**EXIHIBIT10.7**

 

**GUARANTYOF LEASE**

 

The undersigned (hereinafter referred to as“Guarantor”), as a material inducement to and in consideration of ARGPROPERTIES II, LLC, a California limited liability company, whose address isc/o Griffin Capital, 10940 Wilshire Boulevard, Suite 1600, Los Angeles,California 90024 (“Landlord”), entering into that certain Amended and RestatedMaster Lease (“Lease”) with ARG ENTERPRISES, INC., a California corporation(“Tenant”), dated as of May 11, 1998, hereby unconditionally, irrevocably andpersonally guarantees to and for the benefit of Landlord, and Landlord’ssuccessors and assigns, the full and timely payment and performance of all ofTenant’s duties, obligations and covenants under the Lease.  This Guaranty is a guaranty of payment andperformance and not of collection.

 

All payments to be made by Guarantor under thisGuaranty shall be made without deduction or offset and shall be madeimmediately upon demand by Landlord. This Guranty is absolute and unconditional and shall not be affected byLandlord’s failure or delay to enforce any of its rights or any waiver byLandlord, other than modifications or variations of the terms of the Leaseagreed to in writing by Landlord and Tenant or any waiver of Tenant’s andGuarantor’s obligations with respect to the Lease agreed to in writing byLandlord.

 

Guarantor’s obligations are independent of Tenant’sobligations under the Lease and a separate action or actions may be brought andprosecuted against Guarantor whether or not any action is brought againstTenant or Tenant is joined in any such action or actions.  If Tenant defaults under the Lease, Landlordcan proceed immediately against Guarantor or Tenant, or both, or Landlord canenforce against Guarantor or Tenant, or both, any rights that it has under theLease, this Guaranty or pursuant to applicable laws.  If the Lease terminates and Landlord has any rights it canenforce against Tenant after termination, Landlord can enforce those rightsagainst Guarantor without giving previous notice to Tenant or Guarantor orwithout making any demand on either of them. Guarantor hereby consents to any remedy pursued by Landlord to enforceits rights under the Lease, in whatever order such party may choose, includingany remedies which may affect or destroy Guarantor’s right of subrogation orthe right of Guarantor to proceed against Tenant for reimbursement.  Without limiting the generality of theforegoing, Guarantor hereby waives any rights Guarantor may have underCalifornia Civil Code Sections 2809, 2819, 2845, 2849 and 2850, as they may beamended or modified from time to time, and any similar or successor statutes.

 

Guarantor waives the right to require Landlord tofirst or concurrently: (1) proceed against Tenant or any other person or pursueany rights or remedies with respect to the Lease before proceeding againstGuarantor; (2) proceed against or exhaust any security that Landlord holds fromTenant; or (3) pursue any other remedy in Landlord’s power.  The liability of Guarantor shall not bereleased, discharged, affected or exonerated by any extension of time,indulgence, compromise, settlement or modification or variation of terms whichmay be extended by Landlord to Tenant (provided that Guarantor shall receivethe benefit of any modifications or variations of the terms of the Lease agreedto in writing by Landlord and Tenant or any waiver of Tenant’s and Guarantor’sobligations with respect to the Lease agreed to in writing by Landlord) andregardless of the release or discharge of Tenant by Landlord or by others or byoperation of law, and, unless agreed to in writing by Landlord, shall not bereleased, discharged, affected or exonerated by any assignment or sublease byTenant of its interest in the

 

 

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 Lease, nor shall the liabilityof Guarantor be released, discharged, affected or exonerated by the insolvency,bankruptcy (voluntary or involuntary), or reorganization of Tenant, or by thevoluntary or involuntary liquidation, sale or other disposition of all orsubstantially all of the assets of Tenant or by any assignment of the Lease byTenant or by any trustee, receiver or liquidator of Tenant or any consent whichLandlord may give to any such assignment, or by the release, substitution oraddition of any other guarantor.  Landlordand Tenant, without notice to or consent by Guarantor, may at any time or timesenter into such modifications, extensions, amendments or other covenantsrespecting the Lease as they may deem appropriate, and Guarantor shall not bereleased of its liability or released, discharged or exonerated thereby butshall continue to be fully liable for the payment and performance of allobligations and duties of Tenant under the Lease as so modified, extended oramended with the consent of Tenant.

