<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
American Restaurant Group, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-48183 33-0193602
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File (I.R.S. employer
incorporation or organization) Number) identification no.)
450 Newport Center Drive
Newport Beach, CA 92660
(714) 721-8000
- --------------------------------------------------------------------------------
(Address and telephone number of principal executive offices)
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of outstanding shares of the Company's Common Stock (one cent par
value) as of November 3, 1997 was 93,150.
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AMERICAN RESTAURANT GROUP, INC.
INDEX
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PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Condensed Balance Sheets....................... 1
Consolidated Statements of Income........................... 3
Consolidated Statements of Cash Flows....................... 4
Notes to Consolidated Condensed Financial Statements........ 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... 6
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................ 9
</TABLE>
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
------------------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
DECEMBER 30, 1996 AND SEPTEMBER 29, 1997
----------------------------------------
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December 30, September 29,
1996 1997
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 7,493,000 $ 6,189,000
Accounts receivable, net of reserve of
$1,041,000 and $1,076,000 at December 30, 1996
and September 29, 1997, respectively 7,465,000 6,165,000
Inventories 6,818,000 5,632,000
Prepaid expenses 4,485,000 2,906,000
------------ ------------
Total current assets 26,261,000 20,892,000
------------ ------------
PROPERTY AND EQUIPMENT:
Land and land improvements 6,158,000 5,655,000
Buildings and leasehold improvements 110,071,000 112,782,000
Fixtures and equipment 84,162,000 87,326,000
Property held under capital leases 12,375,000 12,375,000
Construction in progress 6,487,000 1,849,000
------------ ------------
219,253,000 219,987,000
Less-- Accumulated depreciation 118,084,000 124,758,000
------------ ------------
101,169,000 95,229,000
------------ ------------
OTHER ASSETS-- NET 44,699,000 41,919,000
------------ ------------
Total Assets $172,129,000 $158,040,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed statements.
(consolidated condensed balance sheets continued on the following page)
1
<PAGE> 4
<TABLE>
<CAPTION>
December 30, September 29,
1996 1997
-------------- -------------
(unaudited)
<S> <C> <C>
LIABILITIES AND COMMON STOCKHOLDER'S
EQUITY
CURRENT LIABILITIES:
Accounts payable $ 33,394,000 $ 32,967,000
Accrued liabilities 14,315,000 13,919,000
Accrued insurance 15,848,000 11,810,000
Accrued interest 1,016,000 6,342,000
Accrued payroll costs 11,059,000 10,069,000
Current portion of obligations
under capital leases 902,000 926,000
Current portion of long-term debt 41,532,000 171,846,000
------------- -------------
Total current liabilities 118,066,000 247,879,000
------------- -------------
LONG-TERM LIABILITIES, net of current portion:
Obligations under capital leases 8,443,000 7,746,000
Long-term debt 131,260,000 1,232,000
------------- -------------
Total long-term liabilities 139,703,000 8,978,000
------------- -------------
DEFERRED GAIN 5,806,000 5,436,000
------------- -------------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE CUMULATIVE PREFERRED STOCK:
Redeemable cumulative senior preferred stock,
$0.01 par value; 1,400,000 shares authorized,
no shares issued or outstanding at December 30,
1996 or September 29, 1997 -- --
Redeemable cumulative junior preferred stock,
$0.01 par value; 100,000 shares authorized,
no shares issued or outstanding at December 30,
1996 or September 29, 1997 -- --
COMMON STOCKHOLDER'S EQUITY:
Common stock, $0.01 par value; 1,000,000
shares authorized; 93,150 shares issued
and outstanding at December 30, 1996 and
September 29, 1997 1,000 1,000
Paid-in capital 63,246,000 63,246,000
Accumulated deficit (154,693,000) (167,500,000)
------------- -------------
Total common stockholder's deficit (91,446,000) (104,253,000)
------------- -------------
Total liabilities and common
stockholder's equity $ 172,129,000 $ 158,040,000
============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed statements.
2
<PAGE> 5
AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 23, 1996 AND SEPTEMBER 29, 1997
----------------------------------------------------------------------
AND THE THIRTY-NINE WEEKS ENDED SEPTEMBER 23, 1996 AND SEPTEMBER 29, 1997
-------------------------------------------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
------------------------------- -------------------------------
September 23, September 29, September 23, September 29,
1996 1997 1996 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 107,319,000 $ 106,253,000 $ 332,988,000 $ 333,198,000
RESTAURANT COSTS:
Food and beverage 33,802,000 33,448,000 105,473,000 105,406,000
Payroll 33,428,000 33,440,000 100,936,000 101,038,000
Direct operating 28,756,000 27,582,000 83,922,000 84,883,000
Depreciation and
amortization 5,075,000 4,982,000 15,187,000 14,839,000
GENERAL AND ADMINISTRATIVE
EXPENSES 6,753,000 5,614,000 20,007,000 22,103,000
------------- ------------- ------------- -------------
Operating profit (loss) (495,000) 1,187,000 7,463,000 4,929,000
INTEREST EXPENSE, net 6,941,000 5,818,000 21,135,000 17,688,000
------------- ------------- ------------- -------------
Loss before provision
for income taxes and
extraordinary loss (7,436,000) (4,631,000) (13,672,000) (12,759,000)
PROVISION FOR INCOME
TAXES 14,000 17,000 64,000 48,000
------------- ------------- ------------- -------------
Loss before extraordinary
loss (7,450,000) (4,648,000) (13,736,000) (12,807,000)
Extraordinary loss on
extinguishment of debt 1,095,000 -- 1,095,000 --
------------- ------------- ------------- -------------
Net loss $ (8,545,000) $ (4,648,000) $ (14,831,000) $ (12,807,000)
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed statements.
3
<PAGE> 6
AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE THIRTY-NINE WEEKS ENDED SEPTEMBER 23, 1996 AND SEPTEMBER 29, 1997
-------------------------------------------------------------------------
(UNAUDITED)
-----------
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<CAPTION>
September 23, September 29,
1996 1997
------------- -------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 332,995,000 $ 334,295,000
Cash paid to suppliers and employees (313,058,000) (317,343,000)
Interest paid, net (26,390,000) (12,261,000)
Income taxes paid (64,000) (48,000)
------------- -------------
Net cash provided by (used in) operating activities (6,517,000) 4,643,000
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8,138,000) (3,631,000)
Net increase in other assets (1,858,000) (959,000)
Proceeds from disposition of assets 49,433,000 609,000
------------- -------------
Net cash provided by (used in) investing activities 39,437,000 (3,981,000)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on indebtedness (40,248,000) (995,000)
Borrowings on indebtedness 549,000 1,199,000
Net increase in deferred debt costs (4,024,000) (1,497,000)
Payments on capital lease obligations (637,000) (673,000)
Contribution from parent 7,115,000 --
------------- -------------
Net cash used in financing activities (37,245,000) (1,966,000)
------------- -------------
NET DECREASE IN CASH (4,325,000) (1,304,000)
CASH, at beginning of period 10,385,000 7,493,000
------------- -------------
CASH, at end of period $ 6,060,000 $ 6,189,000
============= =============
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Net loss $ (14,831,000) $ (12,807,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Extraordinary loss on
extinguishment of debt 1,095,000 --
Depreciation and amortization 15,187,000 14,839,000
Loss on disposition of assets 412,000 4,029,000
Amortization of deferred gain -- (370,000)
Accretion on indebtedness 72,000 82,000
(Increase) decrease in current assets:
Accounts receivable, net 7,000 1,097,000
Inventories 15,000 1,186,000
Prepaid expenses 1,551,000 (72,000)
Increase (decrease) in current liabilities:
Accounts payable 1,410,000 (427,000)
Accrued liabilities (7,482,000) (3,231,000)
Accrued insurance 529,000 (4,038,000)
Accrued interest (5,327,000) 5,345,000
Accrued payroll 845,000 (990,000)
------------- -------------
Net cash provided by (used in)
operating activities $ (6,517,000) $ 4,643,000
============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed statements.
4
<PAGE> 7
AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. MANAGEMENT OPINION
The Consolidated Condensed Financial Statements included herein have
been prepared by the Company, without audit, in accordance with
Securities and Exchange Commission Regulation S-X. In the opinion of
management of the Company, these Consolidated Condensed Financial
Statements contain all adjustments (all of which are of a normal
recurring nature) necessary to present fairly the Company's financial
position as of December 30, 1996 and September 29, 1997, and the
results of its operations and its cash flows for the thirty-nine weeks
ended September 23, 1996 and September 29, 1997. The Company's results
for an interim period are not necessarily indicative of the results
that may be expected for the year.
