SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 63)*
VALHI, INC.
(Name of Issuer)
Common Stock, $0.01 par value
(Title of Class of Securities)
918905 10 0
(CUSIP Number)
STEVEN L. WATSON
THREE LINCOLN CENTRE
SUITE 1700
5430 LBJ FREEWAY
DALLAS, TEXAS 75240-2694
(972) 233-1700
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 7, 2000
(Date of Event which requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Valhi Group, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 93,739,554
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
93,739,554
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
93,739,554
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.7%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
CO
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
National City Lines, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 104,630,563
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
104,630,563
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
104,630,563
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
91.2%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
CO
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NOA, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 104,630,563
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
104,630,563
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
104,630,563
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
91.2%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
CO
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dixie Holding Company
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 93,739,554
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
93,739,554
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
93,739,554
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.7%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
CO
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dixie Rice Agricultural Corporation, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Louisiana
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 93,739,554
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
93,739,554
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
93,739,554
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.7%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
CO
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Southwest Louisiana Land Company, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Louisiana
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 104,630,563
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
104,630,563
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
104,630,563
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
91.2%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
CO
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Contran Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 106,874,263
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
106,874,263
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
106,874,263
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
93.2%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
CO
CUSIP No. 918905 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Harold C. Simmons
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP(SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS(SEE INSTRUCTIONS)
Not applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
7 SOLE VOTING POWER
653,383
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 107,666,263
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 653,383
10 SHARED DISPOSITIVE POWER
107,666,263
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
653,383
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ X ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%
14 TYPE OF REPORTING PERSON(SEE INSTRUCTIONS)
IN
AMENDMENT NO. 63
TO SCHEDULE 13D
This statement on Schedule 13D is hereby amended and restated in its
entirety as set forth below, except for Item 3, which is amended but not
restated in its entirety (collectively, this "Statement").
Item 1. Security and Issuer
This Statement relates to the common stock, $0.01 par value per share
(the "Shares"), of Valhi, Inc., a Delaware corporation (the "Company"). The
principal executive offices of the Company are located at Three Lincoln Centre,
5430 LBJ Freeway, Suite 1740, Dallas, Texas 75240.
Item 2. Identity and Background
(a) This Statement is filed by (i) Valhi Group, Inc. ("VGI"), National
City Lines, Inc. ("National") and Contran Corporation ("Contran") as the direct
holders of Shares, (ii) by virtue of the direct and indirect ownership of
securities of VGI and National (as described below in this Statement), NOA, Inc.
("NOA"), Dixie Holding Company ("Dixie Holding"), Dixie Rice Agricultural
Corporation, Inc. ("Dixie Rice") and Southwest Louisiana Land Company, Inc.
("Southwest") and (iii) by virtue of his positions with Contran and certain of
the other entities (as reported on this Statement), Harold C. Simmons
(collectively, the "Reporting Persons"). By signing this Statement, each
Reporting Person agrees that this Statement is filed on its or his behalf.
VGI, National and Contran are the direct holders of approximately
81.7%, 9.5% and 1.6%, respectively, of the 114,680,014 Shares outstanding as of
July 14, 2000 according to information furnished by the Company (the
"Outstanding Shares"). Together, VGI, National and Contran may be deemed to
control the Company. National, NOA and Dixie Holding are the direct holders of
approximately 73.3%, 11.4% and 15.3%, respectively, of the outstanding common
stock of VGI. Together, National, NOA and Dixie Holding may be deemed to control
VGI. Contran and NOA are the direct holders of approximately 85.7% and 14.3%,
respectively, of the outstanding common stock of National and together may be
deemed to control National. Contran and Southwest are the direct holders of
approximately 49.9% and 50.1%, respectively, of the outstanding common stock of
NOA and together may be deemed to control NOA. Dixie Rice is the direct holder
of 100% of the outstanding common stock of Dixie Holding and may be deemed to
control Dixie Holding. Contran is the holder of 100% of the outstanding common
stock of Dixie Rice and may be deemed to control Dixie Rice. Contran is the
holder of approximately 88.9% of the outstanding common stock of Southwest and
may be deemed to control Southwest.
Substantially all of Contran's outstanding voting stock is held either
by trusts established for the benefit of certain children and grandchildren of
Harold C. Simmons (the "Trusts"), of which Mr. Simmons is the sole trustee, or
by Mr. Simmons directly. As sole trustee of each of the Trusts, Mr. Simmons has
the power to vote and direct the disposition of the shares of Contran stock held
by each of the Trusts. Mr. Simmons, however, disclaims beneficial ownership of
any shares of Contran stock that the Trusts hold.
The Harold Simmons Foundation, Inc. (the "Foundation") directly holds
approximately 0.5% of the Outstanding Shares. The Foundation is a tax-exempt
foundation organized for charitable purposes. Harold C. Simmons is the chairman
of the board and chief executive officer of the Foundation and may be deemed to
control the Foundation.
The Contran Deferred Compensation Trust No. 2 (the "CDCT No. 2")
directly holds approximately 0.4% of the Outstanding Shares. Boston Safe Deposit
and Trust Company serves as the trustee of the CDCT No. 2. Contran established
the CDCT No. 2 as an irrevocable "rabbi trust" to assist Contran in meeting
certain deferred compensation obligations that it owes to Harold C. Simmons. If
the CDCT No. 2 assets are insufficient to satisfy such obligations, Contran is
obligated to satisfy the balance of such obligations as they come due. Pursuant
to the terms of the CDCT No. 2, Contran (i) retains the power to vote the Shares
held directly by the CDCT No. 2, (ii) retains dispositive power over such shares
and (iii) may be deemed the indirect beneficial owner of such shares.
The Combined Master Retirement Trust (the "CMRT") directly holds
approximately 0.1% of the Outstanding Shares. The Company established the CMRT
as a trust to permit the collective investment by master trusts that maintain
the assets of certain employee benefit plans the Company and related companies
adopt. Mr. Simmons is the sole trustee of the CMRT and a member of the trust
investment committee for the CMRT. Mr. Simmons is a participant in one or more
of the employee benefit plans that invest through the CMRT.
