EXHIBIT 10.4
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING
This Second Amended and Restated Liquidity Undertaking (this "Agreement"),
dated effective as of January 31, 1997, is executed and delivered by NL
INDUSTRIES, INC., a New Jersey corporation ("NL Industries"), KRONOS, INC., a
Delaware corporation f/k/a Kronos (USA), Inc. ("Kronos") (NL Industries and
Kronos are sometimes hereinafter individually called a "Shareholder" and
collectively called "Shareholders") and KRONOS INTERNATIONAL, INC., a Delaware
corporation ("Borrower") to and in favor of HYPOBANK INTERNATIONAL S.A.
("Agent"), as Agent for the Banks (hereinafter defined), and the Banks.
WITNESSETH:
Borrower, Kronos Titan-GmbH, Agent and the Banks are, concurrently
herewith, entering into that certain Second Amended and Restated Loan Agreement
dated as of January 31, 1997 (as the same may be amended or supplemented from
time to time now or hereafter, the "Loan Agreement"), which Loan Agreement
amends and restates that certain Amended and Restated Loan Agreement dated as of
October 15, 1993, among Borrower, Agent, Banque Paribas, as Co-Agent
("Co-Agent"), and the Banks (or their precedessors in interest) (the "First
Restated Agreement"), which First Restated Agreement amends and restates that
certain Loan Agreement dated as of May 30, 1990, among Borrower, Agent, Co-Agent
and the Banks (or their predecessors in interest), as amended by that certain
(i) First Amendment Agreement dated as of December 31, 1990, (ii) Second
Amendment Agreement dated as of March 22, 1991, and (iii) Third Amendment
Agreement (herein so-called) dated as of June 15, 1992 (the "Original
Agreement").
Pursuant to the Third Amendment Agreement, the parties hereto executed
that certain Liquidity Undertaking dated as of June 15, 1992 (the "Original
Liquidity Undertaking"). Pursuant to the First Restated Agreement, the parties
hereto executed that certain Amended and Restated Liquidity Undertaking dated as
of October 15, 1993 (the "First Restated Liquidity Undertaking") which amended
and restated the Original Liquidity Undertaking. In order to induce Agent and
the Banks to enter into the Loan Agreement, Shareholders and Borrower desire to
amend and restate the First Restated Liquidity Undertaking as herein set forth.
NOW, THEREFORE, for and in consideration of the Loan Agreement and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree that the First Restated Liquidity
Undertaking is amended and restated in its entirety as follows:
i. Definitions. Unless otherwise defined in this Agreement, initially
capitalized terms used in this Agreement shall have the meanings
ascribed to them in the Loan Agreement. As used in this Agreement,
the phrase "any Shareholder" means any Shareholder and/or both
Shareholders.
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 1
ii. Maintenance of Liquidity.
(i) Liquidity Report. By 5:00 p.m. (New York, New York
time) on each Business Day (i) which occurs prior
to January 1, 2001 and (ii) which is the first
Business Day immediately preceding any date upon
which Borrower is required to make any payment of
principal or interest on the Loans (any such
Business Day herein a "Report Date" and any such
date upon which Borrower is required to make any
such payment hereinafter called a "Payment Date")
but excluding any day upon which the payment of
principal on the Loan is due as a result of the
acceleration thereof, Borrower agrees to provide
Shareholders and Agent with a report (the
"Liquidity Report") identifying Borrower's
Liquidity Level as of the prior Business Day (each
such prior Business Day herein a "Date of
Determination") and showing, in reasonable detail,
Borrower's Liquidity Level and the manner in which
such Liquidity Level was calculated. As used
herein, the term "Liquidity Level" means, as of
each Date of Determination the sum of (i)
Borrower's Cash Position, plus (ii) without
duplication, each Consolidated Subsidiaries' Cash
Position, plus (iii) if no Default has occurred,
the amount available to be borrowed by Borrower
under the terms of Section 2.04 of the Loan
Agreement but excluding any amounts available to
be borrowed by Borrower under any other credit
facilities, minus (iv) the amount of all the
payments scheduled to be made under the Loans on
the Payment Date immediately following the Report
Date. As used herein, the term "Cash Position"
means, with respect to any Person, the amount,
expressed in Deutsche ▇▇▇▇, equal to the remainder
of (A) the sum of such Person's cash and cash
equivalents (determined in accordance with German
GAAP with respect to Borrower and its Consolidated
Subsidiaries or determined on an unconsolidated
basis but otherwise in accordance with accounting
principles generally accepted in the United States
["U.S. GAAP"] with respect to the Shareholders,
both consistently applied) plus the market value
of such Person's Marketable Securities minus (B)
without duplication, the aggregate amount of any
Indebtedness secured by any Lien, other than a
Lien in favor of Agent as security for the Loans,
affecting such cash, cash equivalents and/or
Marketable Securities (in each case not to exceed
the amount
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 2
or value of the particular cash, cash equivalents
or Marketable Securities affected by such Lien).
