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LETTER OF CREDIT
REIMBURSEMENT AND SECURITY AGREEMENT
between
BUFFETS, INC.,
a Debtor and Debtor in Possession
and
U.S. BANK NATIONAL ASSOCIATION
Dated as of February _, 2008
TABLE OF CONTENTS
SECTION 1 Defuritions
1
SECTION 2 Other Definitional Terms; Rules ofInterpretation
4
SECTION 3 The Letters of Credit
4
SECTION 4 Reimbursement and Other Payments
5
SECTION 5 Obligations Absolute
6
SECTION 6 Security
7
SECTION 7 Conditions Precedent
8
SECTION 8 Representations and Warranties of the Borrower
9
SECTION 9 Covenants of the Borrower
11
SECTION 10 Events of Default
12
SECTION 11 Remedies
13
SECTION 12 Amendments, Etc
14
SECTION 13 Notices
14
SECTION 14 No Waiver; Remedies
15
SECTION 15 Indemnification
15
SECTION 16 Continuing Obligation
15
SECTION 17 Transfer of Letters of Credit
15
SECTION 18 Liability of the Bank
16
SECTION 19 Costs, Expenses and Taxes
16
SECTION 20 Severability
17
SECTION 21 Governing Law; Waiver of Jury Trial; Consent to Jurisdiction
17
SECTION 22 Headings
18
,
SECTION 23 Setoff
18
SECTION 24 Multiple Counterparts
18
LETTER OF CREDIT REIMBURSEMENT AND SECURITY AGREEMENT
This LETTER OF CREDIT REIMBURSEMENT AND SECURITY
AGREEMENT, dated as of February _,2008, is made by and between BUFFETS, INC., a
Minnesota corporation, a debtor and debtor in possession under Chapter 11 of the Bankruptcy
Code, as defined below (the "Borrower"), and U.S. BANK NATIONAL ASSOCIATION, a
national banldng association (the "Bank").
WHEREAS, on January 22, 2008, the Borrower and Holdings, as defined below,
and certain of their subsidiaries each filed a voluntary petition for relief (collective, the
"Banlauptcy Cases") under Chapter 11 of the Bankruptcy Code with the United States
Banlauptcy Court for the District of Delaware (the "Bankruptcy Court");
WHEREAS, the Borrower and Holdings and certain of their subsidiaries are
continuing to operate their respective businesses and manage their respective properties as
debtors in possession under Sections 1107 and 1108 of the Banlauptcy Code; and
WHEREAS, the Borrower wishes to induce the Banlc to issue letters of credit, and
the Bank is willing to do so, on the terms and conditions set out in this Agreement (including the
Borrower's unconditional promise to reimburse the Banlc for any draws under letters of credit
issued hereunder and the condition that the Borrower maintain with the Bank a collateral
account, with cash on deposit therein in an amount at least equal to 105% of the aggregate stated
amount of such letters of credit, to secure all obligations under the Reimbursement Documents,
as defined below);
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the Borrower and the Bank hereby agree as follows:
SECTION 1 Definitions. In addition to terms defined elsewhere in this
Agreement, the following defined terms are used throughout this Agreement with the following
meamngs:
"Aggregate Stated Amount" means, as of a date of determination, the aggregate
Stated Amount of all issued and outstanding Letters of Credit on that date.
"Bank" has the meaning given in the preamble.
"Banlauptcy Cases" has the meaning given in the recitals.
"Bankruptcy Code" means Title 11 of the United States Code.
"Banlauptcy Court" has the meaning given in the recitals.
"Borrower" has the meaning given in the preamble.
"Business Day" means any day on which commercial banks are not authorized or
required to close in Minneapolis, Minnesota.
"Closing Date" shall mean the date of this Agreement.
"Collateral" has the meaning given in Section 6(a).
"Collateral Account" means account number 410000723 maintained by the
Borrower with the Bank.
"DIP Credit Agreement" means the Secured Super-Priority Debtor in Possession
Credit Agreement, dated as of January 22,2008, among the Borrower, Holdings, the
lenders from time to time party thereto, Credit Suisse, as administrative agent and
collateral agent for such lenders, and Credit Suisse Securities (USA) LLC, as syndication
agent and documentation agent.
"Event of Default" means any Event of Default described in Section 10.
"Expiration Date" means, with respect to any Letter of Credit, the date on which
that Letter of Credit expires as described in that Letter of Credit, as the same may be
amended from time to time.
"Exposure" means, as of a date of determination, the sum, as of such date, of
(i) the Aggregate Stated Amount, plus (ii) the outstanding principal balance of all
unreimbursed draws under Letters of Credit, plus (iii) the aggregate amount of accrued
and unpaid interest on such unreimbursed draws, plus (iv) due and unpaid fees in respect
of any Reimbursement Agreement Documents.
"Facility Amount" means $25,000,000.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which are applicable to
the circumstances as of any date of determination.
"Holdings" means Buffets Holdings, Inc., a Delaware corporation, a debtor and
debtor in possession under Chapter 11 of the Bankruptcy Code.
"Latest Issuance Date" means the earlier of (i) January 22, 2009, provided that
such date shall be automatically extended for six months if the Pre-Petition Credit
Agreement Agent notifies the Bank in writing that the "Calendar Maturity" (as defined in
the DIP Credit Agreement) has been extended by six months, (ii) the effective date of
confirmation of any plan of reorganization in the Bankruptcy Cases, or (iii) the date on
which the ''New Money Commitments" (as defined in the DIP Credit Agreement) are
terminated or the "New Money Loans" (as defined in the DIP Credit Agreement) become
due and payable.
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"Letter of Credit" means a standby letter of credit issued by the Bank for the
account of the Borrower excluding any letter of credit issued under the Pre-Petition
Credit Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, security
deposit arrangement, encumbrance, lien (statutory or other) or other security agreement
or lien of any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing or similar statement or notice filed
under the Uniform Commercial Code or any other similar recording or notice statute, and
any capital lease having substantially the same economic effect as any of the foregoing).
"Obligations" shall mean all indebtedness, liabilities and obligations of the
Borrower to the Bank of every kind, nature or description under any Reimbursement
Agreement Document, in all cases whether due or to become due, and whether now
existing or hereafter arising or incurred.
"Person" means any natural person, corporation, partnership, joint venture, firm,
association, trust, unincorporated organization, limited liability company, government or
governmental agency or political subdivision or any other entity, whether acting in an
individual, fiduciary or other capacity.
"Pre-Petition Credit Agreement" means the Credit Agreement dated as of
November 1,2006, as amended and restated as of March 13, 2007, among the Borrower,
Holdings, the lenders from time to time party thereto, and Credit Suisse, as administrative
agent and collateral agent for such lenders, as amended on March 13,2007 and by the
Forbearance Agreement and Second Amendment to Credit Agreement dated as of
January 7,2008 and the Third Amendment and Limited Waiver to Credit Agreement
dated as of February _ , 2008.
"Pre-Petition Credit Agreement Agent" means Credit Suisse, as administrative
and collateral agent for the lenders under the Pre-Petition Credit Agreement.
"Prime Rate" means the rate of interest from time to time announced by the BarrIe
as its "prime rate". For purposes of determining any interest rate which is based on the
Prime Rate, such interest rate shall be adjusted each time that the prime rate changes.
"Reimbursement Agreement Documents" means this Agreement and the Related
Documents.
"Related Documents" has the meaning given in Section 3(b).
"Stated Amount" with respect to any Letter of Credit means the amount available
to be drawn under that Letter of Credit as of the date of determination.
"Subsidiary" of any Person means any corporation a maj ority of the issued and
outstanding shares of which having ordinary voting power for the election of directors is
owned by such Person, either directly or through one or more Subsidiaries.
