COLLATERAL DEPOSIT AGREEMENT{PRIVATE }
This COLLATERAL DEPOSIT AGREEMENT (this "AGREEMENT") is dated as of
May 14, 1997 and entered into by and among SNAKE RIVER SUGAR COMPANY, an Oregon
cooperative ("COMPANY"), VALHI, INC., a Delaware corporation ("VALHI"), and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Collateral Agent for the holders
of the Notes referred to below ("COLLATERAL AGENT").
PRELIMINARY STATEMENTS
Pursuant to those certain Note Purchase Agreements (the "NOTE
PURCHASE AGREEMENTS," the terms defined therein and not otherwise defined herein
being used herein as therein defined), each dated May 14, 1997, between Company
and the purchasers referred to therein (the "PURCHASERS"), Company has issued to
the Purchasers $100,000,000 aggregate principal amount of its 10.80% Senior
Notes due April 30, 2009 (said Senior Notes, as they may hereafter be amended,
supplemented or otherwise modified from time to time, being the "NOTES").
Pursuant to a Loan and Security Agreement dated as of January 3,
1997, as amended and restated by the Subordinated Loan Agreement dated as of May
14, 1997, Company has issued to Valhi, Inc., a Delaware Corporation ("VALHI") a
subordinated note in the principal amount of $80,000,000 (as such subordinated
note may be amended, renewed or otherwise modified from time to time the
"SUBORDINATED NOTE").
As Company may from time to time wish to make, and Valhi may wish
to receive, payments of the principal and interest on the Subordinated Note and
the holders of the Notes require that such payments not interfere with Company's
obligations under the Note Purchase Agreements and the Notes, Xxxxxxxxxx Xxxxx,
Xxxxx and Company desire to enter into this Agreement, pursuant to which Company
or Valhi shall, if it is desired that certain payments be made on the
Subordinated Note, deposit certain funds in collateral accounts established
herein to be maintained by or for Collateral Agent.
It is a condition precedent to the initial purchase of Notes by
Purchasers under the Note Purchase Agreements that Company and Valhi shall have
undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Purchasers to purchase Notes under the Note Purchase Agreements and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each of Company and Valhi hereby agrees with Collateral
Agent as follows:
DEFINITIONS. The following terms used in this Agreement shall have
the following meanings:
"CASH EQUIVALENTS" means, as at any date of determination,
(i) marketable securities issued or directly and unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within thirty
(30) days from such date; (ii) marketable direct obligations issued by any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within thirty (30) days from such
date and, at the time of acquisition thereof, having the highest rating
obtainable from either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc.; (iii) commercial paper maturing no more than thirty (30) days
from such date and, at the time of acquisition thereof, having the highest
rating obtainable from either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc.; and (iv) certificates of deposit or bankers' acceptances maturing
within thirty (30) days from such date issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having unimpaired capital and surplus of not less than
$500,000,000.
"COMPANY AGREEMENT" means the Company Agreement of LLC dated as of
January 3, 1997, as amended to the date of the Closing.
"FULLY FUNDED", with respect to the Payment Deposit Accounts, means
such accounts contain (i) cash and/or Cash Equivalents with a fair market value
of at least $5,000,000 plus (ii) marketable securities (in the case of the
Valhi/Snake Account only), cash and/or Cash Equivalents with a fair market value
of $5,000,000 (marketable securities in the Valhi/Snake Account being marked to
market by the Collateral Agent on a quarterly basis on the last Business Day of
each March, June, September and December).
"INVESTMENTS" means those investments, if any, made by Collateral
Agent pursuant to Section 5.
"PAYMENT DEPOSIT" means (i) the Payment Deposit Accounts and all
amounts from time to time on deposit therein, (ii) all Investments, including
all certificates and instruments from time to time representing or evidencing
such Investments and any account or accounts in which such Investments may be
held by, or in the name of, Collateral Agent for or on behalf of Company or
Valhi, as the case may be, (iii) all notes, certificates of deposit, checks and
other instruments and all deposits and securities from time to time hereafter
transferred to or otherwise possessed by, or held in the name of, Collateral
Agent for or on behalf of Company or Valhi in substitution for or in addition to
any or all of the Payment Deposit, (iv) all interest, 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 the Payment
Deposit, and (v) to the extent not covered by clauses (i) through (iv) above,
all proceeds of any or all of the foregoing Payment Deposit.