Mr. Harold C. Simmons is chairman of the board and chief executive
officer of VGI, National, NOA, Dixie Holding, Dixie Rice, Southwest and Contran.
By virtue of the holding of the offices, the stock ownership and his
service as trustee, all as described above, (a) Mr. Simmons may be deemed to
control such entities and (b) Mr. Simmons and certain of such entities may be
deemed to possess indirect beneficial ownership of the Shares directly held by
certain of such other entities. However, Mr. Simmons disclaims beneficial
ownership of the Shares beneficially owned, directly or indirectly, by any of
such entities, except to the extent of his vested beneficial interest in the
Shares held by the CMRT and his interest as a beneficiary of the CDCT No. 2.
Harold C. Simmons' spouse is the direct beneficial owner of 77,000
Shares, or approximately 0.1% of the Outstanding Shares. Mr. Simmons may be
deemed to share indirect beneficial ownership of such Shares. Mr. Simmons
disclaims all such beneficial ownership.
The Company and Tremont Corporation ("Tremont") are the direct holders
of approximately 59.6% and 20.2%, respectively, of the outstanding common stock
of NL Industries, Inc. ("NL") and together may be deemed to control NL. The
Company and NL are the direct holders of approximately 59.6% and 8.4%,
respectively, of the outstanding common stock of Tremont. Together, the Company
and NL may be deemed to control Tremont. The Company is the holder of 100% of
the outstanding common stock of Valmont Insurance Company ("Valmont") and may be
deemed to control Valmont. Mr. Harold C. Simmons is chairman of the board of NL
and is a director of Tremont.
The Reporting Persons understand that Valmont and a subsidiary of NL
directly hold 1,000,000 Shares and 1,186,200 Shares, respectively. The Reporting
Persons further understand that, pursuant to Delaware law, the Company treats
the Shares that Valmont and NL hold directly as treasury stock for voting
purposes. For the purposes of this Statement, the Shares that Valmont and NL
hold directly are not deemed outstanding.
Certain information concerning the directors and executive officers of
the Reporting Persons, including offices held by Mr. Simmons is set forth on
Schedule B attached hereto and incorporated herein by reference.
(b) The principal offices of the Company, VGI, National, NOA, Dixie
Holding and Contran are located at, and the business address of Harold C.
Simmons is, Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas
75240-2697. The principal business address of Dixie Rice is 600 Pasquiere
Street, Gueydan, Louisiana 70542. The principal business address of Southwest is
402 Canal Street, Houma, Louisiana 70360. The business addresses of the
remaining directors and executive officers of the Reporting Persons are set
forth on Schedule B to this Statement and incorporated herein by reference.
(c) The Company is a diversified holding company engaged, through
operating subsidiaries in the titanium dioxide pigments, component products
(ergonomic computer support systems, precision ball bearing slides and security
products), titanium metals products and waste management industries.
In addition to activities engaged in through the Company and its
subsidiaries, and in addition to holding the securities described above, (i) VGI
is engaged in holding notes receivable; (ii) National is engaged in holding
notes receivable and, directly or through other companies, in real estate, oil
and gas activities and the rental and sales of compressors and related products;
(iii) Dixie Holding is engaged in holding preferred stock of Contran; (iv) NOA
is engaged in real estate and holding notes receivable; (v) Dixie Rice is
engaged in land management, agriculture and oil and gas activities; (vi)
Southwest is engaged in land management, agriculture and oil and gas activities;
and (vii) Contran is engaged through other companies in the activities described
above and in the production of, among other things, steel rod, wire and wire
products.
(d) None of the Reporting Persons or, to the best knowledge of such
persons, any of the persons named in Schedule B to this Statement has been
convicted in a criminal proceeding in the past five years (excluding traffic
violations or similar misdemeanors).
(e) None of the Reporting Persons or, to the best knowledge of such
persons, any person named in Schedule B to this Statement, was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
(f) Contran, Dixie Holding and National are Delaware corporations. VGI
is a Nevada corporation. NOA is a Texas corporation. Dixie Rice and Southwest
are Louisiana corporations. Harold C. Simmons and all persons named on Schedule
B to this Statement are citizens of the United States, except as otherwise
indicated on such Schedule.
Item 3. Source and Amount of Funds or Other Consideration
The total amount of funds required by Contran to acquire the Shares
reported in Item 5(c) was $3,518,397.50 (including commissions). Such funds were
or will be provided by Contran's cash on hand and no funds were or will be
borrowed for such purpose.
The Reporting Persons understand that the funds required by each person
named in Schedule B to this Statement to acquire Shares were from such person's
personal funds.
Item 4. Purpose of Transaction
The Reporting Persons acquired Shares to obtain an equity interest in
and control of the Company. By virtue of the relationships and positions held by
Harold C. Simmons as reported in Item 2, Mr. Simmons, directly and indirectly
through Contran, may be deemed to control the Company.
Contran purchased the additional Shares reported in Item 5(c) of this
Statement in order to increase its equity interest in the Company. Depending
upon their evaluation of the Company's business and prospects, and upon future
developments (including, but not limited to, performance of the Shares in the
market, availability of funds, alternative uses of funds, and money, stock
market and general economic conditions), any of the Reporting Persons or other
entities that may be deemed to be affiliated with Contran may from time to time
purchase Shares, and any of the Reporting Persons or other entities that may be
deemed to be affiliated with Contran may from time to time dispose of all or a
portion of the Shares held by such person, or cease buying or selling Shares.
Any such additional purchases or sales of the Shares may be in open market or
privately negotiated transactions or otherwise.
The Reporting Persons understand that prior purchases of Shares by
persons named in Schedule B to this Statement were made for the purpose of each
such person's personal investment.
