CREDIT AGREEMENT
dated as of May 19, 1998
between
VALHI, INC.
and
SOCIETE GENERALE, SOUTHWEST AGENCY
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms
Section 1.02. Computation of Time Periods
Section 1.03. Accounting Terms; Changes in GAAP
Section 1.04. Miscellaneous
ARTICLE II TERMS AND CONDITIONS OF CREDIT
Section 2.01. Advances and Letters of Credit
Section 2.02. Procedures
(a) Notice for Advances
(b) Notice for Letters of Credit
(c) Certain Limitations
(d) Notices Irrevocable
(e) Note
(f) Reimbursement Obligations
Section 2.03. Fees
(a) Commitment Fee
(b) Administrative Fee
(c) Letter of Credit Fees
Section 2.04. Reduction of the Commitments
Section 2.05. Repayment
Section 2.06. Interest
(a) Base Rate Advances
(b) Eurodollar Rate Advances
Section 2.07. Prepayments
(a) Right to Prepay
(b) Optional
(c) Mandatory
(d) Illegality
(e) Notice
Section 2.08. Increased Costs and Capital
(a) Change of Law
(b) Capital Adequacy
Section 2.09. Payments and Computations
(a) Payment Procedures
(b) Computations
(c) Non-Business Day Payments
Section 2.10. Taxes
(a) No Deduction for Certain Taxes
(b) Other Taxes
(c) Indemnification
(d) Evidence of Tax Payments
(e) Survival of Obligations
Section 2.12. Limited Liability of the Bank
(a) Notice of Bank's Duties
(b) No Duty to Inquire
Section 2.13. Security
(a) Collateral Pledge
(b) Collateral After the Termination Date
(c) Further Assurances
Section 2.14 Compliance with Margin Regulations
ARTICLE III CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Initial
Credit Event
(a) Documentation
(b) Cancellation of Existing Reg U.
Facility
Section 3.02. Conditions Precedent to Each Credit
Event
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the
Borrower
(a) Corporate Existence
(b) Corporate Power
(c) Authorization and Approvals
(d) Enforceable Obligations
(e) Financial Statements
(f) Litigation
(g) use of Proceeds
(h) Investment Company Act
(i) Taxes
(j) Pension Plans
(k) Environmental Condition
(l) True and Complete Disclosure
(m) Beneficial Ownership of NL Shares
ARTICLE V COVENANTS OF THE BORROWER
Section 5.01. Affirmative Covenants
(a) Compliance with Laws, Etc.
(b) Maintenance of Insurance
(c) Preservation of Corporate Existence,
Etc.
(d) Payment of Taxes, Etc.
(e) Inspection
Section 5.02. Negative Covenants
(a) Debts, Guaranties an Other
Obligations
(b) Merger or Consolidation
(c) Sale of Stock
(d) Changes in Accounting
(e) Change of NL Industries Certificate
of Incorporation or Bylaws
(f) Certificate of Incorporation
Section 5.03. Reporting Requirements
ARTICLE VI EVENTS OF DEFAULT
Section 6.01. Events of Default
Section 6.02. Remedies
Section 6.03. Collateral Account
ARTICLE VII MISCELLANEOUS
Section 7.01. Amendments, Etc.
Section 7.02. Notices, Etc.
Section 7.03. No Waiver; Remedies
Section 7.04. Costs and Expenses
Section 7.05. Right of Set-off
Section 7.06. Binding Effect
Section 7.07. Indemnification
Section 7.08. Execution in Counterparts
Section 7.09. Governing Laws
Exhibit A - Form of Promissory Note
Exhibit B - Form of Pledge Agreement
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Borrower's Counsel Opinion
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Letter of Credit Application
SCHEDULES:
Schedule 1 - Lending Offices of Bank
Schedule 4.01(f) - Litigation
Schedule 4.01(k) - Environmental Concerns
Schedule 4.01(m) - NL Shares beneficially owned by the Borrower
CREDIT AGREEMENT
This Credit Agreement dated as of May 19, 1998 is between Valhi, Inc., a
Delaware corporation (the "Borrower"), and Societe Generale, Southwest Agency
(the "Bank").
The Borrower and the Bank hereby agree as set forth herein.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acceptable Security Interest" in any Property means a security interest
and Lien (i) which exists in favor of the Bank, (ii) which is superior to all
other Liens, (iii) which secures the Advances and all other amounts owed in
connection with this Agreement and the other Credit Documents, and (iv) which is
perfected and enforceable against all Persons in preference to any rights of any
Person therein.
"Adjusted Base Rate" means, for any day, the fluctuating rate per annum of
interest equal to the greater of (a) the Base Rate in effect on such day and (b)
the Federal Funds Rate in effect on such day plus 1/2%.
"Advance" means an advance by the Bank to the Borrower pursuant to Article
II, and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of
which shall be a "Type" of Advance).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of a Control Percentage, by contract or otherwise.
"Aggregate Exposure" means, as of any date of determination thereof, the
sum of (i) the aggregate outstanding Advances on such date, (ii) the aggregate
unpaid Reimbursement Obligations on such date, and (iii) the aggregate undrawn
face amount of all Letters of Credit outstanding on such date.
"Agreement" means this Credit Agreement dated as of May __, 1998 between
the Borrower and the Bank, as the same may be amended from time to time in
accordance with the terms hereof.
"Applicable Lending Office" means the Bank's Domestic Lending Office in the
case of a Base Rate Advance, and the Bank's Eurodollar Lending Office in the
case of a Eurodollar Rate Advance.
"Available Amount" means on any day an amount equal to the sum of (a) the
product of (i) 33% of the Current Market Value of a NL Share, multiplied by (ii)
the number of NL Shares pledged to the Bank pursuant to the Pledge Agreement,
plus (b) in the event any security other than NL Shares are pledged as
Collateral pursuant to the Pledge Agreement, the product of (x) such percentage
of the Current Market Value of such security as the Bank and the Borrower may
agree in writing (not to exceed 49%), multiplied by (y) the number of shares of
such security pledged to the Bank pursuant to the terms of the Pledge Agreement.
"Base Rate" means a fluctuating interest rate per annum as shall be in
effect from time to time equal to the rate of interest announced publicly by
Societe Generale, New York Branch as its prime rate, whether or not the Borrower
has notice thereof.
"Base Rate Advance" means an Advance which bears interest as provided in
Section 2.06(a).
"Borrower" means Valhi, Inc., a Delaware corporation.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City and Dallas, Texas and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.
"Change in Control" means with respect to any Person the occurrence of any
of the following: (a) a change in control is reported by such Person in
response to either Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Exchange Act or Item 1 of Form 8-K promulgated under the Exchange Act,
(b) any "person" (as such term is used in Section 13(d) and Section 14(d)(2) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of such Person
representing the Control Percentage or more of the combined voting power of such
Person's then outstanding securities or (c) following the election or removal of
directors, a majority of such Person's Board of Directors consists of
individuals who were not members of such Person's Board of Directors immediately
prior to such election or removal, unless the election of each director who was
not a director immediately prior to such election or removal has been approved
in advance by directors representing at least a majority of the directors then
in office who were directors immediately prior to such election or removal.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Collateral" shall have the meaning specified in the Pledge Agreement.
"Collateral Deficiency" means, as of any date of determination thereof,
the positive difference, if any, between (a) the Aggregate Exposure on such date
exceeds (b) the Available Amount on such date.
"Commitment" means the obligation of the Bank to make Advances in an amount
not to exceed $15,000,000, as such amount may be reduced pursuant to Section
2.04 or terminated pursuant to Article VII.
"Consolidated" refers to the consolidation of the accounts of any
corporation and its Subsidiaries in accordance with GAAP, including, when used
in reference to the Borrower, principles of consolidation consistent with those
applied in the preparation of the Financial Statements.
"Control Percentage" means, with respect to any Person, the percentage of
the outstanding capital stock of such Person having ordinary voting power which
gives the direct or indirect holder of such stock the power to elect a majority
of the Board of Directors of such Person.
"Credit Documents" means this Agreement, the Note, the Pledge Agreement,
and each other agreement, instrument or document executed at any time in
connection with this Agreement.
"Credit Event" means any of the making of an Advance hereunder or the
issuance, amendment or extension of a Letter of Credit hereunder.
"Current Market Value" means, (i) with respect to any security, the most
recent closing price of such security on the NYSE or, if such security is not
listed on the NYSE but is listed on another recognized national securities
exchange, the most recent closing price of such security on such other exchange,
or, if such security is not listed on a national securities exchange, the
closing price of such security as reported on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") National Market System
or, if applicable, the average of the closing bid and asked quotations for such
security as reported on NASDAQ, and (ii) with respect to any security other than
a security described in clause (i) above and with respect to any other Property,
such value determined by the Bank in accordance with any reputable valuation
method.
"Debt" means without duplication, in the case of any Person,
(i) indebtedness of such Person for borrowed money, (ii) obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations of such Person to pay the deferred purchase price of property
or services (other than trade accounts payable), (iv) obligations of such Person
as lessee under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (v) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv) above, (vi) indebtedness or obligations of others of
the kinds referred to in clauses (i) through (v) of this definition secured by
any Lien on or in respect of any Property of such Person, and (vii) all
liabilities of such Person in respect of unfunded vested benefits under any
Plan; provided, however, that in no event shall Debt include any amounts which,
by its terms, is non-recourse. Any such determination of which debt is non-
recourse shall be acceptable to the Bank and its counsel.
"Default" means an Event of Default or any event or condition which with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Dollars" and "$" means lawful money of the United States of America.
"Domestic Lending Office" means the office of the Bank specified as its
"Domestic Lending Office" on Schedule 1 hereto or such other office of the Bank
as the Bank may from time to time specify to the Borrower.
"Environmental Law" means all Legal Requirements applicable to the Borrower
or its Subsidiaries arising from, relating to, or in connection with the
environment, including without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, relating to
(a) pollution, contamination, injury, destruction, loss, protection, cleanup,
reclamation or restoration of the air, surface water, groundwater, land surface
or subsurface strata, or other natural resources; (b) solid, gaseous or liquid
waste generation, treatment, processing, recycling, reclamation, cleanup,
storage, disposal or transportation; (c) exposure to pollutants, contaminants,
hazardous, medical, infectious, or toxic substances, materials or wastes; or
(d) the manufacture, processing, handling, transportation, distribution in
commerce, use, storage or disposal of hazardous, medical, infectious, or toxic
substances, materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"Eurodollar Base Rate" means, for the Interest Period for each Eurodollar
Rate Advance, an interest rate per annum (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a multiple) equal
to the rate per annum at which deposits in Dollars are offered by the principal
office of Societe Generale in London, England to prime banks in the London
interbank market at 11:00 a.m. (London time) two Business Days before the first
day of such Interest Period in an amount substantially equal to the Bank's
Eurodollar Rate Advance and for a period equal to such Interest Period.
"Eurodollar Lending Office" means the office of the Bank specified as its
"Eurodollar Lending Office" on Schedule 1 hereto (or, if no such office is
specified, its Domestic Lending Office) or such other office of the Bank as the
Bank may from time to time specify to the Borrower.
"Eurodollar Rate" means, for any Eurodollar Rate Advance, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to (i) the
Eurodollar Base Rate for the Interest Period for such Eurodollar Rate Advance
divided by (ii) 1 minus the Eurodollar Rate Reserve Percentage (if any) for such
Eurodollar Rate Advance for such Interest Period.
"Eurodollar Rate Advance" means an Advance which bears interest as provided
in Section 2.06(b).
"Eurodollar Rate Reserve Percentage" for the Interest Period for any
Eurodollar Rate Advance means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under regulations issued from
time to time by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for member banks of the Federal Reserve System in
New York City with deposits exceeding one billion Dollars with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute, and the rules and regulations
thereunder.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for any such day on such
transactions received by the Bank from three Federal funds brokers of recognized
standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any successor thereof.
"Financial Statements" means the balance sheet and income and cash flow
statements dated December 31, 1997 referred to in Section 4.01(e), copies of
which have been delivered to the Bank.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with the requirements of
Section 1.03.
"Governmental Authority" means, as to any Person in connection with any
subject, any foreign, national, state or provincial governmental authority, or
any political subdivision of any state thereof, or any agency, department,
commission, board, authority or instrumentality, bureau or court, in each case
having jurisdiction over such Person or such Person's Property in connection
with such subject.
"Interest Period" means, for each Advance, the period commencing on the
date of such Advance and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such Interest
Period shall be (a) in the case of a Base Rate Advance, a period of time
commencing on the date such Base Rate Advance is made and ending on the last day
of March, June, September or December, whichever occurs first (or if the
Maturity Date will occur prior to the last day of March, June, September or
December, such Interest Period for such Base Rate Advance shall terminate on the
Maturity Date) and (b) in the case of a Eurodollar Rate Advance, one, two,
three, or six months, in each case as the Borrower may, upon notice received by
the Bank on the day and at the time required by Section 2.02, select; provided,
however, that:
(i) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business
Day, except that in the case of any Interest Period for a Eurodollar
Rate Advance, if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding
Business Day;
(ii) any Interest Period which begins on the last Business Day of the
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month in
which it would have ended if there were a numerically corresponding
day in such calendar month; and
(iii) the Borrower may not select any Interest Period for any Eurodollar
Rate Advance which ends after the Maturity Date.
