FOODMAKER INC /DE/, 10-K, 1996-12-24

FOODMAKER INC /DE/
10-K, 1996-12-24
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
---------

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 29, 1996
------------------

COMMISSION FILE NUMBER 1-9390
-------------

FOODMAKER, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 95-2698708
- ------------------------- ---------------------------------
(State of incorporation) (IRS Employer Identification No.)

9330 Balboa Avenue, San Diego, CA 92123
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (619) 571-2121
--------------

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
- ---------------------------- -----------------------------------------
Common Stock, $.01 par value New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None

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

Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of December 13, 1996, computed by reference to the closing
price reported in the New York Stock Exchange-Composite Transactions, was
approximately $305.4 million.

Number of shares of common stock, $.01 par value, outstanding as of the
close of business December 13, 1996 - 38,846,945.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement to be filed with the Securities and Exchange
Commission in connection with the 1997 Annual Meeting of Stockholders are
incorporated by reference into Part III hereof.
<PAGE>
ITEM 1. BUSINESS
--------

The Company

Foodmaker, Inc. (the "Company") owns, operates and franchises JACK IN THE
BOX restaurants, a fast food chain located principally in the western and
southwestern United States. Until January 27, 1994, the Company also owned
Chi-Chi's, Inc. ("Chi-Chi's"), a chain of full-service, casual Mexican
restaurants located primarily in the midwestern and midatlantic United
States.

On January 27, 1994, Foodmaker, Apollo FRI Partners, L.P. ("Apollo") and
Green Equity Investors, L.P., whose general partner is Leonard Green &
Partners, acquired Restaurant Enterprises Group, Inc. ("REGI"), a company
that owned, operated and franchised various restaurant chains including El
Torito, Carrows and Coco's. Contemporaneously, REGI changed its name to
Family Restaurants, Inc. ("FRI"). Concurrently, Foodmaker contributed its
entire Chi-Chi's Mexican restaurant chain to FRI in exchange for a 39% equity
interest in FRI and other consideration. Pursuant to an agreement dated
November 20, 1995, Foodmaker transferred its entire equity interest in FRI to
Apollo and entered into a mutual release with the other principal
shareholders of FRI, as described in Note 2 to the consolidated financial
statements.

JACK IN THE BOX

Overview. JACK IN THE BOX is a leading regional competitor in the
fast-food segment of the restaurant industry with system-wide sales of
$1,229.0 million in 1996. At September 29, 1996, there were 1,270
JACK IN THE BOX restaurants, of which 879 were operated by the Company
and 391 were franchised.

Menu and marketing strategies for JACK IN THE BOX restaurants are
principally directed toward adult fast-food customers. JACK IN THE BOX
offers a wider menu selection than most of its major competitors
featuring foods that are not commonly offered in the fast-food hamburger
segment (such as the Chicken Teriyaki Bowl and Philly Cheesesteak), as well
as more traditional fast-food products (such as hamburgers and french fries).
The Company believes that a key competitive strength of JACK IN THE BOX is
its ability to introduce new and distinctive, high quality menu items that
appeal to the changing preferences of its adult guests.

JACK IN THE BOX was the first restaurant chain to develop and expand the
concept of drive-thru only restaurants, and drive-thru sales currently
account for more than 60% of the sales at Company-operated restaurants. Over
the years the JACK IN THE BOX concept has evolved to include more inside
seating in its restaurants. Most restaurants are located in freestanding
buildings with seating capacities ranging from 24 to 85 persons and are open
approximately 18 hours a day.

History. The first JACK IN THE BOX restaurant, which offered only
drive-thru service, opened in 1950, and the JACK IN THE BOX chain expanded its
operations to approximately 300 restaurants in 1968. After Ralston Purina
Company purchased the Company in 1968, JACK IN THE BOX underwent a major
expansion program in an effort to penetrate the eastern and midwestern
markets, and the business grew to over 1,000 units by 1979. In 1979, the
Company's management decided to concentrate its efforts and resources in the
western and southwestern markets, which it believed offered the greatest
growth and profit potential. Accordingly, the Company sold 232 restaurants
in the eastern and midwestern markets and redeployed the sale proceeds in its
western and southwestern markets where the Company had a well-established
market position and better growth prospects.

Operating Strategy. JACK IN THE BOX's operating strategy is to:
(i) increase per store average sales through the introduction and promotion of
distinctive, high quality menu items; (ii) focus on improving sales and
margins through increased emphasis on guest service, food quality and safety,
and cost management; and (iii) increase the number of JACK IN THE BOX
restaurants through the addition of Company-operated and franchise-developed
restaurants in JACK IN THE BOX's existing and contiguous markets.

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Food Strategy. JACK IN THE BOX's menu strategy is to provide a variety
of distinctive, high quality products that represent good value and appeal to
the changing preferences of its customers. The JACK IN THE BOX menu
features a wide variety of approximately 45-50 fast-food menu items,
including hamburgers, specialty sandwiches, salads, Mexican foods, finger
foods, breakfast foods, side items and desserts.

Management believes that JACK IN THE BOX's ability to develop new and
unique menu items has been a traditional strength of the Company. JACK IN
THE BOX continuously develops and tests new items for its menu and seeks to
improve existing products. New products are developed in a corporate test
kitchen and then introduced in one or more of Foodmaker's test restaurants
to ensure that product consistency, high quality standards and profitability
can be maintained and to determine preliminary guest response. Operating and
training systems have been developed that enable JACK IN THE BOX to respond
quickly to implement menu changes while achieving quality and profit
objectives. If a new item proves successful at the research and development
level, it is generally tested in selected markets, both with and without
marketing support, and if it proves successful, the item is incorporated into
the standard JACK IN THE BOX menu. JACK IN THE BOX has introduced over 50 new
products in the last ten years. In addition, JACK IN THE BOX pursues menu
strategies involving product reintroductions, limited-time only product
promotions and products which target the value segment of the business.

Hamburgers represent the largest segment of the fast-food industry;
accordingly, JACK IN THE BOX continues to offer hamburgers as principal menu
items. Hamburgers, including the Grilled Sourdough Burger and the Ultimate
Cheeseburger, accounted for approximately one quarter of JACK IN THE BOX's
fiscal 1996 sales. However, management believes that, as a result of its
diverse menu, JACK IN THE BOX restaurants are less dependent on the commercial
success of one or a few products than other fast-food chains, and that JACK
IN THE BOX's menu appeals to a broad range of food preferences.

Growth Strategy. The Company's goal is to achieve targeted levels of
media pressure in JACK IN THE BOX's existing major markets through the
construction of new restaurants primarily by the Company and, to a lesser
extent, by franchisees. The Company's current plan calls for opening
approximately 400-450 new Company-operated restaurants (approximately one-third
of the new development is expected to be on non-traditional sites) as well as
approximately 20 new franchise-operated restaurants over the next five years.
The Company has historically acquired and will continue to consider the
acquisition of existing restaurants for conversion to JACK IN THE BOX
restaurants.

The following table sets forth the growth in Company-operated and
franchised JACK IN THE BOX restaurants since the beginning of fiscal year 1992:

Fiscal year
--------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Company-operated restaurants:
Opened. . . . . . . . . . . 26 21 54 10 51
Sold to franchisees . . . . - (6) (4) (11) (18)
Closed. . . . . . . . . . . (15) (4) (9) (4) (4)
Acquired from franchisees . 5 42 44 10 7
Ending number . . . . . . . 879 863 810 725 720
Franchised restaurants:
Opened. . . . . . . . . . . 10 12 8 13 21
Acquired from Company . . . -- 6 4 11 18
Closed. . . . . . . . . . . (3) (1) (1) (2) (2)
Sold to Company . . . . . . (5) (42) (44) (10) (7)
Ending number . . . . . . . 391 389 414 447 435
System total. . . . . . . . . 1,270 1,252 1,224 1,172 1,155

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The following table summarizes the locations of the JACK IN THE BOX
restaurants at September 29, 1996:

Number of restaurants Number of restaurants
---------------------- -----------------------
Company- Company-
operated Franchised operated Franchised
-------- ---------- -------- ----------
Arizona. . . . . . 62 45 Texas. . . . . 270 56
California . . . . 377 241 Washington . . 69 --
Hawaii . . . . . . 27 2 China. . . . . -- 2
Idaho. . . . . . . 8 -- Egypt. . . . . -- 1
Illinois . . . . . 12 -- Hong Kong. . . -- 7
Louisiana. . . . . -- 5 Indonesia. . . -- 1
Missouri . . . . . 38 3 Mexico . . . . -- 10
Nevada . . . . . . 14 9 Philippines. . -- 4
New Mexico . . . . -- 2 Singapore. . . -- 1
Oregon . . . . . . 2 2 Total. . . . 879 391

Site selections for all new JACK IN THE BOX restaurants are made after an
extensive review of demographic data and other information relating to
population density, restaurant visibility and access, available parking,
surrounding businesses and opportunities for market concentration. JACK IN
THE BOX restaurants developed by franchisees are built to Company
specifications on sites which have been approved by the Company.

The Company currently uses several configurations in building new JACK IN
THE BOX restaurants. The largest restaurants seat 90 customers and
require a larger customer base to justify the required investment of
approximately $1.3 million, including land. The smallest restaurants seat
44 customers, require less land, and cost approximately $35,000 less to build
and equip than do the larger restaurants. Management believes that the
flexibility provided by the alternative configurations enables the Company to
match the restaurant configuration with specific demographic, economic and
geographic characteristics of the site.

Restaurant Operations. Significant resources are devoted to ensure that
all JACK IN THE BOX restaurants offer the highest quality food and
service. Emphasis is placed on ensuring that quality ingredients are
delivered to the restaurants, restaurant food production systems are
continuously developed and improved, and all employees are dedicated to
delivering consistently high quality food and service. Through its network
of corporate quality assurance, facilities services and restaurant management
personnel, including regional vice presidents, area managers and restaurant
managers, the Company standardizes specifications for the preparation and
service of its food, the maintenance and repair of its premises and the
appearance and conduct of its employees. Operating specifications and
procedures are documented in a series of manuals and video presentations.
Most restaurants, including franchised units, receive approximately 6 full
inspections and 26 limited reviews each year.

Each JACK IN THE BOX restaurant is operated by a Company-employed manager
or franchisee who normally receives a minimum of eight weeks of management
training. Foodmaker's management training program involves a combination of
classroom instruction and on-the-job training in specially designated
training restaurants. Restaurant managers and supervisory personnel train
other restaurant employees in accordance with detailed procedures and
guidelines prescribed by Foodmaker, utilizing training aids including video
equipment available at each location. The restaurant managers are directly
responsible for the operation of the restaurants, including product quality,
food handling safety, cleanliness, service, inventory, cash control and the
appearance and conduct of employees.

Restaurant managers are supervised by approximately 45 area managers, each
of whom is responsible for an average of 20 restaurants. The area managers are
under the supervision of 7 regional vice presidents who are supervised in
turn by a vice president of operations. Under the Company's performance
system, area and restaurant managers are eligible for quarterly bonuses based
on a percentage of location operating profit and regional vice presidents are
eligible for bonuses based on profit improvement and achievement of
established goals and objectives.

-3-

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JACK IN THE BOX's quality assurance program is designed to maintain high
standards for the food and materials and food preparation procedures used by
Company-operated and franchised restaurants. Foodmaker maintains product
specifications and approves sources for obtaining such products. The Company
has developed a comprehensive, restaurant-based Hazard Analysis & Critical
Control Points ("HACCP") system for managing food safety and quality. HACCP
combines employee training, testing by suppliers, and detailed attention
to product quality at every stage of the food preparation cycle. Products
are randomly inspected by the Company's quality assurance personnel as they
arrive at Foodmaker's distribution centers to ensure that they conform to
Foodmaker standards. These items then are distributed to individual
restaurants through a network of Company-operated delivery trucks.

Foodmaker provides purchasing, warehouse and distribution services for
both Company-operated and some franchised restaurants. In prior years,
most JACK IN THE BOX franchisees utilized these services to the full extent
available even though they were permitted to purchase products directly
from any approved source. Recently, JACK IN THE BOX franchisees formed a
purchasing cooperative and contracted with another supplier for distribution
services. This transition occurred during fiscal 1996 and has resulted in a
substantial decline in sales to franchisees. Some products, primarily dairy
and bakery items, are delivered to both Company-operated and franchised
restaurants directly by approved suppliers.

The primary commodities purchased by JACK IN THE BOX restaurants are beef,
poultry and produce. The Company monitors the current and future
prices and availability of the primary commodities purchased by the Company
in order to minimize the impact of fluctuations in price and availability,
and makes advance purchases of commodities when considered to be
advantageous. However, the Company remains subject to price fluctuations in
certain commodities. All essential food and beverage products are available,
or upon short notice can be made available, from alternative qualified
suppliers.

Foodmaker maintains centralized financial and accounting controls for
Company-operated JACK IN THE BOX restaurants which it believes are important
in analyzing profit margins. JACK IN THE BOX utilizes a specially designed
computerized reporting and cash register system on a Company-wide basis which
provides point-of-sale transaction data and accumulation of pertinent
marketing information. Sales data are collected and analyzed on a weekly
basis by management.

Franchising Program. JACK IN THE BOX's franchising strategy is directed
toward franchisee development of restaurants in existing non-primary markets
and selected primary markets. The Company offers development agreements for
construction of one or more new restaurants over a defined period of time and
in a defined geographic area. Multi-unit developers are required to prepay
one-half of the franchise fees for restaurants to be opened in the future and
may forfeit such fees and lose their rights to future developments if they do
not maintain the required schedule of openings. At present, most franchisees
operate no more than three restaurants. The Company's strategy is to grant
franchises in a smaller metropolitan area to a single franchisee in order to
achieve operating efficiencies and to grant franchises for a larger
metropolitan area to several franchisees in order to maximize development of
the area.

Another aspect of the franchising program has been the conversion of
existing Company-operated restaurants to franchised restaurants. Although
franchised units totaled 391 of JACK IN THE BOX's 1,270 restaurants at
September 29, 1996, the ratio of franchised to Company-operated restaurants
is still low relative to JACK IN THE BOX's major competitors. The Company
views its non-franchised JACK IN THE BOX units as a potential resource which,
on a selected basis, can be sold to a franchisee to generate additional
immediate cash flow and earnings while still maintaining future cash flows
and earnings through franchise rents and royalties.

JACK IN THE BOX's current franchise agreement provides for an initial
franchise fee of $50,000 (formerly $25,000) per restaurant. This agreement
generally provides for royalties of 5% (formerly 4%) of gross sales, a marketing
fee of 5% of gross sales (although some existing agreements provide for a 4%
rate) and a 20-year term. In connection with the conversion of a
Company-operated restaurant, the restaurant equipment and the right to do
business at that location, known as "Trading Area Rights," are sold to the
franchisee, in most cases for cash. The aggregate price is equal
to the negotiated fair market value of the restaurant as a going concern,
which depends on
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various factors including the history of the facility, its location and its cash
flow potential. In addition, the land and building are leased or subleased to
the franchisee at a negotiated rent, generally equal to the greater of a
minimum base rent or a percentage of gross sales (typically 8 1/2%). The
franchisee is required to pay property taxes, insurance and maintenance costs.

Advertising and Promotion. JACK IN THE BOX engages in substantial
marketing programs and activities. Advertising costs are paid from a fund
created by the marketing fees paid by franchisees together with an amount
contributed each year by the Company equal to at least 5% of the gross sales of
its Company-operated restaurants. JACK IN THE BOX's use of advertising media
is limited to regional and local campaigns both on spot television and radio
and in print media. JACK IN THE BOX does not advertise nationally.
JACK IN THE BOX spent approximately $60 million on advertising and promotions
in fiscal 1996, including franchisee contributions. JACK IN THE BOX's current
advertising campaign promotes new and established JACK IN THE BOX products on
an individual basis in a series of creative 30 second television and radio
spot advertisements. The Company also allocated $1.7 million in 1996 for
local marketing purposes. Franchisees are encouraged to, and generally do,
spend funds in addition to those expended by the Company for local marketing
programs.

Employees. At September 29, 1996, JACK IN THE BOX had approximately 24,800
employees, of whom 23,130 were restaurant employees, 420 were corporate
personnel, 300 were distribution employees and 950 were field management and
administrative personnel. Employees are paid on an hourly basis, except
restaurant managers, corporate and field management, and administrative
personnel. A majority of JACK IN THE BOX's restaurant employees are employed
on a part-time, hourly basis to provide services necessary during peak
periods of restaurant operations. JACK IN THE BOX has not experienced any
significant work stoppages and believes its labor relations are good.

JACK IN THE BOX competes in the job market for qualified employees and
believes its wage rates are comparable to those of its competitors.

Trademarks and Service Marks

The JACK IN THE BOX name is of material importance to the Company and is a
registered trademark and service mark in the United States and in certain
foreign countries. In addition, the Company has registered numerous service
marks and trademarks for use in its business, including the JACK IN THE BOX
logo, Breakfast Jack and Jumbo Jack names and Crescent Breakfast name and
design.

Competition and Markets

In general, the restaurant business is highly competitive and is affected
by competitive changes in a geographic area, changes in the public's eating
habits and preferences and local and national economic conditions affecting
consumer spending habits, population trends and traffic patterns. Key
competitive factors in the industry are the quality and value of the food
products offered, quality and speed of service, advertising, name
identification, restaurant location and attractiveness of facilities.

Each JACK IN THE BOX restaurant competes directly and indirectly with a
large number of national and regional chain operators as well as with
locally-owned fast-food restaurants and coffee shops. In selling franchises,
JACK IN THE BOX competes with many other restaurant franchisors, and some of
its competitors have substantially greater financial resources and higher total
sales volume.

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Regulation

Each Company-operated and franchised restaurant is subject to regulation by
federal agencies and to licensing and regulation by state and local health,
sanitation, safety, fire and other departments. Difficulties or failures in
obtaining any required licensing or approval could result in delays or
cancellations in the opening of new restaurants.

The Company is also subject to federal and a substantial number of state
laws regulating the offer and sale of franchises. Such laws impose registration
and disclosure requirements on franchisors in the offer and sale of
franchises and may also apply substantive standards, including limitations on
the ability of franchisors to terminate franchisees and alter franchise
arrangements, to the relationship between franchisor and franchisee. The
Company believes it is operating in substantial compliance with applicable
laws and regulations governing its operations.

The Company is subject to the Fair Labor Standards Act and various state
laws governing such matters as minimum wages, overtime and other working
conditions. A significant number of the Company's food service personnel are
paid at rates related to the federal and state minimum wage, and accordingly,
increases in the minimum wage increase the Company's labor costs.

In addition, various proposals which would require employers to provide
health insurance for all of their employees are being considered from
time-to-time in Congress and various states. The imposition of any
requirement that the Company provide health insurance to all employees would
have a material adverse impact on the consolidated operations and financial
condition of the Company and the restaurant industry.

The Company is subject to certain guidelines under the Americans with
Disabilities Act of 1990 and various state codes and regulations which
require restaurants to provide full and equal access to persons with physical
disabilities. To comply with such laws and regulations, the cost of
remodeling and developing restaurants has increased, principally due to the
need to provide certain older restaurants with ramps, wider doors, enlarged
restrooms and other conveniences.

The Company is also subject to various federal, state and local laws
regulating the discharge of materials into the environment. The cost of
developing restaurants has increased as a result of the Company's compliance
with such laws. Such costs relate primarily to the necessity of obtaining
more land, landscaping and below surface storm drainage and the cost of more
expensive equipment necessary to decrease the amount of effluent emitted into
the air and ground.

Cautionary Statements Regarding Forward-Looking Statements

The Company wishes to caution readers that the forward-looking statements
involve known and unknown risks and uncertainties which may cause the actual
results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by any forward-looking statements made by or on behalf of the
Company. In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company is filing the following
cautionary statements identifying important factors that in some cases have
affected, and in the future could cause, the Company's actual results to
differ materially from those expressed in any such forward-looking
statements.

In addition to factors discussed in this Form 10-K, among the other factors
that could cause the Company's results to differ materially are: the
effectiveness and cost of advertising and promotional efforts; the degree of
success of the Company's new and unique product offerings; weather
conditions; difficulties in obtaining ingredients and variations in
ingredient costs; the Company's ability to control operating,
general and administrative costs and to raise prices sufficiently to offset
cost increases; the Company's ability to recognize value from any current or
future co-branding efforts; competitive products and pricing and promotions;
the impact of any wide-spread negative publicity; the impact on consumer eating
habits of new scientific information regarding diet, nutrition and health;
competition for labor; general economic conditions; changes in consumer tastes
and in travel and dining-out habits; the impact on operations and the costs to
comply with laws and regulations and other activities of governing entities;

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<PAGE>
the costs and other effects of legal claims by franchisees, customers, vendors
and others, including settlement of those claims; and the effectiveness of
management strategies and decisions.

There can be no assurance that the Company or its franchisees, domestic and
international, will achieve growth objectives or that new restaurants will be
profitable. The opening and profitability of restaurants are subject to
various risk factors including the identification, availability and lease or
purchase terms of suitable sites, both traditional and non-traditional; the
ability of the Company and its franchisees to finance new restaurant
development;the ability to meet construction schedules, permitting and
regulatory compliance; and the sales and cost performance of the individual
new restaurants.

The growth of JACK IN THE BOX restaurants outside the United States is
subject to a number of additional factors. The Company has limited
experience with international franchise development. The growth and
profitability of international restaurants are subject to the financial,
development and operational capabilities of franchisees, the franchisees'
ability to develop a support structure and adequately support subfranchisees,
the franchisees' adherence to the Company's operational standards, as well as
currency regulations and fluctuations.

Because the Company's business is regional, with approximately 75% of its
company-operated and franchised restaurants located in the states of
California and Texas, the economic conditions and weather conditions
affecting those states may have a material impact upon the Company's results.
The Company has a substantial number of minimum wage employees and employees
who are paid at wage rates slightly above the minimum wage. As
federal and/or state minimum wage rates increase, the Company may need
to increase not only the wages of its minimum wage employees but also the
wages paid to the employees at wage rates which are above minimum wage. If
competitive pressures or other factors prevent the Company from offsetting
the increased costs by increases in prices, the Company's profitability may
decline.