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"Termination Date" means the date after the Latest Issuance Date on which (i) all
Obligations are satisfied in full and (ii) no Letters of Credit are outstanding.
"UCC" means the Uniform Commercial Code as enacted in the State of
Minnesota.
"Unmatured Event of Default" means any event which with the lapse of time or
written notice to the Borrower and lapse of time would constitute an Event of Default.
SECTION 2 Other Definitional Terms; Rules of Interpretation. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
All accounting terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP. All terms defined in the UCC cmd not otherwise defined herein have the
meanings assigned to them in the UCC. References to Sections, subsections and the like, are to
Sections and subsections of this Agreement unless otherwise expressly provided. The words
"include", "includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Defmed terms include in the singular number the plural and in the plural number the
singular. Reference to any agreement, document or instrument means such agreement, document
or instrument as amended or modified and in effect from time to time in accordance with the
tenns thereof (and, if applicable, in accordance with the terms hereof and the other
Reimbursement Agreement Documents), except where otherwise explicitly provided. Reference
to any law, rule, regulation, order, decree, requirement, policy, guideline, directive or
interpretation means as amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect on the determin~tion date, including rules and regulations promulgated thereunder.
SECTION 3 The Letters of Credit.
(a)
Issuance and Amendment of Letters of Credit. During the period from the
date all of the conditions in Section 7 are satisfied or waived until the Latest Issuance
Date, and in each case upon the terms and subject to the conditions set forth in this
Agreement, the Bank shall issue Letters of Credit for the account and at the request of the
Borrower, and amend any outstanding Letters of Credit at the request of the Borrower
from time to time to increase or (with the applicable beneficiary's consent) decrease any
Stated Amount or extend any Expiration Date; provided, however, that:
(i)
the Bank shall not be required to comply with any request to issue
or amend any Letter of Credit if, after giving effect to such request, an amount
equal to 105% of the Aggregate Stated Amount would exceed either the amount
of immediately available funds on deposit in the Collateral Account or the Facility
Amount;
(ii)
the Bank shall not be required to comply with any request to issue
a Letter of Credit with an Expiration Date, or to amend a Letter of Credit to
extend any Expiration Date, if such Expiration Date would be later than the date
that is one year after the date of issuance of such Letter of Credit or one year after
the Expiration Date in effect for such Letter of Credit before such amendment
would become effective (as applicable); and
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(iii)
the Bank shall not be required to comply with any request to issue
or amend any Letter of Credit if such Letter of Credit or amendment, as
applicable, is not for a valid business purpose.
(b)
Procedures for Requesting a Letter of Credit or an Amendment. The
Borrower shall make each request for the issuance or the amendment of a Letter of Credit
by submitting a completed application on the Bank's then current form, with all other
documents that the Bank may reasonably request (collectively, the "Related Documents")
at least two Business Days before the date the Borrower desires the Letter of Credit or
amendment to be issued, which in each case shall be a Business Day. The terms and
conditions to which each application is subject shall supplement the terms and conditions
hereof, but if the terms of any application and the terms of this Agreement are
inconsistent, the terms of this Agreement shall control. Any request for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by the Borrower
that all of the conditions precedent set forth in Section 7(b) are satisfied as of the date of
the request, and, upon request by the Banlc, an officer of the Borrower shall deliver to the
Banlc with the application a signed certificate to that effect.
SECTION 4 Reimbursement and Other Payments.
(a)
Reimbursement Payments. The Borrower shall pay to the Bank, on the day
the Bank makes any payment under a Letter of Credit, an amount equal to all amounts
paid by the Bank under such Letter of Credit. All payments by the Borrower to the Bank
hereunder shall be nonrefundable and made in lawful currency of the United States and in
immediately available funds at the Bank's office in Minneapolis, Minnesota no later than
4:00 p.m. MiImeapolis time on the day payment is due. Payments received by the Banlc
after 4:00 p.m. shall be deemed to be received on the following Business Day.
(b)
Interest. The Borrower shall pay the Banlc, on demand, interest on any and
all amounts paid by the Bank under a Letter of Credit, from the date so paid, at a
fluctuating rate per annum (computed on the basis of the actual number of days elapsed
and a year of 360 days) equal to six percent (6.0%) per annum above the Prime Rate;
provided that such fluctuating interest rate shall in no event be higher than the maximum
rate permitted by law.
(c)
Fees. The Borrower shall pay to the Bank:
(i)
a letter of credit fee, payable in advance on the date of issuance or
renewal of any Letter of Credit, in respect of such issuance or renewal, as
applicable, in an amount equal to the product of (x) one-half of one percent
(0.50%) times (y) the Stated Amount times (z) the quotient of (1) the number of
days between the date of issuance or renewal, as applicable, and the Expiration
Date of such Letter of Credit, divided by (2) 360; and
(ii)
all other fees identified in Exhibit A attached hereto.
(d)
Right to Charge Collateral Account. Without limiting any other right of
the Banlc under the Reimbursement Agreement Documents, the Borrower authorizes the
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Banlc immediately to cause the early withdrawal of any certificates of deposit and
payment of the penalty therefor and debit the Collateral Account for all amounts due and
owing under the Reimbursement Agreement Documents, all without prior notice to the
Borrower; and the Bank agrees to do so in respect of each draw under a Letter of Credit
within one (1) Business Day following the date on which such draw is paid unless legally
precluded from doing so as a consequence of any order or proceeding or otherwise.
(e)
Application of Payments. Each payment under any Reimbursement
Agreement Document, however effected, may be applied by the Banlc to reimbursement
with respect to draws under Letters of Credit, fees, interest and other amounts due under
the Reimbursement Agreement Documents in any order the Banlc elects.
(t)
Changes in Law and· Regulation. If any change in law or regulation or in
the interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof, or the enactment of any new law or regulation
occurring after the Closing Date (but excluding any such change that as of the date hereof
is scheduled to take place under existing laws or regulations), shall either (i) impose,
modify or deem applicable any reserve, special deposit, capital allocation or similar
requirement against letters of credit issued by the Bank or (ii) impose on the Banlc any
other condition regarding this Agreement or the Letters of Credit, and the result of any
event referred to in the preceding clause (i) or (ii) shall be to increase the cost to the Banlc
of issuing or maintaining the Letters of Credit (which increase in cost shall be the result
of the Banlc's reasonable allocation of the aggregate of such cost increases resulting from
such event), then, upon demand by the Bank, accompanied by the certificate described in
the next succeeding sentence, the Borrower shall immediately pay to the Bank, on the
date or dates or at the intervals specified by the Banlc, additional amounts which shall be
sufficient to compensate the Bank for such increased cost from the date of such change.
A certificate setting forth in reasonable detail the change in law or regulation or in the
interpretation thereof by any court or administrative or governmental authority charged
with the administration thereof, or the enactment of any new law or regulation, that
caused such increased cost incurred by the Bank as a result of any event mentioned in
clause (i) or (ii) of this subsection (t), and the amount of such increased cost, submitted
by the Banlc to the Borrower, shall be conclusive, absent demonstrable error, as to the
amount thereof.