As used herein, the term "Marketable Securities"
means all stocks, bonds, notes or other securities
which are regularly traded on any recognized
national or international market or exchange and
are otherwise freely transferable. The market
value of Marketable Securities shall be determined
as of each Date of Determination by reference to a
market price quoted as of such date in a
recognized national or international market or
exchange for the Marketable Securities in question
and otherwise on a basis reasonably satisfactory
to the Majority Banks. If any cash, cash
equivalent or the value of Marketable Securities
is denominated in any currency other than Deutsche
▇▇▇▇, then, for purposes of calculating the Cash
Position under this Agreement, the equivalent
amount of Deutsche ▇▇▇▇ shall be determined by
using the Spot Rate existing as of the applicable
Date of Determination. As used in this Agreement,
the term "Spot Rate", with respect to any currency
and any day, means the rate determined based on
the "Frankfurt Foreign Exchange Fixing" for the
offered rates to purchase Deutsche ▇▇▇▇ with such
currency as reflected on the display designated as
page "1011" on the Telerate Systems, Incorporated
service (or such other page as may replace page
"1011" on that service for the purposes of
displaying such offered rates) at or about 11:00
a.m. London time on such date. If at least two
such offered rates appear on such display, the
rate for such date will be the arithmetic mean of
such offered rates.
(ii) Borrower Liquidity Deficit; Required Investment.
If Borrower's Liquidity Level is less than DM
25,000,000 (Deutsche ▇▇▇▇ Twenty Five Million) as
of any Date of Determination, Shareholders shall
on a joint, several, irrevocable and unconditional
basis (but subject to subparagraph (d) of this
Paragraph 2), within ten (10) days after being
given the applicable Liquidity Report (or if such
Liquidity Report is not delivered, within ten (10)
days after being given written notice from Agent)
either make Capital Contributions to Borrower
and/or make Subordinated Loans to Borrower, in
either case in an aggregate amount sufficient so
that, after giving effect to such contributions
and/or such loans and the receipt of such funds by
Borrower, Borrower's Liquidity Level (calculated
as if such contributions and/or
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 3
loans were made as of the applicable Date of
Determination) shall equal or exceed DM 25,000,000
(Deutsche ▇▇▇▇ Twenty Five Million); provided that
the aggregate amount of Capital Contributions and
Subordinated Loans made by Shareholders to
Borrower after January 31, 1997 and prior to
January 1, 2001 pursuant to this Agreement shall
not exceed an aggregate amount equal to DM
125,000,000 (Deutsche ▇▇▇▇ One Hundred Twenty-Five
Million) (the "Maximum Required Investment
Amount"); and provided further that Shareholders'
obligations to make Capital Contributions and/or
Subordinated Loans up to the Maximum Required
Investment Amount shall be satisfied by any of the
following: (A) to the extent and in an amount
equal to, as of the date of determination, the
positive remainder (if any) of (1) the aggregate
amount of Shareholders' optional Capital
Contributions and/or Subordinated Loans made to
Borrower after January 31, 1997 for general
corporate purposes (including, without limitation,
optional prepayments) minus (2) the sum of the
aggregate amount of Restricted Payments made by
Borrower prior to the date of determination but
after January 31, 1997 pursuant to Section
16.20(b) of the Loan Agreement plus the aggregate
amount of Restricted Payments permitted (as of the
date of determination) to be made by Borrower on
or after the date of determination pursuant to
Section 16.20(b) of the Loan Agreement, and (B) an
amount equal to the Liquidity Undertaking Credit
in effect as of the date of determination. The
term "Capital Contributions" means contributions
by a Shareholder to the equity of Borrower. The
term "Subordinated Loans" means loans by a
Shareholder to Borrower on terms and provisions
acceptable to such Shareholder and Borrower;
provided that such loans are "Subordinated Debt",
as such term is defined in the Loan Agreement.
(iii) Event of Default; Required Investment.
Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if an Event of
Default has occurred and is continuing and Agent
shall have given Borrower and Shareholders written
notice requesting or requiring performance under
this subparagraph (c), then Borrower and
Shareholders' jointly and severally agree as
follows:
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 4
(i) a Liquidity Report shall be provided by Borrower to
Shareholders and Agent within two Business Days after Borrower's
receipt of such notice referred to in this subparagraph (c), which
Liquidity Report shall identify Borrower's Liquidity Level as of the
Business Day immediately succeeding the date of such notice (the
"Default Date of Determination"); provided, however that, for
purposes of this subparagraph (c), the term "Liquidity Level" shall
mean (without duplication) (A) the Liquidity Level as defined in
subparagraph (a) of this Paragraph 2 minus, (B) the aggregate unpaid
principal amount of the Loans, minus (C) the aggregate of the
accrued and unpaid interest and fees under the Loan Agreement and
the other Loan Documents; and
(ii) based upon the Liquidity Level as so determined in
accordance with clause (i) immediately preceding, the Shareholders
shall, on a joint, several, irrevocable and unconditional basis (but
subject to subparagraph (d) of this Paragraph 2), within ten (10)
days after being given such notice from Agent, either make Capital
Contributions to Borrower and/or make Subordinated Loans to
Borrower, in either case in an aggregate amount sufficient so that,
after giving effect to such contributions and/or such loans and the
receipt of such funds by Borrower, Borrower's Liquidity Level (as
defined in this subparagraph (c) and calculated as if such
contributions and/or loans were made as of the applicable Default
Date of Determination) shall equal or exceed DM 25,000,000 (Deutsche
▇▇▇▇ Twenty Five Million); provided that the aggregate amount of
Capital Contributions and Subordinated Loans made by Shareholders to
Borrower after January 31, 1997 and prior to January 1, 2001
pursuant to this Agreement shall not exceed the Maximum Required
Investment Amount. Notwithstanding anything to the contrary that may
be contained in this Agreement, payments by NL Industries under the
NL Guaranty will not reduce or otherwise affect the Maximum Required
Investment Amount.
(iv) Priority of Contributions by Shareholders. Each
time the Shareholders are required to make Capital
Contributions or Subordinated Loans (the "Required
Contributions") under subparagraphs (b) or (c) of
this ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ shall be obligated to
make so much of the Required Contributions as it
is able to make from funds received from or
otherwise attributable to its operations before NL
Industries (i) makes any portion of the Required
Contributions or (ii) contributes funds to Kronos
to enable Kronos to make the Required
Contributions. Kronos agrees that it will not
utilize any funds received from NL Industries to
make any Required Contributions until it has
utilized all the then available funds which are
received from or otherwise attributable to its
operations. After Kronos has satisfied its
obligations under the preceding two sentences or
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 5
if Kronos is unable to make Required
Contributions, then NL Industries will, if
necessary, promptly (within the ten (10) day
period specified in subparagraph (c) of this
Paragraph 2) make the Required Contributions or
the remainder thereof left unpaid.
(v) Payments. All payments by either Shareholder under
this Agreement shall be in immediately available
funds and made directly to Borrower's account
number 5803610284 maintained at Bayerische
Hypotheken-und Wechselbank AG in Munich, Germany.
All payments by the Shareholders hereunder shall
be made without setoff, deduction or counterclaim
for amounts owed to any Shareholder by Borrower.
Each Shareholder irrevocably waives, to the
fullest extent permitted by law, all defenses,
rights of setoff and counterclaims, which may now
exist or hereafter arise with respect to such
payments or other obligations under this
Agreement. All payments by each Shareholder under
this Agreement shall also be made free and clear
of, and without withholding or deduction for or on
account of, any present or future taxes now or
hereafter imposed on Borrower or its property,
except to the extent that such withholding or
deduction is required by applicable law.
(vi) Borrower Obligations. Borrower hereby irrevocably
and unconditionally agrees to either (i) authorize
(to the extent necessary), issue and sell capital
stock to Shareholders, in connection with any
Capital Contributions, or (ii) authorize and issue
promissory notes and any other necessary documents
to evidence the Subordinated Loans or (iii) take
such other action at such time as is necessary for
Shareholders to comply with the provisions of this
Paragraph 2. Neither the obligations of Borrower
under this subparagraph (f), any other provision
of this Agreement or any other Loan Document nor
the performance thereof shall be a condition to
the obligations of Shareholders to pay to Borrower
the amounts required under this Agreement;
provided that either Shareholder's performance
shall not constitute a waiver of any rights
against Borrower.
(vii) Termination. The obligations of Shareholders under
this Paragraph 2 shall terminate on January 1,
2001 (the "Termination Date") except with respect
to any obligation under this Paragraph 2 which
remains unsatisfied on the
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 6
Termination Date and except as provided in
subparagraph (j) and (k) below.
(viii)Failure to Perform; No Proof of Damages; Specific
Performance. Borrower and each Shareholder
recognize and agree that in the event Borrower or
any Shareholder fails to perform or observe any or
all of its obligations under this Agreement, and
if for any reason Agent or any Bank shall have
failed to receive when due and payable (whether at
stated maturity, by acceleration, or otherwise)
the payment of all or any part of principal or
interest or any other amount payable by Borrower
under the Loan Agreement or the other Loan
Documents, then in each such case it shall be
assumed conclusively without necessity of proof
that such failure by Borrower or Shareholders was
the sole and direct cause of Agent or any Bank
failing to receive such payment when due
irrespective of any other contributing or
intervening cause whatsoever. As a result of the
forgoing, Shareholders and Borrower irrevocably
waive to the full extent permitted by applicable
law any right or defense that Borrower or
Shareholders may have to cause Agent or any Bank
to prove the cause or amount of any damages or to
mitigate the same. In addition, and without
limiting the forgoing, the parties hereto agree
that in the event of such a failure, (i) it is
impossible to measure in money the damages that
would be suffered by Agent and the Banks, (ii)
Agent and the Banks will be irreparably damaged
and (iii) any remedy at law will be inadequate
relief and, as a result, this Agreement shall be
enforceable by Agent and the Banks in a court of
equity by a decree of specific performance without
the need of proving that a remedy at law is
inadequate, Borrower and each Shareholder hereby
waiving and agreeing not to raise the defense that
an adequate remedy at law exists.