The Company has been required under SFAS 109, because of operating losses
incurred over the past several years, to establish valuation allowances
against deferred tax assets recorded for net operating losses, tax credit
carryforwards and various other items. Until there is sufficient available
evidence that the Company will be able to realize such deferred tax assets
through future taxable earnings, the Company's tax provision will be highly
sensitive to the expected annual level of earnings, the impact of the
alternative minimum tax under the Internal Revenue Code and the limited
current recognition of the deferred tax assets. As a result of changing
expectations, the relationship of the Company's income tax provision to
pre-tax earnings will vary more significantly from quarter to quarter and
year to year than companies that have been continuously profitable. However,
the Company's effective tax rates are likely to increase in the future.

The Company is highly leveraged. Its substantial indebtedness may limit
the Company's ability to respond to changing business and economic conditions.
The contracts under which the Company acquired its debt impose significant
operating and financial restrictions which limit the Company's ability to
borrow money, sell assets or make capital expenditures or investments without
the approval of certain lenders. In addition to cash flows generated by
operations, other financing alternatives may be required in order to repay
the Company's substantial debt as it comes due. There can be no assurance that
the Company will be able to refinance its debt or obtain additional financing
or that any such financing will be on terms favorable to the Company.

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<PAGE>
ITEM 2. PROPERTIES
----------

At September 29, 1996, Foodmaker owned 538 JACK IN THE BOX restaurant
buildings, including 326 located on land covered by ground leases. In
addition, it leased 620 restaurants where both the land and building are
leased. Some of these restaurants are operated by franchisees. The
remaining lease terms of ground leases range from approximately one year to
49 years, including renewal option periods. The remaining lease terms of
Foodmaker's other leases range from approximately one year to 40 years,
including renewal option periods. In addition, at September 29, 1996,
franchisees directly owned or leased 112 restaurants.

Company- Franchise-
operated operated Total
restaurants restaurants restaurants
----------- ----------- -----------
Company-owned restaurant buildings:
On Company-owned land . . . . . . . . . . 141 71 212
On ground-leased land . . . . . . . . . . 277 49 326
Subtotal . . . . . . . . . . . . . . . . 418 120 538
Company-leased restaurant buildings
on leased land . . . . . . . . . . . . . 461 159 620
Franchise directly-owned or directly-leased
restaurant buildings. . . . . . . . . . . -- 112 112
--- --- -----
Total restaurant buildings. . . . . . . . . 879 391 1,270
=== === =====

The Company's leases generally provide for the payment of fixed rentals
(with cost-of-living index adjustments) plus real estate taxes, insurance and
other expenses; in addition, many of the leases provide for contingent rentals
of between 2% and 10% of the restaurant's gross sales. The Company has
generally been able to renew its restaurant leases as they expire at then
current market rates. At September 29, 1996, the leases had initial terms
expiring as follows:

Number of restaurants
---------------------
Years initial Land and
lease term Ground building
expires leases leases
--------- ------ --------
1997-2001. . . . . . . . . . . . . . . . . . . . 114 124
2002-2006. . . . . . . . . . . . . . . . . . . . 112 181
2007-2011. . . . . . . . . . . . . . . . . . . . 63 241
2012 and later . . . . . . . . . . . . . . . . . 37 74
--- ---
326 620
=== ===

In addition, the Company owns its principal executive offices in San Diego,
California, consisting of approximately 150,000 square feet.

The Company owns one warehouse and leases an additional seven with
remaining terms ranging from one year to 21 years, including renewal option
periods.

Substantially all the Company's real and personal property are pledged as
collateral for various components of the Company's long-term debt.

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<PAGE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
Various claims and legal proceedings are pending against the Company in a
federal court and in state courts in the state of Washington, seeking
monetary damages for personal injuries relating to the outbreak of food-borne
illness (the "Outbreak") attributed to hamburgers served at JACK IN THE BOX
restaurants. The Company, in consultation with its insurance carriers and
attorneys, does not anticipate that the total liability on all such lawsuits
and claims will exceed the coverage available under its applicable insurance
policies.

The Company is engaged in litigation with the Vons Companies, Inc. ("Vons")
and other suppliers seeking reimbursement for all damages, costs and expenses
incurred in connection with the Outbreak. The initial litigation was filed
by the Company on February 4, 1993. Vons has filed cross-complaints against
the Company and others alleging certain contractual, indemnification and tort
liabilities; seeking damages in unspecified amounts and a declaration of the
rights and obligations of the parties. The claims of the parties arise out
of two separate lawsuits which have been consolidated and are now set for
trial in the Los Angeles Superior Court, Los Angeles, California in July
1997.

On April 6, 1996 an action was filed by one of the Company's international
franchisees, Wolsey, Ltd., in the United States District Court in San Diego,
California against the Company and its directors, its international
franchising subsidiary, and certain officers of the Company and others. The
complaint alleges certain contractual, tort and law violations related to the
franchisees' development rights in the Far East and seeks damages in excess
of $25 million, injunctive relief, attorneys fees and costs. The Company has
successfully dismissed portions of the complaint, including the single claim
alleging wrongdoing by the Company's outside directors. Management believes
the remaining allegations are without foundation and intends to vigorously
defend the action.

On November 5, 1996 an action was filed by the "National JIB Franchisee
Association, Inc." (the "Association") and several of the Company's
franchisees in the Superior Court of California, County of San Diego in San
Diego, California, against the Company and others. The lawsuit alleges that
certain Company policies are unfair business practices and violate sections
of the California Corporations Code regarding material modifications of
franchise agreements and interfere with franchisees' right of association.
It seeks injunctive relief, a declaration of the rights and duties of the
parties, unspecified damages and recission of alleged material modifications
of plaintiffs' franchise agreements. The complaint also alleges fraud,
breach of a fiduciary duty and breach of a third party beneficiary contract
in connection with certain payments that the Company received from suppliers
and seeks unspecified damages, interest, punitive damages and an accounting.
Management believes that its policies are lawful and that it has satisfied
any obligation to its franchisees in regard to such supplier payments.

On December 10, 1996, a suit was filed by the Company's Mexican licensee,
Foodmex, Inc., in the United States District Court in San Diego, California
against the Company and its international franchising subsidiary. Foodmex
formerly operated several JACK IN THE BOX franchise restaurants in Mexico, but
its licenses were terminated by the Company for, among other reasons, chronic
insolvency and failure to meet operational standards. Foodmex's suit alleges
wrongful termination of its master license, breach of contract and unfair
competition and seeks an injunction to prohibit termination of its license as
well as unspecified monetary damages. The Company believes its termination of
the Foodmex license was proper, and that there is no merit to the Foodmex
claims. The Company intends to vigorously defend the action.

On February 2, 1995, an action by Christina Jorgensen was filed against the
Company in the U.S. District Court in San Francisco, California alleging that
restrooms at a JACK IN THE BOX restaurant failed to comply with laws
regarding disabled persons and seeking damages in unspecified amounts,
punitive damages, injunctive relief, attorneys fees and prejudment interest.
In an amended complaint damages are also sought on behalf of all physically
disabled persons who have been denied access to restrooms at the restaurant.
A motion has been filed, but has not been heard, to permit the lawsuit to
proceed as a class action and to include all Company-operated restaurants.

-9-

<PAGE>
legal proceedings, asserted legal claims and known potential legal claims which
are probable of assertion should not materially affect the consolidated
financial position of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter ended September 29, 1996.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
---------------------------------------------------------------------
The following table sets forth the high and low closing sales prices for
the common stock during the quarters indicated, as reported on the New York
Stock Exchange-Composite Transactions:

16 weeks ended 12 weeks ended
--------------------------------------------
Jan. 22, 1995 Apr. 16, 1995 July 9, 1995 Oct. 1, 1995
------------- ------------- ------------ ------------
High . . . . . 5 5/8 4 3/8 5 5/8 6 7/8
Low. . . . . . 3 7/8 3 3/8 3 7/8 5 1/4

16 weeks ended 12 weeks ended
----------------------------------------------
Jan. 21, 1996 Apr. 14, 1996 July 7, 1996 Sept. 29, 1996
------------- ------------- ------------ --------------
High . . . . . 6 1/8 7 3/4 8 7/8 10 1/8
Low. . . . . . 5 5 7/8 6 7/8 6 3/4

Foodmaker has not paid any cash or other dividends (other than the
issuance of the Rights) during its last two fiscal years and does not anticipate
paying dividends in the foreseeable future. The Company's credit agreements
prohibit and its public debt instruments restrict the Company's right to
declare or pay dividends or make other distributions with respect to shares of
its capital stock.

As of September 29, 1996, there were approximately 800 holders of record.

-10-

<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The selected data presented in the following table summarizes certain
consolidated financial information concerning the Company and is derived from
financial statements which have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. Chi-Chi's results of operations
are included through January 27, 1994, the date of Chi-Chi's sale. The
capital structure changed as the result of the 1992 recapitalization of the
Company. The Company's fiscal year is 52 or 53 weeks, ending the Sunday
closest to September 30.

52 weeks 52 weeks 52 weeks 53 weeks 52 weeks
ended ended ended ended ended
Statement of Operations Data: 9/26/95 10/1/95 10/2/94 10/3/93 9/27/92
- ----------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues:
Restaurant sales. . . . . . . . . . $ 892,029 $ 804,084 $ 843,038 $1,088,269 $1,061,904
Distribution sales. . . . . . . . . 132,421 179,689 171,711 108,546 104,041
Franchise rents and royalties . . . 34,048 32,530 33,740 35,232 38,803
Other revenues. . . . . . . . . . . 4,324 2,413 4,837 8,680 14,585
---------- ---------- ---------- ---------- ----------
Total revenues. . . . . . . . . . . 1,062,822 1,018,716 1,053,326 1,240,727 1,219,333
---------- ---------- ---------- ---------- ----------
Costs of revenues (1) . . . . . . . . 919,211 903,479 950,952 1,147,157 1,018,330
Equity in loss of FRI (2) . . . . . . -- 57,188 2,108 -- --
Selling, general and administrative
expenses (3) . . . . . . . . . . . . 72,134 78,044 78,323 102,183 89,834
Interest expense. . . . . . . . . . . 46,126 48,463 55,201 57,586 72,455
---------- ---------- ---------- ---------- ----------
Earnings (loss) before income taxes
(benefit), extraordinary item, and
cumulative effect of changes in
accounting principles. . . . . . . . 25,351 (68,458) (33,258) (66,199) 38,714
Income taxes (benefit). . . . . . . . 5,300 500 3,010 (22,071) 16,818
---------- ---------- ---------- ---------- ----------
Earnings (loss) before extraordinary
item and cumulative effect of
changes in accounting principles . . 20,051 (68,958) (36,268) (44,128) 21,896
Extraordinary item - loss on early
extinguishment of debt, net of
income taxes . . . . . . . . . . . . -- -- (3,302) -- (63,651)
Cumulative effect on prior years of
adopting SFAS 106 and SFAS 109 . . . -- -- -- (53,980) --
---------- ---------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . . $ 20,051 $ (68,958) $ (39,570) $ (98,108) $ (41,755)
========== ========== ========== ========== ==========
Earnings (loss) per share before
extraordinary item and cumulative
effect of changes in accounting
principles . . . . . . . . . . . . . $ .51 $ (1.77) $ (.94) $ (1.15) $ .67
Earnings (loss) per share . . . . . . $ .51 $ (1.77) $ (1.03) $ (2.55) $ (1.28)

Balance Sheet Data (at end of period):
- -------------------------------------
Current assets. . . . . . . . . . . . $ 96,476 $ 97,889 $ 107,486 $ 93,534 $ 106,311
Current liabilities . . . . . . . . . 147,063 132,017 140,238 202,194 153,851
Total assets. . . . . . . . . . . . . 653,638 662,674 740,285 897,280 915,487
Long-term debt. . . . . . . . . . . . 396,340 440,219 447,822 500,460 501,083
Stockholders' equity. . . . . . . . . 51,384 31,253 100,051 139,132 246,933
- -------------------------------------
<FN>
<F1> Reflects a provision of $44.5 million for the year ended October 3, 1993 to cover franchisee settlements
and associated costs related to the Outbreak of food-borne illness.
<F2> Reflects the complete write-off of the Company's $57.2 million investment in Family Restaurants, Inc.
for the year ended October 1, 1995.
<F3> Includes the recognition of an $8 million stockholders' lawsuit settlement for the year ended October 1,
1995.
</FN>
</TABLE>

-11-

<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------

Results of Operations

All comparisons under this heading between 1996, 1995 and 1994 refer to
the 52-week periods ended September 29, 1996, October 1, 1995 and October 2,
1994, respectively, unless otherwise indicated. On January 27, 1994, the
Company contributed its entire Chi-Chi's Mexican restaurant chain to FRI in
exchange for a 39% equity interest in FRI and other consideration, including
cash, debt assumption and a warrant to acquire additional shares as described
in Note 2 to the consolidated financial statements. The 1996 and 1995
consolidated statements of operations, therefore, do not include Chi-Chi's
results of operations and 1994 only includes Chi-Chi's for the first fiscal
quarter, while it was a subsidiary of the Company.

Revenues

JACK IN THE BOX Company-operated restaurant sales were $892.0 million,
$804.1 million and $719.8 million in 1996, 1995 and 1994, respectively. The
sales improvements from the prior year of $87.9 million, or 10.9%, in 1996
and $84.3 million, or 11.7%, in 1995 reflect increases in both per store
average sales and in the average number of restaurants. Per store average
("PSA") sales for comparable restaurants increased compared to the prior year
7.2% in 1996 and 3.5% in 1995. Sales improved under the Company's two-tier
marketing strategy offering customers premium sandwiches and hamburgers as well
as value-priced product alternatives and which features a compelling
advertising campaign. The average number of Company-operated restaurants were
868, 839 and 761 in 1996, 1995 and 1994, respectively. Chi-Chi's restaurant
sales were $123.2 million in the first quarter of 1994.

Distribution sales of food and supplies were $132.4 million, $179.7
million and $171.7 million in 1996, 1995 and 1994, respectively.
Distribution sales to franchise-operated restaurants decreased $31.3 million
to $67.3 million in 1996 from $98.6 million in 1995 as JACK IN THE BOX
franchisees transitioned to their recently-formed purchasing cooperative
which contracts with another supplier for distribution services. Most
franchisees have elected to participate in the cooperative, which has and
will result in a substantial decline in distribution sales. The loss of
these extremely low profit margin sales is not expected to have a material
effect on the profits of the Company. Distribution sales to FRI and others
have also declined $16.0 million to $65.1 million in 1996 from $81.1 million
in 1995. The $8.0 million sales improvement in 1995 as compared to 1994 is
primarily due to recording sales to Chi-Chi's restaurants in the first
quarter of 1995 and excluding them as intercompany sales in the same quarter
of 1994 since Chi-Chi's was a subsidiary of the Company at that time.

JACK IN THE BOX franchise rents and royalties were $34.0 million, $32.5
million and $33.6 million in 1996, 1995 and 1994, respectively, at just
slightly more than 10% of sales of franchise-operated restaurants in each of
those years. Franchise restaurant sales increased approximately 5% to $337.0
million in 1996 from $319.6 million in 1995, principally due to PSA sales
increases at domestic franchise-operated restaurants, which were also helped
by the marketing initiatives that contributed to sales improvements at
Company-operated restaurants. Franchise restaurant sales declined
approximately 3% in 1995 from $330.1 million in 1994, as PSA sales increases
in 1995 were insufficient to offset a 6.5% decrease in the average number of
franchise-operated restaurants due to the Company's acquisition from
franchisees of 42 restaurants in 1995 and 44 restaurants in 1994. Chi-Chi's
franchise rents and royalties were $.1 million in the first quarter of 1994.

JACK IN THE BOX other revenues, which include interest income on
investments and notes, as well as franchise development fees, were $4.3
million, $2.4 million and $4.3 million in 1996, 1995 and 1994, respectively.
Other revenues were greater in 1996 and 1994 principally due to interest
earned on higher levels of invested cash in those years. Chi-Chi's other
revenues were $.5 million in the first quarter of 1994.

Costs and Expenses

JACK IN THE BOX restaurant costs of sales, which include food and
packaging costs, were $291.0 million, $258.6 million and $234.3 million in
1996, 1995 and 1994, respectively. As a percent of restaurant sales, cost of
sales were
-12-

<PAGE>
32.6% in 1996, 32.2% in 1995 and 32.6% in 1994. Restaurant costs
of sales percentages increased in 1996 compared to 1995 principally due to
higher packaging costs and declined in 1995 compared to 1994 principally due
to favorable ingredient costs. Chi-Chi's restaurant costs of sales were
$32.7 million in the first quarter of 1994.

JACK IN THE BOX restaurant operating costs were $478.0 million, $447.2
million and $414.6 million in 1996, 1995 and 1994, respectively. As a
percent of restaurant sales, operating costs were 53.6% in 1996, 55.6% in
1995 and 57.6% in 1994, declining each year principally due to labor
efficiencies and lower percentages of occupancy and other operating expenses.
While occupancy and other operating expenses increase with the addition of
each new restaurant, such expenses for existing restaurants have increased at
a slower rate than the increase in PSA restaurant sales. Chi-Chi's
restaurant operating costs were $80.7 million in the first quarter of 1994.

Costs of distribution sales were $130.2 million in 1996, $175.7 million
in 1995 and $165.8 million in 1994, reflecting the changes in distribution
sales. Costs of distribution sales have increased as a percent of
distribution sales to 98.4% in 1996 from 97.8% in 1995 and 96.6% in 1994.
Decreases in distribution margins are due primarily to the effect of the loss
of franchise business and declining sales to Chi-Chi's.

JACK IN THE BOX franchised restaurant costs, which consist principally
of rents and depreciation on properties leased to franchisees and other
miscellaneous costs, were $20.0 million, $21.9 million and $22.7 million in
1996, 1995 and 1994, respectively. The decline in such costs reflects a
decrease in the average number of franchise-operated restaurants to 388 in
1996 from 395 in 1995 and 423 in 1994. Chi-Chi's franchised restaurant costs
were $.1 million in the first quarter of 1994.

JACK IN THE BOX selling, general and administrative expenses were $72.1
million, $78.0 million and $69.2 million in 1996, 1995 and 1994,
respectively. Advertising and promotion costs have declined progressively as
a percent of restaurant sales to 5.3% in 1996 from 5.6% in 1995 and 6.0% in
1994, as the Company reduced its extra contributions to the marketing fund and
its use of local promotions. In 1996 the Company received from suppliers
cooperative advertising funds of $4.8 million, or 0.5% of revenues, which
formerly had been contributed directly to the marketing fund. In 1995
general, administrative and other costs include an $8.0 million litigation
settlement with stockholders and a $1.9 million gain on the curtailment of
postretirement benefits, a net increase to such expenses of $6.1 million, or
0.6% of revenues. Excluding the above items, general, administrative and
other costs as a percent of revenues were approximately 2.8% of revenues in
each year. Chi-Chi's selling, general and administrative expenses were
$9.1 million in the first quarter of 1994.

Interest expense was $46.1 million, $48.5 million and $55.2 million in
1996, 1995 and 1994, respectively. Interest expense decreased from the prior
year by $2.4 million in 1996 and $6.7 million in 1995, principally due to a
reduction in total debt outstanding and lower other financing costs. Total
debt at September 29, 1996 was $398.2 million compared to $533.6 million at
the beginning of fiscal year 1994. Interest expense in 1996 reflects
interest savings associated with the early retirement of $42.8
million of the Company's 14 1/4% senior subordinated notes, due in May 1998.
With the sale of Chi-Chi's in 1994, the Company eliminated Chi-Chi's debt and
used proceeds from the sale to repay the bank credit line, the 13 1/2% senior
notes and the 12 3/4% senior notes.

The 1996 tax provision reflects the effective annual tax rate of 21% of
pretax earnings. The low effective annual income tax rate results from the
Company's ability to realize previously unrecognized tax benefits. Although
the Company incurred a loss in 1995, income taxes of $.5 million were
provided due to required minimum taxes and the Company's inability to
recognize the benefit from the carryover of losses to future years under
Statement of Financial Accounting Standards ("SFAS") 109, Accounting for
Income Taxes. Considering the sale of Chi-Chi's combined with the Company's
losses, the rules under SFAS 109 required the Company to provide in 1994 a
non-cash valuation allowance of approximately $14.0 million for previously
recognized tax benefits, resulting in income tax expense of $3.0 million in
1994, rather than a tax benefit related to the pretax loss.

In 1994 the Company incurred an extraordinary loss of $5.1 million, less
income tax benefits of $1.8 million, on the early extinguishment of senior
notes and the debt outstanding under its then existing bank credit facility,
which was then terminated.

-13-

<PAGE>
Liquidity and Capital Resources

Cash and cash equivalents increased $6.1 million to $42.0 million at
September 29, 1996 from $35.9 million at the beginning of the fiscal year.
The cash increase reflects cash flow from operations of $84.1 million in
1996, principal payments on debt of $44.7 million and capital expenditures of
$33.2 million.

The Company's working capital deficit increased $16.5 million to $50.6
million at September 29, 1996 from $34.1 million at the end of 1995,
principally due to increases in insurance, advertising and payroll
liabilities and a decline in accounts receivable as franchisees transitioned
to another distributor and repaid other obligations to the Company. The
Company, and the restaurant industry in general, maintain relatively low
levels of receivables and inventories and vendors grant trade credit for
purchases such as food and supplies. The Company also continually invests in
its business through the addition of new units and refurbishment of existing
units, which are reflected as long-term assets and not as part of working
capital.

Total debt outstanding declined $43.9 million to $398.2 million at
September 29, 1996 from $442.1 million at October 1, 1995. On May 15, 1996,
the Company used $43.5 million of available cash to prepay the 14 q% senior
subordinated notes due in May 1998.

The Company's revolving bank credit agreement, which was amended and
restated March 15, 1996, expires December 31, 1998 and provides for a credit
facility of up to $60 million, including letters of credit of up to $25
million. At September 29, 1996, the Company had no borrowings and
approximately $50.9 million of unused credit under the agreement. The
Company is subject to a number of covenants under its various credit
agreements including limitations on additional borrowings, capital
expenditures, lease commitments and dividend payments, and requirements to
maintain certain financial ratios, cash flows and net worth. Substantially
all of the Company's real estate and machinery and equipment is pledged to
its lenders under the credit agreement and other secured notes.

