RUBY TUESDAY, INC.
NON-QUALIFIED STOCK OPTION AWARD

THIS NON-QUALIFIED STOCK OPTION AWARD (“Award” or “Option”) is made as of the
Grant Date, by RUBY TUESDAY, INC. (the “Company”), a Georgia corporation, to
_____ (the “Optionee”).

Upon and subject to the Terms and Conditions attached hereto and incorporated
herein by reference as part of this Award, the Company hereby awards as of the
Grant Date to the Optionee the Option described below pursuant to the Ruby
Tuesday, Inc. 1996 Stock Incentive Plan or the Ruby Tuesday, Inc. Stock
Incentive Plan (collectively the “Plan”) in consideration of the Optionee’s
services to the Company.

A.           Grant Date:  ____.

B.           Type of Option:  Non-Qualified Stock Option.

C.           Option Shares:  All or any part of _____ shares of the Company’s
common stock (the “Common Stock”), $0.01 par value per share, subject to
adjustment as provided in the attached Terms and Conditions.

D.           Exercise Price:  $__ per share.

E.           Option Period:  The Option may be exercised as to the Vested Option
Shares (as defined below) during the Option Period, which commences on the Grant
Date and ends on the ____ anniversary of the Grant Date or on an earlier date as
provided in the attached Terms and Conditions.  Note that other restrictions to
exercising the Option described in the attached Terms and Conditions may apply.

F.           Vested Option Shares:  The Option Shares shall become Vested Option
Shares, as and to the extent indicated below, only if and to the extent the
Service Condition is satisfied.  The Service Condition is satisfied only if the
Optionee provides Continuous Service (as defined below) to the Company and/or
any affiliate for the period beginning with the Grant Date through the date
described in the following Vesting Schedule:

 
Continuous Service Date
 
Percentage of Option Shares
which become Vested Option Shares
Prior to ____
 
_%
____ through ____
 
_%
____ through ____
 
_%
____ and after
 
_%

The Optionee shall be determined to have provided “Continuous Service” through
the date specified in the Vesting Schedule above if the Optionee continues in
the employ of the Company and/or any affiliate without experiencing a
Termination of Service / Termination of Employment, regardless of the
reason.  All or a portion of the Option Shares may become Vested Option Shares
on an earlier date as provided in the attached Terms and Conditions.

Any portion of the Option Shares which have not become Vested Option Shares in
accordance with this Paragraph F or Section 3 of the attached Terms and
Conditions before or at the time of Optionee’s Termination of Service /
Termination of Employment shall be forfeited.

 
 

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Stock Option Award
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IN WITNESS WHEREOF, the Company has executed and sealed this Award as of the
Grant Date set forth above.

   RUBY TUESDAY, INC.          
 
 By:
               Title:          President and Chief Executive Officer  

                

                    
 
 
 

 

 
 

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Stock Option Award
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TERMS AND CONDITIONS TO THE
RUBY TUESDAY, INC.
NON-QUALIFIED STOCK OPTION AWARD

1.            Exercise of Option.  Subject to the provisions provided herein or
in the Award made pursuant to the Ruby Tuesday, Inc. 1996 Stock Incentive Plan
or the Ruby Tuesday, Inc. Stock Incentive Plan (collectively the “Plan”) and to
the Executive Stock Option Program, the Option may be exercised with respect to
all or any portion of the Vested Option Shares at any time during the Option
Period by the delivery to the Company, at its principal place of business, of:

(a)           a written notice of exercise form, available from the Company upon
request, which shall be actually delivered to the Company prior to the date upon
which Optionee desires to exercise all or any portion of the Option;

(b)           payment to the Company of the Exercise Price multiplied by the
number of shares being purchased (the “Purchase Price”) as provided in
Section 5; and

(c)           payment of the tax withholding liability as provided in Section 6.

Upon acceptance of such notice and receipt of payment in full of the Purchase
Price and the tax withholding liability, the Company shall cause to be issued a
certificate representing the Option Shares purchased.

2.             Adjustment of Option Shares.  If Optionee is demoted to a job
category with respect to which either (a) no option or (b) an option subject to
fewer option shares would have been granted to the Optionee pursuant to the
Executive Stock Option Program had the Optionee been in that job category on the
Grant Date, then the number of Option Shares as to which the Option has not been
exercised as of the date of the demotion shall be adjusted as follows:  If the
Optionee would not have been granted an option in Optionee’s new job category on
the Grant Date, the number of remaining Option Shares shall be reduced to
zero.  If the Optionee would have been granted an option for fewer option shares
on the Grant Date, the remaining Option Shares, if any, shall equal the number
of shares that would have been granted to the Optionee in Optionee’s new job
category on the Grant Date less the number of Option Shares previously purchased
by the Optionee under the Option before Optionee’s demotion, if such number is
less than zero, the number of remaining Option Shares shall be reduced to zero.