"Legal Requirement" means, as to any Person, any law, statute, ordinance,
decree, requirement, order, judgment, rule, regulation (or official
interpretation of any of the foregoing) of, and the terms of any license or
permit issued by, any Governmental Authority which is applicable to such Person.
"Letters of Credit" means, collectively, all standby letters of credit
issued by the Bank hereunder for the account of the Borrower or for the joint
and several account of the Borrower and a Subsidiary or affiliate of the
Borrower.
"Lien" means any mortgage, lien, pledge, charge, deed of trust, security
interest, hypothecation, preference, deposit arrangement or encumbrance (or
other type of arrangement having the practical effect of the foregoing) to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law or otherwise (including, without
limitation, the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement).
"Material Adverse Change" shall mean (i) a material adverse change in the
business, financial condition, or results of operations of (a) the Borrower or
(b) NL Industries and its Subsidiaries taken as a whole, in each case since
December 31, 1997.
"Maturity Date" means May 18, 1999 or the earlier termination in whole of
the Commitment pursuant to Section 2.04 or Article VI.
"Maximum Rate" means the maximum nonusurioius interest rate under
applicable law (determined under such laws after giving effect to any items
which are required by such laws to be construed as interest in making such
determination, including without limitation if required by such laws, certain
fees and other costs).
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower is making or accruing an obligation to
make contributions.
"NL Industries" means NL Industries, Inc., a New Jersey corporation.
"NL Shares" means common stock, par value $.125 per share, of
NL Industries.
"Note" means the promissory note of the Borrower payable to the order of
the Bank, in substantially the form of Exhibit A hereto, evidencing the
aggregate indebtedness of the Borrower to the Bank resulting from the Advances
made by the Bank.
"Notice of Borrowing" has the meaning specified in Section 2.02(a) in the
form of the attached Exhibit C signed by a Responsible Officer of the Borrower.
"NYSE" means the New York Stock Exchange.
"Obligations" means all Advances, Reimbursement Obligations and other
amounts payable by the Borrower to the Bank under the Credit Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof or any trustee, receiver, custodian or similar official.
"Plan" means an employee benefit plan (other than a Multiemployer Plan)
sponsored by the Company and covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code.
"Pledge Agreement" means the Pledge and Security Agreement dated as of the
date hereof between the Borrower and the Bank, in substantially the form of
Exhibit B hereto, as the same may be amended from time to time in accordance
with the terms hereof.
"Pledged Shares" means at any time the Pledged Shares (as defined in the
Pledge Agreement) for which the Bank has an Acceptable Security Interest.
"Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
"Regulations G, T, U, X and D" means Regulations G, T, U, X, and D of the
Federal Reserve Board, as the same is from time-to-time in effect, and all
official rulings and interpretations thereunder or thereof.
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Bank for the amount of any payment by the Bank in connection with
a drawing under a Letter of Credit.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA.
"Responsible Officer" means, of any Person, the Chief Executive Officer,
President, Chief Financial Officer, any Executive or Senior Vice President,
Treasurer, Secretary of such Person or any other member of senior management of
such Person.
"SEC" means the Securities and Exchange Commission, and any successor
entity.
"SEC Filings" means any proxy material, reports or other information which
the Borrower has delivered to the Bank pursuant to Section 5.03(e).
"Security Documents" means, collectively, the Pledge Agreement and each
other collateral agreement executed in connection with this Agreement at any
time by the Borrower in favor of the Bank granting Liens for the benefit of the
Bank, as the same may be amended from time to time in accordance with their
respective terms.
"Subsidiary" of a Person means any corporation, association, partnership or
other business entity of which more than 50% of the outstanding capital stock
(or other equivalent interests) having by the terms thereof ordinary voting
power under ordinary circumstances to elect a majority of the board of directors
or Persons performing similar functions (or, if there are no such directors or
Person, having general voting power) of such entity (irrespective of whether or
not at the time capital stock (or other equivalent interests) of any other class
or classes of such entity shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned by such Person,
or by one or more Subsidiaries of such Person.
"Termination Event" means (i) the occurrence of a Reportable Event with
respect to a Plan, as described in Section 4043(b) of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under such regulations), (ii) the withdrawal of
the Borrower or any of its Affiliates from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the filing of a notice of intent to terminate a Plan under Section 4041(c)
of ERISA, (iv) the institution of proceedings to terminate a Plan by the PBGC,
or (v) any other event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan.
"Type" has the meaning set forth in the definition of the term "Advance".
Section 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.03. Accounting Terms; Changes in GAAP. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP applied
on a consistent basis with those applied in the preparation of the Financial
Statements.
Section 1.04. Miscellaneous. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section, Schedule and Exhibit references are to Articles and Sections
of and Schedules and Exhibits to this Agreement, unless otherwise specified.
ARTICLE II
TERMS AND CONDITIONS OF CREDIT
Section 2.01. Advances and Letters of Credit. The Bank agrees, on the
terms and conditions set forth in this Agreement, to make Advances to the
Borrower and to issue Letters of Credit for the account of the Borrower from
time-to-time on any Business Day during the period from the date of this
Agreement until the Maturity Date, provided that (i) no Advance shall be made
and no Letter of Credit shall be issued, amended, or extended if, after giving
effect thereto, the Aggregate Exposure would exceed the lesser of the Commitment
and the Available Amount, and (ii) each Advance shall be in an aggregate
principal amount not less than $1,000,000 and in integral multiples thereof
(except with respect to Base Rate Advances for the purpose of repaying
Reimbursement Obligations). Within the limits set forth above, the Borrower may
from time-to-time borrow, prepay pursuant to Section 2.07 and reborrow under
this Section 2.01.
Section 2.02. Procedures.
(a) Notice for Advances. Each Advance shall be made pursuant to a Notice
of Borrowing (or by telephone notice promptly confirmed in writing by a Notice
of Borrowing), given not later than 10:00 a.m. (Dallas, Texas time) (i) on the
third Business Day before the date of the proposed Advance, in the case of a
Eurodollar Rate Advance, or (ii) on the Business Day of the proposed Advance, in
the case of a Base Rate Advance, by the Borrower to the Bank. Each Notice of
Borrowing shall be in writing or by telecopier or telex, confirmed immediately
in writing, specifying the requested date of such Advance, Type of Advance,
aggregate amount of such Advance, and if such Advance is to be a Eurodollar Rate
Advance, the Interest Period for such Advance. The Bank shall, before 1:00 p.m.
(Dallas, Texas time) on the date of the Advance, make such funds available to
the Borrower at its account at the Bank.
(b) Notice for Letters of Credit. Each request for a Letter of Credit
shall be made on notice given by the Borrower not later than 11:00 A.M. (Dallas
time) at least three Business Days prior to the date a proposed Letter of Credit
is to be issued, in the form of Exhibit F attached hereto, specifying (i) the
requested date of issuance of such proposed Letter of Credit, (ii) the face
amount of such proposed Letter of Credit, (iii) the form of such proposed Letter
of Credit, which must be a standby Letter of Credit in form acceptable to the
Bank, and (iv) the expiry date of such proposed Letter of Credit, which expiry
date shall in no event be later than the Maturity Date (unless the Bank consents
to such a later date and the Borrower agrees to deposit cash collateral in the
Collateral Account on or prior the Maturity Date to fully secure the undrawn
portion of any such Letter of Credit outstanding on and after the Maturity Date
as set forth in Section 2.13(b) hereof or on terms otherwise satisfactory to the
Bank).
(c) Certain Limitations. Notwithstanding anything in paragraph (a) above:
(i) at no time shall there be more than five outstanding Eurodollar
Rate Advances;
(ii) if the Bank shall, at least two Business Days before the date of
any requested Eurodollar Rate Advance, reasonably conclude that the passage
of or any change in or in the interpretation of any law or regulation makes
it unlawful, or that any central bank or other Governmental Authority
asserts that it is unlawful, for the Bank or its Eurodollar Lending Office
to perform its obligations under this Agreement to make Eurodollar Rate
Advances or to fund or maintain Eurodollar Rate Advances, the right of the
Borrower to select Eurodollar Rate Advances shall be suspended until the
Bank shall reasonably determine that the circumstances causing such
suspension no longer exist (which the Bank agrees promptly to provide
notice of to Borrower), and each subsequent Advance during such period
shall be a Base Rate Advance;
(iii) if the Bank is unable, after the exercise of reasonable
diligence, to determine the Eurodollar Rate for Eurodollar Rate Advances,
the right of the Borrower to select Eurodollar Rate Advances shall be
suspended until the Bank shall reasonably determine that the circumstances
causing such suspension no longer exist (which the Bank agrees promptly to
provide notice of to Borrower), and each subsequent Advance during such
period shall be a Base Rate Advance; provided, however, the Bank agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office
if the making of such a designation would permit the Bank to determine the
Eurodollar Rate for Eurodollar Rate Advances and would not, in the Bank's
reasonable judgment, be otherwise disadvantageous;
(iv) if the Bank shall, at least two Business Days before the date of
any requested Eurodollar Rate Advance, reasonably conclude that the
Eurodollar Rate for Eurodollar Rate Advances will not adequately reflect
the cost to the Bank of making or funding Eurodollar Rate Advances, as the
case may be, the right of the Borrower to select Eurodollar Rate Advances
shall be suspended until the Bank shall reasonably determine that the
circumstances causing such suspension no longer exist (which the Bank
agrees promptly to provide notice of to Borrower), and each subsequent
Advance during such period shall be a Base Rate Advance;
(v) if the Borrower fails to select the duration of any Interest
Period for any Eurodollar Rate Advance in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01 and
paragraph (a) above, the Bank will forthwith so notify the Borrower and
such Advance will be made available to the Borrower on the date of such
Advance with a one-month Interest Period; and
(d) Notices Irrevocable. Each Notice of Borrowing pursuant to which the
Borrower requests an Eurodollar Rate Advance shall be irrevocable and binding on
the Borrower. In the case of any Advance designated in the related Notice of
Borrowing which specifies that the Proposed Borrowing (as defined in such Notice
of Borrowing) shall be a Eurodollar Rate Advance, the Borrower shall indemnify
the Bank against any loss, out-of-pocket cost or expense actually incurred by
the Bank as a result of any failure of the Borrower to borrow the Advance
described therein due to the Borrower's failure to fulfill on or before the date
specified in such Notice of Borrowing for such Advance the applicable conditions
set forth in Article III.
(e) Note. The indebtedness of the Borrower to the Bank resulting from
Advances owing to the Bank shall be evidenced by the Note from the Borrower
payable to the order of the Bank.
(f) Reimbursement Obligations. The amount paid by the Bank in connection
with any drawing under a Letter of Credit shall be reimbursed by the Borrower to
the Bank on the same day as such payment by the Bank, provided, however, that in
the event the conditions precedent for a Prime Rate Advance are satisfied on the
date of such payment by the Bank (other than the delivery of a Notice of
Borrowing) and the Borrower has not otherwise notified the Bank that it intends
to repay such Reimbursement Obligations with its own funds on such day, such
Reimbursement Obligation shall be automatically deemed to be repaid with the
proceeds of a Prime Rate Advance by the Bank for the account of the Borrower
made as of the date of such payment by the Bank of such drawing.
Section 2.03. Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Bank a commitment
fee on the average daily unused portion of the Commitment from the date hereof
until the Maturity Date at the rate of 3/8 of 1% per annum, payable quarterly in
arrears on the last day of each March, June, September and December commencing
June 30, 1998 and ending on the Maturity Date.
(b) Administrative Fee. The Borrower agrees to pay to the Bank an
administrative fee in the amount of $2,000 on the date hereof.
(c) Letter of Credit Fees. The Borrower shall pay to the Bank a letter of
credit fee in connection with each Letter of Credit equal to one and one half of
one percent (1 1/2%) per annum of the amount available for drawing under such
Letter of Credit, from and including the issuance date thereof to but excluding
the date such Letter of Credit expires or is terminated, such fee to be payable
quarterly in arrears on the last date of each March, June, September and
December, on the Maturity Date, and in the event any Letters of Credit are to
remain outstanding after the Maturity Date, on the date the last such Letter of
Credit expires or terminates in accordance with its terms, calculated on the
basis of a 360-day year for the number of days elapsed.
Section 2.04. Reduction of the Commitments. The Borrower shall have the
right, upon at least three Business Days' irrevocable notice to the Bank, to
terminate in whole or reduce ratably in part the unused portions of the
Commitment, provided that each partial reduction shall be in the aggregate
amount of $1,000,000 or an integral multiple thereof. Any such reduction or
termination of the Commitment shall be permanent, with no obligation of the Bank
to reinstate such Commitment and the commitment fees provided for in
Section 2.03(a) shall thereafter be computed on the basis of the Commitment as
so reduced.
Section 2.05. Repayment. The Borrower shall repay the principal amount of
each Advance made by the Bank on the last day of the Interest Period for such
Advance. In the event that the Borrower shall not have notified the Bank on or
prior to 10:00 a.m. (Dallas, Texas time) on the Business Day immediately
preceding the last day of an Interest Period that the Borrower intends to repay
all Advances maturing as of the end of such Interest Period other than with
proceeds of new Advances hereunder requested pursuant to Section 2.02(a), the
Borrower shall be deemed to have requested an Advance comprised of Base Rate
Advances in an amount equal to the aggregate amount of all Advances maturing on
the last day of such Interest Period.
