PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is entered into as of the___ day of October,
2000, (this "Agreement"), by and among THE QUIZNO'S CORPORATION, a Colorado
corporation (the "Company"), AMERICAN FOOD DISTRIBUTORS, INC., a Colorado
corporation ("Distributors"), CIAO B MANAGEMENT, INC., a Colorado corporation
("Ciao"), QUIZ-DIA, INC., a Colorado corporation ("DIA") and THE QUIZNO'S
FRANCHISE COMPANY, a Colorado corporation ("Franchise"), in favor of XXXXXX
XXXXXXXXX CAPITAL PARTNERS II, L.P., a California limited partnership (the
"Purchaser" or the "Secured Party"). The Company, Distributors, Ciao, DIA and
Franchise may be individually referred to herein as "Pledgor" and collectively
referred to herein as the "Pledgors".
RECITALS
A. Pursuant to that certain Securities Purchase Agreement of even date
herewith by and among Secured Party, the Pledgors and the other parties named
therein (including all annexes, exhibits and schedules thereto, as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
"Securities Purchase Agreement"), Secured Party is purchasing from the Company
the Securities, all on the terms and subject to the conditions set forth
therein.
B. The Pledgors are the record and beneficial owners of the Capital
Stock, promissory notes and other instruments listed in Schedule I.
C. The Pledgors are either direct or indirect beneficiaries of the
funds made available to the Company through the purchase of the Notes.
D. In order to induce Secured Party to purchase the Securities as
provided for in the Securities Purchase Agreement, the Pledgors have agreed to
pledge the Pledged Collateral to Secured Party in accordance herewith.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce Secured Party to purchase the Securities
under the Securities Purchase Agreement, the parties agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
and not otherwise defined herein shall have the meanings set forth in the
Securities Purchase Agreement. In addition, the following capitalized terms
shall have the following respective meanings:
"Pledged Collateral" shall have the meaning assigned to it in Section
2.
"Pledged Entity" shall mean an issuer of any Pledged Collateral.
"Pledged Instruments" shall mean the promissory notes or other
instruments listed on Schedule I.
"Pledged Stock" shall mean the Capital Stock listed on Schedule I.
"Secured Obligations" mean any and all Obligations to Purchaser
and all covenants and duties regarding such amounts, of any kind or nature,
present or future, contingent or liquidated, whether or not evidenced by any
note, agreement or other instrument, the payment or performance of which is
provided for or arises now or hereafter under or in connection with the
Securities Purchase Agreement or any other Investment Document.
2. Pledge. Each Pledgor hereby pledges, assigns and transfers to
Secured Party, and grants to Secured Party a first priority Lien in, all of the
following, whether now owned and existing or hereafter acquired or arising
(collectively, the "Pledged Collateral"):
(a) the Pledged Stock and the Pledged Instruments, and the
certificates representing such Pledged Stock or Pledged Instrument, and all
dividends, distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Pledged Stock or Pledged Instruments;
(b) any additional Capital Stock, promissory notes or other
instruments of a Pledged Entity from time to time acquired by any Pledgor in any
manner (which shall be deemed to be part of the Pledged Stock or Pledged
Instruments owned by any Pledgor), and the certificates representing such
additional shares, notes or instruments, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Capital Stock, promissory notes or other instruments;
(c) any Capital Stock, promissory notes or other instruments of any
Person;
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(d) any and all rights, powers, remedies and privileges of any
Pledgor under or with respect to any of the foregoing; and
(e) any and all proceeds and products of any of the foregoing.