"PAYMENT DEPOSIT ACCOUNTS" means the Snake River Payment Deposit
Account and Valhi/Snake Payment Deposit Account established and maintained with
Collateral Agent pursuant to Section 2.
"SECURED OBLIGATIONS" means all obligations and liabilities of every
nature of Company now or hereafter existing under or arising out of or in
connection with the Note Purchase Agreements, the Notes and the Collateral
Documents and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Company, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or unliqui-
dated, whether or not jointly owed with others, and whether or not from time to
time decreased or extinguished and later increased, created or incurred, and all
or any portion of such obligations or liabilities that are paid, to the extent
all or any part of such payment is avoided or recovered directly or indirectly
from Collateral Agent or any holder of a Note as a preference, fraudulent
transfer or otherwise, and all obligations of every nature of Company now or
hereafter existing under this Agreement.
"SNAKE RIVER ACCOUNT" has the meaning given in Section 2.
"VALHI/SNAKE ACCOUNT" has the meaning given in Section 2.
PAYMENT DEPOSIT ACCOUNT; FULL FUNDING OF ACCOUNT.
The Collateral Agent will establish and maintain at its office at
00 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx Trust Department, Salt Lake City, Utah, as
blocked accounts in the name of the Collateral Agent and under the sole dominion
and control of Collateral Agent, a deposit account designated as the "Snake
River Payment Deposit Account" (the "SNAKE RIVER ACCOUNT") and a deposit account
designated as the Valhi/Snake Payment Deposit Account (the "VALHI/SNAKE
ACCOUNT").
From time to time as contemplated by Section 10.5 of the Note
Purchase Agreements, Company may deposit with the Collateral Agent cash and Cash
Equivalents to be placed in the Snake River Account and Valhi may deposit with
the Collateral Agent to be placed in the Valhi/Snake Account marketable
securities, cash and Cash Equivalents so that the Payment Deposit Accounts will
at all times remain Fully Funded. The Collateral Agent shall hold such cash and
Cash Equivalents and, as to the Valhi/Snake Account, marketable securities in
the Payment Deposit Accounts pursuant to the terms hereof. If, as of the last
Business Day of each March, June, September and December, Collateral Agent
determines that the Payment Deposit Accounts are not Fully Funded, Collateral
Agent will promptly notify Company and Valhi of the amount required to cause the
Payment Deposit Account to be Fully Funded.
Any interest and dividends received in respect of marketable
securities and Investments of any amounts held in the Payment Deposit Accounts
shall be delivered by Collateral Agent to Company or Valhi (as appropriate) on
the last Business Day of each March, June, September and December, provided that
such interest and dividends shall be retained in the Payment Deposit Accounts to
the extent necessary to keep the Payment Deposit Accounts Fully Funded; provided
that Collateral Agent shall not deliver to Company any such interest received in
respect of Investments if an Event of Default or Default has occurred and is
then continuing.
Notwithstanding Section 2(b) above, if no Default or Event of
Default shall have occurred and be continuing, then in the event Company shall
have repaid (without the exercise by the Required Holders or the Collateral
Agent of remedies under the Note Purchase Agreements or the Collateral
Documents) an amount in excess of $50,000,000 in principal amount of the Notes,
the Collateral Agent will, at the request of Company or Valhi, as applicable,
terminate its security interest in the Payment Deposit and the Payment Deposit
Accounts and Company (as to the Snake River Account) or Valhi (as to the
Valhi/Snake Accounts) shall be entitled to the return of the Payment Deposit,
all in accordance with Section 15 of this Agreement, except to the extent of any
obligations or expenses that have arisen on or prior to the date of repayment,
in respect of Section 14 of this Agreement. If a Default or Event of Default
has occurred and is continuing at the time the Company or Valhi, as applicable,
would be entitled to the return of the Payment Deposit under this Section 2(d)
but for the existence of such Default or Event of Default, and the Company or
Valhi, as applicable, requests the return of the Payment Deposit as provided
above, then the Collateral Agent, at the direction of the Required Holders,
shall within a reasonable period either (i) liquidate the Payment Deposit and
apply the proceeds thereof as a prepayment of the Notes pursuant to Section 8.2
of the Note Purchase Agreements, together with accrued interest and Make-Whole
Amount, if any, on the amount so prepaid (and the Company and Valhi hereby
authorize such liquidation of the Payment Deposit and prepayment of the Notes),
provided that the Collateral Agent shall provide Valhi written notice prior to
any such liquidation of the Payment Deposit and Valhi shall have five days after
receipt of such notice to substitute cash for marketable securities included in
the Payment Deposit or (ii) return the Payment Deposit to the Company (as to the
Snake River Account) or to Valhi (as to the Valhi/Snake Account).
