,058 10,394
Provision for federal and state
income taxes....................... 3,038 308 (b) 3,346
-------- ------ --------
Income from continuing operations... $ 6,298 $ 750 $ 7,048
======== ====== ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Consolidated Financial
Statements.

F-58
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED JUNE 3, 1995
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 1) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues.. $514,292 $ $514,292
Other revenues.................... 1,020 (258)(a) 762
-------- ------- --------
515,312 (258) 515,054
-------- ------- --------
Operating costs and expenses (Note
3):
Cost of merchandise............... 138,665 138,665
Payroll and related costs......... 169,881 228 (a) 170,109
Other............................. 106,028 (1,048)(a) 104,980
Selling, general and
administrative................... 37,521 (1,695)(a) 35,826
Depreciation and amortization..... 26,634 (142)(a) 26,492
L&N conversion/closing costs...... 19,727 19,727
Interest expense, net............. 744 744
-------- ------- --------
499,200 (2,657) 496,543
-------- ------- --------
Income from continuing operations
before income taxes................ 16,112 2,399 18,511
Provision for federal and state
income taxes....................... 5,027 748 (b) 5,775
-------- ------- --------
Income from continuing operations... $ 11,085 $ 1,651 $ 12,736
======== ======= ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Consolidated Financial
Statements.

F-59
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 2, 1995
------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 2) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments... $ 9,617 $ (8,100)(e) $ 1,517
Receivables:
Trade........................... 213 213
Other........................... 2,960 2,960
Inventories:
Merchandise..................... 5,847 5,847
China, silver and supplies...... 3,021 3,021
Prepaid expenses.................. 9,494 9,494
Deferred income tax benefits...... 1,848 1,848
Current assets of discontinued
operations....................... 47,045 (47,045)(a)
--------- --------- ---------
Total current assets.......... 80,045 (55,145) 24,900
--------- --------- ---------
Property and equipment--at cost:
Land.............................. 24,095 24,095
Buildings......................... 50,273 50,273
Improvements...................... 182,134 182,134
Restaurant equipment.............. 131,605 131,605
Other equipment................... 29,775 29,775
Construction in progress.......... 40,427 40,427
--------- ---------
458,309 458,309
Less accumulated depreciation and
amortization..................... (132,620) (132,620)
--------- ---------
325,689 325,689
Cost in excess of net assets
acquired........................... 21,981 21,981
Non-current assets of discontinued
operations......................... 108,543 (108,543)(a)
Other assets........................ 9,719 1,019 (b) 10,738
--------- --------- ---------
Total assets........................ $ 545,977 $(162,669) $ 383,308
========= ========= =========
</TABLE>

F-60
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 2, 1995
---------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 2) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities:
Accounts payable................. $ 28,182 $ $ 28,182
Short-term borrowings............ 17,720 17,720
Accrued liabilities:
Taxes, other than income
taxes......................... 10,505 10,505
Payroll and related costs...... 5,113 5,113
Insurance...................... 6,808 6,808
Rent and other................. 7,275 7,275
Current portion of long-term
debt............................ 91 91
Current liabilities of
discontinued operations......... 46,182 (46,182)(a)
--------- --------- --------
Total current liabilities.... 121,876 (46,182) 75,694
--------- --------- --------
Long-term debt:
Notes and mortgages payable...... 69,136 69,136
Deferred income taxes.............. 16,955 16,955
Other deferred liabilities......... 18,985 18,985
Non-current liabilities on
discontinued operations........... 62,441 (62,441)(a)
Stockholders' equity:
Common stock, $0.01 par value;
(authorized: 100,000 shares;
issued: historical 43,644
shares; pro forma 21,822
shares)......................... 436 (218)(d) 218
Capital in excess of par value... 84,752 218 (d) 84,970
Retained earnings................ 308,169 (189,233)(a,c,e) 118,936
--------- --------- --------
393,357 (189,233) 204,124
Less cost of treasury stock...... (136,773) 135,187 (b,c) (1,586)
--------- --------- --------
256,584 (54,046) 202,538
--------- --------- --------
Total liabilities and
stockholders' equity........ $ 545,977 $(162,669) $383,308
========= ========= ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Consolidated Financial
Statements.

F-61
<PAGE>

MORRISON RESTAURANTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Accomplishment of the transactions contemplated in this Proxy Statement
would result in Morrison Restaurants Inc. (to be renamed Ruby Tuesday, Inc.)
distributing the net assets of its wholly-owned businesses, Morrison Fresh
Cooking, Inc. (MFCI) and Morrison Health Care, Inc. (MHCI), to its
shareholders. The historical consolidated financial statements reflect periods
during which Morrison Restaurants Inc. did not operate as a separate company,
independent of MFCI and MHCI, and certain assumptions were made in preparing
such financial statements. Therefore these historical consolidated financial
statements may not necessarily reflect the results of operations or financial
position that would have resulted had the transactions contemplated herein
been accomplished at the beginning of the historical periods reported.

Note 1--The pro forma adjustments to the accompanying historical
consolidated statements of income for the fiscal year ended June 3, 1995 and
the thirteen weeks ended December 2, 1995 are described below:

(a) To record the reduction in revenues and changes in operating expenses
associated with shared corporate overhead which would not have been
incurred by Morrison Restaurants Inc. had MFCI and MHCI been separate
stand-alone entities.

(b) To record the estimated income tax benefit associated with pro forma
adjustment (a) at an assumed combined state and federal effective income
tax rate of 31.2% for the year ended June 3, 1995 and 32.2% for the
thirteen weeks ended December 2, 1995.

Note 2--The pro forma adjustments to the accompanying historical
consolidated balance sheet at December 2, 1995 are described below (amounts in
thousands):

(a) To record the distribution of the net assets of MFCI and MHCI
totaling $46,965 to the Company's stockholders.

(b) To record the distribution to employees participating in the Morrison
Restaurants Inc. Deferred Compensation Plan rabbi trust of MFCI and MHCI
stock ($1,019).

(c) To record the cancellation of all remaining Morrison Restaurants Inc.
treasury stock except the expected Ruby Tuesday, Inc. common stock to
remain in the Deferred Compensation Plan rabbi trust ($134,168).

(d) To record the one-for-two reverse stock split which will occur
simultaneous with the Distribution and the Company's reincorporation into
Georgia and name change to "Ruby Tuesday, Inc.".

(e) To record an additional planned transfer of cash of $8,100 to MHCI in
order to help MHCI meet potential lender requirements for positive equity
following the Distribution.

Note 3--Historical operating expenses include certain previously unallocated
corporate expense items. Some of these expenses have been included in the
Statement of Income for Morrison Restaurants Inc. even though they have also
been included in the Statements of Income for one of the other two companies.
This treatment is appropriate because these corporate expenses were not
allocable under generally accepted accounting standards to discontinued
operations for purposes of Morrison Restaurants Inc.'s Consolidated Statement
of Income, only the Statements of Income for MFCI and MHCI.

F-62
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following Unaudited Pro Forma Financial Statements of the Company have
been prepared to illustrate certain estimated effects of the Distribution and
related transactions. These statements include adjustments for the effects of
costs, expenses, assets and liabilities and the recapitalization which might
have occurred had the Distribution been effected as of the dates indicated.
Adjustments are based on the assumptions set forth below and in the notes to
the Unaudited Pro Forma Financial Statements. The pro forma statements of
income for the year ended June 3, 1995 and the twenty-six weeks ended December
2, 1995 are prepared assuming the Distribution has occurred as of June 5, 1994
and June 4, 1995, respectively. The pro forma balance sheet as of December 2,
1995 is prepared assuming that the Distribution had occurred as of that date.
Such pro forma information may not necessarily be indicative of the results
that would actually have occurred had the transactions occurred on the dates
indicated or of the results of that may occur in the future.

The Unaudited Pro Forma Financial Statements and accompanying notes should
be read in conjunction with the historical financial statements, including the
notes thereto, and other financial data of the Company included elsewhere
herein.

F-63
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INORMATION
STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX WEEKS ENDED
DECEMBER 2, 1995
---------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 1) PRO FORMA
-------------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Net sales and operating
revenues...................... $138,148 $ $138,148
Other revenues, net............ (130) (130)
-------- ----- --------
138,018 138,018
-------- ----- --------
Operating costs and expenses
(Note 3):
Cost of merchandise............ 39,302 39,302
Payroll and related costs...... 51,897 178 (a) 52,075
Other.......................... 28,590 129 (a) 28,719
Selling, general and
administrative................ 8,728 609 (a) 9,337
Depreciation and amortization.. 5,342 9 (a) 5,351
Interest income................ (109) (109)
-------- ----- --------
133,750 925 134,675
-------- ----- --------
Income before provision for
income taxes.................. 4,268 (925) 3,343
Provision for federal and state
income taxes.................. 1,761 (382)(b) 1,379
-------- ----- --------
Net income..................... $ 2,507 $(543) $ 1,964
======== ===== ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Financial Statements.

F-64
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INORMATION
STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED JUNE 3, 1995
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 1) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues.. $294,676 $ $294,676
Other revenues, net............... (89) (89)
-------- ------- --------
294,587 294,587
-------- ------- --------
Operating costs and expenses (Note
3):
Cost of merchandise............... 78,987 78,987
Payroll and related costs......... 105,472 475 (a) 105,947
Other............................. 60,618 342 (a) 60,960
Selling, general and
administrative................... 20,426 216 (a) 20,642
Depreciation and amortization..... 10,277 22 (a) 10,299
Interest income................... (301) (301)
-------- ------- --------
275,479 1,055 276,534
-------- ------- --------
Income before provision for income
taxes.............................. 19,108 (1,055) 18,053
Provision for federal and state
income taxes....................... 7,734 (427)(b) 7,307
-------- ------- --------
Net income.......................... $ 11,374 $ (628) $ 10,746
======== ======= ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Financial Statements.

F-65
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 2, 1995
------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 2) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term
investments.................... $ 1,819 $ $ 1,819
Receivables:
Trade......................... 484 484
Other......................... 1,155 1,155
Inventories:
Merchandise................... 1,670 1,670
China, silver and supplies.... 1,594 1,594
Prepaid expenses................ 2,478 2,478
Deferred income tax benefits.... 2,275 2,275
--------- ------ ---------
Total current assets........ 11,475 11,475
--------- ------ ---------
Property and equipment--at cost:
Land............................ 6,636 6,636
Buildings....................... 20,073 20,073
Improvements.................... 73,203 73,203
Restaurant equipment............ 77,353 77,353
Other equipment................. 16,763 16,763
Construction in progress........ 8,906 8,906
--------- ------ ---------
202,934 202,934
Less accumulated depreciation and
amortization..................... (131,401) (131,401)
--------- ------ ---------
71,533 71,533
Deferred income tax benefits...... 1,874 1,874
Other assets...................... 7,743 1,571(b) 9,314
--------- ------ ---------
Total assets................ $ 92,625 $1,571 $ 94,196
========= ====== =========
</TABLE>

F-66
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
BALANCE SHEET (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 2, 1995
-------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 2) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
LIABILITIES AND OWNER'S EQUITY
Current liabilities:
Accounts payable................. $10,008 $ $10,008
Accrued liabilities:
Taxes, other than income
taxes......................... 2,770 2,770
Payroll and related costs...... 3,850 3,850
Insurance...................... 4,901 4,901
Rent and other................. 3,650 3,650
Current portion of capital
lease obligations............. 91 91
------- -------- -------
Total current liabilities.... 25,270 25,270
------- -------- -------
Capital lease obligations.......... 803 803
Reserve for unit closings.......... 657 657
Other deferred liabilities......... 13,725 13,725
Owner's equity:
Investment by and advances from
Morrison Restaurants Inc........ 52,170 (52,170)(a)
Common stock, $0.01 par value;
(authorized: 100,000 shares;
issued: pro forma 8,630
shares)......................... 86 (c) 86
Capital in excess of par value... 53,906 (a,b,c) 53,906
Retained earnings................
------- -------- -------
52,170 1,822 53,992
Less cost of treasury stock...... 251 (b) 251
------- -------- -------
52,170 1,571 53,741
------- -------- -------
Total liabilities and owner's
equity...................... $92,625 $ 1,571 $94,196
======= ======== =======
</TABLE>

See accompanying notes to Unaudited Pro Forma Financial Statements.

F-67
<PAGE>

MORRISON FRESH COOKING, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

Accomplishment of the transactions contemplated in this Proxy Statement
would result in Morrison Restaurants Inc. (to be renamed Ruby Tuesday, Inc.)
distributing the net assets of its wholly-owned businesses, Morrison Fresh
Cooking, Inc. (MFCI) and Morrison Health Care, Inc. (MHCI), to its
shareholders. The historical financial statements reflect periods during which
MFCI did not operate as a separate stand-alone entity and certain assumptions
were made in preparing such financial statements. Therefore, such historical
financial statements may not necessarily reflect the results of operations or
financial position that would have resulted had the transactions contemplated
herein been accomplished.

Note 1--The pro forma adjustments to the accompanying historical statements
of income for the fiscal year ended June 3, 1995 and the twenty-six weeks
ended December 2, 1995 are described below:

(a) To record the increase in operating expenses which presumably would
have been incurred by MFCI had MFCI been a separate stand-alone entity.

(b) To record the estimated income tax benefit associated with pro forma
adjustment (a) at an assumed combined state and federal effective income
tax rate of 40.5% for the year ended June 3, 1995 and 41.3% for the twenty-
six weeks ended December 2, 1995. The assumed effective income tax rate is
comprised of a 35% statutory federal income tax rate plus applicable state
income taxes and permanent differences, less applicable tax credits.

Note 2--The pro forma adjustments to the accompanying historical balance
sheet at December 2, 1995 are described below (amounts in thousands):

(a) To record the distribution of net assets of MFCI ($52,170) to the
Company's stockholders.

(b) To record the distribution to MFCI employees participating in the
Morrison Restaurants Inc. Deferred Compensation Plan rabbi trust of RTI and
MHCI stock ($1,571).

Note 3--Historical operating expenses include certain previously unallocated
corporate expense items.

F-68
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION

F-69
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE TWENTY-SIX WEEKS ENDED
DECEMBER 2, 1995
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 1) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues............................ $112,881 $ $112,881
Operating costs and expenses (Note
3):
Operating expenses................ 91,808 91,808
Selling, general and
administrative................... 9,816 1,200 (a) 11,016
Interest expense, net............. 753 753
-------- ------- --------
102,377 1,200 103,577
-------- ------- --------
Income before provision for income
taxes.............................. 10,504 (1,200) 9,304
Provision for federal and state
income taxes....................... 4,424 (505)(b) 3,919
-------- ------- --------
Net income.......................... $ 6,080 $ (695) $ 5,385
======== ======= ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Financial Statements.

F-70
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED JUNE 3, 1995
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 1) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues............................ $225,392 $ $225,392
Operating costs and expenses (Note
3):
Operating expenses................ 187,426 187,426
Selling, general and
administrative................... 18,946 1,567 (a) 20,513
Net gain on sale/closure of B&I
accounts......................... (46,782) (46,782)
Interest expense, net............. 507 507
-------- ------- --------
160,097 1,567 161,664
-------- ------- --------
Income before provision for income
taxes.............................. 65,295 (1,567) 63,728
Provision for federal and state
income taxes....................... 28,469 (683)(b) 27,786
-------- ------- --------
Net income.......................... $ 36,826 $ (884) $ 35,942
======== ======= ========
</TABLE>

See accompanying notes to Unaudited Pro Forma Financial Statements.

F-71
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 2, 1995
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 2) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments.... $ 750 $ 8,100(d) $ 8,850
Receivables:
Trade, net....................... 19,304 19,304
Other............................ 4,609 4,609
Inventories........................ 2,846 2,846
Prepaid expenses................... 4,705 4,705
Deferred income tax benefits....... 3,356 3,356
------- ------- -------
Total current assets........... 35,570 8,100 43,670
------- ------- -------
Property and equipment--at cost:
Buildings and improvements......... 3,980 3,980
Equipment.......................... 11,416 11,416
------- ------- -------
15,396 15,396
Less accumulated depreciation and
amortization...................... (9,546) (9,546)
------- ------- -------
5,850 5,850
Deferred income tax benefits......... 2,131 2,131
Cost in excess of net assets ac-
quired.............................. 4,812 4,812
Notes receivable..................... 5,237 5,237
Client construction allowances....... 2,619 2,619
Other assets......................... 6,744 2,574(b) 9,318
------- ------- -------
Total assets................... $62,963 $10,674 $73,637
======= ======= =======
</TABLE>

F-72
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
BALANCE SHEET (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 2, 1995
---------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS (NOTE 2) PRO FORMA
---------- -------------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
LIABILITIES AND OWNER'S EQUITY:
Current liabilities:
Accounts payable................ $ 8,460 $ $ 8,460
Accrued liabilities:
Taxes, other than income
taxes........................ 1,680 1,680
Payroll and related costs..... 2,820 2,820
Insurance..................... 5,924 5,924
Rent and other................ 2,017 2,017
Current portion of long-term
debt......................... 11 11
------- ------- -------
Total current liabilities... 20,912 20,912
------- ------- -------
Long-term debt:
Notes and mortgage payable.... 32,054 32,054
Other deferred liabilities.... 15,201 15,201
Owner's equity:
Advances to Morrison Restaurants
Inc............................ (5,204) 5,204 (a)
Common stock, $0.01 par value;
(authorized: 100,000 shares;
issued: pro forma 11,508
shares)........................ 115 (c) 115
Capital in excess of par value.. 6,229 (a,b,c,d) 6,229
Retained earnings...............
------- ------- -------
(5,204) 11,548 6,344
Less cost of treasury stock..... 874 (b) 874
------- ------- -------
(5,204) 10,674 5,470
------- ------- -------
Total liabilities and
owner's equity............. $62,963 $10,674 $73,637
======= ======= =======
</TABLE>

See accompanying notes to Unaudited Pro Forma Financial Statements.

F-73
<PAGE>

MORRISON HEALTH CARE, INC.
(A WHOLLY-OWNED BUSINESS OF MORRISON RESTAURANTS INC.)

UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

Accomplishment of the transactions contemplated in this Proxy Statement
would result in Morrison Restaurants Inc. (to be renamed Ruby Tuesday, Inc.)
distributing the net assets of its wholly-owned businesses, Morrison Fresh
Cooking, Inc. (MFCI) and Morrison Health Care, Inc. (MHCI), to its
shareholders. The historical financial statements reflect periods during which
MHCI did not operate as a separate stand-alone entity and certain assumptions
were made in preparing such financial statements. Therefore, such historical
financial statements may not necessarily reflect the results of operations or
financial position that would have resulted had the transactions contemplated
herein been accomplished.

Note 1--The pro forma adjustments to the accompanying historical statements
of income for the fiscal year ended June 3, 1995 and the twenty-six weeks
ended December 2, 1995 are described below:

(a) To record the increase in operating and selling, general and
administrative expenses which presumably would have been incurred by MHCI
had MHCI been a separate stand-alone entity.

(b) To record the estimated income tax benefit associated with pro forma
adjustment (a) at an assumed combined state and federal effective income
tax rate of 43.6% for the year ended June 3, 1995 and 42.1% for the twenty-
six weeks ended December 2, 1995. The assumed effective income tax rate is
comprised of a 35% statutory federal income tax rate plus applicable state
income taxes and permanent differences, less applicable tax credits.

Note 2--The pro forma adjustments to the accompanying historical balance
sheet at December 2, 1995 are described below (amounts in thousands):

(a) To record the distribution of net assets (liabilities) of MHCI
($5,204) to the Company's stockholders.

(b) To record the distribution to MHCI employees participating in the
Morrison Restaurants Inc. Deferred Compensation Plan rabbi trust of RTI and
MFCI stock ($2,574).

(d) To record an additional planned transfer of cash from Morrison in
order to help MHCI meet potential lender requirements for positive equity
following the Distribution.

Note 3--Historical operating expenses include certain previously unallocated
corporate expense items.

F-74
<PAGE>

ANNEX A

AGREEMENT AND PLAN OF MERGER OF
MORRISON RESTAURANTS INC.
WITH AND INTO
RUBY TUESDAY (GEORGIA), INC.

