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Corporate Governance

General Policy Statement

BUCA, Inc. prides itself on the high standards of excellence embodied by the Company’s operating principles. We expect our directors, employees and other persons who conduct business on behalf of us (each a “Family Member”) to conduct business in compliance with applicable laws, rules, and regulations with honesty, integrity and a strong commitment to the highest standards of ethics. Each Family Member has a responsibility to conduct business within both the letter and spirit of this Code of Business Conduct and Ethics.

This Code applies to all Family Members. Personal integrity is of utmost importance, since each Family Member is a custodian of the Company’s reputation and is in position to influence public confidence in the Company.

This Code is intended to govern the actions and working relationships of all Family Members with customers, co-workers, competitors, suppliers, vendors, representatives of government agencies, the media and all other work-related contacts. This Code is intended to provide guidelines for the professional, ethical, legal, and socially responsible behavior that is expected of all Family Members.

In many situations involving ethical or moral judgment, it may be difficult to determine the correct course of action. If a law conflicts with a policy in this Code, you must comply with the law. If you have doubts about whether a certain situation could result in a conflict of interest, you should consult with an appropriate contact person listed in Section 17 below.

Those who violate the standards in this Code will be subject to disciplinary action, up to and including termination of employment, removal from the board or other appropriate consequences for non-employees.

1. Compliance with Laws, Rules and Regulations

It is our policy to comply with all applicable laws, rules and regulations. It is the personal responsibility of each Family Member to adhere to the standards and restrictions imposed by those laws, rules and regulations. It would be impossible to summarize here all the laws, rules and regulations with which each Family Member must comply; this Code refers to only a few of them.

2. Public Disclosure

It is our policy that the information in our public communications, including SEC filings, be full, fair, accurate, timely and understandable. All Family Members who are involved in our disclosure process (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) are responsible for acting in furtherance of this policy. In particular, these individuals are required to maintain familiarity with the disclosure requirements applicable to us and are prohibited from knowingly misrepresenting, omitting or causing others to misrepresent or omit material facts about us to others, whether within or outside the Company, including our independent auditors. In addition, any Family Member who has a supervisory role in our disclosure process has an obligation to discharge his or her responsibilities diligently.

3. Conflicts of Interest

A “conflict of interest” occurs when an individual’s private interest interferes in any way, or even appears to interfere, with the interests of the Company as a whole. A conflict situation can arise when a Family Member takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively.

Personal conflicts of interest are prohibited as a matter of Company policy, unless they have been waived in writing by us. In particular, no Family Member may use or attempt to use his or her position at the Company to obtain any improper personal benefit for himself or herself, for his or her family members, or for any other person, including loans or guarantees of obligations, from any person or entity. Service to the Company should never be subordinated to personal gain and advantage. Conflicts of interest should, to the extent possible, be avoided. The term “family member” means a person’s spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person’s home.

Any Family Member who is aware of a material transaction or relationship that could reasonably be expected to give rise to a conflict of interest should discuss the matter promptly with an appropriate contact person listed in Section 17 below.

4. Corporate Opportunities

All Family Members owe a duty to the Company to advance our legitimate business interests when the opportunity to do so arises. All Family Members are prohibited from taking for themselves, or directing to a third party, a business opportunity that is discovered through the use of corporate property, information or position, unless we have already been offered the opportunity and turned it down. More generally, all Family Members are prohibited from using Company property, information or position for personal gain or competing, directly or indirectly, with us.

5. Confidentiality

In carrying out our business, a Family Member often learns confidential or proprietary information about us, our customers or other third parties. All Family Members must maintain the confidentiality of all information so entrusted to them, except when disclosure is authorized or legally mandated. Confidential or proprietary information includes, among other things, any non-public information concerning us, including all non-public information that might be of use to competitors or harmful to us or our customers if disclosed. The obligation to preserve confidential information continues even after a Family Member ceases to perform services for us.