(ix) Non-impairment of Obligations upon Bankruptcy of
Borrower. The obligations of Shareholders under
this Agreement shall not be released, impaired,
limited, reduced, discharged or otherwise affected
on account of the insolvency, bankruptcy,
arrangement, adjustment, composi tion,
liquidation, disability, dissolution or lack of
authority of Borrower or any Shareholder, whether
now existing or hereafter arising and, in
furtherance of the foregoing, each Shareholder
waives, to the fullest extent permitted by
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 7
applicable law and for the benefit of, and as a
separate undertaking with, Agent and the Banks,
any defense to the performance of this Agreement
which may be available to either Shareholder as a
consequence of Borrower not being in existence or
this Agreement being rejected or otherwise not
assumed by Borrower or any trustee or other
similar official for Borrower or for any
substantial part of the property of Borrower, or
as a consequence of this Agreement being otherwise
terminated or modified, in any bankruptcy or
insolvency proceeding whether such rejection,
non-assumption, termination or modification be by
reason of this Agreement being held to be an
executory contract or by reason of any other
circumstance; provided that, if Borrower is no
longer in existence or this Agreement shall be
rejected or otherwise not assumed, or terminated
or modified, each Shareholder agrees for the
benefit of, and as a separate undertaking with,
Agent and the Banks, that it will unconditionally,
jointly and severally pay to Agent an amount equal
to each payment which would otherwise be payable
by Shareholders under or in connection with this
Agreement to Borrower if this Agreement were not
so rejected or otherwise not assumed or were
otherwise not so terminated or modified (such
amount to be payable to Agent to be applied to the
indebtedness, liabilities and obligations owing
under or pursuant to the Loan Documents (the "Loan
Obligations")) and in such event, Borrower shall
comply with its obligations under subparagraphs
(f) of this Paragraph 2. Shareholders further
agree that their obligations under this
subparagraph (i) shall continue to be effective or
be reinstated (if a release, discharge or
termination has occurred but only to the extent of
the amount discharged), as the case may be, if at
any time any payment (or any part of such payment)
to Agent or any Bank previously paid by either
Shareholder under the terms of this subparagraph
(i) is rescinded or must otherwise be restored or
disgorged by Agent or any Bank pursuant to any
bankruptcy, insolvency, reorganization,
receivership, liquidation or other debtor relief
granted to any Shareholder or its successors or
assigns. If, pursuant to the foregoing sentence,
the obligations of Shareholders under this
subparagraph (i) shall continue to be effective or
be reinstated (if a release, discharge or
termination has occurred), any prior release,
discharge or termination from
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 8
the terms of this Agreement given to any
Shareholder by Agent or any Bank shall be without
effect.
(x) No Effect or Impairment. Each Shareholder consents
to and agrees that its obligations under this
Agreement will also not be discharged or affected
by: (i) any acceptance, forbearance or release in
respect of the rights of Agent or any of the Banks
under the Loan Agreement or the other Loan
Documents; (ii) any waiver or release of any right
or option of Agent or any of the Banks under the
terms of the Loan Agreement or other Loan
Documents; (iii) any modification, extension,
renewal or amendment of the terms of the Loan
Agreement or other Loan Documents; (iv) the fact
that the Loan Agreement or any other Loan Document
shall be invalid, illegal or unenforceable, in
whole or in part, for any reason; or (v) except as
otherwise provided herein, any other act or
omission of any kind by Agent, any Bank or
Borrower or any other circumstance whatsoever
which might constitute a legal or equitable
discharge of the Shareholders.
(xi) Liquidity Report; Liquidity Level. Borrower agrees
to provide to Agent and Shareholders, promptly
upon any request therefor by Agent or any
Shareholders, such information in such detail as
Agent or any Shareholder may reasonably request
from time to time relating to the determination of
the Liquidity Level from time to time.
