PLEDGE AGREEMENT
- -----------------
THIS PLEDGE AGREEMENT dated as of October 6, 1999, is by and between C.
JEFFREY ROGERS, an individual resident of Dallas County, Texas (the "Pledgor"),
and PIZZA INN, INC., a Missouri corporation (the "Secured Party").
R E C I T A L S:
----------------------
A. Secured Party has agreed to loan to Pledgor $1,949,697.51 pursuant
to the terms of a promissory note made by Pledgor payable to the order of
Secured Party as of October 6, 1999 (the "Note").
B. Secured Party has conditioned its obligations under the Note upon
the execution and delivery of this Agreement by Pledgor and that certain
mortgage dated as of the date hereof by Pledgor in favor of the Secured Party
(the "Mortgage").
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
Security Interest and Pledge
----------------------------
Section 1 Security Interest and Pledge. As collateral security for the
----------------------------
prompt payment in full when due of all obligations, indebtedness and liabilities
of the Pledgor to the Secured Party, now existing or hereafter arising, whether
direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, whether at stated maturity,
by acceleration, or otherwise, under this Agreement, the Mortgage and the Note,
and all interest receiving thereon and all attorneys' fees and other expenses
incurred in the enforcement or collection thereof (the "Obligations"), Pledgor
hereby pledges and grants to Secured Party a security interest in the following
property (such property being hereinafter sometimes called the "Collateral"):
(a) 2,449,000 shares of common capital stock of Secured Party,
evidenced by certificate numbers P1 12370, P1 12397, P1 2152, P1 12326, P1
13354, and P1 13744;
(b) 300,000 additional shares of common capital stock of Secured Party,
evidenced by certificates to be delivered to Wells Fargo Bank (Texas), National
Association ("Wells Fargo") within five (5) business days of the date hereof;
(c) all shares of common capital stock of Secured Party hereafter
delivered by Pledgor to Wells Fargo, pursuant to the terms of that certain Loan
Agreement, dated as of August 28, 1997, by and between Pledgor and Wells Fargo
and the related loan documents, each as amended (the "Wells Fargo Loan
Documents");
(d) all shares of common capital stock of Secured Party hereinafter
delivered by Pledgor to Secured Party pursuant to the terms hereof;
(e) all products, proceeds, revenues, distributions, dividends, stock
dividends, securities, and other property, rights, and interests that Pledgor
receives or is at any time entitled to receive on account of the same; and
(f) certain real property described in the Mortgage.
ARTICLE II
Representations and Warranties
------------------------------
Pledgor represents and warrants to Secured Party that:
Section 2.1 Title. Pledgor owns, and with respect to Collateral
-----
acquired after the date hereof, Pledgor will own, legally and beneficially, the
Collateral free and clear of any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment, preference,
priority, or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law, or otherwise (each a "Lien"), or any
right or option on the part of any third person or entity to purchase or
otherwise acquire the Collateral or any part thereof, except for the security
interest granted hereunder and a first priority security interest granted to
Wells Fargo (the "WF Lien") pursuant to the terms of the Wells Fargo Loan
Documents. The Collateral is not subject to any restriction on transfer or
assignment except for compliance with applicable federal and state securities
laws and regulations promulgated thereunder and the WF Lien. Pledgor has the
unrestricted right to pledge the Collateral as contemplated hereby. All of the
Collateral has been duly and validly issued and is fully paid and nonassessable.
Section 2.2 Marital Status. The Collateral constitutes the separate
---------------
property of Pledgor and no person (including Diane P. Rogers) possesses a
community property interest in any part of the Collateral.
Section 2.3 Security Interest. This Agreement creates in favor of
------------------
Secured Party a second priority security interest in the Collateral. There are
no conditions precedent to the effectiveness of this Agreement that have not
been fully and permanently satisfied.
Section 2.4 Information Regarding Collateral to be Pledged. Pledgor
------------------------------------------------
has completed the Information Regarding Shares to be Pledged form (the "Rule 144
Questionnaire"), and the information contained therein is true, accurate and
complete. The Rule 144 Questionnaire contains no untrue statement of a material
fact nor does it omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
Section 2.5 No Breach. The execution, delivery, and performance by
---------
the Pledgor of this Agreement, the Mortgage and the Note and compliance with the
terms and provisions hereof and thereof do not and will not (a) violate or
conflict with, or result in a breach of, or require any consent under (i) any
applicable law, rule, or regulation or any order, writ, injunction, or decree of
any governmental authority or arbitrator, or (ii) any agreement or instrument to
which the Pledgor is a party or by which his property is bound or subject, or
(b) constitute a default under any such agreement or instrument, or result in
the creation or imposition of any Lien (except as provided in this Agreement and
the Mortgage) upon any of the revenues or assets of the Pledgor.