6. Competition and Fair Dealing

Each Family Member should endeavor to deal fairly with our customers, service providers, suppliers, competitors and employees. Relationships with customers, service providers suppliers, competitors and employees are to be based on fair dealing, on fair competition in quality, price and service, and on compliance with applicable laws and regulations.

We do not seek competitive advantages through illegal or unethical business practices. No Family Member should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any unfair dealing practice.

7. Discrimination and Harassment

The diversity of our employees is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.

8. Health and Safety

It is our policy to establish and manage a safe and healthy work environment and to manage our business in ways that are sensitive to the environment and conserve natural resources. We will comply with all applicable environmental, health and safety laws.

It is essential to the Company to provide safe products and services that fulfill its responsibilities to the public, maintain a competitive position in the marketplace and retain the confidence of our customers.

We strive to provide a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. Except at authorized events such as wine-tastings and approved social events, the use of illegal drugs or alcohol in the workplace is strictly prohibited.

9. Record-Keeping

We require honest and accurate recording and reporting of information in order to make responsible business decisions. No false or fictitious entries shall be made in books, records, accounts, or in our communications for any reason.

Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, contact an appropriate person listed in Section 17 below.

All of our books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect our transactions and must conform both to applicable legal requirements and to our system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.

Business records and communications often become public, and a Family Member should avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos and formal reports.

10. Insider Trading

We have a long-standing commitment to comply with all securities laws and regulations. U.S. securities laws prohibit persons from trading in the securities of a company on the basis of material non-public information. Material non-public information is any information concerning a company’s business, prospects, securities or market that an investor might consider important in deciding whether to buy or sell the securities of the company or that could affect the market price of the securities. Examples of material information include: possible mergers; acquisitions or divestitures; actual or estimated financial results or changes in dividends; purchases and sales of investments in companies; obtaining or losing significant contracts; significant product developments; threatened major litigation or developments in such matters; and major changes in business strategies.

We have adopted an insider trading policy on confidentiality and securities trading which applies to our directors, employees and agents (the “Insider Trading Policy”). The policy prohibits our insiders from (1) buying or selling our securities while aware of material non-public information relating to the Company; and (2) engaging in other actions to take advantage of, or pass on to others, that information. In addition, certain “black out” periods, during which no trading is allowed, and pre-clearance procedures apply to our directors and executive officers, and certain other persons who have frequent access to material nonpublic information regarding us. All Family Members must comply with our Insider Trading Policy, as supplemented from time to time.

Two simple rules can help protect you in this area: (1) do not use material non-public information for personal gain, and (2) do not pass along this information to someone else who does not have a reason to know.

11. Protection and Proper Use of Company Assets

All Family Members should protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on our profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. The Company’s assets should not be used for non-company business, though incidental personal use may be permitted. Any act that involves theft, fraud, embezzlement or misappropriation of any property is prohibited.

The obligation of a Family Member to protect the Company’s assets includes our proprietary information, intellectual property and innovative ideas. These intangible assets are very valuable to us and must be appropriately managed and protected. Information pertaining to acquisition and divestiture plans, technology, competitive position, directional strategy, customers, salaries, product costs, trade secrets, etc. must be protected from misuse.

Intellectual property rights, including patents, trademarks, copyrights, trade secrets and know-how, are valuable assets and must be planned for and managed with the same degree of care as any other valuable asset. New concepts and ideas will be identified for purposes of evaluation and protection, as appropriate, to support our long-term and short-term goals.

12. Bribes and Kickbacks

We do not permit or condone bribes, kickbacks, or any other illegal, secret, or improper payments, transfers, or receipts. To ensure the highest level of objectivity with all outside enterprises with whom we do business, a Family Member may not solicit, request, or accept any gratuity, kickback, free services, or special favors from vendors, suppliers, contractors, agencies, dealers or distributions, except as permitted under Section 13 of this Code.

13. Gifts and Entertainment

Moderate amounts of entertaining are part of normal business relationships with customers, suppliers, and other work-related contacts. However, certain types or amounts of entertainment can be misconstrued by others. No gift or entertainment should ever be offered, given, provided or accepted by any Family Member unless it: (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations. Social outings that include golf, sporting events, lunches or dinners with vendors, suppliers, contractors, agencies, or other work-related contacts are allowed as long as the value is not significant per person.