3.            Vested Option Shares.  Notwithstanding Paragraph F of the Award,
the Service Condition will be deemed satisfied as to all or a portion of the
Option Shares if the Optionee provides Continuous Service to the Company and/or
any affiliate following the Grant Date through the date of any of the earlier
events listed below:

(a)           (i) In the event of Termination of Service / Termination of
Employment due to Disability, Divestiture or death, (ii) upon retirement at or
after age__ or satisfaction of the Rule of 90, if eligible, under the Ruby
Tuesday, Inc. Executive Supplemental Pension Plan, or (iii) in the event of a
Termination of Service / Termination of Employment by the Company or an
affiliate without Cause, all Option Shares shall become Vested Option Shares on
the date of such event.

(b)           In the event of Termination of Service / Termination of Employment
due to early retirement (attainment of at least age 55 (but prior to the Rule of
90, if eligible)), a portion of the Option Shares, equal to the total number of
Option Shares multiplied by the number of Optionee’s completed months of
employment with the Company or an affiliate from the Grant Date until the date
of early retirement and divided by thirty-six (36) shall become Vested Option
Shares on the date of such early retirement.

 
 

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Stock Option Award
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(c)           In the event of a Change in Control (as defined in Section 21 of
these Terms and Conditions), all Option Shares shall become Vested Option
Shares.

4.            Early Expiration of Option Period.  The Option Period commences on
the Grant Date and with respect to Vested Option Shares generally ends on the
____ of the Grant Date.  However, with respect to Vested Option Shares, the
Option Period shall expire on an earlier date as follows:

(a)           in the event of Optionee’s voluntary Termination of Service /
Termination of Employment with the Company or an affiliate (not to include
Disability, retirement or death), the Option Period shall expire ninety (90)
days following the last day of Optionee’s employment with the Company or such
affiliate;

(b)           in the event of the Optionee’s involuntary Termination of Service
/ Termination of Employment by the Company or an affiliate without Cause (as
defined in Section 21 of these Terms and Conditions), the Option Period shall
expire ninety (90) days following the last day of Optionee’s employment with the
Company or such affiliate; and

(c)           in the event of the Optionee’s involuntary Termination of Service
/ Termination of Employment by the Company or an affiliate with Cause, the
Option Period shall expire fifteen (15) days following the last day of
Optionee’s employment with the Company or such affiliate.

5.            Purchase Price.  Payment of the Purchase Price for all Option
Shares purchased pursuant to the exercise of an Option shall be made in cash or,
alternatively, as follows:

(a)           by delivery to the Company of a number of shares of Common Stock
which have been owned by the Optionee for at least six (6) months prior to the
date of the Option’s exercise, having a Fair Market Value, as determined under
the Plan, on the date of exercise either equal to the Purchase Price or in
combination with cash to equal the Purchase Price; or

(b)           by receipt of the Purchase Price in cash from a broker, dealer or
other “creditor” as defined by Regulation T issued by the Board of Governors of
the Federal Reserve System following delivery by the Optionee to the Committee
of instructions in a form acceptable to the Committee regarding delivery to such
broker, dealer or other creditor of that number of Option Shares with respect to
which the Option is exercised; provided, however, any such cashless exercise
must be effected in a manner consistent with the restrictions of Section 13(k)
of the Securities Exchange Act of 1934 (Section 402 of the Sarbanes-Oxley Act of
2002).

6.            Withholding.  The Optionee must pay to the Company the full amount
of the federal, state and local tax withholding obligation arising from the
exercise of the Option.

(a)           The tax withholding liability may be paid in cash, or,
alternatively, as follows:

(i)           by the Optionee making a Withholding Election on or prior to the
date on which the amount of tax required to be withheld is determined (the “Tax
Date”) to reduce the number of Option Shares to be issued upon exercise by the
whole number of shares of Common Stock having a Fair Market Value equal to the
amount of withholding tax;

(ii)           by the Optionee making a Withholding Election and delivering to
the Company before the Tax Date a whole number of shares of Common Stock that
the Optionee has owned for at least six (6) months having a Fair Market Value
equal to the amount of withholding tax; or

 
 

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(iii)           by the Optionee making a Withholding Election prior to the Tax
Date to have a broker, dealer or other “creditor” (as defined by Regulation T
issued by the Board of Governors of the Federal Reserve System) deliver the
amount of tax withholding due in cash to the Company after the Optionee has
delivered to the Committee instructions acceptable to the Committee regarding
the delivery of the number of Option Shares being exercised to such broker,
dealer or other creditor provided, however, that any such delivery must be
effected in a manner consistent with the restrictions of Section 13(k) of the
Securities Exchange Act of 1934 (Section 402 of the Sarbanes-Oxley Act of 2002).

