PLEDGE AGREEMENT{PRIVATE }
(SPT)
This PLEDGE AGREEMENT (this "AGREEMENT") is dated as of May 14, 1997
and entered into by and between AMALGAMATED COLLATERAL TRUST, a Delaware
business trust ("PLEDGOR"), and SNAKE RIVER SUGAR COMPANY, an Oregon cooperative
("SECURED PARTY").
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of the limited
liability company membership interest (the "PLEDGED EQUITY") described in
Schedule I annexed hereto and issued by The Amalgamated Sugar Company LLC, a
Delaware limited liability company ("LLC").
B. Valhi, Inc. ("VALHI"), a Delaware corporation and the indirect
holder of 100% of the outstanding stock of the sole owner of the Pledgor
("COMPANY"), has issued to Secured Party a Limited Recourse Promissory Note
dated January 3, 1997 in aggregate principal amount of $212,500,000 (as it may
hereafter be amended, supplemented or otherwise modified from time to time, the
"LIMITED RECOURSE PROMISSORY NOTE") and a Subordinated Promissory Note dated
January 3, 1997 in aggregate principal amount of $37,500,000 (as it may
hereafter be amended, supplemented or otherwise modified from time to time, the
"SUBORDINATED PROMISSORY NOTE", and, together with the Limited Recourse
Promissory Notes, the "NOTES").
C. Pledgor has entered into a Guaranty, dated May 14, 1997, in favor
of Secured Party (as it may hereafter be amended, supplemented or otherwise
modified from time to time, the "SPT GUARANTY"), pursuant to which Pledgor
guaranteed the obligations of Valhi under the Limited Recourse Promissory Note
and in certain circumstances the obligations of Valhi under the Subordinated
Promissory Note.
D. Pursuant to a Pledge Agreement (the "SENIOR PLEDGE AGREEMENT")
dated as of May 14, 1997 between Secured Party and First Security Bank, National
Association, as "COLLATERAL AGENT," Secured Party has pledged and assigned to
Collateral Agent, and granted to Collateral Agent a security interest in, all of
Secured Party's right, title and interest in and to the Notes and all collateral
related thereto including its interest created hereunder in the Pledged Equity.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledgor hereby agrees with Secured Party as follows:
CERTAIN DEFINITIONS. The following terms used in this Agreement
shall have the following meanings:
"CERTIFICATE OF BENEFICIAL INTEREST" means the Certificate of
Beneficial Interest as defined in the Deposit Trust Agreement of Amalgamated
Collateral Trust, dated as of May 14, 1997, between ASC Holdings, Inc. and
Wilmington Trust Company, as it may be amended, supplemented or otherwise
modified from time to time.
"COMPANY AGREEMENT" means the Company Agreement of LLC, dated January
3, 1997, as amended to the date hereof.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"EVENT OF DEFAULT" means a default under either of the Notes entitling
Secured Party to accelerate payment on the Notes.
"INDEMNIFICATION AND POST-CLOSING AGREEMENT" means the Indemnification
and Post-Closing Agreement, dated as of January 3, 1997, among ASC Holdings,
Inc., Secured Party and LLC, as it may be amended, supplemented or otherwise
modified from time to time.
"INDEMNIFICATION PLEDGE AGREEMENT" means the Amended and Restated
Indemnification Pledge Agreement, dated as of May 14, 1997, by Pledgor in favor
of Secured Party and LLC, as it may be amended, supplemented or otherwise
modified from time to time.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, limited liability companies, cooperatives or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
"RESIDENT TRUSTEE" means the Resident Trustee as defined in the
Deposit Trust Agreement of Amalgamated Collateral Trust, dated as of May 14,
1997, between ASC Holdings, Inc. and Wilmington Trust Company, as it may be
amended, supplemented or otherwise modified from time to time.