Section 2.06. Interest. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by the Bank from the date of such Advance
until such principal amount shall be paid in full, at the following rates per
annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate
per annum equal at all times to the lesser of (i) the Adjusted Base Rate in
effect from time-to-time and (ii) the Maximum Rate, payable in arrears on the
last Business Day of each calendar quarter and on the date such Base Rate
Advance shall be paid in full, provided that any amount of principal which is
not paid when due (whether at stated maturity, by acceleration or otherwise)
shall bear interest, from the date on which such amount is due until such amount
is paid in full, payable on demand, at a rate per annum equal at all times to
the lesser of (i) the Adjusted Base Rate in effect from time-to-time plus 2%
and (ii) the Maximum Rate.
(b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate
Advance, a rate per annum equal at all times during the Interest Period for such
Advance to the lesser of (i) the Eurodollar Rate for such Interest Period plus
11/2% per annum and (ii) the Maximum Rate, payable on the last day of such
Interest Period, and in the case of six month Interest Periods, on the day three
months following the first day of any such Interest Period; provided that any
amount of principal which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the lesser of (i) the greater of (A) the
Adjusted Base Rate in effect from time to time plus 2% and (B) the rate required
to be paid on such Advance immediately prior to the date on which such amount
became due plus 2% and (ii) the Maximum Rate.
Section 2.07. Prepayments.
(a) Right to Prepay. The Borrower shall have no right to prepay any
principal amount of any Advances except as provided in this Section 2.07.
(b) Optional. The Borrower may elect to prepay Advances, upon at least
three Business Days' or, in case of Base Rate Advances, one Business Day's
notice to the Bank stating the proposed date and aggregate principal amount of
such prepayment, and if any such notice is given, the Borrower shall prepay such
Advances in whole or ratably in part in an aggregate principal amount equal to
the amount specified in such notice, together with accrued interest to the date
of such prepayment on the principal amount prepaid and amounts, if any, required
to be paid pursuant to Section 7.04(b) as a result of such prepayment being made
on such date; provided, however, that each partial prepayment shall be in an
aggregate principal amount not less than $1,000,000.
(c) Mandatory. If at any time the Bank shall notify the Borrower that a
Collateral Deficiency exists, then within one Business Day of its receipt of
such notice, the Borrower shall at its option (i) prepay Advances, together with
accrued interest on the principal amount prepaid to the date of such prepayment
and amounts, if any, required to be paid pursuant to Section 7.04(b) as a result
of such prepayment being made on such date, and, if necessary after all Advances
have been prepaid, cash collateralize the aggregate undrawn face amount of
outstanding Letters of Credit, so that immediately following such prepayment or
cash collateralization, no Collateral Deficiency exists or (ii) provide the Bank
with an Acceptable Security Interest on additional Pledged Shares so that no
Collateral Deficiency exists.
(d) Illegality. If the Bank shall notify the Borrower that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful for the Bank or its Eurodollar Lending
Office to perform its obligations hereunder to maintain any Eurodollar Rate
Advances of the Bank then outstanding hereunder, (i) the Borrower shall, no
later than 1:00 p.m. (Dallas, Texas time) on the second Business Day following
its receipt of such notice, prepay all of the Eurodollar Rate Advances then
outstanding hereunder, together with accrued interest on the principal amount
prepaid to the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 7.04(b) as a result of such prepayment being made on such
date (other than loss of any anticipated profits), (ii) the Bank shall thereupon
make a Base Rate Advance to the Borrower on such date in an amount equal to the
aggregate principal amount of the Eurodollar Rate Advances prepaid by the
Borrower on such date, and (iii) the right of the Borrower to select Eurodollar
Rate Advances for any subsequent Advance shall be suspended until the Bank shall
notify the Borrower that the circumstances causing such suspension no longer
exist.
(e) Notice. The Borrower will give notice to the Bank at or before the
time of each prepayment of Advances pursuant to this Section 2.07 specifying the
Advances which are to be prepaid and the amount of such prepayment to be applied
to such Advances. All notices given pursuant to this Section 2.07 shall be
irrevocable and binding upon the Borrower.
Section 2.08. Increased Costs and Capital.
(a) Change of Law. If, due to either (i) the introduction of or any
change (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time, upon demand
by the Bank, immediately pay to the Bank such additional amounts sufficient to
compensate the Bank for such increased cost; provided however, that before
making any such demand, the Bank agrees to use commercially reasonable efforts
(consistent with its internal policy and subject to legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost and would not, in the reasonably judgment of the Bank, be
otherwise economically disadvantageous to the Bank. A certificate (a)
indicating the amount of such increased cost and detailing the calculation of
such cost, (b) stating that the Bank is generally charging such amounts to other
customers similarly situated with the Borrower, and (c) that all costs are being
charged within 90 days of the date the Bank learned of such costs, such
certificate to be conclusive and binding for all purposes, absent manifest
error.
(b) Capital Adequacy. If the Bank determines in good faith that
compliance with any generally applicable law or regulation or any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law) implemented or effective after the date of this
Agreement increases or would increase the amount of capital required or expected
to be maintained by the Bank or any corporation controlling the Bank and that
the amount of such capital is increased by or based upon the existence of the
Bank's commitment to lend hereunder and other commitments of this type, then,
upon demand by the Bank, the Borrower shall immediately pay to the Bank, from
time to time as specified by the Bank, additional amounts (without duplication
of any other amounts payable in respect of increased costs) sufficient to
compensate the Bank in light of such circumstances, to the extent that the Bank
reasonably determines such increase in capital to be allocable to the existence
of the Bank's commitment to lend hereunder. A certificate shall be submitted to
the Borrower by the Bank (a) indicating the amount of such capital adequacy
costs and detailing the calculation of such costs, (b) stating that the Bank is
generally charging such amounts to other customers similarly situated with the
Borrower, and (c) that all such costs are being charged within 90 days of the
date the Bank learned of such costs, such certificate to be conclusive and
binding for all purposes, absent manifest error.
Section 2.09. Payments and Computations.
(a) Payment Procedures. The Borrower shall make each payment hereunder
and under the Note not later than 1:00 p.m. (Dallas, Texas time) on the day when
due in Dollars to the Bank at the location referred to in the Note (or such
other location as the Bank shall designate in writing to the Borrower) in same
day funds.
(b) Computations. All computations of interest based on the Base Rate
shall be made by the Bank on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the Eurodollar Rate, the
Federal Funds Rate and of fees shall be made by the Bank, on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
fees are payable. Each determination by the Bank of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.
(c) Non-Business Day Payments. Whenever any payment hereunder or under
the Note shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest or
fees, as the case may be; provided, however, that if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.
Section 2.10. Taxes.
(a) No Deduction for Certain Taxes. Any and all payments by the Borrower
hereunder or under the Note shall be made, in accordance with Section 2.09, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on the Bank's income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which the Bank is
organized or any political subdivision thereof and by the jurisdiction of the
Bank's Applicable Lending Office or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable to the
Bank, (i) the sum payable shall be increased as may be necessary so that, after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.10), the Bank receives an amount equal to the
sum it would have received had no such deductions been made; (ii) the Borrower
shall make such deductions; and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) Other Taxes. In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or under the Note
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or the Note (hereinafter referred to as "Other Taxes").
(c) Indemnification. The Borrower will indemnify the Bank for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.10) paid by the Bank and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Each payment required to be
made by the Borrower in respect of this indemnification shall be made to the
Bank within 30 days from the date the Borrower receives written demand therefor
from the Bank.
(d) Evidence of Tax Payments. The Borrower will pay when due all Taxes
payable in respect of any payment hereunder or under any Note. Within 30 days
after the date of any payment of Taxes, the Borrower will furnish to the Bank
the original or a certified copy of a receipt evidencing payment thereof.
(e) Survival of Obligations. Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.10 shall survive the payment in full of
principal and interest hereunder and under the Note for a period equal to the
applicable statute of limitations.
Section 2.11. Obligations Absolute. To the fullest extent permitted by
applicable law, the obligations of the Borrower under this Agreement in
connection with Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be paid or performed strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of this Agreement, the Pledge
Agreement, or any Letter of Credit;
(b) any amendment or waiver of or any consent to depart from the terms of
this Agreement, the Pledge Agreement, or any Letter of Credit (with the consent
of the Borrower and any beneficiary of such Letter of Credit);
(c) the existence of any claim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit, the Bank or any other Person, whether in connection with this
Agreement, or any transactions contemplated hereby or thereby or any unrelated
transaction;
(d) any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever,
provided that payment by the Bank under any Letter of Credit shall not have
constituted gross negligence or willful misconduct of the Bank;
(e) any nonapplication or misapplication by the beneficiary of any Letter
of Credit or otherwise of the proceeds of any drawing under any Letter of
Credit;
(f) payment by the Bank under any Letter of Credit against presentation of
a draft or certificate that does not comply with the terms of such Letter of
Credit, provided that payment by the Bank under such Letter of Credit shall not
have constituted gross negligence or willful misconduct of the Bank;
(g) the failure by the Bank to honor any drawing under any Letter of
Credit or to make any payment demanded under any Letter of Credit on the ground
that the demand for such payment does not conform to the terms and conditions
such Letter of Credit, provided that such failure shall not have constituted
gross negligence or willful misconduct of the Bank; and
(h) any other circumstance or happening whatsoever, including the
circumstances described in Section 2.14, whether or not similar to any of the
foregoing, provided that such circumstances or happening shall not have
constituted gross negligence or willful misconduct of the Bank.
Section 2.12. Limited Liability of the Bank.
(a) Notice of Bank's Duties. As between the Bank and the Borrower, the
Borrower assumes all risk of the acts or omissions of any beneficiary of a
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Bank, its correspondents, its affiliates nor any of their officers or directors
shall be liable or responsible for:
(i) the use which may be made of any Letter of Credit or for any
actions or omissions of any beneficiary of any Letter of Credit;
(ii) the existence or nonexistence of a default under any instrument
secured or supported by any Letter of Credit or any other event
which gives rise to a right to call upon any Letter of Credit;
(iii) the failure of any instrument to bear any reference or adequate
reference to any Letter of Credit;
(iv) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted in connection with the application
for and issuance of, or the making of a drawing under, any Letter
of Credit, even if it should in fact prove to be in any or all
respect invalid, insufficient, inaccurate, fraudulent or forged;
(v) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole
or in part, that may prove to be invalid or ineffective for any
reason;
(vi) the failure of the beneficiary of any Letter of Credit to comply
fully with all conditions required in order to effect a drawing;
(vii) errors, omissions, interruptions, losses, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex,
telecopier or otherwise;
(viii) any consequences arising from causes beyond the control of the
Bank; and
(ix) any act, error, neglect or default, omissions, insolvency or
failure in the business of any of the Bank's correspondents, for
any refusal by the Bank or any of the Bank's correspondents to pay
or honor drafts drawn under any Letter of Credit because of any
applicable law, now or hereafter enforced, or for any matter beyond
the control of the Bank and its affiliates;
except only that the Borrower shall have a claim against the Bank for acts or
events described in the immediately preceding clauses (ii) through (ix), and the
Bank shall be liable to the Borrower, to the extent, but only to the extent, of
any direct, as opposed to consequential, damages suffered by the Borrower which
the Borrower proves were caused by (A) the Bank's willful misconduct or gross
negligence in determining whether documents were presented under any Letter of
Credit comply with the terms of any Letter of Credit or (B) the Bank's willful
failure or gross negligence in failing to pay under such Letter of Credit after
the presentation to it by the beneficiary of a sight draft and any required
document strictly complying with the terms and conditions of the such Letter of
Credit.
(b) No Duty to Inquire. The Borrower agrees that the Bank is authorized
and instructed to accept and pay drawings under any Letter of Credit without
requiring, and without responsibility for, the determination as to the existence
of any event giving rise to such drawing, either at the time of acceptance of
documents presented in connection with such drawing, upon payment of such
drawing by the Bank or thereafter. The Borrower agrees that the Bank is under
no duty to determine the proper identity of anyone presenting documents under
any Letter of Credit in connection with a drawing or otherwise (whether by
tested telex or otherwise) as the officer, representative or agent of any
beneficiary under the such Letter of Credit and payment by the Bank to any such
beneficiary when requested by any such purported officer, representative or
agent is hereby authorized and approved by the Borrower. In furtherance and not
in limitation hereof, the Bank may accept documents that appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
Section 2.13. Security.
(a) Collateral Pledge. As security for the Obligations and the perfor-
▇▇▇▇▇ of all other obligations of the Borrower to the Bank pursuant to this
Agreement and the other Credit Documents, the Borrower agrees that at all times
the Bank shall have an Acceptable Security Interest on all Collateral. In
connection therewith, the Bank agrees that the Borrower may, at any time prior
to the Maturity Date when no Default has occurred and is continuing, withdraw or
substitute Collateral if (i) the substitute Collateral is margin stock
acceptable to the Bank in its sole discretion and any changes deemed necessary
in the sole discretion of the Bank to the Credit Documents are made to reflect
such substitution of Collateral, and (ii) the Available Amount is redetermined
to give effect to such withdrawal or substitution, and the Aggregate Exposure
does not exceed such redetermined Available Amount.
