Exhibit 99.4
FORBEARANCE
AGREEMENT
This FORBEARANCE AGREEMENT (as
amended, modified or extended in accordance with the terms hereof,
this “ Forbearance Agreement ”), dated and
effective as of [August 11], 2004 (the “ Effective
Date ”), is entered into by and among TCW SHARED
OPPORTUNITY III, L.P. (“ Lender ”), American
Restaurant Group, Inc., a Delaware corporation (“ ARG
”), ARG Enterprises, Inc., a California corporation (“
Enterprises ”), ARG Property Management Corporation, a
California corporation (“ Property Management ”;
and collectively with ARG and Enterprises, the “
Borrowers ”), and ARG Terra, Inc., a Delaware
corporation (“ Terra ”; and collectively with
the Borrowers, the “ Credit Parties
”).
RECITALS
WHEREAS, Credit Parties and BNY
Western Trust Company, a California state banking corporation
formerly known as U.S. Trust Company, National Association, as
successor to U.S. Trust Company of California, N.A. (“
BNY ”), as trustee (the “ Trustee
”), are parties to that certain Indenture dated as of
February 25, 1998 (as amended and supplemented to date, the “
Indenture ”), providing for the issuance of an
aggregate principal amount of up to $166,000,000 of the Indenture
Notes;
WHEREAS, the Credit Parties are
borrowers and Wells Fargo Foothill, Inc. (formerly known as
Foothill Capital Corporation, “ Foothill ”) is
both agent and a lender under that certain loan agreement dated
December 17, 2001 (as amended, restated, supplemented, or otherwise
modified from time to time, the “ Foothill Credit
Agreement ”);
WHEREAS, Credit Parties and Lender
are parties to that certain loan agreement dated October 31, 2003
(as amended, restated, supplemented, or otherwise modified from
time to time, the “ Eligible Credit Facility
”);
WHEREAS, Credit Parties, Lender,
Foothill, and the Trustee are parties to the Second Amended and
Restated Intercreditor and Collateral Agency Agreement dated
December 17, 2001 (the “ Intercreditor Agreement
”), in which BNY is separately designated Collateral Agent
(as that term is defined therein, the “ Collateral
Agent ”);
WHEREAS, the obligations of Credit
Parties under the Indenture, the Indenture Notes, the Foothill
Credit Agreement and the Eligible Credit Facility are secured by
liens and security interests in favor of the Collateral Agent on
certain assets of Credit Parties (the “ Collateral
”);
WHEREAS, the parties to the
Intercreditor Agreement intend that obligations of Credit Parties
under the Foothill Credit Agreement and the Eligible Credit
Facility be paid in full in cash before any obligations under the
Indenture or the Indenture Notes be paid from the
Collateral;
WHEREAS, Credit Parties are not in
compliance with certain provisions of the Eligible Credit Facility,
resulting in the occurrence of the following Defaults and Events of
Default under: (a) Section 8.9 and Section 8.16 in respect of
an interest payment on the Indenture Notes due on May 1, 2004,
(b) Section 6.2 for Borrowers’ failure to deliver to
Lender certified consolidated financial statements, without any
qualifications, of ARG and its Subsidiaries for Credit
Parties’ fiscal year ending December 29, 2003, and (c)
Section 8.10 because of the occurrence and continuation of the
“Specified Defaults” as defined in that certain
Forbearance Agreement dated as of August 5, 2004, between Foothill
and the Credit Parties (collectively, the “ Specified
Defaults ”); and
WHEREAS, Credit Parties have
requested that Lender forbear in the exercise of any remedies with
respect to the Specified Defaults, and Lender is willing to grant
such forbearance with respect to the Specified Defaults on the
terms and conditions provided herein.
NOW, THEREFORE, in consideration of
the premises and covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto mutually agree and covenant
as follows:
Section 1 . Capitalized Terms . Capitalized
terms used herein without definition shall have the meanings
assigned to them in the Eligible Credit Facility.