Although the Company believes that all adjustments necessary for a
fair presentation of the interim periods presented are included and
that the disclosures are adequate to make the information presented
not misleading, it is suggested that these Consolidated Condensed
Financial Statements be read in conjunction with the Consolidated
Financial Statements and notes thereto included in the Company's
annual report on Form 10-K, File No. 33-48183, for the year ended
December 30, 1996 and the Company's current report on Form 8-K, File
No.
33-48183, dated September 12, 1997.
2. SUBSIDIARY GUARANTORS
Separate financial statements of the Company's subsidiaries are not
included in this report on Form 10-Q because the subsidiaries are
fully, unconditionally jointly and severally liable for the
obligations of the Company under the Company's 13% Senior Secured
Notes, due September 15, 1998, and the aggregate net assets, earnings
and equity of such subsidiary guarantors are substantially equivalent
to the net assets, earnings and equity of the Company on a
consolidated basis.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of American Restaurant Group, Inc.'s
financial condition and results of operations should be read in conjunction with
the historical financial information included in the Consolidated Condensed
Financial Statements.
RESULTS OF OPERATIONS
Thirteen weeks ended September 23, 1996 and September 29, 1997:
Revenues. Total revenues decreased from $107.3 million in the third quarter of
1996 to $106.3 million in the third quarter of 1997. Comparable restaurant
revenues decreased 2.9%. During the twelve months ended September 29, 1997, the
Company opened six new restaurants and closed 23 restaurants. There were 249
restaurants operating as of September 23, 1996 and 232 operating as of September
29, 1997.
Black Angus revenues increased 3.6% to $62.0 million in the third quarter of
1997 as compared to the same period in 1996. The increase was due to the
addition of six new restaurants, which included expansion into the Salt Lake
City, Utah, market (one restaurant). The Company closed one restaurant during
the twelve months ended September 29, 1997. Comparable restaurant revenues
decreased 3.2% as compared to the prior year.
Grandy's revenues decreased 13.7% to $19.7 million in the third quarter of 1997
as compared to the same period in 1996. Comparable restaurant revenues in the
third quarter of 1997 were 8.6% lower than the same period in 1996, due to less
use of discounting to stimulate sales and less advertising and promotion. The
Company closed 19 poor performing restaurants during the twelve months ended
September 29, 1997. Franchise revenues increased in the third quarter of 1997
due to the recognition of deferred franchise fees.
Revenues from other concepts (Spoons, Spectrum and National Sports Grill)
remained constant at $24.6 million in the third quarter of 1996 and 1997. The
Company closed three poor performing restaurants during the twelve months ended
September 29, 1997.
Comparable restaurant revenues increased 2.6%.
Food and Beverage Costs. As a percentage of revenues, food and beverage costs
remained the same at 31.5% in the third quarter of 1996 and 1997. Higher seafood
costs were offset by lower meat and beverage costs.
Payroll Costs. As a percentage of revenues, labor costs increased from 31.1% in
the third quarter of 1996 to 31.5% in the third quarter of 1997. The increase
was partially due to higher restaurant management payroll.
Direct Operating Costs. Direct operating costs consist of occupancy, advertising
and other expenses incurred by individual restaurants. As a percentage of
revenues, these costs decreased in the third quarter from 26.8% in 1996 to 26.0%
in 1997. The decrease was primarily due to lower advertising costs partially
offset by higher occupancy expenses.
Depreciation and Amortization. Depreciation and amortization consists of
depreciation of fixed assets used by individual restaurants, divisions and
corporate offices, as well as amortization of intangible assets. As a percentage
of revenues, depreciation and amortization remained the same at 4.7% in the
third quarter of 1996 and 1997. A decrease in depreciation, primarily due to the
non-cash reduction of the historical cost of certain long-lived assets in
December 1996, was offset by an increase in deferred debt cost amortization
related to the March 1997 increase in principal for senior secured note holders
who consented to an amendment.
6
<PAGE> 9
General and Administrative Expenses. General and administrative expenses
decreased from $6.8 million in the third quarter of 1996 to $5.6 million in the
third quarter of 1997. The decrease was primarily due to a reduction in
administrative payroll. General and administrative expenses as a percentage of
revenues decreased from 6.3% to 5.3%.
Operating Profit. Due to the above items, operating profit increased from an
operating loss of $0.5 million in the third quarter of 1996 to an operating
profit of $1.2 million in the third quarter of 1997. As a percentage of
revenues, operating profit increased from -0.5% to 1.1%.
Interest Expense - Net. Interest expense decreased from $6.9 million in the
third quarter of 1996 to $5.8 million in the third quarter of 1997. The decrease
was primarily due to a lower average debt balance in the third quarter of 1997.
The Company's average stated interest rate increased from 11.7% in the third
quarter of 1996 to 12.1% in the third quarter of 1997. The weighted average debt
balance (excluding capitalized lease obligations) decreased from $214.8 million
in the third quarter of 1996 to $171.8 million in the third quarter of 1997.
Thirty-nine weeks ended September 23, 1996 and September 29, 1997:
Revenues. Total revenues increased 0.1% from $333.0 million in the thirty-nine
weeks ended September 23, 1996 to $333.2 million in the thirty-nine weeks ended
September 29, 1997. Comparable restaurant revenues decreased 3.5%. There were
249 restaurants operating as of September 23, 1996 and 232 operating as of
September 29, 1997.
Black Angus revenues increased 4.5% to $199.7 million in 1997 as compared to the
same period in 1996. The increase was due to the addition of six new
restaurants. Comparable restaurant revenues decreased 4.2%.
Grandy's revenues decreased 12.1% to $60.0 million in 1997 as compared to the
same period in 1996. Comparable restaurant revenues were 7.2% lower than the
prior year. The Company closed 19 poor performing restaurants during the twelve
months ended September 29, 1997. Franchise revenues were $1.9 million and $2.1
million in 1996 and 1997, respectively.
Revenues from other concepts (Spoons, Spectrum and National Sports Grill)
remained approximately the same at $73.5 million in 1996 and $73.4 million in
1997. Comparable restaurant revenues increased 1.4%.
Food and Beverage Costs. Food and beverage costs as a percentage of revenues
remained approximately the same at 31.7% in 1996 and 31.6% in 1997.
Payroll Costs. As a percentage of revenues, labor costs remained constant at
30.3% in 1996 and 1997.
Direct Operating Costs. As a percentage of revenues, total direct operating
costs increased 0.3% from 25.2% in 1996 to 25.5% in 1997. The increase was
primarily due to higher occupancy expenses partially offset by lower advertising
costs.
Depreciation and Amortization. As a percentage of revenues, depreciation and
amortization decreased from 4.6% in 1996 to 4.5% in 1997. The decrease was
primarily due to the non-cash reduction of the historical cost of certain
long-lived assets in December 1996.
General and Administrative Expenses. General and administrative expenses
increased from $20.0 million in 1996 to $22.1 million in 1997. The increase was
primarily due to a non-cash charge of $4.1 million for costs associated with
closed restaurants. General and administrative expenses as a percentage of
revenues were 6.0% and 6.6% (5.4% before the non-cash charge for closed
restaurants) for 1996 and 1997, respectively.
7
<PAGE> 10
Operating Profit. Due to the items mentioned above, operating profit decreased
from $7.5 million in 1996 to $4.9 million in 1997. As a percentage of revenues,
operating profit decreased from 2.2% to 1.5%. Before the non-cash charge
mentioned above there was an operating profit of $9.0 million in 1997.
Interest Expense. Interest expense decreased from $21.1 million in 1996 to $17.7
million in 1997. The Company's average stated interest rate increased from 11.6%
in 1996 to 12.2% in 1997. Average borrowings (excluding capitalized lease
obligations) decreased from $218.3 million in 1996 to $171.8 million in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash flow from operations. The
Company requires capital principally for the acquisition and construction of new
restaurants, the remodeling of existing restaurants and the purchase of new
equipment and leasehold improvements.
In general, restaurant businesses do not have significant accounts receivable
because sales are made for cash or by credit card vouchers which are ordinarily
paid within a few days, and do not maintain substantial inventory as a result of
the relatively brief shelf life and frequent turnover of food products.
Additionally, restaurants generally are able to obtain trade credit in
purchasing food and restaurant supplies. As a result, restaurants are frequently
able to operate with working capital deficits, i.e., current liabilities exceed
current assets. At September 29, 1997, the Company had a working capital deficit
of $227.0 million which included $171.8 million in current portion of long-term
debt.