This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered into
as of the day of , 1996, by and between Morrison Restaurants Inc., a
Delaware corporation ("Morrison") and Ruby Tuesday (Georgia), Inc., a Georgia
corporation ("RTI-Georgia") and wholly-owned subsidiary of Morrison (Morrison
and RTI-Georgia hereinafter sometimes collectively referred to as the
"Constituent Corporations");

Witnesseth:

Whereas, Morrison has authorized capitalization consisting of: (i)
100,000,000 shares of common stock, $0.01 par value ("Morrison Common Stock");
and (ii) 250,000 shares of preferred stock, $0.01 par value ("Morrison
Preferred Stock"); and

Whereas, RTI-Georgia has authorized capitalization consisting of: (i)
100,000,000 shares of common stock, $0.01 par value ("RTI-Georgia Common
Stock"); and (ii) 250,000 shares of preferred stock $0.01 par value ("RTI-
Georgia Preferred Stock"); and

Whereas, the Board of Directors of each of the Constituent Corporations has
determined that it advisable and for the benefit of each of the Constituent
Corporations and its shareholders that Morrison be merged with and into RTI-
Georgia on the terms and conditions hereinafter set forth; and

Whereas, the Board of Directors of each of the Constituent Corporations has
approved this Agreement and the merger contemplated hereby and has directed
that this Agreement be submitted to a vote of its respective shareholders;

Now, Therefore, for and in consideration of the premises and of the mutual
agreements, promises and covenants contained herein, and in accordance with
the applicable provisions of the Georgia Business Corporation Code and
Delaware General Corporation Law, the parties hereto hereby agree as follows:

Section 1. Merger

1.1 Upon the Effective Time (as hereinafter defined), Morrison shall be
merged with and into RTI-Georgia and RTI-Georgia shall survive the merger (the
"Merger"); the Merger shall in all respects have the effect provided for in
the Georgia Business Corporation Code, the Delaware General Corporation Law
and in this Agreement.

1.2 RTI-Georgia, the corporation surviving the Merger (hereinafter sometimes
referred to as the "Surviving Corporation"), shall continue its corporate
existence under the laws of the State of Georgia.

1.3 Without limiting the foregoing, on and after the Effective Time, the
separate existence of Morrison shall cease, and, in accordance with the terms
of this Agreement, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public or private nature, of each
of the Constituent Corporations; and all debts due on whatever account,
including subscriptions to shares, and all other choses in action and all and
every other interest of or belonging to or due to either of the Constituent
Corporations shall be taken and deemed to be transferred to and invested in
the Surviving Corporation without further act or deed; and all property,
rights and privileges, powers and franchises and all and every other interest
shall thereafter effectively be the property of the Surviving Corporation as
they were of the respective Constituent Corporations and the title to any real
estate, whether by deed or otherwise, vested in either of said Constituent
Corporations shall not revert or be in any way impaired by reason of this
Merger. The Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of the Constituent Corporations. Any
claim existing or action or proceeding pending by or against either of said
Constituent Corporations may be prosecuted as if

A-1
<PAGE>

the Merger had not taken place, or the Surviving Corporation may be
substituted in its place. Neither the rights of creditors nor any liens upon
property of either of the Constituent Corporations shall be impaired by the
Merger.

1.4 Prior to and from and after the Effective Time, the Constituent
Corporations shall take all such action as shall be necessary or appropriate
in order to effectuate the Merger. If at any time the Surviving Corporation
shall consider or be advised that any further assignments or assurances in law
or any other actions are necessary, appropriate or desirable to vest in said
corporation, according to the terms hereof, the title to any property or
rights of Morrison, the last acting officers of Morrison, or the corresponding
officers of the Surviving Corporation, shall and will execute and make all
such proper assignments and assurances and take all action necessary and
proper to vest title in such property or rights in the Surviving Corporation,
and otherwise to carry out the purposes of this Agreement.

Section 2. Terms of Transaction

2.1 Upon the Effective Time:

(a) Each share of Morrison Common Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, thereupon be
converted into one-half of one share of RTI-Georgia Common Stock, the
shares of RTI-Georgia Common Stock required for such purpose being drawn
from authorized but unissued shares of RTI-Georgia, provided, however, that
cash shall be paid in lieu of the issuance of fractional shares in
accordance with the provisions of Section 2.2 hereof.

(b) Each share of RTI-Georgia Common Stock outstanding and owned of
record by Morrison immediately prior to the Effective Time shall be
cancelled and retired and returned to the status of authorized but unissued
capital stock of the Surviving Corporation and all certificates
representing such shares shall be cancelled and no cash or securities or
other property shall be issued in respect thereof.

(c) Each share of Morrison Common Stock held in the treasury of Morrison
immediately prior to the Effective Time shall be cancelled and retired and
all certificates representing such shares shall be cancelled.

(d) Each Right (a "Right") associated with each share of Morrison Common
Stock governed by that certain Rights Agreement between Morrison and
AmSouth Bank, National Association, dated March 30, 1987 (the "Shareholder
Rights Plan"), to purchase shares of Preferred Stock from Morrison, under
certain circumstances and pursuant to the Shareholder Rights Plan, shall,
by virtue of the Merger and without further action on the part of the
holder thereof or any other person, be converted into a Right to purchase
twice as many fractional shares of RTI-Georgia Preferred Stock from RTI-
Georgia at the same price per share pursuant to, and subject to the
conditions set forth in, the Shareholder Rights Plan in effect as of the
Effective Time. The same number of shares of RTI-Georgia Preferred Stock
designated as "Series A Junior Participating Preferred Stock" shall be
reserved for issuance upon the exercise of the Rights pursuant to the
Shareholder Rights Plan as is equal to the number of shares of Morrison
Preferred Stock so designated and reserved as of the Effective Time.

2.2 No fractional shares of RTI-Georgia Common Stock shall be issued as a
result of the Merger. Fractional shares will be aggregated into whole shares
of RTI-Georgia Common Stock and sold in the open market at prevailing prices
on behalf of holders of Morrison Common Stock who would otherwise have been
entitled to receive a fractional share as soon as practicable after the Merger
by an independent agent retained by the Surviving Corporation. Any holder of
Morrison Common Stock who would otherwise have been entitled to receive a
fractional share of RTI-Georgia Common Stock shall be entitled to receive
instead a cash payment in an amount equal to the portion of the total sales
proceeds allocable to such fractional share ("Cash Consideration").

2.3 After the Effective Time, each outstanding certificate representing
shares of Morrison Common Stock immediately prior to the Effective Time shall
be deemed for all purposes to evidence ownership of, and to represent the
appropriate whole number of, RTI-Georgia Common Stock into which the shares of
Morrison Common Stock formerly represented by such certificate shall have been
converted as herein provided, plus the

A-2
<PAGE>

right to receive the Cash Consideration in lieu of any fractional shares.
After the Effective Time, whenever certificates which formerly represented
shares of Morrison Common Stock are presented for exchange or registration of
transfer, the Surviving Corporation will cause to be issued in respect thereof
certificates representing the appropriate whole number of shares of RTI-
Georgia Common Stock and, if applicable, payment of the Cash Consideration in
lieu of any fractional shares.

Section 3. Directors and Officers

On the Effective Time, the persons who are directors and officers of RTI-
Georgia immediately prior to the Effective Time shall continue as the
directors and officers of the Surviving Corporation and shall continue to hold
office as provided in the Articles of Incorporation and Bylaws of the
Surviving Corporation until their successors are elected and qualified or
their earlier resignation, removal or death.

Section 4. Charter and Bylaws

4.1 From and after the Effective Time, the Articles of Incorporation of RTI-
Georgia as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation and shall continue in
effect until the same shall be altered, amended or repealed as therein
provided or as provided by law.

4.2 From and after the Effective Time, the Bylaws of RTI-Georgia as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation and shall continue in effect until the same shall be
altered, amended or repealed as therein provided or as provided by law.

Section 5. Shareholder Approval; Effectiveness of Merger

This Agreement shall be submitted for approval to the shareholders of
Morrison as provided by the Delaware General Corporation Law and to the sole
shareholder of RTI-Georgia as provided by the Georgia Business Corporation
Code. If this Agreement is duly authorized and adopted by the requisite vote
or written consent of such shareholders and is not terminated and abandoned
pursuant to the provisions of Section 6 hereof, this Agreement shall be
executed and a Certificate of Ownership and Merger shall be filed and recorded
in accordance with the laws of the State of Delaware and a Certificate of
Merger shall be filed and recorded in accordance with the laws of the State of
Georgia, as soon as practicable after the last approval by such shareholders
or sole shareholder. The Merger shall become effective as of p.m., ,
1996 (said date is herein referred to as the "Effective Time").

Section 6. Termination

At any time prior to the filing and recordation of a Certificate of
Ownership and Merger with the Secretary of State of Delaware or the filing and
recordation of a Certificate of Merger with the Secretary of State of Georgia,
the Board of Directors of Morrison or the Board of Directors of RTI-Georgia
may terminate and abandon this Agreement notwithstanding earlier approval by
each such Board or favorable action on the Merger by the shareholders of
Morrison or the sole shareholder of RTI-Georgia.

Section 7. Amendments

The Boards of Directors of the Constituent Corporations, prior to the
Effective Time, may jointly amend, modify and supplement this Agreement in
such manner as they may deem appropriate at any time before approval or
adoption hereof by the shareholders of Morrison or the sole shareholder of
RTI-Georgia. Any amendment, modification or supplement to this Agreement after
the approval or adoption by the sole shareholder of RTI-Georgia or the
shareholders of Morrison, but prior to the Effective Time, shall require the
approval or adoption thereof by such shareholders, provided, however, that the
approval or adoption thereof by the shareholders of Morrison shall not be
required with respect to any amendment, modification or supplement hereto that
(i) does not alter (a) the amount or kinds of shares, securities, cash,
property and/or rights to be received hereunder in exchange for any of the
shares of Morrison, or (b) any term of the Articles of Incorporation of the
Surviving Corporation as provided for herein, or (ii) otherwise alters any of
the terms and conditions of this Agreement if such alteration would not
adversely affect the holders of any class or series of stock of Morrison.

A-3
<PAGE>

Section 8. Miscellaneous

8.1 This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original but all of which together shall
constitute one and the same instrument.

8.2 With respect to all leases and other agreements, instruments or
obligations under which either of the Constituent Corporations is obligated to
obtain a consent prior to the Merger herein contemplated or in order to comply
with the conditions thereof, or to vest the respective interest therein in the
Surviving Corporation, the Constituent Corporations shall each exercise all
reasonable efforts to obtain such consent prior to the Effective Time.

8.3 Except as otherwise provided in this Agreement, nothing contained herein
is intended, nor shall be construed, to confer upon or give any person, firm
or corporation, other than the Constituent Corporations and their respective
shareholders, any rights or remedies under or by reason of this Agreement.

8.4 This Agreement and the legal relations between the parties hereto shall
be governed by and construed in accordance with the laws of the State of
Georgia.

In Witness Whereof, each Constituent Corporation has caused this Agreement
to be executed on its behalf and its corporate seal to be affixed hereto and
the foregoing attested, all by its duly authorized officers, as of the date
hereinabove first written.

Morrison Restaurants Inc.

By:
----------------------------------

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

Attest:

By:
-------------------------------
Pfilip G. Hunt
Senior Vice President,
General Counsel and Secretary

[Corporate Seal]

Ruby Tuesday (Georgia), Inc.

By:
----------------------------------

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

Attest:

By:
-------------------------------
Pfilip G. Hunt
Senior Vice President,
General Counsel and Secretary

[Corporate Seal]

A-4
<PAGE>

ANNEX B

ARTICLES OF INCORPORATION

RUBY TUESDAY (GEORGIA), INC.

The undersigned, for the purposes of forming a corporation pursuant to the
Georgia Business Corporation Code, does hereby certify as follows:

Name

The name of the corporation is "Ruby Tuesday (Georgia), Inc." (hereinafter
the "Corporation").

II.

Business

The purpose for which the Corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the
Georgia Business Corporation Code.

III.

Capitalization

(a) The total number of shares of capital stock which the Corporation shall
have authority to issue is One Hundred Million Two Hundred Fifty Thousand
(100,250,000), divided into two classes as follows:

(1) One Hundred Million (100,000,000) shares of common stock, $.01 par
value per share ("Common Stock"); and

(2) Two Hundred Fifty Thousand (250,000) shares of preferred stock, $.01
par value per share ("Preferred Stock").

(b) The preferences, limitations and relative rights of the Common Stock and
the Preferred Stock are as follows:

(1) The holders of Common Stock shall be entitled to one vote for each
share on all matters required or permitted to be voted on by stockholders
of the Corporation.

After payment or provision for the payment of dividends on any series of
Preferred Stock then outstanding to the extent provided by the Board of
Directors of the Corporation in resolutions providing for the issuance
thereof, the Board of Directors of the Corporation may declare and pay
dividends on the Common Stock as and to the extent permitted by law.

(2) The Preferred Stock entitles the holders thereof to the rights and
preferences set out or determined as provided below.

Any unissued shares of Preferred Stock may be issued from time to time in
one or more series. All shares of Preferred Stock shall be identical and of
equal rank, except with respect to particular variations in the relative
rights and preferences as between different series which may be fixed and
determined by the Board of Directors of the Corporation as hereinafter
provided, and each share of any series of Preferred Stock shall be
identical in all respects with the other shares of such series except that,
if dividends thereon are cumulative, as to the date from which dividends
thereon shall accumulate.

Different series of Preferred Stock shall not be construed to constitute
different classes of stock for the purpose of voting by classes, except to
the extent such voting by classes is expressly required by law.

B-1
<PAGE>

Before any shares of Preferred Stock of any particular series shall be
issued, the Board of Directors of the Corporation shall, by resolution
adopted, fix and determine, and is hereby expressly empowered to fix and
determine, in the manner provided by law, the following provisions, rights
and preferences of shares of any such series:

(A) The distinctive designation of such series and the number of
shares which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors of
the Corporation in creating such a series) or decreased (but not below
the number of shares thereof then issued) from time to time by action
of the Board of Directors of the Corporation;

(B) The amount of capital of such series;

(C) The annual rate of any dividends which may be payable on shares
of such series, whether dividends shall be cumulative, and the
conditions upon which and the date when such dividends shall begin to
accumulate on all shares of such series issued prior to the record date
for the first dividend of such series;

(D) Whether the shares of any such series shall be redeemable, and if
so, the time or times when, the conditions under which and the price or
prices at which shares of such series shall be redeemable and the
purchase, retirement or sinking fund provisions, if any, for the
purchase or redemption of such shares;

(E) The amount payable on shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;

(F) The rights, if any, of the holders of shares of such series to
convert such shares into, or exchange such shares for, shares of Common
Stock or shares of any other series of Preferred Stock and the terms
and conditions of such conversion or exchange; and

(G) Whether or not the holders of shares of such series have voting
rights, and the extent of such voting rights, if any.

The holders of Preferred Stock are entitled to receive, when and as
declared by the Board of Directors of the Corporation, but only from funds
legally available for the payment of dividends, cash dividends at the
annual rate for each particular series as fixed and determined by the Board
of Directors of the Corporation as herein authorized, and no more; such
dividends shall be payable before any dividend on Common Stock shall be
paid or set apart for payment. Any arrearages in the payment of dividends
shall not bear interest.

In the event of any dissolution, liquidation or winding up of the affairs
of the Corporation, whether voluntary or involuntary, after payment or
provisions for payment of the debts and other liabilities of the
Corporation, the holders of shares of each series of Preferred Stock shall
be entitled to receive in cash, out of the net assets of the Corporation,
an amount equal to the amount fixed and determined by the Board of
Directors of the Corporation in any resolution providing for the issuance
of any particular series of Preferred Stock, plus an amount equal to any
dividends payable to such holder which are then unpaid, either under the
provisions of the resolution of the Board of Directors of the Corporation
providing for the issuance of such series of Preferred Stock or by
declaration of the Board of Directors of the Corporation, on each such
share up to the date fixed for distribution, and no more, before any
distribution shall be made to the holders of Common Stock. Neither the
merger or consolidation of the Corporation, nor the sale, lease or
conveyance of all or a part of its assets, shall be deemed to be a
liquidation, dissolution or winding up of the affairs of the Corporation.

(3) Fifty Thousand (50,000) shares of Preferred Stock shall be designated
as "Series A Junior Participating Preferred Stock" and shall have the
preferences, limitations and relative rights set forth on Exhibit A hereto.

B-2
<PAGE>

IV.

Registered Office and Agent

The address of the Corporation's registered office in the State of Georgia
is 66 Luckie Street, Suite 604, Atlanta, Georgia 30303. The name of the
Corporation's registered agent at such address is The Prentice-Hall
Corporation System, Inc.

Principal Office

The mailing address of the initial principal office of the Corporation is
4721 Morrison Drive, Post Office Box 160266, Mobile, Alabama 36625.

VI.

Corporate Existence

The existence of the Corporation shall be perpetual.

VII.

Board of Directors

(a) The business and affairs of the Corporation shall be managed by, or
under the direction of, a Board of Directors comprised as follows:

(1) The initial number of directors shall be such as may be determined by
the incorporator and thereafter the number of directors of the Corporation
shall be not less than three and not more than twelve, the exact number
within such minimum and maximum limits to be fixed and determined from time
to time by resolution of a majority of the Board of Directors or by the
affirmative vote of the holders of at least 80% of all outstanding shares
entitled to be voted in the election of directors, voting together as a
single class.

(2) At the first Special Meeting of Stockholders, the Board of Directors
shall be divided into three classes, each consisting, as nearly as may be
possible, of one-third of the total number of directors constituting the
entire Board of Directors. At the first Special Meeting of Stockholders,
the first class of directors shall be elected for a term expiring upon the
next following Annual Meeting of Stockholders and upon the election and
qualification of their respective successors, the second class of directors
shall be elected for a term expiring upon the second next Annual Meeting of
Stockholders and upon the election and qualification of their respective
successors, and the third class of directors shall be elected for a term
expiring upon the third next Annual Meeting of Stockholders and upon the
election and qualification of their respective successors. At each
succeeding Annual Meeting of Stockholders, successors to the class of
directors whose term expires at that Annual Meeting of Stockholders shall
be elected for a three-year term. If the number of directors has changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class elected to fill a vacancy
resulting from an increase in such a class shall hold office for a term
that shall coincide with the remaining term of that class, unless otherwise
required by law, but in no case shall a decrease in the number of directors
for a class shorten the term of an incumbent director.

(3) A director shall hold office until the Annual Meeting of Stockholders
upon which his term expires and until his successor shall be elected and
qualified, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Directors may be removed only for
cause by the vote of at least 80% of the outstanding shares entitled to
vote at an election of directors, at a meeting of stockholders called
expressly for that purpose.

B-3
<PAGE>

(4) Nominations for the election of directors may be made by the Board of
Directors or a committee appointed by the Board of Directors, or by any
stockholder entitled to vote generally in the election of directors;
provided, however, any stockholder entitled to vote generally in the
election of directors may nominate one or more persons for election as
directors at a meeting only if written notice of such stockholder's intent
to make such nomination or nominations has been given, either by personal
delivery or by the United States mail, postage prepaid, to the Secretary of
the Corporation not later than (i) with respect to any election to be held
at the Annual Meeting of Stockholders, 90 days in advance of such meeting,
and (ii) with respect to any election to be held at a Special Meeting of
Stockholders for the election of directors, the close of business on the
seventh day following the date on which notice of such meeting is first
given to stockholders. Each such notice shall set forth:

(A) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated;

(B) a representation that the stockholder is a holder of record of
shares of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person
or persons specified in the notice;

(C) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations
are to be made by the stockholder;

(D) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement
filed pursuant to the then current proxy rules of the Securities and
Exchange Commission, if the nominees were to be nominated by the Board
of Directors; and

(E) the consent of each nominee to serve as a director of the
Corporation if so elected.

The chairman of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.

(5) Any vacancy on the Board of Directors that results from an increase
in the number of directors or from prior death, resignation, retirement,
disqualification or removal from office of a director shall be filled by a
majority of the Board of Directors then in office, though less than a
quorum, or by the sole remaining director. Any director elected to fill a
vacancy resulting from prior death, resignation, retirement,
disqualification or removal from office of a director, shall have the same
remaining term as that of his predecessor.

(6) At any meeting of stockholders with respect to which notice of such
purpose has been given, the entire Board of Directors or any individual
director may be removed, with cause, by the affirmative vote of the holders
of 80% of all outstanding shares entitled to be voted at an election of
directors.

(7) Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at
an Annual or Special Meeting of Stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of these Articles of Incorporation or the resolutions
of the Board of Directors creating such class or series, as the case may
be, applicable thereto, and such directors so elected shall not be divided
into classes pursuant to this Section (a) of Article VII unless expressly
provided by such terms.

(b) Except as may be prohibited by law, by the Bylaws of the Corporation, or
by these Articles of Incorporation, the Board of Directors shall have the
right to make, alter, amend, change, add to, or repeal the Bylaws of the
Corporation, and have the right (which, to the extent exercised, shall be
exclusive) to establish the rights, powers, duties, rules and procedures that
from time to time shall govern the Board of Directors, each of its members,
including without limitation, the vote required for any action and the
election of officers of the Corporation by the Board of Directors, and that
from time to time shall affect the directors' powers to manage

B-4
<PAGE>

the business and affairs of the Corporation; no Bylaw shall be adopted by
stockholders that shall impair or impede the implementation of the foregoing.

(d) The Board of Directors of the Corporation, when evaluating any offer of
another party to (a) make a tender or exchange offer for any equity security
of the Corporation, (b) merge or consolidate the Corporation with another
corporation or (c) purchase or otherwise acquire all or substantially all of
the properties and assets of the Corporation, shall, in evaluating what is in
the best interests of the Corporation and its stockholders, consider not only
the consideration being offered by another party, in relation to the then
current market price, but also in relation to the then current value of the
Corporation in a freely negotiated transaction and in relation to the Board of
Directors' then estimate of the future value of the Corporation as an
independent entity. Furthermore, the Board of Directors is authorized, in
connection with the exercise of its judgment in determining what is in the
best interests of the Corporation and its stockholders, to give due
consideration to all relevant factors, including, without limitation, the
social, legal, and economic effects on the employees, customers, suppliers and
management services clients under contract to the Corporation and its
subsidiaries, and on the communities in which the Corporation and its
subsidiaries operate or are located.

