EXECUTION COPY
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Agreement") is made and
entered into as of the 1st day of May, 1998, by and between Quincy's Realty,
Inc., an Alabama corporation (the "Assignor"), and I.M. Special, Inc., a
Delaware corporation (the "Assignee").
Reference is made to (i) that certain Loan Agreement, dated as of November
1, 1990, as amended by a First Amendment to Loan Agreement, dated as of November
15, 1991, and as further amended by a Second Amendment to Loan Agreement, dated
as of April 1, 1998, between Spardee's Realty, Inc. ("Spardee's") as borrower,
and Secured Restaurants Trust (the "Issuer") with respect to a loan in the
original principal amount of One Hundred Thirty Million Dollars ($130,000,000)
(the "Spardee's Loan Agreement"), and (ii) that certain Loan Agreement, dated as
November 1, 1990, as amended by a First Amendment to Loan Agreement, dated as of
November 15, 1991, and as further amended by a Second Amendment to Loan
Agreement, dated as of April 1, 1998, between Assignor, as borrower, and the
Issuer, in the original principal amount of Ninety-Five Million Dollars
($95,000,000) (the "Quincy's Loan Agreement", and collectively with the
Spardee's Loan Agreement, the "Loan Agreements"), and certain other agreements
and instruments relating to the Loan Agreements (the "SRT Financing Documents")
and certain other agreements and instruments executed as of the date hereof
pursuant to the Letter Agreement (as defined herein) (collectively with the SRT
Financing Documents, the "Documents"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Loan
Agreements.
Reference is also made to the Stock Purchase Agreement dated February 18,
1998 among Advantica Restaurant Group, Inc. ("Advantica"), Spartan Holdings,
Inc. ("Spartan"), Flagstar Enterprises, Inc. ("FEI"), and CKE Restaurants, Inc.
("Purchase Agreement") pursuant to which Spartan, as of April 1, 1998, sold to
CKE Restaurants, Inc. (the "Buyer") the stock of FEI (the "FEI Stock Sale").
Under the provisions of the Purchase Agreement, Advantica and Spartan were
required, among other things, as applicable, to deliver to Buyer evidence of the
release of FEI and Spardee's and their assets from any obligations and liens
relating to the SRT Financing Documents.
Concurrently with the closing of the FEI Stock Sale (the "Closing") and in
order to effect the release of certain obligations and liens relating to the SRT
Financing Documents in connection therewith, Advantica, Spartan, Spardee's and
the Assignor, together with the other requisite parties to the SRT Financing
Documents, effected a defeasance of the Mortgage Notes underlying the Loan
Agreements in accordance with the terms of such Loan Agreements (and certain
waivers, consents, and directions from the Controlling Party provided pursuant
to the terms and provisions of the SRT Financing Documents) (the "Defeasance
Transaction") and, pursuant to an Assignment and Assumption Agreement, dated as
of April 1, 1998, by and between Spardee's and the Assignor (the "Spardee's
Assignment Agreement"), the Assignor assumed all liabilities and obligations of
Spardee's and agreed to
perform and discharge all obligations of Spardee's under the Spardee's Loan
Agreement and the Mortgage Notes thereunder and any related Loan Documents. As a
result of (and after giving effect to) the Defeasance Transaction, among other
things, FEI and Spardee's and their assets were released from any obligations
and liens relating to the SRT Financing Documents, and the other Collateral
under the Collateral Assignment Agreement, as amended (other than the Borrower
Collateral (as defined in the Second Amendments to Loan Agreement)) was released
from any lien, security interest or encumbrance, charge or other claim of any
kind, character or nature whatsoever securing, arising out of or in any way
connected with or relating to the SRT Financing Documents.
In order to effect the releases and terminations contemplated by that
certain letter agreement dated April 1, 1998 among Advantica, Quincy's
Restaurants, Inc., Assignor and Financial Security Assurance Inc. ("FSA") (the
"Letter Agreement"), Assignee is required to assume all of the obligations and
take an assignment of the rights of Assignor under the Assignor's interest in
Loan Agreements and the respective Mortgage Notes thereunder and take an
assignment of the Assignor's interest in the Borrower Collateral. Concurrently
with the execution and delivery of this Agreement, Assignee shall receive title
to the Assignor's interest in the Borrower Collateral held by the Collateral
Agent subject to the first priority security interest of the Collateral Agent.