Section 2.6 Litigation and Judgments. There is no action, suit,
--------------------------
investigation, or proceeding before or by any governmental authority or
arbitrator pending, or to the knowledge of the Pledgor, threatened against or
affecting the Pledgor.
Section 2.7 Enforceability. This Agreement, the Mortgage and the
--------------
Note constitute valid, and binding obligations of the Pledgor, enforceable
against the Pledgor in accordance with their respective terms, except as limited
by bankruptcy, insolvency, or other laws of general application relating to the
enforcement of creditors' rights.
Section 2.8 Approvals. No authorization, approval, or consent of,
---------
and no filing or registration with, any governmental authority or third party is
or will be necessary for the execution, delivery, or performance by the Pledgor
of this Agreement, the Mortgage and the Note or the validity or enforceability
thereof, except for filings provided for herein or in the Wells Fargo Loan
Documents.
Section 2.9 Disclosure. No statement, information, report,
----------
representation, or warranty made by the Pledgor in this Agreement or the Note or
furnished to the Secured Party in connection with this Agreement, the Mortgage
or any of the transactions contemplated hereby contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to the
Pledgor which has a material adverse effect, or which might in the future have a
material adverse effect, on the condition (financial or otherwise), prospects,
or properties of the Pledgor that has not been disclosed in writing to the
Secured Party.
Section 2.10 Agreements. The Pledgor is not a party to any
----------
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument, which could have a material adverse effect on the business,
condition (financial or otherwise), prospects, or properties of the Pledgor, or
the ability of the Pledgor to pay and perform his obligations under the Note.
ARTICLE III
Affirmative and Negative Covenants
----------------------------------
Pledgor covenants and agrees with Secured Party that:
Section 3.1 Delivery. Within five (5) business days of the date
--------
hereof, Pledgor shall deliver to Wells Fargo certificate(s) representing the
shares of capital stock identified in Section 1(b) hereof, accompanied by
undated stock powers only executed in blank. In the event that Wells Fargo
relinquishes the WF Lien on any of the Collateral, Pledgor shall deliver to
Secured Party all certificate(s) representing such Collateral, accompanied by
undated stock powers duly executed in blank.
Section 3.2 Encumbrances. Pledgor shall not create, permit, or suffer
------------
to exist, and shall defend the Collateral against, any Lien, security interest,
or other encumbrance on the Collateral except the pledge and security interest
of Secured Party hereunder and liens permitted in the Wells Fargo Loan
Documents, and shall defend Pledgor's rights in the Collateral and Secured
Party's security interest in the Collateral against the claims of all persons or
entities.
Section 3.3 Sale of Collateral. With the exception of the WF Lien,
--------------------
Pledgor shall not sell, assign, or otherwise dispose of the Collateral or any
part thereof without the prior written consent of Secured Party.
Section 3.4 Distributions. If Pledgor shall become entitled to receive
-------------
or shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether in substitution of, or in
exchange for any Collateral, Pledgor agrees to accept the same as Secured
Party's agent and to hold the same in trust for Secured Party, and to deliver
the same forthwith to Secured Party in the exact form received, with the
appropriate endorsement of Pledgor when necessary and/or appropriate undated
stock powers duly executed in blank, to be held by Secured Party as additional
Collateral for the Obligations, subject to the terms hereof. Upon the
occurrence of an Event of Default, Pledgor shall become entitled to receive or
shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral or otherwise, Pledgor agrees
to accept the same as Secured Party's agent and to hold the same in trust for
Secured Party, and to deliver the same forthwith to Secured Party in the exact
form received, with the appropriate endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by Secured
Party as additional Collateral for the Obligations, subject to the terms hereof.