(e) Notwithstanding any other provisions of these Articles of Incorporation
or the Bylaws of the Corporation (and notwithstanding the fact that a lesser
percentage for separate class vote for certain actions may be permitted by
law, by these Articles of Incorporation or by the Bylaws of the Corporation),
the affirmative vote of the holders of not less than 80% of the votes entitled
to be cast by the holders of all then outstanding shares of capital stock,
voting together as a single class, shall be required to make, alter, amend,
change, add to or repeal any provision of these Articles of Incorporation or
the Bylaws of the Corporation which is or which is proposed to be inconsistent
with this Article VII; provided, however, that this Section (e) shall not
apply to, and such 80% vote shall not be required to alter, amend, change, add
to or repeal any provisions of the Bylaws relating to this Article VII, or
Article VII of these Articles of Incorporation, recommended by not less than
80% of the members of the Board of Directors.

(f) The invalidity or unenforceability of this Article VII or any portion
hereof, or of any action taken pursuant to this Article VII, shall not affect
the validity or enforceability of any other provision of these Articles of
Incorporation, any action taken pursuant to such other provision, or any
action taken pursuant to this Article VII.

VIII.

Directors' Liability

To the fullest extent permitted by the Georgia Business Corporation Code, as
the same exists or may hereafter be amended, a director of the Corporation
shall not be liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.

IX.

Indemnification

Except as prohibited by law, the Corporation may indemnify any person who is
or was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan) and may
take such steps as may be deemed appropriate by the Board of Directors,
including purchasing and maintaining insurance, entering into contracts
(including, without limitation, contracts of indemnification between the
Corporation and its directors and officers), creating a trust fund, granting
security interests or using other means (including, without limitation, a
letter of credit) to ensure the payment of such amounts as may be necessary to
effect such indemnification.

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<PAGE>

Stockholder Vote For Certain Matters

(a) In addition to any affirmative vote required by law, these Articles of
Incorporation, or the Bylaws of the Corporation and except as otherwise
expressly provided in Section (b) of this Article X, a Business Combination
(as hereinafter defined) shall require the affirmative vote of the holders of
not less than 80% of the Voting Stock (as hereinafter defined), voting
together as a single class. Such affirmative vote shall be required
notwithstanding that no vote may be required or that a lesser percentage or
separate class vote may be allowed by law, any agreement with any national
securities exchange or the National Association of Securities Dealers, Inc.
(the "NASD"), or otherwise.

(b) The provisions of Section (a) of this Article X shall not be applicable
to any particular Business Combination, and such Business Combination shall
require only such affirmative vote, if any, as is required by law, by any
other provision of these Articles of Incorporation or the Bylaws of the
Corporation, or by any agreement with any national securities exchange or the
NASD, if all of the conditions specified in either of the following Paragraphs
(1) or (2) are met:

(1) The Business Combination shall have been approved by 80% of the
Continuing Directors (as hereinafter defined), whether such approval is
made prior or subsequent to the acquisition of beneficial ownership of the
Voting Stock that caused the Interested Stockholder (as hereinafter
defined) to become an Interested Stockholder.

(2) All of the following price and procedural conditions shall have been
met:

(A) The aggregate amount of cash and the Fair Market Value (as
hereinafter defined), as of the date of the consummation of the
Business Combination (the "Consummation Date"), of the consideration
other than cash to be received per share by the holders of Common Stock
pursuant to such Business Combination shall be at least equal to the
higher amount determined under the following clauses (i) and (ii):

(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any share of Common Stock
acquired by it (x) within the two-year period immediately prior to
the first public announcement of the proposal of the Business
Combination (the "Announcement Date"), or (y) the transaction in
which the Interested Stockholder became an Interested Stockholder,
whichever is higher; plus interest compounded annually from the date
on which the Interested Stockholder became an Interested Stockholder
(the "Determination Date") through the Consummation Date at the rate
of interest announced by SunTrust Bank in Atlanta, Georgia (or other
major bank headquartered in Atlanta, Georgia, selected by a majority
of the Continuing Directors) from time to time as its "prime rate,"
less the aggregate amount of any cash dividends paid and the Fair
Market Value of any dividends paid other than in cash, per share of
Common Stock from the Determination Date through the Consummation
Date in an amount up to but not exceeding the amount of such
interest payable per share of Common Stock; or

(ii) (if applicable) the Fair Market Value per share of the Common
Stock on the Announcement Date or on the Determination Date,
whichever is higher.

(B) The aggregate amount of the cash and the Fair Market Value as of
the Consummation Date of the consideration other than cash to be
received per share by the holders of shares of any class or series of
outstanding Capital Stock (as hereinafter defined), other than Common
Stock, in such Business Combination shall be at least equal to the
highest amount determined under clauses (i), (ii) and (iii) below (it
being intended that the requirements of this Paragraph (2)(B) of this
Section (b) shall be required to be met with respect to every such
class or series of outstanding Capital Stock, whether or not the
Interested Stockholder has previously acquired any shares of a
particular class or series of Capital Stock):

B-6
<PAGE>

(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any share of such class or
series of Capital Stock acquired by it (x) within the two-year
period immediately prior to the Announcement Date, or (y) the
transaction in which the Interested Stockholder became an Interested
Stockholder, whichever is higher; plus interest compounded annually
from the Determination Date through the Consummation Date at the
rate of interest announced by SunTrust Bank in Atlanta, Georgia (or
other major bank headquartered in Atlanta, Georgia, selected by a
majority of the Continuing Directors) from time to time as its
"prime rate," less the aggregate amount of any cash dividends paid
and the Fair Market Value of any dividends paid other than in cash,
per share of such class of Capital Stock from the Determination Date
through the Consummation Date in an amount up to but not exceeding
the amount of such interest payable per share of such class of
Capital Stock;

(ii) (if applicable) the Fair Market Value per share of such class
or series of Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher; or

(iii) (if applicable) the highest preferential amount per share to
which the holders of shares of such class or series of Capital Stock
would be entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, regardless of whether the Business Combination to be
consummated constitutes such an event.

(C) The consideration to be received by holders of a particular class
or series of outstanding Capital Stock in such Business Combination
shall be in cash or in the same form as previously has been paid by or
on behalf of the Interested Stockholder in connection with its direct
or indirect acquisition of beneficial ownership of shares of such class
or series of Capital Stock. If the consideration so paid for shares of
a class or series of Capital Stock varies as to form, the form of
consideration for such class or series of Capital Stock shall either be
cash or the form used to acquire beneficial ownership of the largest
number of shares of such class or series of Capital Stock previously
acquired by the Interested Stockholder; provided that if the Interested
Stockholder acquired equal portions of such shares by forms of
consideration other than cash, the form of consideration to be paid to
the holders of a class or series of Capital Stock shall be the form
last paid by the Interested Stockholder for previously acquired shares.

(D) The holders of all outstanding shares of Capital Stock not
beneficially owned by the Interested Stockholder prior to the
consummation of such Business Combination shall be entitled to receive
in such Business Combination cash or other consideration for their
shares in compliance with Paragraphs (2)(A), (2)(B) and (2)(C) of this
Section (b) (provided, however, that the failure of any such holders
who are exercising their statutory rights to dissent from such Business
Combination and receive payment of the fair value of their shares to
exchange their shares in such Business Combination shall not be deemed
to have prevented the condition set forth in this Paragraph (2)(D) of
this Section (b) from being satisfied).

(E) After the Determination Date and prior to the Consummation Date:

(i) there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) payable in accordance with the terms of any outstanding
Capital Stock, except as approved by a majority of the Continuing
Directors;

(ii) there shall have been no reduction in the annual rate of
dividends paid on the Capital Stock (other than as necessary to
reflect any stock split, stock dividend or subdivision of the
Capital Stock), except as approved by a majority of the Continuing
Directors;

(iii) there shall have been an increase in the annual rate of
dividends paid on the Common Stock as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization, or any similar transaction that
has the effect of reducing the number of outstanding shares of
Common Stock, except as approved by a majority of the Continuing
Directors; and

B-7
<PAGE>

(iv) such Interested Stockholder shall not have become the
beneficial owner of any additional shares of Capital Stock except as
part of a transaction that results in such Interested Stockholder
becoming an Interested Stockholder.

(F) After the Determination Date, the Interested Stockholder shall
not have received the benefit, directly or indirectly (except
proportionately as a stockholder of the Corporation), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by or through the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.

(G) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), shall be mailed to all
stockholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed under the provisions of
the Exchange Act). The proxy or information statement shall contain on
the first page thereof, in a prominent place (or, if required, as near
as practicable to the first page thereof and in a prominent place), any
statement regarding the advisability (or inadvisability) of the
Business Combination that a majority of the Continuing Directors
chooses to make, and if deemed advisable by a majority of the
Continuing Directors, the opinion of an investment banking firm
selected by a majority of the Continuing Directors, concerning the
fairness (or unfairness) of the terms of the Business Combination from
a financial viewpoint to the holders of the outstanding shares of
Capital Stock other than the Interested Stockholder and its Affiliates
or Associates (as hereinafter defined), such investment banking firm to
be paid a reasonable fee for its services by the Corporation.

(1) "Affiliate" shall have the meaning ascribed to it in Rule 12b-2
promulgated under the Exchange Act as in existence on the date this Article
X was approved by the stockholders of the Corporation. (The term
"registrant" as used in Rule 12b-2 shall mean, in this case, the
Corporation.)

(2) "Associate" shall have the meaning ascribed to it in Rule 12b-2
promulgated under the Exchange Act as in existence on the date this Article
X was approved by the stockholders of the Corporation. (The term
"registrant" as used in Rule 12b-2 shall mean, in this case, the
Corporation.)

(3) "Beneficial Owner" shall mean a person who, either itself or through
any of its Affiliates or Associates,

(A) beneficially owns, directly or indirectly, any Capital Stock;

(B) has, directly or indirectly,

(i) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time) any Capital
Stock pursuant to any agreement, arrangement or understanding or
upon the exercise of any conversion rights, exchange rights,
warrants, options or otherwise; or

(ii) the right to vote any Capital Stock pursuant to any
agreement, arrangement or understanding; or

(C) beneficially owns, directly or indirectly, Capital Stock through
any other Person with which such Person or Affiliate or Associate of
such Person has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Capital Stock.

For the purposes of determining whether a Person is an Interested
Stockholder pursuant to Paragraph (8) of this Section (c), the number
of shares of Capital Stock deemed to be outstanding shall include
shares deemed beneficially owned by such Persons through application of
this Paragraph (3) of

B-8
<PAGE>

this Section (c), but shall not include any other shares of Capital
Stock that may be issuable pursuant to any agreement, arrangement or
understanding, or upon the exercise of any conversion rights.

(4) "Business Combination" shall mean:

(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder, or (ii)
any Person (whether or not itself an Interested Stockholder) that is,
or after such merger or consolidation would be, an Affiliate or
Associate of an Interested Stockholder;

(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) with any
Interested Stockholder or any Affiliate or Associate of an Interested
Stockholder involving any assets or securities of the Corporation, any
Subsidiary or any Interested Stockholder or any Affiliate or Associate
of an Interested Stockholder, having an aggregate Fair Market Value
equal to or in excess of 25% of the total assets of the Corporation as
shown on the balance sheet of the Corporation contained in the most
recent annual report to stockholders of the Corporation;

(C) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliate or Associate of an Interested
Stockholder;

(D) any reclassification of securities (including any reverse stock
splits), recapitalization of the Corporation, merger or consolidation
of the Corporation with any of its Subsidiaries, or any other
transaction (whether or not with or otherwise involving an Interested
Stockholder) that has the effect, either directly or indirectly, of
increasing the proportionate share of any class or series of Capital
Stock or any securities convertible into Capital Stock, or into equity
securities of any Subsidiary that is beneficially owned by any
Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder; or

(E) any agreement, contract, or other arrangement providing for any
one or more of the actions specified in Paragraphs A through D of this
Section (c)(4).

(5) "Capital Stock" shall mean capital stock of the Corporation
authorized to be issued from time to time pursuant to Article III of these
Articles of Incorporation.

(6) "Continuing Director" shall mean:

(A) any member of the Board of Directors of the Corporation who,
while such person is a member of the Board of Directors, is not an
Affiliate, Associate or representative of an Interested Stockholder and
was a member of the Board of Directors prior to the time that the
Interested Stockholder became an Interested Stockholder; and

(B) any successor of a Continuing Director who, while such successor
is a member of the Board of Directors, is not an Affiliate, Associate
or representative of an Interested Stockholder and is recommended or
elected to succeed the Continuing Director by a majority of the
Continuing Directors.

(7) "Fair Market Value" shall mean:

(A) in the case of cash, the amount of such cash;

(B) in the case of stock, the highest closing sale price during the
30-day period immediately preceding the date in question of a share of
such stock listed on any national securities exchange registered under
the Exchange Act or, if such stock is not listed on any such exchange,
the highest closing sale price as reported by the NASD Nasdaq Stock
Market (the "Nasdaq Stock Market"), or if there is no closing sale
price reporting, the average between the highest bid and asked prices
with respect to a share of such stock as quoted by the Nasdaq Stock
Market for the 30-day period preceding the date in question, or if no
such quotations are available, the Fair Market Value on the date in
question of a share of such stock as determined in good faith by a
majority of the Continuing Directors;

(C) in the case of property other than cash or stock, the Fair Market
Value of such property on the date in question as determined in good
faith by a majority of the Continuing Directors; and

B-9
<PAGE>

(D) in the event of any Business Combination in which the Corporation
is the surviving entity, either or both the shares of Common Stock or
the shares of any other class or series of Capital Stock retained by
the holders of such shares shall be deemed consideration other than
cash received for purposes of Paragraphs (2)(A) and (2)(B) of Section
(b) and Paragraph (4) of Section (d) of this Article X.

(8) "Interested Stockholder" shall mean any Person (other than the
Corporation, any Subsidiary, or any profit-sharing, employee stock
ownership or other employee benefit plan established by the Corporation, by
any Subsidiary, or by any trustee of or fiduciary with respect to any such
plan when acting in such capacity) who:

(A) is the beneficial owner of Voting Stock representing 10% or more
of the votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock;

(B) is an Affiliate or Associate of the Corporation and that at any
time within the two-year period immediately prior to the date in
question was the beneficial owner of Voting Stock representing 10% or
more of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock; or

(C) is an assignee of or has otherwise succeeded to any shares of
Capital Stock that were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
other Interested Stockholder if such assignment or succession shall
have occurred in the course of a transaction or series of transactions
not involving a public offering within the meaning of the Securities
Act of 1933, as amended.

(9) "Person" shall mean any individual, firm, corporation or other entity
and shall include any group comprised of any Person and any other Person
with whom such Person or any Affiliate or Associate of such Person has any
agreement, arrangement or understanding, either directly or indirectly, for
the purpose of acquiring, holding, voting or disposing of Capital Stock.

(10) "Subsidiary" shall mean any corporation of which a majority of any
class of equity securities is beneficially owned by the Corporation;
provided, however, for the purposes of the definition of Interested
Stockholder as set forth in Paragraph (8) of this Section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is beneficially owned by the Corporation.

(11) "Voting Stock" shall mean all Capital Stock which by its terms may
be voted on the particular matter submitted to stockholders of the
Corporation.

(d) When it appears that a particular person may be an Interested
Stockholder and that the provisions of this Article X must be applied or
interpreted, then a majority of the total number of those directors of the
Corporation who would qualify as Continuing Directors (assuming that such
particular person is in fact an Interested Stockholder) shall have the power
and the duty to interpret all of the terms and provisions of this Article X,
and to determine on the basis of information known to them after reasonable
inquiry all facts necessary to ascertain compliance with this Article X,
including without limitation:

(1) whether a person is an Interested Stockholder;

(2) the number of shares of Capital Stock or other securities
beneficially owned by such person:

(3) whether a person is an Affiliate or Associate of another; and

(4) whether the assets that are the subject of any Business Combination
have, or the consideration to be received for the issuance or transfer of
securities by the Corporation or any subsidiary in any Business Combination
has, in the aggregate a Fair Market Value equal to or in excess of 25% of
the total assets of the Corporation as shown on the balance sheet of the
Corporation contained in the most recent annual report to stockholders of
the Corporation. Any such determination shall be made in good faith and
shall be binding and conclusive on all parties.

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<PAGE>

(e) Nothing contained in this Article X shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.

(f) Whether or not any Business Combination complies with the provisions of
Section (b) of this Article X shall not be construed to impose any fiduciary
duty, obligation or responsibility on the Board of Directors or on any member
thereof to approve such Business Combination or recommend its adoption or
approval to the stockholders of the Corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board of Directors, or
any member thereof, with respect to its or his evaluations of, or actions and
responses taken toward, such Business Combination.

(g) Notwithstanding any other provisions of these Articles of Incorporation
or the Bylaws of the Corporation (and notwithstanding that a lesser percentage
or separate class vote may be permitted by law, these Articles of
Incorporation or the Bylaws of the Corporation), the affirmative vote of the
holders of not less than 80% of the vote entitled to be cast by the holders of
all then outstanding shares of Voting Stock, voting together as a single
class, shall be required to make, alter, amend, change, add to or repeal any
provisions inconsistent with this Article X; provided, however, that this
Section (g) shall not apply to, and such 80% vote shall not be required to
alter, amend, change, add to or repeal any provisions of the Bylaws relating
to this Article X, or this Article X of these Articles of Incorporation,
recommended by not less than 80% of the members of the Board of Directors.

XI.

Incorporator

The name and mailing address of the incorporator is:

<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Pfilip G. Hunt..................................... 4721 Morrison Drive
Post Office Box 160266
Mobile, Alabama 36625
</TABLE>

In Witness Whereof, the undersigned, being the sole incorporator hereinabove
named, hereby further certifies that the facts herein stated are true and,
accordingly, has signed these Articles of Incorporation this day of
, 1996.

_____________________________________
Pfilip G. Hunt

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<PAGE>

EXHIBIT A

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
RUBY TUESDAY (GEORGIA), INC.

I. DESIGNATION AND AMOUNT

The shares of such series shall be designated as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock") and the number
of shares constituting the Series A Preferred Stock shall be 50,000. Such
number of shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of shares of
Series A Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Preferred Stock. Fractions of the Series A Preferred Stock may be issued, but
only in integral multiples of one one-thousandth of a share.

II. DIVIDENDS AND DISTRIBUTIONS

(A) Subject to the rights of the holders of any share of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $.01 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $100 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the Series A
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $100 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of

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<PAGE>

issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.

III. VOTING RIGHTS

The holders of shares of Series A Preferred Stock shall have the following
voting rights:

(A) Subject to the provisions for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes (and each one one-thousandth of a share of Series A Preferred Stock
shall entitle the holder thereof to one vote) on all matters submitted to a
vote of the stockholders of the Corporation. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(B) Except as otherwise provided herein, in any Amendment to the Articles of
Incorporation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.

IV. CERTAIN RESTRICTIONS

(A) Whenever quarterly dividends or other dividends or distributions payable
on the Series A Preferred Stock as provided in Section II are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:

(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;

(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock,

B-13
<PAGE>

provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
IV, purchase or otherwise acquire such shares at such time and in such manner.

V. REACQUIRED SHARES

Any shares of Series A Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares upon their
cancellation become authorized but unissued shares of Preferred Stock and may
be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the Restated
Articles of Incorporation, in any other Certificate of Designation creating a
series of Preferred Stock or any similar stock or as otherwise required by
law.

VI. LIQUIDATION, DISSOLUTION OR WINDING UP

Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received $1,000 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

VII. CONSOLIDATION, MERGER, ETC.

In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock shall
at the same time be similarly

B-14
<PAGE>

exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.

VIII. REDEMPTION

The shares of Series A Preferred Stock shall not be redeemable.

IX. RANK

The Series A Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.

X. AMENDMENT

The Articles of Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least eighty percent (80%)
of the outstanding shares of Series A Preferred Stock, voting together as a
single series.

B-15
<PAGE>

ANNEX C
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

BYLAWS

RUBY TUESDAY (GEORGIA), INC.