14. Political and Charitable Contributions

Although a Family Member is encouraged to be socially responsible and politically active, a Family Member may not contribute the Company’s funds or assets to any political candidates, party, charity, or similar organizations, unless the contribution is expressly authorized by the appropriate Company representative.

15. Waivers of the Code of Business Conduct and Ethics

This Code may be amended or modified by our board of directors. Any waivers of the provisions in this Code for our directors, principal executive officer, principal financial officer, principal accounting officer, controller and other employees performing similar functions and other executive officers may be granted only by our board of directors. Any amendment to, or waiver from, a provision of this Code that applies to a director, principal executive officer, principal financial officer, principal accounting officer, controller and other employee performing similar functions and other executive officers will be publicly disclosed as required by applicable law, regulation or Nasdaq rules.

16. Reporting Violation and Enforcement

All Family Members must understand and comply with this Code. Violation of this Code will not be tolerated and will result in discipline for employees and other appropriate consequences for non-employees.

Any person who knows or believes that any Family Member has engaged or is engaging in Company-related conduct that violates this Code should report the information to an appropriate contact person listed in Section 17 below.

You may report such conduct openly or anonymously without fear of retaliation. The Company will not discipline, discriminate against or retaliate against any person who reports such conduct in good faith, whether or not such information is ultimately proven to be correct, or who cooperates in any investigation or inquiry regarding such conduct. Confidentiality regarding those who make compliance reports and those potentially involved is maintained to the extent possible during a compliance investigation.

In order to facilitate a complete investigation of a suspected violation, a reporting person should be prepared to provide as many details as possible, including a description of the questionable practice or behavior, the names of any persons involved, the names of possible witnesses, dates, times, places and any other available details.

Based on its investigation, we will take prompt and appropriate corrective action in response to the concern, if necessary, to ensure compliance with legal and ethical requirements.

Violation of this Code may result in disciplinary action, up to and including termination of employment, removal from the board or other appropriate consequences for non-employees. Any supervisor who directs or approves of any conduct in violation of this Code, or who has knowledge of such conduct and does not immediately report it, also will be subject to disciplinary action, up to and including termination of employment.

Legal proceedings may also be commenced, if necessary, to recover the amount of any improper expenditures, any profits realized by the offending Family Member and any financial detriment sustained by the Company. In appropriate circumstances, violations of this Code will be reported to the applicable authority.

17. Who to Contact With Questions or Concerns

Directors and Executive Officers should Contact:

  • Chairman of the Board
  • Lead Director
  • Chief Financial Officer
  • General Counsel

Other Employees should Contact:

  • The employee’s immediate supervisor
  • Family Resources representative
  • Chief Financial Officer
  • General Counsel

Company Representatives should Contact:

  • Family Resources representative
  • Chief Financial Officer
  • General Counsel

This contact list is subject to change from time to time. Any change to this contact list will not be deemed an amendment to this Code.

Revised — February 9, 2006

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Director Nominee Selection Process

The Governance and Nominating Committee (the “Committee”) of the board of directors (the “Board”) of BUCA, Inc. (the “Company”) will select nominees for directors pursuant to the following process:

  • the identification of director candidates by the Committee based upon suggestions from current directors and senior management, recommendations by shareholders and possibly a director search firm;
  • a review of the candidates’ qualifications by the Committee to determine which candidates best meet the Board’s required and desired criteria;
  • interviews of interested candidates among those who best meet these criteria by the Chair of the Committee or the entire Committee;
  • a report to the Board by the Committee on the selection process; and
  • formal nomination by the Committee for inclusion in the slate of directors for the annual meeting of shareholders or appointment by the Board to fill a vacancy during the intervals between shareholder meetings.

The Committee will reassess the qualifications of a director, including the director’s past contributions to the Board and the director’s attendance and contributions at Board and Committee meetings, prior to recommending a director for reelection to another term.