The Company estimates that capital expenditures of $5.0 million to $10.0 million
are required annually to maintain and refurbish its existing restaurants. In
addition, the Company spends approximately $10.0 million to $13.0 million
annually for repairs and maintenance which are expensed as incurred. Other
capital expenditures, which are generally discretionary, are primarily for the
construction of new restaurants and for expanding, reformatting and extending
the capabilities of existing restaurants and for general corporate purposes.
Total capital expenditures year to date were $8.1 million in 1996 and $3.6
million in 1997. The decrease was partially due to the construction of six new
restaurants in the prior year. The Company's credit agreement contains
limitations on the amount of capital expenditures that the Company may incur.
The Company was three weeks late in paying the quarterly interest of $4.2
million on its senior secured notes which was due September 15, 1997. The credit
agreement provides for a 30-day grace period for interest payments.
Because the Company failed to make the $40.9 million payment that was due on
September 15, 1997 under the sinking fund provisions of its senior secured
notes, the Company was restricted from paying the quarterly interest of $1.2
million on its subordinated debt which was due September 15, 1997. In addition,
the Company failed to meet EBITDA covenants under its senior secured notes for
the twelve months ended May 31, 1997, for the four quarters ended June 30, 1997
and for the four quarters ended September 29, 1997. Although the Company's
lenders have not moved to accelerate the repayment of this debt, the Company has
included its senior secured notes and its subordinated debt in the current
portion of long-term debt.
Arthur Andersen LLP, independent public accountants, has issued a report which
states that the fact that the Company (i) has suffered recurring losses from
operations, (ii) has a net capital deficit, (iii) has failed to make the sinking
fund payment of $40.9 million which was due September 15, 1997, and (iv) may be
required to renegotiate its senior debt if it cannot meet amended covenants,
raises substantial doubt about its ability to continue as a going concern.
Substantially all assets of the Company are pledged to its senior lenders. In
addition, the subsidiaries have guaranteed the indebtedness owed by the Company
and such guarantee is secured by substantially all of the assets of the
subsidiaries. In connection with such indebtedness, contingent and mandatory
prepayments may be required under certain specified conditions and events.
8
<PAGE> 11
The Company's senior credit facilities provide for a letter of credit facility
of $11.0 million until December 15, 1997. This letter of credit facility was
fully utilized as of November 3, 1997. A quarterly commitment fee of 0.5% per
annum is payable on the letter of credit facility and a quarterly fee of 3.75%
per annum is payable on outstanding letters of credit. Having repaid the
outstanding bank loan in September 1996, the Company does not have a working
capital facility.
The Company did not obtain the required consents from its senior secured note
holders or from the holders of its subordinated debt to sell its Stuart
Anderson's Black Angus and Stuart Anderson's Cattle Company restaurants.
Consequently, the Company will not continue to pursue that transaction.
In order to address these liquidity issues, the Company intends to solicit
consent from its debt holders to refrain from accelerating the repayment of its
debt and has developed a refinancing plan and retained an investment banking
company as its financial advisor and sole placement agent. Although the Company
believes that this refinancing can be completed by year end 1997 and that it
will be in the best interests of its various debt holders, there can be no
assurance that it will be completed on the terms and within the time frame
expected.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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4.21 Tenth Amendment to Amended and Restated Credit
Agreement, dated June 25, 1997, among the
Company, the subsidiaries of the Company parties
hereto, Bankers Trust Company, as Agent, and the
several banks named thereto.
4.22 Eleventh Amendment to Amended and Restated
Credit Agreement, dated July 28, 1997, among the
Company, the subsidiaries of the Company parties
hereto, Bankers Trust Company, as Agent, and the
several banks named thereto.
4.23 Twelfth Amendment to Amended and Restated Credit
Agreement, dated September 12, 1997, among the
Company, the subsidiaries of the Company parties
hereto, Bankers Trust Company, as Agent, and the
several banks named thereto.
4.24 Thirteenth Amendment to Amended and Restated
Credit Agreement, dated October 13, 1997, among
the Company, the subsidiaries of the Company
parties hereto, Bankers Trust Company, as Agent,
and the several banks named thereto.
27.1 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only.
</TABLE>
9
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN RESTAURANT GROUP, INC.
(Registrant)
Date: November 13, 1997 By: /s/ WILLIAM J. MCCAFFREY, JR.
----------------- -------------------------------
William J. McCaffrey, Jr.
Vice President, Chief
Financial Officer
10
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description Page
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<S> <C> <C>
4.21 Tenth Amendment to Amended and Restated Credit
Agreement, dated June 25, 1997, among the
Company, the subsidiaries of the Company parties
hereto, Bankers Trust Company, as Agent, and the
several banks named thereto.
4.22 Eleventh Amendment to Amended and Restated
Credit Agreement, dated July 28, 1997, among the
Company, the subsidiaries of the Company parties
hereto, Bankers Trust Company, as Agent, and the
several banks named thereto.
4.23 Twelfth Amendment to Amended and Restated Credit
Agreement, dated September 12, 1997, among the
Company, the subsidiaries of the Company parties
hereto, Bankers Trust Company, as Agent, and the
several banks named thereto.
4.24 Thirteenth Amendment to Amended and Restated
Credit Agreement, dated October 13, 1997, among
the Company, the subsidiaries of the Company
parties hereto, Bankers Trust Company, as Agent,
and the several banks named thereto.
27.1 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only.
</TABLE>
<PAGE> 1
EXHIBIT 4.21
EXECUTION
AMERICAN RESTAURANT GROUP
TENTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS TENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"AMENDMENT") is dated as of June 25, 1997, and entered into by and among
AMERICAN RESTAURANT GROUP, INC., a Delaware corporation ("COMPANY"), the
Subsidiaries of Company listed on the signature pages hereof (the "WORKING
CAPITAL BORROWERS"), the financial institutions listed on the signature pages
hereof ("LENDERS") and BANKERS TRUST COMPANY, as agent for Lenders ("AGENT"),
and, for purposes of Section 3 hereof, Local Favorite, Inc., a California
corporation, and is made with reference to that certain Amended and Restated
Credit Agreement, dated as of December 13, 1993, as amended by that certain
Limited Waiver and First Amendment to Amended and Restated Credit Agreement
dated as of March 23, 1994, that certain Second Amendment to Amended and
Restated Credit Agreement dated as of May 10, 1994, that certain Limited Waiver
and Third Amendment to Amended and Restated Credit Agreement dated as of March
17, 1995, that certain Limited Waiver and Fourth Amendment to Amended and
Restated Credit Agreement dated as of November 1, 1995, that certain Limited
Waiver and Fifth Amendment to Amended and Restated Credit Agreement dated as of
February 27, 1996, that certain Limited Waiver and Sixth Amendment to Amended
and Restated Credit Agreement dated as of August 26, 1996, and that certain
Limited Waiver and Seventh Amendment to Amended and Restated Credit Agreement
dated as of September 10, 1996, that certain Eighth Amendment to Amended and
Restated Credit Agreement dated as of February 25, 1997, and that certain
Limited Waiver and Ninth Amendment to Amended and Restated Credit Agreement
dated as of February 27, 1997 (the "CREDIT AGREEMENT"), by and among Company,
the Working Capital Borrowers, Lenders and Agent. Capitalized terms used herein
without definition shall have the same meanings herein as set forth in the
Credit Agreement.
RECITALS
WHEREAS, Borrowers have requested Lenders to extend the maturity date
of the Facility Letter of Credit Commitments and Lenders have agreed to make
such extension subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
<PAGE> 2
SECTION 1.
AMENDMENT TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO SUBSECTION 2.4: FEES
Subsection 2.4 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Borrowers jointly and severally agree to pay to Agent for
distribution to each Facility L/C Lender in proportion to that Facility L/C
Lender's Pro Rata Share of the Facility Letter of Credit Commitments, an
amendment fee for the period from and including July 31, 1997 to but excluding
August 31, 1997, equal to the amount of the Facility Letter of Credit Commitment
as of June 26, 1997 multiplied by 1.50% per annum (calculated on the basis of a
360-day year), such amendment fee to be due and payable in advance on June 26,
1997."
1.2 AMENDMENT TO SUBSECTION 2.10: FACILITY LETTERS OF CREDIT
Subsection 2.10A of the Credit Agreement is hereby amended by
deleting all references to "July 31, 1997" contained therein and substituting
"August 31, 1997" therefor.
1.3 AMENDMENT TO SUBSECTION 6.10: INDEBTEDNESS
Subsection 6.1 of the Credit Agreement is amended by deleting the
reference to "July 31, 1997" in Clause (ix) thereof and substituting "August
31, 1997" therefor.