AS IN EFFECT , 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

C-1
<PAGE>

INDEX

<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I OFFICES...................................................... C-4
ARTICLE II STOCKHOLDERS' MEETINGS....................................... C-4
2.1 Places of Meetings........................................... C-4
2.2 Annual Meetings.............................................. C-4
2.3 Special Meetings............................................. C-4
2.4 Meetings Without Notice...................................... C-4
2.5 Voting....................................................... C-4
2.6 Quorum....................................................... C-4
2.7 List of Stockholders......................................... C-5
2.8 Action Without Meeting....................................... C-5
ARTICLE III BOARD OF DIRECTORS........................................... C-5
3.1 Powers....................................................... C-5
3.2 Number, Qualification and Term............................... C-5
3.3 Compensation................................................. C-5
3.4 Meetings and Quorum.......................................... C-6
3.5 Executive Committee.......................................... C-6
3.6 Other Committees............................................. C-7
3.7 Conference Telephone Meetings................................ C-7
3.8 Action Without Meeting....................................... C-7
ARTICLE IV OFFICERS..................................................... C-7
4.1 Titles and Election.......................................... C-7
4.2 Duties....................................................... C-8
(a)Chairman of the Board of Directors........................ C-8
(b)Vice Chairman of the Board of Directors................... C-8
(c)President................................................. C-8
(d)Vice President............................................ C-8
(e)Secretary................................................. C-8
(f)Treasurer................................................. C-8
4.3 Chief Executive Officer and Chief Operating Officer.......... C-9
4.4 Chief Financial Officer and Chief Accounting Officer......... C-9
4.5 Delegation of Authority...................................... C-9
4.6 Compensation................................................. C-9
ARTICLE V RESIGNATIONS, VACANCIES AND REMOVALS......................... C-9
5.1 Resignations................................................. C-9
5.2 Vacancies.................................................... C-9
(a)Directors................................................. C-9
(b)Officers.................................................. C-10
5.3 Removals..................................................... C-10
(a)Directors................................................. C-10
(b)Officers.................................................. C-10
ARTICLE VI CAPITAL STOCK................................................ C-10
6.1 Certificates of Stock........................................ C-10
6.2 Transfer of Stock............................................ C-10
6.3 Stock Transfer Records....................................... C-10
6.4 Record Dates................................................. C-10
6.5 Lost Certificates............................................ C-11
</TABLE>

C-2
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VII FISCAL YEAR, BANK DEPOSITS, CHECKS, ETC................... C-11
7.1 Fiscal Year............................................... C-11
7.2 Bank Deposits, Checks, Etc................................ C-11
ARTICLE VIII BOOKS AND RECORDS......................................... C-11
8.1 Place of Keeping Books.................................... C-11
8.2 Examination of Books...................................... C-11
ARTICLE IX NOTICES................................................... C-11
9.1 Requirements of Notice.................................... C-11
9.2 Waivers................................................... C-12
ARTICLE X SEAL...................................................... C-12
ARTICLE XI POWERS OF ATTORNEY........................................ C-12
ARTICLE XII INDEMNIFICATION OF DIRECTORS, OFFICERS, AND OTHER
PERSONS.................................................. C-12
12.1 Indemnified Actions....................................... C-12
12.2 Indemnification Against Expenses of Successful Party...... C-12
12.3 Advances of Expenses...................................... C-13
12.4 Right of Agent to Indemnification Upon Application;
Procedure Upon Application............................... C-13
12.5 Other Rights and Remedies................................. C-13
12.6 Insurance of Agents....................................... C-13
12.7 Certain Definitions....................................... C-13
12.8 Indemnification and Insurance of Other Persons............ C-13
12.9 Survival of Indemnification............................... C-14
12.10 Savings Clause............................................ C-14
ARTICLE XIII AMENDMENTS................................................ C-14
</TABLE>

C-3
<PAGE>

RUBY TUESDAY (GEORGIA), INC.

BYLAWS

ARTICLE I

Offices

The Corporation shall at all times maintain a registered office in the State
of Georgia and a registered agent at that address but may have other offices
located in or outside of the State of Georgia as the Board of Directors may
from time to time determine.

ARTICLE II

Stockholders' Meetings

2.1 Places of Meetings. All meetings of stockholders shall be held at such
place or places in or outside of the State of Georgia as the Board of
Directors may from time to time determine or as may be designated in the
notice of meeting or waiver of notice thereof, subject to any provisions of
the laws of the State of Georgia.

2.2 Annual Meetings. The annual meeting of stockholders shall be held on
such date in the month of September each year and at such time as shall be
determined by the Board of Directors from time to time or with respect to any
particular annual meeting for the purpose of electing directors and
transacting such other business as may come properly before the meeting.
Written notice of the date, time and place of the annual meeting shall be
given by mail to each stockholder entitled to vote at his address as it
appears on the records of the Corporation not less than ten (10) nor more than
sixty (60) days prior to the scheduled date thereof, unless such notice is
waived as provided by Article IX of these Bylaws.

2.3 Special Meetings. A special meeting of stockholders may be called at any
time by the Board of Directors, the Chairman of the Board of Directors or the
President. Written notice of the time, place and specific purposes of such
meeting shall be given by mail to each stockholder entitled to vote thereat at
his address as it appears on the records of the Corporation not less than ten
(10) nor more than sixty (60) days prior to the scheduled date thereof, unless
such notice is waived as provided in Article IX of these Bylaws.

2.4 Meetings Without Notice. Meetings of the stockholders may be held at any
time without notice when all the stockholders entitled to vote thereat are
present in person or by proxy.

2.5 Voting. At all meetings of stockholders, each stockholder entitled to
vote on the record date as determined under Article VI, Section 6.4 of these
Bylaws, or if not so determined, as prescribed under the laws of the State of
Georgia, shall be entitled to one vote for each share of common stock, or such
other number of votes prescribed in the Articles of Incorporation for each
share of stock other than common stock, standing of record in his name,
subject to any restrictions or qualifications set forth in the Articles of
Incorporation, and may vote either in person or by proxy.

2.6 Quorum. At any meeting of stockholders, a majority of the number of
shares of stock outstanding and entitled to vote thereat, present in person or
by proxy, shall constitute a quorum, but a smaller interest may adjourn any
meeting from time to time, and the meeting may be held as adjourned without
further notice, subject to such limitation as may be imposed under the laws of
the State of Georgia. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at
the originally scheduled meeting.

When a quorum is present at any meeting, a majority of the number of shares
of stock entitled to vote present thereat shall decide any question brought
before such meeting, unless the question is one upon which a

C-4
<PAGE>

different vote is required by express provision of the laws of the State of
Georgia, or the Articles of Incorporation or these Bylaws, in which case such
express provision shall govern.

2.7 List of Stockholders. At least one (1) day before every meeting, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of and the number of shares
registered in the name of each stockholder, shall be prepared by the Secretary
or the transfer agent in charge of the stock ledger of the Corporation. Such
list shall be open for examination by any stockholder at the time and place of
the meeting. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine such list or the books of the Corporation or
to vote in person or by proxy at such meeting.

2.8 Action Without Meeting. Any action required by the laws of the State of
Georgia or the Articles of Incorporation to be taken at any annual or special
meeting of stockholders, or any action which may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by all the holders of outstanding shares of
stock entitled to vote on such action.

ARTICLE III

Board of Directors

3.1 Powers. The business and affairs of the Corporation shall be carried on
by or under the direction of the Board of Directors, which shall have all the
powers authorized by the laws of the State of Georgia, subject to such
limitations as may be provided by the Articles of Incorporation or these
Bylaws.

3.2 Number, Qualification and Term. The initial number of directors shall be
such as may be determined by the incorporator(s) and thereafter the number of
directors shall be not less than three (3) and not more than twelve (12), the
exact number within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the Board of Directors or by
the affirmative vote of the holders of at least 80% of all outstanding shares
of capital stock entitled to vote in the election of directors, voting
together as a single class, as provided in the Articles of Incorporation.

Directors shall be of full age, and no person shall be nominated for the
Board of Directors who shall have attained the age of seventy (70) on or
before the annual meeting of stockholders at which directors are elected,
provided, however, under special conditions in the best interests of the
Corporation, as determined by the Board of Directors or the shareholders, a
person may be nominated for the Board of Directors who has attained the age of
seventy (70) before such meeting. Directors need not be residents of the State
of Georgia.

The initial Board of Directors shall be elected by the incorporator.
Thereafter, Directors shall be elected at the annual meeting of stockholders
by a plurality of the votes cast at such election. Each director shall serve
until the election and qualification of his successor or until his earlier
death, resignation or removal as provided in the Articles of Incorporation and
these Bylaws. In case of an increase in the number of directors between
elections by the stockholders, the additional directorships shall be
considered vacancies and shall be filled in the manner prescribed in Article V
of these Bylaws.

The Board of Directors may, by majority vote, elect a Chairman of the Board
of Directors. The Chairman shall be a member of the Board and shall preside at
all meetings of the stockholders and of the Board of Directors and shall have
such other powers and perform such other duties as the Board of Directors may
prescribe from time to time.

3.3 Compensation. The Board of Directors, or a committee thereof, may from
time to time by resolution authorize the payment of fees or other compensation
to the directors for services as such to the Corporation, including, but not
limited to, fees for attendance at all meetings of the Board of Directors or
any committee

C-5
<PAGE>

thereof, and determine the amount of such fees and compensation. Directors
shall in any event be paid their traveling expenses for attendance at all
meetings of the Board of Directors or any committee thereof. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor in
amounts authorized or otherwise approved from time to time by the Board of
Directors or a committee thereof.

3.4 Meetings and Quorum. Meetings of the Board of Directors may be held
either in or outside of the State of Georgia. A quorum shall be one-third
(1/3) of the number of directors then fixed in the manner provided in Section
3.2 of this Article but not less than two (2) directors. The act of a majority
of the directors present at a meeting at which there is a quorum shall be the
act of the Board of Directors. If a quorum is not present at any meeting, the
Directors who are present may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is obtained,
subject to such limitation as may be imposed under the laws of the State of
Georgia.

The Board of Directors shall, at the close of each annual meeting of
stockholders and without further notice other than these Bylaws, if a quorum
of directors is then present or as soon thereafter as may be convenient, hold
a regular meeting for the election of officers and the transaction of any
other business.

The Board of Directors may from time to time provide for the holding of
regular meetings with or without notice and may fix the times and places at
which such meetings are to be held. Meetings other than regular meetings may
be called at any time by the Chairman of the Board of Directors or the
President and must be called by the Chairman of the Board, the President, the
Secretary or an Assistant Secretary upon the request of at least three (3)
directors.

Notice of each meeting, other than a regular meeting (unless required by the
Board of Directors), shall be given to each director by mailing the same to
each director at his residence or business address at least two (2) days
before the meeting or by delivering the same to him personally or by
telephone, facsimile transmission or telegraph at least one (1) day before the
meeting unless, in case of exigency, the Chairman of the Board of Directors,
the President, the Secretary or an Assistant Secretary, as the case may be,
shall prescribe a shorter notice to be given personally or by telephone,
telegraph, cable or facsimile transmission to all or any one or more of the
directors at their respective residences or places of business. Notice will be
deemed to have been given at the time it is mailed, postage-prepaid, or sent
by telegraph, cable or facsimile transmission, or given by telephone, as the
case may be.

Notice of any meeting shall state the time and place of such meeting, but
need not state the purposes thereof unless otherwise required by the laws of
the State of Georgia, the Articles of Incorporation or the Board of Directors.

3.5 Executive Committee. The Board of Directors, by resolution adopted by a
majority of the number of directors then fixed in the manner provided in
Section 3.2 of this Article, may provide for an Executive Committee of three
(3) or more directors and shall elect the members thereof to serve during the
pleasure of the Board of Directors. The Executive Committee shall elect its
own chairman, unless a chairman has been designated by the Board of Directors.
Special meetings of the Executive Committee may be called by the chairman of
the committee or by the Board of Directors, and notice of meetings of the
Executive Committee shall be given by the chairman of the committee or by the
Secretary, in the manner provided in Section 3.4 of this Article for notice of
meetings of the Board of Directors.

The Board of Directors may at any time change the membership of the
Executive Committee, fill vacancies in it, designate alternate members to
replace any absent or disqualified members at any meeting of the Executive
Committee, or dissolve it.

During the intervals between the meetings of the Board of Directors, the
Executive Committee shall possess and may exercise any or all of the powers of
the Board of Directors in the management or direction of the business and
affairs of the Corporation to the extent authorized by resolution adopted by a
majority of the number

C-6
<PAGE>

of directors then fixed in the manner provided in Section 3.2 of this Article,
subject to such limitations as may be imposed by the laws of the State of
Georgia.

Except as inconsistent with these Bylaws or the resolution of the Board of
Directors from time to time, the Executive Committee may determine its rules
of procedure and the notice to be given of its meeting, and it may appoint
such sub-committees as it shall from time to time deem necessary. A majority
of the members of the Executive Committee shall constitute a quorum. The
Executive Committee shall keep minutes of its meetings and shall report the
same to the Board of Directors.

3.6 Other Committees. The Board of Directors may by resolution provide for
such other committees as it deems desirable and may discontinue the same at
its pleasure. Each such committee shall have the powers and perform such
duties, not inconsistent with law, as may be assigned to it by the Board of
Directors.

Each such committee shall elect its own chairman, unless a chairman has been
designated by the Board of Directors.

Except as inconsistent with these Bylaws or the resolution of the Board of
Directors from time to time, each such committee may determine its rules of
procedure and the notice to be given of its meeting, and it may appoint such
sub-committees as it shall from time to time deem necessary. Special meetings
of any such committee may be called by the chairman of that committee or by
the Board of Directors, and notice of any meeting of any such committee shall
be given by the chairman of that committee or by the Secretary in the manner
provided in Section 3.4 of this Article for notice of meetings of the Board of
Directors. A majority of the members of any such committee then in office
shall constitute a quorum. Each such committee shall keep minutes of its
meetings and report the same to the Board of Directors.

3.7 Conference Telephone Meetings. Any one or more members of the Board of
Directors or any committee thereof may participate in a meeting by means of a
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.

3.8 Action Without Meeting. To the extent authorized by Georgia law, any
action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting if all
members of the Board of Directors or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the Board of Director or committee.

ARTICLE IV

Officers

4.1 Titles and Election. The officers of the Corporation shall be the
Chairman of the Board of Directors, the Vice Chairman of the Board of
Directors, the President, one or more Vice Presidents, the Secretary and the
Treasurer, who shall have such authority and perform such duties as may be
prescribed by the Board of Directors or as otherwise provided in these Bylaws.

The Board of Directors, in its discretion, may also at any time elect or
appoint such other officers as it may deem advisable, each of whom shall have
such authority and shall perform such duties as may be prescribed or
determined from time to time by the Board of Directors or, if not prescribed
or determined by the Board of Directors, as the Chairman of the Board, the
President or the then senior executive officer may prescribe or determine.

The Board of Directors may assign such additional titles and duties to one
or more of the officers as it shall deem appropriate.

Any person may hold more than one office if the duties can be consistently
performed by the same person.

C-7
<PAGE>

The officers of the Corporation shall initially be elected as soon as
convenient by the Board of Directors and thereafter, in the absence of earlier
deaths, resignations or removals, shall be elected at the first meeting of the
Board of Directors following each annual meeting of stockholders. Each officer
shall hold office at the pleasure of the Board of Directors except as may
otherwise be approved by the Board of Directors, or until his earlier
resignation, removal or other termination of his employment.

The Board of Directors may require any officer or other employee or agent to
give bond for the faithful performance of his duties in such form and with
such sureties as the Board may require.

4.2 Duties. Subject to such extension, limitations, and other provisions as
the Board of Directors may from time to time prescribe or determine, the
following officers shall have the following powers and duties:

(a) Chairman of the Board of Directors. The Chairman of the Board of
Directors shall be a director and, when present, shall preside at all
meetings of the stockholders and of the Board of Directors and shall have
such other powers and perform such other duties as the Board of Directors
may prescribe from time to time.

(b) Vice Chairman of the Board of Directors. The Vice Chairman of the
Board of Directors shall be a director and, in the absence of the Chairman
of the Board, shall preside at all meetings of the stockholders and of the
Board of Directors and shall have such other powers and perform such other
duties as the Board of Directors may prescribe from time to time.

(c) President. The President shall exercise the powers and authority and
perform all of the duties commonly incident to his office and shall perform
such other duties as the Board of Directors shall specify from time to
time. In the absence or disability of the Chairman of the Board, the
President shall perform those duties of the Chairman of the Board not
assigned to the Vice Chairman of the Board, unless otherwise provided by
the Board of Directors.

(d) Vice President. The Vice President or Vice Presidents shall perform
such duties and have such powers as may be assigned to them from time to
time by the Board of Directors, the Chairman of the Board or the President.
Any Vice President may have the title of Executive Vice President, Senior
Vice President, Assistant Vice President or such other title deemed
appropriate by the Board of Directors from time to time.

In the absence or disability of the President, the Vice Presidents in
order of seniority may, unless otherwise determined by the Board of
Directors or the Chairman of the Board, exercise the powers and perform the
duties pertaining to the office of the President.

(e) Secretary. The Secretary, or in his absence an Assistant Secretary,
shall keep the minutes of all meetings of stockholders and of the Board of
Directors and any committee thereof, cause all notices to be duly given to
and served on the stockholders and directors, attend to such correspondence
as may be assigned to him, keep or cause to be kept in safe custody the
seal and corporate records of the Corporation and affix such seal to all
such instruments properly executed as may require it, have general charge
of the stock transfer books of the Corporation and shall in general perform
all duties incident to his office, and shall have such other duties and
powers as may be prescribed or determined from time to time by the Board of
Directors, the Chairman of the Board or the President.

In the absence or disability of the Secretary, the Assistant Secretary,
or if there be more than one, the Assistant Secretaries in the order
determined by the Board of Directors, or if no such determination has been
made, in the order of their election, shall perform the duties and exercise
the powers of the Secretary. Each Assistant Secretary also shall perform
such other duties and have such other powers as may be assigned to him from
time to time by the Board of Directors, the Chairman of the Board or the
President.

(f) Treasurer. The Treasurer shall have the care and custody of and be
responsible for the monies, funds, securities, financial records and other
valuable papers of the Corporation (other than his own bond, if any, which
shall be in the custody of the President); shall keep full and accurate
accounts of receipts and disbursements and shall render account thereof
whenever required by the Board of Directors, the Chairman of the Board or
the President; shall have and perform, under the supervision of the Board
of Directors, the

C-8
<PAGE>

Chairman of the Board and the President all the powers and duties commonly
incident to his office; shall deposit or cause to be deposited all funds of
the Corporation in such bank or banks, trust company or trust companies, or
with such firm or firms doing a banking business as may be designated by
the Board of Directors, the Chairman of the Board or the President; may
endorse for deposit or collection all checks, notes, and similar
instruments payable to the Corporation or to its order; and shall have such
other duties as may be prescribed or determined from time to time by the
Board of Directors, the Chairman of the Board or the President.

In the absence or disability of the Treasurer, the Assistant Treasurer,
or if there be more than one, the Assistant Treasurers in the order
determined by the Board of Directors, or if no such determination has been
made, in the order of their election, shall perform the duties and exercise
the powers of the Treasurer and such other duties as may be assigned to
them from time to time by the Board of Directors, the Chairman of the Board
or the President.

4.3 Chief Executive Officer and Chief Operating Officer. In its discretion,
the Board of Directors may designate either the Chairman of the Board or the
President to serve as the Chief Executive Officer or the Chief Operating
Officer, or both, of the Corporation.

The Chief Executive Officer shall, subject to the direction and control of
the Board of Directors, have general supervision, direction and control of the
business and officers of the Corporation and have the powers and duties
otherwise customary to the office.

The Chief Operating Officer shall, subject to the direction and control of
the Board of Directors, have general supervision, management and control of
the operations and personnel of the Corporation and the powers and duties
otherwise customary to the office.

4.4 Chief Financial Officer and Chief Accounting Officer. In its discretion,
the Board of Directors may at any time designate any officer as the Chief
Financial Officer, the Chief Accounting Officer, or both, of the Corporation.

4.5 Delegation of Authority. The Board of Directors may at any time delegate
the powers and duties of any officer for the time being to any other officer,
director or employee.

4.6 Compensation. The compensation of the officers shall be fixed by the
Board of Directors or a committee thereof and the fact that any officer is a
director shall not preclude him from receiving compensation or from voting
upon the resolution providing the same.

ARTICLE V

Resignations, Vacancies and Removals

5.1 Resignations. Any director or officer may resign at any time by giving
written notice thereof to the Board of Directors, the Chairman of the Board,
the President or the Secretary. Any such resignation shall take effect at the
time specified therein or, if the time be not specified, upon receipt thereof;
and unless otherwise specified therein, the acceptance of any resignation
shall not be necessary to make it effective.

5.2 Vacancies.

(a) Directors. Any vacancy in the Board of Directors caused by reason of
death, incapacity, resignation, removal, increase in the authorized number
of directors or otherwise may be filled by a majority vote of the remaining
directors though less than a quorum, or by the sole remaining director.

Any director so elected by the Board of Directors shall serve until the
next annual meeting of stockholders at which directors of the class in
which such director serves are to be elected and until the election and
qualification of his successor or until his earlier death, resignation or
removal as provided in

C-9
<PAGE>

the Articles of Incorporation or these Bylaws. The Board of Directors also
may reduce their authorized number by the number of vacancies in the Board,
provided such reduction does not reduce the Board to less than the minimum
authorized by the laws of the State of Georgia or the Articles of
Incorporation, or to less than the number of directors then in office.

(b) Officers. The Board of Directors may at any time or from time to time
fill any vacancy among the officers of the Corporation.