The Company's primary sources of liquidity are expected to be cash flows
from operations, the revolving bank credit facility, and the sale and
leaseback of restaurant properties. An additional potential source of
liquidity is the conversion of Company-operated restaurants to franchised
restaurants. The Company requires capital principally to grow the business
through new restaurant construction, as well as to maintain, improve and
refurbish existing restaurants, and for general operating purposes.

Based upon current levels of operations and anticipated growth, the
Company expects that sufficient cash flows will be generated from operations
so that, combined with other financing alternatives available, including
utilization of cash on hand, the bank credit facility and the sale and
leaseback of restaurants, the Company will be able to meet all of its debt
service, capital expenditure and working capital requirements.

On August 7, 1992, the Board of Directors of the Company authorized the
purchase of up to 2 million shares of the Company's outstanding common stock
in the open market, for an aggregate amount not to exceed $20 million. At
September 29, 1996, the Company had acquired 1,412,654 shares for an
aggregate cost of $14.5 million, none of which were acquired in 1996.

Seasonality

The Company's restaurant sales and profitability are subject to seasonal
fluctuations and are traditionally higher during the spring and summer months
because of factors such as increased travel and improved weather conditions
which affect the public's dining habits.

-14-

<PAGE>
New Accounting Standards

In March 1995, the Financial Accounting Standards Board issued SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of, effective for fiscal years beginning after December 15,
1995. SFAS 121 requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. SFAS 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company does not
believe, based on current circumstances, the effect of adoption of SFAS 121
will be material.

In October 1995, the Financial Accounting Standards Board issued SFAS 123,
Accounting for Stock-Based Compensation, effective for fiscal years beginning
after December 15, 1995. SFAS 123 establishes the fair value based method of
accounting for stock-based compensation arrangements, under which
compensation cost is determined using the fair value of the stock option at
the grant date and the number of options vested, and is recognized over the
periods in which the related services are rendered. The Company plans to
retain its current intrinsic value based method, as allowed by SFAS 123, and
will be required to disclose the pro forma effect of adopting the fair value
based method.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------

The consolidated financial statements and related financial information
required to be filed are indexed on page F-1 and are incorporated herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------

Not applicable.

-15-

<PAGE>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------

The following table provides certain information about each of the
Company's current directors and executive officers as of January 1, 1997:

Name Age Position with the Company(6)
---- --- ----------------------------
Robert J. Nugent(1) 55 President, Chief Executive Officer and
Director
Charles W. Duddles 56 Executive Vice President, Chief
Financial Officer, Chief Administrative
Officer and Director
Kenneth R. Williams 54 Executive Vice President, Marketing and
Operations
Lawrence E. Schauf 51 Executive Vice President, Corporate
Counsel and Corporate Secretary
William E. Rulon 64 Senior Vice President
Donald C. Blough 48 Vice President, Management Information
Systems
Bruce N. Bowers 50 Vice President, Purchasing and
Distribution
Carlo E. Cetti 52 Vice President, Human Resources and
Strategic Planning
Bradford R. Haley 38 Vice President, Marketing
Communications
William F. Motts 53 Vice President, Restaurant Development
Paul L. Schultz 42 Vice President, Operations
David M. Theno, Ph.D. 46 Vice President, Quality Assurance,
Research and Development and
Product Safety
Linda A. Vaughan 38 Vice President, New Products and
Promotions
Darwin J. Weeks 50 Vice President, Controller and
Chief Accounting Officer
Jack W. Goodall(1)(3) 58 Chairman of the Board
Michael E. Alpert 54 Director
Paul T. Carter(2) 74 Director
Edward Gibbons(1)(2)(3)(4)(5) 60 Director
Leonard I. Green(2)(3)(4)(5) 63 Director
L. Robert Payne(2)(5) 63 Director
Christopher V. Walker 50 Director
- ----------------------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Stock Option Committee.
(5) Member of the Investment Committee.
(6) Directors and officers are elected annually. Each director and officer
holds his office until his successor has been elected and qualified or
until he resigns or is removed.

-16-

<PAGE>
Mr. Nugent has been President and Chief Executive Officer of the Company
since April 1996. He was Executive Vice President of the Company from
February 1985 to April 1996 and President and Chief Operating Officer of the
JACK IN THE BOX Division of the Company from May 1988 to April 1996. He has
been a director since February 1988.

Mr. Duddles has been Executive Vice President and Chief Administrative
Officer of the Company since May 1988. He has been Chief Financial Officer
of the Company since October 1985 and was Senior Vice President from October
1985 to May 1988. He was previously Vice President and Controller of the
Company from August 1979 to July 1981 and Senior Vice President, Finance and
Administration from August 1981 to October 1985. He has been a director
since February 1988.

Mr. Williams has been Executive Vice President of the Company since
May 1996. He was Senior Vice President of the Company from January 1993 to
May 1996 and Executive Vice President of Marketing and Operations,
JACK IN THE BOX Division from November 1994 to May 1996. He was Executive
Vice President of Operations, JACK IN THE BOX Division from May 1988 until
November 1994. He was temporarily President and Chief Executive Officer of
Chi-Chi's from June 1992 to January 1993. He was previously Vice President
of the Company and Vice President, Operations-Division I from January 1985
to May 1988.

Mr. Schauf has been Executive Vice President, Corporate Counsel and
Corporate Secretary of the Company since August 1996. Prior to joining
Foodmaker he was Senior Vice President, General Counsel and Secretary of
Wendy's International, Inc. from February 1991 to August 1996. He was
previously Vice President, General Counsel and Secretary of Wendy's
International, Inc. from September 1987 to February 1991.

Mr. Rulon has been Senior Vice President of the Company since October 1985.
He was Secretary of the Company from October 1985 to August 1996 and was
previously Secretary and Treasurer of the Company from March 1976 to July
1981 and Senior Vice President, Secretary and Treasurer from July 1981 to
October 1985. Mr. Rulon is also a trustee of Income Managers Trust,
Neuberger & Berman Income Funds and Neuberger & Berman Income Trust.

Mr. Blough has been Vice President, Management Information Systems of the
Company since August 1993 and was previously Division Vice President, Systems
Development from June 1990 to August 1993 and Director of Systems Development
and POS Support from December 1984 to June 1990.

Mr. Bowers has been Vice President, Purchasing and Distribution of the
Company, since April 1982 and previously held various other positions with
the Company relating to manufacturing, purchasing and distribution from
September 1975 to April 1982.

Mr. Cetti has been Vice President, Human Resources and Strategic Planning
of the Company since March 1994. He was previously Vice President, Training
and Risk Management, from December 1992 to March 1994, Division Vice President,
Training and Risk Control from October 1991 to December 1992 and Director of
Management and Franchise Training from April 1981 to October 1991.

Mr. Haley has been Vice President of the Company and Vice President of
Marketing Communications of JACK IN THE BOX Division since February 1995. He
was previously Division Vice President, Marketing Communications from October
1992 until February 1995. Prior to joining Foodmaker, he was a marketing
consultant, principally on the development of new retail food products, from
November 1991 to October 1992.

Mr. Motts has been Vice President of the Company and Vice President of
Restaurant Development of JACK IN THE BOX Division since September 1988. He
was Division Vice President, Restaurant Construction from August 1984 through
August 1988 and was Director, Restaurant Construction from April 1983 to
August 1984.

Mr. Schultz has been Vice President of the Company since May 1988 and Vice
President of Operations, JACK IN THE BOX Division since November 1994. He
was Vice President of Domestic Franchising, JACK IN THE BOX Division from
October 1993 until November 1994. He was previously Vice President of JACK
IN THE BOX
-17-

<PAGE>
Operations-Division I from May 1988 to October 1993, temporarily Vice President
of JACK IN THE BOX Operations and Domestic Franchising from June 1992 to January
1993, Regional Manager of Los Angeles from August 1985 to May 1988.

Dr. Theno has been Vice President, Quality Assurance, Research and
Development and Product Safety of the Company since April 1994. He was Vice
President, Quality Assurance and Product Safety from March 1993 to April
1994. Prior to joining Foodmaker, he was previously Managing Director and
Chief Executive Officer of Theno & Associates, Inc., an agribusiness
consulting firm, from January 1990 to March 1993 and Director of Technical
Services for Foster Farms from March 1982 to December 1989.

Ms. Vaughan has been Vice President, New Product and Promotions of the
Company since February 1996. She was Division Vice President, New Products
and Promotions from November 1994 until February 1996. Previously, she was
Manager, Product Marketing from October 1993 until November 1994 and Manager
Franchise Analysis from November 1992 to October 1993. She was Senior
Financial Analyst, Franchise Analysis, from October 1991 until November 1992.

Mr. Weeks has been Vice President, Controller and Chief Accounting Officer
of the Company since August 1995 and was previously Division Vice President and
Assistant Controller for the Company from April 1982 through July 1995.

Mr. Goodall has been Chairman of the Board since October 1985. For more
than five years prior to his retirement in April 1996, he was President and
Chief Executive Officer of the Company. Mr. Goodall is a director of Van Camp
Seafood Company, Inc., Thrifty Payless, Inc. and Ralcorp Holdings, Inc.

Mr. Alpert has been a director of the Company since August 1992.
Mr. Alpert was a partner in the San Diego Office of the law firm of Gibson,
Dunn & Crutcher for more than 5 years prior to his retirement on August 1, 1992.
He is currently Advisory Counsel to Gibson, Dunn & Crutcher. Gibson, Dunn &
Crutcher provides legal services from time to time to the Company.

Mr. Carter has been a director of the Company since June 1991. Mr. Carter
has been an insurance consultant for the Government Division of Corroon &
Black Corporation since February 1987. From February 1987 until December
1990, he was also a consultant to the San Diego Unified School District on
insurance matters. He retired in February 1987 as Chairman and Chief
Executive Officer of Corroon & Black Corporation, Southwestern Region and as
Director and Senior Vice President of Corroon & Black Corporation, New York.

Mr. Gibbons has been a director of the Company since October 1985 and has
been a general partner of Gibbons, Goodwin, van Amerongen ("GGvA"), successor
to Gibbons, Green, van Amerongen ("Gibbons Green"), an investment banking
firm specializing in management buyouts, for more than five years preceding
the date hereof. Mr. Gibbons is also a director of Robert Half
International, Inc.

Mr. Green has been a director of the Company since October 1985 and has
been a general partner of Leonard Green & Partners, an investment firm, since
June 1989. For more than five years preceding that date, he was a partner of
Gibbons Green. Mr. Green is also a director of Big 5 Corporation, Carr-
Gottstein Foods Co., Communications & Power Industries, Inc. and Horace Mann
Educators Corporation.

Mr. Payne has been a director of the Company since August 1986. He has
been President and Chief Executive Officer of Multi-Ventures, Inc. since
February 1976 and was Chairman of the Board of Grossmont Bank, a wholly-owned
subsidiary of Bancomer, S.A., from February 1974 until October 1995.
Multi-Ventures, Inc. is a real estate development and investment company that
is also the managing partner of the San Diego Mission Valley Hilton and the
Hanalei Hotel. He was a principal in the Company prior to its acquisition by
its former parent Ralston Purina Company in 1968.

Mr. Walker has been a director of the Company since February 1988. Mr.
Walker has been a Managing Director of Trust Company of the West since April
1995. He was a general partner of Leonard Green & Partners, an

-18-

<PAGE>
investment firm from September 1989 until March 1995. He was associated with
Gibbons Green from November 1985 and was a partner thereof from January 1989
until September 1989.

That portion of Foodmaker's definitive Proxy Statement appearing under the
captions "Information About the Board of Directors and Committees of the
Board" and "Nonconforming Securities and Exchange Commission Filings" to be
filed with the Commission pursuant to Regulation 14A within 120 days after
September 29, 1996 and to be used in connection with its 1997 Annual Meeting
of Stockholders is hereby incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION
----------------------

That portion of Foodmaker's definitive Proxy Statement appearing under the
caption "Executive Compensation" to be filed with the Commission pursuant to
Regulation 14A within 120 days after September 29, 1996 and to be used in
connection with its 1997 Annual Meeting of Stockholders is hereby
incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------

That portion of Foodmaker's definitive Proxy Statement appearing under the
caption "Security Ownership of Certain Beneficial Owners and Management" to
be filed with the Commission pursuant to Regulation 14A within 120 days after
September 29, 1996 and to be used in connection with its 1997 Annual Meeting
of Stockholders is hereby incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------

That portion of Foodmaker's definitive Proxy Statement appearing under the
caption "Certain Transactions" to be filed with the Commission pursuant to
Regulation 14A within 120 days after September 29, 1996 and to be used in
connection with its 1997 Annual Meeting of Stockholders is hereby
incorporated by reference.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------

ITEM 14(a)(1) Financial Statements. See the index to consolidated financial
statements on page F-1 of this report.

ITEM 14(a)(2) Financial Statement Schedules. Not applicable.

-19-

<PAGE>
ITEM 14(a)(3) Exhibits.

Number Description
- ------ -----------
3.1 Restated Certificate of Incorporation
3.2 Restated Bylaws(8)
4.2 Indenture for the 9 1/4% Senior Notes due 1999(4)
4.3 Indenture for the 9 3/4% Senior Subordinated Notes due 2002(4)

(Instruments with respect to the registrant's long-term debt not
in excess of 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis have been omitted. The
registrant agrees to furnish supplementally a copy of any such
instrument to the Commission upon request.)

10.1 Amended and Restated Revolving Credit Agreement dated as of
March 15, 1996, as amended as of April 5, 1996 by the Agreement
to Add Banks, among Foodmaker, Inc. and the Banks named
therein(7)
10.1.1 First Amendment dated as of November 26, 1996 to the Amended
and Restated Revolving Credit Agreement dated as of March 15,
1996, as amended as of April 5, 1996 by the Agreement to Add
Banks, among Foodmaker, Inc. and the Banks named therein
10.2 Purchase Agreements dated as of January 22, 1987 between
Foodmaker, Inc. and FFCA/IIP 1985 Property Company and FFCA/IIP
1986 Property Company(1)
10.3 Land Purchase Agreements dated as of February 18, 1987, by and
between Foodmaker, Inc. and FFCA/IPI 1984 Property Company and
FFCA/IPI 1985 Property Company and Letter Agreement relating
thereto(1)
10.4 1992 Employee Stock Incentive Plan(3)
10.5 Capital Accumulation Plan for Executives(2)
10.6 Supplemental Executive Retirement Plan(2)
10.7 Performance Bonus Plan(5)
10.8 Deferred Compensation Plan for Non-Management Directors(6)
10.9 Non-Employee Director Stock Option Plan(6)
10.10 Form of Compensation and Benefits Assurance Agreement for
Executives
23.1 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule (included only with electronic filing)
- -----------------
(1) Previously filed and incorporated herein by reference from registrant's
Registration Statement on Form S-1 (No. 33-10763) filed
February 24, 1987.
(2) Previously filed and incorporated herein by reference from registrant's
Annual Report on Form 10-K for the fiscal year ended September 30, 1990.
(3) Previously filed and incorporated herein by reference from registrant's
Quarterly Report on Form 10-Q for the quarter ended January 19, 1992.
(4) Previously filed and incorporated herein by reference from registrant's
Quarterly Report on Form 10-Q for the quarter ended April 12, 1992.
(5) Previously filed and incorporated herein by reference from registrant's
Annual Report on form 10-K for the fiscal year ended September 27, 1992.
(6) Previously filed and incorporated herein by reference from registrant's
Definitive Proxy Statement dated January 17, 1995 for the Annual Meeting
of Stockholders on February 17, 1995.
(7) Previously filed and incorporated herein by reference from registrant's
Quarterly Report on Form 10-Q for the quarter ended April 14, 1996.
(8) Previously filed and incorporated herein by reference from registrant's
Current Report on Form 8-K as of July 26, 1996.

-20-

<PAGE>
ITEM 14(b) During the fourth quarter ended September 29, 1996, the Company
filed with the Securities and Exchange Commission a report on Form 8-K under
item 5 thereof, the amendment of the Bylaws of the Company and the adoption
of a Stockholder Rights Plan.

ITEM 14(c) All required exhibits are filed herein or incorporated by
reference as described in Item 14(a)(3).

ITEM 14(d) All supplemental schedules are omitted as inapplicable or because
the required information is included in the consolidated financial statements
or notes thereto.

-21-

<PAGE>
SIGNATURES
----------

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

FOODMAKER, INC.

By: CHARLES W. DUDDLES
---------------------
Charles W. Duddles
Executive Vice President,
Chief Financial Officer, Chief
Administrative Officer and Director
Date: December 23, 1996

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----
JACK W. GOODALL Chairman of the Board December 23, 1996
- ----------------------
Jack W. Goodall

ROBERT J. NUGENT President, Chief Executive Officer December 23, 1996
- ---------------------- and Director
Robert J. Nugent (Principal Executive Officer)

CHARLES W. DUDDLES Executive Vice President, December 23, 1996
- ---------------------- Chief Financial Officer, Chief
Charles W. Duddles Administrative Officer and Director
(Principal Financial Officer)

DARWIN J. WEEKS Vice President, Controller and December 23, 1996
- ---------------------- Chief Accounting Officer
Darwin J. Weeks (Principal Accounting Officer)

MICHAEL E. ALPERT Director December 23, 1996
- ----------------------
Michael E. Alpert

PAUL T. CARTER Director December 23, 1996
- ----------------------
Paul T. Carter

-22-

<PAGE>
EDWARD GIBBONS Director December 23, 1996
- ----------------------
Edward Gibbons

Director December , 1996
- ----------------------
Leonard I. Green

L. ROBERT PAYNE Director December 23, 1996
- ----------------------
L. Robert Payne

Director December , 1996
- ----------------------
Christopher V. Walker

-23-

<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Foodmaker, Inc. and Subsidiaries Consolidated Financial Statements for the
52-week periods ended September 29, 1996, October 1, 1995 and
October 2, 1994.

Page
----
Independent Auditors' Report. . . . . . . . . . . F-2

Consolidated Balance Sheets . . . . . . . . . . . F-3

Consolidated Statements of Operations . . . . . . F-4

Consolidated Statements of Cash Flows . . . . . . F-5

Consolidated Statements of Stockholders' Equity . F-6

Notes to Consolidated Financial Statements. . . . F-7

F-1

<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors
Foodmaker, Inc.:

We have audited the accompanying consolidated balance sheets of Foodmaker,
Inc. and subsidiaries as of September 29, 1996 and October 1, 1995, and the
related consolidated statements of operations, cash flows and stockholders'
equity for the fifty-two weeks ended September 29, 1996, October 1, 1995 and
October 2, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Foodmaker, Inc. and subsidiaries as of September 29, 1996 and October 1,
1995, and the results of their operations and their cash flows for the fifty-
two weeks ended September 29, 1996, October 1, 1995 and October 2, 1994 in
conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

San Diego, California
November 5, 1996, except for the fifth paragraph
of Note 12, which is as of December 10, 1996
F-2

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

ASSETS
September 29, October 1,
1996 1995
-------- --------

Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . $ 41,983 $ 35,865
Accounts receivable, net . . . . . . . . . . . . . . 12,482 25,272
Inventories. . . . . . . . . . . . . . . . . . . . . 20,850 22,385
Prepaid expenses . . . . . . . . . . . . . . . . . . 21,161 14,367
-------- --------
Total current assets . . . . . . . . . . . . . . . 96,476 97,889
-------- --------

Property:
Land . . . . . . . . . . . . . . . . . . . . . . . . 90,890 90,594
Buildings. . . . . . . . . . . . . . . . . . . . . . 293,690 287,265
Restaurant and other equipment . . . . . . . . . . . 213,159 201,240
Construction in progress . . . . . . . . . . . . . . 13,017 10,543
-------- --------
610,756 589,642
Less accumulated depreciation and amortization . . . 177,817 155,931
-------- --------
432,939 433,711
-------- --------

Other assets, net. . . . . . . . . . . . . . . . . . . 124,223 131,074
-------- --------
$653,638 $662,674
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt . . . . . . . . $ 1,812 $ 1,836
Accounts payable . . . . . . . . . . . . . . . . . . 29,293 32,015
Accrued liabilities. . . . . . . . . . . . . . . . . 115,958 98,166
-------- --------
Total current liabilities. . . . . . . . . . . . . 147,063 132,017
-------- --------

Long-term debt, net of current maturities. . . . . . . 396,340 440,219

Other long-term liabilities. . . . . . . . . . . . . . 51,561 49,599

Deferred income taxes. . . . . . . . . . . . . . . . . 7,290 9,586

Stockholders' equity:
Preferred stock. . . . . . . . . . . . . . . . . . . -- --
Common stock, $.01 par value, 75,000,000 authorized,
40,253,179 and 40,214,849 issued, respectively . . 403 402
Capital in excess of par value . . . . . . . . . . . 281,075 280,996
Accumulated deficit. . . . . . . . . . . . . . . . . (215,631) (235,682)
Treasury stock, at cost, 1,412,654 shares. . . . . . (14,463) (14,463)
-------- --------
Total stockholders' equity . . . . . . . . . . . . 51,384 31,253
-------- --------
$653,638 $662,674
======== ========

See accompanying notes to consolidated financial statements.
F-3

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

September 29, October 1, October 2,
1996 1995 1994
--------- --------- ---------

Revenues:
Restaurant sales . . . . . . . . . . . . $ 892,029 $ 804,084 $ 843,038
Distribution sales . . . . . . . . . . . 132,421 179,689 171,711
Franchise rents and royalties. . . . . . 34,048 32,530 33,740
Other. . . . . . . . . . . . . . . . . . 4,324 2,413 4,837
--------- --------- ---------
1,062,822 1,018,716 1,053,326
--------- --------- ---------
Costs and expenses:
Costs of revenues:
Restaurant costs of sales. . . . . . . 290,955 258,627 267,001
Restaurant operating costs . . . . . . 477,976 447,235 495,340
Costs of distribution sales. . . . . . 130,241 175,688 165,789
Franchised restaurants costs . . . . . 20,039 21,929 22,822
Selling, general and administrative. . . 72,134 78,044 78,323
Equity in loss of FRI. . . . . . . . . . -- 57,188 2,108
Interest expense . . . . . . . . . . . . 46,126 48,463 55,201
--------- --------- ---------
1,037,471 1,087,174 1,086,584
--------- --------- ---------
Earnings (loss) before income taxes and
extraordinary item . . . . . . . . . . . 25,351 (68,458) (33,258)
Income taxes . . . . . . . . . . . . . . . 5,300 500 3,010
--------- --------- ---------
Earnings (loss) before extraordinary item. 20,051 (68,958) (36,268)
Extraordinary item - loss on early
extinguishment of debt, net of taxes . . -- -- (3,302)
--------- --------- ---------
Net earnings (loss). . . . . . . . . . . . $ 20,051 $ (68,958) $ (39,570)
========= ========= =========

