EXTENSION AND AMENDMENT AGREEMENT (2005)
This
Extension and Amendment Agreement (2005) (the “Agreement”) is entered into as of
October 28, 2005, among CONTRAN CORPORATION (“Contran”), NATIONAL CITY LINES,
INC. (“NCL”), VALHI HOLDING COMPANY (“VHC”) (collectively, the “Contran
Companies”), and U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”).
RECITALS
A. Contran,
NCL, and U.S. Bank are parties to a loan agreement dated as of September 3,
1998. That agreement, as it has been modified and amended, is referred to herein
as the “Loan Agreement.”
B. Capitalized
terms used in this Agreement that are not defined herein have the meanings
assigned to those terms in the Loan Agreement.
C. Contran’s
obligations pursuant to the Note are secured by the Pledged Securities. Contran
has informed U.S. Bank that, as part of a corporate reorganization, ownership
of
the Pledged Securities will be transferred from NCL to VHC.
D. Contran
has requested U.S. Bank to extend the Expiry Date of the revolving credit
facility provided by U.S. Bank pursuant to the Loan Documents to October 27,
2006. In addition, Contran has requested U.S. Bank’s consent to the transfer of
ownership of the Pledged Securities from NCL to VHC and to the release of NCL
from any further obligations under the guaranty it executed with respect to
the
Obligations.
E. U.S.
Bank is prepared to extend the Expiry Date and to consent to the other matters
requested by Contran, subject to the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Contran Companies and U.S. Bank agree as
follows:
AGREEMENT
1. Conditions
Precedent. This Agreement shall be effective if the following conditions are
satisfied on or before October 28, 2005:
(a) The
Contran Companies execute this Agreement and deliver it to U.S.
Bank;
(b) VHC
executes and delivers to U.S. Bank a guaranty in form and content satisfactory
to U.S. Bank in its reasonable discretion whereby VHC guarantees payment and
performance of the Obligations (including the obligations of Contran pursuant
to
the Note);
(c) VHC
executes and delivers to U.S. Bank a pledge agreement in form and content
satisfactory to U.S. Bank in its reasonable discretion whereby VHC grants U.S.
Bank a security interest in 7,000,000
shares
of
common stock of Valhi, Inc., owned by VHC;
(d) VHC
delivers to U.S. Bank the original certificates with respect to the stock
encumbered by the pledge agreement described above;
(e) Contran
pays U.S. Bank $31,250 in consideration of U.S. Bank’s agreement to extend the
Expiry Date of the revolving credit facility governed by the Loan Agreement
on
the basis set forth in this Agreement; and
(f) Contran
completes, executes, and delivers to U.S. Bank a Federal Reserve Form
U-1.
If
the
above-described conditions precedent are not satisfied by October 28, 2005
(or
waived by U.S. Bank in writing in its sole and absolute discretion), this
Agreement shall not be effective and the parties’ rights and obligations shall
continue to be governed by the Loan Documents (without giving effect to this
Agreement).
2. Representations
and Warranties of the Contran Companies. Each Contran Company represents and
warrants to U.S. Bank that (a) it is in good standing under the laws of the
state of its formation, (b) it has been authorized to execute and perform its
obligations under this Agreement and the Loan Documents (as modified by this
Agreement), (c) the individual executing this Agreement on its behalf has been
duly authorized to take such action, (d) the Loan Documents (as amended by
this
Agreement) are enforceable against it in accordance with their respective terms,
subject only to the effect of insolvency and other similar laws affecting the
rights and remedies of creditors generally, general principles of equity whether
applied by a court of law or equity, and generally applicable rules of law,
(e)
all financial information previously provided to U.S. Bank presents fairly
its
financial position as of the date of such financial information and the results
of its operations and changes in financial position for the period in
question, (f) the representations and warranties made to U.S. Bank in the Loan
Documents continue to be true and correct in all material respects, and (g)
the
Contran Companies are not in default in any material respect under the Loan
Documents as of the date of this Agreement.
3. Extension
of Expiry Date. U.S. Bank hereby extends the Expiry Date, and U.S. Bank’s
commitment to make Advances to Contran (on the terms and conditions specified
in
the Loan Documents), to October 27, 2006.
4. Modified
Definitions. The definitions of the terms “Contran Companies,” “Guaranty,”
“LTV,” and “Security Document” hereby are modified, amended, and restated as
follows:
(a) “Contran
Companies” means Contran and Valhi Holding Company and “Contran Company” means
any one of the Contran Companies;
(b) “Guaranty”
means the unconditional payment guaranty in the form satisfactory to U.S. Bank
to be issued in favor of U.S. Bank by Valhi Holding Company on or about October
28, 2005;
(c) “LTV”
means the percentage resulting from dividing the outstanding principal balance
of the Advances on the date the LTV is being determined by the value of the
Pledged Securities (as determined by multiplying the number of Pledged
Securities (initially 7,000,000) by the published closing price for the stock
on
the preceding trading day, as published in the Wall Street Journal or,
if the prices are not published, as reasonably determined by U.S. Bank);
and
(d) “Security
Document” means the pledge agreement executed by Valhi Holding Company on or
about October 28, 2005, in a form acceptable to U.S. Bank and the related stock
powers and compliance forms, and any security agreement and financing statements
that any Contran Company hereafter executes to secure performance of the
Obligations.
5. Reaffirmation
of Obligations. Contran and VHC hereby acknowledge and reaffirm their
agreements to pay the Obligations in accordance with the terms of the Note
and
the Guaranty, respectively.
6. Cash
Collateralization of Certain Letters of Credit. If U.S. Bank discontinues
its commitment to extend the revolving credit facility to the Contran Companies,
and at that time any letter of credit or letters of credit are outstanding
under
the Loan Documents, the Contran Companies within three Business Days of U.S.
Bank’s termination of that credit commitment shall deposit with U.S. Bank cash
in an amount specified by U.S. Bank in its reasonable discretion sufficient
to
fully collateralize the Contran Companies’ obligations in respect of such
letters of credit.
7. Effectiveness
of this Agreement. This Agreement shall become effective only when each of
the Contran Companies and U.S. Bank has signed it and has sent a copy of the
signed document to the other parties to this Agreement (which may be
accomplished by facsimile transmission). Each party to this Agreement shall
deliver manually signed counterparts of this Agreement to the
other.
8. Release
of NCL. Upon the timely satisfaction of the conditions precedent specified
in paragraph 1 of this Agreement, U.S. Bank acknowledges and agrees that NCL
shall be released of any further obligations under the Pledge Agreement and
the
Guaranty that NCL executed in favor of U.S. Bank on or about September 3,
1998.
9. Other
Terms Unchanged. All of the terms and conditions of the Loan Agreement and
the Loan Documents remain in full force and effect, as expressly modified by
the
terms and conditions of this Agreement.
10. Statutory
Notice. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES, AND
COMMITMENTS MADE BY U.S. BANK CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED
SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION,
AND BE SIGNED BY U.S. BANK TO BE ENFORCEABLE.
U.S.
BANK NATIONAL ASSOCIATION
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Vice
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CONTRAN
CORPORATION
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Vice
President and Chief Financial
Officer
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NATIONAL
CITY LINES, INC.
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Vice
President and Chief Financial
Officer
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VALHI
HOLDING COMPANY
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Vice
President and Assistant
Treasurer
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