5.3 Removals.

(a) Directors. The entire Board of Directors, or any individual member
thereof, may be removed only as provided in the Articles of Incorporation.

(b) Officers. Subject to the provisions of any validly existing
agreement, the Board of Directors may at any meeting remove from office any
officer, with or without cause, and may elect or appoint a successor.

ARTICLE VI

Capital Stock

6.1 Certificates of Stock. Every stockholder shall be entitled to a
certificate or certificates for shares of the capital stock of the Corporation
in such form as may be prescribed or authorized by the Board of Directors,
duly numbered and setting forth the number and kind of shares represented
thereby. Such certificates shall be signed by the Chairman of the Board, the
Vice Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary. If
and to the extent permitted by Georgia law, any or all of such signatures may
be in facsimile if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or an employee of
the Corporation. The transfer agent or registrar may sign either manually or
by facsimile.

In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on a certificate has ceased to be such
officer, transfer agent or registrar before the certificate has been issued,
such certificate may nevertheless be issued and delivered by the Corporation
with the same effect as if he were such officer, transfer agent or registrar
at the date of issue.

6.2 Transfer of Stock. Shares of the capital stock of the Corporation shall
be transferable only upon the books of the Corporation upon the surrender of
the certificate or certificates properly assigned and endorsed for transfer.

The Board of Directors may appoint a transfer agent and one or more co-
transfer agents and a registrar and one or more co-registrars and may make or
authorize such agents to make all such rules and regulations deemed expedient
concerning the issue, transfer and registration of shares of stock. If the
Corporation has a transfer agent or registrar acting on its behalf, the
signature of any officer or representative thereof may be in facsimile.

6.3 Stock Transfer Records. Unless the Corporation has a stock transfer
agent to keep such records, the Secretary shall keep a stock book or books
containing the names, alphabetically arranged, with the address of every
stockholder showing the number of shares of each kind, class or series of
stock held of record.

The person in whose name shares of stock stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.

6.4 Record Dates. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors shall fix in
advance a record date which, in the case

C-10
<PAGE>

of a meeting, shall not be less than ten (10) nor more than sixty (60) days
prior to the scheduled date of such meeting and which, in the case of any
other action, shall be not more than sixty (60) days prior to any such action
permitted by the laws of the State of Georgia.

A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.

6.5 Lost Certificates. In case of loss, mutilation or destruction of a stock
certificate, a duplicate certificate may be issued upon such terms as may be
determined or authorized by the Board of Directors, the Chairman of the Board
or the President.

ARTICLE VII

Fiscal Year, Bank Deposits, Checks, Etc.

7.1 Fiscal Year. The fiscal year of the Corporation shall end on the first
Saturday following May 30 each year.

7.2 Bank Deposits, Checks, Etc. The funds of the Corporation shall be
deposited in the name of the Corporation or of any division thereof in such
banks or trust companies in the United States or elsewhere as may be
designated from time to time by the Board of Directors, or by such officer or
officers as the Board of Directors may authorize to make such designations.

All checks, drafts or other orders for the withdrawal of funds from any bank
account shall be signed by such person or persons as may be designated from
time to time by the Board of Directors. The signatures on checks, drafts or
other orders for the withdrawal of funds may be in facsimile if authorized in
the designation.

ARTICLE VIII

Books and Records

8.1 Place of Keeping Books. The books and records of the Corporation may be
kept in or outside of the State of Georgia, as the Board of Directors may from
time to time determine.

8.2 Examination of Books. Except as may otherwise be provided by the laws of
the State of Georgia, the Articles of Incorporation or these Bylaws, the Board
of Directors shall have power to determine from time to time whether and to
what extent and at what times and places and under what conditions any of the
accounts, records and books of the Corporation are to be open to the
inspection of any stockholder. No stockholder shall have any right to inspect
any account or book or document of the Corporation except as prescribed by law
or authorized by express resolution of the stockholders or of the Board of
Directors.

ARTICLE IX

Notices

9.1 Requirements of Notice. Whenever notice is required to be given by
statute, the Articles of Incorporation or these Bylaws, it shall not mean
personal notice unless so specified, but such notice may be given in writing
by depositing the same in a post office, letter box, or mail chute postage
prepaid and addressed to the person to whom such notice is directed at the
address of such person on the records of the Corporation, and such notice
shall be deemed given at the time when the same shall be thus mailed.

C-11
<PAGE>

9.2 Waivers. Any stockholder, director or officer may, in writing delivered
via first-class mail, hand-delivered or facsimile transmission or by telegram
or cable, at any time waive any notice or other formality required by statute,
the Articles of Incorporation or these Bylaws. Such waiver of notice, whether
given before or after any meeting or action, shall be deemed equivalent to
notice. Presence of a stockholder either in person or by proxy at any meeting
of stockholders and presence of any director at any meeting of the Board of
Directors shall constitute a waiver of such notice as may be required by any
statute, the Articles of Incorporation or these Bylaws.

ARTICLE X

Seal

The corporate seal of the Corporation shall be in such form as the Board of
Directors shall determine from time to time and may consist of a facsimile
thereof or the words "Corporate Seal" or "Seal" enclosed in parentheses.

In the absence of the Secretary, any other officer of the Corporation may
affix and attest the seal of the Corporation to any instrument requiring it,
unless otherwise provided by resolution of the Board of Directors.

ARTICLE XI

Powers of Attorney

The Board of Directors may authorize one or more of the officers of the
Corporation to execute powers of attorney delegating to named representatives
or agents power to represent or act on behalf of the Corporation, with or
without power of substitution.

In the absence of any action by the Board of Directors, any officer of the
Corporation may execute for and on behalf of the Corporation waivers of notice
of meetings of stockholders and proxies for such meetings of any company in
which the Corporation may hold voting securities.

ARTICLE XII

Indemnification of Directors, Officers, and Other Persons

12.1 Indemnified Actions. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, and whether external or internal to the Corporation (including
a judicial action or suit brought by or in the right of the Corporation), by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise (all such persons being referred to hereafter as an "Agent"),
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged liable to the Corporation or subjected to injunctive relief in
favor of the Corporation: (a) for any appropriation, in violation of his
duties, of any business opportunity of the Corporation; (b) for acts or
omissions which involve intentional misconduct or a knowing violation of law;
(c) for unlawful distributions pursuant to Section 14-2-832 of the Georgia
Business Corporation Code; or (d) for any transaction from which he received
an improper personal benefit.

12.2 Indemnification Against Expenses of Successful Party. Notwithstanding
the other provisions of this Article XII, to the extent that an Agent has been
successful on the merits or otherwise in defense of any proceeding or in
defense of any claim, issue or matter therein, such Agent shall be indemnified
against all expenses incurred in connection therewith.

C-12
<PAGE>

12.3 Advances of Expenses. Expenses incurred in defending or investigating
any action, suit, proceeding or investigation shall be paid by the Corporation
in advance of the final disposition of such matter, if the Agent shall provide
the Corporation with (i) a written affirmation of his good faith belief that
his conduct does not constitute behavior of the kind described in any of the
clauses (a) through (d) of Section 12.1, and (ii) a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under Section
12.1.

12.4 Right of Agent to Indemnification Upon Application; Procedure Upon
Application. Any indemnification under Sections 12.1 and 12.2 hereof or
advance under Section 12.3 hereof shall be made promptly and in any event
within forty-five (45) days after receipt of the written request of the Agent,
unless the Agent is not entitled to such indemnification or advance pursuant
to the terms of such sections. The right to indemnification or advances as
granted by this Article XIl shall be enforceable by the Agent in any court of
competent jurisdiction if the Corporation denies the claim, in whole or in
part, or if no disposition of such claim is made within forty-five (45) days
of the Agent's request. The Agent's expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part,
in any such proceeding shall also be indemnified by the Corporation.

12.5 Other Rights and Remedies. The indemnification provided by this Article
XII shall not be deemed exclusive of any other rights to which an Agent
seeking indemnification may be entitled under any agreement, vote of
stockholders or disinterested directors, court order or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. It is the policy of the Corporation that indemnification
of Agents shall be made to the fullest extent permitted by law. All rights to
indemnification under this Article XII shall be deemed to be provided by a
contract between the Corporation and the Agent who serves in such capacity at
any time while these Bylaws and other relevant provisions of the Georgia
Business Corporation Code and other applicable law, if any, are in effect. Any
repeal or modification thereof shall not affect any rights or obligations then
existing.

12.6 Insurance of Agents. To the extent permitted by Georgia law, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was an Agent against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article XII.

12.7 Certain Definitions. For purposes of this Article XII, references to
the "Corporation" shall include, in addition to the resulting or surviving
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power to indemnify its directors,
officers and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under this Article XII with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued; references to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director or officer
of the Corporation which imposes duties on, or involves services by, such
director or officer with respect to any employee benefit plan, its
participants, or beneficiaries.

12.8 Indemnification and Insurance of Other Persons. The provisions of this
Article XII shall not be deemed to preclude the Corporation from either
indemnifying or purchasing and maintaining insurance on behalf of, or both,
any person who is not an Agent but whom the Corporation has the power or
obligation to indemnify or insure under the provisions of the Georgia Business
Corporation Code or otherwise. The Corporation may, in its sole discretion,
indemnify or insure, or both, an employee, trustee or other agent as permitted
by the Georgia Business Corporation Code. The Corporation shall indemnify or
insure any employee, trustee or other agent where required by law.

C-13
<PAGE>

12.9 Survival of Indemnification. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article XII shall continue
as to a person who has ceased to be an Agent and shall inure to the benefit of
the heirs, executors and administrators of such Agent.

12.10 Savings Clause. If this Article XII or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Agent against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article XII that shall not have been invalidated or by any other applicable
law.

ARTICLE XIII

Amendments

Unless otherwise provided by law, the Articles of Incorporation or another
provision of these Bylaws, these Bylaws may be amended or repealed either:

(a) at any meeting of stockholders at which a quorum is present by vote
of the holders of a majority of the number of shares of stock entitled to
vote present in person or by proxy at such meeting as provided in Article
II, Sections 2.4 and 2.5 of these Bylaws, or

(b) at any meeting of the Board of Directors by a majority vote of the
directors then in office;

provided the notice of such meeting of stockholders or directors or waiver of
notice thereof contains a statement of the substance of the proposed amendment
or repeal.

C-14
<PAGE>

REVISED PRELIMINARY COPY

LOGO
MORRISON RESTAURANTS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby acknowledges receipt of the Notice of Special Meeting
of Stockholders and Proxy Statement, each dated January , 1996, and does
hereby appoint Samuel E. Beall, III and Arthur R. Outlaw, and either of them,
with full power of substitution, as proxy or proxies of the undersigned to
represent the undersigned and to vote all shares of Morrison Restaurants Inc.
Common Stock which the undersigned would be entitled to vote if personally
present at the Special Meeting of Stockholders of Morrison Restaurants Inc., to
be held at the Stouffer Concourse Hotel, 1 Hartsfield Center Parkway, Atlanta,
Georgia 30354 at 10:30 a.m., local time, on February , 1996, and at any
adjournment(s) thereof:

1. Approval of the distribution by the Company of all the outstanding shares of
common stock of Morrison Fresh Cooking, Inc. and Morrison Health Care, Inc.
[_] FOR [_] AGAINST [_] ABSTAIN

2. Approval and adoption of an Agreement and Plan of Merger between the Company
and Ruby Tuesday (Georgia), Inc. providing for (i) the reincorporation of
the Company in Georgia and (ii) a one-for-two reverse stock split.
[_] FOR [_] AGAINST [_] ABSTAIN

3. Approval of amendments to the Company's Stock Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN

4. Approval of amendments to (i) the Company's Stock Incentive and Deferred
Compensation Plan for Directors, (ii) the Company's 1987 Stock Bonus and
Non-Qualified Stock Option Plan, and (iii) the Company's 1984 Long Term
Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN

5. Approval of the adoption (i) by MFCI of the MFCI 1996 Stock Incentive Plan,
and (ii) by MHCI of the MHCI 1996 Stock Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE PROPOSALS LISTED
ABOVE.

PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY.

<PAGE>

LOGO

6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before this meeting.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, IT
WILL BE VOTED FOR ALL OF THE PROPOSALS LISTED ABOVE.

PROXY NUMBER NUMBER OF SHARES Dated: _____________________ , 1996.

____________________________________
Signature

____________________________________
Signature, if held jointly

PLEASE SIGN EXACTLY AS YOUR NAME(S)
APPEAR HEREON. IF SHARES ARE HELD
JOINTLY, EACH STOCKHOLDER NAMED
SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, GIVE YOUR FULL
TITLE AS SUCH. IF THE SIGNATORY IS
A CORPORATION, SIGN THE FULL
CORPORATE NAME BY A DULY AUTHORIZED
OFFICER.

PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.

<PAGE>

<ARTICLE> 5
<LEGEND>
This schedule contains revised summary financial information extracted from
Morrison Restaurants Inc. revised financial statements as of and for the periods
ended June 3, 1995; June 4, 1994; December 2, 1995; and December 3, 1994 and are
qualified in their entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR YEAR
<FISCAL-YEAR-END> JUN-03-1995 JUN-04-1994 JUN-01-1996 JUN-03-1995
<PERIOD-END> JUN-03-1995<F1> JUN-04-1994<F1> DEC-02-1995<F1> DEC-03-1994<F1>
<CASH> 5,957 4,420 9,617 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 115 194 213 0
<ALLOWANCES> 0 0 0 0
<INVENTORY> 7,484 6,292 8,868 0
<CURRENT-ASSETS> 30,198 79,616 80,045 0
<PP&E> 387,070 288,306 458,309 0
<DEPRECIATION> 117,068 98,064 (132,520) 0
<TOTAL-ASSETS> 484,051 408,453 545,977 0
<CURRENT-LIABILITIES> 124,977 122,823 121,876 0
<BONDS> 32,003 5,467 89,136 0
436 436 436 0
0 0 0 0
<COMMON> 0 0 0 0
<OTHER-SE> 245,057 220,700 258,148 0
<TOTAL-LIABILITY-AND-EQUITY> 484,051 408,453 545,977 0
<SALES> 514,292 458,451 298,356 233,675
<TOTAL-REVENUES> 515,312 459,039 297,965 234,062
<CGS> 138,665 127,862 82,031 62,924
<TOTAL-COSTS> 441,208 396,815 266,246 197,877
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 744 160 1,522 (168)
<INCOME-PRETAX> 16,112 27,814 9,338 (2,862)
<INCOME-TAX> 5,027 9,707 3,038 (1,839)
<INCOME-CONTINUING> 11,085 18,107 8,298 (1,123)
<DISCONTINUED> 51,086 26,577 9,892 37,764
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 62,171 44,684 18,190 36,641
<EPS-PRIMARY> $1.73 $1.20 $0.46 $1.01
<EPS-DILUTED> $1.73 $1.20 $0.46 $1.01
<FN>
<F1> The above information relates to restated financial information including
the discontinued operations accounting treatment permitted for Morrison Fresh
Cooking, Inc. and Morrison Health Care, Inc. resulting from the proposed
spinoff. Balance Sheet amounts for December 3, 1994 are not included as they are
not being restated.
</FN>

</TABLE>

<PAGE>

MORRISON RESTAURANTS INC.
1996 STOCK INCENTIVE PLAN
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SECTION 1 DEFINITIONS.................................................... 1

1.1 Definitions............................................... 1

SECTION 2 THE STOCK INCENTIVE PLAN....................................... 4

2.1 Purpose of the Plan....................................... 4
2.2 Stock Subject to the Plan................................. 4
2.3 Administration of the Plan................................ 4
2.4 Eligibility and Limits.................................... 5

SECTION 3 TERMS OF STOCK INCENTIVES...................................... 5

3.1 Terms and Conditions of All Stock Incentives.............. 5
3.2 Terms and Conditions of Options........................... 7
(a) Option Price......................................... 7
(b) Option Term.......................................... 7
(c) Payment.............................................. 7
(d) Conditions to the Exercise of an Option.............. 8
(e) Termination of Incentive Stock Option................ 8
(f) Special Provisions for Certain Substitute Options.... 8
3.3 Terms and Conditions of Stock Appreciation Rights......... 8
(a) Payment.............................................. 9
(b) Conditions to Exercise............................... 9
3.4 Terms and Conditions of Stock Awards...................... 9
3.5 Terms and Conditions of Dividend Equivalent Rights........ 9
(a) Payment.............................................. 9
(b) Conditions to Payment................................ 9
3.6 Terms and Conditions of Performance Unit Awards........... 10
(a) Payment.............................................. 10
(b) Conditions to Payment................................ 10
3.7 Terms and Conditions of Phantom Shares.................... 10
(a) Payment.............................................. 10
(b) Conditions to Payment................................ 10
3.8 Treatment of Awards Upon Termination of Service........... 11

SECTION 4 RESTRICTIONS ON STOCK.......................................... 11

4.1 Escrow of Shares.......................................... 11
4.2 Forfeiture of Shares...................................... 11
4.3 Restrictions on Transfer.................................. 11
</TABLE>

-i-
<PAGE>

<TABLE>
<C> <S> <C>
SECTION 5 GENERAL PROVISIONS............................................. 12

5.1 Withholding............................................... 12
5.2 Changes in Capitalization; Merger; Liquidation............ 12
5.3 Cash Awards............................................... 13
5.4 Compliance with Code...................................... 13
5.5 Right to Terminate Service................................ 13
5.6 Restrictions on Delivery and Sale of Shares; Legends...... 13
5.7 Non-alienation of Benefits................................ 14
5.8 Termination and Amendment of the Plan..................... 14
5.9 Stockholder Approval...................................... 14
5.10 Choice of Law............................................. 14
5.11 Effective Date of Plan.................................... 14
</TABLE>

-ii-
<PAGE>

MORRISON RESTAURANTS INC.
1996 STOCK INCENTIVE PLAN

The Morrison Restaurants Inc. 1996 Stock Incentive Plan constitutes an
amendment and restatement of the Morrison Restaurants Inc. Stock Incentive Plan.
If the Morrison Restaurants Inc. 1996 Stock Incentive Plan is not approved by
the stockholders of Morrison Restaurants Inc. within twelve (12) months from the
date of its adoption by the Board of Directors of Morrison Restaurants Inc., the
Morrison Restaurants Inc. Stock Incentive Plan shall remain in force and effect
pursuant to the terms in effect immediately prior to this amendment and
restatement.

SECTION 1 DEFINITIONS

1.1 Definitions. Whenever used herein, the masculine pronoun shall be
-----------
deemed to include the feminine, and the singular to include the plural, unless
the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:

(a) "Board of Directors" means the board of directors of the Company.
------------------

(b) "Cause" has the same meaning as provided in the employment
-----
agreement between the Participant and the Company or, if applicable, any
affiliate of the Company on the date of Termination of Service, or if no such
definition or employment agreement exists, "Cause" means conduct amounting to
(1) fraud or dishonesty against the Company or its affiliates, (2) Participant's
willful misconduct, repeated refusal to follow the reasonable directions of the
board of directors of the Company or its affiliates, or knowing violation of law
in the course of performance of the duties of Participant's service with the
Company or its affiliates, (3) repeated absences from work without a reasonable
excuse, (4) repeated intoxication with alcohol or drugs while on the Company or
affiliates' premises during regular business hours, (5) a conviction or plea of
guilty or nolo contendere to a felony or a crime involving dishonesty, or (6) a
breach or violation of the terms of any agreement to which Participant and the
Company or its affiliates are party.

(c) "Change in Control" means any event that pursuant to the Company's
-----------------
Certificate of Incorporation, as amended from time to time, requires the
affirmative vote of the holders of not less than eighty percent (80%) of the
Voting Stock (as defined therein); provided, however, that no event shall
constitute a Change in Control if approved by the Board of Directors a majority
of whom are present directors and new directors. For purposes of the preceding
sentence, the term "present directors" means individuals who as of the date this
Plan is adopted were members of the Board of Directors and the term "new
directors" means any director whose election by the Board of Directors in the
event of vacancy or whose nomination for election was approved by a vote of at
least three-fourths of the directors then still in office who are present
directors and new

-1-
<PAGE>

directors; provided that any director elected to the Board of Directors solely
to avoid or settle a threatened or actual proxy contest shall in no event be
deemed to be a new director.

(d) "Code" means the Internal Revenue Code of 1986, as amended.
----

(e) "Committee" means the committee appointed by the Board of
---------
Directors to administer the Plan pursuant to Plan Section 2.3.

(f) "Company" means Morrison Restaurants Inc., a Delaware corporation,
-------
or its successor.

(g) "Disability" has the same meaning as provided in the long-term
----------
disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company for
the Participant. If no long-term disability plan or policy was ever maintained
on behalf of the Participant or, if the determination of Disability relates to
an Incentive Stock Option, Disability shall mean that condition described in
Code Section 22(e)(3), as amended from time to time. In the event of a dispute,
the determination of Disability shall be made by the Board of Directors and
shall be supported by advice of a physician competent in the area to which such
Disability relates.

(h) "Disposition" means any conveyance, sale, transfer, assignment,
-----------
pledge or hypothecation, whether outright or as security, inter vivos or
testamentary, with or without consideration, voluntary or involuntary.