SECTION 5 Obligations Absolute. The obligations of the Borrower under the
Reimbursement Agreement Documents shall be absolute, unconditional and irrevocable, and
shall not be subject to any right of setoff or counterclaim and shall be paid or performed strictly
in accordance with the terms of the Reimbursement Agreement Documents, under all
circumstances whatsoever, including, without limitation, the following circumstances:
(a)
any lack of validity or enforceability of any Letter of Credit or any of the
Related Documents;
(b)
Documents;
any amendment or waiver of any provision of all or any of the Related
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(c)
the existence of any claim, setoff, defense or other rights which the
Borrower may have at any time against any beneficiary or any transferee of a Letter of
Credit (or any Persons for which any such beneficiary or any such transferee may be
acting), the Bank (other than the defense of payment to the Bank in accordance with the
tenns of this Agreement) or any other Person, whether in connection with this
Agreement, the Related Documents or any transaction contemplated thereby or any
unrelated transaction;
(d)
any statement or any other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever, unless the Banlc was grossly
negligent or engaged in willful misconduct in failing to notice the forgery, fraud,
invalidity, insufficiency, untruth or inaccuracy;
(e)
payment by the Bank under a Letter of Credit against presentation 'of a
sight draft or certificate which does not comply with the tenns of the Letter of Credit,
provided that such payment shall not have constituted willful misconduct or gross
negligence by the Bank;
(f)
the fact that an Event of Default or Unmatured Event of Default shall have
occurred or be continuing; and
(g)
any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing.
SECTION 6 Security.
(a)
Grant of Security Interest. As security for the payment and perfonnance of
the Obligations, the Borrower hereby grants to the Bank a security interest in all of the
Borrower's right, title and interest in and to the Collateral Account and all certificates of
deposit and other fmancial assets in and amounts on deposit in the Collateral Account,
together with all proceeds thereof (collectively, the "Collateral").
(b)
Maintenance of Collateral Account Balance. The Borrower shall cause to
be maintained in the Collateral Account at all times immediately available funds in an
amount at least equal to 105% of the Aggregate Stated Amount. All items deposited in
the Collateral Account shall be subject to final payment. The Borrower shall be liable as
an endorser on all items deposited in the Collateral Account,whether or not in fact
endorsed by the Borrower.
(c)
Certificates of Deposit. As long as no Event of Default shall have
occurred and be continuing, the Borrower may from time to time direct that any cash
deposited in the Collateral Account, be invested in certificates of deposit issued by the
Bank having a maturity of seven days. In the absence of directions from the Borrower, or
upon and during the occurrence of an Event of Default, any cash or interest on certificates
of deposit held in the Account shall be maintained as cash. All interest on and all other
proceeds of any certificates of deposit shall be retained in the Collateral Account and
shall be deemed to be Collateral.
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(d)
Limited Right to Withdraw. So long as any Letter of Credit is outstanding
or any amount due to the Bank hereunder is unpaid, the Borrower shall have no right to
withdraw from the Collateral Account at any time any amounts that would cause the total
amount of immediately available funds on deposit in the Collateral Account to be less
than 105% of the Aggregate Stated Amount.
(e)
Termination of Security Interest. On the Termination Date, the security
interest granted under Section 6(a) shall terminate. Upon the release and withdrawal of
any funds from the Collateral Account not required to be maintained therein under
Section 6(b), the security interest granted under Section 6(a) in such funds shall
terminate.
SECTION 7 Conditions Precedent.
(a)
Initial Conditions. It shall be a condition precedent to the Bank's
obligation to issue or amend any Letter of Credit that the Bank shall have received the
following items, each, unless otherwise indicated, dated as of the Closing Date and in
form and substance satisfactory to the Bank and its counsel:
(i)
this Agreement, duly executed by the Borrower;
(ii)
copies of the corporate resolutions of the Borrower authorizing the
execution, delivery and performance of this Agreement and requests for issuance
of or modifications to the Letters of Credit and containing an incumbency
certificate showing the names and titles, and bearing the signatures of, the officers
of the Borrower authorized to execute this Agreement and requests for issuance of
or modifications to the Letters of Credit, and the bylaws of the Borrower, all
certified as of the Closing Date by the Secretary or an Assistant Secretary of the
Borrower;
(iii)
copies of the articles of incorporation of the Borrower with all
amendments thereto and a certificate of good standing for the Borrower in
Minnesota, each certified by the Secretary of State of Minnesota as of a date not
more than ten days prior to the Closing Date;
(iv)
entry by the Bankruptcy Court of an interim order approving this
Agreement, substantially in the form attached hereto as Exhibit B;
(v)
payment (or evidence acceptable to the Bank that payment has
been made) of the fees and expenses incurred by the BarrIe from and after the
filing of the Bankruptcy Cases in connection with its relationships with the
Borrower, including without limitation, the fees and expenses incurred in
connection with the preparation of this Agreement;
(vi)
payment of a work fee in the amount of $100,000, payment of
which will have been satisfied if the BarrIe received payment of a $100,000 work
fee in connection with the execution and delivery of the Third Amendment to the
Pre-Petition Credit Agreement; and
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(vii) such other documents, instrurilents, approvals and, if requested by
the Bank, certified duplicates of executed copies thereof, and opinions as the
Bank may reasonably request.
(b)
Conditions Precedent to Each Issuance and Amendment. It shall be a
condition precedent to the Bank's obligation to issue or amend any Letter of Credit that:
(i)
(A) if the Bankruptcy Court has not. entered a final order
substantially in the form attached hereto as Exhibit C approving this Agreement,
the interim order referenced in Section 7(a)(iv) shall be in full force and effect and
shall not have been stayed, reversed, vacated, subj ect to appeal, or otherwise
modified in a manner materially adverse to the Bank, and (B) if the Bankruptcy
Court has entered such final order, such final order shall be in full force and effect
and shall not have been stayed, reversed, vacated, subj ect to appeal, or otherwise
modified in a manner materially adverse to the Bank;
(ii)
the representations and warranties contained in Section 8 are
correct in all material respects on and as of the date of the requested action as
though made on and as of such date;
(iii)
no Event of Default or Unmatured Event of Default has occurred
and is continuing, or would result from the requested action;
(iv)
without limiting the generality of clause (iii) above, the balance of
immediately available funds on deposit in the Collateral Account shall be at least
equal to 105% of the Aggregate Stated Amount after giving effect to such
issuance or amendment; and
if the requested date of such issuance or amendment is on or after
(v)
March U, 2008, the Banlauptcy Court has entered the order referenced in
clause (i) above.
. SECTION 8 Representations and Warranties of the Borrower. The Borrower
represents and warrants the following:
(a)
Corporate Status. The Borrower (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its organization, (ii) has
the power and authority to own its property and assets and subject to entry of the
applicable order referred to in Section 7(b)(i), to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is authorized to
do business and is in good standing in each jurisdiction where it is required to be so
qualified and where the failure to be so qualified would have a material adverse effect on
the results of operations or financial condition of the Borrower, Holdings and their
Subsidiaries taken as a whole.
(b)
Corporate Power and Authority. Subject to entry of the applicable order
referred to in Section 7(b)(i), the Borrower has the power and authority to execute,
deliver and perform the terms and provisions of each of the Reimbursement Agreement
Documents to which it is a party and has taken all necessary action to authorize the
execution, delivery and performance by it of each such Reimbursement Agreement
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Document. The Borrower has duly executed and delivered each of the Reimbursement
Agreement Documents to which it is party, and each of such Reimbursement Agreement
Documents constitutes the Borrower's legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).
(c)
No Violation. Neither the execution, delivery or performance by the
Borrower of the Reimbursement Agreement Documents to which it is a party, nor
compliance by it with the terms and provisions thereof (i) will contravene in any material
respect any provision of any material applicable law, statute, rule or regulation or any
applicable order, writ, injunction or decree of any court or governmental instrumentality,
(ii) will conflict in any material respect with or result in any material breach of any of the
terms, covenants, conditions or provisions of, or constitute a material default under, or
result in the creation or imposition of (or the obligation to create or impose) any Lien
upon any of the properties or assets of the Borrower pursuant to the terms of any material
indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, to which the Borrower is a party or by which
it or any of its property or assets is bound or to which it may be subject, (iii) will violate
any provision of the articles of incorporation or by-laws of the Borrower, or (iv) will
result in a breach of any of the terms of, or constitute a default under, any other
agreement to which it is a party.