SECTION 2.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, each Loan Party represents
and warrants to each Lender that the following statements are true, correct and
complete:
2.1 CORPORATE POWER AND AUTHORITY.
Each Loan Party has all requisite corporate power and authority to
enter into this Amendment and to carry out the transactions contemplated by, and
perform its obligations under, the Credit Agreement as amended by this Amendment
(the "AMENDED AGREEMENT").
2
<PAGE> 3
2.2 AUTHORIZATION OF AGREEMENTS.
The execution and delivery of this Amendment and the performance of
the Amended Agreement have been duly authorized by all necessary corporate
action on the part of each Loan Party.
2.3 NO CONFLICT.
The execution and delivery by each Loan Party of this Amendment and
the performance by each Loan Party of the Amended Agreement do not and will not
(a) violate any provision of any law or any governmental rule or regulation
applicable to any Loan Party, the Certificate or Articles of Incorporation or
Bylaws of any Loan Party or any order, judgment or decree of any court or other
agency of government binding on any Loan Party, (b) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of any Loan Party, except for conflicts,
breaches or defaults which would not singly or in the aggregate have a Material
Adverse Effect, (c) result in or require the creation or imposition of any Lien
upon any of the properties or assets of any Loan Party (other than any Liens in
favor of Collateral Agent for the benefit of Lenders and the Senior Note
Holders), or (d) require any approval of stockholders or any approval or consent
of any Person under any Contractual Obligation of any Loan Party, except for
such approvals or consents which have been obtained on or before the Tenth
Amendment Effective Date (as hereinafter defined) or the absence of which would
not singly or in the aggregate have a Material Adverse Effect.
2.4 GOVERNMENTAL CONSENTS.
The execution, delivery and performance by each Loan Party of this
Amendment and the Amended Agreement do not and will not require any registration
with, consent or approval of, or notice to, or action to, with or by, any
Federal, state or other governmental authority or regulatory body, other than
registrations, consents, approvals, notices and actions that have been taken or
obtained prior to the Tenth Amendment Effective Date or the absence of which
would not have a Material Adverse Effect.
2.5 BINDING OBLIGATION.
This Amendment and the Amended Agreement have been duly executed and
delivered by each Loan Party which is a party thereto and are the legally valid
and binding obligations of each such Loan Party, enforceable against each such
Loan Party in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable principles relating
to enforceability.
3
<PAGE> 4
2.6 INCORPORATION OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in Section 4 of the
Credit Agreement and each Collateral Document are and will be true, correct and
complete in all material respects on and as of the Tenth Amendment Effective
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
2.7 ABSENCE OF DEFAULT.
As of the Tenth Amendment Effective Date, except as previously
disclosed to Lenders, no event has occurred and is continuing that would
constitute an Event of Default or a Potential Event of Default.
SECTION 3.
ACKNOWLEDGEMENT AND CONSENT
Company is a party to the Company Guaranty pursuant to which Company
has guarantied certain Obligations under the Credit Agreement. Each Subsidiary
of Company is a party to the Subsidiary Guaranty Agreement pursuant to which
each such Subsidiary has guarantied certain Obligations under the Credit
Agreement. Each of the Loan Parties is a party to certain Collateral Documents
pursuant to which the Loan Parties have granted Liens on certain Collateral to
the Collateral Agent, for the benefit of Lenders and the Senior Note Holders.
The Company Guaranty, the Subsidiary Guaranty Agreement and the Collateral
Documents are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS".
Each Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each Loan
Party hereby confirms that each Credit Support Document to which it is a party
or otherwise bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all "GUARANTIED OBLIGATIONS" and "SECURED
OBLIGATIONS", as the case may be (in each case as such terms are defined in the
applicable Credit Support Document), including without limitation the payment
and performance of all such "GUARANTIED OBLIGATIONS" or "SECURED OBLIGATIONS",
as the case may be, in respect of the Obligations now or hereafter existing
under or in respect of the Amended Agreement.
Each Loan Party acknowledges and agrees that any of the Credit Support
Documents to which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Loan Party represents and warrants that
all representations and warranties contained in the Amended Agreement and the
Credit Support
4
<PAGE> 5
Documents to which it is a party or otherwise bound are true, correct and
complete in all material respects on and as of the Tenth Amendment Effective
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
Each Loan Party (other than Borrowers) acknowledges and agrees that
(a) notwithstanding the conditions to effectiveness set forth in this Amendment,
such Loan Party is not required by the terms of the Credit Agreement or any
other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (b) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of such Loan Party to any future amendments to the Credit Agreement.
SECTION 4.
MISCELLANEOUS
4.1 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(a) On and after the Tenth 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 Amended Agreement.
(b) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and performance of this
Amendment shall not constitute a waiver of any existing Event of
Default or Potential Event of Default or any provision of, or operate
as a waiver of any right, power or remedy of Agent, the Collateral
Agent or any Lender under, the Credit Agreement or any of the other
Loan Documents.
4.2 FEES AND EXPENSES.
Company acknowledges that all reasonable costs, fees and expenses as
described in subsection 9.3 of the Credit Agreement incurred by Agent and its
counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.
5
<PAGE> 6
4.3 HEADINGS.
Section and subsection headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
4.4 APPLICABLE LAW.
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5.1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
4.5 COUNTERPARTS; EFFECTIVENESS.
This Amendment may be executed in any number of counterparts and by
different 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 pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Amendment shall become effective (the "TENTH AMENDMENT EFFECTIVE
DATE") upon the execution of a counterpart hereof by each of the parties hereto,
receipt by Agent of the fee payable pursuant to Subsection 2.4 of the Credit
Agreement as amended hereby, and receipt by Company and Agent of written or
telephonic notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
AMERICAN RESTAURANT GROUP, INC.,
a Delaware corporation
ARG ENTERPRISES, INC.,
a California corporation
SPECTRUM FOODS, INC.,
a California corporation
SPOONS RESTAURANTS, INC.,
a Texas corporation
ARG PROPERTY MANAGEMENT
CORPORATION,
a California corporation
GRANDY'S, INC.,
a California corporation
By: /s/ WILLIAM J. McCAFFREY, JR.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
of each of the foregoing
FOR PURPOSES OF SECTION 3 ONLY:
LOCAL FAVORITE, INC.,
a California corporation
By: /s/ WILLIAM J. McCAFFREY, JR.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
S-1
<PAGE> 8
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By: /s/ MARY JO JOLLY
-------------------------------
Name: MARY JO JOLLY
Title: ASSISTANT VICE PRESIDENT
BANQUE NATIONALE DE PARIS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-2
<PAGE> 9
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By:
-------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ C. BETTLES
-------------------------------
Name: C. BETTLES
Title: Sr. V.P. & Manager
By: /s/ MARGARET MUDD
-------------------------------
Name: Margaret Mudd
Title: V.P.
BANQUE PARIBAS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-2
<PAGE> 10
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By:
-------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Lender
By: /s/ EDWARD V. CANALE
-------------------------------
Name: Edward V. Canale
Title: Senior Vice President
By: /s/ ALBERT A. YOUNG JR.
-------------------------------
Name: Albert A. Young, Jr.
Title: Vice President
S-2
<PAGE> 11
SWISS BANK CORPORATION
LOND0N-BRANCH,
as a Lender
By: /s/ JAMES CULLINANE
-------------------------------
Name: James Cullinane
Title: Director Distressed Debt
By: /s/ BERND E. KALLMEYER
-------------------------------
Name: Bernd E. Kallmeyer
Title: Attorney-In-Fact
DRESDNER BANK AG,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-3
<PAGE> 12
SWISS BANK CORPORATION
CAYMAN ISLANDS BRANCH
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
as a Lender
By: /S/ THOMAS J. NADRAMIA
-------------------------------
Name: Thomas J. Nadramia
Title: Vice President
By: /s/ BRIGITTE SACIN
-------------------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
S-3
<PAGE> 1
EXHIBIT 4.22
EXECUTION
AMERICAN RESTAURANT GROUP
ELEVENTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS ELEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"AMENDMENT") is dated as of July 28, 1997, and entered into by and among
AMERICAN RESTAURANT GROUP, INC., a Delaware corporation ("COMPANY"), the
Subsidiaries of Company listed on the signature pages hereof (the "WORKING
CAPITAL BORROWERS"), the financial institutions listed on the signature pages
hereof ("LENDERS") and BANKERS TRUST COMPANY, as agent for Lenders ("AGENT"),
and, for purposes of Section 3 hereof, Local Favorite, Inc., a California
corporation, and is made with reference to that certain Amended and Restated
Credit Agreement, dated as of December 13, 1993, as amended by that certain
Limited Waiver and First Amendment to Amended and Restated Credit Agreement
dated as of March 23, 1994, that certain Second Amendment to Amended and
Restated Credit Agreement dated as of May 10, 1994, that certain Limited Waiver
and Third Amendment to Amended and Restated Credit Agreement dated as of March
17, 1995, that certain Limited Waiver and Fourth Amendment to Amended and
Restated Credit Agreement dated as of November 1, 1995, that certain Limited
Waiver and Fifth Amendment to Amended and Restated Credit Agreement dated as of
February 27, 1996, that certain Limited Waiver and Sixth Amendment to Amended
and Restated Credit Agreement dated as of August 26, 1996, that certain Limited
Waiver and Seventh Amendment to Amended and Restated Credit Agreement dated as
of September 10, 1996, that certain Eighth Amendment to Amended and Restated
Credit Agreement dated as of February 25, 1997, that certain Limited Waiver and
Ninth Amendment to Amended and Restated Credit Agreement dated as of February
27, 1997, and that certain Tenth Amendment to Amended and Restated Credit
Agreement dated as of June 25, 1997 (the "CREDIT AGREEMENT"), by and among
Company, the Working Capital Borrowers, Lenders and Agent. Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Credit Agreement.
