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EXHIBIT 10.38
EXECUTION COPY
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") dated as of
April l, 1998 among SPARTAN HOLDINGS, INC., a New York corporation (the
"Pledgor"), who owns all of the outstanding capital stock in I. M. Special,
Inc., a Delaware corporation (the "Pledged Entity"), FINANCIAL SECURITY
ASSURANCE INC., a New York stock insurance company ("Financial Security"), and
THE BANK OF NEW YORK, as collateral agent (the "Collateral Agent"), on behalf of
Financial Security. Capitalized terms used herein and not otherwise defined have
the meanings assigned to them in the Insurance Agreement (as defined below).
INTRODUCTORY STATEMENTS
The Pledgor is the sole shareholder of the Pledged Entity. Pursuant to an
Assignment and Assumption Agreement, dated May 1, 1998, the Pledged Entity has
assumed all obligations and responsibilities of Quincy's Realty, Inc.
("Quincy's") and has been substituted as the "Borrower" under:
(i) the Loan Agreement, dated as of November 1,
1990, between Quincy's Realty, Inc. and Secured Restaurants Trust
(the "Issuer"), as amended by a First Amendment to Loan
Agreement, dated as of November 1, 1991, and as further amended
by a Second Amendment to Loan Agreement, dated as of April 1,
1998, and the related Mortgage Notes (collectively, the "Quincy's
Loan Agreement"); and
(ii) the Loan Agreement, dated as of November 1,
1990, between Spardee's Realty, Inc. ("Spardee's") and the
Issuer, as amended by a First Amendment to Loan Agreement, dated
as of November 1, 1991, and as further amended by a Second
Amendment to Loan Agreement, dated as of April 1, 1998 and the
related Mortgage Notes, each, as assumed by Quincy's pursuant to
an Assignment and Assumption Agreement, made as of April 1, 1998,
by and between Quincy's and Spardee's (collectively, the
"Spardee's Loan Agreement").
(Each of the Quincy's Loan Agreement and the Spardee's Loan Agreement are
referred to as a "Loan Agreement" and together, as the "Loan Agreements").
Pursuant to the Insurance and Indemnity Agreement, dated as of
November 1,1990, between Financial Security and the Issuer (the "Insurance
Agreement"), Financial Security has issued its Financial Guaranty Insurance
Policy #50137A-N with respect to the Issuer's $225,000,000 initial aggregate
principal amount of 10 1/4% Guaranteed Secured Bonds Due 2000. The Collateral
Agent has succeeded The Citizens and Southern National Bank of South Carolina
(the "Previous Collateral Agent") as collateral agent under the Collateral
Assignment Agreement, dated as of November 1, 1990, among the Issuer, Financial
Security and the Previous Collateral Agent, as amended by the First Amendment to
Collateral Assignment Agreement, dated as of April 1, 1998 (as amended, the
"Collateral Assignment Agreement").
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In consideration of the premises and of the agreements herein
contained, the Pledgor, Financial Security and the Collateral Agent agree as
follows:
SECTION 1. SECURITY INTEREST. As security for the full and
complete performance of all of the obligations of the Pledged Entity under the
Loan Agreements (the "Obligations"), Pledgor hereby delivers, pledges and
assigns to the Collateral Agent on behalf of Financial Security, and creates in
the Collateral Agent on behalf of Financial Security, a first priority security
interest in all of the Pledgor's right, title and interest in, to and under its
shares of the Pledged Entity (collectively, the "Pledged Shares"), together with
all of Pledgor's rights and privileges with respect thereto, including without
limitation all dividends thereon, all proceeds, income and profits thereof and
all property received in exchange thereof or in substitution therefor (the
"Collateral").
SECTION 2. STOCK DIVIDENDS, OPTIONS OR OTHER ADJUSTMENTS. Until
the Termination Date (as defined in Section 17), the Pledgor shall deliver, as
Collateral, to the Collateral Agent, any and all additional shares of stock or
any other property of any kind distributable on or by reason of the Collateral,
whether in the form of or by way of stock dividends, warrants, total or partial
liquidation, conversion, prepayments, redemptions or otherwise. If any
additional shares of capital stock, instruments or other property a security
interest in which can be perfected only by possession by the Collateral Agent,
which are distributable on or by reason of the Collateral pledged hereunder,
shall come into the possession or control of the Pledgor, Pledgor shall
forthwith transfer and deliver such property to the Collateral Agent, as
Collateral hereunder.
SECTION 3. DELIVERY OF SHARE CERTIFICATES; STOCK POWERS.