(d)
Governmental Approvals. Other than the applicable order referred to in
Section 7(b)(i), no material order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or is required in
connection with, (i) the execution, delivery and performance of any Reimbursement
Agreement Document or (ii) the legality, validity, binding effect or enforceability of any
Reimb.ursement Agreement Document.
(e)
Litigation. There are no actions, suits or (other than the Banlauptcy Cases)
proceedings pending or threatened with respect to the Borrower that affect the legality,
validity, binding effect or enforceability of any Reimbursement Agreement Document.
(f)
True and Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Borrower in writing to the Banlc for purposes of or in
connection with this Agreement, the other Reimbursement Agreement Documents or any
transaction contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the Borrower in writing to the
Banlc will be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any fact
necessary to malce such information (taken as a whole) not misleading in any material
respect as such time in light of the circumstances under which such information was
provided.
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(g)
Use of Proceeds; Margin Regulations. Neither the issuance of any Letter
of Credit nor the use of the proceeds of any thereof will violate or be inconsistent with
the provisions of Regulation T, U or X of the Board of Govemors of the Federal Reserve
System.
(h)
Collateral. The Borrower has absolute title to each item of Collateral, free
and clear of all Liens except those in favor of the Bank and a subordinate lien in favor of
the "Lenders" as defined in the DIP Credit Agreement. No financing statement, security
agreement or similar or equivalent document or instrument covering all or part of the
Collateral is on file or of record in any jurisdiction.
SECTION 9 Covenants of the Borrower. So long as any Obligations remain
outstanding, unless the Bank shall otherwise consent in writing:
(a)
Provision of Certain Information. The Borrower will furnish to the Bank:
(i)
Promptly upon the Borrower's receipt or transmission of the same,
copies of (x) any notices of default, breach or termination under the Pre-Petition
Credit Agreement or the DIP Credit Agreement and (y) any other notice or
information delivered to the "Lenders" under the Pre-Petition Credit Agreement
or the DIP Credit Agreement by the Borrower under Article V of the DIP Credit
Agreement;
(ii)
Within ten Business Days after the Borrower has notice of the
occurrence of any event which constitutes an Unmatured Event of Default or an
Event of Default, notice of such occurrence together with a statement by a
responsible officer of a the Borrower of the action being taken by the Borrower
with respect thereto; and
(iii)
Such other information regarding Holdings, the Borrower and their
Subsidiaries as the Bank may from time to time reasonably request.
(b)
Books, Records and Inspections. The Borrower and Holdings will, and
will cause each of their Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all requirements of law shall
be made of all dealings and transactions in relation to its business and activities. The
Borrower and Holdings will, and will cause each of their Subsidiaries to, permit, upon
reasonable notice given by the Bank, officers and designated representatives of the Banlc
(including without limitation, appraisers) to visit and inspect any of the properties or
assets of the Borrower, Holdings and any of their Subsidiaries and to examine the books
of account of the Borrower, Holdings and any of their Subsidiaries and discuss the
affairs, finances and accounts of the Borrower, Holdings and of any of their Subsidiaries
with its and their officers, independent accountants and other advisors, all at such
reasonable times and intervals and to such reasonable extent as the Bank may desire, but
no such adviser shall be obligated to disclose to the Bank information that the Borrower
deems to be privileged or wishes to treat as confidential.
(c)
Payment of Taxes. The Borrower and Holdings will pay and discharge,
and will cause each of their Subsidiaries, to pay and discharge, all material taxes,
Letter of Credit ReimburseIrent and Security Agreement
- 11 -
fb.us.2604082.10
assessments and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all material lawful claims which, if unpaid, might become a
Lien or charge upon any properties of the Borrower, Holdings or any of their
Subsidiaries, provided that neither the Borrower, Holdings nor any of their Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim (i) which is being
contested in good faith and by proper proceedings if it has maintained adequate reserves
(in the good faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP or (ii) the nonpayment of which would not have a material
adverse effect on the financial condition or results of operations of the Borrower,
Holdings and their Subsidiaries taken as a whole.
(d)
Consolidated Corporate Franchises. The Borrower and Holdings will do,
and will cause each of their Subsidiaries to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material rights, authority
and franchises, unless the failure to keep in full force and effect any such right, authority
or franchise would not have a material adverse effect on the financial condition or results
of operations of the Borrower, Holdings and their Subsidiaries talcen as a whole.
(e)
Compliance with Law. The Borrower and Holdings will, and will cause
each of their Subsidiaries to, comply in all material respects with all applicable statues,
regulations and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect to the conduct of its business and the ownership of
its property (including applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls) other than those the non-compliance with which
would not have a material adverse effect on the financial condition or results of
operations of the Borrower, Holdings and their Subsidiaries talcen as a whole.
(f)
Further Assurances. The Borrower will execute and deliver any and all
further documents, fmancing statements, agreements and instruments, and take all further
action (including filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust) that may be required under applicable law, or that the Banlc
may reasonably request, in order to effectuate the transactions contemplated by the
Reimbursement Agreement Documents, to grant, preserve, protect and perfect the
validity and first priority of the security interests created or intended to be created hereby,
and to enable the Bank to exercise and enforce any of its rights and remedies with respect
to the Collateral.
(g)
Compliance with Reimbursement Agreement Documents. The Borrower
will keep, perform, enforce and maintain in full force and effect all of the terms,
covenants, conditions and requirements of all Reimbursement Agreement Documents to
which it is a pai.1:y.
SECTION 10 Events of Default. After the occurrence of any of the following
events (each such event, including the expiration of any specified time period being an "Event of
Default"), the Banlc may exercise its rights and remedies under this Agreement in accordance
with Section 11:
Letter of Credit ReirnburseIrent and Security Agreement
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(a)
the Borrower shall fail to make or cause to be made when due, whether by
acceleration, by demand or otherwise, any payment due pursuant to the Reimbursement
Agreement Documents, or the total amount of immediately available funds on deposit in
the Collateral Account at any time shall be less than 105% of the Aggregate Stated
Amount as of such time; or
(b)
any representation, warranty or statement made by the Borrower in any
Reimbursement Agreement Document to which it is a party or in any certificate delivered
pursuant hereto or thereto shall prove to be untrue in any material respect on the date as
of which made or deemed made; or
.
(c)
the Borrower shall default in any material respect in the due performance
or observance by it of any term, covenant or agreement contained in the Reimbursement
Agreement Documents (other than as described in Section 10(a)), and such default shall
continue unremedied for a period of 30 days after written notice to the Borrower by the
Banl<:; or
(d)
an "Event of Default" as defined in the DIP Credit Agreement shall exist,
or the Borrower shall fail to pay any interest or fees due under the Pre-Petition Credit
Agreement, or the "Administrative Agent", as defined in the Pre-Petition Credit
Agreement, shall fail to pay any amount when due to the Bank from the Credit-Linked
Deposit Account defined in the Pre-Petition Credit Agreement; or
(e)
any Reimbursement Agreement Document ceases to be valid and binding
on the. Borrower, or is declared null and void, or the validity or enforceability thereof is
contested by the Borrower, or the Borrower denies it has any or further liability under this
Agreement or any of the Related Documents to which it is a party; or
(f)
a garnishment, summons, levy or writ of attachment shall be issued
against or served upon the Bank with respect to any portion of the Collateral which
either: (i) is not stayed, dismissed, discharged or otherwise released, in each case within
30 days of the issuance or service thereof, or (ii) results in an order that requires the Banl<:
to turn over any portion of such Collateral to any other Person; or
(g)
the Bank does not have a first-priority perfected security interest in all of
the Collateral.
SECTION 11 Remedies. If any Event of Default shall occur and be continuing,
then:
(a).