Furthermore, and notwithstanding anything to the
contrary contained elsewhere in this Agreement, in
the event that Borrower fails to timely provide a
Liquidity Report or an accurate Liquidity Report
in accordance with this Agreement within five (5)
days after being given written notice from Agent
to do so, then for all purposes of this Agreement,
the Liquidity Level as of the applicable date
shall be deemed to be the Liquidity Level, as
reasonably determined by Agent in good faith,
specified in a written notice to Borrower and
Shareholders.
iii. Representations and Warranties of Shareholders. In connection with
this Agreement, Shareholders hereby jointly and severally represent
and warrant to Agent and the Banks as follows, provided, however,
that any representation or warranty contained in this Paragraph 3
made as to a particular Shareholder shall be deemed made in this
Agreement only by such Shareholder:
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 9
(i) NL Industries is the sole shareholder of Kronos
and Kronos is the sole shareholder of Borrower,
and Shareholders have received and will continue
to receive a direct and indirect material benefit
from the making of this Agreement, the Loans and
the transactions evidenced by and contemplated in
the Loan Agreement and the other Loan Documents;
this Agreement is given by Shareholders in
furtherance of the direct and indirect business
interests and corporate purposes of Shareholders,
and is necessary to the conduct, promotion and
attainment of the business of Shareholders; and
the value of the consideration received and to be
received by Shareholders pursuant to the Loan
Agreement is reasonably worth at least as much as
the liability and obligation of Shareholders under
this Agreement;
(ii) Each Shareholder is a corporation duly organized,
validly existing and in good standing under the
laws of the jurisdiction of its incorporation and
has the corporate power and authority to execute,
deliver and perform its obligations under this
Agreement. The execution, delivery and performance
by each Shareholder of this Agreement have been
duly authorized by all requisite action on the
part of each Shareholder and do not and will not
violate or conflict with the articles of
incorporation or bylaws of either Shareholder or
any law, rule or regulation or any order, writ,
injunction or decree of any court, governmental
authority or arbitrator to which such Shareholder
is subject and do not and will not result in the
creation or imposition of any Lien upon any of the
revenues or assets of either Shareholder. The
execution and delivery of this Agreement and the
performance of and compliance with the terms of
this Agreement will not conflict with, constitute
a default (or an event which with notice or lapse
of time or both would constitute a default) under,
or result in the breach of, any material contract,
agreement or other instrument to which any
Shareholder is a party or which may be applicable
to any Shareholder or any of its assets;
(iii) This Agreement, when executed and delivered by
each Shareholder and Borrower, will constitute the
joint and several and valid, legal and binding
obligation of each Shareholder enforceable in
accordance with its terms, except to the extent
that enforcement may be limited by
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 10
bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of
creditors' rights generally and by principles of
equity;
(iv) As of the date of this Agreement, and after giving
effect to this Agreement and the contingent
obligations evidenced by this Agreement, each
Shareholder is not, and will not be, insolvent (as
such term is used or defined in all applicable
bankruptcy, fraudulent transfer, insolvency,
fraudulent conveyance and similar laws), and each
Shareholder has and will have assets which, fairly
valued, exceed its indebtedness, liabilities and
obligations;
(v) All corporate acts and conditions required to be
performed and satisfied prior to the execution and
delivery of this Agreement, and to constitute this
Agreement as the valid, binding and enforceable
obligation of each Shareholder in accordance with
its terms, except to the extent that enforcement
may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights
generally and by principles of equity, have been
performed and satisfied in accordance with all
applicable laws;
(vi) Each Shareholder is familiar with, and has
independently reviewed books and records
regarding, the financial condition of Borrower and
is familiar with the value of any and all
Collateral and other collateral and security
intended to secure or to be created to secure the
Loans; however, each of Shareholders is not
relying on such financial condition or such
Collateral, collateral or security as an
inducement to enter into this Agreement; and
(vii) Except for the execution of the Loan Agreement by
Agent and Majority Banks, neither Agent, any of
the Banks nor any other Person has made any
representation, warranty or statement to, or
promise, covenant or agreement with, any
Shareholder in order to induce Shareholders to
execute this Agreement.
iv. Representations and Warranties of Borrower. In connection with this
Agreement, Borrower hereby represents and warrants to Shareholders,
Agent and the Banks as follows:
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 11
(i) Borrower is a corporation duly organized, validly
existing and in good standing under the laws of
the jurisdiction of its incorporation, has all
requisite corporate power and authority to own its
assets and carry on its business as now being or
as proposed to be conducted, and has the corporate
power and authority to execute, deliver and
perform its obligations under this Agreement;
(ii) The execution, delivery and performance by
Borrower of this Agreement have been duly
authorized by all requisite action on the part of
Borrower and do not and will not violate or
conflict with the articles of incorporation or
bylaws of Borrower or any law, rule or regulation
or any order, writ, injunction or decree of any
court, governmental authority or arbitrator to
which Borrower is subject, and do not and will not
result in the creation or imposition of any lien
upon any of the revenues or assets of Borrower.
