Execution version

FORBEARANCE AGREEMENT, LIMITED WAIVER AND THIRD AMENDMENT TO
CREDIT AGREEMENT
 
THIS FORBEARANCE AGREEMENT, LIMITED WAIVER AND THIRD AMENDMENT TO CREDIT
AGREEMENT (this “Agreement”) is dated as of December 8, 2008 and is entered into
by and among Buffets, Inc., a Minnesota corporation, as a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (the “Borrower”);
Buffets Holdings, Inc., a Delaware corporation (“Holdings”), as a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code and the
Subsidiaries of Borrower and Holdings, as Guarantors (together with the Borrower
and Holdings, the “Loan Parties”); the financial institutions party hereto as
Lenders (collectively, the “Lenders”).  Capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Credit Agreement (as hereinafter defined).
 
RECITALS

WHEREAS, Borrower, Holdings, the Administrative Agent and the Lenders are
parties to the Secured Super-Priority Debtor in Possession Credit Agreement
dated as of January 22, 2008 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), pursuant to which, among
other things, the Lenders agreed, subject to the terms and conditions set forth
in the Credit Agreement, to make certain loans and other financial
accommodations to the Loan Parties;
 
WHEREAS, the Events of Default listed on Exhibit A hereto have occurred and are
continuing under the Credit Agreement as of the date hereof (the “Specified
Defaults”);
 
WHEREAS, pursuant to the Second Forbearance Agreement, dated as of December 1,
2008 and as amended as of December 5, 2008 (the “Forbearance Agreement”), by and
among the Loan Parties and the Lenders signatory thereto, the Lenders have
agreed, subject to the terms and conditions set forth therein, to forbear from
exercising certain of their default-related rights and remedies against Borrower
and the other Loan Parties with respect to the Specified Defaults during the
Forbearance Period (as defined therein);
 
WHEREAS, pursuant to Section 2.15 of the Credit Agreement, unless and until all
New Money Loans have been paid in full in cash, no amounts shall be paid in
respect of Rollover Loans (including payments of regularly scheduled interest)
after a Default or Event of Default shall have occurred and be continuing;
 
WHEREAS, upon the request of the Loan Parties, the undersigned Lenders have
agreed, subject to the terms and conditions set forth herein, (a) upon the
occurrence of the Forbearance Effective Date, to forbear from exercising certain
of their default-related rights and remedies against the Borrower and the other
Loan Parties with respect to the Specified Defaults and (b) upon the occurrence
of the Third Amendment Effective Date, to waive the Specified Defaults as set
forth in Section II below and amend the Credit Agreement as set forth in Section
III below.
 
NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
 
 
 

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SECTION I.     FORBEARANCE; FORBEARANCE DEFAULT RIGHTS AND REMEDIES
 
A.     Effective as of the Forbearance Effective Date, the Lenders agree that
until the expiration or termination of the Forbearance Period (as hereinafter
defined), they will temporarily forbear from exercising their respective
default-related rights and remedies against Borrower or any other Loan Party
solely with respect to the Specified Defaults.  As used herein, the term
“Forbearance Period” shall mean the period beginning on the Forbearance
Effective Date and ending on the earlier to occur of: (i) any Forbearance
Default (as hereinafter defined), and (ii) December 17, 2008.  As used herein,
the term “Forbearance Default” shall mean (A) the occurrence of any Event of
Default other than the Specified Defaults, (B) the failure of Borrower or any
other Loan Party to timely comply with any term, condition, or covenant set
forth in this Agreement or (C) the failure of any representation or warranty
made by Borrower or any other Loan Party under or in connection with this
Agreement to be true and complete as of the date when made or any other breach
of any such representation or warranty.  Any Forbearance Default shall
constitute an immediate Event of Default under the Credit Agreement and other
Loan Documents.  Upon the termination or expiration of the Forbearance Period,
the agreement of the Lenders hereunder to forbear from exercising their
respective default-related rights and remedies shall immediately terminate
without the requirement of any demand, presentment, protest, or notice of any
kind, all of which Borrower and the other Loan Parties each waives.  The
Borrower and the other Loan Parties each agrees that the Lenders may at any time
after the expiration or termination of the Forbearance Period proceed to
exercise any and all of their respective rights and remedies under any or all of
the Credit Agreement, any other Loan Document and/or applicable law, all of
which rights and remedies are fully reserved by the Lenders.
 
B.     Any agreement by the Lenders to extend the Forbearance Period, if any,
must be set forth in writing and signed by a duly authorized signatory of each
Lender (constituting Required Lenders with respect hereto).  The Borrower and
the other Loan Parties each acknowledges that no Lender has made any assurances
concerning any possibility of an extension of the Forbearance Period.
 
C.     The Borrower and the other Loan Parties each acknowledges and agrees that
any financial accommodation which the Lenders make on or after the Forbearance
Effective Date has been made by such party in reliance upon, and is
consideration for, among other things, the general releases and indemnities
contained in Section IV hereof and the other covenants, agreements,
representations and warranties of Borrower and the other Loan Parties hereunder.
 
