Exhibit 10.52
Xxxxx 0, 0000
Xxxxxxxxx Restaurant Group, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Quincy's Restaurants, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Quincy's Realty, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
This Letter Agreement (this "Agreement") sets forth the conditions
precedent to the following releases and terminations (collectively, the
"Release"): (a) release of the SPE LOC (defined below); (b) termination of the
Reimbursement Agreement, dated as of April 1, 1998 (the "Reimbursement
Agreement"), between Advantica Restaurant Group, Inc. ("Advantica") and
Financial Security Assurance Inc. ("Financial Security"); (c) termination of the
Stock Pledge Agreement, dated as of November 1, 1990 (the "Quincy's Stock Pledge
Agreement"), between Quincy's Restaurants, Inc. and Secured Restaurants Trust
(the "Issuer"), as amended, and (d) release of Quincy's Realty, Inc.
("Quincy's") from all obligations as Borrower under each of the two Loan
Agreements, each dated as of November 1, 1990, as amended, and the Mortgage
Notes thereunder. One Loan Agreement is between Quincy's and the Issuer.
Quincy's has assumed all of the obligations of Spardee's Realty, Inc. under the
second Loan Agreement, and the Mortgage Notes thereunder, pursuant to an
Assignment and Assumption Agreement, dated as of April 1, 1998. The two Loan
Agreements are referred to herein as the "Loan Agreements."
Capitalized terms used herein but not defined herein shall have the
meanings given to such terms in the Loan Agreements.
On the date hereof, Advantica will provide two letters of credit to or
for the benefit of Financial Security from The Chase Manhattan Bank. One letter
of credit (the "Overcollateralization LOC") will have an initial stated amount
of $1 million and shall be available to be drawn by the Collateral Agent for the
benefit of Financial Security (i) to pay any expenses associated with the
transaction contemplated to be paid by the Borrower pursuant to the Loan
Agreements, if the Defeasance Eligible Investments deposited with the Collateral
Agent are insufficient to pay such costs and expenses, including any amounts due
and payable on the
Bonds, or (ii) if such letter of credit is not extended on each anniversary
hereof, to draw the full available amount prior to termination. Such
Overcollateralization LOC shall be returned for cancellation upon the return for
cancellation of the Policy. The second letter of credit (the "SPE LOC") shall
have an initial stated amount equal to $1 million and shall be drawable by
Financial Security in increments of $250,000 under the following circumstances.
If the SPE described below has not been formed and the Substitution (defined
below) and Release has not occurred by July 1, 1998, October 1, 1998, January 1,
1999 or April 1, 1999, Financial Security may make a drawing under the SPE LOC
on or after each such date for an amount equal to $250,000. The SPE LOC shall
not reinstate for any amount so drawn.
The conditions precedent consist of the following:
(i) Formation by Advantica of a single-purpose,
bankruptcy-remote entity (the "SPE") to be substituted for Quincy's as
the "Borrower" under the Loan Agreements and the Mortgage Notes (the
"Substitution"). The SPE shall meet all standard rating agency
requirements for special purpose entities in an "AAA/Aaa"rated
transactions, and Financial Security and its counsel shall have
reviewed the organizational documents of the SPE and confirmed that the
SPE is a single-purpose bankruptcy-remote entity;
(ii) The SPE shall have assumed in writing all obligations of
Quincy's under the existing Loan Agreements and the Mortgage Notes and
shall make all representations, warranties and covenants set forth in
the Loan Agreements and the Mortgage Notes related to the Borrower's
obligations thereunder and its operations as a special purpose entity
and maintenance of its single-purpose bankruptcy-remote nature;
(iii) Counsel to the SPE shall have delivered to Financial
Security , the Trustee and the Collateral Agent legal opinions, in form
and substance satisfactory to Financial Security, addressing matters
typically required in connection with formation of a special purpose
entity to serve as an Issuer in an "AAA/Aaa" rated mortgage backed
securities transaction, including opinions regarding enforceability of
the assumption of all obligations of the SPE as Borrower under the Loan
Agreements and the Mortgage Notes, corporate matters, preference
issues, nonconsolidation issues and fraudulent conveyance issues and
that the first priority perfected security interest of the Collateral
Agent in the Borrower Collateral will continue to have such status
after the Substitution;
(iv) No Event of Default exists under the Loan Agreements or
the Mortgage Notes;
(v) The owners of the equity interests in the SPE, or if the
SPE is a limited partnership or a limited liability company, the owners
of the special purpose entity which serves as the general partner or
the special purpose member, as applicable, shall execute a Stock Pledge
Agreement substantially in the form provided to Advantica on or prior
to the date of this Agreement, together with a legal opinion, in form
and substance satisfactory to Financial Security, with respect to the
enforceability thereof; and
(vi) Advantica shall have paid all costs and expenses of
Financial Security, the Trustee and the Collateral Agent incurred in
connection with the Substitution, including reasonable fees and
disbursements of legal counsel.
If the conditions precedent set forth above are satisfied in full,
Financial Security will give its written consent to terminate the Quincy's Stock
Pledge Agreement and the Reimbursement Agreement, to release the SPE LOC and to
the Substitution under the Loan Agreements and the Mortgage Notes.
[Signature page follows]
Your signature below indicates your agreement and acceptance of the
terms and conditions set forth above.
Yours truly,
Financial Security Assurance Inc.
By /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
General Counsel and Managing Director
Letter Agreement Acknowledged and
Agreed:
Advantica Restaurant Group Inc.
By /s/ Xxxxxxx X. Xxxxx Date: April 1, 1998
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Name Xxxxxxx X. Xxxxx
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Title Vice President and Treasurer
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Quincy's Restaurants, Inc.
By /s/ Xxxxxxx X. Xxxxx Date: April 1, 1998
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Name Xxxxxxx X. Xxxxx
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Title Vice President and Treasurer
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Quincy's Realty, Inc.
By /s/ Xxxxxxx X. Xxxxx Date: April 1, 1998
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Name Xxxxxxx X. Xxxxx
--------------------------------------------
Title Vice President and Treasurer
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