Simultaneously with the delivery of this Pledge Agreement, the Pledgor is
delivering to the Collateral Agent all instruments and stock certificates
representing the Collateral, together with stock powers duly executed in blank
by Pledgor. Pledgor shall promptly deliver to the Collateral Agent, or cause the
Pledged Entity or any other entity issuing any Collateral to deliver directly to
the Collateral Agent, share certificates or other instruments representing any
Collateral acquired or received after the date of this Pledge Agreement with a
stock or bond power duly executed by Pledgor. If at any time either the
Collateral Agent or Financial Security notifies Pledgor that it requires
additional stock powers endorsed in blank, Pledgor shall, at its expense,
promptly execute in blank and deliver the requested power to the requesting
party.
SECTION 4. POWER OF ATTORNEY. Pledgor hereby constitutes and
irrevocably appoints the Collateral Agent and Financial Security, or either one
acting alone, with full power of substitution and revocation, as Pledgor's true
and lawful attorney-in-fact, with the power, after the occurrence of a Stock
Pledge Event (as defined in Section 10), to the full extent permitted by law, to
affix to any certificates and documents representing the Collateral the stock or
bond powers delivered with respect thereto, and to transfer or cause the
transfer of the Collateral, or any part thereof, on the books of the Pledged
Entity or other entity issuing any Collateral, to the name of the Collateral
Agent or Financial Security or any nominee, and thereafter to exercise, with
respect to such Collateral, all the rights, powers and remedies of an owner. The
power of attorney granted pursuant to this Pledge Agreement and all authority
hereby conferred are granted and conferred solely to protect Financial
Security's interest in the Collateral and shall not impose any duty upon the
Collateral Agent or Financial Security to exercise any power. This power of
attorney shall be irrevocable as one coupled with an interest until the
occurrence of the Termination Date.
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SECTION 5. INDUCING REPRESENTATIONS OF PLEDGOR.
(a) Pledgor represents and warrants to Financial Security that:
(i) The Pledged Shares are validly issued, fully
paid and nonassessable.
(ii) The Pledged Shares represent all of the issued
and outstanding capital stock of the Pledged Entity.
(iii) The Pledgor is the sole legal and beneficial
owner of the Pledged Shares, free and clear of all Liens (other
than the Lien created by this Pledge Agreement) and the Pledgor
has the unqualified power, right and authority to execute and
perform this Pledge Agreement.
(iv) No options, warrants or other agreements with
respect to the Collateral are outstanding.
(v) Any consent, approval or authorization of, or
designation or filing with, any authority on the part of the
Pledgor which is required in connection with the pledge and
security interest granted under this Pledge Agreement has been
obtained or effected.
(vi) Neither the execution and delivery of this
Pledge Agreement by the Pledgor, the consummation of the
transaction contemplated hereby nor the satisfaction of the xxxxx
and conditions of this Pledge Agreement:
(A) conflicts with or results in any
breach or violation of any provision of the
articles of incorporation or bylaws of the Pledgor
or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or
award currently in effect having applicability to
the Pledgor or any of its properties, including
regulations issued by an administrative agency or
other governmental authority having supervisory
powers over the Pledgor;
(B) conflicts or will conflict with,
constitutes or will constitute a default (or an
event which with the giving of notice or the
passage of time, or both, would constitute a
default) by the Pledgor under, or a breach of, or
contravenes or will contravene any provision of its
organizational documents, either Loan Agreement, or
any Mortgage Note (collectively, the "Borrower
Documents") or any loan agreement, mortgage,
indenture or other agreement or instrument to which
the Pledgor is a party or by which it or any of its
properties is or may be bound or affected; or
(C) results in or requires the
creation of any Lien upon or in respect of any of
the Pledgor's assets (other than the Lien created
by this Pledge Agreement).
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(vii) Upon the Pledgor's delivery of the Pledged
Shares to the Collateral Agent, the Collateral Agent, on behalf
of Financial Security, will have a valid, perfected first
priority Lien on the Collateral, enforceable as such against all
creditors of the Pledgor and against all Persons purporting to
purchase any of the Collateral from the Pledgor.
(b) Any damages payable due to a breach of this Section 6 are
limited to amounts payable (i) pursuant to a drawing under Irrevocable Letter of
Credit No. P-360919 issued by The Chase Manhattan Bank and dated April 1, 1998
and (ii) from the Collateral, including pursuant to any action taken with
respect to the Collateral pursuant to Section 10 hereof.
SECTION 6. OBLIGATIONS OF PLEDGOR.
(a) Pledgor hereby covenants and agrees as follows:
(i) Pledgor shall not incur, assume or guarantee
any indebtedness for money borrowed by the Pledged Entity.