SECTION II.     LIMITED WAIVER
 
A.     Limited Waiver.  Subject to the terms and conditions set forth herein and
in reliance on the representations and warranties of the Loan Parties herein
contained, effective upon satisfaction of the conditions precedent set forth in
Section V below, the undersigned Lenders hereby consent to the waiver of the
Specified Defaults for all purposes other than with respect to Section 2.15 of
the Credit Agreement.  In addition, the undersigned Lenders reaffirm their
consent to the amendment and restatement set forth in the Final Order entered on
May 19, 2008 and waive any Event of Default that would arise under Section 7(e),
as a result of the breach of the covenant set forth in Section 6.18, Section
7(m)(iv) or Section 7(m)(v) of the Credit Agreement in connection with such
amendment.
 
 
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B.     Limitation of Waiver.  The waiver set forth above shall be limited
precisely as written and relate solely to the waiver of the provision of the
Credit Agreement in the manner and to the extent described above, and nothing in
this Waiver shall be deemed to:
 
 
(i)
constitute a waiver of (A) any Default or Event of Default other than the
Specified Defaults, or (B) any other term, provision or condition of any Loan
Document or any other instrument or agreement referred to therein; or

 
 
(ii)
prejudice any right or remedy that the Administrative Agent or any Lender may
have (except to the extent such right or remedy was based upon the Specified
Defaults) or may have in the future under or in connection with the Credit
Agreement or any other instrument or agreement referred to therein.

 
The Loan Parties hereby agree and acknowledge that the Lenders require and will
require strict performance by the Loan Parties of all of their respective
obligations, agreements and covenants contained in the Credit Agreement and the
other Loan Documents, and no inaction or action regarding any Event of Default
(other than the waiver expressly set forth herein with respect to the Specified
Defaults) is intended to be or shall be a waiver thereof.

SECTION III.     AMENDMENTS
 
3.1
Addition of Schedule 2.12 to the Credit Agreement.

 
Schedule 2.12 is hereby added to the Credit Agreement to read as set forth in
Exhibit B attached to this Agreement.
 
3.2
Amendments to the Table of Contents.

 
The Table of Contents is hereby amended by inserting the words “Schedule 2.12 –
Declining New Money Lenders” below the words “Schedule 2.02(e) – Details of
Rollover Procedure”.
 
 
3.3
Amendments to Section 1.01: Definitions.

 
A.           Section 1.01 of the Credit Agreement is hereby amended by adding
the following definitions in proper alphabetical sequence:
 
“Second Amendment” shall mean the Forbearance Agreement and Second Amendment to
Credit Agreement, dated as of September 26, 2008.
 
“Third Amendment” shall mean the Forbearance Agreement, Limited Waiver and Third
Amendment to this Agreement, dated as of December 8, 2008.
 
“Third Amendment Effective Date” shall mean the date on which the Third
Amendment becomes effective in accordance with its terms.

 
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B.     Section 1.01 of the Credit Agreement is hereby further amended by
deleting the definition of “Applicable Percentage” in its entirety and replacing
it with the following:
 
“Applicable Percentage” shall mean (a) with respect to the New Money Loans,
15.00% and (b) with respect to the Rollover Loans, 7.25%.
 
C.     Section 1.01 of the Credit Agreement is hereby further amended by
deleting the definition of “Calendar Maturity” in its entirety and replacing it
with the following:
 
“Calendar Maturity” shall mean April 30, 2009; provided, however, that such date
may be extended with the consent of the Required Lenders until May 31, 2009.
 
D.     Section 1.01 of the Credit Agreement is hereby further amended by
deleting clause (b) of the proviso at the end of the definition of “LIBO Rate”
and replacing it with the following:
 
“(b) notwithstanding the foregoing, at no time shall the LIBO Rate applicable to
the New Money Loans be less than 4.00%.”

E.     Section 1.01 of the Credit Agreement is hereby further amended by
inserting the words “the Second Amendment, the Third Amendment,” immediately
after the words “this Agreement,” in the definition of “Loan Documents”.
 
 
3.4
Amendment to Section 2.05: Fees.

 
Section 2.05 of the Credit Agreement is hereby amended by:
 
(a) changing paragraph (d) thereof to paragraph (e); and
 
(b) inserting a new paragraph (d) immediately after paragraph (c), such
paragraph (d) to read in its entirety as follows:
 
“(d) The Borrower agrees to pay, to the extent the effective date of the Plan of
Reorganization confirmed by the Bankruptcy Court shall not have occurred on or
before February 28, 2009, to each Lender on such date, a fee equal to 1.00% of
the aggregate amount of such Lender’s outstanding New Money Loans on such date;
provided, however, that the Borrower may elect to pay such fee by increasing the
outstanding principal amount of the New Money Loans by the aggregate amount of
such fee.”
 
