Fill and Sign the Plan of Internal Restructuring Form

§7.204 PROXY STATEMENTS: STRATEGY & FORMS 7-194© 1996 Jefren Publishing Company, Inc. APPENDIX A BUFFETS, INC. PLAN OF INTERNAL RESTRUCTURING This Plan of Restructuring contemplates that Buffets, Inc., a Minnesota corporation (hereinafter, “Company”), will establish the following four new subsidiaries: OCB Purchasing Co. (hereinafter, “Purchasing”), OCB Restaurant Co. (hereinafter, Restaurant”), OCB Property Co. (hereinafter, “Property”), and OCB Realty Co. (hereinafter, “Realty”). Purchasing, Restaurant, Property and Realty are referred to collectively as the “New Subsidiari es” and singularly at times as “each New Subsidiary,” or “applicable New Subsidiary,” or “re spective New Subsidiary.” Buffets, Inc. and the New Subsidiaries are sometimes referred to colle ctively as the Corporations. I. Transfers of Certain Assets, Assumptions of Certain Liabilities As of an Effective Date or Dates to be determined (such dates to be as soon after approval of this Plan by the shareholders of the Company as deemed prudent and practicable by the officers of the Company) the following asset and operations transfers will be implemented. (A) Buffets. Inc./Purchasing The Company will transfer to Purchasing as a capital contribution, and Purchasing will accept, the assets of the Company described in Part II of Schedule A attached hereto, and Purchasing will assume the liabilities of the Company described in said Part II. (B) Buffets. Inc. Restaurant The Company will transfer to Restaurant as a capital contribution, and Restaurant will accept. the assets of the Company described in Part III of Schedule A, and Restaurant will assume the liabilities of the Company described in said Part III of Schedule A. (C) Buffets. Inc./Property The Company will transfer to Property as a capital contribution, and Property will accept, the assets of the Company described in Part IV of Schedule A. (D) Buffets, Inc./Realty The Company will transfer to Realty as a capital contribution, and Realty will accept, the assets of the Company described in Part V of Schedule A, and Realty will assume the liabilities and obligations of the Company described in said Part V. (E) Taxes/Utilities CORPORATE RESTRUCTURING§7.204 December 1996 7-195 For each New Subsidiary as of the applicable Effective Date, real and personal property taxes, water, gas, electricity and other utilities, and similar matters associated with any of the assets transferred by the Company to such New Subsidiary will be prorated between the Company and the respective New Subsidiary and such amounts as shall be due to the Company or the respective New Subsidiary as a result of such proration will be promptly paid to the other following the Effective Date. §7.204 PROXY STATEMENTS: STRATEGY & FORMS 7-196© 1996 Jefren Publishing Company, Inc. (F) Indemnity An appropriate cross-indemnification agreement among all of the Corporations relating to periods of operations before and after the various Effective Dates will be prepared and executed on or prior to the first Effective Date. II. Transfers of Employees On the appropriate Effective Date, subject to any exceptions deemed appropriate by the officers of th1e Company: (A)The Company employees described in Schedule A will become employees of Purchasing, Restaurant, Property or Realty (as the case may be), with the remaining employees continuing in their current status with the Company subject to such changes as occur in the ordinary course of business. (B) In each case: 1. The applicable New Subsidiary will assume and be responsible for all obligations of the Company with respect to the transferred employees; 2. The applicable New Subsidiary will assume and be responsible for accrued benefits of all transferred employees for vacation and sick leave; 3. All benefit plan account balances will be transferred by the Company to the comparable plan accounts of the applicable New Subsidiary with the exception of the Company’s stock option plans, as to which the Company shall remain as the obligated party. III. Further Agreements and Instruments As of each applicable Effective Date, the following agreements will be entered into by and among various of the Corporations: (A) License Agreements 1. The Company will license the use of its intellectual property to Restaurant for use in the latter’s operations. 2. Restaurant will pay a royalty to the Company in compensation for such utilization. (B) Purchasing Agreements CORPORATE RESTRUCTURING§7.204 December 1996 7-197 1. Purchasing will provide food, equipment, supplies and other procurement functions for the Company and Restaurant pursuant to agreements that will be entered into by the subject parties. 