Any sums paid upon or in respect of the Collateral upon the liquidation or
dissolution of the issuer thereof shall be paid over to Secured Party to be held
by it as additional Collateral for the Obligations subject to the terms hereof;
and in case any distribution of capital shall be made on or in respect of the
Collateral or any property shall be distributed upon or with respect to the
Collateral pursuant to any recapitalization or reclassification of the capital
of the issuer thereof or pursuant to any reorganization of the issuer thereof,
the property so distributed shall be delivered to the Secured Party to be held
by it, as additional Collateral for the Obligations, subject to the terms
hereof. All sums of money and property so paid or distributed in respect of the
Collateral that are received by Pledgor shall, until paid or delivered to
Secured Party, be held by Pledgor in trust as additional security for the
Obligations. Secured Party agrees and acknowledges that during such time as the
WF Lien remains in effect, Wells Fargo may have a first priority interest in
certain of the Collateral described in this Section 3.4 entitling Wells Fargo to
possession of certain of the certificates described herein.
Section 3.5 Further Assurances. At any time and from time to time,
-------------------
upon the request of Secured Party, and at the sole expense of Pledgor, Pledgor
shall promptly execute and deliver all such further instruments and documents
and take such further action as Secured Party may reasonably deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement, including, without
limitation, the execution and filing of such financing statements as Secured
Party may require. A carbon, photographic, or other reproduction of this
Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement. Secured Party shall at all times have the right to
exchange any certificates representing Collateral for certificates of smaller
or larger denominations for any purpose consistent with this Agreement.
Section 3.6 Taxes. Pledgor agrees to pay or discharge prior to
-----
delinquency all taxes, assessments, levies, and other governmental charges
imposed on him or his property, except Pledgor shall not be required to pay or
discharge any tax, assessment, levy, or other governmental charge if (i) the
amount or validity thereof is being contested by Pledgor in good faith by
appropriate proceedings diligently pursued, and (ii) such proceedings do not
involve any risk of sale, forfeiture, or loss of the Collateral or any interest
therein.
Section 3.7 Notification. Pledgor shall promptly notify Secured Party
------------
of (i) any Lien, security interest, encumbrance, or claim made or threatened
against the Collateral, (ii) any material change in the Collateral, including,
without limitation, any material decrease in the value of the Collateral, (iii)
the occurrence or existence of any Event of Default under this Agreement, the
Note, the Mortgage or the Wells Fargo Loan Documents or the occurrence or
existence of any condition or event that, with the giving of notice or lapse of
time or both, would be an Event of Default under any such agreements or the
Wells Fargo Loan Documents, and (iv) any matter that could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise) prospects or properties of the Pledgor.
Section 3.8 Compliance with Agreements. Pledgor shall comply in all
----------------------------
material respects with all agreements, contracts, and instruments binding on him
or affecting his properties or employment.
Section 3.9 Compliance with Laws. Pledgor shall comply in all material
--------------------
respects with all applicable laws, rules, regulations, and orders of any court
or governmental authority.
Section 3.10 Provide Information. Pledgor shall fully cooperate, to
--------------------
the extent requested by Secured Party, in the completion of any notice, form,
schedule, or other document filed by Secured Party on its own behalf or on
behalf of Pledgor, including, without limitation, any required notice or
statement of beneficial ownership or of the acquisition of beneficial ownership
of equity securities constituting part of the Collateral and any notice of
proposed sale of any such securities pursuant to Rule 144 as promulgated by the
SEC under the Securities Act of 1933, as amended. Without limiting the
generality of the foregoing, Pledgor shall furnish to Secured Party any and all
information which Secured Party may reasonably request for purposes of any such
filing, regarding Pledgor, the Collateral, and any issuer of any of the
Collateral.
Section 3.11 Notification of Changes in Beneficial Ownership. Pledgor
-----------------------------------------------
shall promptly notify Secured Party of any sale of securities of Secured Party
by Pledgor or by any person or entity named on the Rule 144 Questionnaire and
shall furnish promptly to Secured Party a copy of any Form 144 filed in respect
of any such sale. In addition, if Pledgor or any other person or entity named
in the Rule 144 Questionnaire shall file with the SEC a form or other document
reporting any change in the beneficial ownership of the common stock of Secured
Party, Pledgor shall promptly furnish to Secured Party a copy of such form or
document.
Section 3.12 Restriction on Sales after Default. Pledgor shall not
-------------------------------------
sell or suffer or permit any person or entity named in the Rule 144
Questionnaire to sell any shares of the same class of securities as the
Collateral at any time after any Event of Default shall have occurred.