RECITALS
WHEREAS, Borrowers have requested Lenders to extend the maturity date
of the Facility Letter of Credit Commitments and Lenders have agreed to make
such extension subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
<PAGE> 2
SECTION 1.
AMENDMENT TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO SUBSECTION 2.4: FEES
Subsection 2.4 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Borrowers jointly and severally agree to pay to Agent for
distribution to each Facility L/C Lender in proportion to that
Facility L/C Lender's Pro Rata Share of the Facility Letter of Credit
Commitments, an amendment fee for the period from and including
August 31, 1997 to but excluding October 15, 1997, equal to the
amount of the Facility Letter of Credit Commitment as of July 29,
1997 multiplied by 1.50% per annum (calculated on the basis of a
360-day year), such amendment fee to be due and payable in advance on
July 29, 1997. "
1.2 AMENDMENT TO SUBSECTION 2.10: FACILITY LETTERS OF CREDIT
Subsection 2.10A of the Credit Agreement is hereby amended by deleting
all references to "August 31, 1997" contained therein and substituting "October
15, 1997" therefor.
1.3 AMENDMENT TO SUBSECTION 6.10: INDEBTEDNESS
Subsection 6.1 of the Credit Agreement is amended by deleting the
reference to "August 31, 1997" in Clause (ix) thereof and substituting "October
15, 1997" therefor and adding the following paragraph at the end of such
subsection:
"Working Capital Borrowers hereby, ratify, confirm and
agree that all of the Working Capital Borrowers are jointly and
severally liable for all Obligations in respect of any issued and
outstanding Facility Letters of Credit irrespective of the Working
Capital Borrower on whose behalf the Facility Letter of Credit is
issued or any allocation of the Facility Letters of Credit pursuant
to subsection 5.18 hereof."
SECTION 2.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, each Loan Party represents
and warrants to each Lender that the following statements are true, correct and
complete:
2
<PAGE> 3
2.1 CORPORATE POWER AND AUTHORITY.
Each Loan Party has all requisite corporate power and authority to
enter into this Amendment and to carry out the transactions contemplated by, and
perform its obligations under, the Credit Agreement as amended by this Amendment
(the "AMENDED AGREEMENT").
2.2 AUTHORIZATION OF AGREEMENTS.
The execution and delivery of this Amendment and the performance of
the Amended Agreement have been duly authorized by all necessary corporate
action on the part of each Loan Party.
2.3 NO CONFLICT.
The execution and delivery by each Loan Party of this Amendment and
the performance by each Loan Party of the Amended Agreement do not and will not
(a) violate any provision of any law or any governmental rule or regulation
applicable to any Loan Party, the Certificate or Articles of Incorporation or
Bylaws of any Loan Party or any order, judgment or decree of any court or other
agency of government binding on any Loan Party, (b) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of any Loan Party, except for conflicts,
breaches or defaults which would not singly or in the aggregate have a Material
Adverse Effect, (c) result in or require the creation or imposition of any Lien
upon any of the properties or assets of any Loan Party (other than any Liens in
favor of Collateral Agent for the benefit of Lenders and the Senior Note
Holders), or (d) require any approval of stockholders or any approval or consent
of any Person under any Contractual Obligation of any Loan Party, except for
such approvals or consents which have been obtained on or before the Eleventh
Amendment Effective Date (as hereinafter defined) or the absence of which would
not singly or in the aggregate have a Material Adverse Effect.
2.4 GOVERNMENTAL CONSENTS.
The execution, delivery and performance by each Loan Party of this
Amendment and the Amended Agreement do not and will not require any registration
with, consent or approval of, or notice to, or action to, with or by, any
Federal, state or other governmental authority or regulatory body, other than
registrations, consents, approvals, notices and actions that have been taken or
obtained prior to the Eleventh Amendment Effective Date or the absence of which
would not have a Material Adverse Effect.
2.5 BINDING OBLIGATION.
This Amendment and the Amended Agreement have been duly executed and
delivered by each Loan Party which is a party thereto and are the legally valid
and binding obligations of each such Loan Party, enforceable against each such
Loan Party in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization,
3
<PAGE> 4
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
2.6 INCORPORATION OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in Section 4 of the
Credit Agreement and each Collateral Document are and will be true, correct and
complete in all material respects on and as of the Eleventh Amendment Effective
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
2.7 ABSENCE OF DEFAULT.
As of the Eleventh Amendment Effective Date, except as previously
disclosed to Lenders, no event has occurred and is continuing that would
constitute an Event of Default or a Potential Event of Default.
SECTION 3.
ACKNOWLEDGMENT AND CONSENT
Company is a party to the Company Guaranty pursuant to which Company
has guarantied certain Obligations under the Credit Agreement. Each Subsidiary
of Company is a party to the Subsidiary Guaranty Agreement pursuant to which
each such Subsidiary has guarantied certain Obligations under the Credit
Agreement. Each of the Loan Parties is a party to certain Collateral Documents
pursuant to which the Loan Parties have granted Liens on certain Collateral to
the Collateral Agent, for the benefit of Lenders and the Senior Note Holders.
The Company Guaranty, the Subsidiary Guaranty Agreement and the Collateral
Documents are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS".
Each Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each Loan
Party hereby confirms that each Credit Support Document to which it is a party
or otherwise bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all "GUARANTIED OBLIGATIONS" and "SECURED
OBLIGATIONS", as the case may be (in each case as such terms are defined in the
applicable Credit Support Document), including without limitation the payment
and performance of all such "GUARANTIED OBLIGATIONS" or "SECURED OBLIGATIONS",
as the case may be, in respect of the Obligations now or hereafter existing
under or in respect of the Amended Agreement.
Each Loan Party acknowledges and agrees that any of the Credit Support
Documents to which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the
4
<PAGE> 5
execution or effectiveness of this Amendment. Each Loan Party represents and
warrants that all representations and warranties contained in the Amended
Agreement and the Credit Support Documents to which it is a party or otherwise
bound are true, correct and complete in all material respects on and as of the
Eleventh Amendment Effective Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and complete in
all material respects on and as of such earlier date.
Each Loan Party (other than Borrowers) acknowledges and agrees that
(a) notwithstanding the conditions to effectiveness set forth in this Amendment,
such Loan Party is not required by the terms of the Credit Agreement or any
other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (b) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of such Loan Party to any future amendments to the Credit Agreement.
SECTION 4.
MISCELLANEOUS
4.1 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(a) On and after the Eleventh 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 Amended Agreement.
(b) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and performance of this
Amendment shall not constitute a waiver of any existing Event of
Default or Potential Event of Default or any provision of, or operate
as a waiver of any right, power or remedy of Agent, the Collateral
Agent or any Lender under, the Credit Agreement or any of the other
Loan Documents.
4.2 FEES AND EXPENSES.
Company acknowledges that all reasonable costs, fees and expenses as
described in subsection 9.3 of the Credit Agreement incurred by Agent and its
counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.