Shareholders who wish to recommend individuals for consideration by the Committee to become nominees for election to the Board may do so by submitting a written recommendation to the Secretary of the Company at 1300 Nicollet Mall, Suite 5003, Minneapolis, Minnesota 55403. Submissions must include a written recommendation, biographical information concerning the recommended individual, including age, a description of the recommended individual’s past five years of employment history and any past and current board memberships. The submission must be accompanied by a written consent of the individual to stand for election if nominated by the Committee and to serve if elected by the Board or the shareholders, as applicable. Alternatively, shareholders may directly nominate a person for election to the Company’s Board by complying with the procedures set forth in the Company’s Bylaws, any applicable rules and regulations of the Securities and Exchange Commission and any applicable laws.

Director Selection Criteria

Candidates for director nominees are reviewed in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of the Company’s shareholders.

The Committee will consider, at a minimum, the following factors in recommending to the Board potential new Board members, or the continued service of existing members in addition to other factors it deems appropriate based on the current needs and desires of the Board:

  1. demonstrated character and integrity; an inquiring mind; experience at a strategy/policy setting level; sufficient time to devote to the affairs of the Company; high-level managerial experience;
  2. whether the member/potential member is subject to a disqualifying factor, such as, relationships with competitors, customers, suppliers, contractors, counselors or consultants, or recent previous employment with the Company;
  3. the member’s/potential member’s independence;
  4. whether an existing member has reached retirement age or a term limit;
  5. whether the member/potential member assists in achieving a mix of Board members that represents a diversity of background and experience, including with respect to age, gender, international background, race and specialized experience;
  6. whether the member/potential member, by virtue of particular experience, technical expertise, or specialized skills, will add specific value as a Board member; and
  7. any factors related to the ability and willingness of a new member to serve, or an existing member to continue his/her service.

M1:1085609.01

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Purpose

The purpose of the Audit Committee (the “Audit Committee”) of the board of directors (the “Board”) of BUCA, Inc. (the “Company”) is to oversee the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company.

Composition

The Audit Committee shall consist of at least three directors, each of whom:

  1. shall be “independent” as that term is defined under the listing standards of the National Association of Securities Dealers;
  2. shall meet the criteria of independence under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the rules adopted by the Securities and Exchange Commission (the “SEC”) pursuant to the Sarbanes-Oxley Act;
  3. shall be free of any relationship that, in the opinion of the Board, would interfere with his or her individual exercise of independent judgment;
  4. shall not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the three years prior to such member’s appointment to the Audit Committee; and
  5. shall be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement.

At least one member of the Audit Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.

The Audit Committee shall also endeavor to have at all times on the Audit Committee at least one member who satisfies the definition of an “audit committee financial expert” as defined by the SEC.

Each Audit Committee member shall be appointed by the Board on the recommendation of the Governance and Nominating Committee of the Board. Audit Committee members may be removed or replaced by the Board from time to time in its discretion. No Audit Committee member shall simultaneously serve on the audit committees of more than two other public companies.

The Board shall appoint one member of the Audit Committee as chairperson. He or she shall be responsible for leadership of the Audit Committee, including overseeing the agenda, presiding over the meetings and reporting to the Board.

Responsibilities and Duties

In carrying out its responsibilities, the Audit Committee believes that its policies and procedures should remain flexible in order to best react to changing circumstances. The primary duties and responsibilities of the Audit Committee shall be as follows:

