EXHIBIT 10.32
FORM OF
AMENDMENT NUMBER ONE TO
GENERAL CONTINUING GUARANTY AND
SECURITY AGREEMENT
This AMENDMENT NUMBER ONE TO GENERAL CONTINUING GUARANTY AND SECURITY
AGREEMENT (this "Amendment") is entered into as of June 9, 1998, by and between
Foothill Capital Corporation, a California corporation ("Foothill"), and Family
Restaurants, Inc., a Delaware corporation ("FRI") with reference to the
following facts:
A. Foothill, on the one hand, and El Torito Restaurant's, Inc. ("El
Torito"), a Delaware corporation, Chi-Chi's, Inc., a Delaware
Corporation (collectively with El Torito, "Borrower"), FRI-MRD
Corporation, a Delaware corporation ("FRI-MRD"), and certain of their
Affiliates, on the other hand, heretofore have entered into that
certain Loan and Security Agreement, dated as of January 10, 1997, as
amended by that certain Amendment Number One to Loan and Security
Agreement, dated as of May 23, 1997, as amended by that certain
Amendment Number Two to Loan and Security Agreement, dated as of
August 12, 1997, as amended by that certain Amendment Number Three to
Loan and Security Agreement, dated as of April __, 1998, and as
amended by that certain Amendment Number Four to Loan and Security
Agreement, dated as of the date hereof (the "Fourth Amendment"),
(collectively, the "Loan Agreement");
B. Foothill and FRI have heretofore entered into that certain General
Continuing Guaranty, dated as of January 10, 1997 (the "Guaranty"),
pursuant to which FRI has guaranteed the obligations of Borrower to
Foothill under the Loan Agreement, and that certain Security
Agreement, dated as of January 10, 1997 (the "Security Agreement"),
pursuant to which FRI has collateralized its obligations under the
Guaranty;
C. Concurrently herewith, Borrower, FRI-MRD, and Foothill are entering
into the Fourth Amendment to permit, inter alia, FRI-MRD's issuance of
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new Senior Secured Discount Notes in the original principal amount of
up to $24,000,000 (yielding gross proceeds of approximately
$21,000,000) to be secured by a pledge of the Pledged HGI Collateral;
D. FRI has requested Foothill to amend the Guaranty and the Security
Agreement to permit the foregoing transactions; and
E. Foothill is willing to so modify the Guaranty and the Security
Agreement, each in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the above recitals and the mutual
premises contained herein, Foothill and FRI hereby agree as follows:
1. DEFINITIONS FOR THIS AMENDMENT.
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Any and all initially capitalized terms used herein shall have the
meanings ascribed thereto in the Security Agreement, as amended hereby. For
purposes of this Amendment only, the following initially capitalized terms shall
have the following meanings:
"Effective Date" means the date on which Foothill acknowledges, in
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writing, that each of the conditions contained in Section 4 have been fulfilled
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or waived.
2. AMENDMENTS TO THE GUARANTY.
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a. Section 21(c) of the Guaranty hereby is amended and restated
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in its entirety to read as follows:
(c) Except as otherwise provided below, (i) if, after the Closing
Date, Guarantor acquires any real or personal property or assets, Guarantor
shall grant to Guarantied Party first priority (except for Permitted Liens)
security interests in any or all of such real or personal property or
assets, and (ii) if, after the Closing Date, Guarantor forms or acquires
any additional Subsidiary, Guarantor shall (A) grant or cause to be granted
to Guarantied Party a first priority security interest in all Stock of such
Subsidiary (not including the Stock of HGI) owned by Guarantor or any
Subsidiary of Guarantor, (B) cause such Subsidiary, if it is a Restricted
Subsidiary, to guarantee payment and performance of the Obligations
pursuant to a written guaranty similar in form and substance to the
Guaranty (including similar representations, warranties, and covenants,
except for any provisions that are unique to Guarantor and therefore
inapplicable to such Restricted Subsidiary), and (C) except for HGI, cause
such Subsidiary, if it is a Restricted Subsidiary, to grant to Guarantied
Party first priority (except for Permitted Liens) security interests in any
or all of the real or personal property or assets of such Subsidiary
pursuant to a written security agreement similar in form and substance to
the Guarantor Security Agreement (including similar representations,
warranties, and covenants, except for any provisions that are unique to
Guarantor and therefore inapplicable to such Restricted Subsidiary).
3. AMENDMENTS TO THE SECURITY AGREEMENT.
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a. Section 1.1 of the Agreement hereby is amended by modifying
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the following definition:
"Collateral" means each of the following: the Accounts;
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Guarantor's Books; the Equipment; the General Intangibles; the Inventory;
the Negotiable Collateral; any money, or other assets of Guarantor which
now or hereafter come into the possession, custody, or control of Foothill;
and the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering
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any or all of the Collateral, and any and all Accounts, Guarantor's Books,
Equipment, General Intangibles, Inventory, Negotiable Collateral, money,
deposit accounts, or other tangible or intangible property resulting from
the sale, exchange, collection, or other disposition of any of the
foregoing, or any portion thereof or interest therein, and the proceeds
thereof; provided, however, that the Pledged HGI Collateral and the
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proceeds or products thereof shall not constitute Collateral.