 
3.5
Amendment to Section 2.12: Prepayment.

 
Section 2.12 of the Credit Agreement is hereby amended by deleting “.” at the
end of paragraph (a) thereof and adding the following sentence at the end
thereof:
 
“provided, further, that with respect to the prepayment made by the Borrower on
the Third Amendment Effective Date, each New Money Lender shall have the right
to decline such prepayment and any amount so declined shall be reallocated to
the New Money Lenders that have accepted such prepayment.  In furtherance of the
foregoing, the Lenders holding New Money Loans set forth on Schedule 2.12
attached hereto, and solely such Lenders holding New Money Loans as set forth on
Schedule 2.12 attached hereto, hereby decline such prepayment offered to be made
on the Third Amendment Effective Date and direct the Administrative Agent to
reallocate all such applicable proceeds to the remaining Lenders holding New
Money Loans.”

 
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3.6
Amendment to Section 5.13: Bankruptcy Cases.

 
Section 5.13 of the Credit Agreement is hereby amended by deleting paragraph (b)
thereof in its entirety and replacing it with the following:
 
“(b)  The Borrower shall use its best efforts to ensure the following occurs:
(i) a Plan of Reorganization and disclosure statement in the Bankruptcy Cases
shall be filed with the Bankruptcy Court on or before October 30, 2008, (ii) an
order approving the adequacy of such disclosure statement and otherwise finding
such disclosure statement in compliance with 11 U.S.C. § 1125 shall be entered
in the Bankruptcy Cases on or before December 31, 2008 and (iii) the Bankruptcy
Court shall have entered an order confirming the Plan of Reorganization by
February 28, 2009.”
 
 
3.7
Amendment to Section 6.10: Capital Expenditures.

 
Section 6.10 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
 
“SECTION 6.10. Capital Expenditures. Permit the aggregate amount of Capital
Expenditures made by the Borrower and the Subsidiaries to exceed (a) $15,000,000
for the period from the Closing Date through the end of the fiscal year ending
on July 2, 2008 and (b) the applicable amounts indicated for each such period as
set forth below, provided that the Borrower will not exceed $3,000,000 of
Capital Expenditures in any given four-week reporting period:
 
Period
 
Maximum Cumulative Capital
Expenditures
($ thousands)
 
July 3, 2008 through November 19, 2008
    14,477  
November 20, 2008 through June 3, 2009
    12,600  

 
 
3.8
Amendment to Section 6.13: Minimum Consolidated EBITDA.

 
Section 6.13 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
 
“SECTION 6.13.  Minimum Consolidated EBITDA.   Permit the Consolidated EBITDA of
the Borrower for the most recently completed three monthly fiscal accounting
periods, as of the last day of each monthly fiscal accounting period commencing
(i) February 6, 2008 and ending August 27, 2008, to be less than 85% of the
corresponding Consolidated EBITDA set forth in the Final Budget and (ii)
September 24, 2008 and ending on the Maturity Date, to be less than the amounts
indicated for such three monthly fiscal accounting periods ending on the
applicable dates set forth below:

 
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Period
 
Minimum EBITDA
($ thousands)
September 24, 2008
 
14,464
October 22, 2008
 
14,511
November 19, 2008
 
7,417
December 17, 2008
 
4,747
January 14, 2009
 
4,292
February 11, 2009
 
5,890
March 11, 2009
 
11,770
April 8, 2009
 
16,222
May 6, 2009
 
19,051
June 3, 2009
 
20,806
July 1, 2009
 
21,839

3.9
Amendment to Article VII: Events of Default.

 
Article VII of the Credit Agreement is hereby amended by deleting paragraph (p)
thereof in its entirety and replacing it with the following:

“(p) any of the following shall not occur: (i) a disclosure statement in the
Bankruptcy Cases shall be filed with the Bankruptcy Court on or before October
30, 2008, (ii) an order shall be entered on or before December 31, 2008, finding
that the disclosure statement contains adequate information and otherwise
complies with 11 U.S.C. § 1125 or (iii) the Bankruptcy Court shall have entered
an order confirming the Plan of Reorganization on or before February 28, 2009.”
 
SECTION IV.     GENERAL RELEASE; COVENANT NOT TO SUE
 
A.           Subject to the approval of the Bankruptcy Court, and in
consideration of, among other things, the Lenders’ execution and delivery of
this Agreement, each of Borrower and Holdings, on behalf of itself and its
agents, representatives, officers, directors, advisors, employees, subsidiaries,
affiliates, successors and assigns (collectively, “Releasors”), hereby forever
waives, releases and discharges, to the fullest extent permitted by law, each
Releasee (as hereinafter defined) from any and all liens, claims, interests and
causes of action of any kind or nature (collectively, the “Claims”) that such
Releasor now has or hereafter may have against (a) the Administrative Agent and
its affiliates, subsidiaries, shareholders, directors, officers, employees,
agents, attorneys, other representatives and “controlling persons” (within the
meaning if the federal securities laws) and (b) the Lenders in their capacity as
Lenders and their respective affiliates, subsidiaries, shareholders and
“controlling persons” (within the meaning of the federal securities laws), and
their respective successors and assigns and each and all of the officers,
directors, employees, agents, attorneys and other representatives of each of the
foregoing (collectively, the “Releasees”), based on facts existing on or before
the Forbearance Effective Date that relate to: (i) any Loan Document, (ii) any
transaction, action or omission contemplated thereby, or (iii) any aspect of the
dealings or relationships between or among Borrower and the other Loan Parties,
on the one hand, and the Agent and the Lenders, on the other hand, relating to
any Loan Document or transaction, action or omission contemplated thereby.  The
receipt by the Borrower or Holdings of any Loans or other financial
accommodations made by the Lenders after the date hereof shall constitute a
ratification, adoption, and confirmation by such party of the foregoing general
release of all Claims against the Releasees which are based on facts existing on
or prior to the date of receipt of any such Loans or other financial
accommodations.  The provisions of this Section IV shall survive the termination
of this Agreement, the Credit Agreement, the other Loan Documents and payment in
full of the Obligations.