Oversight of Independent Auditor
  1. Be directly responsible for the appointment, retention, compensation, evaluation, termination and oversight of the work of the Company’s independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) engaged for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Audit Committee.
  2. Pre-approve all audit services and permissible non-audit services by the Company’s independent auditor.
  3. Review and discuss representations from the independent auditor regarding:
    • critical accounting policies and practices to be used;
    • alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and
    • other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
  4. Ensure regular rotation of the lead and concurring audit partners and other significant audit partners of the Company’s independent auditor as required by law.
  5. Obtain and review a report from the independent auditor at least annually regarding all relationships between the independent auditor and the Company consistent with Independence Standards Board Standard No. 1.
  6. Evaluate the qualifications, performance and independence of the independent auditor, including:
    • actively engaging in a dialogue with the independent auditor regarding any relationship or services that may impact the auditor’s objectivity and independence;
    • at least annually, evaluating the independence of the auditor, including assessing whether all relationships between the independent auditor and the Company and the provisions of permissive non-audit services are compatible with maintaining the auditor’s independence;
    • considering whether the independent auditor’s quality controls are adequate; and
    • reviewing and evaluating the qualifications and performance of the Company’s independent auditor, including the independent auditor’s judgment about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.
  7. On an annual basis, review the independent auditor’s audit plan and discuss scope, staffing, locations, reliance upon management and general audit approach.
  8. Review with the independent auditor any audit problems or difficulties the auditor may have encountered and management’s response thereto. Such reviews should include any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information.
  9. Establish policies for the hiring of employees or former employees of the Company’s independent auditor that are consistent with the SEC rules and regulations.
  10. Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 related to the conduct of the audit.
Oversight of Financial Reporting and Disclosure Matters
  1. Review and discuss with management and the independent auditor the Company’s annual audited financial statements, including disclosures made in management’s discussion and analysis, prior to the filing of the Company’s 10-K, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K.
  2. Review and discuss with management and the independent auditor the Company’s quarterly financial statements, including disclosures made in management’s discussion and analysis, prior to the filing of the Company’s Form 10-Q, including the results of the independent auditor’s review of the quarterly financial statements.
  3. Discuss with management and the independent auditor:
    • material financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements;
    • any material changes, including proposed changes, in the Company’s selection or application of accounting principles;
    • any significant deficiencies or material weaknesses in the design or operation of internal controls that could adversely affect the Company’s ability to record, process, summarize and report financial data;
    • the independent auditor’s attestation of management’s report on internal controls; and
    • any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls.
  4. Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies, prior to public release.
  5. Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements.
  6. Review any significant reports to management prepared by the independent auditor or the internal audit firm and management’s responses.
  7. Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting policies.
  8. Discuss with management the status of pending litigation, taxation matters and other areas of oversight with respect to the legal and compliance area as may be appropriate.
  9. Review with the Company’s outside counsel legal matters that may have a material impact on the financial statements, the Company’s compliance policies, and any management material reports or inquiries received from regulatory or governmental agencies.
Oversight of Compliance and Regulatory Matters
  1. Establish and review periodically procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Audit Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities and has direct access to the Company’s outside counsel and anyone in the Company.
  2. Discuss with the independent auditor and management any other matters covered by Section 10A of the Securities Exchange Act of 1934 as determined necessary or appropriate by the Audit Committee to ensure compliance.
Other Responsibilities
  1. Approve all related party transactions of the Company. The term “related party transaction” shall refer to transactions required to be disclosed pursuant to SEC Regulation S-K, Item 404.
  2. Review with the full Board any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, and the performance and independence of the Company’s independent auditor.
  3. Discuss with management guidelines and policies for assessing and managing the Company’s risk exposure and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
  4. Perform any other activities consistent with this Audit Committee Charter, the Company’s By-laws and governing law, as the Audit Committee or the Board deems necessary or appropriate.
Committee Administration
  1. Prepare the Audit Committee report required by the rules of the SEC to be included in the Company’s annual proxy statement.
  2. Meet periodically with management and the independent auditor in separate executive sessions.
  3. Review the Audit Committee’s own performance annually.
  4. Review and reassess the adequacy of this Audit Committee Charter annually and recommend any proposed changes to the Board and have the Audit Committee Charter published at least every three years in accordance with SEC regulations.
  5. Retain independent counsel and other legal, accounting or other advisors as the Audit Committee determines necessary to carry out its duties. The Company shall provide funding, as determined by the Audit Committee, for payment of compensation to any advisors employed by the Audit Committee and for payment of ordinary administrative expenses that are necessary for the Audit Committee to carry out its duties.