The execution and delivery of this Agreement and
the performance of and compliance with the terms
of this Agreement will not conflict with,
constitute a default (or an event which with
notice or lapse of time or both would constitute a
default) under, or result in the breach of, any
material contract, agreement or other instrument
to which Borrower is a party or which may be
applicable to Borrower or any of its assets;
(iii) This Agreement, when executed and delivered by
each Shareholder and Borrower, will constitute the
valid, legal and binding obligation of Borrower
enforceable in accordance with its terms, except
to the extent that enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of
creditors' rights generally and by principles of
equity; and
(iv) All corporate acts and conditions required to be
performed and satisfied prior to the execution and
delivery of this Agreement, and to constitute this
Agreement as the valid, binding and enforceable
obligation of Borrower in accordance with its
terms, except to the extent that enforcement may
be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights
generally and by
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 12
principles of equity, have been performed and
satisfied in accordance with all applicable laws.
v. Cumulative Remedies; No Election. The rights of Agent and the Banks
under this Agreement shall be cumulative of any and all other rights
that Agent and the Banks may ever have against any Shareholder or
Borrower or arising under the Loan Documents, or at law or in
equity. The exercise by Agent or any Bank of any right or remedy
under this Agreement or under any other Loan Document, or at law or
in equity, shall not preclude the concurrent or subsequent exercise
of any other right or remedy. This Agreement may be enforced from
time to time as often as occasion therefor may arise, and it is
agreed that it shall not be necessary for Agent or any Bank, in
order to enforce the provisions of this Agreement, first to exercise
any rights against Borrower, any Shareholder or any other Person or
institute suit or to exhaust any available remedies against security
in its possession or under its control, or to resort to any other
sources or means of obtaining payment of the Loans. The obligations
and duties of Shareholders under this Agreement are independent of
the obligations and duties of Borrower under the Loan Agreement or
this Agreement, and a separate action or actions may be brought and
prosecuted against Shareholders or either of them, on a joint and
several basis, whether or not action is brought against Borrower or
any other Person obligated in respect of the Loan and whether or not
Borrower is joined in any such action or actions. In furtherance and
not in limitation of the foregoing, the obligations and duties of NL
Industries under this Agreement are independent of the obligations
and duties of NL Industries under the NL Guaranty, payments made by
NL Industries under the terms of this Agreement will not be credited
against payments made or required to be made under the NL Guaranty,
payments made by NL Industries under the NL Guaranty will not be
credited against payments made or required to be made hereunder and
the rights of Agent and the Banks under this Agreement are
cumulative of all rights Agent and the Banks may have against NL
Industries under the NL Guaranty.
vi. Binding Effect. This Agreement is for the benefit of Borrower, Agent
and the Banks, and their successors and assigns, and in the event of
an assignment by Agent or any Bank, its successors or assigns, of
the Loans, or any part of the Loans, the rights and benefits under
this Agreement, to the extent applicable to the indebtedness,
liabilities and obligations so assigned, may be transferred with
such indebtedness, liabilities and obligations. This Agreement is
binding, not only upon Shareholders and Borrower, but upon their
respective successors and assigns; provided that neither Borrower
nor any Shareholder may assign any of its rights or obligations
hereunder without the prior written consent of the Majority Banks.
vii. Right of Setoff. With respect to all obligations of Shareholders
hereunder owed to Agent or the Banks, each Shareholder hereby grants
to Agent and the Banks a right of setoff upon any and all monies,
securities or other property of
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 13
such Shareholder, and the proceeds therefrom, now or hereafter held
or received by or in transit to Agent or any Bank from or for the
account of such Shareholder, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any and
all deposits (general or special) and credits of such Shareholder,
and any and all claims of such Shareholder against Agent or any
Banks at any time existing.
viii. Further Assurances. Upon the reasonable request of Agent, each
Shareholder will, at any time and from time to time, duly execute
and deliver to Agent any and all such further agreements, documents
and instruments, and supply such additional information, as may be
necessary or advisable, in the reasonable opinion of Agent, to
obtain the full benefits of this Agreement, provided, however, that
delivery of such additional information is subject to receipt of an
executed Confidentiality Agreement with respect to confidential
information of any Shareholder or any Person Controlled directly or
indirectly by such Shareholder.
ix. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be
fully severable, this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of
this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of such
illegal, invalid or unenforceable provision there shall be added
automatically as a part of this Agreement a provision as similar in
terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
x. Modification in Writing. No modification, consent, amendment or
waiver of any provision of this Agreement, and no consent to any
departure by any Shareholder or Borrower from the terms of this
Agreement, shall be effective unless the same shall be in writing
and signed by the Majority Banks and then shall be effective only in
the specific instance and for the specific purpose for which given;
provided that no amendment, waiver or other modification of, or
consent to any departure from, the provisions of Paragraph 2 of this
Agreement or this Paragraph 10 shall be effective unless the same
shall be in writing and signed by Banks who hold at least 80%
(eighty percent) of the aggregate unpaid principal amount of the
Loans.