Except as described in this Item 4, none of the Reporting Persons nor,
to the best knowledge of such persons, any other person named in Schedule B to
this Statement has formulated any plans or proposals which relate to or would
result in any matter required to be disclosed in response to paragraphs (a)
through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) VGI, National, Contran, the Foundation, the CDCT No. 2, the CMRT,
Mr. Simmons' spouse and Mr. Simmons are the direct beneficial owners of
93,739,554, 10,891,009, 1,804,300, 600,000, 439,400, 115,000, 77,000 and 3,383
of the Shares, respectively. In addition, Harold C. Simmons holds stock options
exercisable for 650,000 Shares, some of which will not vest within 60 days of
the filing of this Statement.
By virtue of the relationships described under Item 2 of this
Statement:
(1) VGI, Dixie Holding and Dixie Rice may each be deemed to be
the beneficial owner of the 93,739,554 Shares (approximately 81.7% of
the Outstanding Shares) that VGI directly holds;
(2) National, NOA and Southwest each may be deemed to be the
beneficial owner of the 104,630,563 Shares (approximately 91.2% of the
Outstanding Shares) that VGI and National directly hold;
(3) Contran may be deemed to be the beneficial owner of the
106,874,263 Shares (approximately 93.2% of the Outstanding Shares) that
VGI, National, Contran and the CDCT No. 2 directly hold; and
(4) Harold C. Simmons may be deemed to be the beneficial owner
of the 108,319,646 Shares (approximately 93.9% of the sum of the
Outstanding Shares and the 650,000 Shares that Mr. Simmons can acquire
by exercise of stock options) that VGI, National, Contran, the
Foundation, the CDCT No. 2, the CMRT, Mr. Simmons' spouse and himself
directly hold and including the 650,000 Shares that Mr. Simmons can
acquire by exercise of stock options, some of which will not vest
within 60 days of the filing of this Statement.
Except for the 3,383 Shares that he holds directly and to the extent of
his vested beneficial interest in Shares directly held by the CMRT and his
interest as a beneficiary of the CDCT No. 2, Mr. Simmons disclaims beneficial
ownership of all Shares.
(b) By virtue of the relationships described in Item 2:
(1) VGI, Dixie Holding and Dixie Rice may each be deemed to
share the power to vote and direct the disposition of the Shares that
VGI directly holds;
(2) National, NOA and Southwest may each be deemed to share
the power to vote and direct the disposition of the Shares that VGI and
National directly hold;
(3) Contran may be deemed to share the power to vote and
direct the disposition of the Shares that VGI, National, Contran and
the CDCT No. 2 directly hold; and
(4) Harold C. Simmons may be deemed to share the power to vote
and direct the disposition of the Shares that VGI, National, Contran,
the Foundation, the CDCT No. 2, the CMRT, Mr. Simmons' spouse and
himself directly hold and including the 650,000 Shares that Mr. Simmons
can acquire by exercise of stock options, some of which will not vest
within 60 days of the filing of this Statement.
(c) The table below sets forth purchases of the Shares by the Reporting
Persons during the last 60 days. Contran executed all of such purchases on the
New York Stock Exchange.
Number of Approximate Price Per Share ($)
Date Shares (exclusive of commissions)
---------------- --------------- -------------------
05/22/00 6,000 $10.6250
05/23/00 300 $10.6250
05/30/00 4,100 $10.6250
05/31/00 500 $10.6250
06/09/00 100,000 $11.0000
07/03/00 20,000 $10.7500
07/03/00 4,000 $10.8125
07/03/00 9,800 $10.8750
07/03/00 6,000 $10.9375
07/03/00 101,200 $11.0000
07/05/00 10,000 $11.0000
07/06/00 1,800 $10.8750
07/06/00 29,500 $11.0000
07/07/00 9,100 $11.0000
07/11/00 2,400 $11.0000
07/12/00 5,000 $11.0000
07/17/00 5,000 $11.0000
07/17/00 5,000 $10.8750
(d) Each of VGI, National, Contran, the Foundation, the CDCT No. 2, the
CMRT, Harold C. Simmons' spouse and Harold C. Simmons has the right to receive
and the power to direct the receipt of dividends from, and proceeds from the
sale of, the shares directly held by such entity or person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Contran and National are parties to a $25.0 million revolving credit
and letter of credit facility dated as of September 3, 1998, as amended and
supplemented through September 2, 1999 with U.S. Bank National Association (the
"U.S. Bank Facility"). Borrowings under the U.S. Bank Facility bear interest at
the rate announced publicly from time to time by each bank as its base rate or
at a rate of 1.75% over the London interbank offered rate of interest ("LIBOR"),
are due August 30, 2000 or such extended maturity date as may be mutually agreed
to, and are collateralized by, among other things, certain Shares. On July 14,
2000, no money had been borrowed, no letters of credit were outstanding and
National had pledged 6,000,000 Shares under the U.S. Bank Facility. The
foregoing summary of the U.S. Bank Facility is qualified in its entirety by
reference to Exhibits 1 through 5 to this Statement, which are incorporated
herein by this reference.
Dixie Rice is a party to a $1.5 million credit facility dated as of
August 18, 1986 with Southern Methodist University (the "SMU Facility").
Borrowings under the SMU Facility bear interest at the greater or 7.5% per annum
or 76% of the Shearson Lehman Brothers, Inc. Bond Market Report -- Corporate
Bond Index -- Long Term (Average) Yield, are due in forty equal quarterly
installments beginning September 30, 1996 and ending on June 30, 2006 and are
secured by certain Shares. As of July 14, 2000, $900,000 principal amount was
outstanding under the SMU Facility and 300,000 Shares had been pledged under the
SMU Facility. The Shares pledged under the SMU Facility are held directly by
Contran but loaned to Dixie Rice pursuant to a Collateral Agreement, dated
December 29, 1988 between Dixie Rice and Contran (the "Collateral Agreement").
The foregoing summary of the SMU Facility and the Collateral Agreement is
qualified in its entirety by reference to Exhibits 6 and 7 to this Statement,
respectively, which are incorporated herein by this reference.