Earnings (loss) per share - primary
and fully diluted:
Earnings (loss) before
extraordinary item . . . . . . . . . . $ .51 $ (1.77) $ (.94)
Extraordinary item . . . . . . . . . . . -- -- (.09)
--------- --------- ---------
Net earnings (loss) per share. . . . . . $ .51 $ (1.77) $ (1.03)
========= ========= =========

Weighted average shares outstanding. . . . 39,301 38,915 38,531

See accompanying notes to consolidated financial statements.
F-4

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share data)

September 29, October 1, October 2,
1996 1995 1994
--------- --------- ---------
Cash flows from operating activities:
Net earnings (loss) excluding
extraordinary item . . . . . . . . . . $ 20,051 $ (68,958) $ (36,268)
Non-cash items included in operations:
Depreciation and amortization. . . . . 36,491 35,837 39,925
Deferred finance cost amortization . . 2,499 2,467 2,685
Deferred income taxes. . . . . . . . . (2,296) 4,524 4,535
Equity in loss of FRI. . . . . . . . . -- 57,188 2,108
Decrease (increase) in receivables . . . 12,790 5,895 (3,373)
Decrease in inventories. . . . . . . . . 1,535 2,934 194
Increase in prepaid expenses . . . . . . (7,421) (985) (196)
Increase (decrease) in accounts payable. (2,722) (4,900) 16,375
Increase (decrease) in other
accrued liabilities. . . . . . . . . . 23,206 (458) 3,417
--------- --------- ---------
Cash flows provided by operating
activities . . . . . . . . . . . . . 84,133 33,544 29,402
--------- --------- ---------

Cash flows from investing activities:
Additions to property and equipment. . . (33,232) (27,033) (92,037)
Disposition of property and equipment. . 4,597 4,416 3,374
Increase in trading area rights. . . . . (1,086) (9,745) (9,915)
Investment in FRI, net . . . . . . . . . -- -- (59,296)
Disposition of Chi-Chi's . . . . . . . . -- -- 214,551
Other. . . . . . . . . . . . . . . . . . (1,012) 6,538 (2,641)
--------- --------- ---------
Cash flows provided (used) by
investing activities . . . . . . . . (30,733) (25,824) 54,036
--------- --------- ---------

Cash flows from financing activities:
Proceeds from issuance of long-term debt 400 900 82,519
Principal payments on long-term debt,
including current maturities . . . . . (44,677) (8,385) (113,033)
Borrowings under revolving bank loans. . -- 29,000 5,000
Principal repayments under revolving
bank loans . . . . . . . . . . . . . . -- (29,000) (35,000)
Extraordinary loss on retirement of
debt, net of taxes . . . . . . . . . . -- -- (3,302)
Increase (decrease) in accrued interest. (3,085) (495) 1,678
Proceeds from issuance of common stock . 80 160 489
Proceeds from sale and leaseback
transactions . . . . . . . . . . . . . -- -- 9,695
--------- --------- ---------
Cash flows used in financing
activities . . . . . . . . . . . . . (47,282) (7,820) (51,954)
--------- --------- ---------

Net increase (decrease) in cash and cash
equivalents. . . . . . . . . . . . . . . $ 6,118 $ (100) $ 31,484
========= ========= =========

Supplemental disclosure of cash flow
information:
Cash paid during the year for:
Interest, net of amounts capitalized. $ 46,712 $ 46,491 $ 51,242
Income tax payments (refunds), net. . 5,973 (6,403) (275)

See accompanying notes to consolidated financial statements.
F-5

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>

Capital
Common stock in excess
Number of of par Accumulated Treasury
Shares Amount value deficit stock Total
---------- ------ -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 3, 1993 . . . 39,646,904 $ 396 $280,353 $(127,154) $(14,463) $139,132

Exercise of stock options
and warrants . . . . . . . . . 433,950 5 484 -- -- 489

Net loss of the Company. . . . . -- -- -- (39,570) -- (39,570)
---------- ----- -------- --------- -------- --------

Balance at October 2, 1994 . . . 40,080,854 401 280,837 (166,724) (14,463) 100,051

Exercise of stock options
and warrants . . . . . . . . . 133,995 1 159 -- -- 160

Net loss of the Company. . . . . -- -- -- (68,958) -- (68,958)
---------- ----- -------- --------- -------- --------

Balance at October 1, 1995 . . . 40,214,849 402 280,996 (235,682) (14,463) 31,253

Exercise of stock options
and warrants . . . . . . . . . 38,330 1 79 -- -- 80

Net earnings of the Company. . . -- -- -- 20,051 -- 20,051
---------- ----- -------- --------- -------- --------

Balance at September 29, 1996. . 40,253,179 $ 403 $281,075 $(215,631) $(14,463) $ 51,384
========== ===== ======== ========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of operations - Foodmaker, Inc. (the "Company" or "Foodmaker")
operates and franchises JACK IN THE BOX quick-serve restaurants with
operations principally in the western and southwestern United States.
Until January 27, 1994, the Company also owned Chi-Chi's, Inc. ("Chi-
Chi's"), a chain of full-service, casual Mexican restaurants located
primarily in the midwestern and midatlantic United States.

Basis of presentation and fiscal year - The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions are eliminated.
Certain prior year amounts in the consolidated financial statements have
been reclassified to conform with the 1996 presentation. The Company's
fiscal year is 52 or 53 weeks ending the Sunday closest to September 30.

Fair value of financial instruments - The Company invests cash in excess
of operating requirements in short term, highly liquid investments with
original maturities of three months or less, which are considered as cash
equivalents. The fair value of these financial instruments approximate
the carrying amounts due to their short duration. The fair values of each
of the Company's long-term debt instruments are based on quoted market
values, where available, or on the amount of future cash flows associated
with each instrument discounted using the Company's current borrowing rate
for similar debt instruments of comparable maturity. The fair values of
the Company's long-term debt approximate carrying values.

Inventories are valued at the lower of cost (first-in, first-out method)
or market.

Preopening costs are those typically associated with the opening of a new
restaurant and consist primarily of employee training and food costs
incurred before a restaurant opens. Preopening costs, included in prepaid
expenses, are amortized over a one-year period commencing on the date a
restaurant opens.

Property at cost - Expenditures for new facilities and those that
substantially increase the useful lives of the property are capitalized.
Maintenance, repairs, and minor renewals are expensed as incurred. When
properties are retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the accounts and gains or losses
on the dispositions are reflected in results of operations.

Facilities leased under capital leases are stated at the present value of
minimum lease payments at the beginning of the lease term, not to exceed
fair value.

Buildings, equipment and leasehold improvements are depreciated using the
straight-line method based on the estimated useful lives of the assets or
over the lease term for certain capital leases (buildings 15 to 33 years
and equipment 3 to 30 years).

Investments - The Company accounted for its 39% investment in Family
Restaurants, Inc. ("FRI") using the equity method of accounting. In 1995
the Company completely wrote off its investment in FRI as described in
Note 2.

Trading area rights represent the amount allocated under purchase
accounting to reflect the value of operating existing restaurants within
their specific trading area. These rights are amortized on a straight-
line basis over the period of control of the property, not exceeding 40
years, and are retired when a restaurant is franchised or sold.
F-7

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Lease acquisition costs represent the acquired values of existing lease
contracts having lower contractual rents than fair market rents and are
amortized over the remaining lease term.

Other assets primarily include deferred franchise contract costs, deferred
finance costs and goodwill. Deferred franchise contract costs represent
the acquired value of franchise contracts and are amortized over the term
of the franchise agreement, usually 20 years. Deferred finance costs are
amortized on the interest method over the terms of the respective loan
agreements, from 4 to 10 years. Goodwill represents the cost of business
in excess of net assets at acquisition and is amortized on a straight-line
basis over 40 years. The Company assesses the recoverability of goodwill
by determining whether the amortization of the balance over its remaining
life can be recovered through projected undiscounted future cash flows.
Based on these calculations, the Company has determined that this
intangible asset was not impaired and no reduction in the related
estimated useful life is warranted.

Franchise operations - Franchise arrangements generally provide for
initial license fees of approximately $50 (formerly $25) per restaurant
and continuing payments to the Company based on a percentage of sales.
Among other things, the franchisee may be provided the use of land and
building, generally for a period of 20 years, and is required to pay
negotiated rent, property taxes, insurance and maintenance. Franchise
fees are recorded as revenue when the Company has substantially performed
all of its contractual obligations. Expenses associated with the issuance
of the franchise are expensed as incurred. Franchise rents and royalties
are recorded as income on an accrual basis. Gains on sales of restaurant
businesses to franchisees, which have not been material, are recorded as
other revenues when the sales are consummated and certain other criteria
are met.

Income taxes - Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.

Net earnings (loss) per share for each year is computed based on the
weighted average number of common and common equivalent shares
outstanding. When dilutive, stock options and warrants are included as
share equivalents using the treasury stock method. For all years
presented, primary and fully diluted earnings (loss) per share are not
materially different.

Stock options - The Company accounts for stock options under the intrinsic
value based method whereby compensation expense is recognized for the
excess, if any, of the quoted market price of the Company stock at the
date of grant over the option price. The Company's policy is to grant
stock options at fair value at the date of grant.

Advertising costs - The Company maintains a marketing fund consisting of
funds contributed by the Company equal to at least 5% of gross sales of
all Company-operated JACK IN THE BOX restaurants and contractual marketing
fees paid monthly by franchisees for restaurants operated in the United
States. Production costs of commercials, programming and other marketing
activities are expensed to the marketing fund.

Estimations - Management is required to make certain assumptions and
estimates in conformity with generally accepted accounting principles that
affect reported amounts of assets, liabilities, disclosure of
contingencies, revenues and expenses. Actual amounts could differ from
these estimates.
F-8

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

2. FAMILY RESTAURANTS, INC.

On January 27, 1994, Foodmaker, Apollo FRI Partners, L.P. ("Apollo") and
Green Equity Investors, L.P. ("GEI"), whose general partner is Leonard
Green & Partners, acquired Restaurant Enterprises Group, Inc. ("REGI"), a
company that owned, operated and franchised various restaurant chains
including El Torito, Carrows and Coco's. Contemporaneously, REGI changed
its name to Family Restaurants, Inc. ("FRI"). Concurrently, Foodmaker
contributed its entire Chi-Chi's Mexican restaurant chain to FRI in
exchange for a 39% equity interest in FRI, valued at $62 million, a five-
year warrant to acquire 111,111 additional shares at $240 per share, which
would increase its equity interest to 45% and approximately $173 million
in cash ($208 million less the face amount of Chi-Chi's debt assumed, of
approximately $35 million). Apollo and GEI, respectively, contributed $62
million and $29 million in cash and held approximate 39% and 18% equity
positions in FRI. Management of FRI invested $2.5 million in cash and
notes and held an approximate 4% equity position. The net cash received
was used by Foodmaker to repay all of the debt outstanding under its then
existing bank credit facility, which has been terminated, and to reduce
other debt, to the extent permitted by the Company's financing agreements,
and to provide funds for capital expenditures and general corporate
purposes.

As a result of substantial sales declines, FRI wrote off the goodwill
attributable to Chi-Chi's in its quarter ended December 25, 1994. The
Company then wrote off its 39% investment in FRI in its first quarter of
fiscal year 1995.

Because of FRI's continuing substantial losses and resulting increased
borrowing requirements, the major FRI stockholders were required to
purchase a participation in any additional advances by the banks to FRI.
Rather than become liable for these advances, the Company, by an agreement
dated November 20, 1995, transferred all of its stock and warrants to
Apollo. Since the Company's investment in FRI was previously written off
in fiscal 1995, the consummation of this agreement had no effect on the
consolidated financial condition or results of operations of the Company
in fiscal 1996.
F-9

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

3. LONG-TERM DEBT
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------ ---------

The detail of long-term debt follows:

<S> <C> <C>
Senior notes, 9 1/4% interest, due March 1, 1999,
redeemable beginning March 1, 1997. . . . . . . . . . . . . . . . $175,000 $175,000
Senior subordinated notes, 9 3/4% interest, due June 1, 2002,
redeemable beginning June 1, 1997 . . . . . . . . . . . . . . . . 125,000 125,000
Senior subordinated notes, 14 1/4% interest,
due May 15, 1998, redeemable beginning May 15, 1993,
repaid in full on May 15, 1996. . . . . . . . . . . . . . . . . . -- 42,843
Financing lease obligations, net of discounts of
$2,548 reflecting a 10.3% effective interest rate,
semi-annual payments of $3,413 and $747 to cover
interest and sinking fund requirements, respectively,
due in equal installments January 1, 2003 and
November 1, 2003. . . . . . . . . . . . . . . . . . . . . . . . . 67,452 67,077
Secured notes, 11 1/2% interest, due in monthly
installments through May 1, 2005. . . . . . . . . . . . . . . . . 9,356 9,954
Secured notes, 9 1/2% interest, due in monthly
installments through August 1, 2017 . . . . . . . . . . . . . . . 8,456 8,580
Capitalized lease obligations, 11% average interest rate . . . . . 11,043 11,127
Other notes, principally unsecured, 10% average interest rate. . . 1,845 2,474
-------- --------
398,152 442,055
Less current portion . . . . . . . . . . . . . . . . . . . . . . . 1,812 1,836
-------- --------
$396,340 $440,219
======== ========
</TABLE>

The Company's revolving bank credit agreement which was restated March 15,
1996, expires December 31, 1998, and provides for a credit facility of up
to $60 million, including letters of credit of up to $25 million. The
credit agreement requires the payment of an annual commitment fee of
either 1/2% or 3/8% of the unused credit line depending on the Company's
leverage ratio. The Company had no borrowings under the agreement at the
end of fiscal years 1996 or 1995.

The Company is subject to a number of covenants under its various credit
agreements including limitations on additional borrowings, capital
expenditures, lease commitments and dividend payments, and requirements to
maintain certain financial ratios, cash flows and net worth. The secured
notes and bank loans are secured by substantially all the Company's real
and personal property.

F-10

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

3. LONG-TERM DEBT (continued)

In early January 1994, the Company entered into financing lease
arrangements with two limited partnerships (the "Partnerships"), in which
estates for years relating to 76 restaurants were sold. The acquisition
of the properties, including costs and expenses, was funded through the
issuance by a special purpose corporation acting as agent for the
Partnerships of $70 million senior secured notes. On January 1, 2003 and
November 1, 2003, the Company must make offers to reacquire 50% of the
properties at each date at a price which is sufficient, in conjunction
with previous sinking fund deposits, to retire the notes. If the
Partnerships reject the offers, the Company may purchase the properties at
less than fair market value or cause the Partnerships to fund the
remaining principal payments on the notes and, at the Company's option,
cause the Partnerships to acquire the Company's residual interest in the
properties. If the Partnerships are allowed to retain the estates for
years, the Company has available options to extend the leases for total
terms of up to 35 years, at which time the ownership of the property will
revert to the Company. The transactions are reflected as financings with
the properties remaining in the Company's consolidated financial
statements.

Aggregate maturities and sinking fund requirements on all long-term debt
are $2,948, $178,069, $3,229 and $3,410 for the years 1998 through 2001,
respectively.

Interest capitalized during the construction period of restaurants was
$200, $161 and $727 in 1996, 1995 and 1994, respectively.

4. LEASES

As Lessee - The Company leases restaurant and other facilities under
leases having terms expiring at various dates through 2046. The leases
generally have renewal clauses of 5 to 20 years exercisable at the option
of the Company and in some instances have provisions for contingent
rentals based upon a percentage of defined revenues. Total rent expense
for all operating leases was $81,006, $75,680 and $77,296, including
contingent rentals of $3,903, $2,843 and $3,486 in 1996, 1995 and 1994,
respectively.

Future minimum lease payments under capital and operating leases are as
follows:

Fiscal Capital Operating
year leases leases
------ ------- --------
1997. . . . . . . . . . . . . . . . . . . . . . . $ 1,689 $ 68,803
1998. . . . . . . . . . . . . . . . . . . . . . . 1,611 65,494
1999. . . . . . . . . . . . . . . . . . . . . . . 1,568 62,814
2000. . . . . . . . . . . . . . . . . . . . . . . 1,549 56,667
2001. . . . . . . . . . . . . . . . . . . . . . . 1,531 52,422
Thereafter. . . . . . . . . . . . . . . . . . . . 15,426 348,427
------- --------
Total minimum lease payments . . . . . . . . . . . 23,374 $654,627
========
Less amount representing interest. . . . . . . . . 12,331
-------
Present value of obligations under capital leases. 11,043
Less current portion . . . . . . . . . . . . . . . 468
-------
Long-term capital lease obligations. . . . . . . . $10,575
=======
F-11

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

4. LEASES (continued)

Building assets recorded under capital leases were $13,281 and $10,248,
net of accumulated depreciation of $3,639 and $3,033, as of September 29,
1996 and October 1, 1995, respectively.

As Lessor - The Company leases or subleases restaurants to certain
franchisees and others under agreements which generally provide for the
payment of percentage rentals in excess of stipulated minimum rentals,
usually for a period of 20 years. Total rental revenue was $21,497,
$21,309 and $21,911, including contingent rentals of $5,469, $4,763 and
$4,979 in 1996, 1995 and 1994, respectively.

The minimum rents receivable under these non-cancelable leases are as
follows:

Fiscal Sales-type Operating
year leases leases
------ ------- --------
1997. . . . . . . . . . . . . . . . . . . . . . . $ 44 $ 16,542
1998. . . . . . . . . . . . . . . . . . . . . . . 44 16,193
1999. . . . . . . . . . . . . . . . . . . . . . . 44 15,968
2000. . . . . . . . . . . . . . . . . . . . . . . 44 15,531
2001. . . . . . . . . . . . . . . . . . . . . . . 45 15,262
Thereafter. . . . . . . . . . . . . . . . . . . . 211 90,081
----- --------
Total minimum future rentals . . . . . . . . . . . 432 $169,577
========
Less amount representing interest. . . . . . . . . 168
-----
Net investment (included in other assets). . . . . $ 264
=====

Land and building assets held for lease were $65,156 and $67,972, net of
accumulated depreciation of $17,038 and $14,862, as of September 29, 1996
and October 1, 1995, respectively.

5. INCOME TAXES

The fiscal year income taxes consist of the following:

1996 1995 1994
--------- --------- ---------
Federal - current . . . . . . . . . . . . $ 7,179 $ (388) $ (624)
- deferred. . . . . . . . . . . . (2,680) 345 3,236
State - current . . . . . . . . . . . . 737 256 478
- deferred. . . . . . . . . . . . 64 287 (1,858)
-------- ------ -------
Subtotal. . . . . . . . . . . . . . . . . 5,300 500 1,232
Income tax benefit of extraordinary item. -- -- 1,778
-------- ------ -------
Income taxes. . . . . . . . . . . . . . . $ 5,300 $ 500 $ 3,010
======== ====== =======
F-12

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

5. INCOME TAXES (continued)

A reconciliation of fiscal year income taxes with the amounts computed at
the statutory federal rate of 35% follows:
1996 1995 1994
--------- --------- ---------
Computed at federal statutory rate. . . . $ 8,874 $(23,960) $(11,640)
State income taxes (benefits), net of
federal effect . . . . . . . . . . . . . 521 353 (897)
Amortization of intangibles . . . . . . . 53 27 327
Targeted jobs credit wages. . . . . . . . -- (733) (742)
Addition (reduction) to valuation
allowance. . . . . . . . . . . . . . . . (4,295) 26,280 18,520
Gain on sale of subsidiary. . . . . . . . -- -- (1,988)
Benefit of reattributed net operating
loss carryback . . . . . . . . . . . . . -- (1,420) --
Other, net. . . . . . . . . . . . . . . . 147 (47) (570)
------- -------- --------
$ 5,300 $ 500 $ 3,010
======= ======== ========

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities are presented
below:
September 29, October 1,
1996 1995
-------- --------
Deferred tax assets:
Tax loss, captial loss, contribution
and tax credit carryforwards . . . . . . . . . . $ 57,698 $ 33,387
Investment in subsidiary. . . . . . . . . . . . . -- 26,130
Insurance reserves. . . . . . . . . . . . . . . . 16,569 14,393
Accrued pension and postretirement benefits . . . 8,775 9,552
Accrued vacation pay expense. . . . . . . . . . . 6,257 6,029
Other reserves and allowances . . . . . . . . . . 5,049 5,871
Deferred income . . . . . . . . . . . . . . . . . 3,840 3,598
Other, net. . . . . . . . . . . . . . . . . . . . $ 3,352 $ 2,383
-------- --------
Total gross deferred tax assets . . . . . . . . . 101,540 101,343
Less valuation allowance. . . . . . . . . . . . . 45,212 49,507
-------- --------
Net deferred tax assets . . . . . . . . . . . . . 56,328 51,836
-------- --------

Deferred tax liabilities:
Property and equipment, principally due to
differences in depreciation. . . . . . . . . . . 47,707 43,889
Intangible assets . . . . . . . . . . . . . . . . 15,592 17,059
Other, net. . . . . . . . . . . . . . . . . . . . 319 474
-------- --------
Total gross deferred tax liabilities. . . . . . . 63,618 61,422
-------- --------
Net deferred tax liability. . . . . . . . . . . . $ 7,290 $ 9,586
======== ========
F-13

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

5. INCOME TAXES (continued)

The valuation allowance of $45,212 as of September 29, 1996 represents
deferred tax assets that may not be realized by the reversal of future
taxable temporary differences. In fiscal 1996, the Company recognized a
decrease in the valuation allowance of $4,295 related to the expected use
of tax credit carryforwards.