"Negotiable Collateral" means all of Guarantor's present and
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future letters of credit, notes, drafts, instruments, Investment Property
(including the shares of stock of Subsidiaries of Guarantor, other than
HGI), documents, personal property leases (wherein Guarantor is the
lessor), chattel paper, and Guarantor's Books relating to any of the
foregoing.
b. Section 5.1 of the Security Agreement hereby is amended and
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restated in its entirety to read as follows:
5.1 LIENS. Create, incur, assume, or permit to exist, directly
or indirectly, any Lien on or with respect to any of its property or
assets, of any kind, whether now owned or hereafter acquired, or any income
or profits therefrom, except for Permitted Liens and the pledge of the
Pledged HGI Collateral pursuant to the Senior Secured Discount Note
Agreement.
4. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT.
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The effectiveness of the provisions of this Amendment is subject to
the fulfillment, to the satisfaction of Foothill and its counsel, of each of the
following conditions:
a. Foothill shall have received each of the following
documents, in form and substance satisfactory to Foothill and its counsel, duly
executed, and each such document shall be in full force and effect:
(1) this Amendment; and
(2) the Fourth Amendment.
b. All conditions to the effectiveness of Section 3 of the
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Fourth Amendment shall have been fulfilled or waived, and the same shall be in
full force and effect.
c. Foothill shall have received a certificate from the
Secretary of FRI attesting to the resolutions of FRI's Board of Directors
authorizing its execution, delivery, and performance of this Amendment and
authorizing specific officers of FRI to execute the same;
d. No injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the consummation of the
transactions contemplated herein shall have been issued and remain in force by
any governmental authority against Borrower, FRI-MRD, FRI, any other Guarantor,
Foothill, or any of their Affiliates; and
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e. All other documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been delivered or
executed or recorded and shall be in form and substance reasonably satisfactory
to Foothill and its counsel.
5. REPRESENTATIONS AND WARRANTIES. FRI hereby represents and
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warrants to Foothill that: (a) the execution, delivery, and performance of this
Amendment, of the Guaranty as amended by this Amendment, and of the Security
Agreement as amended by this Amendment, are within its corporate powers, have
been duly authorized by all necessary corporate action, and are not in
contravention of any law, rule, or regulation, or any order, judgment, decree,
writ, injunction, or award of any arbitrator, court, or governmental authority,
or of the terms of its charter or bylaws, or of any contract or undertaking to
which it is a party or by which any of its properties may be bound or affected;
(b) this Amendment, the Guaranty as amended by this Amendment, and the Security
Agreement as amended by this Amendment, constitute FRI's legal, valid, and
binding obligation, enforceable against FRI in accordance with their terms.
6. EFFECT ON GUARANTY. The Guaranty, as amended by this Amendment,
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shall be and remain in full force and effect in accordance with its respective
terms and hereby is ratified and confirmed in all respects. The execution,
delivery, and performance of this Amendment shall not operate as a waiver of or,
except as expressly set forth herein, as an amendment, of any right, power, or
remedy of Foothill under the Guaranty, as in effect prior to the date hereof.
7. EFFECT ON SECURITY AGREEMENT. The Security Agreement, as amended
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by this Amendment, shall be and remain in full force and effect in accordance
with its respective terms and hereby are ratified and confirmed in all respects.
The execution, delivery, and performance of this Amendment shall not operate as
a waiver of or, except as expressly set forth herein, as an amendment, of any
right, power, or remedy of Foothill under the Security Agreement, as in effect
prior to the date hereof.
8. MISCELLANEOUS.
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a. Upon the effectiveness of this Amendment, each reference in
the Guaranty to "this Guaranty", "hereunder", "herein", "hereof" or words of
like import referring to the Guaranty shall mean and refer to the Guaranty as
amended by this Amendment.
b. Upon the effectiveness of this Amendment, each reference in the
Loan Documents to the "Guaranty", "thereunder", "therein", "thereof" or words of
like import referring to the Guaranty shall mean and refer to the Guaranty as
amended by this Amendment.
c. Upon the effectiveness of this Amendment, each reference in
the Security Agreement to "this Agreement", "hereunder", "herein", "hereof" or
words of like import referring to the Security Agreement shall mean and refer to
the Security Agreement as amended by this Amendment.
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d. Upon the effectiveness of this Amendment, each reference in
the Loan Documents to the "Security Agreement", "thereunder", "therein",
"thereof" or words of like import referring to the Security Agreement shall mean
and refer to the Security Agreement as amended by this Amendment.
e. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing
any such counterpart. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.
FAMILY RESTAURANTS, INC.,
a Delaware corporation
By
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Title:
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FOOTHILL CAPITAL CORPORATION,
a California corporation
By
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Title:
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-S-1