Other than as set forth above, none of the Reporting Persons or, to the
best knowledge of such persons, any person named in Schedule B to this Statement
has any contract, arrangement, understanding or relationship (legal or
otherwise) with any person with respect to securities of the Company, including,
but not limited to, transfer or voting of any such securities, finder's fees,
joint ventures, loans or option arrangements, puts or calls, guarantees of
profits, division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1* Loan Agreement dated as of September 3, 1998 among Contran
Corporation, National City Lines, Inc. and U.S. Bank
National Association.
Exhibit 2* Promissory Note dated September 3, 1998 in the original
principal amount of $25 million payable to the order of U.S.
Bank National Association and executed by Contran Corporation.
Exhibit 3* Payment Guaranty dated September 3, 1998 executed by National
City Lines, Inc.
Exhibit 4* Securities Pledge Agreement dated as of September 3, 1998 among
Contran Corporation, National City Lines, Inc. and
U.S. Bank National Association.
Exhibit 5* Extension Agreement dated as of September 2, 1999 among Contran
Corporation, National City Lines, Inc. and U.S. Bank
National Association.
Exhibit 6 Loan and Pledge Agreement, dated as of August 18, 1986, between
Dixie Rice Agricultural Corporation, Inc.
and Southern Methodist University (incorporated by
reference to Exhibit 11 to Amendment No. 59 to this
Statement).
Exhibit 7 Collateral Agreement, dated as of December 29, 1988, between
Dixie Rice Agricultural Corporation, Inc. and
Contran Corporation (incorporated by reference to Exhibit 12 to
Amendment No. 59 to this Statement).
Exhibit 8* Contran Deferred Compensation Trust No. 2 (Amended and
Restated), dated as of February 11, 1999, between Contran
Corporation and Boston Safe Deposit and Trust Company.
- ----------
* Filed herewith.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: July 17, 2000
By: /s/ Harold C. Simmons
--------------------------
Harold C. Simmons
Signing in his
individual capacity only.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: July 17, 2000
/s/ Steven L. Watson
---------------------
Steven L. Watson
Signing in the
capacities listed on
Schedule "A" attached
hereto and
incorporated herein by
reference.
SCHEDULE A
Steven L. Watson, as President or Executive Vice President of each of:
CONTRAN CORPORATION
DIXIE RICE AGRICULTURAL CORPORATION, INC.
DIXIE HOLDING COMPANY
NATIONAL CITY LINES, INC.
NOA, INC.
VALHI GROUP, INC.
SOUTHWEST LOUISIANA LAND COMPANY, INC.
Schedule B
The names of the directors and executive officers of Contran Corporation
("Contran"), Dixie Holding Company ("Dixie Holding"), Dixie Rice Agricultural
Corporation, Inc. ("Dixie Rice"), National City Lines, Inc. ("National"), NOA,
Inc. ("NOA"), Southwest Louisiana Land Company, Inc. ("Southwest") and Valhi
Group, Inc. ("VGI") and their present principal occupations are set forth below.
Except as otherwise indicated, the business address of each such person is 5430
LBJ Freeway, Suite 1700, Dallas, Texas 75240.
Name Present Principal Occupation
- --------------------------------------- ----------------------------------------------------------
Eugene K. Anderson Vice president of Contran, Dixie Holding, Dixie Rice,
NOA, National, Southwest, VGI and the Company; and
treasurer of the Harold Simmons Foundation, Inc. (the
"Foundation").
F. Murlyn Broussard (1) Treasurer of Southwest.
J. Mark Hollingsworth Vice president and general counsel of Contran, Dixie
Holding, Dixie Rice, NOA, National, Southwest, VGI and
the Company; general counsel of the Foundation; general
counsel of CompX International Inc., a manufacturer of
computer support systems, drawer slides and security
products that is affiliated with the Company ("CompX");
general counsel of The Combined Master Retirement Trust,
a trust the Company formed to permit the collective
investment by trusts that maintain the assets of certain
employee benefit plans the Company and related companies
adopt (the "CMRT").
William J. Lindquist Director and senior vice president of Contran, Dixie Holding,
NOA, National and VGI; senior vice president of Dixie
Rice, Southwest and the Company.
A. Andrew R. Louis Secretary of Contran, CompX, Dixie Holding, Dixie Rice,
NOA, National, Southwest, VGI, and the Company.
Kelly D. Luttmer Tax director of Contran, CompX, Dixie Holding, Dixie
Rice, NOA, National, Southwest, VGI and the Company.
Andrew McCollam, Jr. (1) President and director of Southwest; director of Dixie
Rice; and a private investor.
Harold M. Mire (2) Vice president of Dixie Rice and Southwest.
Bobby D. O'Brien Vice president and treasurer of Contran, Dixie Holding,
Dixie Rice, NOA, National, VGI and the Company; and vice
president of Southwest.
Glenn R. Simmons Vice chairman of the board of Contran, Dixie Holding,
NOA, National, VGI and the Company; chairman of the board
of Keystone Consolidated Industries, Inc. ("Keystone"), a
manufacturer of steel rod, wire and wire products that is
affiliated with Contran; director and executive vice
president of Southwest and Dixie Rice; director of NL
Industries, Inc., a producer of titanium dioxide pigments
and a subsidiary of the Company ("NL"); director of
Tremont Corporation, a holding company that primarily
holds an interest in NL and an interest in Titanium
Metals Corporation, a producer of titanium metal products
("TIMET"); and a director of CompX and TIMET.
Harold C. Simmons Chairman of the board and chief executive officer of
Contran, Dixie Holding, Dixie Rice, the Foundation,
NOA, National, Southwest, VGI and the Company; chairman
of the board of NL; director of Tremont; and trustee
and member of the trust investment committee of the CMRT.
Richard A. Smith (2) Director and president of Dixie Rice.
Gregory M. Swalwell Vice president and controller of Contran, Dixie Holding,
NOA, National, VGI and the Company; vice president of Dixie
Rice and Southwest.
Steven L. Watson Director and president of Contran, Dixie Holding, NOA,
National, VGI and the Company; director and executive vice
president of Dixie Rice; director, vice president and
secretary of the Foundation; executive vice president of
Southwest; and a director of CompX, Keystone and TIMET.
- ----------
(1) The principal business address for Messrs. Broussard and McCollam is 402
Canal Street, Houma, Louisiana 70360.
(2) The principal business address for Messrs. Mire and Smith is 600 Pasquiere
Street, Gueydan, Louisiana 70542-0010.
SCHEDULE C
Based upon ownership filings with the Securities and Exchange
Commission or upon information provided by the persons listed on Schedule B to
this Statement, such persons may be deemed to own personally and beneficially
Shares, as outlined below:
Name Shares Held Options Held (1)
- ------------------------------- ------------------- -----------------
Eugene K. Anderson (2) 1,446 22,000
F. Murlyn Broussard (3) 1,157 -0-
J. Mark Hollingsworth -0- 86,000
William J. Lindquist -0- 241,000
A. Andrew R. Louis -0- 25,000
Kelly D. Luttmer -0- 20,000
Andrew McCollam, Jr. 550 -0-
Harold M. Mire 1,137 -0-
Bobby D. O'Brien -0- 138,000
Glenn R. Simmons(4) 3,183 420,000
Harold C. Simmons(5) 80,383 550,000
Richard A. Smith 2,610 -0-
Gregory M. Swalwell(6) 1,166 103,000
Steven L. Watson(7) 18,635 310,000
- ----------
(1) Represents Shares issuable pursuant to the exercise within 60 days of the
date of this Statement of stock options.
(2) The Reporting Persons understand that the Shares indicated as held by
Eugene K. Anderson include 1,446 Shares held in his individual retirement
account.
(3) The Reporting Persons understand that the Shares indicated as held by F.
Murlyn Broussard include 1,157 Shares held in his individual retirement
account.
(4) The Reporting Persons understand the Shares indicated as held by Glenn R.
Simmons include 2,383 Shares held in his individual retirement account. The
Reporting Persons further understand that the Shares indicated as held by
Mr. Simmons also include 800 Shares held in his wife's retirement account,
with respect to which Mr. Simmons disclaims beneficial ownership.
(5) The Reporting Persons understand that the Shares indicated as held by
Harold C. Simmons include 77,000 Shares held by Mr. Simmons wife, with
respect to all of which beneficial ownership is disclaimed by Mr. Simmons.
Mr. Simmons may be deemed to possess indirect beneficial ownership of the
Shares set forth in Item 5(a) of this Statement, held by other Reporting
Persons. Item 5 of this Statement reports all Shares issuable pursuant to
the exercise of Mr. Simmons' stock options, regardless of vesting, while
this Schedule C reports only those Shares that Mr. Simmons can receive
within 60 days of the date of this Statement upon exercise of his stock
options. Mr. Simmons disclaims beneficial ownership of all Shares except
for the 3,383 Shares that he holds directly and to the extent of his vested
beneficial interest in Shares directly held by the CMRT and his interest as
a beneficiary of the CDCT No. 2.
(6) The Reporting Persons understand that the Shares indicated as held by
Gregory M. Swalwell include 1,166 Shares held in his individual retirement
account.
(7) The Reporting Persons understand that the Shares indicated as held by
Steven L. Watson include 3,035 Shares held in his individual retirement
account.
EXHIBIT INDEX
Exhibit 1* Loan Agreement dated as of September 3, 1998 among Contran
Corporation, National City Lines, Inc. and U.S. Bank National
Association.
Exhibit 2* Promissory Note dated September 3, 1998 in the original
principal amount of $25 million payable to the order of U.S. Bank
National Association and executed by Contran Corporation.
Exhibit 3* Payment Guaranty dated September 3, 1998 executed by National
City Lines, Inc.
Exhibit 4* Securities Pledge Agreement dated as of September 3, 1998 among
Contran Corporation, National City Lines, Inc. and
U.S. Bank National Association.
Exhibit 5* Extension Agreement dated as of September 2, 1999 among Contran
Corporation, National City Lines, Inc. and U.S. Bank
National Association.
Exhibit 6 Loan and Pledge Agreement, dated as of August 18, 1986, between
Dixie Rice Agricultural Corporation, Inc. and Southern
Methodist University (incorporated by reference to Exhibit 11
to Amendment No. 59 to this Statement).
Exhibit 7 Collateral Agreement, dated as of December 29, 1988, between
Dixie Rice Agricultural Corporation, Inc. and Contran
Corporation (incorporated by reference to Exhibit 12 to Amendment
No. 59 to this Statement).
Exhibit 8* Contran Deferred Compensation Trust No. 2 (Amended and
Restated), dated as of February 11, 1999, between Contran
Corporation and Boston Safe Deposit and Trust Company.
- ----------
* Filed herewith.
LOAN AGREEMENT
This loan agreement (this "Agreement") is dated as of September 3, 1998, and is
among Contran Corporation, a Delaware corporation ("Contran"), National City
Lines, Inc. ("NCL"), a Delaware corporation, U.S. Bank National Association
("U.S. Bank"), and the Bank Group (as defined below).
Recitals
A. Contran, NCL, the Agent, and the Bank Group desire to enter into the
Loan Documents under which the members of the Bank Group will severally make
Advances to Contran aggregating no more than the Maximum Availability at any one
time.
B. The members of the Bank Group are prepared to severally make
Advances and extend credit to Contran aggregating no more than the Maximum
Availability at any one time under the terms and conditions of the Loan
Documents.
NOW, THEREFORE, for value, it is agreed that:
I. DEFINITIONS; CONSTRUCTION MATTERS.
A. Definitions. As used in the Loan Documents:
"Advance" means advances or extensions of credit made by the members of
the Bank Group to Contran under the Loan Documents for the
benefit of one or more members of the Contran Companies and
the issuance of letters of credit under the Letter of Credit
Subfacility;
"Agent" means U.S. Bank or any successor or assignee when acting as
the administrative agent for the Bank Group under the
Loan Documents;
"Allowed Uses" means the general corporate purposes of the Contran
Companies including the purchase of margin stock;
"Available" or "Availability" means the difference between the Maximum
Availability and the outstanding balance of the Advances at
the time that Availability is being determined;
"Average Availability" means the difference between the Maximum
Availability and the average outstanding principal balance of
the Advances during a Quarter;
"Bank Group" means U.S. Bank and any banks hereafter added to this
Agreement by modification agreement;
"Bank Group Majority" initially means U.S. Bank. If other banks join
the Bank Group following the date hereof, the term "Bank Group
Majority" shall mean members of the Bank Group holding at
least 51 percent of the total amount of Advances hereunder,
but in any event not less than two banks;
"Banking Day" means a day when all members of the Bank Group are open
to the public at their main offices for carrying on
substantially all of their banking activities (except for a
Saturday, Sunday, or a bank holiday and, with respect to LIBOR
Advances, a day upon which banks transact business on the
London interbank market for Eurodollars;
"Commitment Fee" means a fee, which is payable quarterly in arrears as
of the last Banking Day of each Quarter, equal to 37.5 basis
points per annum (365/366 day year) multiplied by the
difference between the Maximum Availability and the average
outstanding principal balance of the advances and extensions
of credit (excluding standby letters of credit) during the
Quarter, on a prorated basis;
"Contran Companies" means Contran and NCL and "Contran Company" means
any one of the Contran Companies;
"Credit Line" means the revolving lines of credit being severally
extended by the members of the Bank Group to and for the
benefit of the Contran Companies under the terms and
conditions of the Loan Documents;
"Default Rate" means the rate of interest that is otherwise applicable
plus an additional 2% per annum;
"Event of Default" means those events, occurrences, or other matters
identified in Section VI of this Agreement, that, if they
occur or exist, cause Contran to be in default under this
Agreement;
"Eurodollars" means U.S. dollars to be deposited in a bank or other
financial institution located outside of the United
States;
"Expiry Date" means the date which is 364 days following the date of
this Agreement, and any anniversary of such date as extended
by mutual agreement of the Contran Companies and the Bank
Group;
"Guaranty" means the unconditional payment guaranty in the form
satisfactory to the Bank Group to be issued to each member of
the Bank Group by NCL contemporaneously with the execution of
this Agreement;
"Hazardous Material" or "Hazmat" means any waste, substance, mixture,
pollutant or contaminant defined as hazardous, toxic or
radioactive under any federal, state, or local statutory laws,
regulations, or orders and includes, whether or not so
defined, petroleum and natural gas products, polychlorinated
biphenyls and asbestos-containing materials;
"Interest Period" means as of the end of each calendar month for Prime
Rate Advances and a period of 1 month, 2 months, 3 months or 6
months as selected by Contran for each LIBOR Advance, and, if
any Interest Period would otherwise end on a day which is not
a Banking Day, such Interest Period will end on the next
succeeding Banking Day unless such day falls in the next
calendar month in which case that Interest Period will end on
the last Banking Day in the immediately preceding calendar
month;
"Letter of Credit Fee" means a fee, which is payable quarterly in
arrears as of the 10th Banking Day of each Quarter, equal to
1.75% per annum (360 day year) multiplied by the undrawn
amount of outstanding letters of credit during the preceding
Quarter, on a prorated basis.
"Letter of Credit Subfacility" means the facility under which U.S.
Bank will issue one or more standby letters of credit to third
parties aggregating no more than $15,000,000 at any one time
when Contran requests a letter of credit by executing a
written application and reimbursement agreement in form
satisfactory to U.S. Bank. All letters of credit will be
subject to U.S. Bank's standard terms and conditions for
letters of credit.
"LIBOR" means the London interbank offered rate of interest, as
determined and quoted by the Agent, for a deposit of
Eurodollars in the amount of the Advance requested by Contran,
rounded up to the nearest 1/16th of 1% and adjusted for any
reserves, FDIC insurance premiums or other charges which would
be payable by any member of the Bank Group in connection
therewith;
"LIBOR Advance" means an Advance to which the LIBOR applies;
"LTV" means the percentage resulting from dividing the outstanding
principal balance of the Advances on the date the LTV is being
determined by the value of the Pledged Shares (as determined
by multiplying the number of Pledged Shares (initially
6,000,000) by the published closing price for the stock on the
preceding trading day, as published in the Wall Street Journal
or, if the prices are not published, as reasonably determined
by the Agent);
"Loan Documents" means this Agreement, the Guaranties, the Notes,
and the Security Documents, as originally executed and as
hereafter extended and/or modified;
"Maximum Availability" means $25,000,000 until changed by mutual
agreement or reduced by Contran as provided in this Agreement;
"NCL" means National City Lines, Inc., a Delaware corporation;
"Note" means the note to be issued by Contran to the Bank Group in a
form acceptable to the Bank Group;
"Notice of Borrowing" means the notice of intention to borrow to be
given by Contran to the Agent in a form acceptable to the
Agent;
"Obligations" means the debts and obligations of the Contran Companies
to the Bank Group and the Agent under the Loan Documents,
including repayment of the Advances;
"Per annum" means, when referring to interest, the actual number of
days elapsed in an Interest Period over a denominator of 360
days;
"Percentage Interest" means the percentage interest of each member of
the Bank Group determined by dividing its commitment by the
Maximum Availability;
"Pledged Securities" means initially the 6,000,000 shares of common
stock that have been issued by Valhi and any investment
securities that are pledged to the Bank Group under Section
II.B.10 of this Agreement to secure payment and performance of
the Obligations;
"Prime Rate" means the rate of interest publicly-announced by the
Agent from time to time as its prime rate of interest for
Advances to commercial customers;
"Prime Rate Advance" means an Advance to which the Prime Rate is
applicable;
"Prospective Default" means an Event of Default but for the giving of
any required notice, the passage of any applicable grace or
notice period, or both;
"Quarter" means a calendar quarter;
"Security Document" means the securities pledge agreement to be
executed by the Contran Companies in a form acceptable to the
Agent and the related stock powers and compliance forms, and
any security agreement and financing statements that any
Contran Company hereafter executes to secure performance of
the Obligations; and
"Valhi" means Valhi, Inc., a Delaware corporation.