I. Assignment.
In consideration of the foregoing, the Assignor hereby transfers, conveys
and assigns to Assignee all of Assignor's right, title and interest in, to and
under the Documents, including without limitation, the Loan Agreements and the
respective Mortgage Notes thereunder and any related Loan Documents, as
applicable, and all of Assignor's right, title and interest in, to and under the
Borrower Collateral, including without limitation, each Defeasance Eligible
Investment and proceeds thereof. Assignee hereby accepts such transfer,
conveyance and assignment and assumes, in full, all liabilities, duties,
covenants, agreements and obligations and agrees to perform and discharge each
and every agreement, liability, duty, covenant and obligation of Assignor under
the Documents, including without limitation, the Loan Agreements and the
respective Mortgage Notes thereunder and any related Loan Documents, as
applicable. The transfer, conveyance and assignment of the Assignor's right,
title and interest in, to and under the Borrower Collateral made hereby is
intended to be an absolute transfer, conveyance and assignment.
This Assignment and Assumption Agreement shall automatically become
effective, without any further action of the undersigned required, upon its full
execution with the prior written consent of FSA.
II. Representations and Warranties.
Assignee represents and warrants as follows:
(a) Due Organization and Qualification. Assignor and Assignee are
corporations, duly organized, validly existing and in good standing under
the laws of
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the States of Alabama and Delaware, respectively and each is duly
qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charter, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as proposed to be conducted and the performance of
its obligations under this Agreement or any Loan Document, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render this Agreement or any Loan Document unenforceable
in any respect or would have a material adverse effect upon the
transaction.
(b) Power and Authority. Assignor and Assignee have all necessary
corporate power and authority to conduct their business as currently
conducted and as proposed to be conducted, to execute, deliver and perform
its obligations under this Agreement or any Loan Document and to
consummate the transaction.
(c) Due Authorization. The execution, delivery and performance of
this Agreement and, as applicable, the Loan Documents by Assignor and
Assignee have been duly authorized by all necessary corporate action and
do not require any additional approvals or consents or other action by or
any notice to or filing with any person, including, without limitation,
any governmental entity or the Assignor's and Assignee's respective
stockholders.
(d) Noncontravention. Neither the execution and delivery of this
Agreement or any Loan Document by the Assignor or Assignee, the
consummation of the transactions contemplated thereby nor the satisfaction
of the terms and conditions of this Agreement or any Loan Document,
(i) conflicts with or results in any breach or violation of any
provision of the certificate of incorporation or bylaws of either
the Assignor or Assignee or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Assignor or Assignee or any of
its properties, including regulations issued by an administrative
agency or other governmental authority having supervisory powers
over the Assignor or Assignee,
(ii) constitutes a default by the Assignor or Assignee under or a
breach of any provision of any loan agreement, mortgage, indenture
or other agreement or instrument to which the Assignor or Assignee
is a party or by which it or any of their properties is or may be
bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the assets of the Assignor or Assignee except as
otherwise expressly contemplated by this Agreement or any Loan
Document.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Assignor or Assignee or the
Borrower Collateral, or any of Assignor's or
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Assignee's properties or rights pending or, to their knowledge after
reasonable inquiry, threatened, which, in any case, if decided adversely
to either, would result in a material adverse change with respect to
either of them.
(f) Valid and Binding Obligations. This Agreement has been duly
executed and delivered by Assignor and Assignee and it constitutes their
legal, valid and binding obligations enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy; insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles.
(g) Good Title; Absence of Liens; Security Interest. Assignor is the
owner of, and has good and marketable title to, all Borrower Collateral
free and clear of all Liens (other than the Liens created by the Loan
Agreements) and has full right, corporate power and lawful authority to
assign, convey, transfer and pledge its interests in, to and under the
Borrower Collateral (and any documents which are a part thereof) and all
such substitutions therefor and additions thereto delivered under the Loan
Agreements. The Collateral Agent has a valid and perfected first priority
security interest in the Borrower Collateral free and clear of all Liens.
Upon transfer to Assignee, Assignee will have good and marketable title
free and clear of all Liens (other that the Liens created by the Loan
Agreements).
(h) Solvent Entity. After giving effect to the transactions
contemplated by this Agreement, each of Assignee and Assignor will have
sufficient capital to pay its debts as they become due. Neither Assignee
nor Assignor is engaged in any business, or about to engage in any
business or any transaction, for which it has, or will have after engaging
in such business or transaction, unreasonably small capital in relation to
such business or transaction. Neither Assignee nor Assignor intends to
incur, or believes that it will incur, additional debts that would be
beyond its ability to pay as such debts become due.