 
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B.           Each of the Borrower and Holdings, on behalf of itself and its
successors, assigns, and other legal representatives, hereby unconditionally and
irrevocably agrees that it will not sue any Releasee on the basis of any Claim
released, remised and discharged by the Borrower or Holdings pursuant to this
Section IV.  If the Borrower, Holdings or any of its successors, assigns or
other legal representatives violates the foregoing covenant, the Borrower and
Holdings, each for itself and its successors, assigns and legal representatives,
agrees to pay, in addition to such other damages as any Releasee may sustain as
a result of such violation, all attorneys’ fees and costs incurred by any
Releasee as a result of such violation.

SECTION V.     CONDITIONS PRECEDENT TO EFFECTIVENESS
 
A.     This Agreement (other than those provisions set forth in Sections II and
III hereof) shall become effective at the time (the date on which such time
occurs, the “Forbearance Effective Date”) that all of the following conditions
precedent have been met (or waived) as determined by the Administrative Agent in
its sole discretion:
 
(a)     Execution.  The Administrative Agent shall have received duly executed
signature pages for this Agreement signed by the Required Lenders, the Borrower,
Holdings and the other Loan Parties.
 
(b)      Representations and Warranties.  As of the Forbearance Effective Date
and, with respect to the provisions set forth in Sections II and III hereof, the
Third Amendment Effective Date (as defined below), other than as specifically
set forth in Section II, each representation and warranty of each Loan Party set
forth in Section IV and in the Credit Agreement as amended by this Agreement
shall be true and correct in all material respects, except that to the extent
such representations and warranties relate to an earlier date, in which case
such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date.
 
(c)     Absence of Default.  As of the Forbearance Effective Date and, with
respect to the provisions set forth in Sections II and III hereof, the Third
Amendment Effective Date, other than as specifically set forth in Section II, no
Default or Event of Default shall have occurred and be continuing.
 
B.     The provisions set forth in Sections II and III hereof shall become
effective at the earliest time (the date on which such time occurs, the “Third
Amendment Effective Date”) on which both (i) the Forbearance Effective Date
shall have occurred and (ii) each of the following conditions precedent have
been met (or waived) as determined by the Administrative Agent in its sole
discretion:
 
(a)     Fees and Expenses.  The Borrower and Holdings shall have paid the
Administrative Agent the fees, costs and expenses described in Sections VII(A)
and VII(B) of this Agreement in accordance with the Bankruptcy Court Order (as
defined below).
 
 
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(b)     Prepayment.  Contemporaneously with the occurrence of the Third
Amendment Effective Date, the Borrower shall have prepaid New Money Loans to the
Lenders in an amount not less than $6,950,000 and not greater than $8,000,000 in
accordance with the provisions set forth in Section 2.12 of the Credit Agreement
as amended hereby.
 
(c)     Bankruptcy Court Order.  The Bankruptcy Court shall have issued an order
in form and substance satisfactory to the Administrative Agent in its sole
discretion approving the execution, delivery and performance of this Agreement,
including with respect to the payment of the fees and expenses set forth herein
(the “Bankruptcy Court Order”).
 
SECTION VI.     REPRESENTATIONS AND WARRANTIES
 
In order to induce the Lenders to enter into this Agreement and to amend the
Credit Agreement in the manner provided herein, each of the Loan Parties
represents and warrants to each of the Lenders that:
 
A.     Corporate Power and Authority.  Each and every Loan Party (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted, (c) is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be expected to result in a
Material Adverse Effect, (d) subject to Bankruptcy Court approval of this
Agreement, has the power and authority to execute, deliver and perform its
obligations under this Agreement, each of the Loan Documents and each other
agreement or instrument contemplated hereby or thereby to which it is or will be
a party and (e) other than as a result of the Bankruptcy Cases (including the
operation of the automatic stay), is in compliance with all applicable
Requirements of Law, except where the failure to be in compliance would not have
a Material Adverse Effect.
 
