FORBEARANCE AGREEMENT AND SECOND AMENDMENT TO CREDIT AGREEMENT

This FORBEARANCE AGREEMENT AND SECOND AMENDMENT TO CREDIT AGREEMENT (this “ Agreement ”) is entered into as of September 26, 2008, by and among Buffets, Inc., a Minnesota corporation, as a debtor and debtor in possession under Chapter 11 of the Bankruptcy Code (“ Borrower ”), Buffets Holdings, Inc., a Delaware corporation, as a debtor and debtor in possession under Chapter 11 of the Bankruptcy Code (“ Holdings ”), the Subsidiaries of Borrower and Holdings, as Guarantors (together with Borrower and Holdings, the “ Loan Parties ”), the financial institutions party hereto as Lenders (collectively, the “ Lenders ”) and Credit Suisse, Cayman Islands Branch, as administrative agent for the Lenders (in such capacity, the “ Administrative Agent ”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement (as hereinafter defined).

A.   On January 22, 2008, Borrower and Holdings and certain of their Subsidiaries each filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”). On February 22, 2008, the Bankruptcy Court entered a final order (as has been or may be further amended, restated, supplemented or otherwise modified from time to time, the “ Final Order ”) authorizing Borrower to obtain post-petition debtor-in-possession financing pursuant to the terms and conditions set forth in that certain Secured Super-Priority Debtor in Possession Credit Agreement, dated as of January 22, 2008 (as has been or may be further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).

B.   Pursuant to the Credit Agreement, the Lenders have agreed, subject to the terms and conditions set forth in the Credit Agreement, to make certain loans and other financial accommodations to Borrower.

C.   As of the date hereof, the Event of Default listed on Exhibit A hereto has either occurred and is continuing as of the date hereof or is expected to occur prior to the expiration of the Forbearance Period (as hereinafter defined) (collectively, the “ Specified Default ”).

D.   Upon Borrower’s request, the undersigned Lenders have agreed, subject to the terms and conditions set forth herein, to (a) forbear from exercising certain of their default-related rights and remedies against Borrower and the other Loan Parties with respect to the Specified Default and (b) amend the Credit Agreement as set forth in Section 2 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:

(a) Borrower and each other Loan Party acknowledges and agrees that as of September 26, 2008, the aggregate principal balance of the outstanding Obligations under the Credit Agreement is at least $279,930,667.44, and that the respective principal balances of the various Loans as of such date were not less than the following:

The foregoing amounts do not include interest, fees, expenses and other amounts which are chargeable or otherwise reimbursable under the Credit Agreement and the other Loan Documents.   All of the Obligations, including those set forth above, are valid and outstanding, and none of Borrower and the other Loan Parties have any rights of offset, defenses, claims or counterclaims with respect to any of the Obligations.

(b) Borrower and each other Loan Party acknowledges and agrees that the Specified Default constitutes a material Event of Default that has occurred and is continuing as of the date hereof or is expected to occur and continue during the Forbearance Period, as the case may be. Prior to the effectiveness of this Agreement, the existence of the Specified Default (i) relieved or upon its occurrence would relieve the Lenders from any obligation to provide any financial accommodations under the Credit Agreement or other Loan Documents and (ii) permitted or upon its occurrence would permit the Lenders to, among other things, (A) suspend or terminate any commitment to provide Loans or make other extensions of credit under any or all of the Credit Agreement and the other Loan Documents, (B) accelerate all or any portion of the New Money Loans, (C) charge the default interest rate applicable pursuant to Section 2.07 of the Credit Agreement with respect to the New Money Loans, (D) commence any legal or other action to collect any or all of the Obligations from Borrower, any other Loan Party and/or any Collateral or any other property as to which any other Person granted the Lenders a security interest therein as security for the Obligations or any guaranty thereof (collectively, the “ Other Collateral ”), (E) foreclose or otherwise realize on any or all of the Collateral and Other Collateral, and/or appropriate, set-off and apply to the payment of any or all of the Obligations, any or all of the Collateral and Other Collateral, and/or (F) take any other enforcement action or otherwise exercise any or all rights and remedies provided for by any or all of the Credit Agreement, the other Loan Documents or applicable law.

SECTION 2.   Amendments to Credit Agreement .  

(a) Effective as of the Forbearance Effective Date (as defined herein), the following provisions of the Credit Agreement shall be amended as set forth below:    

(i) Section 5.13 of the Credit Agreement is hereby amended by deleting the reference to “September 30, 2008” in clause (i) of paragraph (b) thereof and replacing it with “October 30, 2008”.

(ii) Article VII of the Credit Agreement is hereby amended by deleting the reference to “September 30, 2008” in clause (i) of paragraph (p) thereof and replacing it with “October 30, 2008”.

(b) Effective as of the Supplemental Amendments Effective Date (as defined herein), the following provisions of the Credit Agreement shall be amended as set forth below:

(i) Section 1.1 of the Credit Agreement is hereby 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, 8.25% and (b) with respect to the Rollover Loans, 7.25%.

(ii) Section 6.13 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“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:

For the avoidance of doubt, (i) the Credit Agreement shall remain amended as set forth in this Section 2 after the Forbearance Period expires or terminates and (ii) the increase in the Applicable Percentage applicable with respect to the New Money Loans from 7.25% to 8.25% made pursuant to Section 2(b)(i) hereof shall apply retroactively as of the Forbearance Effective Date.

SECTION 3.   General Release; Covenant Not to Sue .

(a)   Subject to the approval of the Bankruptcy Court pursuant to the order referred to in Section 14(b)(i) hereof, 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 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 Lenders, on the other hand, relating to any Loan Document or transaction, action or omission contemplated thereby. The receipt by 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 shall survive the termination of this Agreement, the Credit Agreement, the other Loan Documents and payment in full of the Obligations.

(b)   Subject to the approval of the Bankruptcy Court pursuant to the order referred to in Section 14(b)(i) hereof, each of 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 Borrower or Holdings pursuant to this Section 3. If Borrower, Holdings or any of its successors, assigns or other legal representatives violates the foregoing covenant, 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 4.   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 Default. 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), or (ii) October 15, 2008. As used herein, the term “ Forbearance Default ” shall mean (A) the occurrence of any Event of Default other than the Specified Default, (B) the failure of Borrower or any other Loan Party to timely comply with any term, condition, or covenant set forth in this Agreement, (C) the failure of Borrower to file within two Business Days of the Forbearance Effective Date a motion, in form and substance satisfactory to the Administrative Agent, for an order from the Bankruptcy Court authorizing and approving the payment of the fees and expenses set forth herein, (D) the failure of Borrower to obtain by October 15, 2008 entry of an order by the Bankruptcy Court in form and substance satisfactory to the Administrative Agent authorizing and approving the payment of the fees and expenses set forth herein, (E) the failure of the Borrower to pay the Administrative Agent and the Lenders within two Business Days of the Supplemental Amendments Effective Date the fees and expenses described in Section 15(a) and Section 15(b) of this Agreement or (F) 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.

(b)   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. 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.

(c)   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). 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.

(d)   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 releas