(b)           A Withholding Election must be made in the form available from the
Company upon request, and may be made only if:

(i)           the Optionee delivers to the Company a completed written
Withholding Election no later than on the Tax Date;

(ii)           the Withholding Election is irrevocable and satisfies the
requirements of the exemption provided under Rule 16b-3 of the Securities
Exchange Act of 1934; and

(iii)           the Optionee delivers to the Company the Withholding Election on
a date determined by the Committee (i.e., at least six (6) months prior to the
Tax Date or prior to the Tax Date and in any ten-day period beginning on the
third day following the release of the Company’s quarterly or annual summary
statement of sales and earnings), if the Optionee is considered by the Committee
to be subject to Section 16 of the Securities Exchange Act of 1934.
 
The Committee may give no effect to any Withholding Election in its discretion.
 
7.            Rights as Shareholder.  Until the stock certificates reflecting
the Option Shares accruing to the Optionee upon exercise of the Option are
issued to the Optionee, the Optionee shall have no rights as a shareholder with
respect to such Option Shares.  The Company shall make no adjustment for any
dividends or distributions or other rights on or with respect to Option Shares
for which the record date is prior to the issuance of that stock certificate,
except as the Plan or this Award otherwise provides.

8.            Restriction on Transfer of Option and of Option Shares.  The
Option evidenced hereby is nontransferable other than by will or the laws of
descent and distribution, and shall be exercisable during the lifetime of the
Optionee only by the Optionee (or in the event of Optionee’s Disability, by
Optionee’s personal representative) and after Optionee’s death, only by
Optionee’s legatee or the executor of Optionee’s estate.

9.       Changes in Capitalization; Merger; Reorganization.
 
(a)           The number of Option Shares and the Exercise Price shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or combination of shares or
the payment of a stock dividend in shares of Common Stock to holders of
outstanding shares of Common Stock or any other increase or decrease in the
number of shares of Common Stock outstanding effected without receipt of
consideration by the Company.

(b)           In the event of a merger, consolidation, extraordinary dividend
(including a spin-off), or other reorganization involving the Company or a
tender offer for shares of Common Stock, whether or not such an event
constitutes a Change in Control, the Committee may, in its sole discretion,
adjust the number and class of securities subject to the Option, with a
corresponding adjustment made in the Exercise Price; substitute a new option to
replace the Option; or accelerate the

 
 

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Stock Option Award
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termination of the Option Period to a date prior to the occurrence of any event
specified in Paragraph E of the Award or Section 4 of the Terms and Conditions.
 
(c)           The existence of the Plan and this Award shall not affect in any
way the right or power of the Company to make or authorize any adjustment,
reclassification, reorganization or other change in its capital or business
structure, any merger or consolidation of the Company, any issue of debt or
equity securities having preferences or priorities as to the Common Stock or the
rights thereof, the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its business or assets, or any other corporate
act or proceeding.

10.            Special Limitation on Exercise.  Any exercise of the Option is
subject to the condition that if at any time the Committee, in its discretion,
shall determine that the listing, registration or qualification of the shares
covered by the Option upon any securities exchange or under any state or federal
law is necessary or desirable as a condition of or in connection with the
delivery of shares thereunder, the delivery of any or all shares pursuant to the
Option may be withheld unless and until such listing, registration or
qualification shall have been effected.  The Optionee shall deliver to the
Company, prior to the exercise of the Option, such information, representations
and warranties as the Company may reasonably request in order for the Company to
be able to satisfy itself that the Option Shares are being acquired in
accordance with the terms of an applicable exemption from the securities
registration requirements of applicable federal and state securities laws.

11.            Legend on Stock Certificates.  Certificates evidencing the Option
Shares, to the extent appropriate at the time, shall have noted conspicuously on
the certificates a legend intended to give all persons full notice of the
existence of the conditions, restrictions, rights and obligations set forth in
this Award and in the Plan.

12.            Governing Laws.  This Award shall be construed, administered and
enforced according to the laws of the State of Georgia; provided, however, no
option may be exercised except, in the reasonable judgment of the Board of
Directors, in compliance with exemptions under applicable state securities laws
of the state in which the Optionee resides, and/or any other applicable
securities laws.

13.            Successors.  This Award shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and permitted assigns of
the parties.