Notwithstanding the foregoing, "Pledged Collateral" shall not include any of the
foregoing that is subject to a valid Lien in favor of any Bank pursuant to
Refinancing Indebtedness or any Bank Credit Documents; provided, however, that
no Lien shall be granted in any collateral of any Company Party which would be
prohibited by the terms of any Refinancing Indebtedness or any Bank Credit
Documents, and provided further, however, that upon the occurrence of a Released
Lien or a New Subsidiary or New Assets pursuant to Section 9.15 of the
Securities Purchase Agreement, such asset or property or subsidiary shall become
part of the Pledged Collateral and shall be subject to this Agreement, subject
to the provisions of Section 9.15(e) of the Securities Purchase Agreement. In
such event, the Company Parties shall execute and deliver to the Purchaser such
other agreements, instruments, approvals or other documents as may be requested
by the Purchaser in order to create, perfect, establish, and maintain the first
priority (subject only to the remaining Liens, if any, of a Bank, or Liens
granted pursuant to Refinancing Indebtedness) of any Lien in favor of the
Purchaser to effect the intent that, subject to certain exceptions contained in
this Agreement, the other Collateral Documents, and the Securities Purchase
Agreement, all Company Parties and all Subsidiaries shall be bound by all of the
terms, covenants and agreements contained in this Agreement and that all
property and assets of all Company Parties and all Subsidiaries shall be
collateral for the Obligations.
3. Security for Obligations. The pledge and security interest granted
pursuant to Section 2 secures, and the Pledged Collateral is security for, the
prompt payment and performance in full when due, whether at stated maturity, by
acceleration or otherwise, of all Secured Obligations.
4. Delivery of Pledged Collateral. Upon the execution of this
Agreement, all certificates evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Secured Party pursuant hereto. All Pledged
Collateral shall thereupon be accompanied by duly executed instruments of
transfer or assignments in blank in favor of Secured Party, all in form and
substance satisfactory to Secured Party.
5. Representations and Warranties. The Pledgors represent and warrant
jointly and severally to Secured Party that:
(a) Each Pledgor is, and at the time of delivery of the Pledged
Collateral in accordance with the terms hereof will be, the sole holder of
record and the sole beneficial owner of such Pledged Collateral as set forth on
Schedule I, free and clear of any Lien thereon or affecting the title thereto,
except for any Lien created by this Agreement.
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(b) All of the Pledged Stock have been duly authorized and validly
issued and are fully paid and nonassessable.
(c) Each Pledgor has the right and requisite authority to pledge,
assign, transfer, deliver, deposit and set over the Pledged Collateral pledged
by such Pledgor to Secured Party as provided herein.
(d) None of the Pledged Collateral has been issued or transferred in
violation of the securities registration, securities disclosure or similar laws
of any jurisdiction to which such issuance or transfer may be subject.
(e) The Pledged Collateral is presently represented by the
certificates or instruments listed on Schedule I. As of the date hereof, there
are no existing options, warrants, calls or commitments of any character
whatsoever relating to the Pledged Stock pledged by any Pledgor hereunder.
(f) No Consent that has not been obtained prior to the date hereof
is required to be obtained from any Governmental Authority or any other Person
(i) for the pledge by the Pledgors of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement by
Pledgors, or (ii) for the exercise by Secured Party of the voting or other
rights provided for in this Agreement or the remedies in respect of such Pledged
Collateral pursuant to this Agreement, except as may be required in connection
with such disposition by laws affecting the offering and sale of securities
generally.
(g) Each Pledgor has good and marketable title to its Pledged
Collateral, as set forth on Schedule I. The pledge, assignment and delivery of
the Pledged Collateral pursuant to this Agreement will create a valid and
perfected a security interest in favor of Secured Party in the Pledged
Collateral securing the payment of the Secured Obligations, subject to no other
Lien.
(h) This Agreement has been duly authorized, executed and delivered
by each Pledgor and constitutes a legal, valid and binding obligation of each
Pledgor, enforceable against each Pledgor in accordance with its terms.
(i) The Pledged Stock constitutes all of the issued and outstanding
Capital Stock of each Pledged Entity as set forth on Schedule I.
The representations and warranties set forth in this Section 5 shall
survive the execution, delivery and performance by the Pledgors of this
Agreement.
6. Covenants. Each of the Pledgors covenants and agrees that:
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(a) Without the prior written consent of Secured Party, such Pledgor
will not sell, assign, transfer, pledge, or otherwise encumber any of its rights
in or to any Pledged Collateral owned or held by it, or any unpaid dividends,
interest or other distributions or payments with respect to such Pledged
Collateral, or grant any Lien on such Pledged Collateral. except as permitted in
Section 10.8 of the Securities Purchase Agreement.