(ii) Pledgor does not, and will not, assume
liability for any debts of the pledged Entity and does not, and
will not, guarantee any of the debts or obligations of the
Pledged Entity. Pledgor will not hold itself out as being liable
for the debts of the Pledged Entity.
(iii) Pledged Entity is not referred to as a
"department" or "division" in the incorporation or other internal
materials, records or documents of Pledgor.
(iv) Pledgor shall conduct its business solely in
its own name so as not to mislead others as to the identity of
the Pledged Entity with which those others are concerned and
particularly will use its best efforts to avoid the appearance of
conducting business on behalf of the Pledged Entity. Without
limiting the generality of the foregoing, all oral and written
communications, including, without limitation, letters, invoices,
purchase orders, contracts, statements and loan applications,
will be made solely in the name of the Pledgor.
(v) Pledgor will act solely in its corporate name
and through its duly authorized officers or agents in the conduct
of its business.
(vi) Where necessary and appropriate, Pledgor shall
disclose the nature of the transaction referred to above and the
independent corporate status of the Pledged Entity to creditors
of Pledgor, if any.
(vii) The annual financial statements of Pledgor,
including consolidated financial statements, if any, will
disclose the effects of Pledgor's transactions in accordance with
generally accepted accounting principles and will disclose that
the assets of the Pledged Entity are not available to pay any
creditors of Pledgor.
(viii) The resolutions, agreements and other
instruments of Pledgor, if any, underlying the transactions
described in this Pledge Agreement will be continuously
maintained by Pledgor as the official records.
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(ix) Pledgor will use its best efforts to maintain
an arm's-length relationship with the Pledged Entity.
(x) Pledgor will use its best efforts to keep its
assets and its liabilities wholly separate from those of the
Pledged Entity.
(xi) Except for actions taken by it as the sole
shareholder of the Pledged Entity, Pledgor will not direct, or
otherwise control, the ongoing business decisions of the Pledged
Entity.
(b) Any damages payable due to a breach of this Section 6 are
limited to amounts payable (i) pursuant to a drawing under Irrevocable Letter of
Credit No. P-360919 issued by The Chase Manhattan Bank and dated April 1, 1998
and (ii) from the Collateral, including pursuant to any action taken with
respect to the Collateral pursuant to Section 10 hereof.
SECTION 7. FURTHER COVENANTS; CERTAIN VOTING RIGHTS.
(a) Pledgor hereby further covenants and agrees as follows:
(i) The Pledgor will not sell, transfer or convey
any interest in, or suffer or permit any Lien or encumbrance to
be created upon or with respect to, any of the Collateral (other
than as created under this Pledge Agreement) during the term of
this Pledge Agreement.
(ii) The Pledgor will, at its own expense, at any
time and from time to time at the request of the Collateral Agent
or Financial Security, do, make, procure, execute and deliver all
acts, things, writings, assurances and other documents as may be
reasonably requested by the Collateral Agent or Financial
Security to preserve or establish Financial Security's Lien on
the Collateral.
(iii) The Pledgor has not and will not take any
action which would cause the Pledged Entity to issue any other
capital stock, without the prior written consent of Financial
Security. Any such issuance shall be subject to this Pledge
Agreement.
(iv) The Pledgor will not consent to any amendment
of the Pledged Entity's Certificate of Incorporation or Bylaws
without the prior written consent of Financial Security.
(v) The Pledgor will not voluntarily permit the
Pledged Entity to engage in any dissolution, insolvency
proceeding, liquidation, consolidation, merger, asset sale,
transfer of ownership or amendment of organic documents without
the prior written consent of Financial Security.
(vi) Pledgor will not file or cause to be filed a
voluntary petition in bankruptcy against the Pledged Entity, nor
seek substantive consolidation of the assets and liabilities of
the Pledged Entity and Pledgor in any bankruptcy or insolvency
proceeding, for one year and one day after maturity of all debt
of the Pledged Entity under the Loan Agreements.
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(b)(i) Subject to Section 8, so long as no Stock Pledge Event (as
defined in Section 10) exists, Pledgor shall be entitled to vote its Pledged
Stock and to give consents, waivers or ratifications in respect of its Pledged
Stock;
(ii) provided, however, that until the date
described in 7(a)(vi), no vote shall be cast, or consent, waiver
or ratification given, by Pledgor with respect to any matter
described in Section 7(a) hereof, any matter prohibited by the
organizational documents of the Pledged Entity in effect as of
the date hereof or as amended with the prior written consent of
Financial Security, any matter relating to the Loan Agreements,
or any matter relating to the Borrower Collateral (as defined in
the Loan Agreements) without the prior written consent of
Financial Security.