PLEDGE OF SECURITY FOR SECURED OBLIGATIONS. Each of Company and
Valhi hereby pledges and assigns to Collateral Agent, and hereby grants to
Collateral Agent a security interest in, all of Company's or Valhi's (as the
case may be) right, title and interest in and to the Payment Deposit as
collateral security for the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. Section362(a)), of all Secured Obligations.
DELIVERY OF PAYMENT DEPOSIT. (a) All certificates or instruments,
if any, representing or evidencing Payment Deposit shall be delivered to and
held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Company's or Valhi's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Collateral Agent. In the event any portion of Payment Deposit
is not evidenced by a certificate, a notation reflecting title in the name of
Collateral Agent or the security interest of Collateral Agent shall be made in
the records of the issuer of such Payment Deposit or in such other appropriate
records as Collateral Agent may require, all in form and substance satisfactory
to Collateral Agent. Collateral Agent shall have the right, at any time in its
discretion and without notice to Company or Valhi, to transfer to or to register
in the name of Collateral Agent or any of its nominees any or all of the Payment
Deposit. In addition, Collateral Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Payment Deposit
for certificates or instruments of smaller or larger denominations.
(b) So long as no Event of Default shall have occurred and be
continuing:
(i) Valhi shall be entitled to exercise any and all voting and
other consensual rights pertaining to the marketable securities in the
Valhi/Snake Account or any part thereof for any purpose not
inconsistent with the terms of this Agreement;
(ii) Collateral Agent shall promptly execute and deliver (or
cause to be executed and delivered) to Valhi all such proxies and
other instruments as Valhi may from time to time reasonably request
for the purpose of enabling Valhi to exercise the voting and other
consensual rights which it is entitled to exercise pursuant to
paragraph (i) above.
(c) Upon the occurrence and during the continuation of an Event of
Default and upon written notice from Collateral Agent to Valhi, all rights of
Valhi to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 4(b)(i) shall cease, and
all such rights shall thereupon become vested in Collateral Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights.
INVESTMENT OF AMOUNTS IN THE PAYMENT DEPOSIT ACCOUNT. Cash held by
Collateral Agent in the Payment Deposit Accounts shall not be invested or
reinvested except as provided in this Section 5.
Except as otherwise provided in Section 13, any cash on deposit
in the Payment Deposit Accounts shall, so long as no Event of Default or Default
has occurred and is continuing, be invested by Collateral Agent in its own name
in Cash Equivalents from time to time designated by Company or Valhi, as
applicable, in written notices to Collateral Agent.
Collateral Agent is hereby authorized to sell, and shall sell,
all or any designated part of the securities constituting part of the Payment
Deposit (i) so long as no Event of Default or Default shall have occurred and be
continuing, upon receipt of appropriate written instructions from Company or
Valhi (as applicable) or (ii) in any event if such sale is necessary to permit
Collateral Agent to perform its duties hereunder. Collateral Agent shall have
no responsibility for any loss resulting from a fluctuation in interest rates or
otherwise. Subject to the provisions of Section 2(c), any interest received in
respect of securities constituting part of the Payment Deposit and the net
proceeds of the sale or payment of any such securities shall be held in the
Payment Deposit Accounts by Collateral Agent pending investment thereof pursuant
to Section 5(a).
Valhi may at any time instruct the Collateral Agent to sell the
marketable securities held in the Valhi/Snake Account, the proceeds of which
sale shall be retained in the Valhi/Snake Account and may be invested as
provided in this Section 5.
The Payment Deposit Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or governmental authority,
as may now or hereafter be in effect.