B. Additional References.
1. Accounting Terms. Accounting terms which are not specifically defined
in the Loan Documents will be defined or interpreted and all reporting
practices will be performed, in accordance with generally accepted
accounting principles ("GAAP") unless the Bank Group has given its
prior written consent to a different accounting definition,
interpretation or practice. Without thereby limiting the generality of
the foregoing, all financial statements and calculations which are
based on financial condition or results of operations as of specific
dates or for specific periods (including compliance with financial
covenants) will be calculated on a consolidated basis unless otherwise
specified. Whenever any Loan Document calls for a payment to be made
or an event to occur annually or quarterly, the reference is to
Contran's fiscal year and fiscal quarter. The term "financial
statements" means balance sheets and statements of income and cash
flows prepared in reasonable detail, on a comparative basis, and in
accordance with GAAP for the interim (quarterly) accounting periods
and balance sheets and statements of income, cash flows, and equity,
and related footnotes, for the annual accounting periods.
2. Legal Terms. The definitions and substantive terms of the Uniform
Commercial Code, the Uniform Fraudulent Transfer Act, and the
Bankruptcy Code will be used as additional aids to construction of the
Loan Documents before resort to any other source. The word "execute"
means to subscribe and deliver a document. The term "investment
security" means the obligation of an issuer, or a share,
participation, or other interest in an issuer or in property or an
enterprise of an issuer, and any related certificate and entitlement,
including a warrant, dividend, or other distribution in respect
thereof.
3. Date/Time. Whenever a date or time is specified in the Loan Documents,
it means such date or time in Portland, Oregon.
4. Schedules/Exhibits. The schedules and exhibits, if any, that are
attached to this Agreement incorporated into this Agreement by this
reference.
5. Gender; Number. The Loan Documents are intended to be gender neutral
and the neuter pronoun can refer not only to an organization but also
to an individual. Use of the singular can include the plural and vice
versa. Where the singular refers to several persons, the liability of
such persons is joint and several.
6. Conflicts. The terms and conditions of the Loan Documents are intended
to complement and supplement each other and are to be construed so as
to be consistent and complimentary. In the event that a conflict of
terms cannot be reconciled, the terms and conditions of this Agreement
will govern over any conflicting terms or conditions in any other Loan
Document.
7. Captions. Captions and headings are merely for convenience and
substantively are not a part of the Loan Documents.
8. Governing Law. Construction, performance, and enforcement of the Loan
Documents will be governed by the substantive provisions (i.e.,
without regard to the rules for conflict of laws) of Oregon law, but
if the Bank Group has greater rights or remedies under federal law,
then such rights and remedies under federal law also will be available
to the Bank.
9. Complete Agreement. The Loan Documents are the complete, final, and
exclusive agreement of the parties. No term or condition can or will
be explained, supplemented, waived, or modified by conduct or oral
agreement either before, at, or after signing and delivery of the Loan
Documents.
II. THE LINE OF CREDIT.
A. Advances.
1. Commitment. Upon satisfaction of the conditions precedent by the
Contran
Companies or waiver thereof by the Bank Group, each member of the Bank
Group severally promises and agrees (commits) to make Advances and/or
extend credit (all such Advances and/or extensions of credit at
substantially the same time being an "Advance") to the Contran
Companies for the Allowed Uses until the Expiry Date as long as at the
time of such Advance (a) No Event of Default or Prospective Default
exists under the Loan Documents, (b) the aggregate principal amount of
all outstanding Advances and the requested Advance does not exceed the
Maximum Availability, and (c) the LTV after such Advance will not
exceed 40%.
2. Revolving Nature. The commitments of the Bank Group are revolving in
nature so the Contran Companies may borrow and repay at any time and
from time to time without penalty or premium (except for breakage
charges collectible in connection with full or partial prepayment of
LIBOR Advances) subject to the terms and conditions of the Loan
Documents. LIBOR Advances mature and must be repaid or renewed at a
new LIBOR or at the Prime Rate at the end of the Interest Period
applicable thereto. Prime Rate Advances mature and must be repaid on
the Expiry Date.
3. Notice of Borrowing. In order to borrow (obtain a LIBOR Advance or a
Prime Rate Advance), convert a Prime Rate Advance to a LIBOR Advance
or vice versa, or replace a LIBOR Advance with another new LIBOR
Advance at the end of an Interest Period, Contran must submit a Notice
of Borrowing to the Agent through an authorized representative (a) not
later than 10 a.m. on the date of any requested Prime Rate Advance and
(b) not later than 9 a.m. on the third Banking Day before the
effective date of a LIBOR Advance, unless the Advance is requested
orally and the Agent grants the request, in which case either the
Advance will be repaid or a Notice of Borrowing will be submitted to
the Agent in writing within 48 hours following the oral request
(including any breakage charge related thereto).
The Notice of Borrowing will specify the date when the Advance is to
be funded, converted, or renewed, the amount thereof, the applicable
interest rate and, if the LIBOR has been selected, the Interest
Period. Each Notice of Borrowing and oral request will be irrevocable
and the Agent and the Bank Group will be entitled to procure funds in
reliance on such Notice of Borrowing and oral request; provided,
however, that Contran may withdraw any Notice of Borrowing at any time
prior to the funding of such Advance as long as Contran pays all
reasonable direct costs and expenses (including breakage charges)
incurred by any member(s) of the Bank Group in reliance on such Notice
of Borrowing. No LIBOR Interest Period may be selected that extends
beyond the Expiry Date. The Prime Rate will be applicable to each
Advance unless Contran has properly selected the LIBOR.