(b) Such Pledgor will, at its expense, promptly execute, acknowledge
and deliver all such instruments and deliver letters of credit and take all such
actions as Secured Party from time to time may request in order to ensure to
Secured Party the benefits of the Liens upon the Pledged Collateral intended to
be created by this Agreement, including, without limitation, the filing of any
necessary UCC financing statements that may be filed by Secured Party with or
(to the extent permitted by Applicable Laws) without the signature of such
Pledgor, and will cooperate with Secured Party, at such Pledgor's expense, in
obtaining all necessary consents and making all necessary filings under
Applicable Laws in connection with such Liens or any sale or transfer of such
Pledged Collateral.
(c) Such Pledgor has and will defend the title to the Pledged
Collateral, and the Liens of Secured Party on such Pledged Collateral, against
the claim of any Person and will maintain and preserve such Liens.
(d) Such Pledgor will, upon obtaining ownership of any additional
Capital Stock, promissory notes or other instruments of a Pledged Entity, or
Capital Stock, promissory notes or other instruments of any Person that does not
already constitute Pledged Collateral hereunder, promptly (and in any event
within three (3) Business Days after it acquires any such additional Capital
Stock, notes or other instruments) deliver to Secured Party a Pledge Amendment,
duly executed by such Pledgor, in substantially the form of Schedule II (each, a
"Pledge Amendment"), in respect of any such additional Capital Stock, notes or
other instruments, pursuant to which such Pledgor shall pledge to Secured Party
all of such additional Capital Stock, notes and other instruments and shall
deliver the certificates or instruments evidencing the same to Secured Party.
Such Pledgor hereby authorizes Secured Party to attach each such Pledge
Amendment to this Agreement and agrees that all Capital Stock, notes or other
instruments listed in any such Pledge Amendment delivered to Secured Party shall
for all purposes hereunder be considered Pledged Collateral.
7. Pledgor's Rights. So long as no Default or Event of Default shall
have occurred and be continuing and until written notice shall be given to a
Pledgor in accordance with Section 8(a):
(a) Such Pledgor shall have the right to vote and give consents with
respect to the Pledged Collateral pledged by it hereunder or any part thereof
for all purposes not inconsistent with the provisions of this Agreement, the
Securities Purchase Agreement or any
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other Investment Document; provided, however, that no vote shall be cast, and no
consent shall be given or action taken, that would have the effect of impairing
the position or interest of Secured Party in respect of the Pledged Collateral
or that would authorize, effect or consent to (unless and to the extent
expressly permitted by the Securities Purchase Agreement or consented to in
writing by Secured Party):
(i) the dissolution or liquidation, in whole or in part, of
a Pledged Entity;
(ii) the consolidation or merger of a Pledged Entity with
any other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity;
(iv) any change in the authorized number of shares, the
stated capital or the authorized share capital of a Pledged Entity or
the issuance of any additional shares of its Stock; or
(v) the alteration of the voting rights with respect to the
Stock of a Pledged Entity.
(b) Such Pledgor shall be entitled, from time to time, to collect
and receive for its own use all cash dividends and interest paid in respect of
the Pledged Collateral pledged by it hereunder to the extent not in violation of
the Securities Purchase Agreement, except for any and all: (i) dividends and
interest paid or payable other than in cash in respect of any such Pledged
Collateral, instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any such Pledged Collateral; (ii)
dividends and other distributions paid or payable in cash in respect of any such
Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in capital of a Pledged Entity; and (iii) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of, or in exchange for,
any such Pledged Collateral.
(c) All dividends and interest (other than such cash dividends and
interest as are permitted to be paid to such Pledgor in accordance with Section
7(b)) and all other distributions in respect of any of the Pledged Collateral,
whenever paid or made, shall be delivered to Secured Party to hold as Pledged
Collateral and shall, if received by such Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Secured Party as Pledged Collateral in
the same form as so received (with any necessary indorsements).
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8. Defaults and Remedies; Proxy.