xi. No Waiver, Etc. No notice to or demand on any Shareholder in any
case shall, of itself, entitle any Shareholder to any other or
further notice or demand in similar or other circumstances. No delay
or omission by Agent or any Bank in exercising any power or right
under this Agreement shall impair any such power or right or be
construed as a waiver thereof or any acquiescence therein, and no
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 14
single or partial exercise of any such power or right shall preclude
other or further exercise thereof or the exercise of any other power
or right under this Agreement.
xii. Expenses. If any Shareholder or Borrower should breach or fail to
perform any provision of this Agreement, Shareholders agree to pay
to Agent all reasonable costs and expenses (including court costs
and reasonable attorneys' fees of outside counsel) incurred by Agent
in the enforcement of this Agreement.
xiii. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE INTERNAL LAWS OF THE STATE OF NEW YORK.
xiv. Notices. Unless otherwise specifically provided in this Agreement,
any notice or other communication required or permitted to be given
under this Agreement shall be in writing and may be personally
served, telefaxed, telecopied, telexed or sent by courier service or
first class prepaid mail (airmail if to an address in a foreign
country from the party writing) and shall be deemed to have been
given when delivered in person or by courier service, upon
transmission of a telefax, telecopy or telex or four (4) days after
deposit in the mail (registered, with postage prepaid and properly
addressed). For the purposes of this Agreement, the addresses of
Borrower, Shareholders and Agent (until fifteen (15) days' prior
written notice of a change thereof is delivered as provided in this
Paragraph 14 ) shall be as set forth below on the signature pages
hereof in the case of Shareholders and Agent and as set forth in the
Loan Agreement in the case of Borrower.
xv. NO ORAL AGREEMENTS. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
AMONG SHAREHOLDERS, BORROWER AND AGENT AND THE BANKS RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR
AMONG SUCH PARTIES.
xvi. Joint and Several Obligations, Etc. Except for certain
representations and warranties made by only one of Shareholders
pursuant to Paragraph 3 of this Agreement, all obligations,
covenants, agreements, representations and warranties under this
Agreement or contained in this Agreement shall constitute and be the
joint and several obligations, covenants, agreements,
representations and warranties of each Shareholder; provided
however, that in no event shall the amount of Capital Contributions
or Subordinated Loans made pursuant to this Agreement by
Shareholders exceed individually or in the aggregate DM 125,000,000
(Deutsche ▇▇▇▇ One Hundred Twenty-Five Million).
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 15
xvii. Survival. All representations, warranties, covenants and agreements
of any Shareholder or Borrower in this Agreement shall survive the
execution of this Agreement.
xviii.Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but all of
which when taken together shall constitute one and the same
Agreement.
xix. CONSENT TO JURISDICTION, VENUE. EACH SHAREHOLDER REPRESENTS AND
WARRANTS THAT IT IS NOT ENTITLED TO IMMUNITY FROM JUDICIAL
PROCEEDINGS AND AGREES THAT, SHOULD AGENT OR ANY BANK BRING ANY
SUIT, ACTION OR PROCEEDING IN ANY JURISDICTION DESCRIBED BELOW TO
ENFORCE ANY OBLIGATION OR LIABILITY OF SUCH SHAREHOLDER UNDER THIS
AGREEMENT NO IMMUNITY FROM SUCH SUIT, ACTION OR PROCEEDING WILL BE
CLAIMED BY OR ON BEHALF OF SUCH SHAREHOLDER OR WITH RESPECT TO ITS
PROPERTY. EACH SHAREHOLDER IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT SITTING IN THE CITY OF NEW YORK, STATE
OF NEW YORK, OR IN THE CITY OF HOUSTON, STATE OF TEXAS, OR IN THE
CITY OF DALLAS, STATE OF TEXAS, OVER ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH SHAREHOLDER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR MAY HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH
SHAREHOLDER AGREES THAT A FINAL AND NON-APPEALABLE JUDGMENT IN ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT SHALL BE
CONCLUSIVE AND BINDING UPON SUCH SHAREHOLDER AND MAY BE ENFORCED IN
ANY OTHER COURTS TO THE JURISDICTION OF WHICH SUCH SHAREHOLDER IS
SUBJECT BY A SUIT UPON SUCH JUDGMENT, PROVIDED THAT SERVICE OF
PROCESS IS EFFECTED UPON SUCH SHAREHOLDER IN ONE OF THE MANNERS
SPECIFIED IN PARAGRAPH 21 BELOW OR AS OTHERWISE PERMITTED BY LAW.
xx. Appointment of Agent. Each Shareholder hereby irrevocably designates
and appoints ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc., ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as its authorized agent to accept and
acknowledge on its behalf service of any and all process which may
be served in any suit, action or proceeding of the nature referred
to in Paragraph 19 of this Agreement in any court
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 16
sitting in the City of New York, State of New York, in the City of
Houston, State of Texas, or in the City of Dallas, State of Texas,
respectively. Said designation and appointment shall be irrevocable.