All rights of Pledgor to vote and give consents, waivers and
ratifications pursuant to (b)(i) above shall cease if a Stock Pledge Event
exists, except to the extent that Financial Security in writing otherwise
agrees.
SECTION 8. VOTING PROXY. Pledgor hereby grants to the Collateral
Agent on behalf of Financial Security an irrevocable proxy to vote the Pledged
Shares with respect to any matter described in Section 7(b)(ii) above, which
proxy is coupled with an interest and shall continue until the Termination Date.
Pledgor represents and warrants that it has directed the Pledged Entity to
reflect the Collateral Agent's right to vote the Collateral, on behalf of
Financial Security, on the Pledged Entity's books. Upon the request of the
Collateral Agent or Financial Security, Pledgor shall deliver to the Collateral
Agent such further evidence of such irrevocable proxy or such further
irrevocable proxy to vote the Collateral as the Collateral Agent or Financial
Security may reasonably request. The Collateral Agent shall exercise all such
rights to vote the Collateral granted hereunder in accordance with the written
directions given by Financial Security.
SECTION 9. RIGHTS OF FINANCIAL SECURITY. At any time and without
notice, Financial Security may, upon providing the Collateral Agent with the
full amount necessary to carry out such direction, direct the Collateral Agent
to discharge any taxes, liens, security interests or other encumbrances levied
or placed on the Collateral, or pay for the maintenance and preservation of the
Collateral. The Collateral Agent shall have no duty or obligation to follow any
direction provided in this Section 9 unless Financial Security has provided the
Collateral Agent with the full amount necessary to carry out such direction.
SECTION 10. REMEDIES UPON EVENT OF DEFAULT.
(a) If a material default exists under this Pledge Agreement or
an "Event of Default" exists under either Loan Agreement, any Mortgage Note or
the Insurance Agreement (any such event, a "Stock Pledge Event"), Financial
Security may, directly or through the Collateral Agent, without notice to
Pledgor:
(i) cause the Collateral to be transferred to the
Collateral Agent's name or Financial Security's name or in the
name of nominees of either and thereafter exercise as to such
Collateral all of the rights, powers and remedies of an owner;
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(ii) collect by legal proceedings or otherwise all
amounts now or hereafter payable on account of the Collateral,
and hold all such sums as part of the Collateral, or apply such
sums to the payment of the Obligations in such manner and order
as Financial Security may decide, in its sole discretion; and
(iii) enter into any extension, subordination,
reorganization, deposit, merger, or consolidation agreement, or
any other agreement relating to or affecting the Collateral, and
in connection therewith deposit or surrender control of the
Collateral thereunder, and accept other property in exchange
therefor and hold and apply such property or money so received in
accordance with the provisions hereof.
(b) In addition to all the rights and remedies of a secured party
under the Uniform Commercial Code, Financial Security shall have the right, and
without demand of performance or other demand, advertisement or notice of any
kind, except as specified below, to or upon Pledgor or any other person (all and
each of which demands, advertisements and/or notices are hereby expressly waived
to the extent permitted by law), to proceed forthwith, or direct the Collateral
Agent to proceed forthwith, to collect, receive, appropriate and realize upon
the Collateral, or any part thereof and to proceed forthwith to sell, assign,
give an option or options to purchase, contract to sell, or otherwise dispose of
and deliver the Collateral or any part thereof in one or more parcels in
accordance with applicable securities laws and in a manner designed to ensure
that such sale will not result in a distribution of the Pledged Shares in
violation of the Securities Act and on such terms (including, without
limitation, a requirement that any purchaser of all or any part of the
Collateral shall be required to purchase any securities constituting the
Collateral solely for investment and without any intention to make a
distribution thereof) as Financial Security, in its sole and absolute discretion
deems appropriate without any liability for any loss due to decrease in the
market value of the Collateral during the period held. If any notification of
intended disposition of the Collateral is required by law, such notification
shall be deemed reasonable and properly given if mailed to Pledgor, postage
prepaid, at least 10 days before any such disposition at the address indicated
in Section 20. Any disposition of the Collateral or any part thereof may be for
cash or on credit or for future delivery without assumption of any credit risk,
with the right of Financial Security to purchase all or any part of the
Collateral so sold at any such sale or sales, public or private, free of any
equity or right of redemption in Pledgor, which right of equity is, to the
extent permitted by applicable law, hereby expressly waived or released by
Pledgor.