2. Compensation will be structured according to a negotiated percentage of the price of items purchased for its customers. §7.204 PROXY STATEMENTS: STRATEGY & FORMS 7-198© 1996 Jefren Publishing Company, Inc. (C) Lease and Sublease Agreements 1. Realty will lease or sublease to Purchasing, Restaurant and the Company the real estate used in their respective operations. 2. Terms will vary depending upon existing lease arrangements with third parties and upon various determinations made by the parties, but rental payments by Restaurant and the Company will generally be based on a percentage basis relative to restaurant sales. (D) Management and Administrative Service Agreements 1. The Company will provide management and administrative services to each New Subsidiary pursuant to separate management and administrative service agreements. 2. The nature and scope of the services provided will vary according to the needs of the particular subsidiary, but may include accounting, tax, restaurant supervision and legal services, among others. 3. Compensation will vary as to the New Subsidiary and the services provided and utilized. (E) Training Services Agreement 1. The Company will provide training services to Restaurant pursuant to a training services agreement. 2. The compensation paid by Restaurant to the Company will be computed on a cost-plus basis. (F) Miscellaneous The Corporations will enter into such additional agreements, documents and instruments as the officers of the Company deem necessary or advisable to effectuate the general purposes of this Plan. IV. Modification This Plan may be modified by the officers of the Company at any time and from tim e to time in any fashion which the Chairman and the President of the Company deem advi sable and in the best interests of the Company and its entire affiliated group without regard t o the effect of any modification on any single corporation included in the group; provided, however, that no modification shall be implemented without the approval of the Company’s Board of Directors if it would result in any tax being imposed on the individual shareholders of the Company as suc h or would result in a materially increased tax burden or other material adverse effect on the Company and its affiliated group of subsidiaries taken as a whole. CORPORATE RESTRUCTURING§7.204 December 1996 7-199 SCHEDULE A to Buffets, Inc. Plan of Internal Restructuring Summary of Restructured Operations The operations presently conducted in Buffets, Inc. are to be transferred in part to four newly-created subsidiaries. As a result of the transfer, the five companies will contai n the assets, operating functions and employees generally described below. I. BUFFETS, INC. Operations: Buffets, Inc., as the parent and public company, will be responsible for the oversight and corporate management of the restructured group. In general, it will manage the daily activities of its various subsidiaries by maintaining responsibility for restaurant operational matters including regional and district supervision of restaurants, concept development matters, product research and development and franchise and licensing matters. The company will be responsible for the development of chain-wide management and restaurant level training programs, and advertising and promotional campaigns. Buffets, inc. will provide each of its subsidiaries with centralized corpora te services including accounting, cash management. systems, legal and human resources support. The company will also continue to directly operate all restaurants located i n Minnesota, and possibly also a number of restaurants outside of Minnesota (as described in Part III below). Assets: Physical assets remaining within Buffets, Inc. will include the tangible personal property in the corporate headquarters facility, Old Country Buffets College and Old Country Buffet restaurants located in Minnesota (and possibly, in selected cases, outside of Minnesota). Intangible assets remaining in Buffets, Inc. will include all trademark, trade nam e, copyright and other intellectual property ownership rights. Appropriate current assets related to the retained operations will also be retained. Employees: Employees remaining at Buffets, Inc. will include all corporate management personnel located at the Eden Prairie headquarters facility, Old Country Buffet College training personnel, regional and district supervisors, and restaurant