 

Guarantor further agrees (1) to indemnify and holdharmless Landlord from and against any claims, damages, expenses or losses,including to the extent permitted by law, all reasonable attorney’s feesincurred by counsel of Landlord’s choice (whether or not litigation iscommenced), resulting from or arising out of any breach of any provision of theLease by Tenant or by reason of Tenant’s failure to perform any of itsobligations thereunder, and (2) to the extent permitted by law, to pay allcosts and expenses, including reasonable attorneys’ fees (whether or notlitigation is commenced) incurred by Landlord in enforcing this Guaranty.

 

Landlord’s rights under this Guaranty will not beexhausted by any action by Landlord until all of the obligations of Tenant topay rent and other sums under the Lease have been fully paid and performed andthe period of time has expired during which any payment made by Tenant orGuarantor to Landlord may be determined to be a Preferential Payment(hereinafter defined).  Guarantor furtheragrees that to the extent Tenant or Guarantor makes any payment to Landlord inconnection with the obligations of Tenant under the Lease and all or any partof such payment is subsequently invalidated, declared to be fraudulent orpreferential, set aside or required to be repaid by Landlord or paid over to atrustee, receiver or any other entity, whether under any bankruptcy act orotherwise (any such payment is hereinafter referred to as a “PreferentialPayment”), then this Guaranty shall continue to be effective or shall bereinstated, as the case may be, and, to the extent of such payment or repaymentby Landlord (but only to the extent of the then remaining liability ofGuarantor under this Guaranty), the obligations or part thereof intended to besatisfied by such Preferential Payment shall be revived and continued in fullforce and effect as if said Preferential Payment had not been made.

 

Notwithstanding any other provision of this Guarantyto the contrary, Guarantor agrees that until such time as the obligations andliabilities of Tenant to Landlord under or arising out of the Lease (whethernow existing or hereafter arising, voluntary of involuntary, whether or notjointly owed with others, direct or indirect, absolute or contingent,liquidated or unliquidated, and whether or not from time to time decreased orextinguished and later increased, created or incurred), including, withoutlimitations, Tenant’s obligations under the Lease to comply with certainprovisions of the Financing Documents, as such term is defined in the Lease(collectively, the “Obligations”) have been paid and performed in full and theperiod of time has expired during which any payment made by Tenant or Guarantorto Landlord on account of the Obligations may be determined to be aPreferential Payment, any claim or other rights which Guarantor may now have orhereafter acquire against Tenant or any other guarantor of all or any of theObligations that arise from the existence or performance of Guarantor’sobligations under 

 

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this Guaranty or otherwise (all such claims and rights are referred toas “Guarantor’s Conditional Rights”), including, without limitation, any rightof subrogation, reimbursement, exoneration, contribution, or indemnification,any right to participate in any claim or remedy of Landlord against Tenant orany collateral which Landlord now has or hereafter acquires, whether or notsuch claim, remedy or right arises in equity or under contract, statute or commonlaw, by any payment made hereunder or otherwise, including without limitation,the right to take or receive from Tenant, directly or indirectly, in cash orother property or by setoff or in any other manner, payment or security onaccount of such claim or other rights, shall be subordinate to Landlord’s rightto full payment and performance of the Obligations, and Guarantor shall notenforce any of Guarantor’s Conditional Rights during such period.  If, notwithstanding the foregoingprovisions, any amount shall be paid to Guarantor on account of any suchGuarantor’s Conditional Rights and either (a) such amount is paid to Guarantorat any time when any of the Obligations shall not have been paid or performedin full, or (b) regardless of when such amount is paid to Guarantor, anypayment made by Tenant to Landlord is at any time determined to be aPreferential Payment, then such amount paid to Guarantor shall be held in trustfor the benefit of Landlord and shall forthwith be paid to Landlord to becredited and applied upon the Obligations, whether matured or unmatured, insuch order as Landlord, in its sole and absolute discretion, shall determine.