(i) "Dividend Equivalent Rights" means certain rights to receive cash
--------------------------
payments as described in Plan Section 3.5.

(j) "Fair Market Value" with regard to a date means the closing price
-----------------
at which Stock shall have been sold on the last trading date prior to that date
as reported by a national securities exchange selected by the Committee on which
the shares of Stock are then actively traded and published in The Wall Street
Journal; provided that, for purposes of granting awards other than Incentive
Stock Options, Fair Market Value of the shares of Stock may be determined by the
Committee by reference to the average market value determined over a period
certain or as of specified dates, to a tender offer price for the shares of
Stock (if settlement of an award is triggered by such an event) or to any other
reasonable measure of fair market value.

(k) "Incentive Stock Option" means an incentive stock option, as
----------------------
defined in Code Section 422, described in Plan Section 3.2.

(l) "Non-Qualified Stock Option" means a stock option, other than an
--------------------------
option qualifying as an Incentive Stock Option, described in Plan Section 3.2.

(m) "Option" means a Non-Qualified Stock Option or an Incentive Stock
------
Option.

-2-
<PAGE>

(n) "Over 10% Owner" means an individual who at the time an Incentive
--------------
Stock Option is granted owns Stock possessing more than 10% of the total
combined voting power of the Company or one of its Parents or Subsidiaries,
determined by applying the attribution rules of Code Section 424(d).

(o) "Parent" means any corporation (other than the Company) in an
------
unbroken chain of corporations ending with the Company if, with respect to
Incentive Stock Options, at the time of granting of the Option, each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.

(p) "Participant" means an individual who receives a Stock Incentive
-----------
hereunder.

(q) "Performance Unit Award" refers to a performance unit award
----------------------
described in Plan Section 3.6.

(r) "Phantom Shares" refers to the rights described in Plan
--------------
Section 3.7.

(s) "Plan" means the Morrison Restaurants Inc. 1996 Stock Incentive
----
Plan. If the Company's Certificate of Incorporation is amended to change the
name of the Company, the Plan shall thereafter be formally titled using the new
name of the Company followed by the phrase "1996 Stock Incentive Plan."

(t) "Stock" means the Company's common stock, $.01 par value.
-----

(u) "Stock Appreciation Right" means a stock appreciation right
------------------------
described in Plan Section 3.3.

(v) "Stock Award" means a stock award described in Plan Section 3.4.
-----------

(w) "Stock Incentive Agreement" means an agreement between the Company
-------------------------
and a Participant or other documentation evidencing an award of a Stock
Incentive.

(x) "Stock Incentive Program" means a written program established by
-----------------------
the Committee pursuant to which Stock Incentives, other than Options or Stock
Appreciation Rights, are awarded under the Plan under uniform terms, conditions
and restrictions set forth in such written program and distributed among
eligible officers, employees and directors.

(y) "Stock Incentives" means, collectively, Dividend Equivalent
----------------
Rights, Incentive Stock Options, Non-Qualified Stock Options, Performance Unit
Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards.

-3-
<PAGE>

unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.

(aa) "Termination of Service" means the termination of either the
----------------------
employee-employer or director relationship, as the case may be, between a
Participant and the Company and its affiliates, regardless of the fact that
severance or similar payments are made to the Participant, for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, Disability or retirement. The Committee shall, in its
absolute discretion, determine the effect of all matters and questions relating
to Termination of Service, including, but not by way of limitation, the question
of whether a leave of absence constitutes a Termination of Service, or whether a
Termination of Service is for Cause.

SECTION 2 THE STOCK INCENTIVE PLAN

2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
-------------------
officers, employees and directors of the Company and its affiliates to stimulate
their efforts toward the continued success of the Company and to operate and
manage the business in a manner that will provide for the long-term growth and
profitability of the Company; (b) encourage stock ownership by officers,
employees and directors by providing them with a means to acquire a proprietary
interest in the Company by acquiring shares of Stock or to receive compensation
which is based upon appreciation in the value of Stock; and (c) provide a means
of obtaining and rewarding key personnel.

2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
-------------------------
Section 5.2, 1,000,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At no time shall
the Company have outstanding Stock Incentives and shares of Stock issued in
respect of Stock Incentives in excess of the Maximum Plan Shares; for this
purpose, the outstanding Stock Incentives and shares of Stock issued in respect
of Stock Incentives shall be computed in accordance with Rule 16b-3(a)(1) as
promulgated under the Securities Exchange Act of 1934, as amended from time to
time. To the extent permitted by Rule 16b-3(a)(1) as promulgated under the
Securities Exchange Act of 1934, the shares of Stock attributable to the
nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of
any Stock Incentive that is forfeited or cancelled or expires or terminates for
any reason without becoming vested, paid, exercised, converted or otherwise
settled in full shall again be available for purposes of the Plan.

2.3 Administration of the Plan. The Plan shall be administered by the
--------------------------
Committee. The Committee shall have full authority in its discretion to
determine the officers, employees and directors of the Company or its affiliates
to whom Stock Incentives shall be granted and the terms and provisions of Stock
Incentives, subject to the Plan. Subject to the provisions of the Plan, the
Committee shall have full and conclusive authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the respective Stock Incentive Agreements
or Stock Incentive Programs and to make all other determinations necessary or
advisable for the proper administration of the Plan. The Committee's
determinations under the Plan need not be uniform and may be made by it
selectively among persons

-4-
<PAGE>

who receive, or are eligible to receive, awards under the Plan (whether or not
such persons are similarly situated). The Committee's decisions shall be final
and binding on all Participants.

As to any matter involving a Participant who is not a "reporting person"
for purposes of Section 16 of the Securities Exchange Act of 1934, Committee may
delegate to any member of the Board of Directors or officer of the Company the
administrative authority to (a) interpret the provisions of the Participant's
Stock Incentive Agreement and (b) determine the treatment of Stock Incentives
upon a Termination of Service, as contemplated by Plan Section 3.8.

The Committee shall consist of at least two members of the Board of
Directors each of whom shall qualify as a "disinterested person," as defined in
Rule 16b-3 as promulgated under the Securities Exchange Act of 1934 and as an
"outside director," within the meaning of Code Section 162(m) and the
regulations promulgated thereunder. The Board of Directors may from time to
time remove members from or add members to the Committee. Vacancies on the
Committee shall be filled by the Board of Directors.

2.4 Eligibility and Limits. Stock Incentives may be granted only to
----------------------
officers, employees and directors of the Company or an affiliate; provided,
however, that directors who serve on the Committee shall not be eligible to
receive awards that are subject to Section 16 of the Securities Exchange Act of
1934 while they are members of the Committee and that an Incentive Stock Option
may only be granted to an employee of the Company or any Parent or Subsidiary.
In the case of Incentive Stock Options, the aggregate Fair Market Value
(determined as at the date an Incentive Stock Option is granted) of stock with
respect to which stock options intended to meet the requirements of Code Section
422 become exercisable for the first time by an individual during any calendar
year under all plans of the Company and its Parents and Subsidiaries shall not
exceed $100,000; provided further, that if the limitation is exceeded, the
Incentive Stock Option(s) which cause the limitation to be exceeded shall be
treated as Non-Qualified Stock Option(s). To the extent required under Code
Section 162(m) and regulations thereunder for compensation to be treated as
qualified performance-based compensation, the maximum number of shares Stock
with respect to which Options or Stock Appreciation Rights may be granted during
any single fiscal year of the Company to any Participant who is a "covered
employee," within the meaning of Code Section 162(m) and the regulations
promulgated thereunder (a "Covered Employee"), shall not exceed 100,000.

SECTION 3 TERMS OF STOCK INCENTIVES

3.1 Terms and Conditions of All Stock Incentives.
--------------------------------------------

(a) The number of shares of Stock as to which a Stock Incentive shall
be granted shall be determined by the Committee in its sole discretion, subject
to the provisions of Section 2.2 as to the total number of shares available for
grants under the Plan. If a Stock Incentive Agreement so provides, a
Participant may be granted a new Option to purchase a number of shares of Stock
equal to the number of previously owned shares of Stock tendered in payment of
the Exercise Price (as defined below) for each share of Stock purchased pursuant
to the terms of the Stock Incentive Agreement.

-5-
<PAGE>

(b) Each Stock Incentive shall be evidenced either by a Stock
Incentive Agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine is appropriate or be made subject to
the terms of a Stock Incentive Program, containing such terms, conditions and
restrictions as the Committee may determine is appropriate. Each Stock
Incentive Agreement or Stock Incentive Program shall be subject to the terms of
the Plan and any provision in a Stock Incentive Agreement or Stock Incentive
Program that is inconsistent with the Plan shall be null and void.

(c) The date a Stock Incentive is granted shall be the date on which
the Committee has approved the terms and conditions of the Stock Incentive
Agreement or Stock Incentive Program and has determined the recipient of the
Stock Incentive and the number of shares covered by the Stock Incentive and has
taken all such other action necessary to complete the grant of the Stock
Incentive.

(d) The Committee may provide in any Stock Incentive Agreement or
pursuant to any Stock Incentive Program (or subsequent to the award of a Stock
Incentive but prior to its expiration or cancellation, as the case may be) that,
in the event of a Change in Control, the Stock Incentive shall or may be cashed
out on the basis of any price not greater than the highest price paid for a
share of Stock in any transaction reported by any national securities exchange
selected by the Committee on which the shares of Stock are then actively traded
during a specified period immediately preceding or including the date of the
Change in Control or offered for a share of Stock in any tender offer occurring
during a specified period immediately preceding or including the date the tender
offer commences; provided that, in no case shall any such specified period
exceed one (1) year (the "Change in Control Price"). For purposes of this
Subsection, the cash-out of a Stock Incentive shall be determined as follows:

(i) Options shall be cashed out on the basis of the excess, if any,
of the Change in Control Price (but not more than the Fair Market Value of the
Stock on the date of the cash-out in the case of Incentive Stock Options) over
the Exercise Price with or without regard to whether the Option may otherwise be
exercisable only in part;

(ii) Stock Awards and Phantom Shares shall be cashed out in an
amount equal to the Change in Control Price with or without regard to any
conditions or restrictions otherwise applicable to any such Stock Incentive; and

(iii) Stock Appreciation Rights, Dividend Equivalent Rights and
Performance Unit Awards shall be cashed out with or without regard to any
conditions or restrictions otherwise applicable to any such Stock Incentive and
the amount of the cash out shall be determined by reference to the number of
shares of Stock that would be required to pay the Participant in kind for the
value of the Stock Incentive as of the date of the Change in Control multiplied
by the Change in Control Price.

(e) Any Stock Incentive may be granted in connection with all or any
portion of a previously or contemporaneously granted Stock Incentive. Exercise
or vesting of a Stock Incentive granted in connection with another Stock
Incentive may result in a pro rata surrender or cancellation

-6-
<PAGE>

of any related Stock Incentive, as specified in the applicable Stock Incentive
Agreement or Stock Incentive Program.

(f) Stock Incentives shall not be transferable or assignable except by
will or by the laws of descent and distribution and shall be exercisable, during
the Participant's lifetime, only by the Participant; in the event of the
Disability of the Participant, by the legal representative of the Participant;
or in the event of the death of the participant, by the personal representative
of the Participant's estate or if no personal representative has been appointed,
by the successor in interest determined under the Participant's will.

3.2 Terms and Conditions of Options. Each Option granted under the Plan
-------------------------------
shall be evidenced by a Stock Incentive Agreement. At the time any Option is
granted, the Committee shall determine whether the Option is to be an Incentive
Stock Option or a Non-Qualified Stock Option, and the Option shall be clearly
identified as to its status as an Incentive Stock Option or a Non-Qualified
Stock Option. At the time any Incentive Stock Option is exercised, the Company
shall be entitled to place a legend on the certificates representing the shares
of Stock purchased pursuant to the Option to clearly identify them as shares of
Stock purchased upon exercise of an Incentive Stock Option. An Incentive Stock
Option may only be granted within ten (10) years from the earlier of the date
the Plan, as amended and restated, is adopted or approved by the Company's
stockholders.

(a) Option Price. Subject to adjustment in accordance with
------------
Section 5.2 and the other provisions of this Section 3.2, the exercise price
(the "Exercise Price") per share of Stock purchasable under any Option shall be
as set forth in the applicable Stock Incentive Agreement. With respect to each
grant of an Incentive Stock Option to a Participant who is not an Over 10% Owner
or to each grant of any Option to a Participant who is then a Covered Employee,
the Exercise Price per share shall not be less than the Fair Market Value on the
date the Option is granted. With respect to each grant of an Incentive Stock
Option to a Participant who is an Over 10% Owner, the Exercise Price shall not
be less than 110% of the Fair Market Value on the date the Option is granted.

(b) Option Term. The term of an Option shall be as specified in the
-----------
applicable Stock Incentive Agreement; provided, however that any Incentive Stock
Option granted to a Participant who is not an Over 10% Owner shall not be
exercisable after the expiration of ten (10) years after the date the Option is
granted and any Incentive Stock Option granted to an Over 10% Owner shall not be
exercisable after the expiration of five (5) years after the date the Option is
granted.

-7-
<PAGE>

cashless exercise through a broker; or (iii) by having a number of shares of
Stock withheld, the Fair Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price. In its discretion, the Committee
also may authorize (at the time an Option is granted or thereafter) Company
financing to assist the Participant as to payment of the Exercise Price on such
terms as may be offered by the Committee in its discretion. Payment shall be
made at the time that the Option or any part thereof is exercised, and no shares
shall be issued or delivered upon exercise of an option until full payment has
been made by the Participant. The holder of an Option, as such, shall have none
of the rights of a stockholder.

(d) Conditions to the Exercise of an Option. Each Option granted
---------------------------------------
under the Plan shall be exercisable by whom, at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of an Option, the Committee, at any time before complete termination
of such Option, may accelerate the time or times at which such Option may be
exercised in whole or in part, including, without limitation, upon a Change in
Control and may permit the Participant or any other designated person to
exercise the Option, or any portion thereof, for all or part of the remaining
Option term notwithstanding any provision of the Stock Incentive Agreement to
the contrary.

(e) Termination of Incentive Stock Option. With respect to an
-------------------------------------
Incentive Stock Option, in the event of the Termination of Service of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Service;
provided, however, that in the case of a holder whose Termination of Service is
due to death or Disability, one (1) year shall be substituted for such three (3)
month period. For purposes of this Subsection (e), Termination of Service of
the Participant shall not be deemed to have occurred if the Participant is
employed by another corporation (or a parent or subsidiary corporation of such
other corporation) which has assumed the Incentive Stock Option of the
Participant in a transaction to which Code Section 424(a) is applicable.

(f) Special Provisions for Certain Substitute Options.
-------------------------------------------------
Notwithstanding anything to the contrary in this Section 3.2, any Option issued
in substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such other
terms and conditions as the Committee may prescribe to cause such substitute
Option to contain as nearly as possible the same terms and conditions (including
the applicable vesting and termination provisions) as those contained in the
previously issued option being replaced thereby.

-8-
<PAGE>

price (i) which, in the case of a Stock Appreciation Right granted in connection
with an Option, shall be not less than the Exercise Price for that number of
shares and (ii) which, in the case of a Stock Appreciation Right that is granted
to a Participant who is then a Covered Employee, shall not be less than the Fair
Market Value of the Stock at the time of the award. A Stock Appreciation Right
granted in connection with a Stock Incentive may only be exercised to the extent
that the related Stock Incentive has not been exercised, paid or otherwise
settled. The exercise of a Stock Appreciation Right granted in connection with
a Stock Incentive shall result in a pro rata surrender or cancellation of any
related Stock Incentive to the extent the Stock Appreciation Right has been
exercised.

(a) Settlement. Upon settlement of a Stock Appreciation Right, the
----------
Company shall pay to the Participant the appreciation in cash or shares of Stock
(valued at the aggregate Fair Market Value on the date of payment or exercise)
as provided in the Stock Incentive Agreement or, in the absence of such
provision, as the Committee may determine.

(b) Conditions to Exercise. Each Stock Appreciation Right granted
----------------------
under the Plan shall be exercisable or payable at such time or times, or upon
the occurrence of such event or events, and in such amounts, as the Committee
shall specify in the Stock Incentive Agreement; provided, however, that
subsequent to the grant of a Stock Appreciation Right, the Committee, at any
time before complete termination of such Stock Appreciation Right, may
accelerate the time or times at which such Stock Appreciation Right may be
exercised or paid in whole or in part.

3.4 Terms and Conditions of Stock Awards. The number of shares of Stock
------------------------------------
subject to a Stock Award and restrictions or conditions on such shares, if any,
shall be as the Committee determines, and the certificate for such shares shall
bear evidence of any restrictions or conditions. Subsequent to the date of the
grant of the Stock Award, the Committee shall have the power to permit, in its
discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
The Committee may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment.

3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
--------------------------------------------------
Equivalent Right shall entitle the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends paid on a
specified number of shares of Stock to Company stockholders of record during the
period such rights are effective. The Committee may impose such restrictions
and conditions on any Dividend Equivalent Right as the Committee in its
discretion shall determine, including the date any such right shall terminate
and may reserve the right to terminate, amend or suspend any such right at any
time.

(a) Payment. Payment in respect of a Dividend Equivalent Right may be
-------
made by the Company in cash or shares of Stock (valued at Fair Market Value on
the date of payment) as provided in the Stock Incentive Agreement or, in the
absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Dividend Equivalent Right granted
---------------------
under the Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in

-9-
<PAGE>

such amounts, as the Committee shall specify in the Stock Incentive Agreement or
Stock Incentive Program; provided, however, that subsequent to the grant of a
Dividend Equivalent Right, the Committee, at any time before complete
termination of such Dividend Equivalent Right, may accelerate the time or times
at which such Dividend Equivalent Right may be paid in whole or in part.

3.6 Terms and Conditions of Performance Unit Awards. A Performance Unit
-----------------------------------------------
Award shall entitle the Participant to receive, at a future date, payment of an
amount equal to all or a portion of the value of a number of units (stated in
terms of a designated dollar amount per unit) granted by the Committee, all as
the Committee shall specify in the Stock Incentive Agreement or Stock Incentive
Program. At the time of the grant, the Committee must determine the base value
of each unit, the number of units subject to a Performance Unit Award, the
performance factors applicable to the determination of the ultimate payment
value of the Performance Unit Award and the period over which Company
performance shall be measured. The Committee may provide for an alternate base
value for each unit under certain specified conditions.

(a) Payment. Payment in respect of Performance Unit Awards may be
-------
made by the Company in cash or shares of Stock (valued at Fair Market Value on
the date of payment) as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine.

(b) Conditions to Payment. Each Performance Unit Award granted under
---------------------
the Plan shall be payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
Stock Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Performance Unit Award, the Committee, at any time
before complete termination of such Performance Unit Award, may accelerate the
time or times at which such Performance Unit Award may be paid in whole or in
part.

3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall entitle
--------------------------------------
the Participant to receive, at a future date, payment of an amount equal to all
or a portion of the Fair Market Value of a number of shares of Stock at the end
of a certain period, all as the Committee shall specify in the Stock Incentive
Agreement or Stock Incentive Program. At the time of the grant, the Committee
shall determine the factors which will govern the portion of the rights so
payable, including, at the discretion of the Committee, any performance criteria
that must be satisfied as a condition to payment.

(a) Payment. Payment in respect of Phantom Shares may be made by the
-------
Company in cash or shares of Stock (valued at Fair Market Value on the date of
payment) as provided in the Stock Incentive Agreement or Stock Incentive Program
or, in the absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Phantom Share granted under the Plan
---------------------
shall be payable at such time or times, or upon the occurrence of such event or
events, and in such amounts, as the Committee shall specify in the Stock
Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Phantom Share, the Committee, at any time before
complete termination of such Phantom Share, may accelerate the time or times at
which such Phantom Share may be paid in whole or in part.

-10-
<PAGE>

3.8 Treatment of Awards Upon Termination of Service. Except as otherwise
-----------------------------------------------
provided by Plan Section 3.2(e), any award under this Plan to a Participant who
suffers a Termination of Service may be cancelled, accelerated, paid or
continued, as provided in the Stock Incentive Agreement or Stock Incentive
Program or, in the absence of such provision, as the Committee may determine;
provided that, a Participant who continues in the service of Morrison Fresh
Cooking, Inc. or Morrison Health Care, Inc. immediately following a spin-off of
either such Subsidiary shall not be deemed to have incurred a Termination of
Service solely by reason of the spin-off. The portion of any award exercisable
in the event of continuation or the amount of any payment due under a continued
award may be adjusted by the Committee to reflect the Participant's period of
service from the date of grant through the date of the Participant's Termination
of Service or such other factors as the Committee determines are relevant to its
decision to continue the award.

