EXECUTION COPY
EXHIBIT 10.1
PREPAYMENT AND TERMINATION AGREEMENT
This Prepayment and Termination Agreement (this "Agreement") is dated as of
October 14, 2005 and is made by and between Valhi, Inc., a Delaware corporation
("Valhi"), Snake River Sugar Company, an Oregon cooperative corporation ("Snake
River") and Wells Fargo Bank Northwest, N.A. ("WFB", and formerly known as First
Security Bank, National Association).
PRELIMINARY STATEMENTS
A. Snake River and Valhi are parties to a Subordinated Loan Agreement dated
January 3, 1997, as amended and restated May 14, 1997, and as further
amended as of November 30, 1998 and October 19, 2000 (collectively, as so
amended, the "Subordinated Loan Agreement").
B. Snake River and Valhi are parties to a Contingent Subordinate Security
Agreement dated as of October 19, 2000 (the "Contingent Subordinate
Security Agreement").
C. Snake River and Valhi are parties to a Contingent Subordinate Pledge
Agreement dated as of October 19, 2000 (the "Contingent Subordinate Pledge
Agreement").
D. Snake River, Valhi and WFB are parties to a Contingent Subordinate
Collateral Agency and Paying Agency Agreement dated as of October 19, 2000
(the "Contingent Subordinate Collateral Agency and Paying Agency
Agreement").
E. Snake River made a interest payment to Valhi under the Subordinated Loan
Agreement on August 31, 2005 in the amount of $1,137,847.23, and Snake
River made additional interest payments to Valhi under the Subordinated
Loan Agreement on September 30, 2005 in the amounts of $1,963,541.67 and
$2,400,000.00.
F. Snake River is currently in compliance with all terms, provisions and
covenants to which it is subject under the Subordinated Loan Agreement.
G. Snake River desires to prepay an aggregate of $94,758,211.06 on October 18,
2005 owed to Valhi under the Subordinated Loan Agreement, using funds
generated from certain new senior indebtedness of Snake River (the "Senior
Notes") issued pursuant to the terms of a note purchase agreement (the
"Note Purchase Agreement") dated as of October 17, 2005, and Valhi desires
to accept such prepayment, in return for which Valhi is willing to
discharge Snake River's remaining obligations under the Subordinated Loan
Agreement, and certain other agreements related to the Subordinated Loan
Agreement would be terminated.
H. In connection with Snake River's issuance of the Senior Notes pursuant to
the Note Purchase Agreement, certain agreements to which certain of Valhi's
subsidiaries are a party will require amendment or restatement.
NOW THEREFORE, in consideration of the foregoing and upon the full and
complete satisfaction of the conditions precedent to the effectiveness of this
Agreement set forth in Section 5 hereof, and for other good and sufficient
consideration, the receipt of which is hereby acknowledged, the parties do
hereby agree as follows:
1. Definitions.
1.1. The terms "Subordinated Notes" and "Obligations" have the same meaning
as defined in the Subordinated Loan Agreement.
1.2. The term "Discharged Documents" means the Subordinated Loan Agreement,
the Subordinated Notes and any ancillary instruments, documents or
agreements related thereto.
1.3. The term "ASC" means ASC Holdings, Inc., a Utah corporation and an
indirectly, wholly-owned subsidiary of Valhi.
1.4. The term "Trust" means the Amalgamated Collateral Trust, a business
trust organized under the laws of the state of Delaware, whose sole
Certificate of Beneficial Interest is held by ASC.
2. Prepayment. Notwithstanding Section 8.1(g) or any other provision of the
Subordinated Loan Agreement, Valhi and Snake River agree that Snake River's
$94,758,211.06 prepayment under the Subordinated Loan Agreement will be
applied as follows: (i) first, $80 million will be applied to the
outstanding principal amount of the Subordinated Notes; and (ii) second,
$14,758,211.06 will be applied to accrued and unpaid interest owed on the
Obligations.
3. Discharge and Termination. After application of the $94,758,211.06
prepayment under the Subordinated Loan Agreement as described in Section 2
of this Agreement, Valhi and Snake River agree that (i) all remaining
Obligations of Snake River under the Discharged Documents, including
without limitation the remaining amount of accrued and unpaid interest owed
on the Obligations, shall be forgiven and discharged and the Obligations
and Discharged Documents shall be considered performed and satisfied; (ii)
Snake River shall be released from and owe no further Obligations to Valhi
under the Discharged Documents, and Snake River shall be fully released
from all Obligations under the Discharged Documents; and (iii) the
Discharged Documents shall be terminated.
