**Exhibit 99.2**

 

**FIRST AMENDMENT TO LOAN AGREEMENT**

 

This FIRST AMENDMENT TO LOANAGREEMENT (this “First Amendment”), effective as of August 5, 2004 uponthe satisfaction of the conditions set forth herein, is hereby entered intoamong TCW SHARED OPPORTUNITY III, L.P. (“Lender”), and AmericanRestaurant Group, Inc., a Delaware corporation (“ARG”), ARG Enterprises,Inc., a California corporation (“Enterprises”) and ARG PropertyManagement Corporation, a California corporation (“Property Management”;and collectively with ARG and Enterprises, the “Borrowers”), and ARGTerra, Inc., a Delaware corporation (“Terra”; and collectively with theBorrowers, the “Credit Parties”).

 

**RECITALS**

 

**WHEREAS**,Credit Parties and Lender have executed and delivered that certain Loan Agreement,dated as of October 31, 2003 (the “Loan Agreement”); and

 

**WHEREAS**,Credit Parties have requested Lender to agree to amend Section 7.2 of the LoanAgreement, and Lender has agreed to such amendment, subject to the terms andconditions of this First Amendment.

 

**NOW,THEREFORE**, for good and valuable consideration, thereceipt and adequacy of which are hereby acknowledged, Credit Parties andLender do hereby agree as follows:

 

**SECTION 5. RELATION TO THE LOAN AGREEMENT; DEFINITIONS.**

 

**5.1****                                       Relationto Loan Agreement.**  This FirstAmendment constitutes an integral part of the Loan Agreement and shall bedeemed to be a Loan Document for all purposes. Upon the effectiveness of this First Amendment, on and after the datehereof each reference in the Loan Agreement to “this Agreement,” “hereunder,”“hereof,” or words of like import referring to the Loan Agreement, and eachreference in the other Loan Documents to “the Loan Agreement,” “thereunder,”“thereof,” or words of like import referring to the Loan Agreement, shall meanand be a reference to the Loan Agreement as amended hereby.

 

**5.2****                                       CapitalizedTerms.**  For all purposes of thisFirst Amendment, capitalized terms used herein without definition shall havethe meaning specified in the Loan Agreement.

 

**SECTION 6.  AMENDMENT TO LOAN AGREEMENT**.

 

**6.1****                                       Amendmentto Section 7.2.**

 

From and after the date hereof,Section 7.2 of the Loan Agreement is hereby amended by deleting such Sectionand replacing it with the following: 

 

**7.2          FoothillCredit Agreement Obligations**.  NoBorrower shall permit the aggregate principal amount of loans and Advances (asdefined in the Foothill Credit Agreement) outstanding under the Foothill CreditAgreement, together with all contingent reimbursement obligations with respectto letters of credit outstanding under the Foothill Credit Agreement, to exceed$17,500,000.

 

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**SECTION 7.  REPRESENTATIONS ANDWARRANTIES OF CREDIT PARTIES.**

 

**7.1****                                       CorporateOrganization and Authority.**

** **

(a)                                          EachCredit Party is a corporation duly organized and existing and in good standingunder the laws of its jurisdiction of formation and is duly qualified to dobusiness and in good standing in every jurisdiction in which the nature of thebusiness done or the property owned by it would make such qualification necessary.

 

(b)                                         EachCredit Party has all requisite power and authority to own and operate itsproperties, and to conduct its business as currently conducted and as currentlyproposed to be conducted.  Each CreditParty has all requisite power and authority necessary to enter into this FirstAmendment and to perform its obligations under this First Amendment.

 

**7.2****                                       CorporateProceedings; Validity of Amendment.** Each Credit Party has taken all corporate action necessary to be takenby it to authorize the execution and delivery of this First Amendment.   This First Amendment has been duly executedand delivered by each Credit Party and constitutes the legal, valid, andbinding obligation of each Credit Party, enforceable against each Credit Partyin accordance with its terms, except as enforcement may be limited by equitableprinciples or by bankruptcy, insolvency, reorganization, moratorium, or similarlaws relating to or limiting creditors’ rights generally.

