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EXHIBIT 10.24
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") is entered into
as of September 15, 1997, by PACKAGED ICE, INC., a Texas corporation (the
"PLEDGOR") in favor of THE FROST NATIONAL BANK, as Agent (in such capacity, the
"AGENT") for each of the Banks under the Credit Agreement (defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of the
date hereof (as modified, amended, supplemented, or restated from time to time,
the "CREDIT AGREEMENT"), among Pledgor (the "BORROWER"), the Agent, and certain
other financial institutions who from time to time are parties thereto (the
"BANKS"), the Banks have extended Commitments to make Revolving Credit Loans to
the Borrower;
WHEREAS, as a condition precedent to the making of loans by the Banks
under the Credit Agreement, the Pledgor is required to execute and deliver this
Agreement;
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in order to induce the Banks to extend the
Commitments to the Pledgor pursuant to the Credit Agreement, the Pledgor
agrees, for the benefit of each of the Banks, as follows:
SECTION 1. DEFINED TERMS. Capitalized terms not otherwise defined
herein shall have the meaning assigned to such terms in the Credit Agreement
unless the context hereof shall otherwise require or provide. For the purposes
of this Agreement, the following terms shall have the respective meanings
assigned to them in this Section 1:
"ATTRIBUTION GROUP" shall have the meaning assigned in Section 5(d)
hereof.
"BANKS" shall mean the Agent and each of the Banks, and each of their
respective successors, transferees and assigns.
"CLASS SECURITIES" shall have the meaning assigned in Section 4(i).
"CODE" shall have the meaning assigned in Section 7(a).
"EVENT OF DEFAULT" shall mean the occurrence of any one or more of the
following:
(a) Any Event of Default specified in the Credit
Agreement, the Notes, the Loan Papers, or agreements or contracts existing at
the date hereof or hereafter entered into between Agent and Borrower or Agent
and Issuers, or any of them, subject to applicable notice and cure periods;
(b) Default is made in the due observance or performance
by Pledgor of any of the covenants or agreements contained in this Agreement,
subject to applicable notice and cure periods;
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(c) Any statement, warranty or representation by Pledgor
contained in this Agreement proves to be untrue or inaccurate in any material
respect;
(d) This Agreement shall cease to be a legal, valid and
binding agreement enforceable against Pledgor in accordance with its terms,
shall be terminated, become or be declared ineffective or inoperative or cease
to provide the respective liens, security interests, rights, titles, interests,
remedies, powers or privileges intended to be provided hereby;
(e) Pledgor shall: (i) apply for or consent to the
appointment of a receiver, trustee, custodian, intervenor or liquidator of
itself or of all or a substantial part of its assets, (ii) file a voluntary
petition in bankruptcy, (iii) generally fail to pay, or admit in writing it is
unable to pay, its debts as they become due or generally not pay its debts as
they become due, (iv) make a general assignment for the benefit of creditors,
(v) file a petition or answer seeking reorganization or an arrangement with
creditors or to take advantage of any bankruptcy or insolvency laws, (vi) file
an answer admitting the material allegations of, or consent to, or default in
answering, a petition filed against Pledgor in any bankruptcy, reorganization
or insolvency proceeding, or (vii) take corporate action for the purpose of
effecting any of the foregoing;
(f) An involuntary proceeding shall be commenced against
Pledgor seeking bankruptcy or reorganization or the appointment of a receiver,
custodian, trustee, liquidator or other similar official, of all or
substantially all of its assets, and such proceeding shall not have been
dismissed within sixty (60) days of the filing thereof; or an order, order for
relief, judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or complaint
seeking reorganization of Pledgor or appointing a receiver; or
(g) The levy on, seizure, or attachment of all or part of
the Pledged Collateral.
"ISSUERS" shall mean Packaged Ice Leasing, Inc., Southwestern Ice,
Inc., Mission Party Ice, Inc., and Southwest Texas Packaged Ice, Inc.
"PLEDGED COLLATERAL" shall have the meaning assigned to it in Section
2 hereof.
"PLEDGED SHARES" shall mean all shares of common stock, capital stock,
voting stock and other equity interests issued by the Issuers which are
delivered or required to be delivered under the terms of the Credit Agreement
from time to time by the Pledgor to the Agent as Pledged Collateral hereunder.
"RULE 144" shall have the meaning assigned in Section 5(d) hereof.