(b) Collateral After the Termination Date. Except as otherwise set forth
in this Section 2.13(b), if any Letters of Credit are to remain outstanding on
or after the Maturity Date, but all other non-contingent obligations of the
Borrower hereunder have been paid in full and no Default has occurred and is
continuing, the Borrower may provide cash collateral to the Bank on or before
sixty days after the Maturity Date having an aggregate fair market value equal
to the aggregate undrawn amount of such outstanding Letters of Credit for
deposit in the Collateral Account (as defined in the Pledge Agreement), and such
cash collateral shall secure the Borrower's continuing obligations in respect of
such outstanding Letters of Credit subject to the terms of the Pledge Agreement.
In the event the Bank receives such cash collateral on or prior to the date
required, the Bank shall release the Pledged Shares to the Borrower and any
other Collateral subject to the terms of the Pledge Agreement (other than the
cash collateral just received by the Bank from the Borrower); provided, however,
that such Pledged Shares and the lien of the Bank on such other Collateral shall
not be released, and the Borrower shall not be obligated to provide such cash
collateral if, on or before the earlier of the date sixty days after the
Maturity Date or the date of the proposed release any Default specified in
Section 6.01(e) shall have occurred. In the event that, for whatever reason,
the Borrower fails to provide cash collateral as required pursuant to this
Section, then notwithstanding anything to the contrary in the Pledge Agreement,
the Bank may, at its discretion and in addition to any rights it may have under
the Pledge Agreement in respect of any unpaid Obligations then due and payable,
sell, transfer, dispose of or otherwise liquidate all or any portion of the
Pledged Shares or such other Collateral and hold the proceeds thereof in the
Collateral Account as cash collateral to secure the Borrower's contingent
obligations in respect of the outstanding Letters of Credit.
(c) Further Assurances. The Borrower agrees to execute or to cause the
execution of such further financing statements, instruments or documents as may
be necessary from time to time in the opinion of the Bank to effect the intent
of this Section 2.13.
Section 2.14. Compliance with Margin Regulations. For purposes of
complying with Regulations G, T, U, X and D, each Credit Event hereunder shall
be deemed to be a "purpose credit" as defined in such regulations,
notwithstanding the fact that the Letters of Credit and some Advances are not
for the purpose of buying or carrying margin stock.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Initial Credit Event. The
obligation of the Bank to make its initial Advance or to issue the initial
Letter of Credit is subject to the conditions precedent that:
(a) Documentation. On or before the day on which the initial Advance is
to be made or the initial Letter of Credit is to be issued, the Bank shall have
received the following, each dated on or before such day, duly executed by all
the parties thereto, in form and substance satisfactory to the Bank:
(i) this Agreement, the Note, the Pledge Agreement, and a Federal
Reserve Form U-1;
(ii) certificates from the appropriate Governmental Authority
certifying as to the good standing, existence and authority of the Borrower
in all jurisdictions where the Borrower is organized and does business
where the failure to so qualify could reasonably be expected to cause a
Material Adverse Change;
(iii) certificates from a Responsible Officer of the Borrower
stating that (A) all representations and warranties of the Borrower set
forth in this Agreement are true and correct in all material respects; (B)
no Default has occurred and is continuing; and (C) all conditions in this
Section 3.01 have been met;
(iv) copies, certified as of the date of this Agreement by a
Responsible Officer of the Borrower of (A) the resolutions of the Board of
Directors of the Borrower approving this Agreement, the Note, the Pledge
Agreement and the other Credit Documents, (B) the articles of incorporation
and bylaws of the Borrower, and (C) all other documents evidencing other
necessary corporate action and governmental approvals, if any, with respect
to this Agreement, the Note, the Pledge Agreement and the other Credit
Documents.
(v) certificates of a Responsible Officer of the Borrower certifying
the names and true signatures of officers of the Borrower authorized to
sign this Agreement, the Note, the Pledge Agreement, and the other Credit
Documents;
(vi) a favorable opinion of the General Counsel of the Borrower,
substantially in the form of the attached Exhibit D;
(vii) all certificates evidencing the Pledged Shares and related
stock powers in favor of the Bank, duly executed on behalf of the Borrower;
and
(viii) such other documents, governmental certificates, agreements,
lien searches as the Bank may reasonably request.
(b) Cancellation of Existing Reg U Facility. The Credit Agreement dated
as of December 20, 1995, as amended, between the Borrower and the Bank has been
canceled, and the Bank has no further obligation to make advances to the
Borrower thereunder, and all amounts owing by the Borrower to the Bank in
connection therewith have been paid in full.
Section 3.02. Conditions Precedent to Each Credit Event. The obligation
of the Bank to make an Advance and to issue, amend or extend a Letter of Credit
shall be subject to the further conditions precedent that on the date of each
such Credit Event the following statements shall be true (and the Borrower shall
be deemed to have affirmed the truth thereof as of the date of such Credit
Event):
(i) The representations and warranties contained in Article IV (other
than Section 4.01(m)) are correct in all material respects on and as of the
date of such Credit Event, before and after giving effect to such Credit
Event and to the application of the proceeds thereof, as though made on and
as of such date, and
(ii) No Event of Default has occurred and is continuing, or would
result from such Credit Event or from the application of the proceeds
thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Corporate Existence. The Borrower is a corporation validly existing
and in good standing under the laws of the State of Delaware and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of property or conduct of its business requires such qualification,
except where a failure to be qualified could not reasonably be expected to cause
a Material Adverse Change.
(b) Corporate Power. The execution, delivery and performance by the
Borrower of this Agreement, the Note, the Pledge Agreement and the other Credit
Documents, and the consummation of the transactions contemplated hereby and
thereby are within the Borrower's corporate powers, have been duly authorized by
all necessary corporate action, do not contravene (i) the Borrower's certificate
of incorporation or bylaws or (ii) any law or any material contractual
restriction binding on or affecting the Borrower and will not result in or
require the creation or imposition of any Lien prohibited by this Agreement. At
the time of each Advance hereunder, such Advance and the use of the proceeds of
such Advance will be within the Borrower's corporate ▇▇▇▇▇▇, ▇▇▇▇ have been duly
authorized by all necessary corporate action, will not contravene (i) the
Borrower's certificate of incorporation or bylaws or (ii) any law or any
material contractual restriction binding on or affecting the Borrower and will
not result in or require the creation or imposition of any Lien prohibited by
this Agreement.
(c) Authorization and Approvals. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the Borrower of this
Agreement, the Note, the Pledge Agreement or the other Credit Documents or the
consummation of the transactions contemplated thereby. At the time of each
Advance hereunder, no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority will be required for such
Advance or the use of the proceeds of such Advance.
(d) Enforceable Obligations. This Agreement, the Note, and the other
Credit Documents have been duly executed and delivered by the Borrower. This
Agreement, the Note, the Pledge Agreement, and the other Credit Documents are
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally.
(e) Financial Statements. The audited Consolidated and unaudited
consolidating balance sheets of the Borrower and its Subsidiaries as at December
31, 1997, and the related audited Consolidated and unaudited consolidating
statements of income, changes in stockholders' equity and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, copies of which
have been furnished to the Bank, fairly present, subject to the assumptions set
forth therein, the Consolidated and consolidating financial condition of the
Borrower and its Subsidiaries at such date and the Consolidated and
consolidating results of the operations of the Borrower and its Subsidiaries for
the period ended on such date, and such Consolidated balance sheets and
Consolidated statements of income, changes in stockholders' equity and cash
flows were prepared in accordance with GAAP.
(f) Litigation. Except as set forth in the Financial Statements or on
Schedule 4.01(f) attached hereto, or as otherwise disclosed in writing by the
Borrower to the Bank, to the best knowledge of the executive officers of the
Borrower, there is no pending or threatened action or proceeding affecting the
Borrower before any court, Governmental Authority or arbitrator, which could
reasonably be expected to cause a Material Adverse Change or which purports to
affect the legality, validity, binding effect or enforceability of this
Agreement, the Note, the Pledge Agreement or any other Credit Document.
Additionally, to the best knowledge of the executive officers of the Borrower,
there is no pending or threatened action or proceeding instituted against the
Borrower as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property.
(g) Use of Proceeds. The proceeds of Advances will be used for general
corporate purposes and to purchase margin stock; provided, however, that no
proceeds of any Advance will be used to purchase or carry any margin stock (as
defined in Regulations G, T, U, X, and D) in violation of Regulations G, T, U,
X, and D. The Borrower shall request Letters of Credit solely to support
contingent obligations of the Borrower (other than obligations in respect of
borrowed money) and, in the case of Letters of Credit issued for the joint and
several account of the Borrower and a Subsidiary or affiliate of the Borrower,
to support contingent obligations of such Subsidiary or affiliate (other than
obligations in respect of borrowed money).
(h) Investment Company Act. The Borrower is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(i) Taxes. Except as set forth in the SEC Filings with respect to matters
being contested in good faith by appropriate proceedings, and for which
reserves, if required by GAAP, are being maintained, all federal and all
material state, local and foreign tax returns, reports and statements required
to be filed by the Borrower have been filed with the appropriate Governmental
Authorities in all jurisdictions in which such returns, reports and statements
are required to be filed, unless the failure to file could not reasonably be
expected to cause a Material Adverse Change, and all taxes (which are material
in amount) and other impositions due and payable have been timely paid prior to
the date on which any fine, penalty, interest, late charge, or loss may be added
thereto for non-payment thereof, unless the failure to pay when due and payable
could not reasonably be expected to cause a Material Adverse Change.
(j) Pension Plans. No Termination Event has occurred with respect to any
Plan, and each Plan has complied with and been administered in all material
respects in accordance with applicable provisions of ERISA and the Code. No
"accumulated funding deficiency" (as defined in Section 302 of ERISA) has
occurred and there has been no excise tax imposed under Section 4971 of the
Code. To the knowledge of any Responsible Officer of the Borrower, no
Reportable Event has occurred with respect to any Multiemployer Plan, and each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. The present value of
all benefits vested under each Plan (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits in any
amount that would reasonably be expected to cause a Material Adverse Change. The
Borrower has not had a complete or partial withdrawal from any Multiemployer
Plan for which there is any material withdrawal liability. As of the most
recent valuation date applicable thereto, the Borrower has not received notice
that any Multiemployer Plan is insolvent or in reorganization. Based upon GAAP
existing as of the date of this Agreement and current factual circumstances, the
Responsible Officers of the Borrower have no reason to believe that the annual
cost during the term of this Agreement to the Borrower for post-retirement
benefits to be provided to the current and former employees of the Borrower
under welfare benefit plans (as defined in Section 3(1) of ERISA) could, in the
aggregate, reasonably be expected to cause a Material Adverse Change.
(k) Environmental Condition. Except as described in the Borrower's annual
report on Form 10-K for the year ended December 31, 1997 (the "Valhi Form 10-K")
or as set forth on Schedule 4.01(k) attached hereto, the Borrower (i) has
been and is in compliance with the material requirements of applicable
Environmental Laws of which the failure to comply would reasonably be expected
to cause a Material Adverse Change; (ii) have not received notice of any
violation or alleged violation of any Environmental Law the violation of which
would reasonably be expected to cause a Material Adverse Change; and (iii) are
not subject to any actual or contingent Environmental Claim, which Environmental
Claim would reasonably be expected to cause a Material Adverse Change.
(l) True and Complete Disclosure. The Valhi Form 10-K most recently filed
with the SEC and the Borrower's quarterly report on Form 10-Q most recently
filed with the SEC, copies of which have been furnished by the Borrower to the
Bank, did not, as of the respective dates such Form 10-K and Form 10-Q were
filed with the SEC, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (b) from the date
of filing of the Valhi Form 10-K or any subsequent Form 10-Q no event or
condition exists or has occurred which has required or would require the
Borrower to file a current report on Form 8-K pursuant to the Exchange Act
except for any such event or condition which has been disclosed in writing to
the Bank by delivery to the Bank of a Form 8-K.
(m) Beneficial Ownership of NL Shares. As of the date of this Agreement,
the Borrower beneficially owns such amount of NL Shares as is set forth in
Schedule 4.01(m) attached hereto.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01. Affirmative Covenants. So long as the Note or any amount
under any Credit Document shall remain unpaid or the Bank shall have any
Commitment hereunder, the Borrower shall:
(a) Compliance with Laws, Etc. Comply in all material respects with all
Legal Requirements, except where any failure to comply could not reasonably be
expected to cause a Material Adverse Change. Without limiting the generality
and coverage of the foregoing, the Borrower shall comply in all material
respects with all Environmental Laws, and all laws, regulations, or directives
with respect to equal employment opportunity and employee safety in all
jurisdictions in which the Borrower does business, except where any failure to
comply could not reasonably be expected to cause a Material Adverse Change;
provided, however, that this Section 5.01(a) shall not prevent the Borrower, in
good faith and with reasonable diligence, contesting the validity or application
of any such laws or regulations by appropriate legal proceedings.
(b) Maintenance of Insurance. Maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower,
operates, except where failure to maintain any such insurance could not
reasonably be expected to cause a Material Adverse Change; provided that the
Borrower may self-insure to the extent and in the manner normal for similarly
situated companies of like size, type and financial condition that are part of a
group of companies under common control.
