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    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:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (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.]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                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        

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          	
                  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              

                

        

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          
            
              	
                      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            

                    
	 
      	 
      	 
      	 
      	 
      

            

          

        

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                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         

              
	 
      	 
      	 
      	 
      	 
      

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                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                              

              	 
      	 
      	 
      

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.Unassociated Document

    

     

    Exhibit
10.1

     

     

    AMENDMENT NO. 1
TO

     

     

    CONVERTIBLE
DEBENTURE

     

    THIS AMENDMENT NO. 1 TO CONVERTIBLE
DEBENTURE (this “Amendment”), is
entered into by and between TRIANGLE PETROLEUM
CORPORATION, a Nevada corporation (the “Company”), and
Centrum Bank AG (the “Holder”), as of
December 18, 2008.

     

    WHEREAS:

     

    A.           The
Company and the Holder are parties to that certain Securities Purchase
Agreement, dated December 28, 2005, (the “Purchase Agreement”),
pursuant to which the Company issued to the Holder a Convertible Debenture, due
December 28, 2008 in an aggregate principal amount of $2,500,000 (the “December Debenture”)
and a Convertible Debenture, due January 23, 2009 in an aggregate principal
amount of $2,500,000 (the “January Debenture”
and together with the December Debenture, the “Debentures”).

     

    B.           Simultaneously
with the execution of this Agreement, the following transactions are also taking
place: a) the Company is entering into an settlement agreement with the Holder,
pursuant to which the Holder has agreed to accept $3,250,000 from the Company
for the final settlement of the Debentures; b) the Company is entering into an
amendment agreement with the Holder, pursuant to which the conversion price of
convertible debentures issued pursuant to a securities purchase agreement dated
December 28, 2005 will be reduced to $1.40 and the Holder will convert
$1,750,000 of debentures and receive 1,250,000 shares of the Company’s common
stock; and c) the Company is entering into a settlement agreement with the
Holder for the settlement of the remaining convertible debentures issued to the
Holder.

     

    C.           As
of the date hereof, the outstanding value of the Debenture is $6,102,396, which
includes $5,000,000 in principal and $1,102,396 of accrued
interest.

     

    D.           The
parties to the Agreement now desire to amend certain provisions set forth in the
Debenture as more fully described herein.

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Holder hereby agree as
follows:

     

    1.           AMENDMENT OF SECTION
2.1. Section 2.1 of the Debentures is hereby amended and replaced in its
entirety with the following:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    “2.1.          Optional
Conversion.  Subject to the terms of this Article II, the
Holder shall have the right, but not the obligation, at any time until the
Maturity Date, or thereafter during an Event of Default and to convert all or
any portion of the outstanding Principal Amount and/or accrued interest and fees
due and payable into fully paid and nonassessable shares of the Common Stock at
the Fixed Conversion Price. The shares of Common Stock to be issued upon such
conversion are herein referred to as the “Conversion
Shares.”  The “Fixed Conversion Price” shall
mean $1.40.”

     

    

    2.           CONVERSION
OF DEBENTURES.  Upon execution of this Agreement, Holder agrees to
immediately convert $1,750,000 of Debentures into 1,250,000 shares of the
Company’s common stock by executing the Notice of Conversion, in substantially
the same form as attached as Exhibit A
hereto

     

    3.           EFFECT
ON OTHER TERMS.  This Amendment shall be deemed effective as of
December 18, 2008.  All other terms set forth in the Debenture shall
remain unchanged and this Amendment and the Debenture shall be deemed a single
integrated agreement for all purposes.

     

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, the
parties have caused this Amendment No. 1 to Debenture to be duly executed as of
day and year first above written.

     

    
      
        
          	
                  TRIANGLE PETROLEUM
      CORPORATION

                   

                	 	 	 	 
	
                  By:
      /s/ MARK GUSTAFSON

                	 	 	
                   

                	 
	
                  Name:
      Mark Gustafson

                	 	 	
                   

                	 
	
                  Title:   Chief
      Executive Officer

                	 	 	
                   

                	 

        

      

    

     

    
      
        
          

          
            
              
                
                  	
                          CENTRUM
      BANK AG

                        	 
      
	 
      	 
      
	 
      	 
      
	By:
      /s/ JURG MUEHLETHALER
	
                           
      Jurg
      Muehlethaler

                        
	
                           
      Executive
      Director

                        

                

              

            

          

          

          

          
            
              
                
                  	By:
      /s/ DANIEL KIEBER
	
                           
      Daniel
      Kieber

                        
	
                           
      Associate
      Director

                        

                

              

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

     

    NOTICE OF
CONVERSION

     

    (To be
executed by the Holder in order to convert all or part of the
Debenture

    into
Common Stock)

    

    

    Centrum
Bank AG

    Kirchstrasse
3

    PO Box
1168

    FL – 9490
Vaduz

    Liechtenstein

     

    The
undersigned hereby converts $1,750,000 of the principal due on December 28, 2008
under the Convertible Debenture issued by Triangle Petroleum Corporation
(“Borrower”) dated as of December 28, 2005, as amended on December 18, 2008, by
delivery of shares of Common Stock of Borrower on and subject to the conditions
set forth in Article II of such Debenture.

     

    
      	
              1.

            	
              Date
      of Conversion

            	
              December
      18, 2008

            

    

     

    
      	
              2.

            	
              Shares
      To Be Delivered:

            	
              1,250,000

            

    

     

    
      
        
          	
                  CENTRUM BANK
      AG

                   

                	 	 	 	 
	
                  By:

                	 	 	 	 
	
                  Jurg
      Muehlethaler

                	 	 	 	 
	
                  Executive
      Director

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