PLEDGE OF SECURITY. Pledgor hereby pledges and assigns to Secured
Party, and hereby grants to Secured Party a security interest in, all of
Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Equity and any certificates representing the Pledged
Equity and any interest of Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Equity, and all dividends, cash,
warrants, rights, 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 the Pledged Equity;
(b) all additional equity interests, and all securities convertible
into and warrants, options and other rights to purchase or otherwise acquire any
equity interests, in any issuer of the Pledged Equity from time to time acquired
by Pledgor in any manner (which interests shall be deemed to be part of the
Pledged Equity), any certificates or other instruments representing such
additional equity interests, securities, warrants, options or other rights and
any interest of Pledgor in the entries on the books of any financial
intermediary pertaining to such additional equity interests, and all dividends,
cash, warrants, rights, 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 additional equity interests, securities, warrants,
options or other rights; and
(c) to the extent not covered by clauses (a) and (b) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "PROCEEDS" includes whatever is receivable or received
when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, proceeds of any indemnity or guaranty payable to Pledgor or
Secured Party from time to time with respect to any of the Pledged Collateral.
Notwithstanding anything in this Agreement to the contrary, the
Pledged Collateral shall not include, and Secured Party shall not have a
security interest in (and Secured Party's security interest shall terminate and
automatically be released with respect to), (i) any cash distributions on
account of the Pledged Collateral paid or distributed prior to the date of any
Event of Default on the Notes to holder of the Certificate of Beneficial
Interest and (ii) any Retained Amounts (as defined in the Company Agreement)
accrued prior to an Event of Default. Upon the exercise of the put option
pursuant to Article XVIII of the Company Agreement by the Pledgor or any
mandatory redemption under Article XVII of the Company Agreement, the proceeds
received by Pledgor shall be applied as set forth in Section 13 of this
Agreement.
SECURITY FOR OBLIGATIONS. This Agreement secures, and the Pledged
Collateral is 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 (i) all obligations and
liabilities of every nature of Valhi now or hereafter existing under or arising
out of or in connection with the Subordinated Note and all extensions or
renewals thereof and (ii) all obligations and liabilities of every nature of
Pledgor now or hereafter existing under or arising out of or in connection with
the SPT Guaranty, in the case of each of clauses (i) and (ii) whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Valhi or Pledgor, would
accrue on such obligations), fees, expenses, indemnities or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, 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 Secured Party as a preference, fraudulent transfer
or otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement (all such obligations of Pledgor, together with the Underlying
Debt, being the "SECURED OBLIGATIONS").
ASSIGNMENT TO COLLATERAL AGENT; DELIVERY OF PLEDGED COLLATERAL. (a)
Pledgor hereby acknowledges and agrees that Secured Party will assign and grant
a security interest in all of Secured Party's rights in, to and under this
Agreement and the Pledged Collateral to Collateral Agent for the benefit of the
holders of the 10.80% Senior Notes due April 30, 2009 (the "SENIOR NOTES")
issued by Secured Party pursuant to the Note Purchase Agreements (the "NOTE
PURCHASE AGREEMENTS"), each dated May 14, 1997, between Secured Party and the
purchasers referred to therein, as security for Secured Party's obligations
under the Senior Notes and the Note Purchase Agreements, and thereafter
Collateral Agent shall have all of the rights granted to Secured Party
hereunder. So long as Collateral Agent has any security interest in this
Agreement or the Pledged Collateral, the term "Secured Party" shall include
Collateral Agent for all purposes under this Agreement.
(b) All certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on behalf of Collateral
Agent pursuant hereto and to the Senior Pledge Agreement and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, 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 Pledgor, to transfer to or to register in the
name of Collateral Agent or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 8(a).
(c) The parties hereto hereby acknowledge and agree that Pledgor will
direct LLC and any other applicable party, as the case may be, (i) prior to an
Event of Default, to make all payments of distributions and any other amounts in
respect of any of the Pledged Collateral directly to the Resident Trustee (or as
otherwise instructed by the Resident Trustee) and (ii) upon and after an Event
of Default, to make all payments of distributions and any other amounts in
respect of any of the Pledged Collateral directly to Collateral Agent, to be
applied as provided in the Senior Pledge Agreement.
REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants as
follows:
(a) Organization and Powers. Pledgor is a business trust duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to be
conducted and to enter into this Agreement and carry out the transactions
contemplated hereby.
(b) Authorization. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action by Pledgor.
(c) No Conflict. The execution, delivery and performance by Pledgor
of this Agreement will not (i) violate the Certificate of Trust or other
organizational documents of Pledgor, (ii) violate any provision of law
applicable to Pledgor, or any order, judgment or decree of any court or other
agency of government binding on Pledgor, (iii) be in conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Pledgor, (iv) result in or require the
creation or imposition of any Lien upon any of its properties or assets, or
(v) require the approval of LLC or any direct or indirect beneficiary of Pledgor
or any approval or consent of any Person under any Contractual Obligation of
Pledgor other than the Company Agreement.
(d) Binding Obligation. This Agreement is the legally valid and
binding obligation of Pledgor, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditors' rights generally.
(e) Due Authorization, etc. of Pledged Equity. All of the Pledged
Equity has been duly authorized and validly issued and is fully paid and non-
assessable.
(f) Description of Pledged Equity. The Pledged Equity constitutes
94.7% of the membership interests in the LLC, and there are no outstanding
warrants, options or other rights to purchase, or other agreements outstanding
with respect to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Equity other than the Company
Agreement, the Indemnification Pledge Agreement and the Senior Pledge Agreement.
(g) Ownership of Pledged Collateral. Pledgor is the legal, record
and beneficial owner of the Pledged Collateral free and clear of any Lien,
except for the security interest created by this Agreement and subject to the
limitations set forth in the Company Agreement.
(h) Governmental Authorizations. Other than the filing of
appropriate UCC financing statements with the Secretary of State (or Department
of Business Regulation, if applicable) of the States of Utah and Delaware, no
authorization, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for either (i) the pledge
by Pledgor of the Pledged Collateral pursuant to this Agreement and the grant by
Pledgor of the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the exercise by Secured Party
of the voting or other rights, or the remedies in respect of the Pledged
Collateral, provided for in this Agreement (except as may be required in
connection with a disposition of Pledged Collateral by laws affecting the
offering and sale of securities generally).
(i) Perfection. The pledge of the Pledged Collateral pursuant to
this Agreement creates a valid and perfected first priority security interest in
the Pledged Collateral, securing the payment of the Secured Obligations.
(j) Margin Regulations. The pledge of the Pledged Collateral
pursuant to this Agreement does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
(k) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Pledgor with respect to
the Pledged Collateral is accurate and complete in all material respects.
TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL; ETC.
Pledgor shall:
(a) not, except as may be expressly permitted by this Agreement, the
Notes, or the Company Agreement (subject to the Note Purchase Agreements so long
as any is in effect) (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral or (ii) create or suffer to exist any Lien upon or with respect to
any of the Pledged Collateral, except for the security interest under this
Agreement, the Senior Pledge Agreement and the Indemnification Pledge Agreement;
(b) (i) cause each issuer of Pledged Equity not to issue any equity
in addition to or in substitution for the Pledged Equity issued by such issuer,
except to Pledgor, and (ii) pledge hereunder, immediately upon acquisition
(directly or indirectly) thereof by the Pledgor, any and all additional equity
of each issuer of Pledged Equity;
(c) promptly deliver to Secured Party and Collateral Agent all
written notices received by it with respect to the Pledged Collateral; and
(d) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that Pledgor shall in any event pay such taxes, assessments, charges,
levies or claims not later than five days prior to the date of any proposed sale
under any judgement, writ or warrant of attachment entered or filed against
Pledgor or any of the Pledged Collateral as a result of the failure to make such
payment.
FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral. Without limiting the generality of the foregoing, Pledgor 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 Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Secured
Party's request, appear in and defend any action or proceeding that may affect
Pledgor's title to or Secured Party's security interest in all or any part of
the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any
additional equity or securities required to be pledged hereunder as provided in
Section 6(b), promptly (and in any event within five business days) deliver to
Secured Party a Pledge Amendment, duly executed by Pledgor, in substantially the
form of Schedule II annexed hereto (a "PLEDGE AMENDMENT"), in respect of the
additional Pledged Collateral to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Secured Party to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Collateral listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be considered
Pledged Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional Pledged Collateral pledged pursuant to
this Agreement shall not impair the security interest of Secured Party therein
or otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
VOTING RIGHTS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the Notes.
(ii) Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies and other instruments
as Pledgor may from time to time reasonably request for the purpose of
enabling Pledgor to exercise the voting and other consensual rights which
it is entitled to exercise pursuant to paragraph (i) above.
(b) Upon the occurrence and during the continuation of an Event of
Default and upon written notice from Secured Party to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 8(a)(i) shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights.
(c) In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section 8(b)
(i) Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies and other instruments as Secured
Party may from time to time reasonably request and (ii) without limiting the
effect of the immediately preceding clause (i), Pledgor hereby grants to Secured
Party an irrevocable proxy to vote the Pledged Equity and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged Equity
would be entitled (including, without limitation, giving or withholding written
consents of equity holders, calling special meetings of equity holders and
voting at such meetings), which proxy shall be effective, automatically and
without the necessity of any action (including any transfer of any Pledged
Equity on the record books of the issuer thereof) by any other Person (including
the issuer of the Pledged Equity or any officer or agent thereof), upon the
occurrence of an Event of Default and which proxy shall only terminate upon the
payment in full in cash of the Secured Obligations.
SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party 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 Pledged Collateral
without the signature of Pledgor;
(b) to ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of and constituting any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to
Pledgor representing any dividend, principal or interest payment or other
distribution in respect of and constituting the Pledged Collateral or any part
thereof and to give full discharge for the same; and
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Pledged Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Pledged Collateral.
SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 14(b).
STANDARD OF CARE. The powers conferred on Secured Party hereunder
are solely to protect its interest in the Pledged Collateral 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 Pledged Collateral in its possession and
the accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Pledged Collateral, it being understood that Secured
Party shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not Secured Party 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 Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (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 Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
REMEDIES.
(a) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Pledged Collateral, 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 Pledged Collateral), and Secured Party
may also in its sole discretion, without notice except as specified below, sell
the Pledged Collateral 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 Secured Party'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 Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Pledged Collateral. Secured Party may be the
purchaser of any or all of the Pledged Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Pledged Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of Pledgor, and Pledgor
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.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor 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. Secured Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Pledged Collateral are insufficient to pay all the Secured
Obligations, Pledgor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"SECURITIES ACT"), and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances, Pledgor agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner and that
Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or
all of the Pledged Collateral, upon written request, Pledgor shall furnish to
Secured Party all such information as Secured Party may reasonably request in
order to determine the extent to which such equity interest and any instruments
included in the Pledged Collateral which may be sold by Secured Party in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of Secured Party, be held by Secured Party as
Pledged Collateral for, and/or then, or at any time thereafter, applied in full
or in part by Secured Party 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
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder
for the account of Pledgor, and to the payment of all costs and expenses
paid or incurred by Secured Party 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 Secured Party shall elect; and
THIRD: To the payment to or upon the order of Pledgor, 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.
Notwithstanding anything to the contrary herein, upon the exercise of the put
option pursuant to Article XVIII of the Company Agreement by the Pledgor or any
mandatory redemption under Article XVII of the Company Agreement, the proceeds
received by Pledgor shall be applied to the payment of the Notes.
INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party 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 Secured Party's
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
(b) Pledgor shall pay to Secured Party 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 Secured Party may incur in connec-
tion with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Secured Party hereunder, or (iv) the failure by Pledgor to perform or
observe any of the provisions hereof.