14.            Notice.  Except as otherwise specified herein, all notices and
other communications under this Award shall be in writing and shall be deemed to
have been given if personally delivered or if sent by registered or certified
United States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient.  Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.

15.            Severability.  In the event that any one or more of the
provisions or portion thereof contained in this Award shall for any reason be
held to be invalid, illegal or unenforceable in any respect, the same shall not
invalidate or otherwise affect any other provisions of this Award, and this
Award shall be construed as if the invalid, illegal or unenforceable provision
or portion thereof had never been contained herein.

16.            Entire Agreement.  Subject to the terms and conditions of the
Plan, this Award expresses the entire understanding and agreement of the
parties.

17.            Violation.  Any transfer, pledge, sale, assignment, or
hypothecation of the Option or any portion thereof shall be a violation of the
terms of this Award and shall be void and without effect.

 
 

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18.            Headings and Capitalized Terms.  Section headings used herein are
for convenience of reference only and shall not be considered in construing this
Award.  Capitalized terms used, but not defined, herein shall be given the
meaning ascribed to them in the Plan.

19.            Specific Performance.  In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Award, the party or parties who are thereby aggrieved shall have the right to
specific performance and injunction in addition to any and all other rights and
remedies at law or in equity, and all such rights and remedies shall be
cumulative.

20.            No Right to Continued Employment.  Neither the establishment of
the Plan nor the award of Option Shares hereunder shall be construed as giving
the Optionee the right to continued employment.

21.            Special Definitions.

(a)           For purposes of this Award, the term “Cause” has the same meaning
as provided in the employment agreement between the Optionee and the Company or,
if applicable, any affiliate of the Company on the date of Termination of
Service / Termination of Employment, or if no such definition or employment
agreement exists, “Cause” means conduct amounting to (a) fraud or dishonesty in
the performance of the duties of Optionee’s service with the Company or its
affiliates, (b) Optionee’s willful misconduct, refusal to follow the reasonable
directions of his/her supervisors, or knowing violation of law, rules or
regulations (including misdemeanors relating to public intoxication, driving
under the influence, use or possession of controlled substances or relating to
conduct of a similar nature), (c) acts of moral turpitude or personal conduct in
violation of Company’s Code of Business Conduct and Ethics, (d) absence from
work without a reasonable excuse, (e) intoxication with alcohol or drugs while
on Company’s or affiliates’ premises, (f) a conviction or plea of guilty or nolo
contendere to a crime involving dishonesty, or (g) a breach or violation of the
terms of any agreement to which Optionee and the Company (or any affiliate) are
party.

(b)           For purposes of this Award, the term “Divestiture” means the sale
by the Company, or an affiliate, of previously Company (or affiliate) operated
units or businesses to an independent company, where Optionee was employed at,
or supervised, such units or businesses and, upon the completion of such
transaction, Optionee’s employment with the Company or an affiliate ceases and
Optionee immediately becomes an employee of the purchaser of such units or
business.

(c)           “Change in Control” means any one of the following events:

(i)           the acquisition by any individual, entity or “group” (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act
of 1934 (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) of voting securities of
the Company where such acquisition causes any such Person to own twenty-five
percent (25%) or more of the combined voting power of the then outstanding
voting securities then entitled to vote generally in the election of directors
(the “Outstanding Voting Securities”); provided, however, that the following
shall not constitute a Change in Control:  (1) any acquisition directly from the
Company, unless such a Person subsequently acquires additional shares of
Outstanding Voting Securities other than from the Company; or (2) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any affiliate;
 
(ii) within any twelve-month period (beginning on or after the Grant Date), the
persons who were directors of the Company immediately before the beginning of
such
 
 

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 twelve-month period (the “Incumbent Directors”) shall cease to constitute at
least a majority of the Board of Directors of the Company; provided that any
director who was not a director as of the Grant Date shall be deemed to be an
Incumbent Director if that director was elected to the Board of Directors by, or
on the recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors; and provided further that
no director whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of directors shall be
deemed to be an Incumbent Director;

(iii)           the consummation of a reorganization, merger or consolidation,
with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than fifty percent (50%) of the combined voting
power entitled to vote in the election of directors of the reorganized, merged
or consolidated company’s then outstanding voting securities;

(iv)           the sale, transfer or assignment of all or substantially all of
the assets of the Company and its affiliates to any third party; or

(v)           the liquidation or dissolution of the Company.

(d)           “Disability” has the same meaning as provided in the employment
agreement currently or most recently in effect between the Employee and the
Company or, if applicable, any affiliate of the Company, or if no such
definition or employment agreement ever existed, “Disability” shall be given the
same meaning provided in the Plan.
 

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