(i) No Intent To Defraud. Each of Assignor and Assignee has valid
business reasons for entering into the transactions contemplated by this
Agreement and has not entered into the transactions contemplated by this
Agreement or the Loan Agreements with any intent to hinder, delay or
defraud any entity to which Assignor or Assignee is or may become
indebted.
(j) Loan Agreement. The representations and warranties contained in
Sections 6.01, 6.02, 6.03, 6.04, 6.05 and 6.06 of the Loan Agreements are
true and correct on and as of the date hereof, as though made on and as of
the date hereof.
III. Covenants.
Assignee covenants and agrees that:
(i) Its capital is adequate for its business and undertakings.
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(ii) Other than with respect to this Agreement, it is not engaged
in any business transactions with Assignor or any affiliate.
(iii) At least one director of Assignee is not, and will not be, a
director, officer, employee or holder of any of the equity securities of
Assignor or any affiliate thereof.
(iv) Its funds and assets are not, and will not be, commingled with
those of Assignor or any other person.
(v) Its bylaws require it to maintain (a) correct and complete books
and records of account, and (b) minutes of the meetings and other
proceedings of its stockholders and board of directors.
(vi) It is solvent and will not be rendered insolvent by the
transactions contemplated by the Loan Agreements and Mortgage Notes
thereunder and any related Loan Documents and, after giving effect to such
transactions, it will not be left with an unreasonably small amount of
capital with which to engage in its business nor will it have intended to
incur, or believe that it has incurred, debts beyond its ability to pay
such debts as they mature. Assignee does not contemplate the commencement
of insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of itself or any of its assets.
(vii) All the outstanding shares of capital stock of Assignee are
owned by Spartan Holdings, Inc.
(viii) It will comply and perform all covenants set forth in the
Loan Documents, including, in particular, but without limitations, those
set forth in Article VI of the Loan Agreements.
(ix) It will not take any actions, or permit any actions to be
taken, with respect to the Borrower Collateral or otherwise, that would
cause a default under the Collateral Assignment Agreement.
(x) It will comply with its organizational documents.
IV. Security Interest.
As security for Assignee's obligations under the Loan Agreements,
including, without limitation, its obligations to pay to the Issuer the amounts
payable under the Mortgage Notes and under this Agreement, and the performance
of all of its representations, warranties, covenants, agreements and obligations
under this Agreement and under the Mortgage Notes, Assignee hereby expressly
grants to Issuer for the benefit of Financial Security and the Trustee, as
secured parties, a first priority security interest in and to all of Assignee's
right, title and interest in, to and under the Borrower Collateral and any
proceeds thereof.
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Assignee intends such grant to be prior to all others to the full extent
of applicable law and shall take all actions reasonably necessary to confer a
first priority perfected security interest in, to and under the Borrower
Collateral granted hereunder. It is the intention of Assignee that, with respect
to the Borrower Collateral, this Agreement shall constitute a security agreement
under applicable law, and the Issuer shall have all of the rights and remedies
of a secured party and creditor under the UCC and other applicable law as in
force in the relevant jurisdictions.
Assignee hereby agrees that the Collateral Agent has accepted delivery of
the Borrower Collateral on behalf of the Issuer and that the Issuer has pledged
and assigned all of its right, title and interest in the Borrower Collateral to
the Collateral Agent, for the benefit of Financial Security and the Trustee,
pursuant to the Collateral Assignment Agreement.
V. Miscellaneous.
The representations, warranties, covenants and agreements set forth in
this Agreement are made for the benefit of the Issuer, the Collateral Agent, the
Trustee and Financial Security and each of the Issuer, the Collateral Agent, the
Trustee and Financial Security shall be third party beneficiaries of this
Agreement.
This Agreement shall be construed in accordance with the laws of the State
of New York.
IN WITNESS WHEREOF, each party has caused this Assignment and Assumption
Agreement to be executed in its corporate name as of the day and year first
above written.
I.M. SPECIAL, INC.
By:_______________________________
Name:___________________________
Title: President and Treasurer
QUINCY'S REALTY, INC.
By:________________________________
Name:__________________________
Title: Vice President and Treasurer
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