SURETYSHIP WAIVERS BY PLEDGOR, ETC.
(a) Pledgor 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 in cash of the Underlying Debt. In
furtherance of the foregoing and without limiting the generality thereof,
Pledgor agrees as follows: (i) Secured Party 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 Pledgor's
liability hereunder, (A) renew, extend, accelerate or otherwise change the time,
place, manner or terms of payment of the Underlying Debt, (B) settle,
compromise, release or discharge, or accept or refuse any offer of performance
with respect to, or substitutions for, the Underlying Debt 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 Underlying Debt
and take and hold other security for the payment of the Underlying Debt,
(D) release, exchange, compromise, subordinate or modify, with or without
consideration, any other security for payment of the Underlying Debt, any
guaranties of the Underlying Debt, or any other obligation of any Person with
respect to the Underlying Debt, (E) enforce and apply any other security now or
hereafter held by or for the benefit of Secured Party in respect of the
Underlying Debt and direct the order or manner of sale thereof, or exercise any
other right or remedy that Secured Party may have against any such security, as
Secured Party 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 Secured Party under the Notes, at law or in equity; and
(ii) this Agreement and the obligations of Pledgor 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 in cash of the Underlying Debt),
including without limitation the occurrence of any of the following, whether or
not Pledgor 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 Underlying Debt or any agreement relating thereto, or with
respect to any guaranty of or other security for the payment of the Underlying
Debt, (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
Underlying Debt, (C) the Underlying Debt, 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 Underlying Debt, (E) any defenses,
set-offs or counterclaims which Pledgor or Valhi may allege or assert against
Secured Party in respect of the Underlying Debt, 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 Pledgor as an obligor in respect
of the Underlying Debt.
(b) Pledgor hereby waives, for the benefit of Secured Party: (i) any
right to require Secured Party, as a condition of payment or performance by
Pledgor, to (A) proceed against Valhi, any guarantor of the Underlying Debt or
any other Person, (B) proceed against or exhaust any other security held from
Valhi, any guarantor of the Underlying Debt or any other Person, (C) proceed
against or have resort to any balance of any deposit account or credit on the
books of Secured Party in favor of Valhi or any other Person, or (D) pursue any
other remedy in the power of Secured Party whatsoever; (ii) any defense arising
by reason of the incapacity, lack of authority or any disability or other
defense of Valhi including, without limitation, any defense based on or arising
out of the lack of validity or the unenforceability of the Underlying Debt or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of Valhi from any cause other than payment in full in cash of the
Underlying Debt; (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 Secured Party's errors or omissions in the administration of the
Underlying Debt, 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 Pledgor's obligations hereunder, (B) the benefit of any statute of
limitations affecting Pledgor's liability hereunder or the enforcement hereof,
(C) any rights to set-offs, recoupments and counterclaims, and (D) promptness,
diligence and any requirement that Secured Party 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 Underlying Debt or any agreement related
thereto, notices of any extension of credit to Valhi 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) As used in this Section 15(c), any reference to "the principal"
includes Pledgor and Valhi, and any reference to "the creditor" includes Secured
Party.
(d) Until the Underlying Debt shall have been paid in full in cash,
Pledgor shall withhold exercise of (i) any claim, right or remedy, direct or
indirect, that Pledgor now has or may hereafter have against Valhi or any of its
assets in connection with this Agreement or the performance by Pledgor 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 Pledgor now has or may hereafter have against Valhi,
(B) any right to enforce, or to participate in, any claim, right or remedy that
Secured Party now has or may hereafter have against Valhi, and (C) any benefit
of, and any right to participate in, any other collateral or security now or
hereafter held by Secured Party, and (ii) any right of contribution Pledgor may
have against any guarantor of any of the Underlying Debt. Pledgor 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 Pledgor may have against
Valhi or against any other collateral or security, and any rights of
contribution Pledgor may have against any such guarantor, shall be junior and
subordinate to any rights Secured Party may have against Valhi, to all right,
title and interest Secured Party may have in any such other collateral or
security, and to any right Secured Party may have against any such guarantor.