Agreement;
the Bank may cease issuing and renewing Letters of Credit under this
(b)
the Bank may declare all Obligations to be forthwith due and payable,
whereupon all Obligations shall immediately become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are hereby
expressly waived, anything in this Agreement to the contrary notwithstanding, and the
Bank may take whatever action at law or in equity that may appear necessary or
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appropriate to collect any amount due or thereafter to become due, or to enforce
performance and observance of any obligation, agreement or covenant of the Borrower
hereunder or under any Related Document; and .
(c)
the BarrIe may exercise all rights of a secured party under the UCC and all
of its rights and remedies provided by law or agreement.
SECTION 12 Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor any consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be in writing and signed by the Borrower and the Bank, and then
such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given:
SECTION 13 Notices. Except as otherwise specifically provided for herein, all
notices and other communications provided for herein shall be by telex, telecopy, telegraph,
cable or in writing and telexed, te1ecopied, telegraphed, cabled, mailed or delivered to the
intended recipient at the following addresses:
If to the Banle
U.S. Bank National Association
. U.S. Bancorp Center, BC-MN-H22N
800 Nicollet Mall
Minneapolis, MN 55402
Attention: Ziad Amra and Greg Wilson
Telecopier Number: (612) 303-4660
with a copy to:
U.S. Bank National Association
U.S. Bancorp Center, BC-MN-H20G
800 Nicollet Mall
Minneapolis, MN 55402
Attention: Mamie Sebastian
TelecopierNumber: (612) 303-5226
If to the Borrower:
Buffets, Inc.
1460 Buffet Way
Eagan, Minnesota 55121
Attention: H. Thomas Mitchell and Keith Wall
TelecopierNumber: (651) 365-2224 (H. Thomas Mitchell)
(651) 365-6905 (Keith Wall)
Letter of Credit Reimbursem:nt and Security Agreement
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with a copy to:
Young Conaway Stargatt & Taylor, LLP
The Brandywine Building
1000 West Street, 17& Floor
P.O. Box 391
Wilmington, DE 19801
Attention: Joel A. Waite
Telecopier Number: (302) 576-3342
or as to each party at such other address as shall be designated by such party in a written notice
to the other parties. All notices and other communications hereunder shall be deemed to have
been duly given when transmitted by telex or telecopier, delivered to the telegraph or cable office
or personally delivered or, in the case of a mailed notice, three Business Days after the date
deposited in the mails, postage prepi:tid, in each case given or addressed as aforesaid.
SECTION 14 No Waiver; Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other further exercise
thereof or the exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or by any Related Document. Any investigation at
any time made by or on behalf of the Bank shall not diminish its rights to rely on the
representations contained in this Agreement or in any Related Document.
SECTION 15 Indemnification. The Borrower hereby indemnifies and holds
harmless the Bank from and against any and all claims, damages, losses, liabilities, reasonable
costs or expenses whatsoever (including attorneys' fees) which the Bank may incur (or which
may be claimed against the Bank by any Person whatsoever) by reason of or in connection with
(a) the execution and delivery or transfer of, or payment or failure to pay under, any Letter of
Credit, or (b) any action talcen by the Bank under this Agreement or any Related Document;
provided that the Borrower shall not be required to indemnify the Bank for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of the Bank or (ii) the Bank's willful failure or inability to pay
under a Letter of Credit after the presentation to it by the beneficiary thereunder of a sight draft
and certificate strictly complying with the terms and conditions of that Letter of Credit. Nothing
in this Section 15 is intended to limit the reimbursement obligations of the Borrower contained in
Section 4(a), which are absolute, unconditional and irrevocable. The Borrower's obligations
under this Section 15 shall survive the termination of this Agreement.
SECTION 16 Continuing Obligation. This Agreement is a continuing obligation,
shall survive the termination and expiration of the Letters of Credit and shall (a) be binding upon
the Borrower, its successors and assigns, and (b) be binding on and inure to the benefit of and be
enforceable by the Bank and its successors, transferees and assigns; provided that the Borrower
may not, except as otherwise expressly provided herein, assign all or any part of this Agreement
without the prior written consent of the Bank.
SECTION 17 Transfer of Letters of Credit. The Letters of Credit may not be
transferred without the prior written consent of the Bank.
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SECTION 18 Liability of the Banle As between the Bank and the Borrower, the
Borrower assumes all risks of the acts or omissions of the beneficiary of any Letter of Credit and
any transferee of any Letter of Credit with respect to the use of the Letters of Credit. Neither the
Banlc nor any of its officers or directors shall be liable or responsible for: (a) the use which may
be made of any Letter of Credit or for any acts or omissions of the beneficiary of any Letter of
Credit and any transferee of any Letter of Credit in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by the Bank against presentation of documents that do not comply with the
terms of a Letter of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under a Letter of Credit, except only that the Borrower shall have a claim
against the Bank, and the Banlc shall be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered by the Borrower which were
caused by (x) the Bank's willful misconduct or gross negligence in determining whether
documents presented under a Letter of Credit comply with the terms of that Letter of Credit or
(y) the Bank's willful or grossly negligent failure to pay under, or in paying, a Letter of Credit
after the presentation to it by the beneficiary thereunder of a sight draft and certificate strictly
complying with the terms and conditions of that Letter of Credit. In furtherance and not in
limitation of the foregoing, the Banlc may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any notice or information to
the contrary, and the Banlc shall not be responsible (i). for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (ii) for failure of the beneficiary of a Letter of Credit to
comply fully with the conditions required in order to draw upon that Letter of Credit (other than
the condition that any drawing be accompanied by a certificate in the form specified by that
Letter of Credit, if any such certificate is specified); (iii) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or other
handling, whether or not they be in cipher; (iv) for errors in interpretation of technical terms; (v)
for any loss or delay in the transmission or other handling of any document required in order to
malce a drawing under a Letter of Credit or ofthe proceeds thereof; (vi) for the misapplication by
the beneficiary of a Letter of Credit of the proceeds of any drawing under that Letter of Credit; or
(vii) for any consequences arising from causes beyond the control ofthe Bank. None ofthe
above shall affect, impair or prevent the vesting of any ofthe Banlc's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific provisions hereinabove set
forth, any action taken or omitted by the Bank under or in connection with a Letter of Credit or
the related certificates, if taken or omitted in good faith and without gross negligence, shall not
put the Bank under any resulting liability to the Borrower.
SECTION 19 Costs, Expenses and Taxes.
(a)
The Borrower shall pay to the Bank on demand all reasonable costs and
expenses incurred by the Bank in connection with the preparation, execution, delivery
and administration of this Agreement, the Related Documents and any other documents
which may be delivered in connection with this Agreement, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Bank with respect
Letter of Credit Reimburserrent and Security Agreement
- 16 -
fb.us.2604082.l0
thereto and with respect to advising the Bank as to its rights and responsibilities under
this Agreement and all costs and expenses, if any, in connection with the enforcement of
this Agreement and the Related Documents and the security interest granted hereunder
(determined on the basis of such counsel's generally applicable rates, which may be
higher than the rates such counsel effectively charges to BarrIe on some matters).
(b)
In addition, the Borrower shall pay, and save the Bank harmless from all
liability for, any stamp or other taxes which may be payable with respect to the execution
or delivery of this Agreement or any of the Related Documents or the issuance of any
Letter of Credit. Any and all payments by the Borrower hereunder or under any Related
Document shall be made free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding taxes imposed on the Bank's income, capital, profits or
gains and franchise taxes imposed on it, in each case by (i) the United States, (ii) any
governmental authority in the jurisdiCtion in which the Bank's office is located, or (iii)
any governmental authority in which the Bank is organized, managed, controlled or doing
business, in each case including all political subdivisions thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to withhold or deduct
any Taxes from or in respect of any sum payable hereunder or under any Related
Document, (x) such sum payable shall be increased as may be necessary so that after
. making all required withholdings or deductions (including withholdings or deductions
applicable to additional sums payable under this Section 19) the Bank receives an amount
equal to the sum it would have received had no such withholdings or deductions been
made, (y) the Borrower shall make such withholdings or deductions, and (z) the
Borrower shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with applicable law.