(c) Preservation of Corporate Existence, Etc. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified, as a foreign corporation in
each jurisdiction in which qualification is necessary or desirable in view of
its business and operations or the ownership of its properties except where
failure to so preserve and maintain or so qualify could not reasonably be
expected to cause a Material Adverse Change; provided, however, that nothing
herein contained shall prevent any transaction permitted by Section 5.02(c) or
(d).
(d) Payment of Taxes, Etc. Pay and discharge, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or Property that are material in
amount, prior to the date on which penalties attach thereto, and (ii) all lawful
claims that are material in amount which, if unpaid, might by law become a Lien
upon its property except where any failure to pay and discharge could not
reasonably be expected to cause a Material Adverse Change; provided, however,
that the Borrower shall not be required to pay or discharge any such tax,
assessment, charge, levy, or claim which is not yet due or is being contested in
good faith and by appropriate proceedings, and with respect to which reserves in
conformity with GAAP have been provided.
(e) Inspection. From time-to-time upon reasonable notice or after an
Event of Default has occurred, permit any Persons designated by the Bank to
visit, audit, and inspect any of the properties of the Borrower, including its
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its affairs, finances, and accounts with its officers
and independent public accountants with respect to any matters concerning or
relating to this Agreement or the transactions contemplated herein, all upon
reasonable notice during normal business hours and as often as may be reasonably
requested while such Default exists. All reasonable costs and expenses incurred
by the Bank in connection therewith shall be borne by the Borrower.
Section 5.02. Negative Covenants. So long as the Note or any amount under
any Credit Documents shall remain unpaid or the Bank shall have any Commitment
hereunder, the Borrower will not:
(a) Debts, Guaranties and Other Obligations. Incur, create, assume,
suffer to exist or in any manner become or be liable in respect of any Debt
except:
(i) Debt existing as on December 31, 1997, including, without
limitation, all renewals, extensions, rearrangements or refinancings of any
such Debt on terms and for amounts substantially similar to the terms and
amounts existing as of the date of this Agreement;
(ii) Debt of the Borrower hereunder to the Bank; and
(iii) Debt of the Borrower to any Person not existing on December
31, 1997 which when aggregated with Debt outstanding under this Agreement
does not exceed $100,000,000.
(b) Merger or Consolidation. Merge or consolidate with or into any other
Person, or permit NL Industries to merge or consolidate with or into any other
Person; provided, however, that if, but only if, there shall not exist or result
in a Default, the Borrower or NL Industries may merge with any other Person if
(i) the Borrower or NL Industries, as the case may be, is the surviving
corporation of such merger or consolidation and (ii) the assets of the Person
merging with or into the Borrower or NL Industries, as the case may be, exceed
the liabilities of such Person.
(c) Sale of Stock. Sell, lease or otherwise transfer any NL Shares if
after giving effect thereto the Borrower shall not retain a Control Percentage
with respect to NL Industries.
(d) Changes in Accounting. Change its method of accounting (other than
immaterial changes in methods, changes permitted by GAAP in which its auditors
concur, and changes required by a change in GAAP).
(e) Change of NL Industries Certificate of Incorporation or Bylaws.
Change or amend, or permit any change or amendment of the certificate of
incorporation or bylaws of NL Industries or any of its Subsidiaries that
decreases the Control Percentage with respect to NL Industries below 51%.
(f) Certificate of Incorporation. Take any action, with respect to its
beneficial ownership of the NL Shares to amend the provisions of Article IV,
Section A of NL's Certificate of Incorporation.
Section 5.03. Reporting Requirements. So long as the Note or any other
amount under any Credit Document shall remain unpaid or any Bank shall have any
Commitment hereunder, the Borrower will furnish to each Bank:
(a) as soon as possible and in any event within five days after the
occurrence of each Default known to the Responsible Officers of the Borrower
which is continuing on the date of such statement, a statement of a Responsible
Officer of the Borrower setting forth the details of such Default and the
actions which the Borrower has taken and proposes to take with respect thereto;
(b) as soon as available and in any event not later than 45 days after the
end of each of the first three quarters of each fiscal year of the Borrower, the
Consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and the Consolidated and
consolidating statements of income and retained earnings and cash flows of the
Borrower and its Subsidiaries for the period commencing at the end of the
previous year and ending with the end of such quarter, all in reasonable detail
and duly certified with respect to such Consolidated statements (subject to
year-end audit adjustments) by a Responsible Officer of the Borrower as having
been prepared in accordance with GAAP;
(c) as soon as available and in any event not later than 90 days after the
end of each fiscal year of the Borrower, a copy of the annual audit report for
such year for the Borrower and its Subsidiaries, including therein Consolidated
balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal
year and Consolidated statements of income and retained earnings and of cash
flows of the Borrower and its Subsidiaries for such fiscal year, in each case
certified by Coopers & ▇▇▇▇▇▇▇ or other independent certified public accountants
of recognized standing acceptable to the Bank;
(d) at the time it furnishes each set of financial statements pursuant to
paragraph (b) and (c) above, a compliance certificate of a senior financial
officer of the Borrower substantially in the form of the attached Exhibit E (i)
to the effect that no Default has occurred and is continuing (or, if any Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action that the Borrower has taken or proposes to take with
respect thereto) and (ii) setting forth in reasonable detail the computations
necessary to determine whether the Borrower is in compliance with Section
5.02(a) hereof as of the end of the respective quarterly fiscal period or fiscal
year;
(e) promptly after the sending or filing thereof, copies of all proxy
material, reports and other information which the Borrower sends to any of its
security holders pursuant to the Exchange Act, and copies of all reports and
registration statements which the Borrower or any Subsidiary files with the SEC,
including but not limited to reports on Form 10-Q and Form 10-K;
(f) except as to any matter which could not reasonably be expected to
cause a Material Adverse Change, as soon as possible and in any event (i) within
30 days after any Responsible Officer of the Borrower knows or has reason to
know that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Plan has occurred, and (ii) within 10 days
after a Responsible Officer of the Borrower knows or has reason to know that
any other Termination Event with respect to any Plan has occurred, a statement
of an authorized financial officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower proposes to take with respect
thereto;
(g) except as to any matter which could not reasonably be expected to
cause a Material Adverse Change, promptly and in any event within five Business
Days after receipt thereof by the Borrower from a Multiemployer Plan sponsor, a
copy of each notice received by the Borrower concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA;
(h) prompt written notice of any condition or event of which the Borrower
has knowledge, which condition or event has resulted or may reasonably be
expected to result in a Material Adverse Change;
(i) prompt written notice of any claims, proceedings, or disputes, or to
the knowledge of the Borrower threatened, or affecting the Borrower which, if
adversely determined, could reasonably be expected to cause a Material Adverse
Change, or any material labor controversy of which a Responsible Officer of the
Borrower has knowledge resulting in or threatening to result in a strike against
the Borrower which could reasonably be expected to cause a Material Adverse
Change, or any proposal of which a Responsible Officer of the Borrower has
knowledge by any Governmental Authority to acquire any of the material assets or
business of the Borrower which could reasonably be expected to cause a Material
Adverse Change;
(j) promptly and in any event within five Business Days of any such
amendment, copies of each amendment to the certificate or articles of
incorporation or bylaws of the Borrower or of NL Industries; and
(k) such other information respecting the business or properties, or the
condition or operations, financial or otherwise, of the Borrower, the Bank may
from time to time reasonably request.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" under any Credit Document:
(a) The Borrower shall fail to pay any principal of the Note when the same
becomes due and payable, or any interest on the Note or any fee or other amount
payable hereunder or under any other Credit Document within two Business Days
after the same becomes due and payable; or
(b) Any representation or warranty made in writing by the Borrower herein,
in the Note, the Pledge Agreement or in any other Credit Document or by the
Borrower (or any of its officers) in connection with this Agreement or made as a
consequence of the giving of any Notice of Borrowing or the acceptance of the
proceeds of any Advance shall prove to have been incorrect in any material
respect when made; or
(c) The Borrower shall (i) fail to perform or observe any other term or
covenant or agreement set forth herein, in the Note or in any other Credit
Document on its part to be performed or observed which is not covered by clause
(ii) below or any other provision of this Section 6.01 and such failure
continues for more than 30 days after the Borrower's receipt of notice of such
failure from the Bank or (ii) fail to perform or observe any term, covenant or
agreement contained in Sections 5.01(a) or 5.02, or in subsections (a) and (f)
through (j) of Section 5.03 and such failure continues for more than five days
after the earlier of the knowledge of a Responsible Officer of such failure or
the Borrower's receipt of notice of such failure from the Bank; or
(d) The Borrower shall fail to pay any principal of or premium or interest
on its Debt which is outstanding in a principal amount of at least $10,000,000
individually or when aggregated with all such Debt of the Borrower so in default
(but excluding Debt evidenced by the Note) when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to Debt of the Borrower or Debt of NL Industries or any
Subsidiary of NL Industries which is outstanding in a principal amount of at
least $10,000,000 individually or when aggregated with all such Debt of the
Borrower, NL Industries or any Subsidiary of NL Industries so in default, and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt of the Borrower, NL Industries or any Subsidiary of NL Industries
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof; or
(e) The Borrower or NL Industries shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or any of its
Significant Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against the Borrower, either such
proceeding shall remain undismissed for a period of 30 days or any of the
actions sought in such proceeding shall occur; or the Borrower shall take any
corporate action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower or NL Industries (other than
with respect to matters disclosed in the December 31, 1997 financial statements
of the Borrower) and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(g) Any Termination Event with respect to a Plan shall have occurred, and,
30 days after notice thereof shall have been given to the Borrower, (i) such
Termination Event shall not have been corrected and (ii) the then present value
of such Plan's vested benefits exceeds the then current value of assets
accumulated in such Plan by more than the amount of $10,000,000 (or in the case
of a Termination Event involving the withdrawal of a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA), the withdrawing employer's
proportionate share of such excess shall exceed such amount); or
(h) The Borrower as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan sponsor
of such Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount exceeding
$10,000,000; or
(i) A Material Adverse Change shall occur.
Section 6.02. Remedies. Upon the occurrence of an Event of Default the
Bank (i) may, by notice to the Borrower, declare the obligation of the Bank to
make Advances to be terminated, whereupon the same shall forthwith terminate,
and (ii) may, by notice to the Borrower, declare the Note, all interest thereon
and all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Note, all such interest and all such amounts shall become
and be forthwith due and payable in full, without presentment, demand, protest
or further notice of any kind (including, without limitation, any notice of
intent to accelerate or notice of acceleration), all of which are hereby
expressly waived by the Borrower; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to the Borrower or
any of its Subsidiaries under the Federal Bankruptcy Code, (A) the obligation of
the Bank to make Advances shall immediately and automatically be terminated and
(B) the Note, all such interest and all such amounts shall immediately and
automatically become and be due and payable in full, without presentment,
demand, protest or any notice of any kind (including, without limitation, any
notice of intent to accelerate or notice of acceleration), all of which are
hereby expressly waived by the Borrower.
Section 6.03 Collateral Account. The Borrower hereby agrees that any
funds collected under Sections 2.07(c) and 6.02 hereof as a result of contingent
obligations of the Borrower under outstanding Letters of Credit shall be held by
the Bank in the Collateral Account (as defined in the Pledge Agreement) as cash
collateral securing the Obligations (including without limitation such
contingent obligations) and shall be subject to withdrawal only by the Bank to
satisfy such Obligations (including without limitation such contingent
obligations). In the event any outstanding Letter of Credit expires undrawn,
and provided no Default or Event of Default is then existing, and, in the case
of funds collected under Section 2.07(c) hereof, if no Collateral Deficiency
would result, the Bank shall release to the Borrower proceeds of such account
equal to the undrawn amount of such expired Letter of Credit, together with
accrued interest thereon.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, the Note, the Pledge Agreement or any other Credit Document, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 7.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telecopy, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at its address at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, Vice President - Finance
and Treasurer (telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; telephone: (▇▇▇) ▇▇▇-▇▇▇▇) and if to
the Bank, at its address at 4800 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and Ms. ▇▇▇▇▇ ▇▇▇▇▇ (telecopy: (214)
▇▇▇-▇▇▇▇; telephone: (▇▇▇) ▇▇▇-▇▇▇▇) or, as to each party, at such other address
or teletransmission number as shall be designated by such party in a written
notice to the other parties. All such notices and communications shall, when
mailed, telecopied, telexed or hand delivered or delivered by overnight courier,
be effective upon receipt when mailed, when telecopy transmission is completed,
when confirmed by telex answer-back or when delivered, respectively, except that
notices and communications to the Bank pursuant to Article II or VII shall not
be effective until received by the Bank.
Section 7.03. No Waiver; Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder or under the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
Section 7.04. Costs and Expenses.
(a) The Borrower agrees to pay on demand all reasonable out-of-pocket
costs and expenses in connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement, the Note, the
Pledge Agreement and the other Credit Documents including, without limitation,
the reasonable fees and out-of-pocket expenses of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.,
counsel for the Bank, and with respect to advising the Bank as to its respective
rights and responsibilities under this Agreement, and, after the occurrence of
an Event of Default, all reasonable out-of-pocket costs and expenses, if any, of
the Bank (including, without limitation, reasonable counsel fees and expenses of
the Bank) in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the Note and the other Credit
Documents.