The Audit Committee members are not professional accountants or auditors and their functions are not intended to duplicate or certify the activities of management or the independent auditor. While the Audit Committee has the responsibilities set forth in this Audit Committee Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of the Company’s management and independent auditor.

To the extent permissible under applicable laws and regulations, the Audit Committee may delegate its responsibilities to one or more members of the Audit Committee.

Meetings

The Audit Committee shall meet at least four times annually and special meetings shall be called as necessary.

The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Audit Committee or to meet with any members of, or consultants to, the Audit Committee.

All meetings of the Audit Committee shall be held pursuant to the By-laws of the Company with regard to notice and waiver thereof, and written minutes and presentations of each meeting and other Audit Committee correspondence shall be duly filed in the Company’s records. A majority of the members of the Audit Committee shall constitute a quorum of the Audit Committee.

M1:1086039.01

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  1. Purposes

    The purposes of the Compensation Committee (the “Compensation Committee”) of the board of directors (the “Board”) of BUCA, Inc. (the “Company”) are (a) to discharge the responsibilities of the Board with respect to all forms of compensation of the Company’s executive officers and oversight of the Company’s employee stock purchase plan and stock incentive plans; and (b) to report to the shareholders regarding the Company’s executive compensation practices and policies.

  2. Organization and Composition

    The Compensation Committee shall consist of at least three directors appointed by, and serving at the discretion of, the Board. A director may serve on the Compensation Committee only if the Board determines that he or she:

    1. is a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended;
    2. satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code; and
    3. is “independent” as that term is defined in the applicable listing standards of the NASDAQ Stock Market and has no relationship with the Company which, in the opinion of the Board, would interfere with the exercise of independent judgment.

    The Board shall designate one member of the Compensation Committee to serve as Chairman of the Compensation Committee.

  3. Principal Responsibilities

    The principal responsibilities of the Compensation Committee shall be to:

    1. establish, review and approve corporate goals and objectives relevant to compensation of the Company’s executive officers;
    2. review and evaluate the performance of the Company’s executive officers in light of the goals and objectives of the Company;
    3. review and approve actions affecting salaries, bonuses, stock awards, stock options, benefits, perquisites and other compensation arrangements for the Company’s executive officers;
    4. review and make recommendations to the Board for shareholder approval of all new equity-based incentive plans for the Company;
    5. supervise the administration of the Company’s employee stock purchase plan, equity-based incentive plans (both those in existence at the time of the adoption of this Charter and those created hereafter), including authorizing stock awards, stock option grants, setting option exercise prices and vesting schedules;
    6. grant all stock and stock-based awards to executive officers under the Company’s equity-based incentive plans;
    7. review and recommend to the Board offers of employment for the Company’s executive officers;
    8. review and recommend to the Board all employment agreements between the Company and its executive officers;
    9. prepare an annual report on executive compensation for inclusion in the Company’s annual proxy statement that complies with the rules and regulations of the Securities and Exchange Commission and any other applicable rules and regulations;
    10. review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval; and
    11. undertake such other responsibilities as may be delegated by the Board to the Compensation Committee from time to time.

  4. Outside advisers

    The Compensation Committee shall have the authority to retain such outside counsel, experts, and other advisers as it determines appropriate to assist it in the full performance of its functions.

  5. Meetings

    The Compensation Committee shall meet as often as it deems necessary or appropriate. All meetings of the Compensation Committee shall be held pursuant to the Bylaws of the Company with regard to notice and waiver thereof, and written minutes of each meeting shall be duly filed in the Company’s corporate records. A majority of the members of the Compensation Committee shall constitute a quorum of the Compensation Committee.

M1:1087377.01

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The Lead Director (the “Lead Director”) of BUCA, Inc. (the “Company“) is an independent director designated by the board of directors (the “Board”) of the Company to provide leadership to the Board in those particular instances where the joint roles of Chairman and CEO could potentially be in conflict. Fundamentally, the role exists to ensure that the Board operates independently of management and that directors have an independent leadership contact.