If such agent for service shall cease so to act, each Shareholder
covenants and agrees that it shall irrevocably designate and appoint
without delay another such agent satisfactory to Agent and shall
deliver promptly to Agent evidence in writing of such other agent's
acceptance of such appointment.
xxi. Service of Process. Each Shareholder hereby consents to process
being served in any suit, action or proceeding of the nature
referred to in Paragraph 19 of this Agreement either (a) by the
mailing of a copy thereof by registered mail (registered airmail if
addressed to a location in a country other than the country of
mailing), postage prepaid, return receipt requested, to the address
for such Shareholder set forth below such Shareholder's name on the
signature pages hereof or to any other address of which such
Shareholder shall have given written notice to Agent pursuant to
Paragraph 14 of this Agreement or (b) by serving a copy thereof upon
▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc. at its appropriate address
set forth in Paragraph 20 of this Agreement, as such Shareholder's
agent for service of process (provided that, to the extent lawful
and possible, written notice of said service upon said agent of such
Shareholder may be mailed by registered mail (registered airmail if
addressed to a location in a country other than the country of
mailing), postage prepaid, return receipt requested, to such
Shareholder at its address specified above or to any other address
of which such Shareholder shall have given written notice to Agent).
Each Shareholder irrevocably waives, to the fullest extent permitted
by law, all claim of error by reason of any such service and agrees
that such service (i) shall be deemed in every respect effective
service of process upon such Shareholder in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by law,
be taken and held to be valid personal service upon and personal
delivery to such Shareholder.
xxii. No Limitation on Service or Suit. Nothing in Paragraphs 19, 20 or 21
of this Agreement shall (a) affect the right of Agent or any Bank to
serve process in any manner permitted by law or (b) limit the right
of Agent or any Bank or other holder to bring proceedings against
any Shareholder in the courts of any other jurisdiction.
▇▇▇▇▇.▇▇▇▇▇▇▇▇▇ Reporting. So long as this Agreement remains in effect,
Shareholders agree that they will deliver to Agent, in sufficient
copies for distribution to all Banks, the following financial
information:
(i) As soon as the same become available, but in any
event within 120 (one hundred twenty) days after
the end of the fiscal year, the audited
consolidated financial statements and
consolidating financial statements (which
consolidating
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 17
financial statements are not separately reported
on by independent public accountants) of NL
Industries and its subsidiaries for such fiscal
year and the consolidating financial statements
(not separately reported on by independent public
accountants) of Kronos and its subsidiaries for
such fiscal year; each presented in conformity
with U.S. GAAP with changes in accounting
principles, if any, from the prior fiscal year,
specified in the certificates described below,
together with certificates executed by a Vice
President of NL Industries, in form and substance
reasonably satisfactory to Agent, and otherwise
certifying that such financial statements have
been prepared in accordance with U.S. GAAP and
fairly present the financial condition and results
of operation of the Persons subject thereof.
(ii) Within 90 (ninety) days after the end of each
fiscal quarter (excluding the fourth quarter),
unaudited consolidated and consolidating financial
statements of NL Industries and its subsidiaries
and unaudited consolidating financial statements
of Kronos and its subsidiaries; each presented in
conformity with U.S. GAAP with changes in
accounting principles, if any, from the prior
fiscal year, specified in the certificates
described below, for each fiscal quarter
(excluding the fourth quarter), and certificates
executed by a Vice President of NL Industries, in
form and substance reasonably satisfactory to
Agent, and otherwise certifying that such
financial statements have been prepared in
accordance with U.S. GAAP and fairly present the
financial condition and results of operation of
the Persons subject thereof.
(iii) Promptly deliver notice thereof to Agent, upon the
commencement of any action or other proceedings by
or against any Shareholder under any bankruptcy,
insolvency or other similar law.
(iv) Upon request of Agent, furnish Agent with such
information about the business, assets and
financial condition of any Shareholder and/or any
other Persons Controlled directly or indirectly by
such Shareholder as Agent or any Bank may
reasonably request, provided, however, that
delivery of such information is subject to receipt
of an executed Confidentiality Agreement with
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 18
respect to confidential information of such
Shareholder or Person.
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 19
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the date first written above.
NL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President & Treasurer
By:
Name:
Title:
Address for Notices:
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
KRONOS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President & Treasurer
By:
Name:
Title:
Address for Notices:
c/o NL Industries, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 20
KRONOS INTERNATIONAL, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇
Name: ▇. ▇▇▇▇▇▇▇▇
Title: President
By: /s/ ▇. ▇▇▇▇
Name: ▇. ▇▇▇▇
Title: Vice President & Controller
The undersigned has executed this Agreement solely for the purpose of
confirming receipt of this Agreement and reliance on this Agreement by Agent and
Banks effective as of the date first written above.
HYPOBANK INTERNATIONAL S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Charge de Service
By:
Name:
Title:
Address for Notices:
▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇-▇▇▇▇
SECOND AMENDED AND RESTATED LIQUIDITY UNDERTAKING - Page 21