B.     Authorization.  Subject to Bankruptcy Court approval of this Agreement,
the execution and delivery of this Agreement (a) has been duly authorized by all
requisite corporate or other company and, if required, stockholder, action on
the part of each Loan Party and (b) will not (i) violate (A) any material
provision of law, statute, rule or regulation, or of the certificate or articles
of incorporation, by-laws, limited liability company agreements or other
constitutive documents of Holdings, the Borrower or any Subsidiary, (B) any
applicable order of any Governmental Authority or (C) other than the Existing
Credit Agreement, the New Senior Note Indenture and the Sale Leaseback
Documents, any provision of any indenture or any other material agreement or
other instrument to which Holdings, the Borrower or any Subsidiary is a party or
by which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument (other than the Existing
Credit Agreement, the New Senior Note Indenture and the Sale Leaseback
Documents) or (iii) result in the creation or imposition of any Lien upon or
with respect to any property or assets now owned or hereafter acquired by
Holdings, the Borrower or any Subsidiary (other than (i) any Lien created
hereunder or under the Security Documents and (ii) any Lien created pursuant to
the New Senior Note Indenture).
 
 
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C.     Governmental Consents.  Subject to Bankruptcy Court approval of this
Agreement, no action, consent or approval of, registration or filing with or any
other action by any Governmental Authority is or will be required in connection
with the execution and delivery by each of the Loan Parties, except for (a) such
as have been made or obtained and are in full force and effect and (b) such
actions, consents, approvals, registrations or filings, the failure of which to
make or obtain could not reasonably be expected to result in a Material Adverse
Effect.
 
D.     Binding Obligation.  This Agreement shall have been duly executed and
delivered by each Loan Party thereto.  Subject to Bankruptcy Court approval of
this Agreement, this Agreement and the Credit Agreement, as amended hereby, will
be, a legal, valid and binding obligation of such Loan Party enforceable against
such Loan Party in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization and
other similar laws relating to or affecting creditors’ rights generally and
general equitable principles.
 
E.     Representations and Warranties.  Other than as specifically set forth in
Section II, each of the representations and warranties set forth in the Loan
Documents is and will be true, correct and complete in all material respects on
and as of the date hereof, to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall have been true, correct and complete in all material respects on and as of
such earlier date.
 
F.     Absence of Default.  Except for those defaults occurring solely as a
result of the filing of the Bankruptcy Cases and defaults under the Existing
Credit Agreement, the New Senior Notes Indenture and the Sale Leaseback
Documents, and other than as specifically set forth in Section II, none of
Holdings, the Borrower or any of the Subsidiaries is in default in any manner
under any provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where such default could reasonably be expected to result in a Material Adverse
Effect.
 
 
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SECTION VII.     MISCELLANEOUS
 
A.     Costs and Expenses.  The Borrower and Holdings agree, jointly and
severally, to pay all fees, costs, charges and expenses incurred by the
Administrative Agent, the Collateral Agent and the Lenders in connection with
this Agreement (including the reasonable fees, charges and disbursements of (i)
Blackstone, financial advisor to the Administrative Agent and the Collateral
Agent (as provided in the letter agreement between Blackstone and the
Administrative Agent dated as of December 13, 2007), (ii) Latham & Watkins LLP
and Duane Morris LLP, counsel for the Administrative Agent and the Collateral
Agent and (iii) Kasowitz, Benson Torres & Friedman LLP, counsel for King’s Cross
Asset Funding 27 SARL, Anchorage Crossover Credit Finance, Ltd., Watershed
Capital Partners, L.P., Watershed Capital Institutional Partners, L.P.,
Watershed Capital Partners (Offshore), Ltd., and their respective affiliates).
 
B.     Amendment Fee.  The Borrower and Holdings agree to pay to the
Administrative Agent on the Third Amendment Effective Date, for the benefit of
(i) the Lenders holding New Money Loans set forth on Schedule 2.12 to the Credit
Agreement attached hereto as Exhibit B and (ii) any financial institution
acquiring New Money Loans from the Lenders not set forth on Schedule 2.12 to the
Credit Agreement attached hereto as Exhibit B in a transaction occurring
substantially concurrently with the Third Amendment Effective Date, in each case
an amendment fee equal to 3.00% of the aggregate amount of (a) in the case of
clause (i), such Lenders’ outstanding New Money Loans on such date and (b) in
the case of clause (ii), the aggregate amount of New Money Loans purchased in
such transaction by such financial institution.
 
C.     Effect on the Credit Agreement and the Other Loan Documents.
 
(i)     Except as expressly set forth herein, this Agreement shall not by
implication or otherwise limit, impair, constitute a waiver of or otherwise
affect the rights and remedies of the Lenders or the Administrative Agent under
the Credit Agreement or any other Loan Document, and shall not alter, modify,
amend or in any way affect any of the terms, conditions, obligations, covenants
or agreements contained in the Credit Agreement or any other provision of the
Credit Agreement or of any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.  Nothing
herein shall be deemed to entitle any Loan Party to a further consent to, or a
further waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document in similar or different circumstances.
 
(ii)     On and after the Forbearance Effective Date, each reference in the
Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words
of like import referring to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby, and this Agreement and the Credit
Agreement shall be read together and construed as a single instrument.  This
Agreement is a Loan Document.
 