SECTION 4 RESTRICTIONS ON STOCK

4.1 Escrow of Shares. Any certificates representing the shares of Stock
----------------
issued under the Plan shall be issued in the Participant's name, but, if the
Stock Incentive Agreement or Stock Incentive Program so provides, the shares of
Stock shall be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian shall appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant's name, place and stead to transfer,
assign and convey to the Company any shares of Stock held by the Custodian for
such Participant, if the Participant forfeits the shares under the terms of the
applicable Stock Incentive Agreement or Stock Incentive Program. During the
period that the Custodian holds the shares subject to this Section, the
Participant shall be entitled to all rights, except as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program, applicable to
shares of Stock not so held. Any dividends declared on shares of Stock held by
the Custodian shall, as the Committee may provide in the applicable Stock
Incentive Agreement or Stock Incentive Program, be paid directly to the
Participant or, in the alternative, be retained by the Custodian until the
expiration of the term specified in the applicable Stock Incentive Agreement or
Stock Incentive Program and shall then be delivered, together with any proceeds,
with the shares of Stock to the Participant or to the Company, as applicable.

4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set forth
--------------------
in any Stock Incentive Agreement or Stock Incentive Program, in the event that
the Participant violates a noncompetition agreement as set forth in the Stock
Incentive Agreement or Stock Incentive Program, all Stock Incentives and shares
of Stock issued to the holder pursuant to the Plan shall be forfeited; provided,
however, that the Company shall return to the holder the lesser of any
consideration paid by the Participant in exchange for Stock issued to the
Participant pursuant to the Plan or the then Fair Market Value of the Stock
forfeited hereunder.

4.3 Restrictions on Transfer. The Participant shall not have the right to
------------------------
make or permit to exist any Disposition of the shares of Stock issued pursuant
to the Plan except as provided in the Plan or the applicable Stock Incentive
Agreement or Stock Incentive Program. Any Disposition of the shares of Stock
issued under the Plan by the Participant not made in accordance with the Plan or
the applicable Stock Incentive Agreement or Stock Incentive Program shall be
void. The Company shall not recognize, or have the duty to recognize, any
Disposition not made in accordance

-11-
<PAGE>

with the Plan and the applicable Stock Incentive Agreement or Stock Incentive
Program, and the shares so transferred shall continue to be bound by the Plan
and the applicable Stock Incentive Agreement or Stock Incentive Program.

SECTION 5 GENERAL PROVISIONS

5.1 Withholding. The Company shall deduct from all cash distributions
-----------
under the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company shall have the right to require the recipient to remit to the Company an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares or the vesting of such Stock Award. A Participant may pay the
withholding tax in cash, or, if the applicable Stock Incentive Agreement or
Stock Incentive Program provides, a Participant may elect to have the number of
shares of Stock he is to receive reduced by, or with respect to a Stock Award,
tender back to the Company, the smallest number of whole shares of Stock which,
when multiplied by the Fair Market Value of the shares of Stock determined as of
the Tax Date (defined below), is sufficient to satisfy federal, state and local,
if any, withholding taxes arising from exercise or payment of a Stock Incentive
(a "Withholding Election"). A Participant may make a Withholding Election only
if both of the following conditions are met:

(a) The Withholding Election must be made on or prior to the date on
which the amount of tax required to be withheld is determined (the "Tax Date")
by executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee; and

(b) Any Withholding Election made will be irrevocable; however, the
Committee may in its sole discretion disapprove and give no effect to the
Withholding Election.

5.2 Changes in Capitalization; Merger; Liquidation.
----------------------------------------------

(a) The number of shares of Stock reserved for the grant of Options,
Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares, Stock
Appreciation Rights and Stock Awards; the number of shares of Stock reserved for
issuance upon the exercise or payment, as applicable, of each outstanding
Option, Dividend Equivalent Right, Performance Unit Award, Phantom Share and
Stock Appreciation Right and upon vesting or grant, as applicable, of each Stock
Award; the Exercise Price of each outstanding Option and the specified number of
shares of Stock to which each outstanding Dividend Equivalent Right, Phantom
Share and Stock Appreciation Right pertains shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Stock resulting
from a subdivision or combination of shares or the payment of an ordinary stock
dividend in shares of Stock to holders of outstanding shares of Stock or any
other increase or decrease in the number of shares of Stock outstanding effected
without receipt of consideration by the Company.

-12-
<PAGE>

with respect to awards and take such other action as it deems necessary or
appropriate to reflect or in anticipation of such merger, consolidation,
extraordinary dividend, reorganization, other change in corporate structure or
tender offer, including, without limitation, the substitution of new awards, the
termination or adjustment of outstanding awards, the acceleration of awards or
the removal of restrictions on outstanding awards. Any adjustment pursuant to
this Section 5.2 may provide, in the Committee's discretion, for the elimination
without payment therefor of any fractional shares that might otherwise become
subject to any Stock Incentive.

(c) The existence of the Plan and the Stock Incentives granted
pursuant to the Plan shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification, reorganization or
other change in its capital or business structure, any merger or consolidation
of the Company, any issue of debt or equity securities having preferences or
priorities as to the Stock or the rights thereof, the dissolution or liquidation
of the Company, any sale or transfer of all or any part of its business or
assets, or any other corporate act or proceeding.

5.3 Cash Awards. The Committee may, at any time and in its discretion,
-----------
grant to any holder of a Stock Incentive the right to receive, at such times and
in such amounts as determined by the Committee in its discretion, a cash amount
which is intended to reimburse such person for all or a portion of the federal,
state and local income taxes imposed upon such person as a consequence of the
receipt of the Stock Incentive or the exercise of rights thereunder.

5.4 Compliance with Code. All Incentive Stock Options to be granted
--------------------
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all Incentive Stock Options granted hereunder shall be construed in
such manner as to effectuate that intent.

5.5 Right to Terminate Service. Nothing in the Plan or in any Stock
--------------------------
Incentive Agreement or Stock Incentive Program shall confer upon any Participant
the right to continue as an employee, officer or director of the Company or any
of its affiliates or affect the right of the Company or any of its affiliates to
terminate the Participant's service at any time.

5.6 Restrictions on Delivery and Sale of Shares; Legends. Each Stock
----------------------------------------------------
Incentive is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Stock Incentive upon any securities exchange or under
any state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Stock Incentive or the purchase or delivery
of shares thereunder, the delivery of any or all shares pursuant to such Stock
Incentive may be withheld unless and until such listing, registration or
qualification shall have been effected. If a registration statement is not in
effect under the Securities Act of 1933 or any applicable state securities laws
with respect to the shares of Stock purchasable or otherwise deliverable under
Stock Incentives then outstanding, the Committee may require, as a condition of
exercise of any Option or as a condition to any other delivery of Stock pursuant
to a Stock Incentive, that the Participant or other recipient of a Stock
Incentive represent, in writing, that the shares received pursuant to the Stock
Incentive are being acquired for investment and not with a view to distribution
and agree that the shares will not be disposed of except pursuant to an
effective registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such requirement under
the Securities Act of 1933 and any applicable state securities laws. The
Company may include on certificates representing shares delivered pursuant to a
Stock Incentive such legends referring to the

-13-
<PAGE>

foregoing representations or restrictions or any other applicable restrictions
on resale as the Company, in its discretion, shall deem appropriate.

5.7 Non-alienation of Benefits. Other than as specifically provided with
--------------------------
regard to the death of a Participant, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.

5.8 Termination and Amendment of the Plan. The Board of Directors at any
-------------------------------------
time may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. No such termination or
amendment without the consent of the holder of a Stock Incentive shall adversely
affect the rights of the Participant under such Stock Incentive.

5.9 Stockholder Approval. The Plan, as amended and restated, shall be
--------------------
submitted to the stockholders of the Company for their approval within twelve
(12) months before or after its adoption by the Board of Directors. If such
approval is not obtained, any Stock Incentive granted under the Plan as amended
and restated shall be void.

5.10 Choice of Law. The laws of the State of Georgia shall govern the
-------------
Plan, to the extent not preempted by federal law.

5.11 Effective Date of Plan. The Plan, as amended and restated, shall
----------------------
become effective upon the date the Plan is approved by the stockholders of the
Company.

MORRISON RESTAURANTS INC.

By:
----------------------------

Title:
-------------------------

Attest:

- --------------------------
Secretary

[CORPORATE SEAL]

-14-

<PAGE>

SECOND AMENDMENT TO THE
MORRISON RESTAURANTS INC. STOCK INCENTIVE
AND DEFERRED COMPENSATION PLAN FOR DIRECTORS

THIS SECOND AMENDMENT is made this ____ day of January, 1996, by Morrison
Restaurants Inc., a corporation duly organized and existing under the laws of
the State of Delaware (the "Company").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the Company maintains the Morrison Restaurants Inc. Stock
Incentive and Deferred Compensation Plan for Directors, which is currently
maintained under an amended and restated indenture which became effective as of
September 28, 1994 (the "Plan");

WHEREAS, pursuant to that certain plan of distribution approved and adopted
by the Board of Directors of the Company, the Company contemplates the
distribution to its stockholders of all of the outstanding shares of common
stock, respectively, of Morrison Fresh Cooking, Inc. and Morrison Health Care,
Inc. (the "Distributions");

WHEREAS, the Company desires to amend the Plan to clarify how the
Distributions will affect the payout of deferred compensation accounts
established under the Plan for eligible directors and the treatment of options
issued and outstanding under the Plan; and

WHEREAS, the Board of Directors of the Company has duly approved and
authorized this amendment to the Plan pursuant to the terms of that certain
Agreement respecting Employee Benefit Matters to which the Company, Morrison
Fresh Cooking, Inc. and Morrison Health Care, Inc. are parties;

NOW, THEREFORE, the Company does hereby amend the Plan, effective
immediately, as follows:

1. By deleting existing Section 1.1(f) in its entirety and by substituting
therefor the following:

"(f) `Company' means Morrison Restaurants Inc., a Delaware
-------
corporation, or its successor.

2. By deleting existing Section 1.1(r) in its entirety and by substituting
therefor the following:

"(r) `Plan' means the Morrison Restaurants Inc. Stock Incentive and
----
Deferred Compensation Plan for Directors; provided, however, if the
Company's Certificate of Incorporation is amended to change the name of the
Company, the Plan
<PAGE>

shall thereafter be formally titled using the new name of the Company
followed by the phrase `Stock Incentive and Deferred Compensation Plan for
Directors.'"

3. By adding a new final sentence to Section 3.2 as follows:

"For purposes of this Section 3.2, a Participant shall not suffer a
forfeiture of unvested shares and shall continue to vest in any such
unvested shares as if he or she remained on the Board of Directors for any
period of time following the effective date of the distributions of the
common stock of Morrison Fresh Cooking, Inc. (`MFCI') and of Morrison
Health Care, Inc. (`MHCI') to the stockholders of the Company (the
`Distribution') during which the Participant continuously serves as a
member of the board of directors of the Company, MFCI or MHCI."

4. By adding a new final sentence to Section 5.4 as follows:

"For purposes of this Section 5.4, a Participant shall not be considered to
have ceased to be a member of the Board of Directors for any period of time
following the effective date of the Distribution during which the
Participant continuously serves as a member of the board of directors of
the Company, MFCI or MHCI."

5. By deleting existing Section 7.1(a) in its entirety and by substituting
therefor the following:

"(a) The number of shares of Stock reserved with respect to Stock
Incentives, the number of shares of Stock reserved for issuance upon the
exercise of each outstanding Option and upon the vesting of each
outstanding Restricted Stock Award and the exercise price of each
outstanding Option shall be adjusted by the Committee for any increase or
decrease in the number of issued shares of Stock resulting from a
subdivision or combination of shares or for the payment of a stock dividend
(including, but not limited to, an extraordinary stock dividend such as a
spin-off) to holders of outstanding shares of Stock or for any other
increase or decrease in the number of shares of Stock outstanding effected
without receipt of consideration by the Company, with such adjustment to be
made in such manner as the Committee determines, in its sole discretion,
appropriately reflects the event."

6. By deleting existing Section 7.7 in its entirety and by substituting
therefor the following:

"7.7 `Choice of Law' The laws of the State of Georgia shall govern
-------------
the Plan, to the extent not preempted by federal law."

This Second Amendment shall be submitted to the stockholders of Company for
their approval and, if such approval is not obtained, the adoption of this
Second Amendment shall be deemed null and void and the Plan shall remain as in
effect immediately prior to this Second Amendment.

-2-
<PAGE>

Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to this Second Amendment.

IN WITNESS WHEREOF, the Company has caused this Second Amendment to be
executed on the day and year first above written.

MORRISON RESTAURANTS INC.

By: _________________________________________

Title: ______________________________________
ATTEST:

By: ___________________________

Title: ________________________

[CORPORATE SEAL]

A04319.0148
01963291

-3-

<PAGE>

FOURTH AMENDMENT TO THE
MORRISON RESTAURANTS INC. 1987 STOCK BONUS
AND NON-QUALIFIED STOCK OPTION PLAN

THIS FOURTH AMENDMENT is made this ____ day of January, 1996, by Morrison
Restaurants Inc., a corporation duly organized and existing under the laws of
the State of Delaware (the "Company").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the Company maintains the Morrison Restaurants Inc. 1987 Stock
Bonus and Non-Qualified Stock Option Plan (the "Plan");

WHEREAS, the Company desires to amend the Plan to clarify how the
Distributions will affect the treatment of options issued and outstanding under
the Plan; and

NOW, THEREFORE, the Company does hereby amend the Plan, effective
immediately, as follows:

1. By deleting the second paragraph of existing Section 4 in its entirety and
by substituting therefor the following:

"The total number of Shares reserved for issuance under this Plan and,
in the case of Shares subject to outstanding Options, the option price per
Share, shall be adjusted for any increase or decrease in the number of
outstanding shares resulting from the payment of a stock dividend
(including, but not limited to, an extraordinary stock dividend such as a
spin-off), from a subdivision or combination of Shares, from a
reclassification of the Shares or from any other increase or decrease in
the number of Shares outstanding effected without receipt of consideration
by the Company, with such adjustment to be made in such manner as the
Committee determines, in its sole discretion, appropriately reflects the
event."
<PAGE>

2. By adding a new final sentence to Section 6(j) as follows:

"For purposes of this Section 6, an Eligible Employee shall not be
considered to have suffered a termination of employment with the Company
for any period of time following the effective date of the distributions of
the common stock of Morrison Fresh Cooking, Inc. (`MFCI') and of Morrison
Health Care, Inc. (`MHCI') to the stockholders of the Company during which
the Eligible Employee continuously serves as an employee of the Company,
MFCI or MHCI."

3. By deleting existing Section 12 in its entirety and by substituting
therefor the following:

"12. Choice of Law.
-------------

This Plan shall be governed by the laws of the State of Georgia."

4. By deeming, in the event the Company's Certificate of Incorporation is
amended to change the name of the Company, the title of the Plan to be
thereafter the new name of the Company followed by the phrase "1987 Stock Bonus
and Non-Qualified Stock Option Plan."

This Fourth Amendment shall be submitted to the stockholders of Company for
their approval and, if such approval is not obtained, the adoption of this
Fourth Amendment shall be deemed null and void and the Plan shall remain as in
effect immediately prior to this Fourth Amendment.

Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to this Fourth Amendment.

IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to be
executed on the day and year first above written.

MORRISON RESTAURANTS INC.

By: _________________________________________

Title: ______________________________________
ATTEST:

By: ___________________________

Title: ________________________

[CORPORATE SEAL]

A04319.0148
01963302

-2-

<PAGE>

SECOND AMENDMENT TO THE
MORRISON RESTAURANTS INC. 1984
LONG TERM INCENTIVE PLAN

THIS SECOND AMENDMENT is made this ____ day of January, 1996, by Morrison
Restaurants Inc., a corporation duly organized and existing under the laws of
the State of Delaware (the "Company").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the Company maintains the Morrison Restaurants Inc. 1984 Long Term
Incentive Plan (the "Plan");

WHEREAS, the Company desires to amend the Plan to clarify how the
Distributions will affect the treatment of options issued and outstanding under
the Plan; and

NOW, THEREFORE, the Company does hereby amend the Plan, effective
immediately, as follows:

1. By deleting the existing first sentence of Section 1 and by substituting
therefor the following:

"This Long Term Incentive Plan (the `Plan') is intended to serve as an
incentive and to encourage stock ownership by selected employees of
Morrison Restaurants Inc. and its affiliates (collectively, the `Company')
so that such selected employees may acquire or increase their proprietary
interest in the Company and share in the success of the Company, and to
encourage them to remain in the employ of the Company. As used herein, the
term `Company' shall also include any successor in interest to Morrison
Restaurants Inc."

2. By adding a new final paragraph to Section 12 as follows:

"For purposes of this Section 12, a participant shall not be considered to
have suffered a termination of employment with the Company for any period
of time following the effective date of the distributions of the common
stock of Morrison Fresh Cooking, Inc. (`MFCI') and of Morrison Health Care,
Inc. (`MHCI') to the stockholders of the Company during which the Eligible
Employee continuously serves as an employee of the Company, MFCI or MHCI."

3. By deleting existing Section 18 in its entirety and by substituting
therefor the following:

"18. Change in Capitalization. In the event of reorganization,
------------------------
recapitalization, stock split, reverse stock split, stock dividend
(including, but not limited to, an extraordinary stock dividend such as a
spin-off), combination of shares, merger, consolidation or any change in
the capital structure of the Company (other than the creation of or an
increase in authorized securities of any class of the Company or the
issuance of securities of any class of the Company or of securities
convertible into such securities), the Committee shall make adjustments (a)
in the number of shares of Common Stock available for the granting of stock
<PAGE>

options under the Plan, (b) in the number of shares of Common Stock as to
which outstanding stock options (or the portions thereof) then unexercised
shall be exercisable, (c) in the option price per share, (d) in the number
of performance units available for issuance under the Plan and (e) in the
number of performance units outstanding, all in such manner as the
Committee determines, in its sole discretion, appropriately reflects the
event. The adjustment in outstanding stock options shall be made without
change in the total price applicable to the unexercised portion of the
stock options but with an appropriate adjustment in the option price per
share."

4. By deleting the word "Alabama" each time the same appears in Section 23 and
by substituting therefor the word "Georgia."

5. By deeming, in the event the Company's Certificate of Incorporation is
amended to change the name of the Company, the title of the Plan to be
thereafter the new name of the Company followed by the phrase "1984 Long Term
Incentive Plan."

Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to this Second Amendment.

IN WITNESS WHEREOF, the Company has caused this Second Amendment to be
executed on the day and year first above written.

MORRISON RESTAURANTS INC.

By: _________________________________________

Title: ______________________________________
ATTEST:

By: ___________________________

Title: ________________________

[CORPORATE SEAL]

A04319.0148
01963301

-2-

<PAGE>

MORRISON FRESH COOKING, INC.
1996 STOCK INCENTIVE PLAN
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SECTION 1 DEFINITIONS................................................... 1

1.1 Definitions.............................................. 1

SECTION 2 THE STOCK INCENTIVE PLAN...................................... 4

2.1 Purpose of the Plan...................................... 4
2.2 Stock Subject to the Plan................................ 4
2.3 Administration of the Plan............................... 4
2.4 Eligibility and Limits................................... 5

SECTION 3 TERMS OF STOCK INCENTIVES..................................... 5

3.1 Terms and Conditions of All Stock Incentives............. 5
3.2 Terms and Conditions of Options.......................... 7
(a) Option Price........................................ 7
(b) Option Term......................................... 7
(c) Payment............................................. 7
(d) Conditions to the Exercise of an Option............. 8
(e) Termination of Incentive Stock Option............... 8
(f) Special Provisions for Certain Substitute Options... 8
3.3 Terms and Conditions of Stock Appreciation Rights........ 8
(a) Payment............................................. 9
(b) Conditions to Exercise.............................. 9
3.4 Terms and Conditions of Stock Awards..................... 9
3.5 Terms and Conditions of Dividend Equivalent Rights....... 9
(a) Payment............................................. 9
(b) Conditions to Payment............................... 9
3.6 Terms and Conditions of Performance Unit Awards.......... 9
(a) Payment............................................. 10
(b) Conditions to Payment............................... 10
3.7 Terms and Conditions of Phantom Shares................... 10
(a) Payment............................................. 10
(b) Conditions to Payment............................... 10
3.8 Treatment of Awards Upon Termination of Service.......... 10

SECTION 4 RESTRICTIONS ON STOCK......................................... 11

4.1 Escrow of Shares......................................... 11
4.2 Forfeiture of Shares..................................... 11
4.3 Restrictions on Transfer................................. 11
</TABLE>

-i-
<PAGE>

<TABLE>
<C> <S> <C>
SECTION 5 GENERAL PROVISIONS............................................ 11

5.1 Withholding.............................................. 11
5.2 Changes in Capitalization; Merger; Liquidation........... 12
5.3 Cash Awards.............................................. 13
5.4 Compliance with Code..................................... 13
5.5 Right to Terminate Service............................... 13
5.6 Restrictions on Delivery and Sale of Shares; Legends..... 13
5.7 Non-alienation of Benefits............................... 13
5.8 Termination and Amendment of the Plan.................... 13
5.9 Stockholder Approval..................................... 14
5.10 Choice of Law............................................ 14
5.11 Effective Date of Plan................................... 14
</TABLE>

-ii-
<PAGE>

MORRISON FRESH COOKING, INC.
1996 STOCK INCENTIVE PLAN

SECTION 1 DEFINITIONS

(a) "Board of Directors" means the board of directors of the Company.
------------------

(c) "Change in Control" means any event that pursuant to the
-----------------
Company's Certificate of Incorporation, as amended from time to time, requires
the affirmative vote of the holders of not less than eighty percent (80%) of the
Voting Stock (as defined therein); provided, however, that no event shall
constitute a Change in Control if approved by the Board of Directors a majority
of whom are present directors and new directors. For purposes of the preceding
sentence, the term "present directors" means individuals who as of the date this
Plan is adopted were members of the Board of Directors and the term "new
directors" means any director whose election by the Board of Directors in the
event of vacancy or whose nomination for election was approved by a vote of at
least three-fourths of the directors then still in office who are present
directors and new directors; provided that any director elected to the Board of
Directors solely to avoid or settle a threatened or actual proxy contest shall
in no event be deemed to be a new director.

