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Exhibit 10.37
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
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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 than 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: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President and Treasurer
QUINCY'S REALTY, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: Vice President and Treasurer
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