The Borrower's obligations under this Section 19 shall survive the termination of this
Agreement.
SECTION 20 Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or legality of such provision
in any other jurisdiction.
SECTION 21 Governing Law; Waiver of Jury Trial; Consent to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF MINNESOTA. EACH OF THE BORROWER AND
THE BANK IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE LETTERS OF CREDIT OR ANY RELATED DOCUMENT, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. THE BORROWER HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT AND ANY
OTHER FEDERAL COURT AND ANY MINNESOTA STATE COURT SITTING IN
MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO
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THE mRISDICTION AND VENUE OF ANY SUCH COURT AND WAlVES ANY
ARGUMENT THAT VENUE IN ANY SUCH FORUM IS NOT CONVENIENT. IN THE
EVENT THE BORROWER COMMENCES ANY ACTION IN ANY OTHER mRISDICTION
OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE
BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO
ONE OF THE mRISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE
SUCH CASE DISMISSED WITHOUT PREmDICE.
SECTION 22.Headings. The Table of Contents and Section and subsection
headings in this Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 23 Setoff. In addition to any rights or remedies provided by law, or any
other rights or rem.edies provided for in this Agreement or in any Related Document, while any
Event of Default exists, the Bank is hereby irrevocably authorized, at any time and from time to
time without prior notice to the Borrower, such notice being expressly waived by the Borrower,
to set off, appropriate and apply any and all deposits (general or special, time or demand,
provisional or final) and any other credits, indebtedness or claims, in each case whether direct or
indirect or contingent or matured or unmatured, at any time held or owing by the Banlc to or for
the credit or the account of the Borrower, or any part thereof, in such amounts as the Banlc may
elect, against and on account of the Borrower's obligations under this Agreement and the Related
Documents, as the Bank may elect, whether or not the Bank has made any demand for payment
and although such obligations, liabilities and claims may be contingent or unmatured.
SECTION 24 Multiple Counterparts. This Agreement may be executed in any
number of counterparts, and by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed an original but all such counterparts together shall
constitute but one and the same instrument.
[Signature page follows]
Letter of Credit Reirnburserrent and Security Agreement
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly authorized as of the date
first above written.
u.s. BANK NATIONAL ASSOCIATION
By
Name:
Title:
BUFFETS, INC.
_
By
Name:
Title:
Signature Page to Letter of Credit Reimbursement and Security Agreement
_
Exhibit A .
Fees and Charges
Issuance Fees:
$300.00 administrative fee (at issuance)
*annual fee on each anniversary date
Amendment Fees:
$100.00 per amendment
Courier:
$20.00 US overnight (Airborne and Priority U.S. Mail)
$45.00 International overnight
Cable:
$100.00 Telex Issuance or long message
$ 50.00 Telex Amendment or short message
$ 50.00 SWIFT Issuance
$ 25.00 SWIFT Amendment or short message
Billing:
$25.00 per invoice per transaction
Negotiation (Draw due to default. etc. on letter ofcredit):
Minimum $200.00 per draw or 1/8% (whichever i.s more)
$25.00 wire fee (bank to bank transfer)
Reduction processing fee:
$70.00 per reduction
Transfer (normally paid by Beneficiary):
0.25% of the face amount of the Letter of Credit (Minimum $250.00)
Exhibit B
TIDRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
TIDS TIDRD AMENDMENT AND LIMITED WAIVER TO CREDIT
AGREEMENT (this "Amendment and Waiver") is dated as of February [], 2008 and is entered
into by and among Buffets, Inc., a Minnesota corporation, as Borrower (the "Borrower");
Buffets Holdings, Inc., a Delaware corporation ("Holdings") 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"); and Credit Suisse,
individually as a· Lender, as Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent') and as Collateral Agent for the Lenders.
RECITALS
WHEREAS, Borrower, Holdings, the Administrative Agent and the Lenders are parties
to the Credit Agreement dated as of November 1, 2006 (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 mal(e certain loans and other fmancial accommodations to the Loan Parties;
WHEREAS, capitalized terms used herein, including in the preamble and recitals hereto,
and not otherwise defined herein or otherwise amended hereby shall have the meanings ascribed
thereto in the Credit Agreement;
WHEREAS, the Loan Parties have requested that the Lenders agree to amend and waive
certain provisions of the Credit Agreement as provided for herein; and
WHEREAS, subject to certain conditions provided for herein, the undersigned Lenders
are willing to effect such amendments and waiver on the terms and subject to the conditions of
this Amendment and Waiver.
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.
1.1
Amendments
Amendments to the Table of Contents.
The Table of Contents is hereby amended by inserting the words "Exhibit I - Pre-Petition
PF Letters of Credit" below the words "Exhibit H - Form of Solvency Certificate".
1.2
Addition of Exhibit I to the Credit Agreement.
Exhibit I is hereby added to the Credit Agreement to read as set forth in Exhibit 1
attached to this Amendment and Waiver.
NY\1376069.8
1.3
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:
"Bankruptcy Code" shall mean title 11 of the United States Code, 11 U.S.C. §§
101 et seq., as amended.
"DIP Credit Agreement' shall mean that certain '$285,000,000 Secured SuperPriority Debtor in Possession Credit Agreement dated as of January 22, 2008, among the
Borrower, Holdings, the Lenders named therein, Credit Suisse, as Administrative Agent and
Collateral Agent, and Credit Suisse Securities (USA) LLC, as Syndication Agent and Collateral
Agent, as amended through February [ ], 2008 but without giving effect to any subsequent
amendment.
"Final Order" shall have the meaning assigned to such term in the DIP Credit
Agreement.
"Forbearance Agreement and Second Amendment' shall mean the Forbearance
Agreement and Second Amendment dated as of January 7, 2008, among the Borrower, Holdings,
the Lenders party thereto and Credit Suisse, as a Lender, as Administrative Agent and as
Collateral Agent.
"Orders" shall have the meanmg assigned to such term m the DIP Credit
Agreement.
"Petition Date" shall mean January 22,2008.
"Post-Petition Termination Date" shall mean the earliest of (i) January 22, 2009
(provided that such date shall be automatically extended for six months if the Administrative
Agent notifies U.S. BarrIe in writing that the "Calendar Maturity" as that term is defined in the
DIP Credit Agreement has been extended by six months), (ii) the effective date of confirmation
of any plan of reorganization in the Borrower's chapter 11 case or (iii) the date on which the
"New Money Commitments" (as defined in the DIP Credit Agreement) are terminated or the
"New Money Loans" (as defmed in the DIP Credit Agreement) become due and payable.
"Pre-Petition PF Letters of Credit" shall mean the Letters of Credit listed on
Exhibit I attached hereto.
"Third Amendment" shall mean this Third Amendment and Limited Waiver to
the Credit Agreement, dated as of February [ ],2008.
"Third Amendment Effective Date" shall mean the date on which the Third
Amendment becomes effective in accordance with its terms.
"u.S. Bank" shall mean U.S. Bank National Association, a national banking
association.
2
NY\1376069.8
B. Section 1.01 of the Credit Agreement is hereby further amended by inserting the
words "the Forbearance Agreement and Second Amendment, the Third Amendment,"
immediately after the words "the Amendment Agreement," in the definition of "Loan
Documents".
1.4
Amendment to Section 2.05: Fees.