REPRESENTATIONS AND WARRANTIES. (a) Company represents and warrants
as follows:
(i) Ownership of Payment Deposit. Company is (or at the time of
transfer to Collateral Agent thereof will be) the legal and beneficial owner of
the Payment Deposit from time to time transferred by Company to Collateral
Agent, free and clear of any Lien except for the security interest created by
this Agreement.
(ii) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (x) the grant by Company of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by Company or (y) the perfection of or the exercise by Collateral
Agent of its rights and remedies hereunder (except as may have been taken by or
at the direction of Company) other than the filing of appropriate UCC-1
financing statements.
(iii) Perfection. Assuming continued possession of the Payment
Deposit by the Collateral Agent, the pledge and assignment of the Payment
Deposit pursuant to this Agreement creates a valid and perfected first priority
security interest in the Payment Deposit, securing the payment of the Secured
Obligations.
(iv) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of Company with respect
to the Payment Deposit is accurate and complete in all material respects.
(b) Valhi represents and warrants as follows:
(i) Ownership of Payment Deposit. Valhi is (or at the time of
transfer to Collateral Agent thereof will be) the legal and beneficial owner of
the Payment Deposit from time to time transferred by Valhi to Collateral Agent,
free and clear of any Lien except for the security interest created by this
Agreement.
(ii) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (x) the grant by Valhi of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by Valhi or (y) the perfection of or the exercise by Collateral Agent
of its rights and remedies hereunder (except as may have been taken by or at the
direction of Valhi) other than the filing of appropriate UCC-1 financing
statements.
(iii) Perfection. Assuming continued possession of the Payment
Deposit by the Collateral Agent, the pledge and assignment of the Payment
Deposit pursuant to this Agreement creates a valid and perfected first priority
security interest in the Payment Deposit, securing the payment of the Secured
Obligations.
(iv) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of Valhi with respect to
the Payment Deposit is accurate and complete in all material respects.
FURTHER ASSURANCES. Each of Company and Valhi agrees that from time
to time, at the expense of Company or Valhi, as the case may be, it will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that Collateral Agent may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Payment Deposit.
Without limiting the generality of the foregoing, Company and Valhi will:
(i) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Collateral Agent may request, in order to perfect and preserve
the security interests granted or purported to be granted hereby and (ii) at
Collateral Agent's request, appear in and defend any action or proceeding that
may affect Company's or Valhi's title to or Collateral Agent's security interest
in all or any part of the Payment Deposit.
TRANSFERS AND OTHER LIENS. Each of Company and Valhi agrees that it
will not (a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any part of the Payment Deposit or (b) create or suffer to exist any
Lien upon or with respect to any of the Payment Deposit, except for the security
interest under this Agreement.
COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each of Company and
Valhi hereby irrevocably appoints Collateral Agent as Company's and Valhi's
attorney-in-fact, with full authority in the place and stead of Company or
Valhi, as the case may be, and in the name of Company or Valhi, as the case may
be, Collateral Agent or otherwise, from time to time in Collateral Agent's
discretion to take any action and to execute any instrument that Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation (a) to file one or more financing or
continuation statements, or amendments thereto, relative to all or any part of
the Payment Deposit without the signature of Company or Valhi and (b) to
receive, endorse and collect any instruments made payable to Company or Valhi
representing any dividend, principal or interest payment or other distribution
in respect of the Payment Deposit or any part thereof and to give full discharge
for the same.
COLLATERAL AGENT MAY PERFORM. If Company or Valhi fails to perform
any agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of Collateral Agent incurred in
connection therewith shall be payable by Company or Valhi, as applicable, under
Section 14.
STANDARD OF CARE. The powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Payment Deposit and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Payment Deposit in its
possession and the accounting for moneys actually received by it hereunder,
Collateral Agent shall have no duty as to any Payment Deposit, it being
understood that Collateral Agent shall have no responsibility for
(a) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Payment Deposit, whether or
not Collateral Agent has or is deemed to have knowledge of such matters,
(b) taking any necessary steps (other than steps taken in accordance with the
standard of care set forth above to maintain possession of the Payment Deposit)
to preserve rights against any parties with respect to any Payment Deposit,
(c) taking any necessary steps to collect or realize upon the Secured
Obligations or any guarantee therefor, or any part thereof, or any of the
Payment Deposit, (d) initiating any action to protect the Payment Deposit
against the possibility of a decline in market value, (e) any loss resulting
from Investments made pursuant to Section 5, except for a loss resulting from
Collateral Agent's gross negligence or willful misconduct in complying with
Section 5, or (f) determining (i) the correctness of any statement or
calculation made by Company or Valhi in any written instructions or (ii) whether
any deposit in the Payment Deposit Account is proper. Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of
Payment Deposit in its possession if such Payment Deposit is accorded treatment
substantially equal to that which Collateral Agent accords its own property
consisting of negotiable securities.