(c) Financial Security, in its sole discretion, may elect to
obtain or cause the Collateral Agent to obtain the advice of any independent
nationally known investment banking firm which is a member firm of the New York
Stock Exchange, with respect to the method and manner of sale or other
disposition of any of the Collateral, the best price reasonably obtainable
therefor, the consideration of cash and/or credit terms, or any other details
concerning such sale or disposition; costs and expenses of obtaining such advice
shall be for the account of the Pledged Entity. Financial Security, in its sole
discretion, may elect to sell, or cause the Collateral Agent to sell, the
Collateral on any credit terms which it deems reasonable; the out-of-pocket
costs and expenses of such sale shall be for the account of the Pledged Entity.
The sale of any of the Collateral on credit terms shall not relieve the Pledged
Entity of its liabilities with respect to the Obligations. All payments received
by the Collateral Agent, if any, and Financial Security in respect of any sale
of the Collateral shall be applied to the Obligations as and when such payments
are received. Pledgor shall not have an obligation to register the Pledged
Shares under the Securities Act or any state securities laws.
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(d) Pledgor recognizes that it may not be feasible to effect a
public sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act and that it may be necessary to sell privately
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view for the distribution or resale thereof. Pledgor agrees that private
sales may be at prices and other terms less favorable to the seller than if the
Collateral were sold at public sale and that neither the Collateral Agent nor
Financial Security has any obligation to delay the sale of any Collateral for
the period of time necessary to permit the registration of the Collateral for
public sale under the Securities Act. Pledgor agrees that a private sale or
sales made under the foregoing circumstances shall be deemed to have been made
in a commercially reasonable manner.
(e) If any consent, approval or authorization of any state,
municipal or other governmental department, agency or authority shall be
necessary to effectuate any sale or other disposition of the Collateral, or any
partial disposition of the Collateral, Pledgor will execute all such
applications and other instruments as may be required in connection with
securing any such consent, approval or authorization and will otherwise use its
best efforts to secure the same.
(f) Upon any sale or other disposition, the Collateral Agent,
acting at the direction of Financial Security, or Financial Security, shall have
the right to deliver, assign and transfer to the purchaser thereof the
Collateral so sold or disposed of. Each purchaser at any such sale or other
disposition (including Financial Security) shall hold the Collateral free from
any claim or right of whatever kind, including any equity or right of redemption
of Pledgor. Pledgor specifically waives, to the extent permitted by applicable
law, all rights of redemption, stay or appraisal which it may have under any
rule of law or statute now existing or hereafter adopted.
(g) Neither the Collateral Agent nor Financial Security shall be
obligated to make any sale or other disposition of the Collateral, unless the
terms thereof shall be satisfactory to Financial Security. The Collateral Agent
or Financial Security may, without notice or publication, adjourn any private or
public sale and, upon 10 days' prior notice to Pledgor, hold such sale at any
time or place to which the same may be so adjourned. In case of any sale of all
or any part of the Collateral, on credit or future delivery, the Collateral so
sold may be retained by the Collateral Agent or Financial Security until the
selling price is paid by the purchaser thereof, but neither the Collateral Agent
nor Financial Security shall incur any liability in case of the failure of such
purchaser to take up and pay for the property so sold and, in case of any such
failure, such property may again be sold as herein provided.
(h) Except as otherwise expressly provided herein, all of the
rights and remedies herein provided, including, but not limited to the
foregoing, shall be cumulative and not exclusive of any other remedies provided
by law or any other agreement, and shall be enforceable alternatively,
successively or concurrently as Financial Security may deem expedient.
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SECTION 11. LIMITATION ON LIABILITY.
(a) Neither the Collateral Agent nor Financial Security, nor any
of their respective directors, officers or employees, shall be liable to Pledgor
or to the Pledged Entity for any action taken or omitted to be taken by it or
them hereunder, or in connection herewith, except that the Collateral Agent and
Financial Security shall each be liable for its own negligence, bad faith or
willful misconduct.
(b) The Collateral Agent shall incur no liability to Financial
Security except for the Collateral Agent's negligence or willful misconduct in
carrying out its duties hereunder.
(c) The Collateral Agent shall be protected and shall incur no
liability to any party in relying upon the accuracy, acting in reliance upon the
contents, and assuming the genuineness of any notice, demand, certificate,
signature, instrument or other document the Collateral Agent reasonably believes
to be genuine and to have been duly executed by the appropriate signatory, and
(absent actual knowledge to the contrary) the Collateral Agent shall not be
required to make any independent investigation with respect thereto. The
Collateral Agent shall at all times be free independently to establish to its
reasonable satisfaction, but shall have no duty to independently verify, the
existence or nonexistence of facts that are a condition to the exercise or
enforcement of any right or remedy hereunder.