 

**7.3****                                       NoViolations, Consents, or Approvals.** The execution, delivery, and performance by each Credit Party of thisFirst Amendment, and the consummation of the transactions contemplated hereby,do not and will not (i) violate any provision of federal, state, or local lawor regulation applicable to such Credit Party, the Governing Documents of suchCredit Party, or any order, judgment, or decree of any court or otherGovernmental Authority binding on such Credit Party, (ii) conflict with, resultin a breach of, or constitute (with due notice or lapse of time or both) adefault under any material contractual obligation of such Credit Party,including, without limitation, the Indenture and Foothill Credit Agreement, or(iii) require any approval of such Credit Party’s stockholders or any approvalor consent of any Person under any material contractual obligation of suchCredit Party.

 

**7.4****                                       Ratification and Confirmation of LoanDocuments.**  The Loan Agreement and all other LoanDocuments and all representations, warranties, terms, and conditions thereinremain in full force and effect, and each Credit Party hereby confirms andratifies each of the provisions of the Loan Agreement and the other LoanDocuments. 

 

**7.5****                                       BankDebt.**Upon the consummation of the transactions contemplated hereby,the Maximum Bank Debt Principal (as defined in the definition of “Bank Debt”set forth within the Intercreditor Agreement) shall not exceed $25,000,000.

 

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**SECTION 8.  MISCELLANY.**

 

**8.1****                                       Conditionto Effectiveness**.  The rights andobligations of the parties hereunder and the effectiveness of this FirstAmendment shall be subject to the fulfillment of the following conditionsprecedent, as reasonably determined by Lender: 

 

(a)                                          Lendershall have received duly executed and delivered counterparts of this FirstAmendment by Lender and Credit Parties;

 

(b)                                         Lendershall have received copies of each of the documents delivered by Credit Partiesto Wells Fargo Foothill, Inc. (“Foothill”) pursuant to Section 4.1 ofAmendment No. 6 (“Sixth Amendment”)to Foothill Credit Agreement; and

 

(c)                                          Eachof the conditions precedent set forth in Section 4.1(a), (b), (c) and (e) ofthe Sixth Amendment shall have been duly satisfied, or waived by Foothill.

 

**8.2****                                       Successorsand Assigns.**  This FirstAmendment shall be binding upon and inure to the benefit of the parties heretoand their respective successors and assigns.

 

**8.3****                                       Counterparts.**  This First Amendment may be executedsimultaneously in two or more counterparts, each of which shall be deemed to bean original but all of which shall constitute together but one and the sameinstrument.  Delivery of an executedcounterpart hereof by facsimile or electronic transmission shall be aseffective as delivery of a manually executed counterpart of this FirstAmendment.

 

**8.4****                                       GOVERNINGLAW. THE VALIDITY OF THIS FIRST AMENDMENT, THE CONSTRUCTION,INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETOWITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BEDETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THESTATE OF CALIFORNIA.**

 

**8.5****                                       Expenses.**  Credit Parties agree to pay the expenses ofLender in connection with the transactions contemplated by this FirstAmendment.

 

**8.6****                                       Release. **

** **

(a)                                          Each Credit Party, their respectivesuccessors-in-title, legal representatives, and assignees and, to the extentthe same is claimed by right of, through, or under any Credit Party, for theirpast, present, and future employees, agents, representatives, officers,directors, shareholders, and trustees, do hereby forever remise, release, anddischarge Lender, and Lender’s respective successors-in-title, affiliates,subsidiaries, legal representatives, and assignees, past, present, and futureofficers, directors, shareholders, trustees, agents, employees, consultants,experts, advisors, attorneys and other professionals (collectively hereinafterthe “Lender Parties”), from any and all manner of action and actions,cause and causes of action, defenses, counterclaims, suits, debts, dues, sumsof money, accounts, reckonings, bonds, bills, specialties, covenants,contracts, controversies, damages, judgments, expenses, executions, liens,claims of

 

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liens, claims of costs, penalties, attorneys’ fees, or any othercompensation, recovery, or relief (including subordination of claims) onaccount of any loss, liability, obligation, demand, or cause of action ofwhatever nature relating to, arising out of, or in connection with the LoanAgreement or any other Loan Document, including, but not limited to, acts,omissions to act, actions, negotiations, discussions, and events resulting inthe finalization and execution of this First Amendment, as, among, and betweenthe Credit Parties and the Lender Parties, such claims whether now accrued andwhether now known or hereafter discovered, from the beginning of time throughthe date hereof, and specifically including, without any limitation, any claimsof liability asserted or that could have been asserted with respect to, arisingout of, or in any manner whatsoever connected directly or indirectly with any“lender liability-type” claim.  For theavoidance of doubt, the release provided by this Section 4.6 is only applicableto the Lender Parties in their capacity as a “Lender” under the Loan Agreementand the other Loan Documents and is not applicable to the Lender Parties in anyother capacity.