REMEDIES. If any Event of Default shall have occurred and be
continuing, Collateral Agent may exercise in respect of the Payment Deposit, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Payment Deposit), and
Collateral Agent may also in its sole discretion, without notice except as
specified below, sell the Payment Deposit or any part thereof in one or more
parcels at public or private sale, at any exchange or broker's board or at any
of Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Collateral Agent may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Payment Deposit. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of Company or Valhi, and each of Company and Valhi
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each of Company and Valhi agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Company or Valhi, as applicable of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. Collateral Agent shall
not be obligated to make any sale of the Payment Deposit regardless of notice of
sale having been given. Collateral Agent 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.
APPLICATION OF PROCEEDS. Subject to the provisions of Section 2(b),
if any Event of Default shall have occurred and be continuing, all cash held by
Collateral Agent as Payment Deposit and all proceeds received by Collateral
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Payment Deposit may, in the discretion of Collateral Agent,
be held by Collateral Agent as Payment Deposit for, and/or then, or at any other
time thereafter, applied in full or in part by Collateral Agent against, the
Secured Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Collateral Agent and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Collateral Agent in connection
therewith, and all amounts for which Collateral Agent is entitled to
indemnification hereunder and all advances made by Collateral Agent
hereunder for the account of Company or Valhi, and to the payment of all
costs and expenses paid or incurred by Collateral Agent in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 14;
SECOND: To the payment of all other Secured Obligations in such order
as Collateral Agent shall elect; and
THIRD: To the payment to or upon the order of Company or Valhi, as
applicable, or to whosoever may be lawfully entitled to receive the same or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
INDEMNITY AND EXPENSES.
Company agrees to indemnify Collateral Agent from and against any
and all claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
Company will pay to Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Payment Deposit, (iii) the exercise or enforcement
of any of the rights of Collateral Agent hereunder, or (iv) the failure by
Company or Valhi to perform or observe any of the provisions hereof.
CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This Agreement
shall create a continuing security interest in the Payment Deposit and shall
(a) remain in full force and effect until the payment in full of the Secured
Obligations or the time at which the condition set forth in Section 2(d) shall
have been satisfied, (b) be binding upon Company and Valhi, its successors and
assigns, and (c) inure, together with the rights and remedies of Collateral
Agent hereunder, to the benefit of Collateral Agent and its successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), but subject to the provisions of Section 13.2 of the Note Purchase
Agreements, any holder of a Note may assign or otherwise transfer any Notes held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Collateral Agent herein or
otherwise. Upon the payment in full of all Secured Obligations the security
interest granted hereby shall terminate and all rights to the Payment Deposit
shall revert to Company or Valhi, as applicable. Upon any such termination
Collateral Agent will, at Company's or Valhi's expense, execute and deliver to
Company or Valhi such documents as Company or Valhi shall reasonably request to
evidence such termination and Company and/or Valhi, as applicable, shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Collateral Agent, of such of the Payment Deposit as shall
not have been sold or otherwise applied pursuant to the terms hereof.
COLLATERAL AGENT AS AGENT.
Collateral Agent has been appointed to act as Collateral Agent
hereunder by Purchasers. Collateral Agent shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Payment Deposit),
solely in accordance with this Agreement and the Collateral Agency Agreement.
Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Collateral Agency Agreement. Written notice of
resignation by Collateral Agent pursuant to the Collateral Agency Agreement
shall also constitute notice of resignation as Collateral Agent under this
Agreement; removal of Collateral Agent pursuant to the Collateral Agency
Agreement shall also constitute removal as Collateral Agent under this
Agreement; and appointment of a successor Collateral Agent pursuant to the
Collateral Agency Agreement shall also constitute appointment of a successor
Collateral Agent under this Agreement. Upon the acceptance of any appointment
as Collateral Agent under the Collateral Agency Agreement by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
or removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Payment
Deposit held hereunder (which shall be deposited in new Payment Deposit Accounts
established and maintained by such successor Collateral Agent), together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Collateral Agent under this
Agreement, and (ii) execute and deliver to such successor Collateral Agent such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Collateral Agent of the security interests created hereunder, whereupon such
retiring or removed Collateral Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Collateral
Agent's resignation or removal hereunder as Collateral Agent, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Collateral Agent hereunder.