Section 2 . Forbearance . Lender hereby
agrees, on the terms and subject to the conditions hereof, to
forbear solely during the period from and after the Effective Date
until (but excluding) the Forbearance Termination Date (as defined
below) (the “ Forbearance Period ”) in the
exercise of rights and remedies available under the Loan Documents
with respect to the Specified Defaults; provided
however , that Credit Parties shall comply at all times
during the Forbearance Period with all of the provisions,
limitations, restrictions and prohibitions set forth in, or that
would otherwise be effective or applicable to Credit Parties under,
the Loan Documents. Notwithstanding the forbearance set forth
in the immediately preceding sentence, it is understood and agreed
by Credit Parties that Lender has not waived any existing or
anticipated Default or Event of Default (including, without
limitation, the Specified Defaults), and reserves all of its rights
or remedies in respect thereof, under the Loan Documents and
applicable law. During the Forbearance Period (and
thereafter), Lender shall be permitted to exercise any and all of
its rights and remedies under the Loan Documents to the extent
permitted under the Loan Documents, except as may be limited or
provided otherwise during the Forbearance Period pursuant to the
first sentence of this Section 2.
Section 3 . Termination . The Forbearance Period
shall immediately terminate and be of no further force or effect
whatsoever at 10:00 a.m. Pacific Time on the date of the
earliest to occur (the “ Forbearance Termination Date
”) of the following events (each, a “ Forbearance
Termination Event ”):
(a)
September 3, 2004;
(b)
commencement of any liquidation, bankruptcy, receivership,
assignment for the benefit of creditors, or similar case or
proceeding by or against any of Credit Parties or Subsidiary
Guaranty in a court of competent jurisdiction;
2
(c)
the date on which the Collateral Agent commences, or delivers any
notice to Credit Parties evidencing its intention to commence,
enforcement of its security interests in any of the Collateral by
taking action to collect, take possession of, or dispose of such
Collateral for the benefit of, on behalf of, or at the direction of
Foothill; and
(d)
the date on which Lender or the
Collateral Agent, as the case may be, delivers a notice to
Credit Parties declaring any d efault or e vent of d efault, other than the Specified
Defaults, under or in respect of the Eligible Credit
Facility.
Upon the occurrence of any
Forbearance Termination Event, the agreement of Lender to forbear
with respect to the exercise of any remedy provided for under or in
respect of the Loan Documents shall immediately terminate without
the requirement of any demand, presentment, protest or notice of
any kind, all of which Credit Parties expressly waive. Credit
Parties hereby agree that Lender may at any time after the
occurrence of any Forbearance Termination Event proceed to exercise
any and all rights and remedies that Lender now has or may in the
future have under the Loan Documents and applicable law in
connection with any or all of the Defaults and Events of Default
(including, without limitation, the Specified Defaults) that have
occurred and are continuing.
Section 4 . [Intentionally Omitted.]
Section 5 . Information . The Credit
Parties agree to deliver promptly to the Lender financial
information and other information regarding the Credit Parties
reasonably requested by the Lender (including, without limitation,
any portion of (i) the August 2004 valuation report of the Credit
Parties prepared by Houlihan Lokey Howard & Zukin and (ii) the
lien search of the Credit Parties conducted in August 2004 to the
extent, and only to the extent, disclosed to the
Noteholders).
Section 6. [Intentionally Omitted.]
Section 7. Continuing Effect . Except
as expressly provided herein or as hereafter may be modified, the
Eligible Credit Facility and the other Loan Documents shall
continue unchanged and in full force and effect, and all rights,
powers, and remedies of Lender and Credit Parties thereunder are
hereby expressly reserved. Except to the extent expressly set
forth herein, each Credit Party remains obligated by the
representations, warranties, covenants, and other provisions set
forth in the Eligible Credit Faciity and the other Loan Documents
to which it is a party.
Section 8 . Acknowledgments and Agreements
. Each Credit Party hereby unconditionally acknowledges,
affirms, and agrees that:
(a)
as of the close of business on August [11], 2004, the outstanding
amount of Loans under the Loan Documents is
$[ ];
(b)
Credit Parties are obligated to repay the Loans referred to in
clause (a) of this Section 8 without defense, offset, deduction or
credit of any kind or nature whatsoever;
(c)
no Credit Party has any Claims (as defined in Section 9) against
Lender in its capacity as “Lender” or as “ECF
Party” under the Eligible Credit Facility and the other Loan
Documents in respect of any matter relating to or arising under
this Forbearance Agreement or any of the Loan Documents;
3
(d)
nothing in this Forbearance Agreement shall create a contractual
restriction on Lender that would restrict Lender from assigning or
participating all or any portion of the Obligations under the terms
and conditions of the Eligible Credit Facility;
(e)
except as specifically set forth in this Forbearance Agreement,
Lender has not waived, forborne, modified, or othe