"SECURED INDEBTEDNESS" shall mean all indebtedness, obligations and
liabilities described or referred to in clauses (a) through (e) below,
inclusive:
(a) All or any part of the Obligations, whether for
principal, interest, fees, expenses, or otherwise;
(b) Any and all indebtedness and obligations of Pledgor
to Banks arising pursuant to this Agreement or any other document,
instrument or agreement delivered in connection herewith, including
reasonable legal expenses and other reasonable expenses incurred in
the preparation, execution and/or the enforcement of the Credit
Agreement, Notes, this Agreement and any of the other Loan Papers;
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(c) All other and additional debts, obligations and
liabilities of every kind and character of the Borrower and/or the
Issuers, now or hereafter owed to or existing in favor of Banks,
regardless of whether such debts, obligations and liabilities be
direct or indirect, primary or secondary, joint, several, or joint and
several, fixed or contingent, and regardless of whether such present
or future debts, obligations and liabilities may, prior to their
acquisition by Banks, be or have been payable to, or be or have been
in favor of some other person or have been acquired by Banks in a
transaction with one other than the Borrower and/or the Issuers;
(d) Any and all renewals, extensions, modifications, or
increases of the indebtedness and obligations described in (a)-(c)
above.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
SECTION 2. PLEDGE. As collateral security for the payment of the
Secured Indebtedness, Pledgor hereby pledges, hypothecates, assigns, transfers,
sets over, delivers and transfers to the Agent, for its benefit and the benefit
of each of the other Banks, and hereby grants to the Agent, for its benefit and
the benefit of each of the other Banks, a continuing security interest in all
of Pledgor's rights, titles and interests in and to all the following property:
(a) All capital stock of the Issuers identified in
Exhibit A attached hereto, now owned or hereafter acquired by Pledgor,
including (but not limited to) the Pledged Shares and the certificates
representing the Pledged Shares, together with all cash, securities,
dividends, increases, distributions and profits received therefrom or
in connection therewith, including distributions or payments in
partial or complete liquidation or redemption, or as a result of
reclassification, readjustments, reorganizations or changes in the
capital structure of the Issuers, or any of them, and any other
property at any time and from time to time received, receivable or
otherwise distributed or delivered to Agent, and all rights and
privileges pertaining thereto;
(b) All additional shares of every class of common stock,
capital stock, voting stock and other equity interests of the Issuers,
or any of them, from time to time acquired by the Pledgor in any
manner, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares;
(c) All securities hereafter delivered to Agent or its
designees, in substitution for, or in addition to, any of the
foregoing, all certificates representing or evidencing such
securities, and all cash, securities, instruments, documents,
dividends, increases, distributions and profits received therefrom,
and any other property at any time and from time to time received by,
receivable by or otherwise distributed or delivered to Agent or its
respective designees, in respect of or in exchange for any or all of
the property described;
(d) All subscriptions, warrants, options and any other
rights issued now or hereafter by the Issuers of the Pledged Shares or
any other person whatsoever upon or in connection with the Pledged
Shares and any part of the Pledged Collateral;
(e) All products and proceeds of the foregoing and all
general intangibles and contract rights related thereto, including
without limitation, all revenues, distributions, dividends, property,
registration rights, contract rights and other rights and interests
that Pledgor is, or may hereafter become, entitled to receive on
account of any collateral described in Sections 2(a) through (d);
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(all such Pledged Shares, certificates, securities, instruments,
documents, dividends, increases, distributions, profits, intangibles,
contract rights and other property being herein collectively called
the "PLEDGED COLLATERAL").
Pledgor shall forthwith deliver to Agent or its respective designees
all subscriptions, warrants, options and all such other rights to acquire the
Pledged Collateral, and upon delivery to Agent or its respective designees,
Agent or its respective designees shall hold such subscriptions, warrants,
options and other rights as additional collateral pledged to secure the Secured
Indebtedness; provided, however, that if Agent determines, in its sole
discretion, that any such subscriptions, warrants, options or other rights
shall terminate, expire or be materially reduced in value by holding the same
as Pledged Collateral, Agent shall have the right (but not the obligation), in
its sole discretion, to sell or exercise the same, and if exercised, then the
monies disbursed by Agent in connection therewith shall become part of the
Secured Indebtedness and all of the stock, securities, evidences of
indebtedness and other items so acquired shall become part of the Pledged
Collateral;
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights,
titles, interests, privileges and preferences appertaining to or incidental
thereto, unto Agent, its successors and assigns, forever, subject, however, to
the terms, covenants and conditions hereafter set forth.