(d) The Collateral Agent may consult with qualified counsel,
financial advisors or accountants and shall not be liable for any action taken
or omitted to be taken by it hereunder in good faith and in accordance with the
written advice of such counsel, financial advisors or accountants.
(e) The Collateral Agent shall not be under any obligation to
exercise any of the remedial rights or powers vested in it by this Pledge
Agreement unless it shall have received reasonable security or indemnity
satisfactory to the Collateral Agent against the reasonable costs, expenses and
liabilities which it might incur.
SECTION 12. PERFORMANCE OF DUTIES. The Collateral Agent shall
have no duties or responsibilities except those expressly set forth in this
Pledge Agreement, subject to the provisions of this Pledge Agreement or as
directed by Financial Security in accordance with this Pledge Agreement. The
Collateral Agent on behalf of Financial Security and its successors and assigns
shall have no obligation in respect of the Collateral, except to use reasonable
care in holding the Collateral and to hold and dispose of the same in accordance
with the terms of this Pledge Agreement.
SECTION 13. APPOINTMENT AND POWERS. Subject to the terms and
conditions hereof, Financial Security appoints The Bank of New York as its
Collateral Agent and The Bank of New York accepts such appointment and agrees to
act as Collateral Agent on behalf of Financial Security to maintain custody and
possession of the Collateral and to perform the other duties of the Collateral
Agent in accordance with the provisions of this Pledge Agreement. The Collateral
Agent shall, subject to the other terms and provisions of this Pledge Agreement,
act upon and in compliance with Financial Security's written instructions
delivered pursuant to this Pledge Agreement as promptly as possible following
receipt of such written instructions. Receipt of written instructions shall not
be a condition
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to the exercise by the Collateral Agent of its express duties hereunder, unless
this Pledge Agreement provides that the Collateral Agent is permitted to act
only following receipt of such instructions.
SECTION 14. SUCCESSOR COLLATERAL AGENT.
(a) Merger. Any Person into which the Collateral
Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its corporate
trust business and assets as a whole or substantially as a whole,
or any Person resulting from any such conversion, merger,
consolidation, sale or transfer to which the Collateral Agent is
a party, shall (provided it is otherwise qualified to serve as
the Collateral Agent hereunder) be and become a successor
Collateral Agent hereunder and be vested with all of the title to
and interest in the Collateral and all of the trusts, powers,
immunities, privileges and other matters as was its predecessor
without the execution or fling of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
(b) Resignation. The Collateral Agent and any
successor Collateral Agent may resign only (i) with the 45 days'
prior written notice to Financial Security or (ii) if the
Collateral Agent is unable to perform its duties hereunder as a
matter of law as evidenced by an opinion of counsel acceptable to
Financial Security. Upon the occurrence of (i) or (ii) above, the
Collateral Agent shall give notice of its resignation by
registered or certified mail to Pledgor (with a copy to Financial
Security). Any resignation by the Collateral Agent shall take
effect only upon the date which is the later of (x) the effective
date of the appointment by Financial Security of a successor
Collateral Agent and the acceptance in writing by such successor
Collateral Agent of such appointment and (y) the date on which
the Collateral is delivered to the successor Collateral Agent.
Notwithstanding the preceding sentence, if by the contemplated
date of resignation specified in the written notice of
resignation delivered (as described above) no successor
Collateral Agent has been appointed Collateral Agent or becomes
the Collateral Agent pursuant to subsection (d) below, the
resigning Collateral Agent may petition a court of competent
jurisdiction for the appointment of a successor.
(c) Removal. The Collateral Agent may be removed by
Financial Security at any time, with or without cause, by an
instrument or concurrent instruments in writing delivered to the
Collateral Agent. Any removal pursuant to the provisions of this
subsection (c) shall take effect only upon the later to occur of
(i) the effective date of the appointment of a successor
Collateral Agent and the acceptance in writing by such successor
Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions
hereof and (ii) the date on which the Collateral is delivered to
the successor Collateral Agent.
(d) Appointment of and Acceptance by Successor.
(i) Financial Security shall have
the sole right to appoint each successor Collateral
Agent. Every successor Collateral Agent appointed
hereunder shall execute, acknowledge and deliver to
its predecessor and to Financial Security and
Pledgor an instrument in writing accepting such
appointment hereunder and the relevant predecessor
shall execute, acknowledge and deliver such other
documents
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and instruments as will effectuate the delivery of
all Collateral to the successor Collateral Agent,
whereupon such successor, without any further act,
deed or conveyance, shall become fully vested with
all the estates, properties, rights, powers, duties
and obligations of its predecessor. Such
predecessor shall, nevertheless, on the written
request of Financial Security, execute and deliver
an instrument transferring to such successor all
the estates, properties, rights and powers of such
predecessor hereunder.