Section 3.13 Limitations on Liens. Pledgor will not incur, create, assume,
---------------------
or permit to exist any Lien upon the Collateral or the real property and
interests in real property owned by Pledgor and located at 2 Cedarbrook,
Glenbrook, Nevada 89448 as described in Schedule A attached hereto, and all
improvements and fixtures thereon and all appurtenances thereto (the "Nevada
Property"), except liens permitted herein, in the Mortgage or in the Wells Fargo
Loan Documents. With the exception of Wells Fargo, the Pledgor will not grant to
any other Person a negative pledge with respect to the Collateral or the Nevada
Property.
Section 3.14 Limitation on Debt. Pledgor will not incur, create,
--------------------
assume, or permit to exist any debt except debt described in the April 16, 1998,
financial statement of the Pledgor delivered to the Secured Party, debt to Wells
Fargo in the maximum amount of the total debt to Wells Fargo as of the date of
this Agreement, debt to Farmers & Merchants Bank in the maximum amount of the
total debt to Farmers & Merchants Bank as of the date of this Agreement, debt to
Secured Party, and other debt in the aggregate not to exceed $250,000 at any
time outstanding.
ARTICLE IV
Rights of Secured Party and Pledgor
----------------------------------------
Section 4.1 Power of Attorney. Pledgor hereby irrevocably constitutes
-----------------
and appoints Secured Party and any officer or agent thereof (other than
Pledgor), with full power of substitution, as Pledgor's true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead and in the name of Pledgor or in its own name, from time to time in
Secured Party's discretion, so long as an Event of Default exists, to take any
and all action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives Secured Party the power
and right on behalf of Pledgor and in its own name to do any of the following
(subject to the rights of Pledgor under Sections 4.2 and 4.3 hereof), without
notice to or the consent of Pledgor:
(i) to demand, sue for, collect, or receive in the name of Pledgor or
in its own name, any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, or any
other instruments for the payment of money under the Collateral;
(ii) to pay or discharge taxes, Liens, security interests, or other
encumbrances levied or placed on or threatened against the Collateral;
(iii) (A) to direct account debtors and any other parties liable for
any payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to Secured Party or as Secured Party
shall direct; (B) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices, and other documents relating to
the Collateral; (D) to commence and prosecute any suit, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action, or proceeding brought against
Pledgor with respect to any Collateral; (F) to settle, compromise, or adjust any
suit, action, or proceeding described above and, in connection therewith, to
give such discharges or releases as Secured Party may deem appropriate; (G) to
exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment of the
issuer thereof and, in connection therewith, deposit any of the Collateral with
any committee, depositary, transfer agent, registrar, or other designated agency
upon such terms as Secured Party may determine; (H) to add or release any
guarantor, indorser, surety, or other party to any of the Collateral or the
Obligations; (I) to renew, extend, or otherwise change the terms and conditions
of any of the Collateral or Obligations; (J) to insure any of the Collateral;
(K) to sell, transfer, pledge, make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though Secured Party
were the absolute owner thereof for all purposes, and to do, at Secured Party's
option and Pledgor's expense, at any time, or from time to time, all acts and
things which Secured Party deems necessary to protect, preserve, or realize upon
the Collateral and Secured Party's security interest therein; and (L) to
complete, execute and file with the SEC one or more notices of proposed sale of
securities pursuant to Rule 144.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on Secured Party solely to
protect, preserve, and realize upon its security interest in the Collateral.
Section 4.2 Voting Rights. Unless and until an Event of Default shall
-------------
have occurred and be continuing, Pledgor shall be entitled to exercise any and
all voting rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement. Secured Party shall
execute and deliver to the Pledgor all such proxies and other instruments as
Pledgor may reasonably request for the purpose of enabling Pledgor to exercise
the voting rights which he is entitled to exercise pursuant to this Section.
Section 4.3 Dividends. Unless and until an Event of Default shall have
---------
occurred and be continuing, Pledgor shall be entitled to receive and retain any
dividends on the Collateral paid in cash.
Section 4.4 Performance by Secured Party. If Pledgor fails to perform
----------------------------
or comply with any of the agreements contained herein after being given notice
of such failure by Secured Party, Secured Party itself may, at its sole
discretion, cause or attempt to cause performance or compliance with such
agreement and the expenses of Secured Party, together with interest thereon at
the Default Rate, shall be payable by Pledgor to Secured Party on demand and
shall constitute Obligations secured by this Agreement. Notwithstanding the
foregoing, it is expressly agreed that Secured Party shall not have any
liability or responsibility for the performance of any obligation of Pledgor
under this Agreement.