Section 2.05 of the Credit Agreement is hereby amended by deleting clause (iv) of
paragraph (c) in its entirety and replacing it with the following:
(iv) to the Issuing Bank with respect to each Letter of Credit, the standard fronting,
issuance, negotiation, amendment and draWing fees specified from time· to time by the Issuing
Bank, which in the case of U.S. Bank, shall include a fronting fee equal to: (x) prior to the
Petition Date, 0.125% per annum of the aggregate face amount of the Letters of Credit issued by
U.S. Bank, payable in arrears on each January 15 th , April 15 th , July 15 th and October 15 th prior to
the Petition Date; and (y) after the Petition Date, 0.50% per annum of the aggregate face amount
of the Letters of Credit issued by U.S. Bank, payable (A) for each Letter of Credit issued prior to
the Petition Date, for the period from January 15, 2008 through the stated maturity date of that
Letter of Credit, on or before (and as a condition precedent to) the first issuance or renewal of a
Letter of Credit after the Petition Date, and (B) for each letter of credit issued or renewed after
the Petition Date in advance on the date of issuance or renewal (the "Issuing Bank Fees").
1.5
Amendments to Section 2.23: Letters of Credit.
Section 2.23 of the Credit Agreement is herebyamended by:
(i) deleting "." at the end of paragraph (h) thereof and adding the following sentence at
the end thereof:
; provided that all interest accruing on each LlC Disbursement after the Petition Date
from the date such LlC Disbursement is made until the date U.S. Bank receives payment from
the Credit-Linked Deposit Account for the 100% participation in such LlC Disbursement,
together with all fees due in connection with the draw creating such LlC Disbursement, shall be
administrative expenses.
(ii) deleting paragraph (k) thereof in its entirety and replacing it with the words
"[Reserved]".
(iii) inserting a new paragraph (m) immediately after paragraph (1), such paragraph (m) to
read in its entirety as follows:
(m) Post-Petition PF Letters of Credit. The Borrower and certain of its Affiliates filed
petitions for relief under the Bankruptcy Code on the Petition Date. Such filings
constitute Events of Default, and certain other Events of Default have occurred and
continue to exist. Prior to the Petition Date, U.S. Bank had delivered a notice of
3
NY\1376069.8
resignation as Issuing Banle Each of the PF Lenders, the Administrative Agent, U.S.
Bank and the Borrower hereby irrevocably agrees as follows:
(i) The notice of resignation previously delivered by U.S. Bank is hereby
withdrawn and U.S. Bank shall serve as Issuing Banle with respect to the PF
Letters of Credit. Notwithstanding anything to the contrary elsewhere in this
Agreement, on and after the Third Amendment Effective Date, no additional
Issuing Bank shall be appointed, no additional PF Loans shall be made, no
amounts shall be withdrawn from the Credit-Linleed Deposits or the CreditLinked Deposit Account and no amendment shall be made to this Section 2.23(m)
without the prior written consent of U.S. Bank, provided that in the case of any
withdrawal of a Credit Linked Deposit from the Credit Linleed Deposit Account
that would not cause the balance thereof to be less than the then-current aggregate
PF LlC Exposure, such consent shall not be unreasonably Withheld or delayed.
(ii) U.S. Bank represents and warrants that Exhibit I is a complete list of all PF
Letters of Credit issued and outstanding as of the Third Amendment Effective
Date, and that U.S. Bank has not issued and will not issue any PF Letters of
Credit after the Third Amendment Effective Date except in compliance with this
Section 2.23(m).
(iii) The Administrative Agent represents and warrants that as of the Third
Amendment Effective Date, it holds an aggregate principal amount of $[ ] of
Credit-Linked Deposits in the Credit-Linleed Deposit Account, and that the
Administrative Agent has not released and will not release any Credit-Linleed
Deposits after the Third Amendment Effective Date except in compliance with
this Section 2.23(m).
(iv) Notwithstanding the Borrower's filing for relief under the Banlauptcy Code,
the occurrence of any other Event of Default or the failure of the Borrower to
satisfy the condition precedent set forth in Section 4.01(b) of the Credit
Agreement, the Borrower may request, at any time on or before a date thirty (30)
days prior to the Post-Petition Termination Date, the issuance or renewal of, and
U.S. Banle shall issue or renew, Letters of Credit if and only if the following
conditions are satisfied:
(1) the Letter of Credit is being issued to the same beneficiary to replace
or renew one of the Pre-Petition PF Letters of Credit;
(2) the stated amount of the Letter of Credit does not exceed the stated
amount of the Letter of Credit being replaced or renewed, and will not
cause the aggregate stated amount of all PF Letters of Credit outstanding
to exceed the aggregate stated amount of all Pre-Petition PF Letters of
Credit as of the Petition Date;
4
NY\1376069.8
(3) the Letter of Credit will expire no later than at the close of business
one year after its date of issuance, provided that a Letter of Credit may,
upon the request of the Borrower, include a provision whereby such Letter
of Credit shall be renewed automatically for additional consecutive
periods of 12 months or less unless U.S. Banlc notifies the beneficiary
thereof within a period specified in the Letter of Credit prior to the thenapplicable expiration date of such Letter of Credit that such Letter of
Credit will not be renewed; and
(4) U.S. Bank shall have obtained written confirmation (which may be in
the form of an e-mail or a telecopy) from the Administrative Agent that
the Administrative Agent holds Credit-Linked Deposits in an aggregate
amount no less than the aggregate PF LlC Exposure, after giving effect to
the requested renewal or issuance.
All Letters of Credit issued in compliance with this clause 2.23(m)(iv) shall be
conclusively deemed to be PF Letters of Credit for all purposes under this
Agreement, except that to the extent the provisions of this Section 2.23(m)
conflict with any other provision of this Agreement that would otherwise apply to
PF Letters of Credit, the provisions of this Section 2.23(m) shall govern.
(v) Each of the Administrative Agent and each PF Lender reaffirms that, if the
Borrower does not reimburse U.S. Banlc for any draw under any PF Letter of
Credit, including but not limited to any PF Letter of Credit issued after the
Petition Date, the Administrative Agent shall, as provided in Sections 2.02(g) and
2.23(d), pay the unreimbursed amount to U.S. Banlc out of the Credit-Linked
Deposits. Each PF Lender acknowledges and agrees that, in furtherance of the
foregoing sentence, notwithstanding the filing of the banlcruptcy cases by the
Borrower and its Affiliates on the Petition Date and the occurrence and
coritinuation of the Event of Default related thereto, each PF LlC Commitment is
hereby reinstated and all amounts held in the Credit-Liriked Deposit Account shall
be used for the purposes set forth in the Credit Agreement as amended (including
by this Third Amendment). Each PF Lender further agrees that it will not request
any return of the Credit-Liriked Deposits except (x) in respect of PF Letters of
Credit that have expired or been terminated undrawn and have not been replaced,
extended or renewed hereunder or (y) after the Post-Petition Termination Date
and, in each case of clause (x) and (y) above, orily to the extent the aggregate
amount thereof exceeds the PF LlC Exposure at such time, and the Administrative
Agent and each PF Lender agrees that the Administrative Agent will not disburse
any amount of the Credit-Liriked Deposits to the PF Lenders (or to anyone else
other than reimbursing U.S. Bank for an unpaid PF Letter of Credit
Disbursements) without first informing U.S. Banlc in writing of the proposed
disbursement and the aggregate amount of Credit-Liriked Deposits that will
remain in the Agent's possession following such disbursement, and obtaining
U.S. Banlc's prior written certification (which will not be unreasonably withheld
5
NY\1376069.8
or delayed) that such remaining amount is at least equal to the aggregate PF LlC
Exposure at such time.