SURETYSHIP WAIVERS BY VALHI, ETC.
(a) Valhi agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Secured Obligations. In furtherance of
the foregoing and without limiting the generality thereof, Valhi agrees as
follows: (i) Collateral Agent may from time to time, without notice or demand
and without affecting the validity or enforceability of this Agreement or giving
rise to any limitation, impairment or discharge of Valhi's liability hereunder,
(A) renew, extend, accelerate or otherwise change the time, place, manner or
terms of payment of the Secured Obligations, (B) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Secured Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations, (C) request and accept guaranties of the Secured Obligations and
take and hold other security for the payment of the Secured obligations,
(D) release, exchange, compromise, subordinate or modify, with or without
consideration, any other security for payment of the Secured Obligations, any
guaranties of the Secured Obligations, or any other obligation of any Person
with respect to the Secured Obligations, (E) enforce and apply any other
security now or hereafter held by or for the benefit of Collateral Agent in
respect of the Secured Obligations and direct the order or manner of sale
thereof, or exercise any other right or remedy that Collateral Agent may have
against any such security, as Collateral Agent in its discretion may determine
consistent with the Notes and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and (F) exercise any other rights available to Collateral Agent under the Notes,
at law or in equity; and (ii) this Agreement and the obligations of Valhi
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Secured Obligations), including without limitation the occurrence of any
of the following, whether or not Valhi shall have had notice or knowledge of any
of them: (A) any failure to assert or enforce or agreement not to assert or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy with respect to the Secured Obligations or any agreement
relating thereto, or with respect to any guaranty of or other security for the
payment of the Secured Obligations, (B) any waiver, amendment or modification
of, or any consent to departure from, any of the terms or provisions (including
without limitation provisions relating to events of default) of the Notes or any
agreement or instrument executed pursuant thereto, or of any guaranty or other
security for the Secured Obligations, (C) the Secured Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (D) any failure to perfect or continue perfection
of a security interest in any other collateral which secures any of the Secured
Obligations, (E) any defenses, set-offs or counterclaims which Company may
allege or assert against Collateral Agent in respect of the Secured Obligations,
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury, and (F) any other act or thing or omission, or delay to do any other act
or thing, which may or might in any manner or to any extent vary the risk of
Valhi as an obligor in respect of the Secured Obligations.
(b) Valhi hereby waives, for the benefit of Collateral Agent:
(i) any right to require Collateral Agent, as a condition of payment or
performance by Valhi, to (A) proceed against Company, any guarantor of the
Secured Obligations or any other Person, (B) proceed against or exhaust any
other security held from Company, any guarantor of the Secured Obligations or
any other Person, (C) proceed against or have resort to any balance of any
deposit account or credit on the books of Collateral Agent in favor of Company
or any other Person, or (D) pursue any other remedy in the power of Collateral
Agent whatsoever; (ii) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including, without
limitation, any defense based on or arising out of the lack of validity or the
unenforceability of the Secured Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the liability of Company from
any cause other than payment in full of the Secured Obligations; (iii) any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; (iv) any defense based upon Collateral
Agent's errors or omissions in the administration of the Secured Obligations,
except behavior which amounts to bad faith; (v) (A) any principles or provisions
of law, statutory or otherwise, which are or might be in conflict with the terms
of this Agreement and any legal or equitable discharge of Valhi's obligations
hereunder, (B) the benefit of any statute of limitations affecting Valhi's
liability hereunder or the enforcement hereof, (C) any rights to set-offs,
recoupments and counterclaims, and (D) promptness, diligence and any requirement
that Collateral Agent protect, secure, perfect or insure any other security
interest or lien or any property subject thereto; (vi) notices, demands,
presentments, protests, notices of protest, notices of dishonor and notices of
any action or inaction, notices of default under the Notes or any agreement or
instrument related thereto, notices of any renewal, extension or modification of
the Secured Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
the preceding paragraph and any right to consent to any thereof; and (vii) to
the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Agreement.