5
<PAGE> 6
4.3 HEADINGS.
Section and subsection headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
4.4 APPLICABLE LAW.
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5.1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
4.5 COUNTERPARTS; EFFECTIVENESS.
This Amendment may be executed in any number of counterparts and by
different 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 pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Amendment shall become effective (the "ELEVENTH AMENDMENT
EFFECTIVE DATE") upon the execution of a counterpart hereof by each of the
parties hereto and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
AMERICAN RESTAURANT GROUP, INC.,
a Delaware corporation
ARG ENTERPRISES, INC.,
a California corporation
SPECTRUM FOODS, INC.,
a California corporation
SPOONS RESTAURANTS, INC.,
a Texas corporation
ARG PROPERTY MANAGEMENT
CORPORATION,
a California corporation
GRANDY'S, INC.,
a California corporation
By: /s/ WILLIAM J. MCCAFFREY, JR.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
of each of the foregoing
FOR PURPOSES OF SECTION 3 ONLY:
LOCAL FAVORITE, INC.,
a California corporation
By: /s/ WILLIAM J. MCCAFFREY, JR.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
S-1
<PAGE> 8
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By: /s/ ROBERT R. TELESCA
------------------------------
Name: Robert R. Telesca
Title: Assistant Vice President
S-2
<PAGE> 9
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ C. BETTLES
------------------------------
Name: C. Bettles
Title: Sr. V.P. & Manager
By: /s/ TJALLING TERPSTRA
------------------------------
Name: Tjalling Terpstra
Title: Vice President
S-2
<PAGE> 10
BANQUE PARIBAS,
as a Lender
By: /s/ EDWARD V. CANALE
------------------------------
Name: Edward V. Canale
Title: Senior Vice President
By: /s/ ALBERT A. YOUNG, JR.
------------------------------
Name: Albert A. Young, Jr.
Title: Vice President
S-2
<PAGE> 11
SWISS BANK CORPORATION
CAYMAN ISLANDS BRANCH,
as a Lender
By: /s/ JAMES CULLINANE
------------------------------
Name: James Cullinane
Title: Director Distressed Debt
Attorney-in-Fact
By: /s/ CHRISTINE DALEY
------------------------------
Name: Christine Daley
Title: Executive Director
Attorney-in-Fact
S-3
<PAGE> 12
DRESDNER BANK AG, NV &
GRAND CAYMAN BRANCHES
as a Lender
By: /s/ CHRISTOPHER E. SARISKY
------------------------------
Name: Christopher E. Sarisky
Title: Assistant Treasurer
By: /s/ THOMAS J. NADRAMIA
------------------------------
Name: Thomas J. Nadramia
Title: Vice President
S-3
<PAGE> 1
EXHIBIT 4.23
EXECUTION
AMERICAN RESTAURANT GROUP
TWELFTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS TWELFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"AMENDMENT") is dated as of September 12, 1997, and entered into by and among
AMERICAN RESTAURANT GROUP, INC., a Delaware corporation ("COMPANY"), the
Subsidiaries of Company listed on the signature pages hereof (the "WORKING
CAPITAL BORROWERS"), the financial institutions listed on the signature pages
hereof ("LENDERS") and BANKERS TRUST COMPANY, as agent for Lenders ("AGENT"),
and, for purposes of Section 3 hereof, Local Favorite, Inc., a California
corporation, and is made with reference to that certain Amended and Restated
Credit Agreement, dated as of December 13, 1993, as amended by that certain
Limited Waiver and First Amendment to Amended and Restated Credit Agreement
dated as of March 23, 1994, that certain Second Amendment to Amended and
Restated Credit Agreement dated as of May 10, 1994, that certain Limited Waiver
and Third Amendment to Amended and Restated Credit Agreement dated as of March
17, 1995, that certain Limited Waiver and Fourth Amendment to Amended and
Restated Credit Agreement dated as of November 1, 1995, that certain Limited
Waiver and Fifth Amendment to Amended and Restated Credit Agreement dated as of
February 27, 1996, that certain Limited Waiver and Sixth Amendment to Amended
and Restated Credit Agreement dated as of August 26, 1996, that certain Limited
Waiver and Seventh Amendment to Amended and Restated Credit Agreement dated as
of September 10, 1996, that certain Eighth Amendment TO Amended and Restated
Credit Agreement dated as of February 25, 1997, that certain Limited Waiver and
Ninth Amendment to Amended and Restated Credit Agreement dated as of February
27, 1997, that certain Tenth Amendment to Amended and Restated Credit Agreement
dated as of June 25, 1997, and that certain Eleventh Amendment to Amended and
Restated Credit Agreement dated as of July 28, 1997 (the "CREDIT AGREEMENT"), by
and among Company, the Working Capital Borrowers, Lenders and Agent. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.
RECITALS
WHEREAS, Borrowers have requested Lenders to extend the maturity date
of the Facility Letter of Credit Commitments and Lenders have agreed to make
such extension subject to the terms and conditions set forth herein;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1.
AMENDMENT TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO SUBSECTION 2.4: FEES
Subsection 2.4 of the Credit Agreement is hereby amended to read in
its entirety as follows.
"Borrowers jointly and severally agree to pay to Agent for
distribution to each Facility L/C Lender in proportion to that
Facility L/C Lender's Pro Rata Share of the Facility Letter of Credit
Commitments, an amendment fee for the period from and including
October 15, 1997 to but excluding November 14, 1997, equal to the
amount of the Facility Letter of Credit Commitment as of September
12, 1997 multiplied by 1.50% per annum (calculated on the basis of a
360-day year), such amendment fee to be due and payable in advance on
September 12, 1997."
1.2 AMENDMENT TO SUBSECTION 2.10: FACILITY LETTERS OF CREDIT
Subsection 2.10A of the Credit Agreement is hereby amended by
deleting all references to "October 15, 1997" contained therein and substituting
"November 14, 1997" therefor.
1.3 Amendment TO SUBSECTION 6.1: INDEBTEDNESS
Subsection 6.1 of the Credit Agreement is amended by deleting the
reference to "October 15, 1997" in Clause (ix) thereof and substituting
"November 14, 1997" therefor.
SECTION 2.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, each Loan Party represents
and warrants to each Lender that the following statements are true, correct and
complete:
2.1 CORPORATE POWER AND AUTHORITY.
Each Loan Party has ALL requisite corporate power and authority to
enter into this Amendment and to carry out the transactions contemplated by, and
perform its obligations under, the Credit Agreement as amended by this Amendment
(the "AMENDED AGREEMENT").
2
<PAGE> 3
2.2 AUTHORIZATION OF AGREEMENTS.
The execution and delivery of this Amendment and the performance of
the Amended Agreement have been duly authorized by all necessary corporate
action on the part of each Loan Party.
2.3 No CONFLICT.
The execution and delivery by each Loan Party of this Amendment and
the performance by each Loan Party of the Amended Agreement do not and will not
(a) violate any provision of any law or any governmental rule or regulation
applicable to any Loan Party, the Certificate or Articles of Incorporation or
Bylaws of any Loan Party or any order, judgment or decree of any court or other
agency of government binding on any Loan Party, (b) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of any Loan Party, except for conflicts,
breaches or defaults which would not singly or in the aggregate have a Material
Adverse Effect, (c) result in or require the creation or imposition of any Lien
upon any of the properties or assets of any Loan Party (other than any Liens in
favor of Collateral Agent for the benefit of Lenders and the Senior Note
Holders), or (d) require any approval of stockholders or any approval or consent
of any Person under any Contractual Obligation of any Loan Party, except for
such approvals or consents which have been obtained on or before the Twelfth
Amendment Effective Date (as hereinafter defined) or the absence of which would
not singly or in the aggregate have a Material Adverse Effect.
2.4 GOVERNMENTAL CONSENTS.
The execution, delivery and performance by each Loan Party of this
Amendment and the Amended Agreement do not and will not require any registration
with, consent or approval of, or notice to, or action to, with or by, any
Federal, state or other governmental authority or regulatory body, other than
registrations, consents, approvals, notices and actions that have been taken or
obtained prior to the Twelfth Amendment Effective Date or the absence of which
would not have a Material Adverse Effect.
2.5 BINDING OBLIGATION.
This Amendment and the Amended Agreement have been duly executed and
delivered by each Loan Party which is a party thereto and are the legally valid
and binding obligations of each such Loan Party, enforceable against each such
Loan Party in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable principles relating
to enforceability.
2.6 INCORPORATION OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in Section 4 of the
Credit Agreement and each Collateral Document are and will be true, correct and
complete in all material respects on
3
<PAGE> 4
and as of the Twelfth Amendment Effective Date to the same extent as though made
on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
2.7 ABSENCE OF DEFAULT.
As of the Twelfth Amendment Effective Date, except as previously
disclosed to Lenders, no event has occurred and is continuing that would
constitute an Event of Default or a Potential Event of Default.
SECTION 3.
ACKNOWLEDGMENT AND CONSENT
Company is a party to the Company Guaranty pursuant to which Company
has guarantied certain Obligations under the Credit Agreement. Each Subsidiary
of Company is a party to the Subsidiary Guaranty Agreement pursuant to which
each such Subsidiary has guarantied certain Obligations under the Credit
Agreement. Each of the Loan Parties is a party to certain Collateral Documents
pursuant to which the Loan Parties have granted Liens on certain Collateral to
the Collateral Agent, for the benefit of Lenders and the Senior Note Holders.