SECTION 3. AGENT AS CUSTODIAN. Agent (or an agent designated by
Agent) shall have physical possession of the certificates or instruments
representing or evidencing the Pledged Collateral. Pledgor agrees that the
Pledgor will deposit with Agent or its respective designees, along with the
certificates or instruments representing or evidencing the Pledged Collateral,
duly executed stock powers in favor of Agent or its nominees. In addition,
Agent shall at all times have the right to exchange certificates or instruments
representing or evidencing the Pledged Collateral for certificates or
instruments of smaller or larger denominations if the same exist for any
purpose consistent with its performance of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants to Agent and each of the other Banks, that:
(a) Pledgor is the legal and equitable owner of the
Pledged Collateral free and clear of all liens, charges, pledges,
encumbrances and security interests of every kind and nature;
(b) The Pledged Shares have been validly authorized,
issued and are fully paid and non-assessable;
(c) Pledgor has good right and lawful authority to pledge
the Pledged Collateral in the manner hereby done or contemplated;
(d) No consent or approval of any governmental body or
regulatory authority, or of any securities exchange, is necessary to
effect the validity of the rights created hereunder which have not
been obtained;
(e) Except for any financing statement which may have
been filed by the Agent, no financing statement covering the Pledged
Collateral or any part thereof, has been filed with any filing
officer;
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(f) No security agreement covering the Pledged
Collateral, or any part thereof, has been made and no security
interest, other than the one herein created, has attached or been
perfected in the Pledged Collateral or any part thereof;
(g) The execution, delivery and consummation of this
Agreement will not violate the charter or bylaws of Pledgor or any
law, regulation, mortgage, indenture, contract, instrument, judgment
or decree applicable to or binding on Pledgor or the Issuers;
(h) The Pledged Shares constitute all of the issued and
outstanding voting stock of the Issuers;
(i) The Pledgor has held the Pledged Collateral, free and
clear of all liens, encumbrances and debt, and borne the full economic
risk thereof since the acquisition of the Pledged Collateral by
Pledgor, and at no time has Pledgor held any short position in such
securities or option to sell such securities, and at no time during
such period did any member of the Attribution Group hold a short
position in any shares or securities of the class of any security
pledged as Pledged Collateral hereunder or convertible into such class
(hereinafter referred to as "CLASS SECURITIES") or an option to sell
any such Class Securities; and
(j) The information contained in all forms or other
statements given to Agent by Pledgor regarding the Pledged Shares is
true, complete and accurate in all material respects, and the Pledgor
will immediately notify Agent of any change in such information.
The delivery at any time by Pledgor to Agent of additional Pledged
Collateral shall constitute a representation and warranty by Pledgor that, with
respect to such Pledged Collateral, and each item thereof, the matters
heretofore warranted in clauses (a) through (i) immediately above are true and
correct at, and as if they were made at, the date of such delivery, unless
otherwise disclosed in writing to Agent.
SECTION 5. COVENANTS.
(a) ADDITIONAL DOCUMENTS AND INFORMATION. Pledgor
covenants and agrees to: (i) from time to time promptly execute and
deliver to Agent all such stock powers, assignments, certificates,
supplemental writings, financing statements and other items, do all
other acts or things, and take such further actions, as Agent may
reasonably request from time to time in order more fully to evidence
and perfect the interests of Agent in the Pledged Collateral; (ii)
punctually and properly perform all of Pledgor's covenants and duties
under any other security agreement, deed of trust, collateral pledge
agreement or contract of any kind now or hereafter existing as
security for or in connection with payment of the Secured Indebtedness
(to the extent liable thereon) in accordance with the terms hereof and
in accordance with the terms of the Note; (iii) allow Agent to inspect
all records of Pledgor relating to the Pledged Collateral or to the
Secured Indebtedness at all reasonable times, and to make and take
away copies of such records; (iv) promptly notify Agent of any change
in any fact or circumstances warranted or represented by Pledgor in
this Agreement or in any other writing furnished by Pledgor to Agent
in connection with the Pledged Collateral or the Secured Indebtedness;
(v) promptly notify Agent of any claim, action or proceeding affecting
title to the Pledged Collateral, or any part thereof, or the security
interest herein, and, at the request of Agent, appear in and defend,
at Pledgor's expense, any such action or proceeding; and (vi)
promptly, after being requested by Agent pay to the requesting party
the amount of all reasonable expenses, including reasonable attorney's
fees and other legal expenses, incurred by such requesting party in
perfecting, maintaining and enforcing the security interests.