Section 4.5 Secured Party's Duty of Care. Other than the exercise of
-----------------------------
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation or
duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality
of the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.
Section 4.6 Setoff. If an Event of Default shall have occurred and
------
be continuing, Secured Party shall have the right to set off and apply against
the Obligations in such manner as the Secured Party may determine, at any time
and without notice to the Pledgor, any and all sums at any time credited by or
owing from the Secured Party to the Pledgor whether or not the Obligations are
then due. In addition to the Secured Party's right of setoff and as further
security for the Obligations, the Pledgor hereby grants to the Secured Party a
security interest in all sums at any time credited by or owing from the Secured
Party to the Pledgor. The rights and remedies of the Secured Party hereunder
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Secured Party may have.
ARTICLE V
Default
-------
Section 5.1 Events of Default. Each of the following shall be
-------------------
deemed an "Event of Default":
(1) The Pledgor shall fail to pay when due the Obligations or any part
thereof and such failure shall continue for ten (10) days.
(2) Any representation or warranty made or deemed made by the Pledgor
in this Agreement, the Mortgage, the Note or the Wells Fargo Loan Documents, or
in any certificate, report, notice, or financial statement furnished at any time
in connection with any such agreements shall be false, misleading, or erroneous
in any material respect when made or deemed to have been made.
(3) The Pledgor shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in this Agreement, the Mortgage, the Note
or the Wells Fargo Loan Documents (other than as provided in (1) and (2) of this
Section), and such failure shall continue for ten (10) days after the earlier of
(i) the Pledgor has knowledge of such failure, or (ii) the Secured Party sends
the Pledgor written notice of such failure.
(4) The Pledgor shall commence a voluntary proceeding seeking
liquidation, reorganization, or other relief with respect to himself or his
debts under any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian,
or other similar official of him or a substantial part of his property or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against him
or shall make a general assignment for the benefit of creditors or shall
generally fail to pay his debts as they become due or shall take any corporate
action to authorize any of the foregoing.
(5) An involuntary proceeding shall be commenced against the Pledgor
seeking liquidation, reorganization, or other relief with respect to him or his
debts under any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian,
or other similar official for him or a substantial part of its property, and
such involuntary proceeding shall remain undismissed and unstayed for a period
of sixty (60) days.
(6) The Pledgor shall fail to pay when due any principal of or interest
on any debt with a then-current outstanding principal balance in excess of
$50,000 (other than the Obligations) and such failure shall continue beyond
expiration of any cure period therefor, if any, or the maturity of any such debt
shall have been accelerated, or any such debt shall have been required to be
prepaid prior to the stated maturity thereof, or any event shall have occurred
that permits (or, with the giving of notice or lapse of time or both, would
permit) any holder or holders of such debt or any person or entity acting on
behalf of such holder or holders to accelerate the maturity thereof or require
any such prepayment.
(7) This Agreement, the Mortgage or the Note shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Pledgor, or the
Pledgor shall deny that it has any further liability or obligation under this
Agreement, the Mortgage or the Note, or any lien or security interest created by
this Agreement, the Mortgage or the Note shall for any reason cease to be a
valid, perfected security interest in and lien upon any of the Collateral
purported to be covered thereby.
(8) The Pledgor shall cease to be active in the management of Pizza
Inn, Inc.
(9) The Pledgor or any of his properties, revenues or assets shall
become subject to an order of forfeiture, seizure or divestiture (whether under
RICO or otherwise) and the same shall not have been discharged within thirty
(30) days from the date of entry thereof.
