Exhibit

10.9




AMENDMENT NO. 2 TO


LOAN AGREEMENT




This AMENDMENT NO. 2 TO LOAN AGREEMENT effective as of

November 13, 2002 (this “Second Amendment”) upon the satisfaction of the

conditions set forth herein, is hereby entered into among FOOTHILL CAPITAL

CORPORATION, a California corporation (“Lender”), and 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 ARG

Terra, Inc., a Delaware corporation (“Terra”; ARG, Enterprises, Property

Management, and Terra are collectively referred to as “Borrowers” and

individually as a “Borrower”).




RECITALS




WHEREAS, Borrowers and Lender executed and

delivered that certain Loan Agreement dated as of  December 17, 2001, as amended by Amendment No. 1 to Loan

Agreement effective as of June 28, 2002 (as further amended, modified, or

supplemented from time to time, the “Loan Agreement”);




WHEREAS, Borrowers have requested an extension

for the time period in which to deliver their projections under Section 6.3(c)

of the Loan Agreement;




WHEREAS,

Borrowers have

represented to Lender that they are in compliance with all aspects of the Loan

Agreement and the other Loan Documents, and have no knowledge of any Defaults

or Events of Default under the Loan Agreement or other Loan Documents, other

than their noncompliance with and the Event of Default under Section 7.20(a)(i)

(Minimum EBITDA) of the Loan Agreement with respect to the period ended

September 30, 2002 (the “Existing Default”) for which Lender is entitled to

exercise all of its rights and remedies under the Loan Documents; and




WHEREAS, Borrowers have requested that Lender

amend the existing Loan Agreement and waive the Existing Default and Lender has

agreed to make such amendments and waive the Existing Default, subject to the

terms and conditions of this Second Amendment;




NOW,

THEREFORE, for

good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,

Borrowers and Lender do hereby agree as follows:




SECTION 1.         RELATION TO THE LOAN AGREEMENT; DEFINITIONS.




1.1  Relation

to Loan Agreement.  This Second Amendment

constitutes an integral part of the Loan Agreement and shall be deemed to be a

Loan Document for all purposes.  Upon

the effectiveness of this Second Amendment, on and after the date hereof each

reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” or

words of like import referring to the Loan Agreement, and each reference in the

other Loan Documents to “the Loan Agreement,” “thereunder,” “thereof” or words

of like import referring to the Loan Agreement, shall mean and be a reference

to the Loan Agreement as amended hereby.





























 




1.2  Capitalized

Terms.  For all purposes of this Second Amendment,

capitalized terms used herein without definition shall have the meanings

specified in the Loan Agreement.




SECTION

2.         AMENDMENT TO LOAN AGREEMENT.




2.1  Amendment to Time Period for Delivery of Projections. 

Section 6.3(c) of the Loan Agreement is hereby amended

by deleting the phrase “within 30 days prior to the start of each of Borrowers’

fiscal years” and inserting in lieu thereof the phrase “prior to January 15th

of each of Borrowers’ fiscal years”.




2.2  No

Other Amendments.  Except as specifically amended

herein, the Loan Agreement and all other Loan Documents remain in full force

and effect, and are hereby ratified and confirmed.




SECTION 3.         WAIVER OF EXISTING DEFAULT; RESERVATION OF OTHER RIGHTS.




3.1  Acknowledgement

of Existing Default.  Borrowers acknowledge that the

Existing Default exists and the occurrence of the Existing Default entitles

Lender to exercise its rights and remedies under the Loan Documents.  Except for the Existing Default, Borrowers

represent and warrant that as of the date hereof no other Default or Event of

Default exists or has occurred under the Loan Documents.




3.2  Waiver

of Existing Default; Reservation of Other Rights.  Based

on the foregoing, and in reliance thereon, Lender hereby waives the Existing Default.  Except as provided herein, Lender reserves

all of its rights and remedies under the Loan Documents.




SECTION

4.         REPRESENTATIONS AND WARRANTIES

OF BORROWERS.




4.1  Corporate Organization and Authority.




(a)   Each Borrower is a corporation duly organized

and existing and in good standing under the laws of its jurisdiction of

formation and is duly qualified to do business and in good standing in every

jurisdiction in which the nature of the business done or the property owned by

it would make such qualification necessary.




(b)   Each Borrower has all requisite power and

authority to own and operate its properties, and to conduct its business as

currently conducted and as currently proposed to be conducted.  Each Borrower has all requisite power and

authority necessary to enter into this Second Amendment and to perform its

obligations under this Second Amendment.




4.2  Corporate

Proceedings; Validity of Amendment.  Each Borrower

has taken all corporate action necessary to be taken by it to authorize the

execution and delivery of this Second Amendment.   This Second Amendment has been duly executed and delivered by

each Borrower, and constitutes the legal, valid, and binding obligation of each

Borrower, enforceable against each Borrower in accordance with its terms.




 





























 




4.3  No

Default or Event of Default.  No event has

occurred and no condition exists which constitutes a (i) Default or an Event of

Default under the Loan Agreement or the other Loan Documents, other than the

Existing Default, or (ii) default or event of default, or could constitute a

default or event of default with the giving of notice or passage of time or

both, under the Indenture, and Eligible Credit Facility, or any other material

agreement to which any Borrower is a party.




4.4  No

Violations, Consents or Approvals.  The

execution, delivery, and performance by each Borrower of this Second Amendment

do not and will not (i) violate any provision of Federal, state, or local law

or regulation applicable to such Borrower, the Governing Documents of such Borrower,

or any order, judgment, or decree of any court or other Governmental Authority

binding on such Borrower, (ii) conflict with, result in a breach of, or

constitute (with due notice or lapse of time or both) a default under any

material contractual obligation of such Borrower, or (iii) require any approval

of such Borrower’s stockholders or any approval or consent of any Person under

any material contractual obligation of such Borrower.