(a) Upon the occurrence and during the continuation of any Default
or Event of Default, Secured Party (personally or through an agent) is hereby
authorized and empowered to transfer and register in its name or in the name of
its nominee the whole or any part of the Pledged Collateral pledged by any
Pledgor hereunder, to exchange certificates or instruments representing or
evidencing such Pledged Collateral for certificates or instruments of smaller or
larger denominations, to exercise the voting and all other rights as a holder
with respect thereto, to collect and receive all cash dividends, interest,
principal and other distributions made thereon, to sell in one or more sales
after five (5) days' notice of the time and place of any public sale or of the
time at which a private sale is to take place (which notice each Pledgor agrees
is commercially reasonable) the whole or any part of such Pledged Collateral and
to otherwise act with respect to such Pledged Collateral as though Secured Party
were the outright owner thereof. Any sale shall be made at a public or private
sale at Secured Party's place of business, or at any place in Los Angeles
County, California to be named in the notice of sale, either for cash or upon
credit or for future delivery at such price as Secured Party may deem fair, and
Secured Party may be the purchaser of the whole or any part of such Pledged
Collateral so sold and hold the same thereafter in its own right free from any
claim of any Pledgor or any right of redemption. Each sale shall be made to the
highest bidder, but Secured Party reserves the right to reject any and all bids
at such sale that, in its discretion, it shall deem inadequate. Demands of
performance, except as otherwise herein specifically provided for, notices of
sale, advertisements and the presence of property at sale are hereby waived and
any sale hereunder may be conducted by an auctioneer or any officer or agent of
Secured Party.
UPON THE OCCURRENCE AND DURING THE CONTINUATION OF A DEFAULT OR
EVENT OF DEFAULT, EACH PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS
SECURED PARTY AS THE PROXY AND ATTORNEY-IN-FACT OF SUCH PLEDGOR WITH RESPECT TO
THE PLEDGED COLLATERAL PLEDGED BY SUCH PLEDGOR HEREUNDER, INCLUDING THE RIGHT TO
VOTE THE PLEDGED STOCK OF SUCH PLEDGOR, WITH FULL POWER OF SUBSTITUTION TO DO
SO. THE APPOINTMENT OF SECURED PARTY AS PROXY AND ATTORNEY-IN-FACT IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE. IN ADDITION TO THE RIGHT TO VOTE THE
PLEDGED STOCK OF EACH PLEDGOR, THE APPOINTMENT OF SECURED PARTY AS PROXY AND
ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED STOCK WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH
PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF SUCH PLEDGED STOCK ON THE RECORD BOOKS
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OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED STOCK
OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE
CONTINUATION OF A DEFAULT OR EVENT OF DEFAULT. NOTWITHSTANDING THE FOREGOING,
SECURED PARTY SHALL NOT HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE
THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN
DOING SO.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral pledged by any Pledgor hereunder,
(i) the highest bid, if there is but one sale, shall be inadequate to discharge
in full all the Secured Obligations, or (ii) such Pledged Collateral is offered
for sale in lots, the highest bid for the lot offered for sale at any of such
sales would indicate to Secured Party, in its discretion, that the proceeds of
the sales of the whole of such Pledged Collateral would be unlikely to be
sufficient to discharge all the Secured Obligations, then Secured Party may, on
one or more occasions and in its discretion, postpone any of said sales by
public announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived; provided that any sale or sales
made after such postponement shall be after ten (10) days' notice to such
Pledgor.
(c) Intentionally omitted.
(d) Intentionally omitted.