(d) "Code" means the Internal Revenue Code of 1986, as amended.
----

(e) "Committee" means the committee appointed by the Board of
---------
Directors to administer the Plan pursuant to Plan Section 2.3.

(f) "Company" means Morrison Fresh Cooking, Inc., a Georgia
-------
corporation.

-1-
<PAGE>

(i) "Dividend Equivalent Rights" means certain rights to receive cash
--------------------------
payments as described in Plan Section 3.5.

(k) "Incentive Stock Option" means an incentive stock option, as
----------------------
defined in Code Section 422, described in Plan Section 3.2.

(l) "Non-Qualified Stock Option" means a stock option, other than an
--------------------------
option qualifying as an Incentive Stock Option, described in Plan Section 3.2.

(m) "Option" means a Non-Qualified Stock Option or an Incentive Stock
------
Option.

(p) "Participant" means an individual who receives a Stock Incentive
-----------
hereunder.

-2-
<PAGE>

(q) "Performance Unit Award" refers to a performance unit award
----------------------
described in Plan Section 3.6.

(r) "Phantom Shares" refers to the rights described in Plan
--------------
Section 3.7.

(s) "Plan" means the Morrison Fresh Cooking, Inc. 1996 Stock
----
Incentive Plan. If the Company's Certificate of Incorporation is amended to
change the name of the Company, the Plan shall thereafter be formally titled
using the new name of the Company followed by the phrase "1996 Stock Incentive
Plan."

(t) "Stock" means the Company's common stock, $.01 par value.
-----

(u) "Stock Appreciation Right" means a stock appreciation right
------------------------
described in Plan Section 3.3.

(v) "Stock Award" means a stock award described in Plan Section 3.4.
-----------

(w) "Stock Incentive Agreement" means an agreement between the
-------------------------
Company and a Participant or other documentation evidencing an award of a Stock
Incentive.

(z) "Subsidiary" means any corporation (other than the Company) in an
----------
unbroken chain of corporations beginning with the Company if, with respect to
Incentive Stock Options, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

-3-
<PAGE>

SECTION 2 THE STOCK INCENTIVE PLAN

2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive
-------------------
to officers, employees and directors of the Company and its affiliates to
stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
officers, employees and directors by providing them with a means to acquire a
proprietary interest in the Company by acquiring shares of Stock or to receive
compensation which is based upon appreciation in the value of Stock; and (c)
provide a means of obtaining and rewarding key personnel.

2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
-------------------------
Section 5.2, 500,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At no time shall
the Company have outstanding Stock Incentives and shares of Stock issued in
respect of Stock Incentives in excess of the Maximum Plan Shares; for this
purpose, the outstanding Stock Incentives and shares of Stock issued in respect
of Stock Incentives shall be computed in accordance with Rule 16b-3(a)(1) as
promulgated under the Securities Exchange Act of 1934, as amended from time to
time. To the extent permitted by Rule 16b-3(a)(1) as promulgated under the
Securities Exchange Act of 1934, the shares of Stock attributable to the
nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of
any Stock Incentive that is forfeited or cancelled or expires or terminates for
any reason without becoming vested, paid, exercised, converted or otherwise
settled in full shall again be available for purposes of the Plan.

The Committee shall consist of at least two members of the Board of
Directors each of whom, during those periods that the Company is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, shall
qualify as a "disinterested person," as defined in Rule 16b-3 as promulgated
under the Securities Exchange Act of 1934 and as an "outside director," within
the meaning of Code Section

-4-
<PAGE>

162(m) and the regulations promulgated thereunder. The Board of Directors may
from time to time remove members from or add members to the Committee.
Vacancies on the Committee shall be filled by the Board of Directors.

2.4 Eligibility and Limits. Stock Incentives may be granted only to
----------------------
officers, employees and directors of the Company or an affiliate (including, but
not limited to, Morrison Restaurants Inc. and Morrison Health Care, Inc.);
provided, however, that directors who serve on the Committee shall not be
eligible to receive awards that are subject to Section 16 of the Securities
Exchange Act of 1934 while they are members of the Committee and that an
Incentive Stock Option may only be granted to an employee of the Company or any
Parent or Subsidiary. In the case of Incentive Stock Options, the aggregate
Fair Market Value (determined as at the date an Incentive Stock Option is
granted) of stock with respect to which stock options intended to meet the
requirements of Code Section 422 become exercisable for the first time by an
individual during any calendar year under all plans of the Company and its
Parents and Subsidiaries shall not exceed $100,000; provided further, that if
the limitation is exceeded, the Incentive Stock Option(s) which cause the
limitation to be exceeded shall be treated as Non-Qualified Stock Option(s). To
the extent required under Code Section 162(m) and regulations thereunder for
compensation to be treated as qualified performance-based compensation, the
maximum number of shares Stock with respect to which Options or Stock
Appreciation Rights may be granted during any single fiscal year of the Company
to any Participant who is a "covered employee," within the meaning of Code
Section 162(m) and the regulations promulgated thereunder (a "Covered
Employee"), shall not exceed 100,000.

SECTION 3 TERMS OF STOCK INCENTIVES

3.1 Terms and Conditions of All Stock Incentives.
--------------------------------------------

-5-
<PAGE>

Stock Incentive and has taken all such other action necessary to complete the
grant of the Stock Incentive.

(ii) Stock Awards and Phantom Shares shall be cashed out in an amount
equal to the Change in Control Price with or without regard to any conditions or
restrictions otherwise applicable to any such Stock Incentive; and

(f) Stock Incentives shall not be transferable or assignable except
by will or by the laws of descent and distribution and shall be exercisable,
during the Participant's lifetime, only by the Participant; in the event of the
Disability of the Participant, by the legal representative of the Participant;
or in the event of the death of the participant, by the personal representative
of the Participant's estate or if no personal representative has been appointed,
by the successor in interest determined under the Participant's will.

-6-
<PAGE>

(c) Payment. Payment for all shares of Stock purchased pursuant to
-------
exercise of an Option shall be made in any form or manner authorized by the
Committee in the Stock Incentive Agreement or by amendment thereto, including,
but not limited to, cash or, if the Stock Incentive Agreement provides, (i) by
delivery to the Company of a number of shares of Stock which have been owned by
the holder for at least six (6) months prior to the date of exercise having an
aggregate Fair Market Value of not less than the product of the Exercise Price
multiplied by the number of shares the Participant intends to purchase upon
exercise of the Option on the date of delivery; (ii) in a cashless exercise
through a broker; or (iii) by having a number of shares of Stock withheld, the
Fair Market Value of which as of the date of exercise is sufficient to satisfy
the Exercise Price. In its discretion, the Committee also may authorize (at
the time an Option is granted or thereafter) Company financing to assist the
Participant as to payment of the Exercise Price on such terms as may be offered
by the Committee in its discretion. Payment shall be made at the time that the
Option or any part thereof is exercised, and no shares shall be issued or
delivered upon exercise of an option until full payment has been made by the
Participant. The holder of an Option, as such, shall have none of the rights of
a stockholder.

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<PAGE>

3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
-------------------------------------------------
Appreciation Right granted under the Plan shall be evidenced by a Stock
Incentive Agreement. A Stock Appreciation Right may be granted in connection
with all or any portion of a previously or contemporaneously granted Stock
Incentive or not in connection with a Stock Incentive. A Stock Appreciation
Right shall entitle the Participant to receive the excess of (a) the Fair Market
Value of a specified or determinable number of shares of the Stock at the time
of payment or exercise over (b) a specified price (i) which, in the case of a
Stock Appreciation Right granted in connection with an Option, shall be not less
than the Exercise Price for that number of shares and (ii) which, in the case of
a Stock Appreciation Right that is granted to a Participant who is then a
Covered Employee, shall not be less than the Fair Market Value of the Stock at
the time of the award. A Stock Appreciation Right granted in connection with a
Stock Incentive may only be exercised to the extent that the related Stock
Incentive has not been exercised, paid or otherwise settled. The exercise of a
Stock Appreciation Right granted in connection with a Stock Incentive shall
result in a pro rata surrender or cancellation of any related Stock Incentive to
the extent the Stock Appreciation Right has been exercised.

-8-
<PAGE>

(b) Conditions to Exercise. Each Stock Appreciation Right granted under
----------------------
the Plan shall be exercisable or payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of a Stock Appreciation Right, the Committee, at any time before
complete termination of such Stock Appreciation Right, may accelerate the time
or times at which such Stock Appreciation Right may be exercised or paid in
whole or in part.

(a) Payment. Payment in respect of a Dividend Equivalent Right may
-------
be made by the Company in cash or shares of Stock (valued at Fair Market Value
on the date of payment) as provided in the Stock Incentive Agreement or, in the
absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Dividend Equivalent Right granted
---------------------
under the Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify in the
Stock Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Dividend Equivalent Right, the Committee, at any
time before complete termination of such Dividend Equivalent Right, may
accelerate the time or times at which such Dividend Equivalent Right may be paid
in whole or in part.

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<PAGE>

Stock Incentive Program. At the time of the grant, the Committee must determine
the base value of each unit, the number of units subject to a Performance Unit
Award, the performance factors applicable to the determination of the ultimate
payment value of the Performance Unit Award and the period over which Company
performance shall be measured. The Committee may provide for an alternate base
value for each unit under certain specified conditions.

3.8 Treatment of Awards Upon Termination of Service. Except as
-----------------------------------------------
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who suffers a Termination of Service may be cancelled, accelerated,
paid or continued, as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine. The portion of any award exercisable in the event of continuation or
the amount of any payment due under a continued award may be adjusted by the
Committee to reflect the Participant's period of service from the date of grant
through the date of the Participant's Termination of Service or such other
factors as the Committee determines are relevant to its decision to continue the
award.

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<PAGE>

SECTION 4 RESTRICTIONS ON STOCK

4.3 Restrictions on Transfer. The Participant shall not have the right
------------------------
to make or permit to exist any Disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the applicable Stock
Incentive Agreement or Stock Incentive Program. Any Disposition of the shares of
Stock issued under the Plan by the Participant not made in accordance with the
Plan or the applicable Stock Incentive Agreement or Stock Incentive Program
shall be void. The Company shall not recognize, or have the duty to recognize,
any Disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
shall continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.

SECTION 5 GENERAL PROVISIONS

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<PAGE>

Participant may pay the withholding tax in cash, or, if the applicable Stock
Incentive Agreement or Stock Incentive Program provides, a Participant may elect
to have the number of shares of Stock he is to receive reduced by, or with
respect to a Stock Award, tender back to the Company, the smallest number of
whole shares of Stock which, when multiplied by the Fair Market Value of the
shares of Stock determined as of the Tax Date (defined below), is sufficient to
satisfy federal, state and local, if any, withholding taxes arising from
exercise or payment of a Stock Incentive (a "Withholding Election"). A
Participant may make a Withholding Election only if both of the following
conditions are met:

(b) Any Withholding Election made will be irrevocable; however, the
Committee may in its sole discretion disapprove and give no effect to the
Withholding Election.

5.2 Changes in Capitalization; Merger; Liquidation.
----------------------------------------------

(b) In the event of any merger, consolidation, extraordinary dividend
(including a spin-off), reorganization or other change in the corporate
structure of the Company or its Stock or tender offer for shares of Stock, the
Committee, in its sole discretion, may make such adjustments with respect to
awards and take such other action as it deems necessary or appropriate to
reflect or in anticipation of such merger, consolidation, extraordinary
dividend, reorganization, other change in corporate structure or tender offer,
including, without limitation, the substitution of new awards, the termination
or adjustment of outstanding awards, the acceleration of awards or the removal
of restrictions on outstanding awards. Any adjustment pursuant to this Section
5.2 may provide, in the Committee's discretion, for the elimination without
payment therefor of any fractional shares that might otherwise become subject to
any Stock Incentive.

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<PAGE>

as to the Stock or the rights thereof, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of its business or assets, or
any other corporate act or proceeding.

5.7 Non-alienation of Benefits. Other than as specifically provided
--------------------------
with regard to the death of a Participant, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge; and any attempt to do so shall be void. No such
benefit shall, prior to receipt by the Participant, be in any manner liable for
or subject to the debts, contracts, liabilities, engagements or torts of the
Participant.

5.8 Termination and Amendment of the Plan. The Board of Directors at
-------------------------------------
any time may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of stockholders of the Company if such

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<PAGE>

approval is necessary or advisable with respect to tax, securities or other
applicable laws. No such termination or amendment without the consent of the
holder of a Stock Incentive shall adversely affect the rights of the Participant
under such Stock Incentive.

5.9 Stockholder Approval. The Plan shall be submitted to the
--------------------
stockholders of both Morrison Restaurants Inc. and Morrison Fresh Cooking, Inc.
for their approval within twelve (12) months before or after its adoption by the
Board of Directors. If such approval is not obtained, any Stock Incentive
granted under the Plan shall be void.

5.10 Choice of Law. The laws of the State of Georgia shall govern the
-------------
Plan, to the extent not preempted by federal law.

5.11 Effective Date of Plan. The Plan shall become effective upon the
----------------------
date the Plan is approved by the stockholders of Morrison Restaurants Inc. and
Morrison Fresh Cooking, Inc.

MORRISON FRESH COOKING, INC.

By:
--------------------------------

Title:
------------------------------
Attest:

- ------------------------------
Secretary

[CORPORATE SEAL]

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<PAGE>

MORRISON HEALTH CARE, INC.
1996 STOCK INCENTIVE PLAN
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SECTION 1 DEFINITIONS................................................... 1

1.1 Definitions.............................................. 1

SECTION 2 THE STOCK INCENTIVE PLAN...................................... 4

SECTION 3 TERMS OF STOCK INCENTIVES..................................... 5

SECTION 4 RESTRICTIONS ON STOCK......................................... 11

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<PAGE>

<TABLE>
<C> <S> <C>
SECTION 5 GENERAL PROVISIONS............................................ 11

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<PAGE>

MORRISON HEALTH CARE, INC.
1996 STOCK INCENTIVE PLAN

SECTION 1 DEFINITIONS

(a) "Board of Directors" means the board of directors of the Company.
------------------

(d) "Code" means the Internal Revenue Code of 1986, as amended.
----

(e) "Committee" means the committee appointed by the Board of
---------
Directors to administer the Plan pursuant to Plan Section 2.3.

(f) "Company" means Morrison Health Care, Inc., a Georgia
-------
corporation.

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<PAGE>

(i) "Dividend Equivalent Rights" means certain rights to receive cash
--------------------------
payments as described in Plan Section 3.5.

(k) "Incentive Stock Option" means an incentive stock option, as
----------------------
defined in Code Section 422, described in Plan Section 3.2.

(l) "Non-Qualified Stock Option" means a stock option, other than an
--------------------------
option qualifying as an Incentive Stock Option, described in Plan Section 3.2.

(m) "Option" means a Non-Qualified Stock Option or an Incentive Stock
------
Option.

(p) "Participant" means an individual who receives a Stock Incentive
-----------
hereunder.

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<PAGE>

(q) "Performance Unit Award" refers to a performance unit award
----------------------
described in Plan Section 3.6.

(r) "Phantom Shares" refers to the rights described in Plan
--------------
Section 3.7.

(s) "Plan" means the Morrison Health Care, Inc. 1996 Stock Incentive
----
Plan. If the Company's Certificate of Incorporation is amended to change the
name of the Company, the Plan shall thereafter be formally titled using the new
name of the Company followed by the phrase "1996 Stock Incentive Plan."

(t) "Stock" means the Company's common stock, $.01 par value.
-----

(u) "Stock Appreciation Right" means a stock appreciation right
------------------------
described in Plan Section 3.3.

(v) "Stock Award" means a stock award described in Plan Section 3.4.
-----------

(w) "Stock Incentive Agreement" means an agreement between the
-------------------------
Company and a Participant or other documentation evidencing an award of a Stock
Incentive.

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<PAGE>

SECTION 2 THE STOCK INCENTIVE PLAN

The Committee shall consist of at least two members of the Board of
Directors each of whom, during those periods that the Company is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, shall qualify
as a "disinterested person," as defined in Rule 16b-3 as promulgated under the
Securities Exchange Act of 1934 and as an "outside director," within the meaning
of Code Section

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<PAGE>

2.4 Eligibility and Limits. Stock Incentives may be granted only to
----------------------
officers, employees and directors of the Company or an affiliate (including, but
not limited to, Morrison Restaurants Inc. and Morrison Fresh Cooking, Inc.;
provided, however, that directors who serve on the Committee shall not be
eligible to receive awards that are subject to Section 16 of the Securities
Exchange Act of 1934 while they are members of the Committee and that an
Incentive Stock Option may only be granted to an employee of the Company or any
Parent or Subsidiary. In the case of Incentive Stock Options, the aggregate
Fair Market Value (determined as at the date an Incentive Stock Option is
granted) of stock with respect to which stock options intended to meet the
requirements of Code Section 422 become exercisable for the first time by an
individual during any calendar year under all plans of the Company and its
Parents and Subsidiaries shall not exceed $100,000; provided further, that if
the limitation is exceeded, the Incentive Stock Option(s) which cause the
limitation to be exceeded shall be treated as Non-Qualified Stock Option(s). To
the extent required under Code Section 162(m) and regulations thereunder for
compensation to be treated as qualified performance-based compensation, the
maximum number of shares Stock with respect to which Options or Stock
Appreciation Rights may be granted during any single fiscal year of the Company
to any Participant who is a "covered employee," within the meaning of Code
Section 162(m) and the regulations promulgated thereunder (a "Covered
Employee"), shall not exceed 100,000.

SECTION 3 TERMS OF STOCK INCENTIVES

3.1 Terms and Conditions of All Stock Incentives.
--------------------------------------------

-5-
<PAGE>

Stock Incentive and has taken all such other action necessary to complete the
grant of the Stock Incentive.

(i) Options shall be cashed out on the basis of the excess, if
any, of the Change in Control Price (but not more than the Fair Market Value of
the Stock on the date of the cash-out in the case of Incentive Stock Options)
over the Exercise Price with or without regard to whether the Option may
otherwise be exercisable only in part;

(f) Stock Incentives shall not be transferable or assignable except
by will or by the laws of descent and distribution and shall be exercisable,
during the Participant's lifetime, only by the Participant; in the event of the
Disability of the Participant, by the legal representative of the Participant;
or in the event of the death of the participant, by the personal representative
of the Participant's estate or if no personal representative has been appointed,
by the successor in interest determined under the Participant's will.

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<PAGE>

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<PAGE>

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<PAGE>

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<PAGE>

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<PAGE>

SECTION 4 RESTRICTIONS ON STOCK

4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set
--------------------
forth in any Stock Incentive Agreement or Stock Incentive Program, in the event
that the Participant violates a noncompetition agreement as set forth in the
Stock Incentive Agreement or Stock Incentive Program, all Stock Incentives and
shares of Stock issued to the holder pursuant to the Plan shall be forfeited;
provided, however, that the Company shall return to the holder the lesser of any
consideration paid by the Participant in exchange for Stock issued to the
Participant pursuant to the Plan or the then Fair Market Value of the Stock
forfeited hereunder.

SECTION 5 GENERAL PROVISIONS

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<PAGE>

(b) Any Withholding Election made will be irrevocable; however, the
Committee may in its sole discretion disapprove and give no effect to the
Withholding Election.

5.2 Changes in Capitalization; Merger; Liquidation.
----------------------------------------------

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<PAGE>

as to the Stock or the rights thereof, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of its business or assets, or
any other corporate act or proceeding.

-13-
<PAGE>

5.9 Stockholder Approval. The Plan shall be submitted to the
--------------------
stockholders of both Morrison Restaurants Inc. and Morrison Health Care, Inc.
for their approval within twelve (12) months before or after its adoption by the
Board of Directors. If such approval is not obtained, any Stock Incentive
granted under the Plan shall be void.

5.10 Choice of Law. The laws of the State of Georgia shall govern the
-------------
Plan, to the extent not preempted by federal law.

5.11 Effective Date of Plan. The Plan shall become effective upon the
----------------------
date the Plan is approved by the stockholders of Morrison Restaurants Inc. and
Morrison Health Care, Inc.

MORRISON HEALTH CARE, INC.

By:
---------------------------------

Title:
------------------------------
Attest:

- ----------------------------
Secretary

[CORPORATE SEAL]

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