4. Termination of Other Agreements. Concurrent with the termination of the
Discharged Documents as provided in Section 3 of this Agreement, each of
the Contingent Subordinate Security Agreement, the Contingent Subordinate
Pledge Agreement and the Contingent Subordinate Collateral Agency and
Paying Agency Agreement shall be terminated, and Snake River shall be
released from and have no further obligation or duty under each of the
Contingent Subordinate Security Agreement, the Contingent Subordinate
Pledge Agreement and the Contingent Subordinate Collateral Agency and
Paying Agency Agreement. Valhi agrees that all security interests granted
to it to secure the Obligations are hereby terminated, and Valhi authorizes
Snake River and WFB, as applicable, to take any action necessary to reflect
the termination of such security interests, including without limitation
the filing of UCC termination statements and the return of any collateral
held by Valhi or WFB.
5. Conditions Precedent. Each of the following shall be considered a condition
precedent to the effectiveness of this Agreement:
5.1. Snake River shall have made the $94,758,211.06 prepayment to Valhi
under the Subordinated Loan Agreement as provided for in Section 2
herein;
5.2. Valhi, Snake River and the purchasers of the Senior Notes shall have
entered into an agreement, on terms acceptable to Valhi, pursuant to
which Valhi would be granted an option to purchase all, and only all,
of the Senior Notes from the holders thererof;
5.3. The Company Agreement of The Amalgamated Sugar Company LLC, a limited
liability company organized pursuant to the Delaware Limited Liability
Company Act, as amended, shall be amended and restated on terms
acceptable to ASC.
5.4. The Deposit Trust Agreement relating to the Trust shall be amended on
terms acceptable to ASC.
5.5. The terms of a pledge agreement entered into between ASC and Snake
River shall be amended and restated on terms acceptable to ASC.
5.6. The terms of a pledge agreement entered into between the Trust and
Snake River shall be amended and restated on terms acceptable to ASC.
5.7. The terms of a guaranty issued by the Trust in favor of and for the
benefit of Snake River shall be amended and restated on terms
acceptable to ASC.
6. Representations and Warranties. Each party to this Agreement hereby
represents and warrants as follows:
6.1. Organization and Authority. Each party to this Agreement is an
organization duly and validly organized and existing and in good
standing under the laws of their respective states of incorporation,
and each party has the full power to enter into and perform its
obligations under this Agreement.
6.2. Authorization and Enforceability. The execution, delivery and
performance of this Agreement by each party are within their
respective powers and have been duly authorized by all necessary
action. This Agreement is the legally valid and binding agreement of
each party, enforceable against each party in accordance with its
terms.
6.3. No Violation or Conflict. The execution, delivery and performance of
this Agreement by each party does not and will not violate any law or
applicable organizational document of each party, or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, any contract, agreement, instrument, order, judgment or
decree to which it is a party or by which it is bound, which
violation, conflict, breach or default would have a material adverse
effect on its ability to consummate the transactions contemplated
hereby.
7. Miscellaneous.
7.1. Governing Law. This Agreement, and the rights of the parties hereto,
shall be governed by and construed in accordance with the laws of the
State of Idaho.
7.2. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
7.3. Severability. If any provision of this Agreement shall be declared
void or unenforceable by any court or administrative board of
competent jurisdiction, such provision shall be deemed to have been
severed from the remainder of this Agreement, and this Agreement shall
continue in all other respects to be valid and enforceable.
7.4. Enforceability and Validity. Each party hereto expressly agrees that
this Agreement shall be specifically enforceable in any court of
competent jurisdiction in accordance with its terms and against each
of the other parties hereto.
7.5. Successors and Assigns. All of the covenants and agreements contained
in this Agreement shall be binding upon, and inure to the benefit of,
the respective parties and their successor, assigns, heirs, executors,
administrators and other legal representatives, as the case may be.
7.6. Amendment and Wavier. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any
departure by any party therefrom, shall in any event be effective
unless the same shall be in writing and signed by the parties hereto.
Any such amendment, modification, termination, wavier or consent shall
be effective only in the specific instance and for the specific
purpose for which it is given.
7.7. 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.
7.8. Further Documents. Each party agrees that it shall cooperate and
execute any other document or agreement reasonably necessary to carry
out the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, Valhi, Snake River and WFB have each caused this
Agreement to be duly executed and delivered by the respective officers thereunto
duly authorized as of the date first written above.
SNAKE RIVER SUGAR COMPANY
By: /s/Dave Budge
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Dave Budge
Vice President
VALHI, INC.
By: /s/Gregory M. Swalwell
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Gregory M. Swalwell
Vice President
WELLS FARGO BANK NORTHWEST,
N. A.
By: /s/Brandon Mills
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Brandon Mills
Assistant Vice President