(b) If any payment of principal of any Eurodollar Rate Advance is made
other than on the last day of the Interest Period for such Advance, as a result
of any payment pursuant to Section 2.07 or the acceleration of the maturity of
the Note pursuant to Article VII or for any other reason whatsoever, the
Borrower shall, within ten days of any written demand sent by the Bank to the
Borrower, pay to the Bank any amounts (without duplication of any other amounts
payable in respect of breakage costs) required to compensate the Bank for any
additional losses, out-of-pocket costs or expenses which it may actually incur
as a result of such payment, including, without limitation, any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Bank to
fund or maintain such Advance.
Section 7.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement, the
Note, and the other Credit Documents, irrespective of whether or not the Bank
shall have made any demand under this Agreement, the Note, the Pledge Agreement
or such other Credit Documents, and although such obligations may be unmatured.
The Bank agrees promptly to notify the Borrower after any such set-off and
application made by the Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
the Bank under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Bank may
have.
Section 7.06. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower and the Bank and thereafter shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns upon notice to the Borrower, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Bank.
Section 7.07. Indemnification. The Borrower shall indemnify the Bank and
each affiliate thereof and their respective directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject
(excluding any consequential losses), insofar as such losses, liabilities,
claims or damages arise out of or result from any actual or proposed use by the
Borrower or any Subsidiary of the Borrower of the proceeds of any Advance or
breach by the Borrower of any provision of this Agreement or any other Credit
Document, or from any investigation, litigation or other proceeding (including
any threatened investigation or proceeding) relating to the foregoing, and the
Borrower shall reimburse the Bank, and each affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
reasonable out-of-pocket expenses (including legal fees) incurred in connection
with any such investigation, litigation or other proceeding; but excluding any
such losses, liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified.
Section 7.08. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 7.09. GOVERNING LAW. THIS AGREEMENT, THE NOTE, THE PLEDGE
AGREEMENT AND THE OTHER CREDIT DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT CHAPTER 346 OF THE
TEXAS FINANCE CODE SHALL NOT APPLY TO THIS AGREEMENT OR THE ADVANCES HEREUNDER.
THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY TEXAS STATE
OR FEDERAL COURT SITTING IN DALLAS COUNTY, THE CITY OF DALLAS, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE AND THE OTHER
CREDIT DOCUMENTS, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURT.
THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY AND THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE BORROWER HEREBY
AGREES THAT SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS
WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING MAY BE MADE BY MAILING OR
DELIVERING A COPY OF SUCH PROCESS TO THE BORROWER AT ITS ADDRESS SPECIFIED IN
SECTION 7.02. THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHTS OF THE BANK TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE BANK TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
VALHI, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Vice President-Finance and Treasurer
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
EXHIBIT A
PROMISSORY NOTE
$15,000,000 May 19, 1998
For value received, the undersigned, Valhi, Inc., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of Societe Generale,
Southwest Agency (the "Bank") the principal sum of Fifteen Million and no/100
Dollars ($15,000,000) or, if less, the aggregate outstanding principal amount of
the Advances (as defined in the Credit Agreement referred to below) made by the
Bank to the Borrower, together with interest on the unpaid principal amount of
each such Advance from the date of such Advance until such principal amount is
paid in full, at such interest rates, and at such times, as are specified in the
Credit Agreement.
This Note is the Promissory Note referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Credit Agreement, dated as of
May 19, 1998 (as the same may be amended or modified from time to time, the
"Credit Agreement"), between the Borrower and the Bank. Capitalized terms used
in this Note that are defined in the Credit Agreement and not otherwise defined
in this Note have the meanings assigned to such terms in the Credit Agreement.
The Credit Agreement, among other things, (a) provides for the making of
Advances by the Bank to the Borrower from time to time in an aggregate amount
not to exceed at any time outstanding the Dollar amount first above mentioned
and (b) contains provisions for acceleration of the maturity of this Note upon
the happening of certain events stated in the Credit Agreement and for
prepayments of principal prior to the maturity of this Note upon the terms and
conditions specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Bank at 4800 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (or at such other location or address as may be specified by
the Bank in writing to the Borrower) in same day funds. The Bank shall record
all Advances and payments of principal made under this Note, but no failure of
the Bank to make such recordings shall affect the Borrower's repayment
obligations under this Note.
Except as specifically provided in the Credit Agreement, the Borrower
hereby waives presentment, demand, protest, notice of intent to accelerate,
notice of acceleration, and any other notice of any kind. No failure to
exercise, and no delay in exercising, any rights hereunder on the part of the
holder of this Note shall operate as a waiver of such rights.
Subject to applicable federal law, this Note shall be governed by and
construed and enforced in accordance with the laws of the state of Texas, except
that Chapter 346 of the Texas Finance Code shall not apply to this Note.
VALHI, INC.
By:
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Name:
------------------------------
Title:
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EXHIBIT B
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement dated as of May 19, 1998 ("Pledge
Agreement"), is by and between Valhi, Inc., a Delaware corporation (the
"Borrower"), and Societe Generale, Southwest Agency (the "Bank").
INTRODUCTION
A. The Borrower and the Bank are party to the Credit Agreement dated as of
May 19, 1998 (as the same may be amended from time to time, the "Credit
Agreement").
B. In order to induce the Bank to enter into the Credit Agreement, the
Borrower is entering into this Pledge Agreement to secure its obligations under
the Credit Agreement.
For good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions.
Terms defined in the Credit Agreement and not otherwise defined in this
Pledge Agreement have the meanings provided for in the Credit Agreement. The
following additional terms, have the following respective meanings:
"Approved Depositary" means The Depository Trust Company or any other
depository which has been approved by the Bank and as to which the Bank has
received an opinion of counsel to the Borrower reasonably satisfactory to the
Bank to the effect that the Bank will have valid and perfected security
interests in all Pledged Shares which may be deposited with such depositary.
"Collateral" means (a) the Pledged Shares, (b) the Collateral Account and all
investments and investment property therein, (c) all rights and privileges of
the Borrower with respect to the Pledged Shares (including without limitation
all representations, warranties, registration rights and other undertakings of
any Person inuring to the benefit of the Borrower in respect thereof) and the
Collateral Account, (d) all non-cash dividends and all other payments and
distributions hereafter made on or with respect to the Pledged Shares and,
following the occurrence and during the continuation of a Default, all cash
dividends paid on the Pledged Shares and all interest on the Collateral Account,
and (e) all proceeds of any or all of the foregoing (whether the same arise or
are acquired before or after the commencement of a Proceeding in which the
Borrower is a debtor).
"Collateral Account" means a deposit account established by the Bank with
Societe Generale, New York Branch designated as the "Collateral Account Societe
Generale for Valhi, Inc.".
"Pledged Shares" means the securities described on Annex A attached to this
Pledge Agreement, as such Annex may be amended from time to time by the written
agreement of the Borrower and the Bank.
"Proceeding" means a case under the federal Bankruptcy Code, as amended from
time to time, or any successor federal statute or any similar law of any state
or foreign country or political subdivision thereof.
"Qualified Investments" means
(a) readily marketable securities which are direct obligations of, or are
unconditionally guaranteed by, the United States of America and mature within
one year from the date on which they are acquired;
(b) commercial paper maturing within three months, rated A-2 or higher by
Standard & Poor's Ratings Services or Prime-2 or higher by ▇▇▇▇▇'▇ Investors
Service;
(c) certificates of deposit issued by any bank doing business under the laws
of the United States of America or of any state thereof having a Standard &
Poor's Ratings Services investment grade rating of Single A or above and having
a combined capital and surplus of not less than $1,000,000,000; and
(d) repurchase obligations with a term of not more than ten days for
underlying securities of the types described in clauses (a), (b) and (c) above
entered into with any bank of the type described in clause (c) above.
"Secured Obligations" means (i) all principal of and interest on the Note,
(ii) all Reimbursement Obligations and other amounts payable by the Borrower
hereunder or under the Credit Agreement or any other Credit Document, and (iii)
any renewals or extensions of any of the foregoing.
"UCC" means at any time the Uniform Commercial Code as in effect in the State
of Texas; provided that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of the Acceptable
Security Interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than Texas, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or the effect or perfection or
non-perfection (and for purposes of definitions related to such provisions).
SECTION 2. Representations and Warranties.
The Borrower represents and warrants that:
(a) Title to Collateral. The Borrower is the record and beneficial owner of
each item of Collateral existing on the date of this Pledge Agreement free and
clear of all Liens except the Lien created hereunder. The Borrower will be the
record and beneficial owner of each item of Collateral hereafter acquired in
addition to any then existing Collateral free and clear of all Liens except the
Lien created hereunder. The Borrower is not and will not become a party to or
otherwise bound by any agreement, other than this Pledge Agreement, which
restricts in any manner the rights of any present or future holder of any of the
Pledged Shares with respect thereto.
(b) Issuance of Initial Pledged Shares. The capital stock of NL Industries
is duly authorized, validly issued and fully paid and non-assessable. All of the
initial Pledged Shares have been beneficially owned by the Borrower for a period
in excess of three years.
(c) Validity, Perfection and Priority of Security Interests. Upon delivery
to the Bank of all NL Shares constituting Pledged Shares, the Bank will have
Acceptable Security Interests in such Collateral. The Borrower has not
performed any acts which might prevent the Bank from enforcing any of the terms
and conditions of this Pledge Agreement or which would limit the Bank in any
such enforcement.
SECTION 3. The Security Interests. In order to secure the full and punctual
payment of the Secured Obligations in accordance with the terms thereof, and to
secure the performance of all the obligations of the Borrower hereunder and
under the other Credit Documents, the Borrower hereby grants to the Bank
continuing security interests in the Collateral, whether presently existing or
owned or hereafter arising or acquired.
SECTION 4. Perfection of Security Interests.
(a) Prior to the initial Advance under the Credit Agreement, and thereafter
upon each acquisition of any Pledged Shares and each investment or reinvestment
of funds deposited in the Collateral Account pursuant to Section 7 of this
Pledge Agreement, the Borrower shall (i) deliver or cause to be delivered to the
Bank all previously undelivered certificates and instruments evidencing Pledged
Shares other than Pledged Shares which have been deposited in an Approved
Depositary and (ii) give all notices and take such other action as may be
necessary to perfect the Bank's security interest in any Pledged Shares which
have been deposited with an Approved Depositary.
(b) All Pledged Shares other than Pledged Shares which have been deposited
with an Approved Depositary shall be delivered to the Bank in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, with signatures appropriately guaranteed, and
accompanied in each case by any required transfer tax stamps, all in form and
substance reasonably satisfactory to the Bank.
(c) The Borrower shall cause each Approved Depositary to make appropriate
entries to the Bank's account on the books of such Approved Depositary to
reflect the transfer of all Pledged Shares which have been deposited with such
Approved Depositary to the Bank and to deliver to the Bank a written
confirmation of the book-entry transfer of such Pledged Shares into such
account, to be held as Collateral under this Pledge Agreement.
(d) Promptly following the Borrower's acquisition of any Pledged Security
which constitutes an "uncertificated security" as defined in the UCC, the
Borrower and the Bank will effect such modifications to this Pledge Agreement as
the Bank in its discretion deems necessary or appropriate to ensure that the
security interests with respect to such portion of the Collateral are protected
to substantially the same extent as provided for herein with respect to other
Pledged Shares and the Borrower shall provide evidence satisfactory to the Bank
of compliance by the Borrower with Section 5 hereof with respect to such portion
of the Collateral.
(e) The Borrower shall notify NL Industries of the security interest created
hereby on the initial Pledged Shares and shall cause NL Industries, within ten
Business Days of the date of this Pledge Agreement, to send written notice to
the Bank acknowledging such security interest and expressly agreeing to remit
any and all dividends and distributions on account of the Pledged Shares issued
by NL Industries (other than cash dividends) remitted after the date of this
Pledge Agreement directly to the Bank at the Bank's address set forth in Section
7.02 of the Credit Agreement, and, upon receipt by NL Industries of any notice
from the Bank that a Default has occurred and is continuing under the Credit
Agreement, to remit all cash dividends and any and all other distributions on
account of the Pledged Shares issued by NL Industries directly to the Bank at
the same address (and upon the Bank's receipt of any such cash dividends the
Bank will deposit such funds into the Collateral Account.
SECTION 5. Further Assurances.
The Borrower will, from time to time, at its expense and in such manner and
form as the Bank may reasonably require, execute and deliver any financing
statement, specific assignment, notice or other writing and take any other
action that may be necessary or desirable, or that the Bank may reasonably
request, in order to create, preserve, perfect or validate the security
interests granted hereby or to enable the Bank to exercise and enforce its
rights hereunder with respect to any of the Collateral. To the extent permitted
by applicable law, the Borrower hereby authorizes the Bank to execute and file,
in the name of the Borrower or otherwise, UCC financing statements which the
Bank in its sole discretion may deem necessary or appropriate to perfect the
security interests granted hereby. The Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Pledge Agreement or of a
financing statement is sufficient as a financing statement. The Borrower shall
pay the costs of, or incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
SECTION 6. Collateral Account.