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(b) PROCEEDS. Should the Pledged Collateral, or any part
thereof, ever be in any manner converted by the Issuers, or any of
them, into another type of property or any money or other proceeds
ever be paid or delivered to Pledgor as a result of Pledgor's rights
in the Pledged Collateral, then, in any such event, all such property,
money and other proceeds, except only ordinary cash dividends (unless
and until payable to Agent pursuant to Section 6(b) hereof), shall
become part of the Pledged Collateral, and shall be delivered to Agent
by Pledgor for the benefit of Agent and the other Banks.
(c) PERFORMANCE BY AGENT. Should any covenant, duty or
agreement of Pledgor fail to be performed in accordance with its terms
hereunder, Agent may, but shall never be obligated to, perform or
attempt to perform such covenant, duty or agreement on behalf of
Pledgor, and any reasonable amount expended by Agent in such
performance or attempted performance shall become a part of the
Secured Indebtedness, and, at the written request of Agent, the
Pledgor agrees to pay such amount promptly to requesting party at such
party's office in San Antonio, Texas, together with interest thereon
at the non-default rate provided in the Credit Agreement.
(d) RULE 144. Except as provided below, the Pledgor
hereby further covenants and agrees that (i) it or any person, party
or entity with whom it shall be deemed one "person" for purposes of
(a)(2) of Rule 144 of the Securities and Exchange Commission ("RULE
144"), or any affiliate of such Pledgor, person, party or entity (as
the term "affiliate" is defined in Rule 144(a)(1)) (the Pledgor and
all such persons, parties, entities and affiliates being hereinafter
collectively referred to as the "ATTRIBUTION GROUP") will not sell or
allow the Attribution Group to sell any Class Securities, whether or
not such securities are pledged hereunder, from the date hereof until
the Secured Indebtedness has been paid in full and in the event of any
such sale consented to by Agent, will furnish Agent with a copy of any
Form 144 filed in respect of such sale; (ii) it will cooperate fully
with Agent with respect to any sale by Agent of any of the Pledged
Collateral, including full and complete compliance with all
requirements of Rule 144 and will give to Agent all information and
will do all things necessary, including the execution of all
documents, forms, instruments, and other items, to comply with Rule
144 and any and all other rules, regulations or laws of the United
States or the State of Texas necessary for the complete and
unrestricted sale and/or transfer of the Pledged Collateral and will
exercise its best efforts to have the Issuers, upon the request of the
Agent, publicly disseminate all information required to satisfy Rule
144(c); and (iii) neither the Pledgor nor the Attribution Group will
hold a short position in such securities from the date hereof until
the Secured Indebtedness is paid in full.
(e) NEGATIVE COVENANTS. Pledgor covenants and agrees
that, without the prior written consent of Agent, Pledgor will not
unless otherwise permitted by the Credit Agreement: (i) sell, assign
or transfer any rights of Pledgor in the Pledged Collateral; (ii)
grant any options or other rights in the Pledged Collateral; (iii)
create any other security interest in, mortgage, or otherwise encumber
the Pledged Collateral, or any part thereof, or permit the same to be
or become subject to any lien, attachment, execution, sequestration,
other legal or equitable process, or any encumbrance of any kind or
character, except the security interest herein created; (iv) vote for,
or consent to, any amendment of the articles of incorporation or
charter of the Issuers, or any of them, that might materially
adversely affect the value of the Pledged Collateral; (v) permit the
Issuers, or any of them, to merge or consolidate with or into any
corporation or other person other than mergers or consolidations under
which Pledgor retains 100% of the capital stock of the surviving
corporation; or (vi) permit the Issuers, or any of them, to issue any
additional shares of its capital stock.
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(f) DISTRIBUTIONS. Any and all cash dividends payable on
the Pledged Collateral, or stock and/or liquidating dividends,
distributions in property, returns of capital or other distributions
made on or in respect of the Pledged Collateral, whether resulting
from a subdivision, combination or reclassification of the
outstanding, capital stock of any issuer thereof or received in
exchange for Pledged Collateral or any part thereof or as a result of
any merger, consolidation, acquisition or other exchange of assets to
which any such issuer may be a party or otherwise, and any and all
cash and other property received in exchange for the Pledged
Collateral, or received in payment of the principal of or in
redemption of the Pledged Collateral (either at maturity, upon call
for redemption or otherwise), shall be and become part of, and
constitute, the "Pledged Collateral" and, if received by the Pledgor,
shall be held in trust for the benefit of Agent and forthwith be
delivered to Agent or its respective designees (accompanied by proper
instruments of assignment and/or stock powers executed by the Pledgor
in accordance with Agent's instructions) to be held subject to the
terms of this Agreement.