(ii) Every predecessor Collateral
Agent shall assign, transfer and deliver all
Collateral held by it as Collateral Agent
hereunder to its successor as Collateral Agent.
(iii) Should any instrument in
writing from Pledgor or the Pledged Entity be
reasonably required by a successor Collateral Agent
for more fully and certainly vesting in such
successor the estates, properties, rights, powers,
duties and obligations vested or intended to be
vested hereunder in the Collateral Agent, any and
all such written instruments shall, at the request
of the successor Collateral Agent, be forthwith
executed, acknowledged and delivered by Pledgor.
(iv) The designation of any
successor Collateral Agent and the instrument or
instruments removing any Collateral Agent and
appointing a successor hereunder, together with all
other instruments provided for herein, shall be
maintained with the records relating to the
Collateral and, to the extent required by
applicable law, filed or recorded by the successor
Collateral Agent in each place where such filing or
recording is necessary to effect the transfer of
the Collateral to the successor Collateral Agent or
to protect and preserve the security interests
granted hereunder.
SECTION 15. REIMBURSEMENT AND INDEMNIFICATION.
(a) The Pledgor hereby agrees to pay, and to protect, indemnify
and save harmless Financial Security and its officers, directors, shareholders,
employees, agents and each Person, if any, who controls Financial Security
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act from and against, any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including, without limitation, the costs and expenses of
defending against any claim of liability) of any nature arising out of or in
connection with this Pledge Agreement, except such loss, liabilities, actions,
suits, judgments, demands, damages, costs or expenses as shall result from the
negligence, bad faith or willful misconduct of Financial Security or its
officers, directors, shareholders, employees, agents and each Person, if any,
who controls Financial Security within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act; PROVIDED, however, that, any
provision herein to the contrary notwithstanding:
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(i) Pledgor's obligations pursuant to this Section
15 arising in connection with any breach of Section 5 or Section
6 hereof shall be limited to amounts payable (A) pursuant to a
drawing under Irrevocable Letter of Credit No. P-360919 issued by
The Chase Manhattan Bank and dated April 1, 1998 and (B) from the
Collateral, including pursuant to any action taken with respect
to the Collateral pursuant to Section 10 hereof; and
(ii) The only damages indemnifiable or payable with
respect to a breach of Section 7 hereof shall be any loss or
damages which (A) are not recovered by a drawing under
Irrevocable Letter of Credit No. P-360919 issued by The Chase
Manhattan Bank and dated April 1, 1998, and (B) result from the
loss of the ability or right, or any delay in the exercise of
ability or right, of either the "Collateral Agent" under the
Collateral Assignment Agreement or Financial Security to realize
the full and timely benefits of the Defeasance Eligible
Investments or other Borrower Collateral, or any loss resulting
from a delay in such realization, including any and all charges,
fees, costs and expenses which Financial Security may reasonably
pay or incur, including, but not limited to, attorneys' and
accountants' fees and expenses, in connection with (1)
reimbursement of the Collateral Agent, or (2) the administration,
enforcement, defense or preservation of any rights in respect of
any of the Related Documents (as defined in the Insurance
Agreement), including defending, monitoring or participating in
any litigation or proceeding (including any bankruptcy proceeding
in respect of the Pledged Entity or any affiliate of the Pledged
Entity) relating to any of the Related Documents, any party to
any of the Related Documents or the Transaction.
(b) The obligations of Pledgor under this Section
15 shall survive the termination of this Pledge Agreement and the
resignation or removal of the Collateral Agent.
SECTION 16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COLLATERAL AGENT. The Collateral Agent represents and warrants to Pledgor and to
Financial Security as follows:
(a) The Collateral Agent is a state banking
corporation, duly organized, validly existing and in good
standing under the laws of the State of New York and is duly
authorized and licensed under applicable law to conduct its
business as presently conducted.
(b) The Collateral Agent has all requisite right,
power and authority to execute and deliver this Pledge Agreement
and the other Transaction Documents to which it is or becomes a
party and to perform all of its duties as Collateral Agent
hereunder and thereunder.