(e) Secured Party shall have no obligation to disclose or discuss
with Pledgor its assessment, or Pledgor's assessment, of the financial condition
of Valhi. Pledgor has adequate means to obtain information from Valhi on a
continuing basis concerning the financial condition of Valhi and its ability to
perform its obligations under the Notes, and Pledgor assumes the responsibility
for being and keeping informed of the financial condition of Valhi and of all
circumstances bearing upon the risk of nonpayment of the Underlying Debt.
Pledgor hereby waives and relinquishes any duty on the part of Secured Party to
disclose any matter, fact or thing relating to the business, operations or
condition of Valhi now known or hereafter known by Secured Party.
CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until the payment in full in cash of all
Secured Obligations, (b) be binding upon Pledgor, its successors and assigns,
and (c) inure, together with the rights and remedies of Secured Party hereunder,
to the benefit of Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), Secured Party may
assign or otherwise transfer the Notes to any other Person, including without
limitation Collateral Agent, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Secured Party herein or
otherwise. Upon the payment in full in cash of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Secured Party
will, at Pledgor's expense, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination, and Pledgor shall
be entitled to the return, upon its request and at its expense, against receipt
and without recourse to Secured Party, of such of the Pledged Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.
AMENDMENTS; ETC. No amendment, modification, termination or waiver
of any provision of this Agreement, and no consent to any departure by Pledgor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party and unless the same shall be (i) in the case of any
such amendment or modification, signed by Pledgor and, until payment in full in
cash of the Senior Notes, approved by the Required Holders, as defined in the
Note Purchase Agreements, and (ii) in the case of any such termination prior to
the payment in full in cash of the Senior Notes, approved by all of the Holders,
as defined in the Note Purchase Agreement. Any 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 or sent
by telefacsimile, 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
telefacsimile, or three business days after depositing it in the United States
mail 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 Secured Party 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 AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW 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
PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Notes, terms used
in Articles 8 and 9 of the 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 PLEDGOR 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 PLEDGOR
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. Pledgor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Pledgor at
its address provided in Section 18, such service being hereby acknowledged by
Pledgor to be sufficient for personal jurisdiction in any action against Pledgor
in any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of Secured Party to bring
proceedings against Pledgor in the courts of any other jurisdiction.
WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY HEREBY AGREE 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. Pledgor and Secured Party each
acknowledge that this waiver is a material inducement for Pledgor and Secured
Party to enter into a business relationship, that Pledgor and Secured Party 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. Pledgor and
Secured Party further warrant and represent 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, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
AMALGAMATED COLLATERAL TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Trustee
By:
Name:
Title:
Notice Address:
Wilmington Trust Company, as Trustee
for Amalgamated Collateral Trust
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Corporate Trust Administration
SNAKE RIVER SUGAR COMPANY
By:
Name:
Title:
Notice Address:
Snake River Sugar Company
0000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx, Xxxx 00000
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of May
14, 1997 between Amalgamated Collateral Trust, as Pledgor, and Snake River Sugar
Company, as Secured Party.
Equity Issuer Equity Interest
The Amalgamated Sugar Company LLC AGM Interest, as defined
in the Company Agreement
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is delivered pursuant to
Section 7(b) of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement dated
May 14, 1997, between the undersigned and Snake River Sugar Company, as Secured
Party (the "PLEDGE AGREEMENT," capitalized terms defined therein being used
herein as therein defined), and that the Pledged Collateral listed on this
Pledge Amendment shall be deemed to be and become part of the Pledged Collateral
and shall secure all Secured Obligations.
AMALGAMATED COLLATERAL TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Trustee
By: __________________________
Title:
[LIST PLEDGED COLLATERAL]