SECTION 6. VOTING RIGHTS; DIVIDENDS, ETC., PRIOR TO DEFAULT.
(a) RIGHTS PRIOR TO DEFAULT. So long as no Event of
Default shall have occurred after the date hereof and be continuing,
the Pledgor shall be entitled to exercise any and all voting and/or
consensual rights and powers relating or pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement; provided, however, that the Pledgor shall
not exercise or refrain from exercising any such right or power if
such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof as determined by Pledgor's
Board of Directors in its reasonable business judgment.
(b) TERMINATION OF RIGHTS. Upon the occurrence after the
date hereof of an Event of Default, all rights of the Pledgor to
exercise the voting and/or consensual rights and powers which it is
entitled to exercise pursuant to Section 6(a) hereof shall cease, at
the option of Agent, and all such rights shall thereupon become vested
in Agent who shall have the sole and exclusive right and authority to
exercise such voting and/or consensual rights and powers. Further,
Agent shall have the right upon the occurrence of an Event of Default,
to notify and direct the Issuers to thereafter make all payments,
distributions, dividends and any other distributions payable in
respect thereof directly to Agent. The Issuers in making any
distribution to Agent hereunder shall be fully protected in relying on
the written statement of Agent that it then holds a security interest
which entitles it to receive such payments and distributions. Any and
all money and other property paid over to or received by Agent
pursuant to the provisions of this subsection shall be retained by
Agent as additional collateral hereunder and may be applied (and upon
the Pledgor's written request all cash shall promptly be applied) in
accordance with the provisions hereof.
SECTION 7. RIGHTS AND REMEDIES OF AGENT UPON AND AFTER DEFAULT.
(a) REMEDIES. Upon the occurrence of an Event of
Default, in addition to any and all other rights and remedies which
Agent may then have hereunder, under the Credit Agreement, the other
Loan Papers, under applicable law, or under the Texas Business and
Commerce Code or other states, as applicable (hereinafter called the
"CODE"), or otherwise, Agent may at its option (i) declare the entire
unpaid balance of principal and all accrued interest on all or any
part of the Secured Indebtedness immediately due and payable, without
written notice, demand, or presentment, other than notice required
under the Credit Agreement, which are hereby waived; (ii) reduce its
claim to judgment, foreclose or otherwise enforce its security
interest in all or any part of the Pledged Collateral by any available
judicial procedure; (iii) after notification, if any, expressly
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provided for herein, sell or otherwise dispose of, at the office of
Agent, or elsewhere, as chosen by Agent, all or any part of the
Pledged Collateral, and any such sale or other disposition may be as a
unit or in parcels, by public or private proceedings, and by way of
one or more contracts (it being agreed that the sale of any part of
the Pledged Collateral shall not exhaust Agent's power of sale, but
sales may be made from time to time until all of the Pledged
Collateral has been sold or until the Secured Indebtedness has been
paid in full, provided, however that Agent shall not have any
obligation to sell the Pledged Collateral piecemeal, it being
specifically acknowledged that a sale of all of the Pledged Collateral
to one purchaser in single transaction shall be conclusively presumed
to be commercially reasonable), and at any such sale it shall not be
necessary to exhibit the Pledged Collateral; (iv) at its discretion,
retain the Pledged Collateral in satisfaction of the Secured
Indebtedness whenever the circumstances are such that Agent is
entitled to do so under the Code; (v) apply by appropriate judicial
proceedings for appointment of a receiver for the Pledged Collateral,
or any part thereof, and Pledgor hereby consents to any such
appointment; (vi) together with the other Banks, purchase the Pledged
Collateral at any public sale in accordance with the Code; (vii)
purchase the Pledged Collateral at any private sale in accordance with
the Code; and (viii) exercise the rights set forth in this Section 7
hereof in accordance with the Code.