4.5  Ratification

and Confirmation of Loan Documents.  The Loan Agreement

and all other Loan Documents and all representations, warranties, terms, and

conditions therein remain in full force and effect, and each Borrower hereby

confirms and ratifies each of the provisions of the Loan Agreement and the

other Loan Documents, including, without limitation, the representations and

warranties contained therein which Borrowers confirm are true and correct in

all material respects on the date hereof.




SECTION 5.         MISCELLANEOUS.




5.1  Conditions

to Effectiveness.  This Second Amendment shall not become

effective until Lender has received each of the following:




(a)   duly executed and delivered counterparts of

this Second Amendment by Lender and Borrowers;




(b)   evidence that the execution, delivery, and

performance of this Second Amendment have been duly authorized by all necessary

corporate action on the part of Borrowers;




(c)   consents, if any, required by the Indenture,

any Eligible Credit Facility, or any other agreement to which any Borrower is a

party; and




(d)   Borrowers shall have paid Lender a waiver and

amendment fee in the aggregate amount of $225,000, which fee shall be

nonrefundable and shall be deemed fully earned on the date paid.




5.2  Successors

and Assigns.  This Second Amendment shall be binding upon

and inure to the benefit of the parties hereto and their respective successors

and assigns.




5.3  Counterparts. 

This Second Amendment may be executed simultaneously in two or more

counterparts, each of which shall be deemed to be an original but all of which

shall constitute together but one and the same instrument.




 




 





























 




5.4  GOVERNING

LAW. THE VALIDITY OF THIS SECOND AMENDMENT, THE CONSTRUCTION,

INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO

WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE

DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE

STATE OF CALIFORNIA




5.5  Expenses. 

Borrowers agree to pay the expenses of Lender in connection with the

transactions contemplated by this Second Amendment (including, without

limitation, the fees and expenses of counsel for the Lender).




5.6  Release.




(a)   Each Borrower, its respective

successors-in-title, legal representatives, and assignees and, to the extent

the same is claimed by right of, through or under any Borrower, for its

respective past, present, and future employees, agents, representatives,

officers, directors, shareholders, and trustees, do hereby forever remise,

release, and discharge Lender, and Lender’s respective successors-in-title,

legal representatives, and assignees, past, present, and future officers,

directors, shareholders, trustees, agents, employees, consultants, experts,

advisors, attorneys, and other professionals and all other persons and entities

to whom Lender would be liable if such persons or entities were found to be

liable to Borrowers, or any of them (collectively hereinafter the “Lender

Parties”), from any and all manner of action and actions, cause and causes of

action, counterclaims, suits, debts, dues, sums of money, accounts, reckonings,

bonds, bills, specialties, covenants, contracts, controversies, damages,

judgments, expenses, executions, liens, claims of liens, claims of costs,

penalties, attorneys’ fees, or any other compensation, recovery, or relief on

account of any loss, liability, obligation, demand, or cause of action of

whatever nature relating to, arising out of, or in connection with the Loan

Agreement or any other Loan Document, including, but not limited to, acts,

omissions to act, actions, negotiations, discussions, and events resulting in

the finalization and execution of this Second Amendment, as, among, and between

the Borrowers and the Lender Parties, such claims whether now accrued and

whether now known or hereafter discovered, from the beginning of time through the

date hereof, and specifically including, without any limitation, any claims of

liability asserted or which could have been asserted with respect to, arising

out of, or in any manner whatsoever connected directly or indirectly with any

“lender liability-type” claim.




(b)   As to each and every claim released

hereunder, Borrowers represent that they have received the advice of legal

counsel with regard to the releases contained herein, and having been so

advised, each of them specifically waives the benefit of the provisions of

Section 1542 of the Civil Code of California which provide:




“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF

EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS

SETTLEMENT WITH THE DEBTOR.”




 




 





























 




5.7  Ratification.  Except as expressly amended, any conditions of the

Loan Documents shall remain unamended and unwaived.  The amendments set forth herein shall be limited precisely as

provided for herein to the provisions expressly amended herein and shall not

(i) be deemed to be a waiver of, amendment of, consent to or modification of

any other term or provision of any other document or of any transaction or

further action on the part of the Borrowers that would require the consent of

Lender under the Loan Agreement or (ii) create a course of conduct or dealing

among the parties hereto.




 




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intentionally blank]




 




 





























 




IN

WITNESS WHEREOF,

each of the parties hereto have caused this Second Amendment to be executed and

delivered by a duly authorized representative.




 




	

  AMERICAN RESTAURANT GROUP, INC.


  
	

  a Delaware corporation


  
	

   


  	

   


  
	

  By:


  	

   


  
	

  Title:


  	

  Vice President


  
	

   


  	

   


  
	

  ARG ENTERPRISES, INC.


  
	

  a California

  corporation


  
	

   


  	

   


  
	

  By:


  	

   


  
	

  Title:


  	

  Vice President


  
	

   


  	

   


  
	

  ARG PROPERTY MANAGEMENT

  CORPORATION,


  
	

  a California

  corporation


  
	

   


  	

   


  
	

  By:


  	

   


  
	

  Title:


  	

  Vice President


  
	

   


  	

   


  
	

  ARG TERRA, INC.


  
	

  a Delaware corporation


  
	

   


  	

   


  
	

  By:


  	

   


  
	

  Title:


  	

  Vice President


  
	

   


  	

   


  
	

  FOOTHILL CAPITAL CORPORATION,


  
	

  a California

  corporation


  
	

   


  	

   


  
	

  By:


  	

   


  
	

  Title: