CREDIT AGREEMENT
dated as of December 20, 1995
between
VALHI, INC.
and
SOCIETE GENERALE, SOUTHWEST AGENCY
TABLE OF CONTENTS
Page
ARTICLE I
Section 1.01. Certain Defined Terms
Section 1.02. Computation of Time Periods..................10
Section 1.03. Accounting Terms; Changes in GAAP............10
Section 1.04. Miscellaneous................................10
ARTICLE II
Section 2.01. The Advances.................................11
Section 2.02. The Procedure................................11
Notice................................................11
Certain Limitations...................................11
Notices Irrevocable...................................13
Note..................................................13
Section 2.03. Fees.........................................13
Commitment Fee........................................13
Administrative Fee....................................13
Section 2.04. Reduction of the Commitments.................13
Section 2.05. Repayment....................................13
Section 2.06. Interest.....................................14
Base Rate Advances....................................14
Eurodollar Rate Advances..............................14
Section 2.07. Prepayments..................................15
Right to Prepay.......................................15
Optional..............................................15
Mandatory.............................................15
Illegality............................................15
Collateral Value Maintenance..........................16
Notice................................................16
Section 2.08. Increased Costs and Capital..................17
Change of Law.........................................17
Capital Adequacy......................................17
Section 2.09. Payments and Computations....................18
Payment Procedures....................................18
Computations..........................................18
Non-Business Day Payments.............................18
Section 2.10. Taxes........................................19
No Deduction for Certain Taxes........................19
Other Taxes...........................................19
Indemnification.......................................19
Evidence of Tax Payments..............................20
Survival of Obligations...............................20
ARTICLE III
Section 3.01. Conditions Precedent to Initial Advances.....21
Section 3.02. Conditions Precedent to Each Borrowing.......22
ARTICLE IV
Section 4.01. Representations and Warranties of the Borrower22
Corporate Existence...................................22
Corporate Power.......................................22
Authorization and Approvals...........................23
Enforceable Obligations...............................23
Financial Statements..................................23
Litigation............................................24
Use of Proceeds.......................................24
Investment Company Act................................25
Taxes.................................................25
Pension Plans.........................................25
Environmental Condition...............................26
True and Complete Disclosure..........................26
Beneficial Ownership of NL Shares.....................26
ARTICLE V
Section 5.01. Affirmative Covenants........................26
Compliance with Laws, Etc.............................27
Maintenance of Insurance..............................27
Preservation of Corporate Existence, Etc..............27
Payment of Taxes, Etc.................................27
Inspection............................................28
Section 5.02. Negative Covenants...........................28
Debts, Guaranties and Other Obligations...............28
Merger or Consolidation...............................28
Sale of Stock.........................................29
Changes in Accounting.................................29
Change of NL Industries Certificate of
Incorporation or Bylaws 29
Certificate of Incorporation..........................29
Section 5.03. Reporting Requirements.......................29
ARTICLE VI
Section 6.01. Events of Default............................32
ARTICLE VII
Section 7.01. Amendments, Etc..............................34
Section 7.02. Notices, Etc.................................34
Section 7.03. No Waiver; Remedies..........................35
Section 7.04. Costs and Expenses...........................35
Section 7.05. Right of Set-off.............................36
Section 7.06. Binding Effect...............................36
Section 7.07. Indemnification..............................36
Section 7.08. Execution in Counterparts....................37
SECTION 7.09. GOVERNING LAW................................37
EXHIBITS:
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
SCHEDULES:
Schedule 1 - Notice Information
Schedule 4.01(f) - Litigation
Schedule 4.01(k) - Environmental Concerns
Schedule 4.01(m) - NL Shares beneficially owned by the Borrower
Schedule 5.02(e) - Restrictions on Distributions from Significant
Subsidiaries
CREDIT AGREEMENT
This Credit Agreement dated as of December 20, 1995 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 all costs, expenses and amounts provided for
in the Pledge Agreement establishing such security interest and Lien, 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.
"Agreement" means this Credit Agreement dated as of December 20, 1995
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 33 % of the
-
Collateral Value of all Pledged Shares.
"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 Value of Pledged Shares" means as of any date, a Dollar amount
equal to the product of (a) the number of Pledged Shares on such date, times (b)
the Current Market Value of a NL Share.
"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.
"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) indebted-
ness 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.
"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" opposite its name 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" opposite its name 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, 1994 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.
"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, 1994.
"Maturity Date" means December 17, 1996 or the earlier termination in whole
of the Commitment pursuant to Section 2.04 or Article VII.
"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 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 NL Shares 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.
"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 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, provided that each Significant
Subsidiary shall always be deemed to be a Subsidiary for purposes of this
Agreement.
"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
THE ADVANCES
Section 2.01. The Advances. The Bank agrees, on the terms and conditions
set forth in this Agreement, to make Advances to the Borrower from time-to-time
on any Business Day during the period from the date of this Agreement until the
Maturity Date in an aggregate outstanding amount not to exceed at any time the
lesser of (i) the Commitment less the aggregate outstanding principal amount of
Advances at such time and (ii) the Available Amount less the aggregate
outstanding principal amount of Advances at such time. Each Advance shall be in
an aggregate principal amount not less than $1,000,000 and in integral multiples
thereof. Within the limits of the Bank's Commitment, the Borrower may from
time-to-time borrow, prepay pursuant to Section 2.07 and reborrow under this
Section 2.01.
Section 2.02. The Procedure.
(b) Notice. 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 a 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.
(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.
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
December 31, 1995 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.
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, 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 such date.
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. On the date of each reduction of the aggregate Commitment
pursuant to Section 2.04, the Borrower shall make a prepayment in respect of the
outstanding amount of the Advances to the extent, if any, that the aggregate
unpaid principal amount of the Advances of the Bank exceeds the Commitment, as
so reduced.
(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) Collateral Value Maintenance. If at any time the Bank shall notify
the Borrower that the aggregate outstanding amount of Advances exceeds 33 % of
-
the Collateral Value of Pledged Shares, 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, so that
immediately following such prepayment, the aggregate outstanding amount of
Advances at such time is equal to or less than 33 % of the Collateral Value of
-
Pledged Shares or (ii) provide the Bank with additional Pledged Shares so that
the aggregate outstanding amount of Advances at such time is equal to or less
than 33 % of the Collateral Value of all such Pledged Shares.
(f) 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 of the jurisdiction (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes") and Taxes by the jurisdiction of the Bank's
Applicable Lending Office or any political subdivision of such jurisdiction. 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.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Initial Advances. The obligation of
the Bank to make its initial Advance is subject to the conditions precedent
that:
(a) Documentation. On or before the day on which the initial Advance is
made, 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 and the other Credit Documents and all attached
Exhibits and Schedules and the Note payable to the order of the Bank;
(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 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 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, Notices of Borrowing and the other Credit
Documents;
(vi) a favorable opinion of the Senior Legal Counsel of the Borrower,
substantially in the form of the attached Exhibit D; and
(vii) such other documents, governmental certificates, agreements,
lien searches as the Bank may reasonably request.
Section 3.02. Conditions Precedent to Each Borrowing. The obligation of
the Bank to make an Advance shall be subject to the further conditions precedent
that on the date of such Advance the following statements shall be true (and
each of the giving of the applicable Notice of Borrowing and any deemed notice
of requested Borrowing pursuant to Section 2.02, and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing such statements are
true):
(i) The representations and warranties contained in Article IV are
correct in all material respects on and as of the date of such Advance,
before and after giving effect to such Advance and to the application of
the proceeds therefrom, 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 Advance or from the application of the proceeds therefrom.
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 duly organized,
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, 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, 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 Notes, 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, 1994, 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, and the unaudited Consolidated and ▇▇▇▇▇▇▇-
dating balance sheets of the Borrower and its Subsidiaries as at September 30,
1995, and the related unaudited Consolidated and consolidating statements of
income, changes in stockholders' equity and cash flows of the Borrower and its
Subsidiaries for the nine months then ended, duly certified by an authorized
financial officer of the Borrower, copies of which have been furnished to the
Bank, fairly present, subject to the assumptions set forth therein and, in the
case of said balance sheets as at September 30, 1995 and said statements of
income, changes in stockholders' equity and cash flows for the nine months then
ended, subject to year-end audit adjustments, the Consolidated and consolidating
financial condition of the Borrower and its Subsidiaries at such dates and the
Consolidated and consolidating results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, 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, 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 to finance the
purchase of NL Shares by the Borrower. No proceeds of any Advance will be used
to purchase or carry any margin stock in violation of Regulation G, T, U or X,
and no proceeds of any Advance shall be used for acquisitions by the Borrower or
any Subsidiary of the Borrower which would require the Borrower or any such
Subsidiary to file a Schedule 13D or an amendment of any Schedule 13D filing
with the SEC (other than purchases of additional NL Shares).
(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, 1994 (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. 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 of September 30, 1995, 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
September 30, 1995 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 Subsi-
diaries 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 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 instru-
ment 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 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 accumu-
lated 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 proportion-
ate 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.
then, and in any such event, 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.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, the Note, 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 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, 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 AND THE OTHER
CREDIT DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS. 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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President-Finance and
Treasurer
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
EXHIBIT A
PROMISSORY NOTE
$15,000,000 December 20, 1995
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
December 20, 1995 (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.
VALHI, INC.
By:
Name:
Title:
EXHIBIT B
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement dated as of December 20, 1995 ("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
December 20, 1995 (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:
"Additional Pledge Effective Date" means the earlier of (i) the first date
an Event of Default occurs, and (b) the first date that the aggregate
outstanding amount of Advances under the Credit Agreement exceeds 33 % of the
-
Collateral Value of Pledged Shares.
"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 Securities which may be deposited with such depositary.
"Collateral" means (a) the Pledged Securities, (b) the Collateral Account,
(c) all rights and privileges of the Borrower with respect to the Pledged
Securities (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 Securities and, following the occurrence and during the
continuation of a Default, all cash dividends paid on the Pledged Securities 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" has the meaning set forth in Section 6 of this Pledge
Agreement.
"Pledged Securities" means prior to the Additional Pledge Effective Date,
the NL Shares described on Annex A attached to this Pledge Agreement , and (b)
on and after the Additional Pledge Effective Date, NL shares pledged by the
Borrower hereunder.
"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 Corporation 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 Corporation 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 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 Securities with respect thereto.
(b) Issuance of Pledged Securities. 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 (i)
delivery to the Bank of all Pledged Securities other than Pledged Securities
which have been deposited in an Approved Depositary, and (ii) the making of
appropriate entries under Section 8-320 of the UCC to the Bank's account on the
books of an Approved Depositary of all Pledged Securities which have been
deposited with such Approved Depositary, 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.
(a) 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.
(b) The security interests granted hereby are granted as security only and
shall not subject the Bank to, or transfer or in any way affect or modify, any
obligation or liability of the Borrower with respect to any of the Collateral or
any transaction in connection therewith.
SECTION 4. Perfection of Security Interests.
(a) Prior to the initial Advance under the Credit Agreement, and
thereafter upon each acquisition of any Pledged Securities 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 Securities other than Pledged Securities 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 Securities which have been deposited with an Approved Depositary.
(b) All Pledged Securities other than Pledged Securities 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 Securities 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 Securities 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 Securities 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 Lien on the Pledged
Securities provided hereby 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 Lien and expressly agreeing to remit any and all dividends
and distributions on account of the Pledged Securities (other than cash
dividends) remitted after the date of this Pledge Agreement directly to the
Bank, and, upon receipt by NL Industries of any notice from the Bank that a
Default has occurred and is continuing, to remit all cash dividends and any and
all other distributions on account of the Pledged Securities directly to the
Bank.
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.
Prior to the first Advance under the Credit Agreement there shall be
established and, at all times thereafter until this Pledge Agreement shall have
terminated, there shall be maintained with the Bank an account designated
"Collateral Account Societe Generale for Valhi, Inc." (the "Collateral
Account"). All proceeds of dividends and other payments and distributions on
Pledged Securities (following the occurrence and during the continuation of a
Default, all cash dividends paid on account of Pledged Securities) received by
the Bank at any time shall be deposited directly into the Collateral Account and
thereafter shall be held and applied by the Bank in accordance with this Pledge
Agreement. 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
deposited by the Borrower forthwith 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 of Funds Deposited in the Collateral Account; Release of
Funds.
(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.
SECTION 8. Record Ownership of Pledged Securities; 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 Securities 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
Securities 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 Securities 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
Securities 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 Securities; 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 Securities, 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 Securities 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
Securities 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 Securities, 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
Securities 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 acquittance 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
Securities 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 Securities 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 December 18, 1995, 4,787,210 shares of NL Industries, Inc. common stock
constitutes 9.37% of all issued and outstanding shares on such date.)
THE FOLLOWING SCHEDULES (EXHIBITS)
TO THE CREDIT AGREEMENT
DATED AS OF DECEMBER 20, 1995
BETWEEN VALHI, INC. AND
SOCIETE GENERALE, SOUTHWEST AGENCY
ARE NOT FILED. COPIES WILL BE FURNISHED
UPON REQUEST OF THE COMMISSION
Exhibit C - Form of Notice of Borrowing is the form of notice that Valhi,
Inc. (`Valhi'') must present to Societe Generale, Southwest Agency (``SoGen'')
in order to request an advance under the Credit Agreement, dated as of December
20, 1995, between Valhi and SoGen (the `Credit Agreement'').
Exhibit D - Form of Borrower's Counsel Opinion is the form of legal opinion
Valhi's Senior Legal Counsel provided to SoGen pursuant to the Credit Agreement.
Exhibit E - Compliance Certificate is the form of compliance certificate
that Valhi must present to SoGen with each set of financial statements that
Valhi is required to present to SoGen pursuant to the Credit Agreement.
Schedule 1 - Notice Information discloses the addresses for notice of Valhi
and SoGen, respectively, for purposes of the Credit Agreement.
Schedule 4.01(f) - Litigation refers to Valhi's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 and Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.
Schedule 4.01(k) - Environmental Concerns refers to Valhi's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 and Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995.
Schedule 4.01(m) - NL Shares beneficially owned by the Borrower discloses
that Valhi owned 27,183,810 shares of the common stock, par value $0.125 per
share, of NL Industries, Inc. as of November 30, 1995.