(b) SALE OF PLEDGED COLLATERAL. Agent is authorized, at
any sale of the Pledged Collateral, if it deems it advisable, to
restrict the prospective bidders or purchasers to those persons who
will represent and agree that they are purchasing for their own
account, for investment, and not with a view to distribution or sale
of any of the Pledged Collateral. Upon any such sale, Agent shall
have the right to deliver, assign, and transfer to the purchaser
thereof the Pledged Collateral so sold. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or
right of whatsoever kind, including, any equity or right of
redemption, of Pledgor which hereby specifically waives all rights of
redemption, stay, or appraisal which it has or may have under any rule
of law or statute now existing or hereafter adopted, and such waiver
shall be deemed to have been made after default. Agent shall give
Pledgor ten (10) days' written notice of their intention to make any
such public or private sale or sale at broker's board or on a
securities exchange. Such notice, in case of sale at broker's board
or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Pledged
Collateral, or that portion thereof so being sold, which will first be
offered for sale at such board or exchange. Agent shall not have any
obligation to disclose or provide any information concerning the
Issuers or the Pledged Collateral to prospective purchasers of the
Pledged Collateral other than information in its possession at such
time and Pledgor agrees and acknowledges that it shall be commercially
reasonable for any notices of any such sale, published or otherwise,
to specifically so state. At any such sale the Pledged Collateral may
be sold in one lot as an entirety or in separate parcels, as Agent may
elect, and any such election shall be presumed to be commercially
reasonable. Agent shall not be obligated to make any such sale
pursuant to any such notice. Agent may, without notice or
publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any
part of the Pledged Collateral on credit or for future delivery, the
Pledged Collateral so sold may be retained by Agent until the selling
price is paid by the purchaser thereof, but Agent shall not incur any
liability in case of the failure of such purchaser to take and pay for
the Pledged Collateral so sold, and, in case of any such failure, such
Pledged Collateral may again be sold upon like notice. Agent may
also, at its discretion, proceed by a suit or suits at law or in
equity to foreclose the pledge and sell the Pledged Collateral, or any
portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction. If any consent, approval or authorization of
any state, municipal or other governmental department, agency or
authority should be necessary to effectuate
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any sale or other disposition of the Pledged Collateral, or any part
disposition of the Pledged Collateral, or any part thereof, Pledgor
will execute all such applications and other instruments as may be
required in connection with securing any such consent, approval or
authorization, and will otherwise use its best efforts to secure the
same.
(c) POSSIBLE RESTRICTIONS ON SALE OF PLEDGED COLLATERAL.
Because of the Securities Act, as amended, or any other applicable
laws or regulations, there may be legal restrictions or limitations
affecting Agent in any attempts to dispose of certain portions of the
Pledged Collateral in the enforcement of its rights and remedies
hereunder. For these reasons Agent is hereby authorized by Pledgor,
but not obligated, in the event of any Event of Default hereunder
giving rise to Agent's right to sell or otherwise dispose of the
Pledged Collateral, and after the giving of any notices required
herein, to sell all or any part of the Pledged Collateral at private
sale, subject to an investment letter or in any other manner which
will not require the Pledged Collateral, or any part thereof, to be
registered in accordance with the Securities Act, as amended, or other
applicable rules and regulations promulgated thereunder, or any other
law or regulation, at the best price reasonably obtainable by Agent at
any such private sale or other disposition in the manner mentioned
above and Pledgor specifically acknowledges that any such disposition
shall be commercially reasonable under the Code. Agent is also hereby
authorized by Pledgor, but not obligated, to take such actions, give
such notices, obtain such consents, and do such other things as Agent
may deem required or appropriate in the event of a sale or disposition
of any of the Pledged Collateral. Pledgor clearly understands that
Agent may at its discretion approach a restricted number of potential
purchasers and that a sale under such circumstances may yield a lower
price for the Pledged Collateral, or any part or parts thereof, than
would otherwise be obtainable if the same were registered and sold in
the open market. Pledgor agrees (i) in the event Agent shall, upon an
Event of Default hereunder, sell the Pledged Collateral, or any
portion thereof, at such private sale or sales, Agent shall have the
right to rely upon the advice and opinion of any member firm of the
National Security Exchange as to the best price reasonably obtainable
upon such private sale thereof, and (ii) that such reliance shall be
conclusive evidence that Agent handled such matter in a commercially
reasonable manner under the Code.
(d) NOTIFICATION. Reasonable notification of the time
and place of any public sale of the Pledged Collateral, or reasonable
notification of the time after which any private sale or other
intended disposition of the Pledged Collateral is to be made, shall be
sent to Pledgor and to any other person entitled under the Code to
notice; provided, that if the Pledged Collateral threatens to decline
quickly in value or is of a type customarily sold on a recognized
market, Agent may sell or otherwise dispose of the Pledged Collateral
without notification, advertisement or other notice of any kind. It
is agreed that notice sent or given not less than ten (10) calendar
days prior to the taking of the action to which the notice relates is
reasonable notification and notice for the purpose of this Agreement.
(e) APPLICATION OF PROCEEDS. Upon the maturity of any
instrument evidencing the Secured Indebtedness or any part thereof,
whether such maturity be by such terms of such instruments or through
the exercise of any power of acceleration, Agent is authorized and
empowered to apply any and all funds realized from the sale of the
Pledged Collateral not previously credited against the Secured
Indebtedness first toward the payment of the costs, charges and
expenses, if any, incurred in the collection of such funds hereunder,
and then toward the payment of the Secured Indebtedness as provided
for in the Credit Agreement and shall pay any balance remaining to the
Pledgor or as prescribed by the Code.
9 PII PLEDGE AND SECURITY AGREEMENT
10
(f) NOTICES. In the event that any notice is required to
be given to Pledgor with respect to any sale or liquidation of the
Pledged Collateral, any notice addressed to Pledgor at the address set
forth below its signature hereto, postage prepaid, deposited in the
United States mail ten (10) calendar days prior to the date of any
such intended action shall be deemed to be a sufficient and
commercially reasonable notice. Nothing contained herein shall
prevent Agent from giving notice in any other manner which is
considered reasonable.
SECTION 8. AUTHORITY OF AGENT. Agent shall have and be entitled to
all of the rights, powers, protections, authorities, indemnifications and
rights to payment of expenses as set forth in the Credit Agreement.
SECTION 9. AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
appoints Agent the Pledgor's attorney-in-fact for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instrument which Agent may deem reasonably necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, Agent shall have
the right and power to receive, endorse, and collect all checks and other
orders for the payment of money made payable to the Pledgor representing any
dividend or other distribution payable or distributable in respect of the
Pledged Collateral or any part thereof and to give full discharge for the same.
SECTION 10. CERTAIN RIGHTS BEFORE AND AFTER AN EVENT OF DEFAULT.
(a) AGENT'S RESPONSIBILITY FOR PLEDGED COLLATERAL. Agent
shall not have any duty to fix or preserve rights against prior
parties to the Pledged Collateral, and shall never be liable for its
failure to use diligence to collect any amount payable with respect to
the Pledged Collateral, but shall be liable only to account to Pledgor
for what it may actually collect or receive thereon. If the Pledged
Collateral declines in value, Pledgor will, upon demand by Agent
deliver to Agent, to become part of the Pledged Collateral, additional
property satisfactory to Agent.
(b) INTENTIONALLY DELETED
(c) FINANCING STATEMENT. Agent shall have the right at
any time to execute and file this Agreement as a financing statement,
but the failure of Agent to do so shall not impair the validity or
enforceability of this Agreement.
(d) MAXIMUM INTEREST. Regardless of any provision
contained herein or in any Note or Notes, notes executed in connection
with the Credit Agreement, or in any other writings in connection
herewith, Agent shall not be entitled to receive, collect or apply as
interest on the Secured Indebtedness any amount in excess of the
Maximum Rate, and, to this end, in the event of acceleration of the
maturity of the Secured Indebtedness, or any item thereof, proper
credit shall be given for unearned interest.
(e) DISCLOSURE. Agent is granted the right to discuss
Pledgor's affairs, finances and accounts with all parties to such
degree as Agent deems necessary or advisable to protect its security
interests and/or the repayment of the Secured Indebtedness. The
Pledgor covenants to do all things necessary or appropriate to permit
Agent to fully exercise its rights under this paragraph.
(f) DEPOSIT OF PROCEEDS. Except as expressly prescribed
above, all payments received by Agent with respect to the Pledged
Collateral shall, at Agent's option, be deposited in a special
10 PII PLEDGE AND SECURITY AGREEMENT
11
interest bearing account at a bank (which may be, but need not be, a
trust account or escrow account maintained at Agent) to be designated
by Agent in the name of Agent styled "Collateral Account." Funds in
said account are hereby assigned to Agent and shall be impressed with
a lien to secure the Secured Indebtedness, and shall be applied by
Agent as provided for above.