 

Guarantor agrees to comply with all provisions of theLease and the Financing Documents applicable to Guarantor, including, withoutlimitation, any requirement for delivery of financial statements of Guarantorthereunder.  Without limiting theforgoing, Guarantor acknowledges that Landlord is relying on (and is anintended third party beneficiary of, as applicable) the representations andwarranties of Guarantor contained in the Lease and in the other TransactionDocuments (as defined in the Lease).

 

Guarantor assumes the responsibility to remaininformed of the financial condition of Tenant and of all other circumstancesbearing upon the risk of Tenant’s default, which reasonable inquiry wouldreveal, and agrees that Landlord shall have no duty to advise Guarantor ofinformation known to it regarding such condition or any such circumstances.  Landlord shall not be required to inquireinto the powers of Tenant or the officers, employees, partners or agents actingor purporting to act on its behalf, and any indebtedness made or created inreliance upon the professed exercise of such powers shall be guaranteed under thisGuaranty.  Guarantor hereby representsand warrants to Landlord that Guarantor has received a copy of the Lease, hasread or had the opportunity to read the Lease, and understands the terms of theLease.  The provisions in the Leaserelating to the execution of additional documents, legal proceedings byLandlord against Tenant, severability of the provisions of the Lease,interpretation of the Lease, notices, waivers (including waiver of a jurytrial), limitation on right of recovery against Landlord, disclaimer ofindividual liability, and the applicable laws which govern the interpretationof the Lease are incorporated herein in their entirety by this reference andmade a part hereof as though set forth in full herein; any reference in thoseprovisions to “Tenant” shall mean Guarantor and any reference in thoseprovisions to the “Lease” shall mean this Guaranty.

 

The liability of Guarantor shall not be affected byany repossession of the leased premises by Landlord (except to the extent theliability of Tenant is thereby affected), provided, however, that the netpayments received by Landlord after deducting all costs and expenses ofrepossessing and/or reletting the same, shall be credited from time to time byLandlord to the 

 

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account of Guarantor and Guarantor shall pay any balance owing toLandlord from time to time, immediately upon demand by Landlord.

 

No action or proceeding brought or instituted underthis Guaranty and no recovery in pursuance thereof shall be a bar or defense toany further action or proceeding which may be brought under this Guaranty byreason of any further default or defaults hereunder and/or under the Lease.

 

To the extent permitted by applicable law, Guarantorwaives its right to enforce any remedies (except remedies Tenant has as tenantonly) that Tenant now has, or later may have, against Landlord.  Guarantor waives any right to participate inany security now or later held by Landlord. Guarantor waives notice ofacceptance of this Guaranty, and all other notices in connection with thisGuaranty or in connection with the liabilities, obligations and dutiesguaranteed hereby, including notices to Guarantor of default by Tenant underthe Lease.  Guarantor hereby waivesdiligence, presentment, demand for performance, notice of nonperformance ornonpayment, protest, notice of protest, notice of dishonor, and notice ofacceptance of this Guaranty, and waives all notices of the existence, creation,or incurring of new or additional obligations. Guarantor hereby further waives and agrees not to assert or takeadvantage of: (a) any right or defense that may arise by reason of theincapacity, lack of authority, death or disability of Tenant or any otherperson; (b) any and all defenses based upon an election of remedies by Landlordwhich limits or destroys any subrogation rights Guarantor might otherwise have;or (c) any bankruptcy of Tenant.