(iii)     Except as specifically waived or amended above, the Credit Agreement
and the other Loan Documents are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.  Without limiting
the generality of the foregoing, the Security Documents and all of the
Collateral described therein do and shall continue to secure the payment and
performance of all Obligations under and as defined therein.
 
 
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(iv)     This Agreement shall not be deemed or construed to be a satisfaction,
reinstatement, novation or release of the Loan Documents.
 
D.     Headings.  Section headings used herein are for convenience of reference
only, are not part of this Agreement and are not to affect the construction of,
or to be taken into consideration in interpreting, this Agreement.
 
E.     Successors and Assigns.  This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of the Lenders.
 
F.     Severability.  In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction).  The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
 
G.     Applicable Law.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
 
H.     Counterparts.  This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section V.  Delivery
of an executed signature page to this Agreement by facsimile transmission or
other electronic transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement.
 
I.     Administrative Agent Actions.  The undersigned Lenders hereby authorize
and direct the Administrative Agent to enter into such amendments to the Loan
Documents that it deems necessary or advisable to give effect to the provisions
of the Bankruptcy Court Order.
 
J.     Rights of Official Committee of Unsecured Creditors
Unaffected.  Notwithstanding the foregoing, nothing in this Agreement shall
affect the rights of the Official Committee of Unsecured Creditors under
paragraph 19 of the Final Order to assert a Challenge or an Excepted Challenge.
 
[Remainder of this page intentionally left blank.]

 
 

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IN WITNESS WHEREOF, this Forbearance Agreement, Limited Waiver and Third
Amendment to Credit Agreement has been executed by the parties hereto as of the
date first written above.
 
BUFFETS, INC.,
as Borrower
 
BUFFETS HOLDINGS, INC.,
as Loan Party
         
By:
/s/ A. Keith Wall      
 
By:
 /s/ A. Keith Wall                
         
Name:
A. Keith Wall                
 
Name:
 A. Keith Wall                
         
Its:
EVP, Chief Financial Officer
 
Its:
 EVP, Chief Financial Officer
         
HOMETOWN BUFFET, INC.,
as Loan Party
 
OCB PURCHASING CO.,
as Loan Party
         
By:
 /s/ A. Keith Wall                
 
By:
 /s/ A. Keith Wall                
         
Name:
A. Keith Wall                
 
Name:
 A. Keith Wall                
         
Its:
EVP, Chief Financial Officer
 
Its:
 EVP, Chief Financial Officer
         
OCB RESTAURANT COMPANY, LLC,
as Loan Party
 
BUFFETS FRANCHISE HOLDINGS, LLC,
as Loan Party
         
By:
/s/ A. Keith Wall                
 
By:
 /s/ A. Keith Wall                
         
Name:
A. Keith Wall               
 
Name:
 A. Keith Wall               
         
Its:
Chief Finance Manager
 
Its:
 Chief Finance Manager
         
BUFFETS LEASING COMPANY, LLC,
as Loan Party
 
RYAN’S RESTAURANT GROUP, INC.,
as Loan Party
         
By:
/s/ A. Keith Wall  
 
By:
 /s/ A. Keith Wall
         
Name:
A. Keith Wall               
 
Name:
 A. Keith Wall                
         
Its:
Chief Finance Manager
 
Its:
 EVP, Chief Financial Officer
     
RYAN’S RESTAURANT LEASING COMPANY, LLC,
as Loan Party
 
RYAN’S RESTAURANT MANAGEMENT GROUP, LLC,
as Loan Party
         
By:
/s/ A. Keith Wall   
 
By:
 /s/ A. Keith Wall                
         
Name:
A. Keith Wall               
 
Name:
 A. Keith Wall               
         
Its:
Chief Finance Manager
 
Its:
 Chief Finance Manager

 
 

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HOMETOWN LEASING COMPANY, LLC, as Loan Party
 
OCB LEASING COMPANY, LLC,
as Loan Party
         
By:
/s/ A. Keith Wall                
 
By:
 /s/ A. Keith Wall                
         
Name:
A. Keith Wall               
 
Name:
 A. Keith Wall               
         
Its:
Chief Finance Manager
 
Its:
 Chief Finance Manager
         
FIRE MOUNTAIN RESTAURANTS, LLC,
as Loan Party
 
FIRE MOUNTAIN LEASING COMPANY, LLC,
as Loan Party
         
By:
 /s/ A. Keith Wall                
 
By:
 /s/ A. Keith Wall              
         
Name:
 A. Keith Wall               
 
Name:
 A. Keith Wall               
         
Its:
 Chief Finance Manager
 
Its:
 Chief Finance Manager
         
FIRE MOUNTAIN MANAGEMENT GROUP, LLC,
as Loan Party
 
BIG R PROCUREMENT COMPANY, LLC,
as Loan Party
         
By:
 /s/ A. Keith Wall                
 
By:
 /s/ A. Keith Wall             
         
Name:
 A. Keith Wall               
 
Name:
 A. Keith Wall               
         
Its:
 Chief Finance Manager
 
Its:
 Chief Finance Manager
         
TAHOE JOE’S, INC.,
as Loan Party
 
TAHOE JOE’S LEASING COMPANY, LLC,
as Loan Party
         
By:
 /s/ A. Keith Wall                
 
By:
 /s/ A. Keith Wall             
         
Name:
 A. Keith Wall                
 
Name:
 A. Keith Wall               
         
Its:
 EVP, Chief Financial Officer
 
Its:
 Chief Finance Manager

 
AVL LOAN FUNDING COMPANY, LLC,
as a Lender
 
CANYON CAPITAL ADVISORS, 
as a Lender
         
By:
 /s/ A. Keith Wall                
 
By:
 /s/ Mitch Julis                 
         
Name:
 A. Keith Wall               
 
Name:
 Mitch Julis                    
         
Its:
 Chief Finance Manager
 
Its:
 Managing Partner        

 
 
 

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BOSTON MANAGEMENTAND RESEARCH,
as Investment Advisor
 
EATON VANCE, CDO VIII, LTD, by Eaton Vance Management,
as Investment Advisor
         
By:
 /s/ Michael B. Botthof       
 
By:
 /s/ Michael B. Botthof       
         
Name:
 Michael B. Botthof      
 
Name:
 Michael B. Botthof      
         
Its:
 Vice President              
 
Its:
 Vice President              
         
EATON VANCE, CDO IX, LTD, by Eaton Vance Management, as Investment Advisor
 
EATON VANCE SENIOR FLOATING-RATE TRUST, by Eaton Vance Management,
as Investment Advisor
         
By:
 /s/ Michael B. Botthof       
 
By:
 /s/ Michael B. Botthof       
         
Name:
 Michael B. Botthof      
 
Name:
 Michael B. Botthof      
         
Its:
 Vice President              
 
Its:
 Vice President              
         
EATON VANCE FLOATING-RATE INCOME TRUST, by Eaton Vance Management,
as Investment Advisor
 
EATON VANCE CREDIT OPPORTUNITIES FUND, by Eaton Vance Management,
as Investment Advisor
         
By:
 /s/ Michael B. Botthof       
 
By:
 /s/ Michael B. Botthof       
         
Name:
 Michael B. Botthof      
 
Name:
 Michael B. Botthof      
         
Its:
 Vice President              
 
Its:
 Vice President              
         
EATON VANCE SENIOR INCOME TRUST, by Eaton Vance Management,
as Investment Advisor
 
EATON VANCE SHORT DURATION DIVERSIFIED INCOME FUND, by Eaton Vance Management,
as Investment Advisor
         
By:
 /s/ Michael B. Botthof       
 
By:
 /s/ Michael B. Botthof       
         
Name:
 Michael B. Botthof      
 
Name:
 Michael B. Botthof      
         
Its:
 Vice President              
 
Its:
 Vice President              

 
 
 

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EATON VANCE INSTITUTION SENIOR LOAN FUND, by Eaton Vance Management,
as Investment Advisor
 
EATON VANCE VT FLOATING-RATE INCOME FUND, by Eaton Vance Management,
as Investment Advisor
         
By:
 /s/ Michael B. Botthof       
 
By:
 /s/ Michael B. Botthof       
         
Name:
 Michael B. Botthof      
 
Name:
 Michael B. Botthof      
         
Its:
 Vice President              
 
Its:
 Vice President              
         
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
 
LLCP LOAN FUNDING 2007, 
as Lender
         
By:
 /s/ William E. Magee       
 
By:
 /s/ Arlene Arellano      
         
Name:
 William E. Magee      
 
Name:
 Arlene Arellano      
         
Its:
 Duly Authorized Signatory
 
Its:
 Authorized Signatory
         
VENTURE VIII CDO, LIMITED, by MJX Asset Management LLC,
as Investment Advisor
 
VENTURE IX CDO, LIMITED, by MJX Asset Management LLC,
as Investment Advisor
         
By:
 /s/ John J. Wagner           
 
By:
 /s/ John J. Wagner           
         
Name:
 John J. Wager           
 
Name:
 John J. Wager           
         
Its:
 Managing Director            
 
Its:
 Managing Director            
         
MORGAN STANLEY SENIOR FUNDING,  INC., as Lender
 
NUVEEN SENIOR INCOME FUND, by Symphony Asset Management LLC, its Investment
Advisor, as Lender
         
By:
 /s/ Ian J. Sandler             
 
By:
 /s/ Lenny Mason           
         
Name:
 Ian J. Sandler             
 
Name:
 Lenny Mason           
         
Its:
 Authorized Signatory         
 
Its:
 Portfolio Manager            
         

 
 
 

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PROSPECT FUNDING I, LLC by Sankaty Advisors, LLC, its Collateral Manager,as
Lender
 