At September 29, 1996, the Company had federal tax net operating loss
carryforwards of approximately $16,101 which expire in 2008 through 2010,
general business credit carryforwards of approximately $10,777 which
expire in 2000 through 2010 and captial loss carryforwards of approximately
$65,000 which expire in 2001. The Company has alternative minimum tax
credit carryforwards of approximately $13,856. The alternative minimum
tax credit carryforwards have no expiration date; however, they may only
be utilized to reduce any regular tax liability the Company may have in the
future.

6. RETIREMENT, SAVINGS AND BONUS PLANS

The Company has non-contributory defined benefit pension plans covering
substantially all salaried and hourly employees meeting certain
eligibility requirements. These plans are subject to modification at any
time. The plans provide retirement benefits based on years of service and
compensation. It is the Company's practice to fund retirement costs as
necessary.

The components of the fiscal year net defined benefit pension expense are
as follows:
1996 1995 1994
------- ------- -------
Present value of benefits earned
during the year. . . . . . . . . . . . . $ 2,634 $ 2,303 $ 2,456
Interest cost on projected benefit
obligations. . . . . . . . . . . . . . . 3,659 3,355 2,961
Actual return on plan assets. . . . . . . (3,630) (3,300) (538)
Net amortization. . . . . . . . . . . . . 978 1,431 (908)
------- ------- -------
Net pension expense for the period. . . . $ 3,641 $ 3,789 $ 3,971
======= ======= =======

The funded status of the plans is as follows:
<TABLE>
<CAPTION>
September 29, 1996 October 1, 1995
------------------------- -------------------------
Qualified Non-qualified Qualified Non-qualified
plans plan plans plan
-------- ------- -------- -------
Actuarial present value of benefit obligations:
<S> <C> <C> <C> <C>
Vested benefits. . . . . . . . . . . . . . . . $(29,021) $(5,204) $(27,598) $(4,154)
Nonvested benefits . . . . . . . . . . . . . . (6,859) (715) (3,723) (1,033)
-------- ------- -------- -------
Accumulated benefit obligation . . . . . . . . (35,880) (5,919) (31,321) (5,187)
Effect of future salary increases. . . . . . . (8,374) (2,780) (7,527) (2,836)
-------- ------- -------- -------
Projected benefit obligation. . . . . . . . . . (44,254) (8,699) (38,848) (8,023)
Plan assets at fair value . . . . . . . . . . . 39,677 -- 32,843 --
-------- ------- -------- -------
Projected benefit obligations in
excess of plan assets . . . . . . . . . . . . . (4,577) (8,699) (6,005) (8,023)
Unrecognized prior service cost. . . . . . . . . (243) 2,774 (278) 2,973
Unrecognized net transition obligation . . . . . 47 139 56 166
Unrecognized net (gain) loss . . . . . . . . . . 4,046 (534) 3,981 (532)
-------- ------- -------- -------
Pension liability. . . . . . . . . . . . . . . . $ (727) $(6,320) $ (2,246) $(5,416)
-------- ------- -------- -------

</TABLE>
F-14

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

6. RETIREMENT, SAVINGS AND BONUS PLANS (continued)

In determining the present values of benefit obligations at each year end,
a 7.75% discount rate and a 5% rate of increase in compensation levels
were assumed. The long-term rate of return on assets was 8.5% in both
years. Assets of the qualified plans consist primarily of listed stocks
and bonds.

The Company maintains a savings plan pursuant to Section 401(k) of the
Internal Revenue Code, which allows administrative and clerical employees
who have satisfied the service requirements and reached age 21 to defer
from 2% to 12% of their pay on a pre-tax basis. The Company contributes
an amount equal to 50% of the first 4% of compensation that is deferred by
the participant. The Company's contributions under this plan were $1,067,
$498 and $1,081 in 1996, 1995 and 1994, respectively. The Company also
maintains an unfunded, non-qualified deferred compensation plan, which was
created in 1990 for key executives and other members of management who
were then excluded from participation in the qualified savings plan. This
plan allows participants to defer up to 15% of their salary on a pre-tax
basis. The Company contributes an amount equal to 100% of the first 3%
contributed by the employee. The Company's contributions under the non-
qualified deferred compensation plan were $233, $212 and $285 in 1996,
1995 and 1994, respectively. In each plan, a participant's right to
Company contributions vests at a rate of 25% per year of service.

The Company maintains a bonus plan that allows certain officers and
employees of the Company to earn annual cash bonuses based upon
achievement of certain financial and performance goals approved by the
compensation committee of the Company's Board of Directors. Under this
plan, $3,195 and $710 was expensed in 1996 and 1995, respectively.

The Company adopted a deferred compensation plan for non-management
directors in the second quarter of 1995. Under the plan's equity option,
those who are eligible to receive directors' fees or retainers may choose
to defer receipt of their compensation. The amounts deferred are
converted into stock equivalents at the then current market price of the
Company's common stock. The Company provides a credit equal to 25% of the
compensation initially deferred. Under this plan, a total of $186 and
$116 was expensed in 1996 and 1995, respectively, for both the deferment
credit and the stock appreciation on the deferred compensation.

7. POSTRETIREMENT BENEFIT PLAN

The Company sponsors a health care plan that provides postretirement
medical benefits for employees who meet minimum age and service
requirements. The plan is contributory, with retiree contributions
adjusted annually, and contains other cost-sharing features such as
deductibles and coinsurance. The Company's policy is to fund the cost of
medical benefits in amounts determined at the discretion of management.

The normal net periodic postretirement benefit cost was $1,201, $1,440 and
$1,533 in 1996, 1995 and 1994, respectively. The plan was amended to
eliminate retiree medical benefits coverage for those under age 45 at
September 30, 1995, resulting in a curtailment gain of $1,900.

F-15

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

7. POSTRETIREMENT BENEFIT PLAN (continued)

The components of the fiscal year net periodic postretirement benefit cost
are as follows:
1996 1995 1994
------ ------- ------
Service cost. . . . . . . . . . . . . . . $ 505 $ 675 $ 770
Interest cost . . . . . . . . . . . . . . 816 854 763
Net amortization and deferral . . . . . . (120) (89) --
Curtailment gain. . . . . . . . . . . . . -- (1,900) --
------ ------- ------
Net periodic postretirement benefit
cost (gain). . . . . . . . . . . . . . . $1,201 $ (460) $1,533
====== ======= ======

The plan's funded status reconciled with amounts recognized in the
Company's consolidated balance sheets is as follows:

September 29, October 1,
1996 1995
-------- --------
Accumulated postretirement benefit obligation:
Retirees . . . . . . . . . . . . . . . . . . . . . $ (1,343) $ (1,198)
Fully eligible active plan participants. . . . . . (2,777) (2,478)
Other active plan participants . . . . . . . . . . (7,684) (6,855)
-------- --------
(11,804) (10,531)
Plan assets at fair value . . . . . . . . . . . . . -- --

Accumulated postretirement benefit obligation
in excess of plan assets . . . . . . . . . . . . . (11,804) (10,531)
Unrecognized prior service cost . . . . . . . . . . -- --
Unrecognized net gain . . . . . . . . . . . . . . . (2,062) (2,180)
-------- --------
Accrued postretirement benefit cost
included in other long-term liabilities. . . . . . $(13,866) $(12,711)
======== ========

In determining the above information, the Company's actuaries assumed a
discount rate of 7.75% as of September 29, 1996 and October 1, 1995.

For measurement purposes, a 9.5% annual rate of increase in the per capita
cost of covered benefits (i.e., health care cost trend rate) was assumed
for 1996 for plan participants under age 65; the rate was assumed to
decrease 1/2% per year to 5% by the year 2005 and remain at that level
thereafter. For plan participants age 65 years or older, a 7.5% annual
health care cost trend rate was assumed for 1996; the rate was assumed to
decrease 1/2% per year to 4% by the year 2003. The health care cost trend
rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated
postretirement benefit obligation as of September 29, 1996 by $2,466, or
21%, and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year ended September 29, 1996
by $336 or 25%.

8. STOCK OPTIONS

The Company offers stock option plans to attract, retain and motivate key
officers, non-employee directors and employees by providing for or
increasing the proprietary interests of such persons to work toward the
future financial success of the Company.
F-16

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

8. STOCK OPTIONS (continued)

In January 1992, the Company adopted the 1992 Employee Stock Incentive
Plan (the "1992 Plan") and, as part of a merger, assumed outstanding
options to employees under its predecessor's 1990 Stock Option Plan and
assumed contractually the options to purchase 42,750 shares of common
stock granted to two non-employee directors of the Company. Under the
1992 Plan, employees are eligible to receive stock options, restricted
stock and other various stock-based awards. Subject to certain
adjustments, up to a maximum of 1,875,000 shares of common stock may be
sold or issued under the 1992 Plan. No awards shall be granted after
January 16, 2002, although stock may be issued thereafter, pursuant to
awards granted prior to such date.

In August 1993, the Company adopted the 1993 Stock Option Plan (the "1993
Plan"). Under the 1993 Plan, employees who do not participate in the 1992
Plan are eligible to receive annually stock options with an aggregate
exercise price equivalent to a maximum of 10% of their eligible
earnings. Subject to certain adjustments, up to a maximum of 3,000,000
shares of common stock may be sold or issued under the 1993 Plan. No
awards shall be granted after December 11, 2003, although common stock may
be issued thereafter, pursuant to awards granted prior to such date.

In February 1995, the Company adopted the Non-Employee Director Stock
Option Plan (the "Director Plan"). Under the Director Plan, any eligible
director of the Company who is not an employee of the Company or a
subsidiary of the Company is granted annually an option to purchase 10,000
shares of common stock at fair market value. Subject to certain
adjustments, up to a maximum of 250,000 shares of common stock may be sold
or issued under the Director Plan. Unless sooner terminated, no awards
shall be granted after February 17, 2005, although common stock may be
issued thereafter, pursuant to awards granted prior to such date.

The terms and conditions of the stock-based awards under the plans are
determined by a committee of the Board of Directors on each award date and
may include provisions for the exercise price, expirations, vesting,
restriction on sales and forfeiture, as applicable. Options granted under
the plans have terms not exceeding 11 years and provide for an option
exercise price no less than 100% of the fair market value of the common
stock.

The following is a summary of stock option activity for the three fiscal
years ended September 29, 1996:

Option price
Shares per share
--------- ------------
Balance at October 3, 1993. . . . . . . . . 1,855,611 $ .96-13.38
Granted. . . . . . . . . . . . . . . . . . 323,000 5.88-10.13
Exercised. . . . . . . . . . . . . . . . . (115,050) .96-1.13
Cancelled. . . . . . . . . . . . . . . . . (252,970) 5.88-13.38
--------
Balance at October 2, 1994. . . . . . . . . 1,810,591 .96-12.25
Granted. . . . . . . . . . . . . . . . . . 812,098 4.18-6.50
Exercised. . . . . . . . . . . . . . . . . (42,900) .96-1.13
Cancelled. . . . . . . . . . . . . . . . . (267,818) 1.13-12.25
---------
Balance at October 1, 1995. . . . . . . . . 2,311,971 .96-12.25
Granted. . . . . . . . . . . . . . . . . . 540,891 6.75-9.125
Exercised. . . . . . . . . . . . . . . . . (10,880) 1.13-6.50
Cancelled. . . . . . . . . . . . . . . . . (129,395) 1.13-11.00
---------
Balance at September 29, 1996 . . . . . . . 2,712,587 .96-12.25
=========
Stock options for the purchase of 1,732,685 shares of common stock were
exercisable at September 29, 1996.

F-17

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

9. STOCKHOLDERS' EQUITY

The Company has 15,000,000 shares of preferred stock authorized for
issuance at a par value of $.01 per share. No shares have been issued.

On July 26, 1996, the Board of Directors declared a dividend of one
preferred stock purchase right (a "Right") for each outstanding share of
the Company's common stock, which Rights expire on July 26, 2006. Each
Right entitles a stockholder to purchase for an exercise price of $40,
subject to adjustment, one one-hundredth of a share of Series A Junior
Participating Cumulative Preferred Stock of the Company, or, under certain
circumstances, shares of common stock of the Company or a successor
company with a market value equal to two times the exercise price. The
Rights would only become exercisable for all other persons when any person
has acquired or commences to acquire a beneficial interest of at least 20%
of the Company's outstanding common stock. The Rights have no voting
privileges and may be redeemed by the Board of Directors at a price of
$.001 per Right at any time prior to the acquisition of a beneficial
ownership of 20% of the outstanding common shares. There are 388,405
shares of Series A Junior Participating Cumulative Preferred Stock
reserved for issuance upon exercise of the Rights.

In conjunction with the December 1988 acquisition of the Company, warrants
for the purchase of 1,584,573 shares of common stock were issued and are
exercisable at $.93 per share, as adjusted. As of September 29, 1996,
warrants for 1,478,076 shares had been exercised.

At September 29, 1996, the Company had 4,893,647 shares of common stock
reserved for issuance upon the exercise of stock options and 106,497
shares reserved for issuance upon exercise of warrants.

10. AVERAGE SHARES OUTSTANDING

Fiscal year net earnings (loss) per share is based on the weighted average
number of shares outstanding during the year, determined as follows:

1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Shares outstanding, beginning of fiscal year. . . . . . 38,802,195 38,668,200 38,234,250
Effect of common stock issued . . . . . . . . . . . . . 16,071 29,566 296,797
Assumed additional shares issued upon
exercise of stock options and warrants,
net of shares reacquired at the average
market price . . . . . . . . . . . . . . . . . . . . . 482,510 216,874 --
---------- ---------- ----------
Weighted average shares outstanding . . . . . . . . . . 39,300,776 38,914,640 38,531,047
========== ========== ==========
</TABLE>

F-18

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

11. RELATED PARTY TRANSACTIONS

The Company provides distribution services to a portion of FRI's Mexican
restaurants, principally those operated under the Chi-Chi's name.
Distribution sales to those restaurants subsequent to FRI's acquisition of
Chi-Chi's aggregated $65,106, $78,195 and $63,702 in 1996, 1995 and 1994,
respectively. In relation to the distribution sales, the Company had
accounts receivable of $2,924 and $3,839 due from Chi-Chi's at
September 29, 1996 and October 1, 1995, respectively. Distribution
services continue to be provided by the Company even though FRI is no
longer a related party.

Gibbons, Goodwin, van Amerongen ("GGvA"), successor to Gibbons, Green, van
Amerongen, general partners in the limited partnerships which owned
approximately 45% of the Company's outstanding common stock until such
stock was distributed to the limited partners in November 1995, were paid
fees of $150 and $900 in 1995 and 1994, respectively, under an agreement
which expired December 1994, whereby GGvA provided certain management
services to the Company.

12. CONTINGENT LIABILITIES

Various claims and legal proceedings are pending against the Company in a
federal court and in state courts in the state of Washington, seeking
monetary damages for personal injuries relating to the outbreak of
food-borne illness (the "Outbreak") attributed to hamburgers served at
JACK IN THE BOX restaurants. The Company, in consultation with its
insurance carriers and attorneys, does not anticipate that the total
liability on all such lawsuits and claims will exceed the coverage
available under its applicable insurance policies.

The Company is engaged in litigation with the Vons Companies, Inc.
("Vons") and other suppliers seeking reimbursement for all damages, costs
and expenses incurred in connection with the Outbreak. The initial
litigation was filed by the Company on February 4, 1993. Vons has filed
cross-complaints against the Company and others alleging certain
contractual, indemnification and tort liabilities; seeking damages in
unspecified amounts and a declaration of the rights and obligations of the
parties. The claims of the parties arise out of two separate lawsuits
which have been consolidated and are now set for trial in the Los Angeles
Superior Court, Los Angeles, California in July 1997.

On April 6, 1996 an action was filed by one of the Company's international
franchisees, Wolsey, Ltd., in the United States District Court in San
Diego, California against the Company and its directors, its international
franchising subsidiary, and certain officers of the Company and others.
The complaint alleges certain contractual, tort and law violations related
to the franchisees' development rights in the Far East and seeks damages
in excess of $25 million, injunctive relief, attorney fees and costs.
The Company has successfully dismissed portions of the complaint,
including the single claim alleging wrongdoing by the Company's outside
directors. Management believes the remaining allegations are without
foundation and intends to vigorously defend the action.

F-19

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

12. CONTINGENT LIABILITIES (Continued)

On November 5, 1996 an action was filed by the "National JIB Franchisee
Association, Inc." (the "Association") and several of the Company's
franchisees in the Superior Court of California, County of San Diego in
San Diego, California, against the Company and others. The lawsuit
alleges that certain Company policies are unfair business practices and
violate sections of the California Corporations Code regarding material
modifications of franchise agreements and interfere with franchisees'
right of association. It seeks injunctive relief, a declaration of the
rights and duties of the parties, unspecified damages and recission of
alleged material modifications of plaintiffs' franchise agreements. The
complaint also alleges fraud, breach of a fiduciary duty and breach of a
third party beneficiary contract in connection with certain payments that
the Company received from suppliers and seeks unspecified damages,
interest, punitive damages and an accounting. Management believes that
its policies are lawful and that it has satisfied any obligation to its
franchisees in regard to such supplier payments.

On December 10, 1996, a suit was filed by the Company's Mexican licensee,
Foodmex, Inc., in the United States District Court in San Diego, California
against the Company and its international franchising subsidiary. Foodmex
formerly operated several JACK IN THE BOX franchise restaurants in Mexico,
but its licenses were terminated by the Company for, among other reasons,
chronic insolvency and failure to meet operational standards. Foodmex's
suit alleges wrongful termination of its master license, breach of contract
and unfair competition and seeks an injunction to prohibit termination of
its license as well as unspecified monetary damages. The Company believes
its termination of the Foodmex license was proper, and that there is no
merit to the Foodmex claims. The Company intends to vigorously defend the
action.

On February 2, 1995, an action by Christina Jorgensen was filed against
the Company in the U.S. District Court in San Francisco, California
alleging that restrooms at a JACK IN THE BOX restaurant failed to comply
with laws regarding disabled persons and seeking damages in unspecified
amounts, punitive damages, injunctive relief, attorney fees and
prejudgment interest. In an amended complaint damages are also sought on
behalf of all physically disabled persons who have been denied access to
restrooms at the restaurant. A motion has been filed, but has not been
heard, to permit the lawsuit to proceed as a class action and to include
all Company-operated restaurants.

The amount of liability from the claims and actions described above cannot
be determined with certainty, but in the opinion of management, based in
part upon advice from legal counsel, the ultimate liability from all
pending legal proceedings, asserted legal claims and known potential legal
claims which are probable of assertion should not materially affect the
consolidated financial position of the Company.

F-20

<PAGE>
FOODMAKER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)

13. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
September 29, October 1,
1996 1995
-------- --------
Accounts receivable:
Trade. . . . . . . . . . . . . . . . . . . . . $ 7,489 $ 16,521
Notes. . . . . . . . . . . . . . . . . . . . . 2,010 5,698
Other. . . . . . . . . . . . . . . . . . . . . 6,476 7,584
Allowance for doubtful accounts. . . . . . . . (3,493) (4,531)
-------- --------
$ 12,482 $ 25,272
======== ========

Other Assets:
Trading area rights, net of amortization of
$18,669 and $15,618, respectively. . . . . . . $ 67,663 $ 69,761
Lease acquisition costs, net of amortization of
$20,896 and $18,580, respectively. . . . . . . 22,299 25,003
Other assets, net of amortization of
$18,259 and $16,316, respectively. . . . . . . 34,261 36,310
-------- --------
$124,223 $131,074
======== ========

Accrued liabilities:
Payroll and related taxes. . . . . . . . . . . . $ 29,889 $ 26,372
Sales and property taxes . . . . . . . . . . . . 10,125 9,922
Advertising. . . . . . . . . . . . . . . . . . . 12,294 7,487
Insurance. . . . . . . . . . . . . . . . . . . . 41,494 32,406
Interest . . . . . . . . . . . . . . . . . . . . 7,352 10,437
Other. . . . . . . . . . . . . . . . . . . . . . 14,804 11,542
-------- --------
$115,958 $ 98,166
======== ========

14. QUARTERLY RESULTS OF OPERATIONS (Unaudited)

16 weeks ended 12 weeks ended
----------------------------------------------------
Jan. 22, 1995 Apr. 16, 1995 July 9, 1995 Oct. 1, 1995
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . $293,680 $229,661 $244,075 $251,300
Gross profit . . . . . . . . . . 29,391 25,272 29,885 30,689
Net earnings (loss). . . . . . . (72,291) (3,146) 2,622 3,857
Net earnings (loss) per share. . (1.87) (.08) .07 .10

<CAPTION>
16 weeks ended 12 weeks ended
----------------------------------------------------
Jan. 21, 1996 Apr. 14, 1996 July 7, 1996 Sept. 29, 1996
------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . $330,630 $249,975 $243,147 $239,070
Gross profit . . . . . . . . . . 43,047 29,870 36,134 34,560
Net earnings . . . . . . . . . . 4,690 4,013 5,515 5,833
Net earnings per share . . . . . .12 .10 .14 .15
</TABLE>
F-21

<PAGE>
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF

FOODMAKER, INC.

Foodmaker, Inc., a corporation organized and existing under the laws
of the State of Delaware hereby certifies as follows:

1. The name of the Corporation is Foodmaker, Inc. Foodmaker, Inc. was
originally incorporated under the name National Restaurant Systems, Inc., and
the original Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on July 28, 1971.

2. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of incorporation restates and
integrates and further amends the provisions of the Certificate of
Incorporation of this Corporation.

3. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:

ARTICLE I

NAME OF CORPORATION

The name of this Corporation is Foodmaker, Inc .

ARTICLE II

REGISTERED OFFICE

The address of the registered office of the corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle, and the name of its registered agent at that address is The
Corporation Trust Company.

<PAGE>
ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware (the "GCL").

ARTICLE IV

AUTHORIZED CAPITAL STOCK

A. The total number of shares which the Corporation shall have
authority to issue is ninety million (90,000,000) shares, consisting of
seventy-five million (75,000,000) shares of Common Stock, par value of $.01 per
share (the "Common Stock"), and fifteen million (15,000,000) shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock").