The Company Guaranty, the Subsidiary Guaranty Agreement and the Collateral
Documents are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS".
Each Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each Loan
Party hereby confirms that each Credit Support Document to which it is a party
or otherwise bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all "GUARANTIED OBLIGATIONS" and "SECURED
OBLIGATIONS", as the case may be (in each case as such terms are defined in the
applicable Credit Support Document), including without limitation the payment
and performance of all such "GUARANTIED OBLIGATIONS" or "SECURED OBLIGATIONS",
as the case may be, in respect of the Obligations now or hereafter existing
under or in respect of the Amended Agreement.
Each Loan Party acknowledges and agrees that any of the Credit Support
Documents to which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Loan Party represents and warrants that
all representations and warranties contained in the Amended Agreement and the
Credit Support Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the Twelfth Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
4
<PAGE> 5
Each Loan Party (other than Borrowers) acknowledges and agrees that
(a) notwithstanding the conditions to effectiveness set forth in this Amendment,
such Loan Party is not required by the terms of the Credit Agreement or any
other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (b) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of such Loan Party to any future amendments to the Credit Agreement.
SECTION 4.
MISCELLANEOUS
4.1 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(a) On and after the Twelfth 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 Amended Agreement.
(b) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and performance of this
Amendment shall not constitute a waiver of any existing Event of
Default or Potential Event of Default or any provision of, or operate
as a waiver of any right, power or remedy of Agent, the Collateral
Agent or any Lender under, the Credit Agreement or any of the other
Loan Documents.
4.2 FEES AND EXPENSES.
Company acknowledges that all reasonable costs, fees and expenses as
described in subsection 9.3 of the Credit Agreement incurred by Agent and its
counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.
4.3 HEADINGS.
Section and subsection headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
5
<PAGE> 6
4.4 APPLICABLE LAW.
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5.1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
4.5 COUNTERPARTS; EFFECTIVENESS.
This Amendment may be executed in any number of counterparts and by
different 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 pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Amendment shall become effective (the "TWELFTH AMENDMENT
EFFECTIVE DATE") upon the execution of a counterpart hereof by each of the
parties hereto and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
AMERICAN RESTAURANT GROUP, INC.,
a Delaware corporation
ARG ENTERPRISES, INC.,
a California corporation
SPECTRUM FOODS, INC.,
a California corporation
SPOONS RESTAURANTS, INC.,
a Texas corporation
ARG PROPERTY MANAGEMENT
CORPORATION,
a California corporation
GRANDY'S, INC.,
a California corporation
By: /s/ WILLIAM J. MCCAFFREY, JR.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
of each of the foregoing
FOR PURPOSES OF SECTION 3 ONLY:
LOCAL FAVORITE, INC.,
a California corporation
By: /s/ WILLIAM J. MCCAFFREY, JR.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
S-1
<PAGE> 8
BANKERS TRUST COMPANY,
individually as Agent and a Lender
By: /s/ MARY JO JOLLY
-------------------------------
Name: Mary Jo Jolly
Title: ASSISTANT/VICE PRESIDENT
BANQUE NATIONALE DE PARIS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-2
<PAGE> 9
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By:
-------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ J.L. TOURNE
-------------------------------
Name: J.L. Tourne
Title: V.P. & Deputy Manager
By: /s/ FREDERIQUE MERHAUT
-------------------------------
Name: Frederique Merhaut
Title: V.P. & Credit Manager
BANQUE PARIBAS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-2
<PAGE> 10
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By:
-------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Lender
By: /s/ EDWARD V. CANALE
-------------------------------
Name: Edward V. Canale
Title: Senior Vice President
By: /s/ ALBERT A. YOUNG JR.
-------------------------------
Name: Albert A. Young, Jr.
Title: Vice President
S-2
<PAGE> 11
SWISS BANK CORPORATION
LOND0N-BRANCH,
as a Lender
By: /s/ James Cullinane
-------------------------------
Name: James Cullinane
Title: Director/Distressed Debt
By: /s/ Alfred C. Kellog
-------------------------------
Name: Alfred C. Kellog
Title: Attorney-In-Fact
DRESDNER BANK AG,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-3
<PAGE> 12
SWISS BANK CORPORATION
CAYMAN ISLANDS BRANCH,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
DRESDNER BANK AG, New York Branch
and Grand Cayman Branch as a
Lender
By: /s/ CHRISTOPHER E. SARISKY
-------------------------------
Name:Christopher E. Sarisky
Title: Assistant Vice President
By: /s/ JOHN W. SWEENEY
-------------------------------
Name: John W. Sweeney
Title: Assistant Vice President
S-3
<PAGE> 1
EXHIBIT 4.24
EXECUTION
AMERICAN RESTAURANT GROUP
THIRTEENTH AMENDMENT
to AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRTEENTH AMENDMENT to AMENDED AND RESTATED CREDIT AGREEMENT
(this "AMENDMENT") is dated as of October 13, 1997, and entered into by and
among AMERICAN RESTAURANT GROUP, INC., a Delaware corporation ("COMPANY"), the
Subsidiaries of Company listed on the signature pages hereof (the "WORKING
CAPITAL BORROWERS"), the financial institutions listed on the signature pages
hereof ("LENDERS") and BANKERS TRUST COMPANY, as agent for Lenders ("AGENT"),
and, for purposes of Section 3 hereof, Local Favorite, Inc., a California
corporation, and is made with reference to that certain Amended and Restated
Credit Agreement, dated as of December 13, 1993, as amended by that certain
Limited Waiver and First Amendment to Amended and Restated Credit Agreement
dated as of March 23, 1994, that certain Second Amendment to Amended and
Restated Credit Agreement dated as of May 10, 1994, that certain Limited Waiver
and Third Amendment to Amended and Restated Credit Agreement dated as of March
17, 1995, that certain Limited Waiver and Fourth Amendment to Amended and
Restated Credit Agreement dated as of November 1, 1995, that certain Limited
Waiver and Fifth Amendment to Amended and Restated Credit Agreement dated as of
February 27, 1996, that certain Limited Waiver and Sixth Amendment to Amended
and Restated Credit Agreement dated as of August 26, 1996, that certain Limited
Waiver and Seventh Amendment to Amended and Restated Credit Agreement dated as
of September 10, 1996, that certain Eighth Amendment to Amended and Restated
Credit Agreement dated as of February 25, 1997, that certain Limited Waiver and
Ninth Amendment to Amended and Restated Credit Agreement dated as of February
27, 1997, that certain Tenth Amendment to Amended and Restated Credit Agreement
dated as of June 25, 1997, and that certain Eleventh Amendment to Amended and
Restated Credit Agreement dated as of July 28, 1997 and that certain Twelfth
Amendment to Amended and Restated Credit Agreement dated as of September 12,
1997 (the "CREDIT AGREEMENT"), by and among Company, the Working Capital
Borrowers, Lenders and Agent. Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Borrowers have requested Lenders to extend the maturity date
of the Facility Letter of Credit Commitments and Lenders have agreed to make
such extension subject to the terms and conditions set forth herein;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1.
AMENDMENT TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO SUBSECTION 2.4: FEES
Subsection 2.4 of the Credit Agreement is hereby amended to read in
its entirety as follows.
"Borrowers jointly and severally agree to pay to Agent for
distribution to each Facility L/C Lender in proportion to that
Facility L/C Lender's Pro Rata Share of the Facility Letter of Credit
Commitments, an amendment fee for the period from and including
November 14, 1997 to but excluding December 15, 1997, equal to the
amount of the Facility Letter of Credit Commitment as of October 13,
1997 multiplied by 1.50% per annum (calculated on the basis of a
360-day year), such amendment fee to be due and payable in advance on
October 13, 1997."
1.2 AMENDMENT TO SUBSECTION 2.10: FACILITY LETTERS OF CREDIT
Subsection 2.10A of the Credit Agreement is hereby amended by
deleting all references to "November 14, 1997" contained therein and
substituting "December 15, 1997" therefor.
1.3 AMENDMENT TO SUBSECTION 6.1: INDEBTEDNESS
Subsection 6.1 of the Credit Agreement is amended by deleting the
reference to "November 14, 1997" in Clause (ix) thereof and substituting
"December 15, 1997" therefor.
SECTION 2.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, each Loan Party represents
and warrants to each Lender that the following statements are true, correct and
complete:
2.1 CORPORATE POWER AND AUTHORITY.
Each Loan Party has all requisite corporate power and authority to
enter into this Amendment and to carry out the transactions contemplated by, and
perform its obligations under, the Credit Agreement as amended by this Amendment
(the "AMENDED AGREEMENT").