If at any time the Bank receives and funds from the Borrower pursuant to
Section 2.07(c) or Section 6.02 of the Credit Agreement, or the proceeds of cash
dividends or any other payments and distributions in respect of Pledged Shares
following the occurrence and during the continuation of a Default, the Bank
shall promptly establish the Collateral Account and deposit all such funds
therein and thereafter such funds shall be held in the Collateral Account and
applied by the Bank in accordance with this Pledge Agreement. The Collateral
Account shall be subject to investment, debit and withdrawal solely by the Bank,
as the secured party, as provided in this Agreement, and the Bank shall obtain
from Societe Generale, New York Branch, as the depositary of such Collateral
Account, its written agreement to the terms and provisions hereof. If any such
proceeds, payments or distributions are received by the Borrower at any time
after occurrence and during the continuance of a Default, they shall be received
in trust for the benefit of the Bank, and shall be remitted immediately to the
Bank for deposit into the Collateral Account in the same form as received (with
any necessary endorsement). No amount, including interest on funds in the
Collateral Account, shall be paid or released to or for the account of, or
withdrawn by or for the account of, the Borrower or any other Person from the
Collateral Account except as provided in this Pledge Agreement.
SECTION 7. Investment, Release of Funds, Control of Collateral Account.
(a) Investment of Funds. So long as no Default shall have occurred and be
continuing, the Borrower may direct the investment and reinvestment by the Bank
of all funds on deposit in the Collateral Account in accordance with the
following terms and conditions:
(A) such funds will be invested solely in Qualified Investments; and
(B) prior to or contemporaneously with the making of any such investment,
the Borrower shall in accordance with Section 4 of this Pledge Agreement
take or cause to be taken such steps as may be necessary to insure that
the Bank will have an Acceptable Security Interest in such investment.
(b) Release of Funds. So long as no Default shall have occurred and be
continuing, the Borrower shall be entitled to receive from the Bank all interest
or other income with respect to all funds on deposit in the Collateral Account.
(c) Representation and Warranty. Each request by the Borrower for
investment or release of funds in or from the Collateral Account shall be deemed
to be a representation and warranty by the Borrower that (i) such investment or
withdrawal is in accordance with the terms and conditions specified in
subsection (a) of this Section or for the purposes specified in subsection (b)
of this Section, as applicable, (ii) the representations and warranties set
forth herein are true and correct on and as of the date of such request as if
made on and as of such date; and (iii) no Default has occurred and is continuing
on the date of such request.
(d) Control by Secured Party. The Borrower acknowledges and agrees that (i)
the Bank shall have exclusive control over and the exclusive right of withdrawal
from the Account; (ii) the Bank is vested with full and irrevocable power and
authority for the purpose of carrying out the terms of this Agreement and to
take any and all action and to execute any and all instruments which may be
necessary to accomplish the purposes of this Agreement; (iii) amounts deposited
in the Account shall be applied exclusively as provided in this Agreement; (iv)
except as specified herein, the Borrower shall have no right to withdraw, or
cause the withdrawal of, any funds in the Account or to direct the investment of
such funds or the liquidation thereof, and shall not make, attempt to make, or
consent to the making of any withdrawal or transfer from the Account.
(e) UCC Provisions. Each of the parties hereto agrees that, for purposes of
Article 8 and Article 9 of the UCC, (i) the Collateral Account is a "securities
account" (as defined in Section 8.501 of the UCC); (ii) Societe Generale, New
York Branch is a "securities intermediary" (as defined in Section 8.102 of the
UCC) and the Societe Generale, New York Branch's "jurisdiction" (for purposes of
Section 8.110 of the UCC) is the State of New York; (iii) the Bank is the
"entitlement holder" having the "security entitlements" (as such terms are
defined in Section 8.102 of the UCC) with respect to all financial assets
credited to the Collateral Account (and Societe Generale, New York Branch will
identify the Bank as such in its records); and (iv) all investments and
instruments for the credit of the Collateral Account are to be treated as
"financial assets" under Section 8.102 of the UCC. Each of the parties hereto
further agrees that, for purposes of the UCC, the Borrower has granted, and
hereby confirms that it has granted, to the Bank a security interest in the
Collateral Account and in all interests or security entitlements of the Borrower
relating to the Collateral Account.
(f) Obligations of Depositary. Upon the creation of the Collateral Account,
the Bank will cause Societe Generale, New York Branch to confirm and agree with
the Company and the Bank that (i) it has identified, and will at all times
identify, the Collateral Account as being subject to the security interest
created hereby; (ii) it has not entered into any prior control agreement
relating to the Collateral Account or investment property therein and further
agrees not to enter into any control agreement (other than this Pledge
Agreement) relating to the Collateral Account or investment property therein;
and (iii) it will not comply with any entitlement orders, instructions or
directions of any kind concerning the Collateral Account other than from the
Secured Party.
SECTION 8. Record Ownership of Pledged Shares; Definitive Certificates.
The Bank may at any time following the occurrence and during the continuation
of a Default, from time to time, in its sole discretion, cause any or all of the
Pledged Shares to be transferred of record into the name of the Bank or a
nominee. The Borrower will promptly give to the Bank copies of any notices and
other communications received by it with respect to Pledged Shares registered in
the name of the Borrower, and the Bank will promptly give the Borrower copies of
any notices and other communications received by the Bank with respect to
Pledged Shares registered in the name of the Bank or a nominee. The Bank shall
at all times have the right to obtain definitive certificates (in its name or in
the name of a nominee) representing Pledged Shares at any time deposited with an
Approved Depositary, and all such certificates shall be Collateral hereunder and
be subject to the terms hereof.
SECTION 9. Right to Vote Pledged Shares; Receipt of Dividends, Etc.
(a) Unless a Default shall have occurred and be continuing, the Borrower
shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Shares, and the Bank
shall, upon receiving a written request from the Borrower, which request shall
be deemed to be a representation and warranty by the Borrower that no Default
has occurred and is continuing, deliver to the Borrower or, as specified in such
request, such proxies, powers of attorney, consents, ratifications and waivers
in respect of any Pledged Shares which are registered in the name of the Bank or
a nominee as shall be specified in such request and be in form and substance
satisfactory to the Bank.
(b) If a Default shall have occurred and be continuing, all rights of the
Borrower to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 9(a) above shall end upon
thirty days' notice from the Bank to the Borrower and thereafter the Bank shall
have the right to the extent permitted by law for so long as such Default
continues, and the Borrower shall take all such action as may be necessary or
appropriate to give effect to such right, to vote and to give consents,
ratifications and waivers, and take any other action with respect to all Pledged
Shares with the same force and effect as if the Bank were the absolute and sole
owner thereof.
(c) The Bank shall be entitled to receive and retain as Collateral all
dividends and distributions (other than cash dividends or distributions) made in
respect of the Pledged Shares, whether so paid or made before or after any
Default has occurred; provided, however, that upon the occurrence and during the
continuance of a Default, the Bank shall be entitled to receive and deposit as
Collateral all cash dividends into the Collateral Account for so long as such
Default continues. Any such dividends or distributions on account of Pledged
Shares shall, if received by the Borrower, be received in trust for the benefit
of the Bank, be segregated from the other property or funds of the Borrower, and
be forthwith delivered to the Bank as Collateral in the same form as so received
(with any necessary endorsement).
SECTION 10. General Authority.
The Borrower hereby irrevocably appoints the Bank its true and lawful
attorney, with full power of substitution, in the name of the Borrower, the
Bank, the Bank or otherwise, for the sole use and benefit of the Bank, the Bank
and the holders of the Secured Obligations, but at the Borrower's expense, to
the extent permitted by law to exercise, at any time and from time to time, all
or any of the following powers with respect to all or any of the Collateral:
(a) to take such reasonable action as the Bank deems necessary to protect or
preserve the Collateral and to realize upon the Collateral in accordance with
this Pledge Agreement;
(b) if a Default shall have occurred and be continuing, to give notice
thereof to the Borrower, whereupon (i) funds on deposit in the Collateral
Account shall not be made available to the Borrower and (ii) the Bank may direct
the investment and reinvestment of all funds on deposit in the Collateral
Account pending application in accordance with Section 12 in Qualified
Investments; and
(c) so long as an Event of Default shall have occurred and be continuing:
(i) to demand, ▇▇▇ for, collect, receive and give acquaintance for any
and all monies due or to become due upon or by virtue of the
Collateral,
(ii) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto, and
(iii) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds thereof in accordance with Section 11.
SECTION 11. Remedies upon Event of Default
(a) If any Event of Default shall have occurred and be continuing, the Bank
may exercise all the rights of a secured party under the UCC (whether or not in
effect in the jurisdiction where such rights are exercised) and, in addition,
the Bank may without being required to give any notice, except as herein
provided or as may be required by mandatory provisions of law, (i) apply the
cash, if any, then held as Collateral as specified in Section 12 and (ii) if
there shall be no such cash or if such cash shall be insufficient to pay all the
Secured Obligations in full, sell the Collateral or any part thereof at public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery, and (subject to the requirements of
the UCC) at such price or prices as the Bank may deem satisfactory. The Bank may
be the purchaser of any or all of the Collateral so sold at any public sale (or,
if the Collateral is of a type customarily sold in a recognized market or is of
a type which is the subject of a widely distributed standard price quotations,
at any private sale) and thereafter hold the same, absolutely, free from any
right or claim of whatsoever kind. The Bank is authorized in connection with
any such sale (i) to restrict the prospective bidders on or purchasers of any of
the Collateral to a limited number of sophisticated investors who will represent
and agree that they are purchasing for their own account for investment and not
with a view to the distribution or sale of any of such Collateral, (ii) to
cause, if applicable, to be placed on certificates for any or all of the Pledged
Shares a legend to the effect that such security has not been registered under
the Securities Act of 1933 ("Securities Act") and may not be disposed of in
violation of the provisions of the Securities Act, and (iii) to impose such
other limitations or conditions in connection with any such sale as the Bank
reasonably deems necessary or advisable in order to comply with the Securities
Act or any other applicable law or regulation. The Borrower agrees that it will
execute and deliver such documents and take such other reasonable action as the
Bank deems necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Bank shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Borrower which, to the extent permitted by
law, hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter adopted. The
Bank shall give the Borrower not less than ten days' prior written notice of the
time and place of any sale or other intended disposition of any of the
Collateral unless the Collateral threatens to decline speedily in value. The
Bank and the Borrower agree that such notice constitutes "reasonable
notification" within the meaning of UCC Section 9-504(3). Such notice (if any
is required) shall (i) in the case of a public sale, state the time and place
fixed for such sale, (ii) in the case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion thereof so being sold,
will first be offered to sale at such board or exchange, and (iii) in the case
of a private sale, state the day after which such sale may be consummated. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Bank shall deem to be commercially
reasonably, provided that the Bank shall not be obligated to make any such sale
pursuant to any such notice. The Bank may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. If all
or any part of the Collateral is sold on credit or for future delivery, the
Collateral so sold may be retained by the Bank until the selling price is paid
by the purchaser thereof, but the Bank shall not incur any liability in case of
the failure of such purchaser to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may again be sold upon like notice.
The Bank, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court of courts of competent jurisdiction.
(b) Undertakings to Apply Reports. If the Bank shall determine to exercise
its right to sell all or any of the Pledged Shares pursuant to Rule 144 of the
General Rules and Regulations of the Securities Act ("Rule 144"), at the request
of the Bank, the Borrower shall exercise best efforts to cause NL Industries to
file, on a timely basis, all annual quarterly and other reports required to be
filed by it under Sections 13 and 15(d) of the Exchange Act, and the rules and
regulations of the SEC thereunder, as amended from time to time. In addition,
at the request of the Bank, the Borrower shall exercise best efforts to cause NL
Industries to cooperate with the Bank so as to enable such sales to be made in
accordance with applicable laws, rules, and regulations and the requirements of
the broker through which the sales are proposed to be executed, and shall, upon
request and assuming that the requirements of Rule 144 have been complied with,
furnish at the Borrower's expense an opinion of counsel to NL Industries that
the proposed sale is in compliance with Rule 144.
(c) For the purpose of enforcing any and all rights and remedies under this
Pledge Agreement the Bank may (i) require the Borrower to, and the Borrower
agrees that it will, at its expense and upon the request of the Bank, forthwith
assemble all or any part of the Collateral not held by the Bank or an agent as
directed by the Bank and make it available at a place designated by the Bank
which is, in its opinion, reasonably convenient to the Collateral and the
Borrower, whether at the premises of the Borrower or otherwise, (ii) to the
extent permitted by applicable law, enter, with or without process of law and
without breach of the peace, any premises where any of such Collateral is or may
be located, and without charge or liability to it seize and remove such
Collateral from such premises, and (iii) have access to and use the Borrower's
books and records relating to such Collateral.
SECTION 12. Application of Proceeds.
The proceeds of any sale of, or other realization upon, all or any part of
the Collateral shall be applied by the Bank in the following order of
priorities:
first, to payment of the expenses of such sale or other realization,
including reasonable compensation to the Bank, and its agents and counsel,
and all reasonable expenses, liabilities and advances incurred or made by the
Bank in connection therewith, and any other unreimbursed reasonable expenses
or other reasonable amounts for which the Bank is to be reimbursed pursuant
to Section 13 hereof or is to be reimbursed pursuant to the Credit Agreement;
second, to the ratable payment of accrued but unpaid interest and any
accrued but unpaid fees constituting part of the Secured Obligations in
accordance with the terms of the Credit Agreement;
third, to the ratable payment of unpaid principal of the Secured
Obligations;
fourth, to the ratable payment of all other Secured Obligations, until
all Secured Obligations (including without limitation all reasonable legal
fees and expenses payable by the Borrower pursuant to the terms of the Credit
Agreement) shall have been paid in full; and
finally, to payment to the Borrower or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 13. Expenses.
The Borrower will forthwith upon demand pay to the Bank:
(a) the amount of any taxes which the Bank may have been required to pay by
reason of the security interests granted hereby (including any applicable
transfer taxes) or to free any of the Collateral from any Lien thereon, and
(b) the amount of any and all reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of counsel or any other agents or experts
which the Bank may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the collection, sale or other disposition of any of the
Collateral, (iii) the exercise by the Bank of any of the rights conferred upon
it hereunder or (iv) any default on the part of the Borrower hereunder.
SECTION 14. Termination of Security Interests; Release of Collateral.
Upon the repayment in full of all Secured Obligations and the termination of
the Commitment under the Credit Agreement, the security interests granted hereby
shall terminate and all rights to the Collateral shall revert to the Borrower,
and the Bank will promptly execute and deliver to the Borrower such documents as
the Borrower shall reasonably request to evidence such termination.
At any time when the Borrower is not in Default the Borrower may request the
Bank and the Bank shall promptly release to the Borrower an amount of Pledged
Shares so that the remaining Collateral Value of all Pledged Shares held by the
Bank is equal to or exceeds 300% of the then existing Commitment.
SECTION 15. Notices.
All notices, communications and distributions hereunder shall be given or
made to the parties hereto in the manner and at the locations set forth in the
Credit Agreement or at such other address or telex number as the addressee may
hereafter specify for the purpose of giving notice.
SECTION 16. Waivers, Non-Exclusive Remedies.
No failure on the part of the Bank to exercise, and no delay in exercising
and no course of dealing with respect to, any right under this Pledge Agreement
or any other Credit Document shall operate as a waiver thereof; nor shall any
single or partial exercise by the Bank of any right under this Pledge Agreement
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies in the Credit Documents are cumulative and are
not exclusive of any other remedies provided by law.
SECTION 17. Successors and Assigns.
This Pledge Agreement is for the benefit of the Bank and its successors and
assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the indebtedness
so assigned, may be transferred with such indebtedness. The Bank agrees to give
the Borrower written notice of any such assignment. This Pledge Agreement shall
be binding on the Borrower and its successors and assigns.
SECTION 18. Changes in Writing.
Neither this Pledge Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally, but only by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
SECTION 19. Choice of Law.
This Pledge Agreement shall be construed in accordance with and governed by
the laws of the State of Texas, except as otherwise required by mandatory
provisions of law and except to the extent that remedies provided by the laws of
any jurisdiction other than Texas are governed by the laws of such jurisdiction.
SECTION 20. Severability.
If any provision hereof is invalid and unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (a) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Bank in order to carry out the intentions of
the parties hereto as nearly as may be possible; and (b) the invalidity or
unenforceability of an provisions hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
Executed as of the date first set forth above.
VALHI, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
SOCIETE GENERALE
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
ANNEX A TO
PLEDGE AND SECURITY AGREEMENT
NL SHARES PLEDGED AS OF
THE DATE OF THE PLEDGE AND SECURITY AGREEMENT
AND THE INITIAL ADVANCE UNDER THE
CREDIT AGREEMENT
4,787,210 shares of common stock of NL Industries, Inc., par value $.125 per
share, evidenced by the following certificate numbers:
Certificate No. Amount
--------------- ------
NU13771 4,787,210
(As of the date of the Pledge and Security Agreement, 4,787,210 shares of NL
Industries, Inc. common stock constitutes 9.33% of all issued and outstanding
shares on such date.)
EXHIBIT C
NOTICE OF BORROWING
[Date]
Societe Generale, Southwest Agency
4800 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, Valhi, Inc. (the "Borrower"), refers to the Credit Agreement
dated as of May 19, 1998 (as the same may be amended or modified from time to
time, the "Credit Agreement," the defined terms of which are used in this Notice
of Borrowing unless otherwise defined in this Notice of Borrowing) between the
Borrower and Societe Generale, Southwest Agency (the "Bank"), and hereby gives
you irrevocable notice pursuant to Section 2.02(a) of the Credit Agreement that
the undersigned hereby requests an Advance, and in connection with that request
sets forth below the information relating to such Advance (the "Proposed
Advance") as required by Section 2.02(a) of the Credit Agreement:
(a) The Business Day of the Proposed Advance is
, 19 .
----------- ----
(b) The Proposed Advance will be composed of a [Base Rate Advance]
[Eurodollar Rate Advance].
(c) The aggregate amount of the Proposed Advance is
$ .
-------------
[(d) The Interest Period for the Eurodollar Rate Advance is [
month[s]].
-----
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Advance:
(a) the representations and warranties contained in Article IV and in
each other Credit Document are correct in all material respects on and as
of the date of the Proposed Advance before and after giving effect to such
Proposed Advance and to the application of the proceeds from such Proposed
Advance as though made on and as of such date; and
(b) no Default has occurred and is continuing or would result from
such Proposed Advance or from the application of the proceeds therefrom.
VALHI, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
EXHIBIT D
FORM OF BORROWER'S COUNSEL OPINION
May 19, 1998
Societe Generale, Southwest Agency
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
I am General Counsel to and serve as an officer of Valhi, Inc. (the
"Borrower"), and members of my staff and I have acted on behalf of the Borrower
in connection with the Credit Agreement (the "Credit Agreement") dated as of May
19, 1998 between the Company and Societe Generale, Southwest Agency (the
"Bank"), providing for certain loans to be made to the Borrower in an aggregate
principal amount not exceeding $15,000,000 at any one time outstanding. Unless
and letters of credit to be issued for the Account of the Borrower defined
herein, terms used in this opinion are (i) defined in the Credit Agreement and
used herein as defined therein or (ii) as provided for in the Accord (as defined
below). This opinion is being delivered pursuant to Section 3.01(a)(vi) of the
Credit Agreement.
This Opinion Letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, this Opinion Letter and the opinions contained herein
should be read in conjunction with the Accord for determination of any
applicable limitations, exceptions and definitions contained therein. The laws
covered by the opinions expressed herein are limited to the federal laws of the
United States, the General Corporation Law of the State of Delaware and the laws
of the State of Texas (of which bar I am a member), and I have relied upon
information provided in Public Authority Documents and factual representations
made by the Borrower in the Transaction Documents as the basis for some of my
opinions.
In rendering the opinions expressed below, I have examined the following
agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Note;
(c) the Pledge Agreement; and
(d) such corporate records of the Borrower and such other documents
as I have deemed appropriate for purposes of the opinions expressed below.
The agreements, instruments and other documents referred to in the
foregoing lettered clauses (a) through (c) are collectively referred to as the
"Credit Documents."
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as of the date hereon as I have deemed necessary as a basis for
the opinions expressed below, I am of the opinion that:
1. The Borrower (a) is a corporation validly existing and in good
standing under the laws of the State of Delaware, (b) has the corporate power
and authority to own its assets and to transact its business as now being
conducted, and (c) is duly qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure to so qualify could cause a Material Adverse Change.
2. NL Industries, Inc. (a) is a corporation validly existing and in
good standing under the laws of the State of New Jersey, (b) has the corporate
power and authority to own its assets and to transact its business as now being
conducted, and (c) is duly qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure to so qualify could cause a Material Adverse Change.
3. (a) The execution, delivery or performance by the Borrower of
each of the Credit Documents, (b) the granting of the Liens provided for in the
Pledge Agreement, and (c) the advances by the Borrower under the Credit
Agreement and the Note (i) have been duly authorized by all necessary corporate
action, (ii) do not and will not violate any provisions of any material law,
statute, rule or regulation applicable to the Borrower in effect on the date
hereof or any provisions of the charter or bylaws of the Borrower as in effect
on the date hereof, (iii) do not and will not violate, to the best of my
knowledge, any order, writ, injunction or decree of any court or governmental
instrumentality applicable to the Borrower, or (iv) result in the breach of, or
constitute a default or require a consent under, or (except for the Liens
created pursuant to the Pledge Agreement) result in the creation of any Lien
(except Permitted Liens) upon any of the properties, revenues or assets of the
Borrower pursuant to any indenture, mortgage, deed of trust, credit agreement,
loan agreement or any other material agreement, contract, instruction or other
agreement known to me after due inquiry to which the Borrower or its properties
may be bound.
4. Each of the Credit Documents to which the Borrower is a party
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with their respective terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium, usury or
other similar laws affecting the enforcement or creditors' rights, and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5. No authorizations, approvals or consents of, or filings or
registrations with, any governmental or regulatory authority or agency are to my
knowledge necessary in connection with (a) the participation by the Borrower in
the transactions contemplated by the Credit Agreement or the other Credit
Documents and the execution, delivery, or performance by the Borrower of the
Credit Documents or (b) the grant of the Liens provided for in the Pledge
Agreement and the validity, perfection and enforceability thereof.
6. No authorizations, approvals or consents of, or filings or
registrations with, any governmental or regulatory authority or agency are
necessary in connection with the validity of the execution and delivery of any
of the Credit Documents by the Borrower except such consents, approvals,
exemptions, waivers, licenses, or other authorizations, actions, filings or
registrations as (i) have been obtained, completed or made, (ii) are of a
routine or administrative nature, (iii) to which the failure to obtain or make
could not reasonably be expected to cause a Material Adverse Change, or (iv) are
required of the Bank by governmental or regulatory authority or agency.
7. Except as disclosed pursuant to Section 4.01(f) of the Credit
Agreement, there are no legal or arbitral proceedings, and no proceedings by or
before any governmental or regulatory authority or agency, to my knowledge
pending or threatened against or affecting the Borrower or properties or rights
of the Borrower which, if adversely determined, (a) could cause a Material
Adverse Change, or (b) could impair the value of the security granted to the
Bank pursuant to the Pledge Agreement.
8. The Pledge Agreement creates as security for the Obligations in
favor of the Bank a valid security interest enforceable against the Borrower in
all right, title, and interest of the Borrower in the Pledged Shares (as defined
in the Pledge Agreement) to which Article 9 of the Uniform Commercial Code in
effect in the State of Texas ("U.C.C.") is applicable, assuming the Bank takes
and retains possession of the Pledged Shares, and no filing or recording is
necessary to perfect the Bank's security interest in such Pledged Shares.
Assuming the Bank is a "prorated purchaser" (as defined in Section 8-303 of the
U.C.C.) of the Pledged Shares and assuming the Bank acquired its interest in the
Pledged Shares in good faith and without notice of any adverse claims and each
Pledged Share is either in bearer form or in registered form, issued or endorsed
in the name of the Bank or in blank, the Bank will acquire a security interest
in the Pledged Shares that is prior to any other security interest therein under
the U.C.C.
9. No other taxes and government fees and charges are required by
any Governmental Authority in connection with (a) the creation or perfection of
the liens purported to be created by the Pledge Agreement, (b) the execution and
delivery of the Credit Documents, or (c) the obtaining of credit under the
Credit Agreement.
10. Pursuant to the December 31, 1998, 10-K of NL Industries, Inc.,
150,000,000 NL Shares are authorized and 51,290,614 NL Shares are issued and
outstanding. The Borrower beneficially owns as of May 19, 1998 a total of
29,844,210 NL Shares.
11. The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock within the meaning of Regulation U or X.
12. The Borrower is not any "investment company" or a company
"controlled" by an "investment company" within the meaning of the investment
Company Act of 1940, as amended.
13. The Borrower is not a "holding company" or an "affiliate of a
"holding company" or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
This opinion letter is solely for your benefit and the benefit of your
counsel and may not be relied upon by any person other than you and your
counsel.
Very truly yours,
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
EXHIBIT E
COMPLIANCE CERTIFICATE
This certificate dated as of for the fiscal
---------
quarter ending , 199 is prepared pursuant to Section
-------- ---
5.03(d) of the Credit Agreement dated as of May 19, 1998 (as it may be amended
in accordance with its terms, the "Credit Agreement") between Valhi, Inc. and
Societe Generale, Southwest Agency. Unless otherwise defined in this
certificate, capitalized terms used herein that are defined in the Credit
Agreement shall have the meanings set forth in the Credit Agreement.
The Borrower hereby certifies (a) that no Default has occurred or is
continuing, (b) that all of the representations and warranties made by the
Borrower in the Credit Agreement (other than those made as of a specific date)
are true and correct as if made on this date, and (c) that as of the last day of
the fiscal quarter ending immediately preceding the date of this Certificate the
following amounts and calculations were true and correct:
SECTION 5.02(B) DEBTS, GUARANTIES AND OTHER OBLIGATIONS
(a) Debt of the Borrower to any Person
not existing on December 31, 1997
(b) Debt outstanding under the Credit Agreement
(c) (a) + (b)
Maximum Permitted $100,000,000
Executed this day of , 199
------ ------- --.
VALHI, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
EXHIBIT F
FORM OF LETTER OF CREDIT APPLICATION
This exhibit is omitted. A copy of this exhibit will be furnished
supplementally upon request.