(c) The execution and delivery by the Collateral
Agent of this Pledge Agreement, and the performance by the
Collateral Agent of its duties hereunder, have been duly
authorized by all necessary corporate proceedings and no further
approvals or filings, including any governmental approvals, are
required or will be required, as the case may be, for the valid
execution and delivery by the Collateral Agent, or the
performance by the Collateral Agent, of this Pledge Agreement.
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(d) The Collateral Agent has duly executed and
delivered this Pledge Agreement, and, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, this Pledge Agreement constitutes the legal, valid and
binding obligation of the Collateral Agent, enforceable against
the Collateral Agent in accordance with its terms, except as (i)
such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(e) The Collateral Agent has been paid in full its
ordinary administrative fee for acting as Collateral Agent under
this Pledge Agreement.
SECTION 17. TERMINATION. This Pledge Agreement shall continue in
full force and effect until the date (the "Termination Date") on which the
Insurance Agreement terminates in accordance with its terms.
SECTION 18. RESERVED.
SECTION 19. RESERVED.
SECTION 20. NOTICES. Any notice or other communication given
hereunder shall be in writing and shall be sent by registered mail, postage
prepaid, or personally delivered or telecopied to the recipient as follows:
(a) To the Collateral Agent:
The Bank of New York
Towermarc Plaza
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Corporate Trust Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) To Financial Security:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Surveillance Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(000) 000-0000
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(c) To Pledgor:
Spartan Holdings, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
With a copy to:
Advantica Restaurant Group, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
SECTION 21. GENERAL PROVISIONS.
(a) The failure of the Collateral Agent or Financial Security to
exercise, or delay in exercising, any right, power or remedy hereunder shall not
operate as a waiver thereof, nor shall any single or partial exercise by the
Collateral Agent or Financial Security of any right, power or remedy hereunder
preclude any other or future exercise thereof, or the exercise of any other
right, power or remedy.
(b) The representations of Pledgor herein contained shall survive
the date hereof.
(c) Neither this Pledge Agreement nor the provisions hereof can
be changed, waived or terminated orally. This Pledge Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns. If any provision of this Pledge
Agreement shall be invalid or unenforceable in any respect or in any
jurisdiction, the remaining provisions shall remain in full force and effect and
shall be enforceable to the maximum extent permitted by law.
(d) Unless otherwise indicated, all references to particular
Sections are references to Sections of this Pledge Agreement.
(e) This Pledge Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
(f) Each of the parties hereto waives, to the fullest extent
permitted by law, any right it may have to a trial by jury in respect of any
litigation arising directly or indirectly out of, under or in connection with
this Pledge Agreement or any of the transactions contemplated hereunder. Each of
the parties hereto (i) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the foregoing waiver and
(ii) acknowledges that it has not been induced to enter into this Pledge
Agreement and the other Borrower Documents (as defined in Section 5) to which it
is a party
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nor will have been induced to enter into any other Borrower Documents to which
it becomes a party by, among other things, this waiver.
(g) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) PLEDGOR IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ANY COURT IN THE
STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND
RELATED TO OR IN CONNECTION WITH THIS PLEDGE AGREEMENT, THE OTHER BORROWER
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
SUIT OR ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE
COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HEREBY WAIVES AND AGREES NOT TO
ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
PLEDGE AGREEMENT OR ANY OF THE OTHER BORROWER DOCUMENTS OR THE SUBJECT MATTER
HEREOF OR THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. PLEDGOR IRREVOCABLY
APPOINTS AND DESIGNATES CT CORPORATION SYSTEM AS ITS TRUE AND LAWFUL ATTORNEY
AND DULY AUTHORIZED AGENT FOR ACCEPTANCE OF SERVICE OF LEGAL PROCESS. PLEDGOR
AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PERSON SHALL CONSTITUTE PERSONAL
SERVICE OF PROCESS UPON IT. NOTHING CONTAINED IN THIS PLEDGE AGREEMENT SHALL
LIMIT OR AFFECT THE RIGHTS OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO START LEGAL PROCEEDINGS RELATED TO ANY OF THE
BORROWER DOCUMENTS AGAINST PLEDGOR OR ITS RESPECTIVE PROPERTY IN THE COURTS OF
ANY JURISDICTION.
(i) The Collateral Agent, by the execution hereof, acknowledges
receipt of the Pledged Shares on behalf of Financial Security.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Stock Pledge Agreement on the date first above written.
SPARTAN HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Name Xxxxx X. Xxxxx
-----------------------------------------
Title Director
----------------------------------------
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxx
Managing Director
THE BANK OF NEW YORK
By: /s/ Xxxxx Xxx Xxxx-Bash
-------------------------------------------
Name Xxxxx Xxx Xxxx-Bash
-----------------------------------------
Agent
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