Section 5.2 Rights and Remedies. If any Event of Default shall exist,
-------------------
Secured Party shall have the following rights and remedies:
(i) In addition to all other rights and remedies granted to Secured
Party in this Agreement and in any other instrument or agreement securing,
evidencing, or relating to the Obligations, Secured Party shall have all of the
rights and remedies of a secured party under the Uniform Commercial Code as
adopted by the State of Texas. Without limiting the generality of the
foregoing, Secured Party may (A) without demand or notice to Pledgor, collect,
receive, or take possession of the Collateral or any part thereof, (B) sell or
otherwise dispose of the Collateral, or any part thereof, in one or more parcels
at public or private sale or sales, at Secured Party's offices or elsewhere, for
cash, on credit, or for future delivery, and/or (C) bid and become a purchaser
at any sale free of any right or equity of redemption in Pledgor, which right or
equity is hereby expressly waived and released by Pledgor. Upon the request of
Secured Party, Pledgor shall assemble the Collateral and make it available to
Secured Party at any place designated by Secured Party that is reasonably
convenient to Pledgor and Secured Party. Pledgor agrees that Secured Party
shall not be obligated to give more than five (5) days written notice of the
time and place of any public sale or of the time after which any private sale
may take place and that such notice shall constitute reasonable notice of such
matters. Secured Party shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor shall be liable for
all expenses of retaking, holding, preparing for sale, or the like, and all
reasonable attorneys' fees and other expenses incurred by Secured Party in
connection with the collection of the Obligations and the enforcement of Secured
Party's rights under this Agreement, all of which expenses and fees shall
constitute additional Obligations secured by this Agreement. Secured Party may
apply the Collateral against the Obligations in such order and manner as Secured
Party may elect in its sole discretion. Pledgor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay the Obligations. Pledgor waives all rights of marshalling
in respect of the Collateral.
(ii) Secured Party may cause any or all of the Collateral held by it to
be transferred into the name of Secured Party or the name or names of Secured
Party's nominee or nominees.
(iii) Secured Party may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) Secured Party shall have the right, but shall not be obligated to,
exercise or cause to be exercised all voting, consensual, and other powers of
ownership pertaining to the Collateral, and Pledgor shall deliver to Secured
Party, if requested by Secured Party, irrevocable proxies with respect to the
Collateral in form satisfactory to Secured Party.
(v) Pledgor hereby acknowledges and confirms that Secured Party may be
unable to effect a public sale of any or all of the Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire any shares of the Collateral for their
own respective accounts for investment and not with a view to distribution or
resale thereof. Pledgor further acknowledges and confirms that any such private
sale may result in prices or other terms less favorable to the seller than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner, in accordance with the Uniform Commercial Code, as adopted in
the State of Texas, and Secured Party shall be under no obligation to take any
steps in order to permit the Collateral to be sold at a public sale. Secured
Party shall be under no obligation to delay a sale of any of the Collateral for
any period of time necessary to permit any issuer thereof to register such
Collateral for public sale under the Securities Act of 1933, as amended, or
under applicable state securities laws.
(vi) If Secured Party determines that it will sell all or part of the
Collateral pursuant to Section 5.2 hereof, and if, in the opinion of Secured
Party it is necessary or advisable to have the Collateral, or that portion
thereof to be sold, registered under the Securities Act of 1933, as amended, and
any applicable state securities laws designated by Secured Party, Pledgor will,
at Pledgor's expense, use reasonable efforts to cause each issuer of the
Collateral, or that portion thereof to be sold, to execute and deliver, and
cause the directors and officers of each such issuer to execute and deliver all
such instruments and documents and cause such issuer(s), directors, and officers
to do or use reasonable efforts to cause to be done all such other acts and
things as may be necessary or, in Secured Party's opinion, advisable to register
the Collateral, or that portion thereof to be sold, under the Securities Act of
1933, as amended, and any applicable state securities laws designated by Secured
Party, and to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Collateral, or that portion thereof to be sold, and
to make all amendments thereto and to the related prospectus that, in Secured
Party's opinion, are necessary or advisable, all in conformity with the
requirements of the Securities Act of 1933, as amended, and any applicable state
securities laws designated by Secured Party, and the rules and regulations of
the SEC applicable thereto and any applicable state securities laws designated
by Secured Party. Pledgor agrees to use reasonable efforts to cause each issuer
of the Collateral, or that portion thereof to be sold, to comply with Securities
Act of 1933, as amended, and the blue sky laws of any jurisdiction that Secured
Party shall designate and cause each such issuer to make available to its
security holders, as soon as practical, an earnings statement (which need not be
audited) that will satisfy the provisions of the Securities Act of 1933, as
amended.
(vii) On any sale of the Collateral, Secured Party is hereby authorized
to comply with any limitation or restriction with which compliance is necessary,
in the view of Secured Party's counsel, in order to avoid any violation of
applicable law or in order to obtain any required approval of the purchaser or
purchasers by any applicable governmental authority.