(vi) The Borrower reaffirms that, as provided in Section 2.23 (m)(iii), the
Borrower has no right, title or interest in or to the Credit-Linked Deposit Account
or the Credit-Linked Deposits. The Borrower further agrees that as a result, the
Credit-Linked Deposit Account and the Credit-Linked Deposits are not property
of the Borrower's estate under Section 541 of the Bankruptcy Code, nor subject to
the automatic stay under Section 362 of the Bankruptcy Code.
(vii) On the first and fifteenth days of each month, or if any such day is not a
Business Day, on the next succeeding Business Day, U.S. Banle shall send the
Administrative Agent a list of all PF Letters of Credit and the PF LlC Exposure
then outstanding, and the Administrative Agent shall send U.S. Bank a
certification of the amount of Credit-Linked Deposits then held by the
Administrative Agent and the amount of all reimbursements received by the
Administrative Agent in respect of drawings under PF Letters of Credit since the
date of the most recent certification sent by the Administrative Agent under this
clause (vii). U.S. Bank shall hold the Administrative Agent harmless from losses
incurred by the Administrative Agent resulting solely and directly from any errors
in information regarding the PF Letters of Credit and the PF LlC Exposure
provided by U.S. Bank. The Administrative Agent shall hold U.S. Banle harmless
from losses incurred by U.S. Banle resulting solely and directly from (i) any errors
in information provided by the Administrative Agent regarding the amount of
Credit Linked Deposits held by the Administrative Agent, to the extent that such
losses relate to PF Letters of Credit issued in accordance with the provisions of
this Agreement or (ii) any release of Credit-Linked Deposits by the
Administrative Agent in contravention of the provisions set forth in this
Agreement.
SECTION II.
2.1
WAIVER
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 III below, solely for purposes of issuing, extending and renewing
PF Letters of Credit as set forth in this Third Amendment, the undersigned Lenders hereby
consent to the waiver of the Event of Default that has occurred or would occur under paragraph
(h) of Article VII caused by the filing of a voluntary petition for relief under Chapter 11 of the
Banlcruptcy Code by the Borrower, Holdings and certain of their subsidiaries on January 22,
2008.
2.2
Limitation of Waiver.
The waiver set forth above (a) is made for the limited purpose of allowing the Borrower
to request the issuance, extension or renewal of PF Letters of Credit and (b) shall be limited
6
NY\1376069.8
precisely as written and relate solely to the waiver of the provisions of the Credit Agreement in
the manner and to the extent described above, and nothing in this Amendment and Waiver shall
be deemed to:
(i)
constitute a waiver of compliance by the Loan Parties with respect to (a)
paragraph (h) of Article VII of the Credit Agreement for any other purpose or (b)
any other term, provision or condition of the Credit Agreement 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 existing defaults
that will not exist after giving effect to this Amendment and Waiver) or may have
in the future under or in connection with the Credit Agreement or any other
instrument or agreement referred to therein.
SECTION III.
CONDITIONS PRECEDENT TO EFFECTIVENESS
This Amendment and Waiver shall become effective as of the date hereof only upon the
satisfactioh of all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "Third Amendment Effective Date"):
A. Execution. The Administrative Agent shall have received a counterpart signature
page of this Amendment and Waiver duly executed by the Administrative Agent, the Borrower,
Holdings, the Required Lenders and each PF Lender.
B. Fees and Expenses. The Borrower shall have paid the Administrative Agent and
u.s. Bank the fees, costs and expenses described in Section V(A) and Section V(B) of this
Amendment and Waiver in accordance with the Orders.
C. Bankruptcy Court Order. The Administrative Agent and U.S. Ban1( shall have
received a copy of an interim or [mal order from the· Bankruptcy Court in form and substance
satisfactory to u.S. Ban1( approving the execution, delivery and performance of this Amendment
and Waiver.
D. Representations and Warranties. As of the Third Amendment Effective Date,
each representation and warranty of each Loan Party set forth in Section IV shall be true and
correct in all material respects.
SECTION IV.
REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and the Lenders to enter into this
Amendment and Waiver and to amend the Credit Agreement in the manner provided herein,
each of the Loan Parties represents and warrants to each of the Lenders and the Administrative
Agent that, as of the Third Amendment Effective Date: .
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) subject to the entry of the Final Order, has all requisite power and authority to
7
NY\1376069.8
own its property and assets and to carryon its business as now conducted and as proposed to be
conducted, (c) subject to the entry of the Final Order, 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 the entry of the Final Order, has the power and authority to execute, deliver and perform its
obligations under this Amendment and Waiver, 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)
subject to the entry of the Final Order and 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 the entry of the Final Order, the execution and delivery
of this Amendment and Waiver (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) any provision of ally 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 oftime 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 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).
C. Governmental Consents. Subject to the entry of the Final Order, 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 malce or
obtain could not'reasonably be expected to result in a Material Adverse Effect.
D.
Binding Obligation. This Amendment and Waiver shall have been duly executed
and delivered by each Loan Party thereto. Subject to the entry of the Final Order, this
Amendment and Waiver 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.
8
NY\1376069.8
SECTION V.
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, U.S. Bank and the Lenders in connection with this Amendment and Waiver (including (i)
the reasonable fees, charges and disbursements of (a) 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), (b) Latham &
Watkins LLP, counsel for the Administrative Agent and the Collateral Agent, (c) Faegre &
Benson LLP, counsel for U.S. Bank and (ii) the fees, costs, charges and expenses incurred after
the Petition Date by U.S. BarrIe in connection with its relationship with the Borrower under the
Credit Agreement and any related financing arrangements).
B. Fees. Upon approval of this Amendment and Waiver by the Lenders, the Borrower
and Holdings agree to pay to (i) to the Administrative Agent for the benefit of the undersigned
PF Lenders (to be allocated pro rata based on the PF LlC Commitments held by such
undersigned PF Lenders), an amendment fee equal to $140,000 (0.20% of $70,000,000) and (ii)
U.S. Bank, a work fee equal to $100,000.
C.
Effect on the Credit Agreement and the Other Loan Documents.
(i) Except as expressly set forth herein, this Amendment and Waiver 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 Third Amendment 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 Amendment and Waiver and the Credit Agreement shall be
read together and construed as a single instrument. This Amendment and Waiver 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
9
NY\1376069.8
continue to secure the payment and performance of all Obligations under and as defined
therein.
(iv) This Amendment and Waiver 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 Amendment and Waiver and are not to affect the construction of, or to be taken
into consideration in interpreting, this Amendment and Waiver.
E. Successors and Assigns. This Amendment and Waiver 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 anyone or more of the provisions contained in this
Amendment and Waiver 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
pI'crvision 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 AMENDMENT AND WAIVER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
H. Counterparts. This Amendment and Waiver 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 III. Delivery of an executed signature page to this Amendment and
Waiver by facsimile transmission or other electronic transmission shall be as effective as
delivery of a manually signed counterpart of this Amendment and Waiver.
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 Final Order.
[Remainder ofthis page intentionally left blank.]
10
NY\1376069.8
IN WITNESS WHEREOF, this Amendment and Waiver to Credit Agreement has been
executed by the parties hereto as of the date first written above.
BUFFETS, INC.,
as Borrower
By:
_
Name:
Its:
BUFFETS HOLDINGS, INC.
as Loan Party
------------
-------------
CREDIT SUISSE, CAYMAN ISLANDS
BRANCH, as Administrative Agent and a
Lender
By: - - - - - - - - - - - - - Name:
Its:
------------
-------------
as a Lender
By:
By: - - - - - - - - - - - - Name:
------------
Title: - - - - - - - - - - - - -
NY\1376069.8
------------Name:
-----------Title:
_
Exhibit 1
[To be provided by U.S. Bank]
NY\1376069.8