(e) If, at any time when Secured Party shall determine to exercise
its right to sell the whole or any part of the Pledged Collateral hereunder,
such Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Act (or any similar statute),
then Secured Party may, in its discretion (subject only to applicable
requirements of Applicable Laws), sell such Pledged Collateral or part thereof
by private sale in such manner and under such circumstances as Secured Party may
deem necessary or advisable, but subject to the other requirements of this
Section 8, and shall not be required to effect such registration or to cause the
same to be effected. Without limiting the generality of the foregoing, in any
such event, Secured Party in its discretion may (i) in accordance with
applicable securities laws proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Collateral or part thereof could be or shall have been filed under the Act (or
similar statute), (ii) approach and negotiate with a single possible purchaser
to effect such sale, and (iii) restrict such sale to a purchaser who is an
accredited investor under the Act and who will represent and agree that such
purchaser is purchasing for its own account, for investment and not with a view
to the distribution or sale of such Pledged Collateral or any part thereof. In
addition to a private sale as provided above in this Section 8, if any of the
Pledged Collateral shall not be freely distributable to the public without
registration under the Act (or
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similar statute) at the time of any proposed sale pursuant to this Section 8,
then Secured Party shall not be required to effect such registration or cause
the same to be effected but, in its discretion (subject only to applicable
requirements of Applicable Laws), may require that any sale hereunder (including
a sale at auction) be conducted subject to restrictions:
(i) as to the financial sophistication and ability of any
Person permitted to bid or purchase at any such sale;
(ii) as to the content of legends to be placed upon any
certificates representing the Pledged Collateral sold in such sale,
including restrictions on future transfer thereof;
(iii) as to the representations required to be made by each
Person bidding or purchasing at such sale relating to such Person's
access to financial information about any Pledgor and such Person's
intentions as to the holding of the Pledged Collateral so sold for
investment for its own account and not with a view to the distribution
thereof; and
(iv) as to such other matters as Secured Party may, in its
discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in compliance
with the Bankruptcy Law and other laws affecting the enforcement of
creditors' rights and the Act and all applicable state securities laws.
(f) Each Pledgor recognizes that Secured Party may be unable to
effect a public sale of any or all the Pledged Collateral and may be compelled
to resort to one or more private sales thereof in accordance with Section 8(e).
Each Pledgor also acknowledges that any such private sale may result in prices
and 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 not be deemed to have been made in a commercially unreasonable manner
solely by virtue of such sale being private. Secured Party shall be under no
obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the applicable Pledged Entity to register such
securities for public sale under the Act, or under applicable state securities
laws, even if the Pledgor owning or holding such Pledged Collateral and the
Pledged Entity would agree to do so.
(g) Each Pledgor agrees, to the maximum extent permitted by
Applicable Laws, that following the occurrence and during the continuance of a
Default or Event of Default it will not at any time plead, claim or take the
benefit of any appraisal, valuation, stay, extension, moratorium or redemption
law now or hereafter in force in order to prevent or delay the enforcement of
this Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
each Pledgor
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waives the benefit of all such laws to the extent it lawfully may do so. Each
Pledgor agrees that it will not interfere with any right, power or remedy of
Secured Party provided for in this Agreement or now or hereafter existing at law
or in equity or by statute or otherwise, or the exercise or beginning of the
exercise by Secured Party of any one or more of such rights, powers or remedies.
No failure or delay on the part of Secured Party to exercise any such right,
power or remedy and no notice or demand that may be given to or made upon any
Pledgor by Secured Party with respect to any such remedies shall operate as a
waiver thereof, or limit or impair Secured Party's right to take any action or
to exercise any power or remedy hereunder, without notice or demand, or
prejudice its rights as against any Pledgor in any respect.
(h) Each Pledgor further agrees that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to Secured
Party, that Secured Party shall have no adequate remedy at law in respect of
such breach and, as a consequence, agrees that each and every covenant contained
in this Section 8 shall be specifically enforceable against each Pledgor, and
each Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that: (i)
no Default or Event of Default has occurred under the Securities Purchase
Agreement and (ii) Secured Party is in breach of its obligations under this
Agreement or the Securities Purchase Agreement.
9. Waiver. No delay on Secured Party's part in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand that may be
given to or made upon the Pledgors by Secured Party with respect to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair Secured Party's right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice Secured Party's rights as against any Pledgor in any
respect.
10. Assignment. Secured Party may assign, indorse or transfer any
instrument evidencing all or any part of the Secured Obligations as provided in,
and in accordance with, the Securities Purchase Agreement or any Investment
Agreement, and the holder of such instrument shall be entitled to the benefits
of this Agreement.
