OPTION AGREEMENT
This OPTION AGREEMENT is dated May 14, 1997 ("this Agreement"), by
and among Snake River Sugar Company, an Oregon cooperative corporation (the
"Company"), Valhi, Inc., a Delaware corporation ("Valhi") and the holder of the
Company's 10.8% Senior Notes due 2009 (the "Senior Notes") whose name is set
forth on the signature page of this Agreement (the "Noteholder").
RECITALS
In connection with Valhi's $80,000,000 subordinated loan to the
Company pursuant to the terms of a Loan Agreement, as amended and restated as of
the date of this Agreement, between Valhi and the Company (the "Loan
Agreement"), and the Noteholder's acquisition of certain Senior Notes from the
Company pursuant to the terms of a Note Purchase Agreement dated as of the date
of this Agreement between Noteholder and the Company (the "Note Purchase
Agreement"), the Noteholder has agreed to grant Valhi the right to acquire the
Senior Notes owned or held by Noteholder (the "Option Notes"), pursuant to and
on the terms and conditions set forth in this Agreement. This Agreement is a
condition to the effectiveness of each of the Note Purchase Agreement and the
Loan Agreement.
Now, therefor, in consideration of the foregoing and for other good
and sufficient consideration, receipt of which is hereby acknowledged, the
parties agree as follows:
1. Grant of Option. The Noteholder hereby grants to Valhi an
irrevocable option (the "Option") to purchase all but not less than all of the
Option Notes (including any principal, interest or other amounts owing to
Noteholder from the Company in respect of the Option Notes). The exercise price
of the Option (the "Exercise Price") shall be an amount in cash equal to the sum
of (i) the principal outstanding on Option Notes, (ii) all accrued interest on
Option Notes, and (iii) the applicable Make Whole Amount (as defined in the Note
Purchase Agreement), in each case as of the closing referred to in Section 3.
2. Exercise of Option. The Option may be exercised by Valhi in
whole and not in part at any time after the date of this Agreement, subject to
the condition that, prior to or concurrently with such exercise, Valhi acquire
all other Senior Notes issued by the Company pursuant to the note purchase
agreements dated as of the date of this Agreement. If Valhi wishes to exercise
the Option, Valhi shall send a written notice to Noteholder specifying the
Exercise Price and the place, date and time (but not earlier than 10 Business
Days (as defined in the Note Purchase Agreement) from the date such notice is
given) for the closing of such purchase. The parties' obligations in connection
with the exercise of the Option are subject to compliance with applicable legal
requirements. Upon request of Valhi, the Company shall promptly take all action
required to effect the exercise of the Option (including certifying to Valhi,
upon request, information concerning the outstanding principal, accrued interest
and applicable Make Whole Amount of the Option Notes, any defaults or events of
default under the Senior Notes and any other information requested).
3. Closing of the Option and Transfer of the Option Notes. At the
closing of the exercise of the Option pursuant to this Agreement, Noteholder
shall deliver to the Company the Option Notes, in proper form for transfer, and
the Company will issue a new Senior Note to Valhi in the principal amount of the
Senior Note being purchased. At such closing, Valhi will purchase and pay for
the Option Notes being purchased from Noteholder by wire transfer to the
Noteholder of cash in an amount equal to the Exercise Price.
4. Representations and Warranties of Valhi. Valhi represents and
warrants to Noteholder that (a) Valhi is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to enter into and perform this Agreement; (b) this
Agreement has been duly authorized by all necessary corporate action on the part
of Valhi; (c) Valhi is not subject to or obligated under any provision of
(i) its Certificate of Incorporation or By-Laws, (ii) any contract, (iii) any
license, franchise or permit or (iv) any law, regulation, order, judgment or
decree, which would be breached or violated by its execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby, other than any such breaches or violations which will not,
individually or in the aggregate, have a material adverse effect on the
consummation of the transactions contemplated hereby, and (d) any acquisition of
the Option Notes pursuant to the terms and conditions of this Agreement shall be
for Valhi's own account and not with a view to distribution of the Option Notes.
No authorization, consent or approval of, or filing with, any public body, court
or authority is necessary for the execution, delivery and performance by Valhi
of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals and filings as to which the failure to
obtain or make would not, individually or in the aggregate, have a material
adverse effect on the consummation of the transactions contemplated by this
Agreement.