B. The Board of Directors is hereby authorized to issue the Preferred
Stock in one or more series, to fix the number of shares of any such series of
Preferred Stock, to determine the designation of any such series, and to fix
the powers, preferences and rights, and the qualifications, limitations or
restrictions of the Preferred Stock to the full extent permitted under the
GCL.

C. The authority of the Board of Directors shall include, without
limitation, the power to fix or alter the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions, if any), the redemption price or prices, and the
liquidation preferences of any wholly unissued series of Preferred Stock, and
the number of shares constituting any such unissued series and the designation
thereof, or any of them; and to increase or decrease the number of shares of any
series subsequent to the issue of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.

The designation and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof of the initial series of
Preferred Stock are the following:

<PAGE>
(1) Designation and Number of Shares. The distinctive designation of
such series of Preferred Stock is "Junior Preferred Stock" (the "Junior
Preferred Stock"). The number of shares of Junior Preferred Stock shall be
5,000,000.

(2) Dividends. The holders of shares of the Junior Preferred Stock
shall be entitled to receive, from and after the filing of this Restated
Certificate of Incorporation with the Secretary of State of the State of
Delaware, when, as and if declared by the Board of Directors of the Corporation
out of the funds of the Corporation legally available therefor, dividends at the
rate of nine dollars ($9) per year, payable only in the form of additional
shares of Junior Preferred Stock (valued at $100 per share) and not in cash.
Dividends shall be paid on a quarterly basis in arrears and will be cumulative
from the date of issue.

Fractional shares of Junior Preferred Stock shall be issued to the
extent necessary to make such dividend payments. Each fractional share of
Junior Preferred Stock outstanding shall be entitled to a ratably proportionate
amount of all dividends accruing with respect to each outstanding share of
the Junior Preferred Stock pursuant to this paragraph (2), and all of such
dividends with respect to such outstanding fractional shares shall be fully
cumulative and shall accrue (whether or not declared), and shall be payable
in the same manner and at such times as provided for in this paragraph (2)
with respect to dividends on each outstanding share of the Junior Preferred
Stock.

(3) Priority With Respect to Dividends. Shares of Junior Preferred
Stock shall have priority as to the payment of dividends with respect to the
Common Stock of the Corporation and other future series of Preferred Stock
ranking junior to the Junior Preferred Stock as to the payment of dividends.
No dividends may be paid on any junior series of Preferred Stock or on the
Common Stock (other than dividends payable in the Corporation's capital stock)
unless full cumulative dividends have been paid (or declared and shares
sufficient for the payment thereof set apart for such payment) on the Junior
Preferred Stock for all quarterly dividend periods terminating on or prior to
the date of payment in full of such dividends on the Common Stock and Junior
Preferred Stock.

The Corporation may not redeem or purchase or otherwise acquire for
value shares of Common Stock or any other class of stock or series of Preferred
Stock thereof ranking junior to or a parity with the Junior Preferred Stock
as to dividends or upon liquidation (other than

<PAGE>
redemptions pursuant to employee stock subscription agreements between the
Corporation and certain officers and key employees of the Corporation or its
subsidiaries) unless, at the time of making such redemption, purchase or other
acquisition, the Corporation is not in default with respect to any dividends
payable on, or any obligation to redeem or retire, shares of the Junior
Preferred Stock.

(4) Voting Rights. The holders of the Junior Preferred Stock shall
not be entitled to vote, except as hereinafter provided in this paragraph (4)
or as otherwise provided by law. On matters subject to a vote by holders of
the Junior Preferred Stock, the holders shall be entitled to one vote per share.

(a) So long as shares of Junior Preferred Stock remain outstanding, the
Corporation shall not directly or indirectly or through merger or
consolidation with any other Corporation, without the affirmative vote at a
meeting (or the written consent with or without a meeting) of the holders of
at least a majority in number of shares of the Junior Preferred Stock then
outstanding, (i) create any class or classes of stock ranking equal or prior
to the Junior Preferred Stock, either as to dividends or upon liquidation, or
increase the number of authorized shares of any class or classes of stock
ranking equal or prior to the Junior Preferred Stock either as to dividends
or upon liquidation, (ii) amend, alter or repeal (whether by merger,
consolidation or otherwise and whether or not the Corporation is the
surviving corporation) any of the provisions of the Certificate of
Incorporation of the Corporation so as to affect adversely the preferences,
special rights or powers of the Junior Preferred Stock (iii) authorize any
reclassification of the Junior Preferred Stock.

(b) In the event that six (6) or more quarterly dividends (whether or
not consecutive) payable on the Junior Preferred Stock are in arrears, the
number of directors of the Corporation shall automatically be increased by one
and the holders of all outstanding shares of Junior Preferred Stock, voting as
a separate class, shall be entitled to elect one director of the Corporation.
Such voting right shall remain vested until such time as all dividends in
arrears are paid (or declared and a sum sufficient for the payment thereof
set aside for payment).

(i) Whenever such voting right shall have vested, such right may be
exercised initially either at a

<PAGE>
special meeting of the holders of the Junior Preferred Stock, called as
hereinafter provided, or at any annual meeting of stockholders held for the
purpose of electing directors, and thereafter at such annual meetings or by
the written consent of the holders of the Junior Preferred Stock pursuant to
Section 228 of the GCL. Such voting right shall continue until such time
as (x) all cumulative dividends accumulated on the Junior Preferred
Stock, together with additional dividends accrued thereon, if any, shall have
been paid in full, and (y) all mandatory redemption obligations with respect
to the Junior Preferred Stock which have matured have been met, at which time
such voting right of the holders of the Junior Preferred Stock shall
terminate, subject to revesting in the event of each and every subsequent
event of default of the character indicated above.

(ii) At any time when such voting right shall have vested in the
holders of the Junior Preferred Stock, and if such right shall not already have
been initially exercised, a proper officer of the Corporation shall, upon the
written request of the holders of record of ten percent (10%) of the shares
of Junior Preferred Stock then outstanding, addressed to the Secretary of the
Corporation, call a special meeting of the holders of the Junior Preferred
Stock and of any other class or classes of stock having voting power with
respect thereto for the purpose of electing directors. Such meeting shall be
held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation or, if none, at a place designated by the
Secretary of the Corporation. If such meeting shall not be called by the
proper officers of the corporation within 30 days after the personal service
of such written request upon the Secretary of the Corporation, or within 30
days after mailing the same within the United States, by registered mail,
addressed to the Secretary of the Corporation at its principal office (such
mailing to be evidenced by the registry receipt issued by the postal
authorities), the holders of record of ten percent (10%) of the shares of the
Junior Preferred Stock then outstanding may designate in writing a holder of
Junior Preferred Stock to call such meeting at the expense of the
Corporation and such meeting may be called by such person so designated upon
the notice required for annual meetings of stockholders and shall be held at
the same place as is elsewhere provided in this sub-paragraph (ii). Any
holder of Junior Preferred Stock entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
sub-paragraph (ii).

<PAGE>
Notwithstanding the provisions of this sub-paragraph (ii), however, no such
special meeting shall be called during a period within ninety (90) days
immediately preceding the date fixed for the next annual meeting of
stockholders.

(iii) At any meeting held for the purpose of electing directors at
which the holders of Junior Preferred Stock shall have the right to elect a
director as provided herein, the presence in person or by proxy of the holders
of a majority of the then outstanding shares of Junior Preferred Stock shall be
required and be sufficient to constitute a quorum of such class for the
election of directors by such class. At any such meeting or adjournment
thereof (x) the absence of a quorum of the holders of the Junior Preferred
Stock having such right shall not prevent the election of directors other
than those to be elected by the holders of Junior Preferred Stock and the
absence of a quorum or quorums of the holders of capital stock entitled to
elect such other directors shall not prevent the election of directors to be
elected by the holders of the Junior Preferred Stock entitled to elect such
directors and (y) in the absence of a quorum of the holders of any class of
stock entitled to vote for the election of directors, a majority of the
holders of such class present in person or by proxy shall have the power to
adjourn the meeting for the election of directors which the holders of such
class are entitled to elect, from time to time, without notice (except as
required by law) other than announcement at the meeting, until a quorum shall
be present.

(iv) Any director elected by the holders of Junior Preferred Stock
pursuant to sub-paragraph (b) shall serve until the earlier of payment in full
of the dividend arrearage or the next annual meeting of stockholders, and may
be otherwise removed, with or without cause, only by the holders of at least a
majority of the shares of Junior Preferred Stock outstanding at the time of
such removal.

(5) Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Junior Preferred Stock (including shares issued as
dividends) will be entitled to receive $100 per share (or pro rata portion
thereof with respect to fractional shares) plus an amount equal to the cash
value of accrued and unpaid dividends to the date fixed for distribution before
any distribution of assets may be made to holders of Common Stock or of any
other class of stock of the corporation or series of Preferred Stock ranking
junior to the Junior Preferred Stock with respect to the

<PAGE>
distribution of assets. If upon any liquidation, dissolution or winding up of
the Corporation, the amounts payable with respect to the Junior Preferred
Stock and any other shares of capital stock of the Corporation ranking as to
any such distribution on a parity with the Junior Preferred Stock are not
paid in full, the holders of the Junior Preferred Stock and of such other
shares will share ratably in any such distribution of assets of the
Corporation in proportion to the full respective preferential amounts to
which they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Junior
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation. Such liquidation rights are not
triggered by any consolidation or merger of the Corporation with or into any
other corporation or by the sale, transfer or lease of all or substantially
all of the Corporation's assets, provided that the Corporation shall not
effect such transaction unless provision is made in the certificate of
incorporation of the resulting and surviving corporation or otherwise
for the protection of the rights of the holders of Junior Preferred Stock.

(6) Optional Redemption. The Junior Preferred Stock may be redeemed
at any time at the option of the Corporation, in whole or in part, upon not
less than thirty (30) nor more than sixty (60) days' prior notice at a
redemption price of $100 per share plus an amount equal to the cash value of
all accrued and unpaid dividends to the redemption date. On and after the
redemption date, dividends shall cease to accumulate on shares of Junior
Preferred Stock called for redemption.

(7) Mandatory Redemption. The Corporation shall redeem all outstanding
shares of Junior Preferred Stock at a redemption price of $100 per share plus an
amount equal to the cash value of all accrued and unpaid dividends to the
redemption date upon or immediately prior to the occurrence of any of the
following: (i) the sale of all or substantially all of the Corporation's
assets to any person other than an affiliate of the Corporation; (ii) the
merger or consolidation of the Corporation with or into another corporation
or of another corporation with or into the Corporation with the effect that
the common stockholders of the Corporation immediately prior to such
transaction hold less than 50% of the total voting power entitled to vote
in election of directors, managers or trustees of the surviving corporation
of such merger; (iii) the liquidation or dissolution of the Corporation; or
(iv) the completion by the Corporation of one or more

<PAGE>
public offerings of Common Stock for aggregate net proceeds of at least $75
million; provided, however, that no such redemption may be effected until the
earlier of May 15, 1998 and the date on which no 14-1/4% Senior Subordinated
Notes due 1998 of the Corporation remain outstanding.

If, for any reason, the Corporation shall fail to discharge its
mandatory obligations pursuant to this paragraph (7), such mandatory redemption
obligations shall be discharged as soon as the Corporation is able to
discharge such obligations, but the redemption price shall be determined as
of the date such redemption should have occurred except with respect to the
calculation of the amount equal to accrued and unpaid dividends, which
calculation shall include all such dividends to the date of payment. If and
so long as any mandatory redemption obligations with respect to the Junior
Preferred Stock shall not be fully discharged, the Corporation shall not
declare or pay any cash dividend or make any distributions in cash upon, or,
directly or indirectly, purchase, redeem or otherwise acquire, any capital
stock (including any warrants, rights or options exercisable for or
convertible into any capital stock of the Corporation, but not including the
Junior Preferred Stock) or permit any of its subsidiaries or affiliates to,
directly or indirectly, purchase or acquire any such capital stock. Dividends
shall continue to accrue on a compounding basis on any mandatory redemption
obligation that has not been discharged by the Corporation pursuant to this
paragraph (7).

(8) Selection of Securities to be Redeemed. In the event that fewer
than all of the outstanding shares of Junior Preferred Stock are to be redeemed
at any time, number of shares to be redeemed shall be determined by Board of
Directors and the shares to be redeemed shall determined as follows: first,
all fractional shares of Junior Preferred Stock shall be redeemed, then the
Corporation shall select the remaining shares of Junior Preferred Stock to be
redeemed pro rata or by lot as may be determined by the Board of Directors.

(9) Procedure for Redemption.

(a) In the event the Corporation shall redeem shares of Junior
Preferred Stock at any time, notice of such redemption shall be given by first
class mail, postage prepaid, mailed not less than 30 days nor more than 60 days
prior to the redemption date, to each

<PAGE>
holder of record of the shares to be redeemed at such holder's address as the
same appears on the stock register of the Corporation; provided, however,
that no failure to mail such notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any shares of Junior
Preferred Stock to be redeemed except as to the holder to whom the
Corporation has failed to mail said notice or except as to the holder whose
notice was defective. Each such notice shall state: (i) the redemption date;
(ii) the number of shares of Junior Preferred Stock to be redeemed and, if
fewer than all the shares held by such holder are to be redeemed from such
holder, the number of shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price, and (v) that
dividends on the shares to be redeemed will cease to accrue on such
redemption date unless the Corporation defaults in making such payment.

(b) Notice having been mailed as aforesaid, from and after the
redemption date (unless the Corporation shall fail to provide money for the
payment of the redemption price of the shares called for redemption) dividends
on the shares of Junior Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price including an
amount equal to any accrued and unpaid dividends) shall cease. Upon surrender
in accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the redemption price aforesaid. In
case fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.

ARTICLE V

DIRECTORS

The number of directors may hereafter be fixed from time to time
pursuant to procedures set forth in the Corporation's bylaws.

<PAGE>
ARTICLE VI

BOARD POWER REGARDING BYLAWS

In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind the bylaws of the Corporation.

ARTICLE VII

ELECTION OF DIRECTORS

Elections of directors at annual or special meetings need not be by
written ballot unless the bylaws of the Corporation shall so provide.

ARTICLE VIII

LIMITATION OF DIRECTOR LIABILITY

To the fullest extent permitted by the GCL 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. If the GCL is amended after the date of the
filing of this Restated Certificate of Incorporation to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the GCL, as so amended from time
to time. No repeal or modification of this Article VIII by the stockholders
shall adversely affect any right or protection of a director of the
Corporation existing by virtue of this Article VIII at the time of such
repeal or modification.

ARTICLE IX

INDEMNIFICATION OF DIRECTORS

The Corporation shall indemnify, in the manner and to the full extent
permitted by law, any person (or the estate of any person) who was or is a
party to, or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether or not by or in the right of
the Corporation, and whether civil, criminal, administrative, investigative
or otherwise, by

<PAGE>
reason of the fact that such person 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, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise. The
Corporation may, to the full extent permitted by law, purchase and maintain
insurance on behalf of any such person against any liability which may be
asserted against him. To the full extent permitted by law, the
indemnification provided herein shall include expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, and, in the manner
provided by law, any such expenses may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of the person seeking indemnification to repay
such amounts if it is ultimately determined that he is not entitled to be
indemnified. The indemnification provided herein shall not be deemed to limit
the right of the Corporation to indemnify any other person for any such
expenses to the full extent permitted by law, nor shall it be deemed
exclusive of any other rights to which any person seeking indemnification from
the Corporation may be entitled under any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.

ARTICLE X

SECTION 203 ELECTION

The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law.

ARTICLE XI

CORPORATE POWER

The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation.

<PAGE>
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
signed under the seal of the Corporation this 6th day of March, 1992.

FOODMAKER, INC.

By: ROBERT L. SUTTIE
----------------
Robert L. Suttie
Corporate Vice President
and Controller

Attest:

WILLIAM E. RULON
- ----------------
William E. Rulon
Secretary

<PAGE>

CERTIFICATE OF DESIGNATIONS

SERIES A JUNIOR PARTICIPATING

CUMULATIVE PREFERRED STOCK

$.01 Par Value

FOODMAKER, INC.

Pursuant to Section 151 of the

General Corporation

Law of the State of Delaware

We, Charles W. Duddles, Executive Vice President and
Chief Financial Officer, and William E. Rulon, Senior Vice
President and Secretary, of Foodmaker, Inc., a corporation
organized and existing under the General Corporation Law of
the State of Delaware, in accordance with the provisions of
Section 103 thereof, DO HEREBY CERTIFY:

That pursuant to the authority conferred upon the
Board of Directors by the Restated Certificate of
Incorporation of the Corporation, the Board of Directors on
July 26, 1996, adopted the following resolution creating a
series of 750,000 (seven hundred and fifty thousand) shares of
Preferred Stock, par value $0.01 per share, designated as
Series A Junior Participating Cumulative Preferred Stock:

RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Corporation in accordance with
the provisions of its Restated Certificate of Incorporation, a
series of Preferred Stock of the Corporation be, and it hereby
is, created, and that the designation and amount thereof and
the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions
thereof, are as follows:

Section 1. Designation and Amount. The shares of
such series shall be designated as Series A Junior

<PAGE>
Participating Cumulative Preferred Stock, par value $0.01 per
share (the "Series A Preferred Stock"), and the number of
shares constituting such series shall be 750,000 (seven
hundred and fifty thousand).

Section 2. Dividends and Distributions.

(a) The holders of shares of Series A Preferred
Stock, in preference to the holders of shares of Common Stock,
par value $.01 per share, of the Corporation (the "Common
Stock") and of any other junior stock of the Corporation that
may be outstanding, 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 tenth day of January, April, July and October 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 (i) $.25 per share ($1.00 per annum), or (ii) subject to
the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100
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 that the Corporation
shall at any time declare or pay any dividend on 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) into a greater
or lesser number of shares of Common Stock, then and in each
such event, the amount to which the holder of each share of
Series A Preferred Stock was entitled immediately prior to
such event under clause (ii) 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 2 immediately after it declares
a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided,
however, that in the event no dividend or distribution shall

<PAGE>
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 $.25
per share ($1.00 per annum) 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 of Series A Preferred Stock,
unless the date of 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 cases such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall cumulate but 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.

Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting
rights:

(a) Each share of Series A Preferred Stock shall
entitle the holder thereof to 100 votes (and each one one-
hundredth 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
that the Corporation shall at any time declare or pay any
dividend on 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 and in each such event, 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

3
<PAGE>
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 in the Restated
Certificate of Incorporation of the Corporation or herein or
by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders
of the Corporation.

(i) In the event that at any time dividends
on Series A Preferred Stock, whenever accrued and whether
or not consecutive, shall not have been paid or declared
and a sum sufficient for the payment thereof set aside,
in an amount equivalent to six quarterly dividends on all
shares of Series A Preferred Stock at the time
outstanding, then and in each such event, the holders of
shares of Series A Preferred Stock and each other series
of preferred stock now or hereafter issued that shall be
accorded such class voting right by the Board of
Directors and that shall have the right to elect one
director (or, in the event any such other series is
entitled to a greater number of directors, such number of
directors, which shall be cumulative with and not in
addition to the director provided for herein, such
director or directors being hereinafter referred to as
"Special Directors") as the result of a prior or
subsequent default in payment of dividends on such series
(each such other series being hereinafter called "Other
Series of Preferred Stock"), voting separately as a class
without regard to series, shall be entitled to elect the
Special Director at the next annual meeting of
stockholders of the Corporation, in addition to the
directors to be elected by the holders of all shares of
the Corporation entitled to vote for the election of
directors, and the holders of all shares (including the
Series A Preferred Stock) otherwise entitled to vote for
directors, voting separately as a class, shall be
entitled to elect the remaining members of the Board of
Directors, provided that the Series A Preferred Stock and
each Other Series of Preferred Stock, voting as a class,
shall not have the right to elect more than one Special
Director (in addition to any Special Director to which
the holders of any Other Series of Preferred Stock are
then entitled). Such special voting right of the holders
of shares of Series A Preferred Stock may be exercised

4
<PAGE>
until all dividends in default on the Series A Preferred
Stock shall have been paid in full or declared and funds
sufficient therefor set aside, and when so paid or
provided for, such special voting right of the holders of
shares of Series A Preferred Stock shall cease, but
subject always to the same provisions for the vesting of
such special voting rights in the event of any such
future dividend default or defaults.

(ii) At any time after such special voting
rights shall have so vested in the holders of shares of
Series A Preferred Stock, the Secretary of the
Corporation may, and upon the written request of the
holders of record of 10% or more in number of the shares
of Series A Preferred Stock and each Other Series of
Preferred Stock then outstanding addressed to the
Secretary at the principal executive office of the
Corporation shall, call a special meeting of the holders
of shares of Preferred Stock so entitled to vote, for the
election of the Special Directors to be elected by them
as herein provided, to be held within 60 days after such
call and at the place and upon the notice provided by law
and in the By laws for the holding of meetings of
stockholders; provided, however, that the Secretary shall
not be required to call such special meeting in the case
of any such request received less than 90 days before the
date fixed for any annual meeting of stockholders, and if
in such case such special meeting is not called or held,
the holders of shares of Preferred Stock so entitled to
vote shall be entitled to exercise the special voting
rights provided in this paragraph at such annual meeting.
If any such special meeting required to be called as
above provided shall not be called by the Secretary
within 30 days after receipt of any such request, then
the holders of record of 10% or more in number of the
shares of Series A Preferred Stock and each Other Series
of Preferred Stock then outstanding may designate in
writing one of their number to call such meeting, and the
person so designated may, at the expense of the
Corporation, call such meeting to be held at the place
and upon the notice given by such person, and for that
sole purpose shall have access to the stock books of the
Corporation. No such special meeting and no adjournment
thereof shall be held on a date later than 60 days before
the annual meeting of stockholders. If, at any meeting
so called or at any annual meeting held while the holders
of shares of Series A Preferred Stock have the special
voting rights provided for in this paragraph, the holders
of not less than 40% of the aggregate voting power of
Series A Preferred Stock and each Other Series of
Preferred Stock then outstanding are present in person or
by proxy, which percentage shall be sufficient to

<PAGE>
constitute a quorum for the election of additional
directors as herein provided, the then authorized number
of directors of the Corporation shall be increased by the
number of Special Directors to be elected, as of the time
of such special meeting or the time of the first such
annual meeting held while such holders have special
voting rights and such quorum is present, and the holders
of shares of Series A Preferred Stock and each Other
Series of Preferred Stock, voting as a class, shall be
entitled to elect the Special Director or Directors so
provided for. If the directors of the Corporation are
then divided into classes under provisions of the
Restated Certificate of Incorporation of the Corporation
or the Bylaws, the Special Director or Directors shall
belong to each class of directors in which a vacancy is
created as a result of such increase in the authorized
number of directors. If the foregoing expansion of the
size of the Board of Directors shall not be valid under
applicable law, then the holders of shares of Series A
Preferred Stock and of each Other Series of Preferred
Stock, voting as a class, shall be entitled, at the
meeting of stockholders at which they would otherwise
have voted, to elect a Special Director or Directors to
fill any then existing vacancies on the Board of
Directors, and shall additionally be entitled, at such
meeting and each subsequent meeting of stockholders at
which directors are elected, to elect all of the
directors then being elected until by such class vote the
appropriate number of Special Directors has been so
elected.

(iii) Upon the election at such meeting by the
holders of shares of Series A Preferred Stock and each
Other Series of Preferred Stock, voting as a class, of
the Special Director or Directors they are entitled so to
elect, the persons so elected, together with such persons
as may be directors or as may have been elected as
directors by the holders of all shares (including
Series A Preferred Stock) otherwise entitled to vote for
directors, shall constitute the duly elected directors of
the Corporation. Each Special Director so elected by
holders of shares of Series A Preferred Stock and each
Other Series of Preferred Stock, voting as a class, shall
serve until the next annual meeting or until their
respective successors shall be elected and qualified, or
if any such Special Director is a member of a class of
directors under provisions dividing the directors into
classes, each such Special Director shall serve until the
annual meeting at which the term of office of such
Special Director's class shall expire or until such
Special Director's successor shall be elected and shall
qualify, and at each subsequent meeting of stockholders

6
<PAGE>
at which the directorship of any Special Director is up
for election, said special class voting rights shall
apply in the reelection of such Special Director or in
the election of such Special Director's successor;
provided, however, that whenever the holders of shares of
Series A Preferred Stock and each Other Series of
Preferred Stock shall be divested of the special rights
to elect one or more Special Directors as above provided,
the terms of office of all persons elected as Special
Directors, or elected to fill any vacancies resulting
from the death, resignation, or removal of Special
Directors shall forthwith terminate (and the number of
directors shall be reduced accordingly).

(iv) If, at any time after a special meeting
of stockholders or an annual meeting of stockholders at
which the holders of shares of Series A Preferred Stock
and each Other Series of Preferred Stock, voting as a
class, have elected one or more Special Directors as
provided above, and while the holders of shares of
Series A Preferred Stock and each Other Series of
Preferred Stock shall be entitled so to elect one or more
Special Directors, the number of Special Directors who
have been so elected (or who by reason of one or more
resignations, deaths or removals have succeeded any
Special Directors so elected) shall by reason of
resignation, death or removal be reduced the vacancy in
the Special Directors may be filled by any one or more
remaining Special Director or Special Directors. In the
event that such election shall not occur within 30 days
after such vacancy arises, or in the event that there
shall not be incumbent at least one Special Director, the
Secretary of the Corporation may, and upon the written
request of the holders of record of 10% or more in number
of the shares of Series A Preferred Stock and each Other
Series of Preferred Stock then outstanding addressed to
the Secretary at the principal office of the Corporation
shall, call a special meeting of the holders of shares of
Series A Preferred Stock and each Other Series of
Preferred Stock so entitled to vote, for an election to
fill such vacancy or vacancies, to be held within 60 days
after such call and at the place and upon the notice
provided by law and in the Bylaws for the holding of
meetings of stockholders; provided, however, that the
Secretary shall not be required to call such special
meeting in the case of any such request received less
than 90 days before the date fixed for any annual meeting
of stockholders, and if in such case such special meeting
is not called, the holders of shares of Preferred Stock
so entitled to vote shall be entitled to fill such
vacancy or vacancies at such annual meeting. If any such
special meeting required to be called as above provided

<PAGE>
shall not be called by the Secretary within 30 days after
receipt of any such request, then the holders of record
of 10% or more in number of the shares of Series A
Preferred Stock and each Other Series of Preferred Stock
then outstanding may designate in writing one of their
number to call such meeting, and the person so designated
may, at the expense of the Corporation, call such meeting
to be held at the place and upon the notice above
provided, and for that purpose shall have access to the
stock books of the Corporation; no such special meeting
and no adjournment thereof shall be held on a date later
than 60 days before the annual meeting of stockholders.

(d) Nothing herein shall prevent the directors or
stockholders from taking any action to increase the number of
authorized shares of Series A Preferred Stock, or increasing
the number of authorized shares of Preferred Stock of the same
class as the Series A Preferred Stock or the number of
authorized shares of Common Stock, or changing the par value
of the Common Stock or Preferred Stock, or issuing options,
warrants or rights to any class of stock of the Corporation as
authorized by the Restated Certificate of Incorporation of the
Corporation, as it may hereafter be amended.

(e) Except as set forth herein, holders of shares
of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote as set forth in the Restated
Certificate of Incorporation of the Corporation or herein or
by law) for taking any corporate action.

Section 4. Certain Restrictions.

(a) Whenever any dividends or other distributions
payable on the Series A Preferred Stock as provided in
Section 2 hereof 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,
directly or indirectly:

(i) declare or pay dividends on, or make any
other distributions with respect to, 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 on, or make any
other distributions with respect to, 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 shares

<PAGE>
of 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) with the Series A Preferred Stock,
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) 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, directly or indirectly, any shares of stock of
the Corporation unless the Corporation could, under
paragraph (a) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.

Section 5. 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 shall upon their cancellation become authorized but
unissued shares of preferred stock, without designation as to
series, and may be reissued as part of any series of preferred
stock created by resolution or resolutions of the Board of
Directors (including Series A Preferred Stock), subject to the
conditions and restrictions on issuance set forth herein.

Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to:

<PAGE>
(a) 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 the greater of (i) $1.00 per share ($.001
per one one-hundredth of a share), plus an amount equal to
accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, or
(ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of
shares of Common Stock; or

(b) 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 other 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 that the Corporation shall at any time
declare or pay any dividend on 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) into a greater or lesser number
of shares of Common Stock, then and in each such event, the
aggregate amount to which the holder of each share of Series A
Preferred Stock was entitled immediately prior to such event
under the proviso in clause (a) 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.

Section 7. Consolidation, Merger, etc. In the
event that 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, or otherwise
changed, then and in each such event, the shares of Series A
Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 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 that the Corporation shall at any time declare or
pay any dividend on 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

<PAGE>
or otherwise) into a greater or lesser number of shares of
Common Stock, then and in each such event, 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.

Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable. Notwithstanding the
foregoing, the Corporation may acquire shares of Series A
Preferred Stock in any other manner permitted by law, the
Restated Certificate of Incorporation of the Corporation or
herein.

Section 9. Rank. Unless otherwise provided in the
Restated Certificate of Incorporation of the Corporation or a
Certificate of Designations relating to a subsequent series of
preferred stock of the Corporation, the Series A Preferred
Stock shall rank junior to all other series of the
Corporation's preferred stock as to the payment of dividends
and the distribution of assets on liquidation, dissolution or
winding up, and senior to the Common Stock of the Corporation.

Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be amended in any
manner that would materially and adversely alter or change the
powers, preferences or special rights of the Series A
Preferred Stock without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single series.

Section 11. Fractional Shares. Series A Preferred
Stock may be issued in fractions of a share (in one one-
hundredths (1/100) of a share and integral multiples thereof)
that shall entitle the holder thereof, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and have the benefit
of all other rights of holders of shares of Series A Preferred
Stock.

<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed
this Certificate and do affirm the foregoing as true under the
penalties of perjury this 15th day of August, 1996.

CHARLES W. DUDDLES
----------------------------
Charles W. Duddles
Executive Vice President and
Chief Financial Officer

Attest:

WILLIAM E. RULON
- ----------------------
William E. Rulon
Senior Vice President and Secretary

<PAGE>
Exhibit 10.1.1
FIRST AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT

THIS FIRST AMENDMENT TO THE AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT ("Amendment") is made as of
November 26, 1996, among Foodmaker, Inc., a Delaware
corporation (the "Company"), each of the banks identified on
the signature pages hereof (each a "Bank" and, collectively,
the "Banks"), Credit Lyonnais New York Branch, as Agent,
Collateral Agent and Swing Line Bank and Union Bank, as
Issuing Bank.

W I T N E S S E T H
- - - - - - - - - -

WHEREAS, the Company, the Banks, the Agent, the
Collateral Agent, the Swing Line Bank and the Issuing Bank
entered into the Amended and Restated Revolving Credit
Agreement, dated as of March 15, 1996 (the "Credit
Agreement"); and

WHEREAS, the signatories hereto desire to amend
the Credit Agreement as set forth herein;

NOW, THEREFORE, in consideration of the premises
and of the covenants and agreements contained herein and in
the Credit Agreement, the parties hereto agree that the
Credit Agreement is hereby amended as set forth herein:

1. Capitalized terms used herein which are not
otherwise defined herein but are defined in the Credit
Agreement shall have the meanings given to such terms in the
Credit Agreement.

2. The definition of "Applicable Margin" in
Section 1.01(c) is amended to read in its entirety as
follows:

"Applicable Margin" shall mean with respect to ABR
-----------------
Loans and Eurodollar Loans the rate per annum set forth
opposite the applicable Leverage Ratio set forth below.

<PAGE>
APPLICABLE MARGIN

Eurodollar
Leverage Ratio ABR Loans Loans
------------------ --------------- ----------
Greater than 1.50% 2.50%
4.5:1
4.00:1 to 4.5:1 1.00% 2.00%
3.50:1 to 4.0:1 0.75% 1.75%
less than 3.50:1 0.50% 1.50%

3. The definition of "Consolidated Capital
Expenditures" in Section 1.01(c) is amended to read in its
entirety as follows:

"Consolidated Capital Expenditures" shall mean,
for any period, the aggregate of all expenditures (whether
paid in cash or accrued as liabilities and including that
portion of Capital Leases which is capitalized on the
consolidated balance sheet of the Company and its
Subsidiaries), excluding expenditures made for Permitted
Restaurant Repurchases and Permitted Sale Leaseback
Repurchases, by the Company and its Subsidiaries during such
period that in conformity with GAAP would be classified as
capital expenditures.

4. The definition of "Leverage Ratio" in Section
1.01(c) is amended to read in its entirety as follows:

"Leverage Ratio" shall mean a ratio of
Indebtedness of the Company to Consolidated EBITDA for the
previous four fiscal quarters.

5. The definition of "Excluded Asset Sale" in
Section 1.01(c) is amended to read in its entirety as
follows:

"Excluded Asset Sale" shall mean (i) the sale of
goods in the ordinary course of business; (ii) sales of
assets to franchisees in the ordinary course of business
consistent with past practice; (iii) the sale of any
property or assets, excluding properties listed on Schedule
7.01(b)-1, acquired after March 15, 1996 by the Company or
its Subsidiaries pursuant to a sale-leaseback transaction;
(iv) the sale, lease, transfer or disposal of any asset or
assets by the Company or a Subsidiary of the Company to any
of the Company or any Subsidiary of the Company; (v) the
sale or other disposition of obsolete or worn out equipment
or other assets in the ordinary course of business; (vi) the

-2-

<PAGE>
sale, lease, transfer or disposal of properties listed on
Schedule 1.01(c), as amended from time to time; (vii) the
sale, lease, transfer or disposal of no more than two
properties listed on Schedule 7.01(b)-1 or Schedule 7.01(b)-
2 in each fiscal year; provided, however, that the Company
may sell such properties if and only if the Company proposes
to add an equivalent number of sites, the real estate of
each having a book value no less than that of the property
for which it is being substituted, to Schedule 7.01(b)-1 and
the Agent shall have received (a) evidence satisfactory to
the Agent that Mortgages have been filed on the sites to be
added to Schedule 7.01(b)-1 and (b) revised versions of
Schedule 1.01 (c) and Schedule 7.01(b)-1, marked to show the
date of such revisions; (viii) the sale, lease, transfer or
disposal of assets (other than goods and services) having a
fair value consideration not exceeding $5,000,000 in the
aggregate for all of the Company and its Subsidiaries in any
fiscal year; provided, however, that for purposes of
clause (viii) no sale, lease, transfer or disposal of assets
having a fair value consideration of less than $100,000
shall be included in any aggregation of sales, leases,
transfers and disposals; or (ix) the sale or other
disposition to a Company franchisee of (a) any restaurant
that has been acquired by the Company from a franchisee or
(b) any other Company restaurant, provided that the
aggregate value of such Company restaurants sold or
otherwise disposed of pursuant to this clause (ix) does not
exceed the aggregate value of restaurants acquired by the
Company from its franchisees.

6. The definition of "Net Capital Expenditures"
in Section 1.01(c) is amended to read in its entirety as
follows:

"Net Capital Expenditures" shall mean capital
expenditures in accordance with GAAP, excluding expenditures
made for Permitted Restaurant Repurchases and Permitted Sale
Leaseback Repurchases, less proceeds from sale-leaseback
transactions involving assets not acquired through a
Permitted Restaurant Repurchase or Permitted Sale Leaseback
Repurchase.

7. The definition of "Permitted Restaurant
Repurchases" in Section 1.01(c) is amended to read in its
entirety as follows:

"Permitted Restaurant Repurchases" shall mean
restaurants repurchased by the Company from one or more of
its franchisees, provided that between September 30, 1996
and the Termination Date, the aggregate price of all such
repurchases, less any proceeds generated from the sale by

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<PAGE>
the Company of restaurants to franchisees, does not exceed
$24,000,000, and provided further that when the Company
acquires a fee interest in the property through such
repurchase, the Company shall file a Mortgage on such
property within 30 days thereafter, and when the Company
acquires a leasehold interest in the property through such
repurchase, the Company shall use its best efforts to file a
Mortgage on such property promptly thereafter.

8. Clause (ii) of the definition of "Specified
Additional Indebtedness" in Section 1.01(c) is amended to
read in its entirety as follows:

(ii) Indebtedness incurred pursuant to sale-
leaseback transactions, entered into pursuant to the
acquisition of new restaurant properties, not exceeding
(A) $50,000,000 in the fiscal year ending September 1997 and
$60,000,000 in the fiscal year ending October 1998, or
(B) $120,000,000 during the period from September 30, 1996
to the Termination Date.

9. Definitions for the terms "Capital
Investment" and "Permitted Sale Leaseback Repurchases" are
added to Section 1.01(c) to read in their entirety as
follows:

"Capital Investment" shall mean capital
expenditures in accordance with GAAP, including Permitted
Restaurant Repurchases and Permitted Sale Leaseback
Repurchases.

"Permitted Sale Leaseback Repurchases" shall mean
the repurchase of property with respect to which the Company
has previously entered into a sale leaseback arrangement,
provided that such repurchase is completed by December 31,
1997 and that the aggregate purchase price of such
repurchases does not exceed $18,000,000, and provided
further that when the Company acquires a fee interest in the
property through such repurchase, the Company shall file a
Mortgage on such property within 30 days thereafter, and
when the Company acquires a leasehold interest in the
property through such repurchase, the Company shall use its
best efforts to file a Mortgage on such property promptly
thereafter.

10. Section 2.04 shall be amended to read in its
entirety as follows:

Section 2.04. Commitment Fee. The Company shall
pay to the Agent for the account of the Banks a fee (the
"Commitment Fee") equal, (a) if the Leverage Ratio is

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<PAGE>
greater than 4.00:1, to 0.500 percent (1/2 of 1%) per annum
(on the basis of a 365-day year for the actual number of
days elapsed) on the daily average Available Commitment from
the date hereof to the Termination Date and (b) if the
Leverage Ratio is equal to or less than 4.00:1, to 0.375
percent per annum (on the basis of a 365-day year for the
actual number of days elapsed) on the daily average
Available Commitment from the date thereof to the
Termination Date. Such fee shall be payable in arrears on
the last day of each calendar quarter, commencing on the
first such date after the date hereof, and on the
Termination Date.

11. Section 8.02(d) shall be amended to read in
its entirety as follows:

(d) Merger, Acquisition or Sales of Assets.
Enter into any merger or consolidation or acquire assets of
any Person, other than Permitted Restaurant Repurchases,
Permitted Sale Leaseback Repurchases, or assets acquired in
the ordinary course of the Company's business, or sell,
lease, or otherwise dispose of any of its assets, except
pursuant to an Excluded Asset Sale, or permit any Subsidiary
so to do, except that a Wholly Owned Subsidiary may be
merged or consolidated with one or more other Wholly Owned
Subsidiaries or into the Company.

12. Section 8.03(a) shall be amended to read in
its entirety as follows:

(a) Minimum Consolidated EBITDA. Maintain
Consolidated EBITDA of not less than the amounts specified
for each of the following periods:

For the Four Fiscal Amount
Quarters Ending (in millions)
------------------- ---------------
01/97 $95
04/97 $97
07/97 $98
09/97 $102
1/98 $106
4/98 $110
7/98 $114
10/98 $119
and thereafter

-5-

<PAGE>
13. Section 8.03(b) shall be amended to read in
its entirety as follows:

(b) Capital Expenditures. Not make or permit its
Subsidiaries to make, during the fiscal year ending at the
date specified, aggregate Net Capital Expenditures in an
amount in excess of that specified below for such period,
provided that if in any fiscal year the Company does not
make Net Capital Expenditures equal to the aggregate amount
permitted pursuant to this Section 8.03(b), up to
$10,000,000 of the excess of the amount permitted by this
Section over the amount of such expenditures made shall
carry over to the following fiscal year to increase the
amount of permitted expenditures in that period:

For the Fiscal Year Amount
Ending (in millions)
--------------------- -------------
09/97 $55
10/98 $75
10/05/98 - 12/31/98 $20

The Company may purchase property in which the
Company has an existing interest for an amount up to
$4,000,000, provided, that after subtracting the purchase
price from Consolidated EBITDA for the preceding four fiscal
quarters, the Company remains in compliance with all
covenants of this Section 8.03. If such purchase is made,
the purchase price will be subtracted from Consolidated
EBITDA for the purpose of determining subsequent fiscal
quarters' covenant compliance, the Applicable Margin and the
Commitment Fee.

14. Section 8.03(c) shall be amended to read in
its entirety as follows:

(c) Minimum Interest Coverage Ratio. Maintain a
ratio of Consolidated EBITDA to Consolidated Interest
Expense of not less than the ratio specified for each of the
following periods:

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<PAGE>
For the Four Fiscal
Quarters Ending Ratio
------------------- -------
01/97 2.15:1
04/97 2.25:1
07/97 2.35:1
09/97 2.45:1
1/98 2.55:1
4/98 2.65:1
7/98 2.80:1
10/98 2.90:1
and thereafter

15. Section 8.03(d) shall be amended to read in
its entirety as follows:

(d) Fixed Charge Coverage Ratio. Maintain a
ratio of Consolidated EBITDA less Consolidated Capital
Expenditures, excluding Consolidated Capital Expenditures
made with the proceeds from sale leaseback transactions
involving assets not acquired through a Permitted Restaurant
Repurchase or Permitted Sale Leaseback Repurchase, and less
cash paid for Taxes to Consolidated Fixed Charges of not
less than the ratio specified for each of the following
periods:

For the Four Fiscal
Quarters Ending Ratio
------------------- -------
01/97 1.00:1
04/97 1.00:1
07/97 1.00:1
09/97 1.00:1
1/98 1.00:1
4/98 1.00:1
7/98 1.05:1
10/98 1.10:1
and thereafter

16. Section 8.03(e) shall be amended to read in
its entirety as follows:

(e) Maximum Leverage. Maintain a ratio of
Indebtedness at the date specified to Consolidated EBITDA
for the four fiscal quarters ending at the date specified

-7-

<PAGE>
not in excess of the ratio set forth below for the
applicable period:

For the Fiscal
Quarter Ending Ratio
-------------- ---------
01/97 4.30:1
04/97 4.20:1
07/97 4.15:1
09/97 4.00:1
1/98 3.85:1
4/98 3.70:1
7/98 3.55:1
10/98 3.40:1
and thereafter

17. The Company agrees to pay on demand all
reasonable costs and expenses of the Agent (including all
reasonable fees and expenses of counsel to the Agent) in
connection with the preparation and execution of this
Amendment.

18. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK, UNITED STATES OF AMERICA.

19. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts and each such counterpart shall be
deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument. This
Amendment shall become effective as of the date hereof upon
the delivery to the Agent of executed counterparts from the
Company and all Banks.

20. The Credit Agreement, as amended hereby,
shall be binding upon the Company, the Banks, the Agent, the
Collateral Agent, the Swing Line Bank and the Issuing Bank
and their respective successors and assigns, and shall inure
to the benefit of the Company, the Banks, the Agent, the
Collateral Agent, the Swing Line Bank and the Issuing Bank
and their respective successors and assigns.

21. Except as expressly provided in this
Amendment, all of the terms, covenants, conditions,
restrictions and other provisions contained in the Credit
Agreement shall remain in full force and effect.

-8-

<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first
above written.

FOODMAKER, INC.