11. Lien Absolute. All rights of Secured Party hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Securities
Purchase Agreement, any other Investment Document or any other agreement or
instrument governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Securities
Purchase Agreement, any other Investment
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Document or any other agreement or instrument governing or evidencing any
Secured Obligations;
(c) any exchange, release or non-perfection of any other Collateral
or any release or amendment or waiver of, or consent to departure from any
guaranty for, all or any of the Secured Obligations;
(d) the insolvency of any Pledgor or any Subsidiary Guarantor or any
other guarantor of the obligations; or
(e) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Pledgor.
12. Release. Each Pledgor consents and agrees that Secured Party may at
any time, or from time to time, in its discretion:
(a) renew, extend or change the time of payment of, or the manner,
place or terms of payment of, all or any part of the Secured Obligations; and
(b) exchange, release or surrender all or any of the Collateral
(including the Pledged Collateral), or any part thereof, by whomsoever
deposited, that is now or may hereafter be held by or on behalf of Secured Party
in connection with all or any of the Secured Obligations; all in such manner and
upon such terms as Secured Party may deem proper, and without notice to or
further assent from any Pledgor, it being hereby agreed that each Pledgor shall
be and remain bound by this Agreement irrespective of the value or condition of
any of the Collateral and notwithstanding any such change, exchange, settlement,
compromise, surrender, release, renewal or extension, and notwithstanding also
that the Secured Obligations may, at any time, exceed the aggregate principal
amount thereof set forth in the Securities Purchase Agreement or any other
agreement governing any Secured Obligations. Each Pledgor hereby waives notice
of acceptance of this Agreement, presentment, demand, protest and notice of
dishonor of any and all of the Secured Obligations, and any delay by Secured
Party in commencing suit against any party hereto or Person liable hereon, and
in giving any notice to or of making any claim or demand hereunder upon such
Pledgor. No act or omission of any kind on Secured Party's part (other than an
act or omission that is finally determined by a referee or a court of competent
jurisdiction to have resulted solely from Secured Party's gross negligence or
willful misconduct) shall in any event affect or impair this Agreement.
13. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Pledgor or any Pledged Entity for liquidation or reorganization, should any
Pledgor or any Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all
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or any significant part of any Pledgor's or Pledged Entity's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to Applicable Laws, rescinded or reduced in amount, or must otherwise
be restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference," "fraudulent transfer," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
14. Miscellaneous.
(a) Secured Party may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
(b) Each Pledgor agrees to promptly reimburse Secured Party for
actual out-of-pocket expenses, including reasonable attorneys' fees, incurred by
Secured Party in connection with the enforcement of its rights and remedies
under this Agreement.
(c) Neither Secured Party nor any of its officers, directors,
employees, agents or counsel shall be liable for any action lawfully taken or
omitted to be taken by it or them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct as finally
determined by a referee or a court of competent jurisdiction.
(d) THIS AGREEMENT SHALL BE BINDING UPON EACH PLEDGOR AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING A TRUSTEE OR DEBTOR-IN- POSSESSION ON BEHALF
OF PLEDGOR), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY AND
BINDING UPON, SECURED PARTY AND ITS SUCCESSORS AND ASSIGNS, AND SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE,
AND NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT MAY BE WAIVED, ALTERED,
MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF SECURED
PARTY AND EACH PLEDGOR.
15. Severability. If for any reason any provision or provisions hereof
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement that are valid. To the extent that any term of this Agreement
conflicts with or is contradictory to the terms of the Securities Purchase
Agreement, the terms of the Securities Purchase Agreement shall control.
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16. Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if transmitted by telecopier with
receipt acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon the expiration of 72 hours
after mailing, if mailed by registered or certified mail, return receipt
requested, postage prepaid, to the addresses set forth in Section 13.6 of the
Securities Purchase Agreement.