2
<PAGE> 3
2.2 AUTHORIZATION OF AGREEMENTS.
The execution and delivery of this Amendment and the performance of
the Amended Agreement have been duly authorized by all necessary corporate
action on the part of each Loan Party.
2.3 NO CONFLICT.
The execution and delivery by each Loan Party of this Amendment and
the performance by each Loan Party of the Amended Agreement do not and will not
(a) violate any provision of any law or any governmental rule or regulation
applicable to any Loan Party, the Certificate or Articles of Incorporation or
Bylaws of any Loan Party or any order, judgment or decree of any court or other
agency of government binding on any Loan Party, (b) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of any Loan Party, except for conflicts,
breaches or defaults which would not singly or in the aggregate have a Material
Adverse Effect, (c) result in or require the creation or imposition of any Lien
upon any of the properties or assets of any Loan Party (other than any Liens in
favor of Collateral Agent for the benefit of Lenders and the Senior Note
Holders), or (d) require any approval of stockholders or any approval or consent
of any Person under any Contractual Obligation of any Loan Party, except for
such approvals or consents which have been obtained on or before the Twelfth
Amendment Effective Date (as hereinafter defined) or the absence of which would
not singly or in the aggregate have a Material Adverse Effect.
2.4 GOVERNMENTAL CONSENTS.
The execution, delivery and performance by each Loan Party of this
Amendment and the Amended Agreement do not and will not require any registration
with, consent or approval of, or notice to, or action to, with or by, any
Federal, state or other governmental authority or regulatory body, other than
registrations, consents, approvals, notices and actions that have been taken or
obtained prior to the Thirteenth Amendment Effective Date or the absence of
which would not have a Material Adverse Effect.
2.5 BINDING OBLIGATION.
This Amendment and the Amended Agreement have been duly executed and
delivered by each Loan Party which is a party thereto and are the legally valid
and binding obligations of each such Loan Party, enforceable against each such
Loan Party in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable principles relating
to enforceability.
2.6 INCORPORATION OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in Section 4 of the
Credit Agreement and each Collateral Document are and will be true, correct and
complete in all material respects on
3
<PAGE> 4
and as of the Thirteenth Amendment Effective Date to the same extent as though
made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date.
2.7 ABSENCE OF DEFAULT.
As of the Thirteenth Amendment Effective Date, except as previously
disclosed to Lenders, no event has occurred and is continuing that would
constitute an Event of Default or a Potential Event of Default.
SECTION 3.
ACKNOWLEDGMENT AND CONSENT
Company is a party to the Company Guaranty pursuant to which Company
has guarantied certain Obligations under the Credit Agreement. Each Subsidiary
of Company is a party to the Subsidiary Guaranty Agreement pursuant to which
each such Subsidiary has guarantied certain Obligations under the Credit
Agreement. Each of the Loan Parties is a party to certain Collateral Documents
pursuant to which the Loan Parties have granted Liens on certain Collateral to
the Collateral Agent, for the benefit of Lenders and the Senior Note Holders.
The Company Guaranty, the Subsidiary Guaranty Agreement and the Collateral
Documents are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS".
Each Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each Loan
Party hereby confirms that each Credit Support Document to which it is a party
or otherwise bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all "GUARANTIED OBLIGATIONS" and "SECURED
OBLIGATIONS", as the case may be (in each case as such terms are defined in the
applicable Credit Support Document), including without limitation the payment
and performance of all such "GUARANTIED OBLIGATIONS" or "SECURED OBLIGATIONS",
as the case may be, in respect of the Obligations now or hereafter existing
under or in respect of the Amended Agreement.
Each Loan Party acknowledges and agrees that any of the Credit Support
Documents to which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Loan Party represents and warrants that
all representations and warranties contained in the Amended Agreement and the
Credit Support Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the Twelfth Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
4
<PAGE> 5
Each Loan Party (other than Borrowers) acknowledges and agrees that
(a) notwithstanding the conditions to effectiveness set forth in this Amendment,
such Loan Party is not required by the terms of the Credit Agreement or any
other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (b) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of such Loan Party to any future amendments to the Credit Agreement.
SECTION 4.
MISCELLANEOUS
4.1 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(a) On and after the Thirteenth 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 Amended Agreement.
(b) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and performance of this
Amendment shall not constitute a waiver of any existing Event of
Default or Potential Event of Default or any provision of, or operate
as a waiver of any right, power or remedy of Agent, the Collateral
Agent or any Lender under, the Credit Agreement or any of the other
Loan Documents.
4.2 FEES AND EXPENSES.
Company acknowledges that all reasonable costs, fees and expenses as
described in subsection 9.3 of the Credit Agreement incurred by Agent and its
counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.
4.3 HEADINGS.
Section and subsection headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
5
<PAGE> 6
4.4 APPLICABLE LAW.
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5.1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
4.5 COUNTERPARTS; EFFECTIVENESS.
This Amendment may be executed in any number of counterparts and by
different 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 pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Amendment shall become effective (the "THIRTEENTH AMENDMENT
EFFECTIVE DATE") upon the execution of a counterpart hereof by each of the
parties hereto and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
AMERICAN RESTAURANT GROUP, INC.,
a Delaware corporation
ARG ENTERPRISES, INC.,
a California corporation
SPECTRUM FOODS, INC.,
a California corporation
SPOONS RESTAURANTS, INC.,
a Texas corporation ARG
PROPERTY MANAGEMENT CORPORATION,
a California corporation
GRANDY'S, INC.,
a California corporation
By: /s/ William J. McCaffrey, Jr.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
of each of the foregoing
FOR PURPOSES OF SECTION 3 ONLY:
LOCAL FAVORITE, INC.,
a California corporation
By: /s/ William J. McCaffrey, Jr.
-------------------------------
William J. McCaffrey, Jr.
Vice President and
Chief Financial Officer
S-1
<PAGE> 8
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By: /s/ Mary Jo Jolly
-------------------------------
Name: Mary Jo Jolly
Title: ASSISTANT VICE PRESIDENT
BANQUE NATIONALE DE PARIS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-2
<PAGE> 9
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By:
-------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ C. BETTLES
-------------------------------
Name: C. Bettles
Title: Sr. V.P. & Manager
By: /s/ J.L. TOURNE
-------------------------------
Name: J.L. Tourne
Title: V.P. & Deputy Manager
BANQUE PARIBAS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-2
<PAGE> 10
BANKERS TRUST COMPANY,
individually, as Agent and a Lender
By:
-------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Lender
By: /s/ EDWARD V. CANALE
-------------------------------
Name: Edward V. Canale
Title: Managing Director
By: /S/ ALBERT A. YOUNG JR.
-------------------------------
Name: Albert A. Young, Jr.
Title: Vice President
S-2
<PAGE> 11
SWISS BANK CORPORATION
LOND0N BRANCH,
as a Lender
By: /s/ ALFRED C. KELLOGG
-------------------------------
Name: Alfred C. Kellogg
Title: Attorney-In-Fact
By: /s/ BERND E. KALLMEYER
-------------------------------
Name: Bernd E. Kallmeyer
Title: Attorney-In-Fact
DRESDNER BANK AG,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
S-3
<PAGE> 12
SWISS BANK CORPORATION
CAYMAN ISLANDS BRANCH,
as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
DRESDNER BANK AG, NEW YORK &
GRAND CAYMAN BRANCHES
as a Lender
By: /s/ JOHN W. SWEENEY
-------------------------------
Name: John W. Sweeney
Title: ASST. VICE PRESIDENT
By: /s/ BRIGITTE SACIN
-------------------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
S-3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 29, 1997 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 29, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS
ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> SEP-29-1997
<CASH> 6,189,000
<SECURITIES> 0
<RECEIVABLES> 7,241,000
<ALLOWANCES> 1,076,000
<INVENTORY> 5,632,000
<CURRENT-ASSETS> 20,892,000
<PP&E> 219,987,000
<DEPRECIATION> 124,758,000
<TOTAL-ASSETS> 158,040,000
<CURRENT-LIABILITIES> 247,879,000
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> (104,254,000)
<TOTAL-LIABILITY-AND-EQUITY> 158,040,000
<SALES> 333,198,000
<TOTAL-REVENUES> 333,198,000
<CGS> 105,406,000
<TOTAL-COSTS> 185,921,000
<OTHER-EXPENSES> 14,839,000
<LOSS-PROVISION> 87,000
<INTEREST-EXPENSE> 17,688,000
<INCOME-PRETAX> (12,759,000)
<INCOME-TAX> 48,000
<INCOME-CONTINUING> (12,807,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,807,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