5. Representations and Warranties of Noteholder. Noteholder
represents and warrants to Valhi that (a) Noteholder is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power to enter
into and perform this Agreement; (b) this Agreement has been duly authorized by
all necessary corporate action on the part of Noteholder; (c) Noteholder is not
subject to or obligated under any provision of (i) its charter or bylaws,
(ii) any contract, (iii) any license, franchise or permit or (iv) any law,
regulation, order, judgment or decree, which would be breached or violated by
its execution, delivery and performance of this Agreement and the consummation
by it of the transactions contemplated hereby, other than any such breaches or
violations which will not, individually or in the aggregate, have a material
adverse effect on the consummation of the transactions contemplated hereby; and
(d) when the Option Notes are delivered by Noteholder to Valhi upon exercise of
the Option and payment of the Exercise Price, Noteholder will deliver good,
legal and valid title in and to the Option Notes, free and clear of any claims,
liens, encumbrances, security interests and charges of any nature whatsoever
(other than any such claims, liens, encumbrances, security interests and charges
created by Valhi). As of the date of this Agreement, no authorization, consent
or approval of, or filing with, any public body, court or authority is necessary
for the execution, delivery and performance by Noteholder this Agreement, except
for such authorizations, consents, approvals and filings as to which the failure
to obtain or make would not, individually or in the aggregate, have a material
adverse effect on the consummation of the transactions contemplated by this
Agreement.
6. Legend. Upon execution of this Agreement, the Company and
Noteholder shall place the following legend in a conspicuous place on the Option
Notes:
"This Note is subject to the terms and conditions of that certain Option
Agreement dated May 14, 1997, by and between the issuer, Valhi, Inc. and the
holder of this Note."
7. Amendment; Assignment. This Agreement may not be modified,
amended, altered or supplemented except by a writing signed by Valhi and
Noteholder. Each of the provisions of this Agreement shall be binding upon
Noteholder and its successors and assigns. Valhi may not assign any of its
rights or obligations under this Agreement (other than to any affiliate of
Valhi) without the prior written consent of Noteholder.
8. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and, except as
otherwise provided in this Agreement, shall be deemed to have been duly given if
so given) if delivered in person, by cable, telegram, facsimile, or sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
If to Noteholder (at the address specified on Schedule I to this Agreement)
If to Valhi:
Valhi, Inc.
Three Lincoln Centre, Suite 1700,
5430 LBJ Freeway,
Dallas, Texas 75240
Attn: General Counsel
If to the Company:
Snake River Sugar Company
2427 Lincoln Avenue
PO Box 1520
Ogden, Utah 84402
Attn: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but each of which
together shall constitute one and the same document.
10. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, without giving
effect to the principles of conflicts of laws thereof.
11. Binding Effect. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the heirs, personal representatives,
successors and assigns of the parties hereto. Nothing expressed or referred to
in this Agreement is intended or shall be construed to give any person other
than the parties to this Agreement, or their respective heirs, personal
representatives, successors or assigns, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
12. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
13. Termination. This Agreement shall terminate upon the repayment
in full of the Option Notes.
14. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
15. Further Assurances. The parties will execute and deliver such
documents and take such action reasonably deemed necessary or desirable to more
effectively complete and evidence the sale and transfer of the Option Notes
pursuant to this Agreement.
16. Miscellaneous. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections, subsections and
clauses refer to Sections, subsections and clauses of this Agreement unless
otherwise stated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
Valhi, Inc.
By: _____________________________
Steven L. Watson, Vice President
The Prudential Insurance Company of America
By: _____________________________
Jeffrey L. Dickson, Senior Vice President
Snake River Sugar Company
By: _____________________________
Its:______________________________
24265
Schedule I - Address of Noteholder
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Attn: James F. Evert, Assistant General Counsel
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
Valhi, Inc.
By: _____________________________
Steven L. Watson, Vice President
Connecticut General Life Insurance Company
By CIGNA Investments, Inc.
By:_____________________________
Name:__________________________
Title: ___________________________
Snake River Sugar Company
By: _____________________________
Allan M. Lipman, Jr., President
24265
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
Valhi, Inc.
By: _____________________________
Steven L. Watson, Vice President
Life Insurance Company of North America
By CIGNA Investments, Inc.
By:_____________________________
Name:__________________________
Title: ___________________________
Snake River Sugar Company
By: _____________________________
Allan M. Lipman, Jr., President
24265
Schedule I - Address of Noteholder
CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2307
Attn: Private Securities Division - S-307
Ms. Mary S. Law
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
Valhi, Inc.
By: _____________________________
Steven L. Watson, Vice President
The Minnesota Mutual Life Insurance Company
By: MIMLIC Asset Management Company
By:_____________________________
Name:__________________________
Title: ___________________________
Snake River Sugar Company
By: _____________________________
Allan M. Lipman, Jr., President
24265
Schedule I - Address of Noteholder
MIMLIC Asset Management Company
400 Robert Street North, #1000
St. Paul, Minnesota 55101
Attn: Ron Sandquist