 

(b)                                         Asto each and every claim released hereunder, Credit Parties represent that theyhave received the advice of legal counsel with regard to the releases containedherein, and having been so advised, each of them specifically waives thebenefit of the provisions of Section 1542 of the Civil Code of California:

 

A GENERALRELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECTTO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BYHIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.  

 

**8.7****                                      ****Ratification****.** Except as expressly amended hereby, anyconditions of the Loan Documents shall remain unamended and unwaived.  The amendments set forth herein shall belimited precisely as provided for herein to the provisions expressly amendedherein 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 anytransaction or further action on the part of the Credit Parties that wouldrequire the consent of Lender under the Loan Agreement or (ii) create a courseof conduct or dealing among the parties hereto.

 

**8.8****                                       Reservationof Rights**.  It is understood bythe Credit Parties that Lender has not waived any existing or anticipatedDefault or Event of Default, or any rights or remedies in respect thereof,under the Eligible Credit Facility, the Intercreditor Agreement, or any otheragreements, instruments, or documents executed and delivered in connectiontherewith or the transactions contemplated thereby (the “Eligible CreditFacility Documents”). Neither this First Amendment nor any action orinaction on the part of Lender shall be construed to constitute or represent(i) a commitment by Lender to restructure any indebtedness of any Credit Partyor (ii) an intention by Lender, except as expressly provided in this FirstAmendment, to waive, modify, or forbear from exercising any of its rights,powers, privileges, or remedies under the Eligible Credit Facility Documents orunder any other document or agreement, at law, in equity, or otherwise. EachCredit Party acknowledges, agrees, and confirms, except as expressly providedin this First Amendment, that no such commitment, waiver, modification, orforbearance has been offered, granted, extended, or agreed to by Lender.Nothing set forth in this First Amendment shall be construed so as to requireLender to agree to the

 

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terms of any modification proposed by any Credit Party to the EligibleCredit Facility Documents or any other document or agreement to which Lender isa party.

 

**SIGNATURE PAGES FOLLOW**

 

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**IN WITNESS WHEREOF**, each of the parties heretohas caused this First Amendment to be executed and delivered as of the datefirst written above by a duly authorized representative.

 
| ** ** | **AMERICAN  RESTAURANT GROUP, INC.,**     |
|------------|-------------------------------------------|
|       | a Delaware  corporation                   |
|       |                                      |
|       | By:                                       | /s/ Patrick  J. Kelvie |   |
|       |                                      | Patrick J.  Kelvie |
|       |                                      | Vice  President |
|       |                                      |   |
| ** ** | **ARG  ENTERPRISES, INC.,**               |
|       | a California  corporation                 |
|       |                                      |   |
|       | By:                                       | /s/ Patrick  J. Kelvie |   |
|       |                                      | Patrick J.  Kelvie |
|       |                                      | Vice  President |
|       |                                      |   |
| ** ** | **ARG PROPERTY  MANAGEMENT CORPORATION,** |
|       | a California  corporation                 |
|       |                                      |   |
|       | By:                                       | /s/ Patrick  J. Kelvie |   |
|       |                                      | Patrick J.  Kelvie |
|       |                                      | Vice  President |
|       |                                      |   |
| ** ** | **ARG  TERRA, INC.,**                     |
|       | a Delaware  corporation                   |
|       |                                      |   |
|       | By:                                       | /s/ Patrick  J. Kelvie |   |
|       |                                      | Patrick J.  Kelvie |
|       |                                      | Vice  President |

 

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| ** ** | **TCW SHARED OPPORTUNITY FUND III, L.P.**                |
|------------|----------------------------------------------------------|
| ** ** | ** **                                               |
|       | By: TCW Asset Management Company, its Investment Advisor |
|       |                                                     |
|       |                                                     |
|       | By:                                                      |   |   |
|       | Name:                                                    |
|       | Title:                                                   |
|       |                                                     |
|       | By:                                                      |   |   |
|       | Name:                                                    |
|       | Title:                                                   |
|            |                                                          |  |  |  |  |

 

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