(c) Until the Secured Obligations shall have been paid in full, Valhi
shall withhold exercise of (i) any claim, right or remedy, direct or indirect,
that Valhi now has or may hereafter have against Company or any of its assets in
connection with this Agreement or the performance by Valhi of its obligations
hereunder, in each case whether such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise and including without
limitation (A) any right of subrogation, reimbursement or indemnification that
Valhi now has or may hereafter have against Company, (B) any right to enforce,
or to participate in, any claim, right or remedy that Collateral Agent now has
or may hereafter have against Company, and (C) any benefit of, and any right to
participate in, any other collateral or security now or hereafter held by
Collateral Agent, and (ii) any right of contribution Valhi may have against any
guarantor of any of the Secured Obligations. Valhi further agrees that, to the
extent the waiver of its rights of subrogation, reimbursement, indemnification
and contribution as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any rights of subrogation,
reimbursement or indemnification Valhi may have against Company or against any
other collateral or security, and any rights of contribution Valhi may have
against any such guarantor, shall be junior and subordinate to any rights
Collateral Agent may have against Company, to all right, title and interest
Collateral Agent may have in any such other collateral or security, and to any
right Collateral Agent may have against any such guarantor.
(e) Collateral Agent shall have no obligation to disclose or discuss
with Valhi its assessment, or Valhi's assessment, of the financial condition of
Company. Valhi has adequate means to obtain information from Company on a
continuing basis concerning the financial condition of Company and its ability
to perform its obligations under the Notes, and Valhi assumes the responsibility
for being and keeping informed of the financial condition of Company and of all
circumstances bearing upon the risk of nonpayment of the Secured Obligations.
Valhi hereby waives and relinquishes any duty on the part of Collateral Agent to
disclose any matter, fact or thing relating to the business, operations or
condition of Company now known or hereafter known by Collateral Agent.
SUBROGATION. After all of the Notes have been paid in full in cash,
Valhi shall be subrogated to the right of the holders of the Notes to receive
distributions and payments applicable to the Notes to the extent that any
proceeds of the Valhi/Snake Account have been applied to the payment of the
Notes. Proceeds of the Valhi/Snake Account that have been applied to the
payment of the Notes are not, as between the Company and Valhi, a payment by the
Company on the Notes.
AMENDMENTS; ETC. No amendment or waiver of any provision of this
Agreement, or consent to any departure by Company or Valhi herefrom, shall in
any event be effective unless the same shall be in writing and signed by
Collateral Agent, the Company and Valhi and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
NOTICES. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served,
telecopied or sent by United States mail or courier service and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of telecopy, or four Business Days after depositing it in the United States
mail, registered or certified, with postage prepaid and properly addressed. For
the purposes hereof, the address of each party hereto shall be as set forth
under such party's name on the signature pages hereof or, as to either party,
such other address as shall be designated by such party in a written notice
delivered to the other party hereto.
FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of Collateral Agent in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PAYMENT
DEPOSIT ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK. Unless otherwise defined herein or in the Note Purchase Agreements, terms
used in Article 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST COMPANY OR VALHI ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH
OF COMPANY AND VALHI ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
WAIVER OF JURY TRIAL. EACH OF COMPANY, VALHI AND COLLATERAL AGENT
HEREBY AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Company, Valhi and
Collateral Agent each acknowledge that this waiver is a material inducement for
Company, Valhi and Collateral Agent to enter into a business relationship, that
Company, Valhi and Collateral Agent have already relied on this waiver in
entering into this Agreement and that each will continue to rely on this waiver
in their related future dealings. Each of Company, Valhi and Collateral Agent
further warrants and represents that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, Company, Valhi and Collateral Agent have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
SNAKE RIVER SUGAR COMPANY
By:
Name:
Title:
Notice Address:
Snake River Sugar Company
0000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx, Xxxx 00000
VALHI, INC.
By:
Name:
Title:
Notice Address:
Valhi, Inc.
Three Lincoln Center
0000 XXX Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as
Collateral Agent
By:
Name:
Title:
Notice Address:
First Security Bank,
National Association
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx Trust Department
Xxxx Xxxx Xxxx, Xxxx 00000