By: HAROLD L. SACHS
-------------------
Name: Harold L. Sachs
Title: Treasurer

CREDIT LYONNAIS, NEW YORK BRANCH,
as Agent for the Banks

By: FRED HADDAD
--------------------
Name: Fred Haddad
Title: Sr. Vice President

Address for Notices:

1301 Avenue of the Americas
New York, New York 10016
Attn: David Miller
Fax: (212) 459-3176

With copies to:

Credit Lyonnais Los Angeles Branch
515 South Flower Street
Los Angeles, California 90071
Attn: Eric Dulot
Fax: (213) 623-3437

Sullivan & Cromwell
444 South Flower Street
Suite 1200
Los Angeles, California 90071
Attn: Alison S. Ressler
Fax: (213) 683-0457

-9-

<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
Signing as a Bank, Swing Line
Bank and Collateral Agent

By: FRED HADDAD
---------------------
Name: Fred Haddad
Title: Sr. Vice President

Address for Notices:

1301 Avenue of the Americas
New York, New York 10016
Attn: David Miller
Fax: (212) 459-3176

With copies to:

Credit Lyonnais Los Angeles Branch
515 South Flower Street
Los Angeles, California 90071
Attn: Eric Dulot
Fax: (213) 623-3437

Sullivan & Cromwell
444 South Flower Street
Suite 1200
Los Angeles, California 90071
Attn: Alison S. Ressler
Fax: (213) 683-0457

-10-

<PAGE>
NATIONSBANK OF TEXAS, N.A.
as a Bank

By: MICHELE M. SHAFROTH
-----------------------
Name: Michele M. Shafroth
Title: Senior Vice President

Address for Notices:

NationsBank of Texas, N.A.
901 Main Street, 14th Floor
Dallas, Texas 95202

Attn: Kay Hibbs
Fax: (214) 508-0944

Eurodollar Lending Office:

NationsBank of Texas, N.A.
901 Main Street, 14th Floor
Dallas, Texas 95202

Attn: Kay Hibbs
Fax: (214) 508-0944

-11-

<PAGE>
U.S. NATIONAL BANK OF OREGON
as a Bank

By: JANET E. JORDAN
--------------------------
Name: Janet E. Jordan
Title: Vice President

Address for Notices:

111 S.W. Fifth Avenue, T-29
Portland, Oregon 97204

Attn: Janet E. Jordan
Fax: (503) 275-5428

Eurodollar Lending Office:

111 S.W. Fifth Avenue, T-29
Portland, Oregon 97204

Attn: Janet E. Jordan
Fax: (503) 275-5428

-12-

<PAGE>
UNION BANK OF CALIFORNIA, N.A. as a
Bank and as the Issuing Bank

By: PASHA MOGHADDAM
---------------------------
Name: Pasha Moghaddam
Title: Vice President

Address for Notices:

445 South Figueroa Street
15th Floor
Los Angeles, California 90071

Attn: Wendy Frear
Fax: (213) 236-6701

Eurodollar Lending Office:

445 South Figueroa Street
15th Floor
Los Angeles, California 90071

Attn: Wendy Frear
Fax: (213) 236-6701

-13-

<PAGE>
Exhibit 10.10

Form of
Compensation and Benefits
Assurance Agreement for
Executives

Foodmaker, Inc.

September 30, 1996

<PAGE>
Contents

Page

Section 1. Term of Agreement 1
Section 2. Severance Benefits 2
Section 3. Excise Tax Avoidance 7
Section 4. Successors and Assignments 8

Section 5. Miscellaneous 8

Section 6. Contractual Rights and Legal Remedies 9

<PAGE>
Compensation and Benefits Assurance Agreement

This COMPENSATION AND BENEFITS ASSURANCE AGREEMENT (this "Agreement") is
made, entered into, and is effective as of this _____ day of ________________
(the "Effective Date") by and between Foodmaker, Inc. (hereinafter referred
to as the "Company") and ______________________ (hereinafter referred to
as the "Executive").

WHEREAS, the Executive is presently employed by the Company in a key
management capacity; and

WHEREAS, the Executive possesses considerable experience and knowledge
of the business and affairs of the Company concerning its policies, methods,
personnel, and operations; and

WHEREAS, the Company desires assuring the continued employment of the
Executive in a key management capacity, and the Executive is desirous of
having such assurances.

NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:

Section 1. Term of Agreement

This Agreement will commence on the Effective Date and shall continue
in effect for two full calendar years (through ______________________) (the
"Initial Term").

The Initial Term of this Agreement automatically shall be extended
for two additional years at the end of the Initial Term, and then again after
each successive two-year period thereafter (each such two-year period
following the Initial Term a "Successive Period"). However, either party may
terminate this Agreement at the end of the Initial Term, or at the end of any
Successive Period thereafter, by giving the other party written notice of
intent not to renew, delivered at least six (6) months prior to the end of
such Initial Term or Successive Period. If such notice is properly delivered
by either party, this Agreement, along with all corresponding rights, duties,
and covenants shall automatically expire at the end of the Initial Term or
Successive Period then in progress.

<PAGE>
In the event that a "Change in Control" of the Company occurs (as
such term is hereinafter defined) during the Initial Term or any Successive
Period, upon the effective date of such Change in Control, the term of this
Agreement shall automatically and irrevocably be renewed for a period of
twenty-four (24) full calendar months from the effective date of such Change
in Control. This Agreement shall thereafter automatically terminate following
the twenty-four (24) month Change in Control renewal period. Further, this
Agreement shall be assigned to, and shall be assumed by the purchaser in such
Change in Control, as further provided in Section 4 herein.

Section 2. Severance Benefits

2.1. Right to Severance Benefits. The Executive shall be entitled to
receive from the Company Severance Benefits as described in Paragraph 2.3
herein, if during the term of this Agreement there has been a Change in
Control of the Company (as defined in Paragraph 2.4 herein) and if, within
twenty-four (24) calendar months immediately thereafter, the Executive's
employment with the Company shall end for any reason specified in Paragraph
2.2 herein as being a Qualifying Termination. The Severance Benefits
described in Paragraphs 2.3(a), 2.3(b), 2.3(c), and 2.3(d) herein shall be
paid in cash to the Executive in a single lump sum as soon as practicable
following the Qualifying Termination, but in no event later than thirty (30)
calendar days from such date. Notwithstanding the foregoing, Severance
Benefits which become due pursuant to Paragraphs 2.2(c) and 4.1 shall be paid
immediately.

The Severance Benefits described in Paragraphs 2.3(a), 2.3(b),
2.3(c), and 2.3(d) herein shall be paid out of the general assets of the
Company.

2.2. Qualifying Termination. The occurrence of any one or more of the
following events (i.e., a "Qualifying Termination") within twenty-four (24)
calendar months immediately following a Change in Control of the Company
shall trigger the payment of Severance Benefits to the Executive, as such
benefits are described under Paragraph 2.3 herein:

(a) The Company's involuntary termination of the Executive's employment
without Cause (as such term is defined in Paragraph 2.6 herein);

(b) The Executive's voluntary termination of employment for Good Reason
(as such term is defined in Paragraph 2.5 herein); and

A Qualifying Termination shall not include a termination of the
Executive's employment within twenty-four (24) calendar months after a Change
in Control by reason of death, disability (as such term is defined under the
Company's governing disability plan, or any successor plan thereto), the

<PAGE>
Executive's voluntary termination without Good Reason, or the Company's
involuntary termination of the Executive's employment for Cause.

2.3. Description of Severance Benefits. In the event that the Executive
becomes entitled to receive Severance Benefits, as provided in Paragraphs 2.1
and 2.2 herein, the Company shall pay to the Executive and provide the
Executive with the following:

(a) A lump-sum cash amount equal to the Executive's unpaid Base Salary
(as such term is defined in Paragraph 2.7 herein), accrued vacation
pay, unreimbursed business expenses, and all other items earned by
and owed to the Executive through and including the date of the
Qualifying Termination. Such payment shall constitute full
satisfaction for these amounts owed to the Executive.

(b) A lump-sum cash amount equal to ___ multiplied by the Executive's
annual rate of Base Salary in effect upon the date of the Qualifying
Termination or, if greater, by the Executive's annual rate of Base
Salary in effect immediately prior to the occurrence of the Change in
Control.

(c) A lump-sum cash amount equal to ___ multiplied by the greater of: (i)
the bonus percentage used to determine the executive's bonus in the
prior fiscal year, times the executive's annualized Base Salary
determined in (b) above or (ii) the bonus amount paid for the fiscal
year immediately prior to the fiscal year of the occurrence of the
Change in Control. Such payment shall constitute full satisfaction
for these amounts owed to the Executive.

(d) A lump-sum cash amount equal to ___ multiplied by the maximum
possible estimated annual Company match of the Executive's
contributions to the Company's Capital Accumulation Plan for
Executives for the year in which the Executive's Qualifying
Termination occurs (this amount shall not be less than the Company
match of the Executive's contribution to the Company's Capital
Accumulation Plan for the calendar year prior to the date of the
qualifying termination). Provided, however, that the source of
payment of this sum shall be the general assets of the Company unless
the payment of such amounts is otherwise permissible from the
corresponding qualified plan trust without violating any governmental
regulations or statutes. Such payment shall constitute full
satisfaction for these amounts owed to the Executive.

<PAGE>
(e) At the exact same cost to the Executive, and at the same coverage
level as in effect as of the Executive's date of the Qualifying
Termination (subject to changes in coverage levels applicable to all
employees generally), a continuation of the Executive's (and the
Executive's eligible dependents') health insurance coverage for
eighteen (18) months from the date of the Qualifying Termination.
This will run concurrently with any coverage provided as required by
the Consolidated Budget Reconciliation Act (COBRA). If this requires
a monthly payment to the Plan, the Company will pay the required
amount, adjusted to a pre-tax basis. For this purpose, the executive
shall be deemed to be at the highest marginal rate of federal and
state taxes.

The providing of these health insurance benefits by the Company
shall be discontinued prior to the end of the eighteen (18) month
continuation period to the extent that the Executive becomes
covered under the health insurance coverage of a subsequent
employer which does not contain any exclusion or limitation with
respect to any preexisting condition of the Executive or the
Executive's eligible dependents. For purposes of enforcing this
offset provision, the Executive shall have a duty to inform the
Company as to the terms and conditions of any subsequent
employment and the corresponding benefits earned from such
employment. The Executive shall provide, or cause to provide, to
the Company in writing correct, complete, and timely information
concerning the same.

(f) The Executive shall be entitled, at the expense of the Company, to
receive standard outplacement services from a nationally recognized
outplacement firm of the Executive's selection, for a period of up to
two (2) years from the Executive's date of Qualifying Termination.
However, such services shall be at the Company's expense to a maximum
amount not to exceed thirty-five percent (35%) of the Executive's
annual rate of Base Salary as of the date of the Qualifying
Termination.

2.4. Definition of "Change in Control." "Change in Control" of the
Company means, and shall be deemed to have occurred upon, the first to occur
of any of the following events:

(a) Any Person (other than those Persons in control of the Company as of
the Effective Date, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or
a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company) becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing twenty-five
percent (25%) or more of the combined voting power of the Company's
then outstanding securities; or

<PAGE>
(b) During any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning
of such period constitute the Board (and any new Director, whose
election by the Company's stockholders was approved by a vote of a
least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose
election or nomination for election was so approved), cease for any
reason to constitute a majority thereof; or

(c) The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or
disposition of all or substantially all of the Company's assets; or
(iii) a merger, consolidation, or reorganization of the Company with
or involving any other corporation, other than a merger,
consolidation, or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
fifty percent (50%) of the combined voting power of the voting
securities of the Company (or such surviving entity) outstanding
immediately after such merger, consolidation, or reorganization.

However, in no event shall a "Change in Control" be deemed to have
occurred, with respect to the Executive, if the Executive is part
of a purchasing group which consummates the Change in Control
transaction. The Executive shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if the Executive is
an equity participant in the purchasing company or group (except
for: (i) passive ownership of less than two percent (2%) of the
stock of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is
otherwise not significant, as determined prior to the Change in
Control by a majority of the nonemployee continuing Directors).

2.5. Definition of "Good Reason." "Good Reason" shall be determined
by the Executive, in the exercise of good faith and reasonable judgment, and
shall mean, without the Executive's express written consent, the occurrence
of any one or more of the following within two (2) years immediately
following a Change in Control:

(i) The assignment of the Executive to duties inconsistent with the
Executive's authorities, duties, responsibilities, and status as an
executive of the Company, or a reduction or alteration in the nature
or status of the Executive's authorities, duties, or
responsibilities, from those in effect as of ninety (90) calendar
days prior to the Change in Control, other than an insubstantial and
inadvertent act that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;

<PAGE>
(ii) The Company's requiring the Executive to be based at a location in
excess of fifty (50) miles from the location of the Executive's
principal job location or office immediately prior to the Change in
Control; except for required travel on the Company's business to an
extent consistent with the Executive's then present business travel
obligations;

(iii) A reduction by the Company of the Executive's Base Salary in effect
on the Effective Date, or as the same shall be increased from time to
time;

(iv) The failure of the Company to keep in effect any of the Company's
compensation, health and welfare benefits, retirement benefits, or
perquisite programs under which the Executive receives value, as such
program exists immediately prior to the Change in Control. However,
the replacement of an existing program with a new program will be
permissible (and not grounds for a Good Reason termination) if the
value to be delivered to the Executive under the new program is at
least as great as the value delivered to the Executive under the
existing programs; or

Any breach by the Company of its obligations under Section 4 of this
Agreement or any failure of a successor company to assume and agree
to perform the Company's entire obligations under this Agreement, as
required by Section 4 herein.

The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment
shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason herein.

2.6. Definition of "Cause." "Cause" shall be determined by the
Administrative Committee, in the exercise of good faith and reasonable
judgment, and shall mean the occurrence of any one or more of the following:

(a) A demonstrably willful and deliberate act or failure to act by the
Executive (other than as a result of incapacity due to physical or
mental illness) which is committed in bad faith, without reasonable
belief that such action or inaction is in the best interests of the
Company, which causes actual material financial injury to the Company
and which act or inaction is not remedied within fifteen (15)
business days of written notice from the Company; or

(b) The Executive's conviction for committing an act of fraud,
embezzlement, theft, or any other act constituting a felony involving
moral turpitude or causing material harm, financial or otherwise, to
the Company.

<PAGE>
2.7. Other Defined Terms. The following terms shall have the meanings
set forth below:

(a) "Base Salary" means, at any time, the then-regular annualized rate of
pay which the Executive is receiving as a salary, excluding amounts
(i) designated by the Company as payment toward reimbursement of
expenses; or (ii) received under incentive or other bonus plans,
regardless of whether or not the amounts are deferred.

(b) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act (as such term is defined below).

(c) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

(d) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.

Section 3. Excise Tax Avoidance

3.1. Reduction in Award to Avoid Excise Tax Liability. If any portion
of the Severance Benefits or any other payment under this Agreement, or under
any other agreement with, or plan of the Company, including but not limited
to stock options and other long-term incentives (in the aggregate "Total
Payments") would constitute an "excess parachute payment," such that an
excise tax is due as a result of Section 280G of the Internal Revenue Code,
then the payments to be made to the Executive under this Agreement shall be
reduced such that the value of the aggregate Total Payments that the
Executive is entitled to receive shall be One Dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code or which the Company may pay
without loss of deduction under Section 280G(a) of the Code.

However, the payments to be made to the Executive under this Agreement shall
be reduced if and only if so reducing the payments results in the Executive
receiving a greater net benefit than he would have received had a reduction
not occurred and an excise tax been paid.

For purposes of this Agreement, the term "excess parachute payment" shall
have the meaning assigned to such term in Section 280G of the Internal
Revenue Code, as amended (the "Code"), and the term "excise tax" shall mean
the tax imposed on such excess parachute payment pursuant to Sections 280G
and 4999 of the Code.

<PAGE>
Section 4. Successors and Assignments

4.1. Successors. The Company will require any successor (whether via a
Change in Control, direct or indirect, by purchase, merger, consolidation, or
otherwise) of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place.

Failure of the Company to obtain such assumption and agreement prior
to the effectiveness of any such succession shall, as of the date immediately
preceding the date of a Change in Control, automatically give the Executive
Good Reason to collect, immediately, full benefits hereunder as a Qualifying
Termination.

4.2. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If an Executive should die while any amount is still
payable to the Executive hereunder had the Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement, to the Executive's devisee, legatee, or
other designee, or if there is no such designee, to the Executive's estate.

An Executive's rights hereunder shall not otherwise be assignable.

Section 5. Miscellaneous

5.1. Administration. This Agreement shall be administered by the
Board of Directors of the Company, or by a Committee of the Board designated
by the Board (the "Administrative Committee"). The Administrative Committee
(with the approval of the Board, if the Board is not the Administrative
Committee) is authorized to interpret this Agreement, to prescribe and rescind
rules and regulations, and to make all other determinations necessary or
advisable for the administration of this Agreement.

In fulfilling its administrative duties hereunder, the
Administrative Committee may rely on outside counsel, independent
accountants, or other consultants to render advice or assistance.

5.2. Notices. Any notice required to be delivered to the Company or
the Administrative Committee by the Executive hereunder shall be properly
delivered to the Company when personally delivered to (including by a
reputable overnight courier), or actually received through the U.S. mail,
postage prepaid, by:

Foodmaker, Inc.
9330 Balboa Avenue
San Diego, CA 92123

Attn: General Counsel

<PAGE>
Any notice required to be delivered to the Executive by the Company
or the Administrative Committee hereunder shall be properly delivered to the
Executive when personally delivered to (including by a reputable overnight
courier), or actually received through the U.S. mail, postage prepaid, by,
the Executive at his last known address as reflected on the books and records
of the Company.

Section 6. Contractual Rights and Legal Remedies

6.1. Contractual Rights to Benefits. This Agreement establishes in
the Executive a right to the benefits to which the Executive is entitled
hereunder. However, except as expressly stated herein, nothing herein
contained shall require or be deemed to require, or prohibit or be deemed to
prohibit, the Company to segregate, earmark, or otherwise set aside any funds
or other assets, in trust or otherwise, to provide for any payments to be
made or required hereunder.

6.2. Legal Fees and Expenses. The Company shall pay all legal fees,
costs of litigation, prejudgment interest, and other expenses which are
incurred in good faith by the Executive as a result of the Company's refusal
to provide the Severance Benefits to which the Executive becomes entitled
under this Agreement, or as a result of the Company's (or any third party's)
contesting the validity, enforceability, or interpretation of the Agreement,
or as a result of any conflict between the parties pertaining to this
Agreement.

6.3. Arbitration. The Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising
under or in connection with this Agreement settled by arbitration, conducted
before a panel of three (3) arbitrators sitting in a location selected by the
Executive within fifty (50) miles from the location of his or her job with
the Company, in accordance with the rules of the American Arbitration
Association then in effect. The Executive's election to arbitrate, as herein
provided, and the decision of the arbitrators in that proceeding, shall be
binding on the Company and the Executive.

Judgment may be entered on the award of the arbitrator in any court
having jurisdiction. All expenses of such arbitration, including the fees and
expenses of the counsel for the Executive, shall be borne by the Company.

6.4. Unfunded Agreement. This Agreement is intended to be an
unfunded general asset promise for a select, highly compensated member of the
Company's management and, therefore, is intended to be exempt from the
substantive provisions of the Employee Retirement Income Security Act of 1974
as amended.

<PAGE>
6.5. Exclusivity of Benefits. Unless specifically provided herein,
neither the provisions of this Agreement nor the benefits provided hereunder
shall reduce any amounts otherwise payable, or in any way diminish the
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans, programs, policies,
or practices provided by the Company, for which the Executive may qualify.

Vested benefits or other amounts which the Executive is otherwise
entitled to receive under any plan, policy, practice, or program of the
Company (i.e., including, but not limited to, vested benefits under the
Company's 401(k) plan), at or subsequent to the Executive's date of
Qualifying Termination shall be payable in accordance with such plan, policy,
practice, or program except as expressly modified by this Agreement.

6.6. Includable Compensation. Severance Benefits provided hereunder
shall not be considered "includable compensation" for purposes of determining
the Executive's benefits under any other plan or program of the Company.

6.7. Employment Status. Nothing herein contained shall be deemed to
create an employment agreement between the Company and the Executive,
providing for the employment of the Executive by the Company for any fixed
period of time. The Executive's employment with the Company is terminable at
will by the Company or the Executive and each shall have the right to
terminate the Executive's employment with the Company at any time, with or
without Cause, subject to the Company's obligation to provide Severance
Benefits as required hereunder.

In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, nor
shall the amount of any payment hereunder be reduced by any compensation
earned by the Executive as a result of employment by another employer, other
than as provided in Paragraph 2.3(e) herein.

6.8. Entire Agreement. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior discussions, negotiations, and agreements concerning the
subject matter hereof, including, but not limited to, any prior severance
agreement made between the Executive and the Company.

6.9. Tax Withholding. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as
legally required to be withheld.

<PAGE>
6.10. Waiver of Rights. Except as otherwise provided herein, the
Executive's acceptance of Severance Benefits, the Gross-Up Payment (if
applicable), and any other payments required hereunder shall be deemed to be
a waiver of all rights and claims of the Executive against the Company
pertaining to any matters arising under this Agreement.

6.11. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement
shall be construed and enforced as if the illegal or invalid provision had
not been included.

6.12. Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of Delaware shall be the controlling law
in all matters relating to this Agreement.

IN WITNESS WHEREOF, the Company has executed this Agreement, to be
effective as of the day and year first written above.

ATTEST: Foodmaker, Inc.

By:___________________________ By:___________________________
Secretary Title: _______________________

______________________________
name

<PAGE>
Attachment A

The multiple of salary would vary by role. 2.5 is used for the following
roles:

- Chief Executive Officer
- Chief Financial Officer
- Chief Legal Officer
- Executive Vice President

1.5 is used for the following roles:

- Vice President, Human Resources
- Vice President, Quality Assurance
- Vice President, Controller
- Vice President, Operations

<PAGE>

Independent Auditors' Consents

The Board of Directors
Foodmaker, Inc.;

We consent to incorporation by reference in the registration statement no.
33-50934 on Form S-3 of Foodmaker, Inc. and in registration statement
Nos. 33-67450, 33-54602 and 33-51490 on Form S-8 of Foodmaker, Inc. of our
report dated November 5, 1996, except for the fifth paragraph of Note 12,
which is as of December 10, 1996, relating to the consolidated balance sheets
of Foodmaker, Inc. and subsidiaries as of September 29, 1996 and October 1,
1995, and the related consolidated statements of operations, cash flows and
stockholders' equity for the fifty-two weeks ended September 29, 1996,
October 1, 1995, and October 2, 1994, which report appears in the
September 29, 1996 annual report of Form 10-K of Foodmaker, Inc. and
subsidiaries.

KPMG PEAT MARWICK LLP

San Diego, California
December 20, 1996

<ARTICLE> 5
<LEGEND> FISCAL YEAR 1996 IS 52 WEEKS
<MULTIPLIER> 1000

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