employees of all restaurants operated by Buffets, Inc. §7.204 PROXY STATEMENTS: STRATEGY & FORMS 7-200© 1996 Jefren Publishing Company, Inc. II. OCB PURCHASING CO. Operations: OCB Purchasing Co. will function as the group’s centralized purchasing agent, acquiring and warehousing selected food and equipment items to wholesale to other members of the group. CORPORATE RESTRUCTURING§7.204 December 1996 7-201 Assets Transferred to OCB Purchasing Co.: Physical assets to be received by OCB Purchasing Co. from Buffets, Inc. will include the equipment and other personal property at the warehouse located in Eden Prairie, Minnesota and certain items of equipment used by it to perform the purchasing function on behalf of the group. Appropriate current assets related to the transferred operations, such as inventories of restaurant equipment and an appropriate amount of cash or cash-equivalents, will also be transferred to OCB Purchasing Co.; and OCB Purchasing Co. will assume related liabilities such as related trade accounts payable. Employees Transferred to OCB Purchasing Co.: Employees of Buffets. Inc. to be transferred to OCB Purchasing Co. will include those employees currently involved in the purchasing and warehousing functions. III. OCB RESTAURANT CO. Operations: OCB Restaurant Co. will function as the group’s primary restaurant operating company, containing all restaurants located outside Minnesota unless in some cases it proves impracticable to obtain necessary regulatory or landlord approvals on acceptable term s for the transfer of particular restaurants, or for any other reason proves impracticable to transfer any particular non-Minnesota restaurants. Assets: Physical assets to be received by OCB Restaurant Co. from Buffets, Inc. include all restaurant operations and equipment and other tangible personal property contained in restaurants transferred to OCB Restaurant Co. as described above (i.e., as many of the group’s restaurants outside of Minnesota as feasible). Appropriate current assets related to the transferred operations, such as inventories of food and supplies, cash on premises and the like will also be transferred to OCB Restaurant Co.; and OCB Restaurant Co. will assume related liabilities and obl igations such as those under any lease or sublease of the applicable restaurant premises. Employees to be Transferred to OCB Restaurant Co.: Employees of Buffets, Inc. transferred to OCB Restaurant Co. will include all restaurant employees up through and including restaurant general managers working in the transferred restaurants. IV. OCB PROPERTY CO. Operations: OCB Property Co. will function as an intermediate investment company holding the group’s interest in OCB Realty Co. §7.204 PROXY STATEMENTS: STRATEGY & FORMS 7-202© 1996 Jefren Publishing Company, Inc. Assets: Assets of OCB Property Co. will consist almost solely of its investment (stock) in OCB Realty Co. (described in Part V below) received from Buffets. Inc. in exchange for the issuance to Buffets, Inc. of capital stock of OCB Property Co. No liabilities will be assumed by OCB Property Co. Employees Transferred to OCB Property Co.: No employees of Buffets, Inc. will transfer to OCB Property Co. All necessary corporate activities of OCB Property Co. will be performed by employees of Buffets, Inc. pursuant to a Management Services Agreement. V. OCB REALTY CO. Operations: OCB Realty Co. will function as a sublessor of most or all real estate lease holds employed in the business activities of members of the Buffets, Inc. affiliated group. It will also own the fee interest in most real estate owned by any member of the a ffiliated group and lease such properties to other companies within the group. Assets: Assets to be received by OCB Realty Co. from Buffets, Inc. consist of all or most of the current operating real property leases of Buffets, Inc. Such lease obligations will be transferred to and assumed by OCB Realty Co. subject to the assignment and sublease provisions contained in applicable lease agreements. Selected real estate owned or in process of being purchased by Buffets, Inc. will also be transferred to OCB Realty Co. Appropriate current assets needed to carry on its operations will also be transferred to OCB Realty Co. OCB Realty Co. will assume all liabilities and obligations of the prime tenant under any leases assigned to it. Employees Transferred to OCB Realty Co.: Employees of Buffets, Inc. transferred to OCB Realty Co. will include those employees currently involved in the real estate and development and construction functions of Buffets, Inc.