The principal responsibilities of the Lead Director include:

  1. chairing the Board in the absence of the Chairman and CEO;
  2. as requested by the Board, acting as a liaison between the Board and CEO;
  3. in concert with the Chairman and CEO, setting the agenda for Board meetings;
  4. in concert with the Chairman and CEO, ensuring the appropriate flow of information to the Board and reviewing the adequacy and timing of documentary materials in support of management’s proposals;
  5. meeting with directors annually on a one-on-one basis to assess areas where the Board and/or committees can operate more effectively;
  6. organizing and presiding over executive sessions to review the Company’s performance and management effectiveness;
  7. communicating to management as appropriate the results of private discussions among independent directors;
  8. holding one-on-one discussions with individual directors at the request of the directors or the Board;
  9. carrying out other duties as requested by the Board; and
  10. developing plans for management succession.

M1:1087378.01

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  1. Purposes

    The purposes of the Governance and Nominating Committee (the “Committee”) of the board of directors (the “Board”) of BUCA, Inc. (the “Company”) are to (a) oversee corporate governance matters; (b) approve director-nominees to be considered for election by shareholders and for election by the Board to fill any vacancy or newly created directorship; (c) make recommendations to the Board concerning the appropriate size and composition of the Board and each Board committee, and the establishment of new Board committees; (d) develop and administer a Board and committee evaluation process; and (e) develop and implement director orientation and continuing education policies.

  2. Organization and Composition

    The Committee shall consist of at least three directors appointed by, and serving at the discretion of, the Board, all of whom shall satisfy the applicable independence listing standards of the NASDAQ Stock Market and shall have no relationship with the Company which, in the opinion of the Board, would interfere with the exercise of independent judgment.

    The Board shall designate one member of the Committee to serve as Chairman of the Committee. The Committee shall have the authority to delegate any of its responsibilities to subcommittees as the Committee may deem appropriate.

  3. Principal Responsibilities

    The principal responsibilities of the Committee shall be to:

    1. develop and recommend to the Board for approval a set of corporate governance principles applicable to the Company and review the guidelines at least annually and recommend changes as necessary;
    2. advise the Board on corporate governance matters;
    3. develop and recommend to the Board for approval criteria for the selection of candidates to serve on the Board (such as independence, experience relevant to the needs of the Company, leadership qualities, and ability to represent Company shareholders);
    4. establish procedures for shareholders to submit potential candidates for election to the Board;
    5. establish procedures for the identification and evaluation of candidates for the Board, including any candidates recommended by shareholders;
    6. review and evaluate potential candidates for election to the Board, including incumbent directors and director candidates properly submitted by shareholders, and comply with any requirements of the Securities and Exchange Commission to consider such candidates;
    7. select and approve all nominees for Board membership, whether for the slate of director nominees to be presented for shareholder approval at the Company’s annual meeting of shareholders or any director nominees to be elected by the Board to fill any interim director vacancy or newly created directorship;
    8. make recommendations as necessary regarding changes in the size and composition of the Board and each Board committee;
    9. make recommendations as necessary regarding the establishment of new Board committees (including ad-hoc committees);
    10. select and recommend to the Board potential director candidates for each Board committee;
    11. develop, make recommendations to the Board and administer an annual Board and committee evaluation process, including determining the appropriate evaluation form(s) and procedures to be used;
    12. establish director orientation and continuing education policies;
    13. review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval;
    14. undertake such other responsibilities as may be delegated by the Board to the Committee from time to time; and
    15. take any and all other actions as may be required by the federal securities laws or other applicable laws ore regulations regarding the nomination of directors.

  4. Outside Advisers and Search Firms

    The Committee shall have the authority to retain such outside counsel, experts, and other advisers (including search firms to identify director candidates) as it determines appropriate to assist it in the full performance of its functions.

  5. Meetings

    The Committee shall meet as often as it deems necessary or appropriate. All meetings of the Committee shall be held pursuant to the Bylaws of the Company with regard to notice and waiver thereof, and written minutes of each meeting shall be duly filed in the Company’s corporate records. A majority of the members of the Committee shall constitute a quorum of the Committee.

M1:1087379.01

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