Section 5.3 Performance by the Secured Party. If the Pledgor shall
--------------------------------
fail to perform any covenant or agreement contained in this Agreement or the
Note after being given notice of such failure by the Secured Party, the Secured
Party may perform or attempt to perform such covenant or agreement on behalf of
the Pledgor. In such event, the Pledgor shall, at the request of the Secured
Party, promptly pay any amount expended by the Secured Party in connection with
such performance or attempted performance to the Secured Party, together with
interest thereon at the Default Rate from and including the date of such
expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that the Secured Party
shall not have any liability or responsibility for the performance of any
obligation of the Pledgor under this Agreement, the Note or the Wells Fargo Loan
Documents.
ARTICLE VI
Miscellaneous
-------------
Section 6.1 No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 6.2 Successors and Assigns. This Agreement shall be binding
------------------------
upon and inure to the benefit of Pledgor and Secured Party and their respective
heirs, personal representatives, successors, and assigns, except that Pledgor
may not assign any of his rights or delegate any of his obligations under this
Agreement without the prior written consent of Secured Party.
Section 6.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT, THE MORTGAGE
---------------------------
AND THE NOTE EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement may
be amended or waived only by an instrument in writing signed by the parties
hereto.
Section 6.4 Limitation of Liability. Neither the Secured Party nor
-----------------------
any affiliate, officer, director, employee, attorney, or agent of the Secured
Party shall have any liability with respect to, and the Pledgor hereby waives,
releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by the
Pledgor in connection with, arising out of, or in any way related to, this
Agreement, the Mortgage or the Note, or any of the transactions contemplated by,
in connection with, arising out of, or in any way related to this Agreement, the
Mortgage or the Note. The Pledgor hereby waives, releases, and agrees not to
sue the Secured Party or any of the Secured Party's affiliates, officers,
directors, employees, attorneys, or agents for punitive damages in respect of
any claim in connection with, arising out of, or in any way related to, this
Agreement, the Mortgage or the Note, or any of the transactions contemplated by,
in connection with, arising out of, or in any way related to this Agreement, the
Mortgage or the Note. Nothing in this Section shall impair or restrict the
Pledgor's right to sue the Secured Party for actual damages arising as a result
of the gross negligence or willful misconduct of the Secured Party.
Section 6.5 No Duty. All attorneys, accountants, appraisers, and
--------
other professional persons or entities and consultants retained by the Secured
Party shall have the right to act exclusively in the interest of the Secured
Party and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to the Pledgor or any
other person or entity.
Section 6.6 Equitable Relief. The Pledgor recognizes that in the
-----------------
event the Pledgor fails to pay, perform, observe, or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the Secured
Party. The Pledgor therefore agrees that the Secured Party, if the Secured
Party so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
Section 6.7 Notices. All notices and other communications provided for
-------
in this Agreement shall be given as provided on the signature page hereof.
Section 6.8 Applicable Law; Venue; Service of Process. This Agreement
-----------------------------------------
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America. This Agreement
has been entered into in Dallas County, Texas, and it shall be performable for
all purposes in Dallas County, Texas.
Section 6.9 Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 6.10 Survival. All representations and warranties made in this
--------
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by Secured Party shall affect the representations and warranties
of Pledgor herein or the right of Secured Party to rely upon them.
Section 6.11 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 6.12 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 6.13 Construction. Pledgor and Secured Party acknowledge that each
------------
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Pledgor and Secured
Party.
Section 6.14 Obligations Absolute. The obligations of Pledgor under
---------------------
this Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release
of any other collateral or any guarantor, or any subordination or impairment of
any collateral, or any waiver, consent, extension, indulgence, compromise,
settlement, or other action or inaction in respect of this Agreement, the
Obligations, or any document or instrument evidencing, securing, or otherwise
relating to the Obligations, or any exercise or failure to exercise any right,
remedy, power, or privilege in respect of the Obligations.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
PLEDGOR:
- -------
/s/ C. Jeffrey Rogers
- ------------------------
C. JEFFREY ROGERS
Address for Notices:
5050 Quorum Drive, Suite 500
Dallas, TX 75240
Fax No.: (972) 702-9510
Telephone No.: (972) 701-9955
SECURED PARTY:
- --------------
PIZZA INN, INC.
By:/s/ Ronald W. Parker
-----------------------
Ronald W. Parker, Executive Vice President
Address for Notices:
5050 Quorum Drive, Suite 500
Dallas, TX 75240
Fax No.: (972) 702-9507
Telephone No.: (972) 701-9955
Attention: Ronald W. Parker