 

If there is more than one Guarantor, the liability ofeach Guarantor shall be joint and several. Guarantor’s obligations under this Guaranty shall be binding onGuarantor’s legal representatives, heirs, successors and assigns.

 

If Tenant disposes of its interest in the Lease,“Tenant”, as used in this Guaranty, shall mean Tenant’s successors or assigns.  Assignment of the Lease by Landlord (aspermitted by the Lease) shall not affect this Guaranty.  In the event of an assignment of the Leaseby Landlord, the term “Landlord” as used in this Guaranty shall mean Landlord’ssuccessors or assigns.

 

All rights, powers and remedies of Landlord hereunderand under any other agreement now or at any time hereafter in force betweenLandlord and Guarantor relating to the Lease shall be cumulative and notalternative and such rights, powers and remedies shall be in addition to allrights, powers and remedies given to Landlord by law.

 

Any notice, request, demand, instruction or othercommunication to be given to any party hereunder shall be in writing and shallbe sent by registered or certified mail, return receipt requested, to Guarantorat the address provided under Guarantor’s signature below, and if to Landlordat the address provided above.  Noticesshall be deemed to have been given upon (i) hand delivery, (ii) one (1) dayafter being deposited with Federal Express or another reliable overnightcourier service or transmitted by facsimile telecopy, or (iii) forty-eight (48)hours after the deposit of the same in a United States mail post office box ina state to which the notice is addressed, or three (3) business days afterdeposit of same in any such post office box in a state other than the state towhich the notice is addressed, postage prepaid and addressed as set forth

 

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above.  A notice shall not be deemedgiven unless and until it shall have been given to all address(es) to whichnotices must be sent.  Any party maychange its street address(es) for notices by a notice given in accordance withthis Section.

 

If Landlord is required to enforce Guarantor’sobligations under this Guaranty by any legal action or proceedings, or if adispute arises in connection with the validity, enforceability, enforcement orconstruction of this Guaranty or any other matter relating to this Guaranty,the losing party shall pay all reasonable attorneys’ fees incurred by theprevailing party in such dispute.

 

Guarantor hereby represents and warrants that:  (a) Guarantor has received and reviewed theLease and is familiar with the terms thereof; (b) the execution of this Guarantywill not render Guarantor insolvent in any way; and (c) Landlord’s enteringinto the Lease materially benefits Guarantor and Guarantor is receiving fairconsideration for this Guaranty.

 

Any amount required to be paid by Guarantor hereundershall bear interest from the date due until the date paid to Landlord at thelesser of:  (x) twelve percent (12%) perannum; or (y) the maximum rate permitted by law.  All interest shall be compounded monthly and shall be payable toLandlord on demand.

 

Time is of the essence with respect to the performanceof Guarantor’s obligations hereunder.

 

This Guaranty contains the entire agreement ofGuarantor and Landlord with respect to the subject matter hereof.

 

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If any one or more of the provisions of this Guarantyshall be held to be invalid, illegal or unenforceable in any respect, suchinvalidity, illegality or unenforceability shall not affect any other provisionof this Guaranty, and this Guaranty shall be construed as if such invalid,illegal or unenforceable provision had never been contained herein.  This Guaranty shall be construed accordingto the laws of the State of California (“State”) without regard to conflicts oflaws principles.  By execution hereof,the undersigned specifically consents to this choice of law designation andagrees that all actions or proceedings arising directly, indirectly orotherwise in connection with, out of, related to, or from this Guaranty or theLease shall be litigated only in the courts located in the State, and theundersigned (i) consents and submits in advance to the exclusive and inpersonam jurisdiction of any state or federal court located within theState, (ii) waives any right to transfer or change the venue of litigationbrought against the undersigned, and (iii) agrees to service of process, to theextent permitted by law, by mail.

 

Dated as of May 11, 1998.