17. Captions; Construction and Interpretation. The captions in this
Agreement are for convenience of reference only, do not constitute a part of
this Agreement and are not to be considered in construing or interpreting this
Agreement. All section, preamble, recital, exhibit, schedule, disclosure
schedule, annex, clause and party references are to this Agreement unless
otherwise stated. No party, nor its counsel, shall be deemed the drafter of this
Agreement for purposes of construing the provisions of this Agreement, and all
provisions of this Agreement shall be construed in accordance with their fair
meaning, and not strictly for or against any party.
18. Counterparts. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
19. WAIVER OF TRIAL BY JURY. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO
APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, AND
UNDERSTANDING THEY ARE WAIVING A CONSTITUTIONAL RIGHT, THE PARTIES WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO, THIS AGREEMENT, ANY OTHER INVESTMENT
DOCUMENT OR THE TRANSACTIONS COMPLETED HEREBY OR THEREBY.
20. Security Agreement. The Liens granted pursuant to this Agreement
are granted in conjunction with the Liens granted to Secured Party pursuant to
the other Collateral Documents. Each Pledgor hereby acknowledges and affirms
that additional rights and remedies of Secured Party with respect to the Liens
granted under this Agreement are set forth in the other Collateral Documents,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
PLEDGORS
THE QUIZNO'S CORPORATION, a Colorado corporation
By:
--------------------------------------------
Title:
AMERICAN FOOD DISTRIBUTORS, INC., a Colorado
corporation
By:
--------------------------------------------
Title:
CIAO B MANAGEMENT, INC., a Colorado corporation
By:
---------------------------------------------
Title:
QUIZ-DIA, INC., a Colorado corporation
By:
--------------------------------------------
Title:
THE QUIZNO'S FRANCHISE COMPANY, a Colorado
corporation
By:
---------------------------------------------
Title:
PURCHASER
XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P., a
California limited partnership
By: LLCP California Equity Partners II, L.P.,
a California limited partnership, its
General Partner
By: Xxxxxx Xxxxxxxxx Capital Partners, Inc., a
California corporation, its General
Partner
By:_______________________________
Xxxxxx X. Xxxxxx
President
SCHEDULE I
Pledged Stock
Class of Record and Certificate Number Percentage of
Capital Stock and Issuer Beneficial Owner Number(s) of Shares Outstanding Shares
------------------------ ---------------- --------- --------- ------------------
Pledged Promissory Notes, Instruments
Issuer Record and Beneficial Owner Principal Amount
------ --------------------------- ----------------
SCHEDULE II
FORM OF
PLEDGE AMENDMENT
This Pledge Amendment, dated as of __________ ___, is delivered
pursuant to Section 6(d) of the Pledge Agreement referred to below. All defined
terms herein shall have the meanings assigned thereto or incorporated by
reference in the Pledge Agreement.
The undersigned hereby certifies that the representations and
warranties in Section 5 of the Pledge Agreement are and continue to be true and
correct, both as to the promissory notes, other instruments and the Capital
Stock pledged prior to this Pledge Amendment and as to the promissory notes,
other instruments and the Capital Stock pledged pursuant to this Pledge
Amendment. The undersigned further agrees that this Pledge Amendment may be
attached to that certain Pledge Agreement dated as of October ___, 2000 (the
"Pledge Agreement"), by and between the "Pledgor" named therein and Xxxxxx
Xxxxxxxxx Capital Partners II, L. P., and that the Capital Stock, promissory
notes or other instruments listed on Exhibit A to this Pledge Amendment shall be
and become a part of the Pledged Collateral referred to in the Pledge Agreement
and shall secure all Secured Obligations referred to in the Pledge Agreement.
The undersigned acknowledges that any promissory notes, other instruments or
Capital Stock not included in the Pledged Collateral at the discretion of
Secured Party may not otherwise be pledged by Pledgor to any other Person or
otherwise be used as security for any obligations other than the Secured
Obligations.
"Pledgor"
By: __________________________
Name: __________________________
Title: __________________________
EXHIBIT A
TO PLEDGE AMENDMENT
Pledged Stock
Class of Certificate Number Percentage of
Capital Stock and Issuer Number(s) of Shares Outstanding Shares
------------------------ -------- --------- ------------------
Pledged Promissory Notes/
Other Instruments
Issuer Principal Amount
------ ----------------