(g) PAYMENT OF EXPENSES. At Agent's option, Agent may
discharge taxes, liens and interest, perform or cause to be performed,
for and on behalf of the Pledgor, any actions and conditions,
obligations or covenants which the Pledgor has failed or refused to
perform and may pay for the repair, maintenance or preservation of any
of the Pledged Collateral, and all reasonable sums so expended,
including, but not limited to, reasonable attorneys' fees, court
costs, agents' fee or commissions, or any other costs or expenses,
shall become part of the Secured Indebtedness, shall bear interest
from the date of payment at the rate specified in Section 2.4 of the
Credit Agreement, and shall be payable at the place designated for
payment of the Secured Indebtedness, and shall be secured by this
Agreement.
SECTION 11. CUMULATIVE RIGHTS AND REMEDIES. All rights and remedies
of Agent hereunder are cumulative of each other and of every other right or
remedy which Agent may otherwise have at law or in equity or under any other
contract or other writing for the enforcement of the security interest herein
or the collection of the Secured Indebtedness, and the exercise by Agent of one
or more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies. Should the Pledgor have
heretofore executed or hereafter execute any other security agreement in favor
of Agent in which a security interest is created as security for the debts of
another or others, in respect of which Pledgor may not be personally liable,
the security interest therein created and all other rights, powers and
privileges vested in Agent by the terms thereof shall exist concurrently with
the security interest created herein, and, in addition, all property in which
Agent holds a security interest under any such other security agreement shall
also be part of the Pledged Collateral hereunder, and all or any part of the
proceeds of the sale or other disposition of such property may, in the
discretion of Agent be applied by it in accordance with the terms hereof, and
of such other security agreement, or agreements, or any of them.
SECTION 12. ASSIGNABILITY OF RIGHTS, ETC. The rights, powers and
interest held by Agent hereunder, together with the Pledged Collateral, may be
transferred and assigned by Agent in whole or in part, at such time and upon
such terms as it may deem advisable.
SECTION 13. NO WAIVER. Should any part of the Secured Indebtedness
be payable in installments, the acceptance by Agent at any time and from time
to time of part payment of the aggregate amount of all installments then
matured shall not be deemed to be a waiver of the default then existing. No
waiver by Agent of any default shall be deemed to be a waiver of any other
subsequent default, nor shall any such waiver by Agent be deemed to be a
continuing waiver. No delay or omission by Agent in exercising any right or
power hereunder, or under any other writings executed by the Pledgor as
security for or in connection with the Secured Indebtedness, shall impair any
such right or power or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such right or power
preclude other or further exercise thereof, or the exercise of any other right
or power of Agent hereunder or under such other writings. No action or
omission of Agent shall constitute a waiver by Agent of any rights or remedies
hereunder.
SECTION 14. SECURITY INTEREST ABSOLUTE. All rights of the Agent and
the security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
11 PII PLEDGE AND SECURITY AGREEMENT
12
(a) any lack of validity or enforceability of the Secured
Indebtedness, the Credit Agreement or any other Loan Paper;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Secured Indebtedness,
or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, the Notes, or any other Loan Papers;
(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
Indebtedness; or
(d) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Issuers, the
Pledgor or any other third-party pledgor.
SECTION 15. BINDING EFFECT. This Agreement shall be binding on the
Pledgor and the Pledgor's legal representatives, successors and assigns and
shall inure to the benefit of Agent, the other Banks, and their successors and
assigns.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
SECTION 17. SECTION 26.02 NOTICE. THIS AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES CONCERNING THE MATTERS CONTAINED HEREIN AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED in Bexar County, Texas on the date first above stated.
PLEDGOR:
-------
PACKAGED ICE, INC., a Texas corporation
By:__________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇.▇. ▇▇▇▇▇, III
AGENT:
-----
THE FROST NATIONAL BANK, a national
banking association
By:__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice
President
12 PII PLEDGE AND SECURITY AGREEMENT
13
EXHIBIT A
Percentage Owned Certificate Number Number of Pledged
Issuers by Pledgor Shares
------- ---------------- ------------------- -----------------
Packaged Ice Leasing, Inc. 100% 1 1,000
Southwestern Ice, Inc. 100% 1 1,000
Mission Party Ice, Inc. 100% 1 1,000
Southwest Texas Packaged Ice, Inc. 100% 1 1,000
PII PLEDGE AND SECURITY AGREEMENT