 

|   | GUARANTOR                                          |   |
|--------|----------------------------------------------------|--------|
|   |                                               |   |
|   | AMERICAN RESTAURANT GROUP, INC.,                   |   |
|   | a Delaware corporation                             |   |
|   |                                               |   |
|   |                                               |   |
|   | By                                                 |   |   |
|   |                                               |   |
|   | Its                                                |   |   |
|   |                                               |   |
|   | GUARANTOR’S ADDRESS FOR NOTICES:              |
|   |                                               |
|   | 4410 El Camino Real                                |
|   | Suite 201                                          |
|   | Los Altos, California 94022                        |
|   | Attn:  Legal  Department                      |
|   | Fax No.:   (650) 949-6420                     |
|   |                                               |   |
|   | With a copy to: ARG Enterprises, Inc.              |   |
|   | 6th Floor, 450 Newport Center Drive                |   |
|   | Newport Beach, CA 92660                            |   |
|   | Attn:  Chief  Financial Officer               |   |
|   | Fax No.:   (949) 721-8941                     |   |
|   |                                               |   |
|   | With a copy to: Stuart Anderson’s Restaurants |   |
|   | 4410 El Camino Real                                |   |
|   | Suite 201                                          |   |
|   | Los Altos, California 94022                        |   |
|   | Attn:   Director of Real Estate               |   |
|   | Fax No.:   (650) 949-6425                     |   |
|        |                                                    |        |  |  |  |  |

 

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** **

**CALIFORNIAALL-PURPOSE ACKNOWLEDGMENT**

** **

|                |              |                                                                  |
|---------------------|-------------------|-----------------------------------------------------------------------|
| STATE OF CALIFORNIA | )                 |                                                                  |   |
|                | )  ss.       |                                                                  |   |
| COUNTY OF           |              |                                                                  | ) |   |   |
|                |              |                                                                  |
| On                  |              | , before me,                                                          | , |
| Date                |              | Name and Title of Officer (e.g. “Jane Doe, Notary  Public”) |
|                |              |                                                                  |
| personally appeared | ,                 |
|                | Name of Signer(s) |
|                     |                   |                                                                       |  |  |  |  |  |  |  |  |

 
| o personally known to me – **OR**–

  | o | proved to me on the basis of satisfactory evidence  to be the  person(s) whose name(s) is/are subscribed to the within  instrument and acknowledged to me that he/she/they   executed the same in his/her/their authorized capacity(ies),   and that by his/her/their signature(s) on the instrument the person(s),   or the entity upon behalf of which the person(s)   acted, executed the instrument. |
|------------------------------------------------------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

WITNESS my handand official seal.

 

|                        |
|-----------------------------|
| Signature of Notary  Public |
|                        |

 

**OPTIONAL**

 

Though the data below is not required by law, it may prove valuable topersons relying on the document and could prevent fraudulent reattachment ofthis form.

 
| **CAPACITY(IES) CLAIMED BY SIGNER(S)** | **DESCRIPTION OF ATTACHED DOCUMENT** |
|----------------------------------------|--------------------------------------|
|                                   |                                 |

o Individual

o Corporate Officer

 

|                          |             |                       |
|-------------------------------|------------------|----------------------------|
| Title(s)                      |             | Title or Type of  Document |
|                          |             |
| o   Partner(s)           | o   Limited |                       |
|                          | o   General |                       |
|                          |             | Number of Pages            |
|                          |             |                       |
| o   Attorney-In-Fact     |             |                       |
| o   Trustee(s)           |             |                       |
| o   Guardian/Conservator |             |                       |
| o   Other:               |             |                       |   |
|                          |             |                       | Date of Document |
|                               |                  |                            |  |  |  |

 

Signer is Representing:

Name of Person(s) or Entity(ies)

 

|   |   |                              |
|--------|--------|-----------------------------------|
|   |   | Signer(s) Other Than  Named Above |
|   |   |                              |

 

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