SANKATY HIGH YIELD PARTNERS II, L.P., as Lender
         
By:
 /s/ Alan K. Halfenger             
 
By:
 /s/ Alan K. Halfenger             
         
Name:
 Alan K. Halfenger             
 
Name:
 Alan K. Halfenger             
         
Its:
 Chief Compliance Officer         
 
Its:
 Chief Compliance Officer         
         
SANKATY HIGH YIELD PARTNERS III, L.P., as Lender
 
SPCP GROUP, LLC,  as Lender
         
By:
 /s/ Alan K. Halfenger             
 
By:
 /s/ Michael Gatto                   
         
Name:
 Alan K. Halfenger             
 
Name:
 Michael Gatto                   
         
Its:
 Chief Compliance Officer         
 
Its:
 Authorized Signatory                
         
WATERSHED CAPITAL PARTNERS, L.P., by WS Partners, LLC, its General Partner, as
Lender
 
WATERSHED CAPITAL INSTITUTIONAL PARTNERS, L.P., by WS Partners, LLC, its General
Partner, as Lender
         
By:
 /s/ Meridee A. Moore             
 
By:
 /s/ Meridee A. Moore             
         
Name:
 Meridee A. Moore             
 
Name:
 Meridee A. Moore             
         
Its:
 Senior Managing Member         
 
Its:
 Senior Managing Member         
         

 
 
 

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WHIPPOORWILL OFFSHORE DISTRESSED OPPORTUNITY FUND, LTD, by Whippoorwill
Associates, Inc., its Agent and Authorized Signatory, as Lender
 
WHIPPOORWILL DISTRESSED OPPORTUNITY FUND, L.P., by Whippoorwill Associates,
Inc., its Agent and Authorized Signatory, as Lender
         
By:
 /s/ Steven K. Gendal               
 
By:
 /s/ Steven K. Gendal               
         
Name:
 Steven K. Gendal              
 
Name:
 Steven K. Gendal              
         
Its:
 Principal                                    
 
Its:
 Principal                                    
         
WHIPPOORWILL ASSOCIATES, INC. PROFIT SHARING PLAN, by Whippoorwill Associates,
Inc., its Agent and Authorized Signatory, as Lender
 
THE PRESIDENT AND FELLOWS OF HARVARD COLLEGE., by Whippoorwill Associates, Inc.,
its Agent and Authorized Signatory, as Lender
         
By:
 /s/ Steven K. Gendal               
 
By:
 /s/ Steven K. Gendal               
         
Name:
 Steven K. Gendal              
 
Name:
 Steven K. Gendal              
         
Its:
 Principal                              
 
Its:
 Principal                                    
         
WELLPOINT, INC., by Whippoorwill Associates, Inc., its Agent and Authorized
Signatory, as Lender
               
By:
 /s/ Steven K. Gendal         
               
Name:
 Steven K. Gendal              
               
Its:
 Principal                              
     

 
 
 

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EXHIBIT A (Specified Defaults)
 
1.
Event of Default under Section 7(d) of the Credit Agreement, as a result of the
Borrower’s failure to meet the Minimum Consolidated EBITDA covenant set forth in
Section 6.13 of the Credit Agreement with respect to the three month fiscal
accounting period ending on October 22, 2008.

 
2. 
Existing and Future Events of Default under Section 7(m)(iv) of the Credit
Agreement, asa result of the Borrower’s failure to pay Adequate Protection
Interest (as defined in theFinal Order) pursuant to the terms of the Final
Order, provided that the Borrower shall pay Adequate Protection Interest after
the date hereof by increasing the outstanding principal amount of the
Obligations (as that term is defined in the Existing Credit Agreement, but
including the portion of such Obligations that was exchanged for Rollover Loans)
by the aggregate amount of such Adequate Protection Interest, subject however,
to any rights preserved in the Final Order to recharacterize Adequate Protection
Interest payments.

 
 
 

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EXHIBIT B
 
Schedule 2.12
Declining New Money Lenders

AVL Loan Funding LLC
Canyon Capital Advisors
Eaton Vance CDO IX Ltd.
Eaton Vance CDO VIII, Ltd.
Eaton Vance Credit Opportunities Fund
Eaton Vance Floating-Rate Income Trust
Eaton Vance Institutional Senior Loan Fund
Eaton Vance Senior Floating-Rate Trust
Eaton Vance Senior Income Trust
Eaton Vance Short Duration Diversified Income Fund
Eaton Vance VT Floating-Rate Income Fund
General Electric Capital Corporation
LLCP Loan Funding 2007
Morgan Stanley Senior Funding, Inc.
Nuveen Senior Income Fund
The President & Fellows of Harvard College (Ref. Harvard Special Situations
Account)
Prospect Funding I, LLC
Sankaty High Yield Partners II, L.P.
Sankaty High Yield Partners III, L.P.
Senior Debt Portfolio
SPCP Group, LLC
Venture IX CDO, Limited
Venture VIII CDO, Limited
Watershed Capital Institutional Partners, L.P.
Watershed Capital Partners, L.P.
WellPoint, Inc.
Whippoorwill Associates Inc. Profit Sharing Plan
Whippoorwill Distressed Opportunity Fund, L.P.
Whippoorwill Offshore Distressed Opportunity Fund, Ltd.

 
 

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