4. Disbursement of Proceeds. All Advances will be funded by wiring the
proceeds thereof into Contran's general corporate checking account.
5. Interest Rates. The rates of interest payable by Contran will be (a)
the Prime Rate on each Prime Rate Advance and (b) if selected by
Contran, the LIBOR plus a margin of 1.75% (175 basis points) per annum
on each LIBOR Advance in the minimum amount of $1,000,000 and
increments of $500,000 in excess of the minimum amount.
6. Principal Repayment. Contran will repay the Advances on or before the
Expiry Date.
B. General Matters.
1. Medium. All Advances will be made by, and all payments will be made
to, the Bank Group in immediately available U.S. dollars.
2. Interest Payments. Interest on Prime Rate Advances is due monthly in
arrears. Interest on LIBOR Advances is due in arrears at the end of
the Interest Period and, in the event of any 6-month LIBOR Interest
Period, at the end of the first 90 days of the Interest Period.
3. Payments. Any payment received by the Agent after noon will be deemed
to have been made on the next following Banking Day and interest will
accrue to that day. In the event that the date specified for payment
is not a Banking Day, then interest will accrue to and the payment
will be made on the next following Banking Day; provided, however,
that if the next Banking Day following the end of an Interest Period
for a LIBOR Advance is in the following calendar month, then payment
or renewal of the LIBOR Advance will be due on the last Banking Day
which precedes the end of that Interest Period. All payments will be
applied, to the extent amounts are due, first to costs (including
breakage charges), then to fees, then to accrued interest, and finally
to principal.
4. Breakage Charge. Contran may prepay a LIBOR Advance only upon three
days' advance written notice and upon payment of the breakage charge
specified in the Note.
5. Terminating LIBOR. The Bank Group is offering the LIBOR to Contran on
the assumption that there will continue to be an active interbank
market in Eurodollars. If that market ceases to exist or if it
otherwise becomes illegal or impractical for any member of the Bank
Group to fund an Advance with reference to this source of funds, then
the Bank Group member(s) so affected will give notice of such
illegality or impracticality to Contran and any future loan from those
members of the Bank Group will be at the Prime Rate.
6. Increased Costs. If any member of the Bank Group is required to
increase its reserves, insurance premiums, or regulatory capital or to
pay additional taxes (other than income taxes) in order to make
Advances to Contran because of the future enactment, promulgation, or
amendment of any statute, regulation, or order by a government or
governmental subdivision or agency, then Contran will reimburse such
member(s) of the Bank Group on demand for all such increased costs as
estimated in writing with reasonable particularity by such member.
7. Notes; Promise of Repayment. Contran promises and agrees to issue a
note to each member of the Bank Group in the amount of such member's
commitment and to repay all Advances, plus interest, fees, costs and
expenses, to the order of each member of the Bank Group in accordance
with such member's Percentage Interest.
8. Guaranty; Promise of Repayment. NCL promises and agrees to issue the
Guaranty to each member of the Bank Group and to repay each Bank Group
member's Percentage Interest of all Advances, plus interest, fees,
costs and expenses, to such member's order in accordance with the
terms hereof and of the note.
9. Nature of Liability. Contran and NCL are jointly, severally, and
primarily liable for performance of the Obligations.
10. Maintenance of Loan-to-Value Ratio: Mandatory Prepayment or Pledge of
Additional Pledged Securities. If the outstanding principal balance of
the Advances at any time results in an LTV of more than 40%, the
Contran Companies immediately will either (a) make a prepayment of
principal so as to reduce the LTV to 40% or less and/or (b) pledge
additional investment securities in quality and quantity reasonably
acceptable to the Bank Group so as to reduce the LTV to 40% or less.
For the purposes of this paragraph, the Bank Group acknowledges and
agrees that the Contran Companies always may pledge additional shares
of Valhi common stock owned by a Contran Company in order to meet the
LTV requirement. Prepayments required under this section will be
applied first to Prime Rate Advances, because such Advances may be
prepaid without payment of the breakage charge, and then to LIBOR
Advances in an order which first pays the LIBOR Advance(s) with the
shortest remaining time until maturity, then the next shortest period,
etc. If additional investment securities are pledged and the value of
the pledged securities later increases, the Agent will, upon the
written request of the Contran Companies, return to the Contran
Companies any of the additional pledged securities (including the
Valhi shares pledged initially) which are not then necessary to
maintain the LTV at 40% or less.
11. Waiver; Forbearance. Each Contran Company waives acceptance,
presentment (including notice of dishonor) and all claims, offsets,
defenses, and counterclaims based on suretyship or impairment of
collateral. Without limiting the foregoing, each Contran Company
consents to extension of due dates, material modifications, and
impairment of contribution rights and the value of interests in
collateral without prior notice or demand.
C. Letters of Credit.
1. Commitment. Upon the written application of Contran and such terms and
conditions as U.S. Bank may reasonably require, U.S. Bank will issue,
until 30 days prior to the Expiry Date, standby letters of credit to
beneficiaries designated by Contran for terms that expire no later
than the Expiry Date. Contran will pay all Letter of Credit Fees
associated with issuance of the letters of credit and the
administrative charges normally charged by U.S. Bank in connection
with such letters of credit and drawings thereon.
2. Participation. Each member of the Bank Group will participate, in
accordance with its Percentage Interest, in U.S. Bank's risks and
obligations under such letters of credit and in Contran's obligations
for immediate reimbursement of the amount of any drawings made by the
beneficiaries (which includes successors and transferees) under any
letter of credit. This participation will be as a primary obligor to
U.S. Bank and not as a surety for Contran. Each of the members of the
Bank Group will pay to U.S. Bank such lender's Percentage Interest of
any drawing made under any letter of credit within 24 hours of receipt
of notice from U.S. Bank of such drawing regardless of the existence
of an Event of Default or Prospective Default, or any offset, defense,
or counterclaim of Contran.
3. Reduction in Availability. Upon issuance of a letter of credit under
this subfacility, the amount of Availability will be reduced in an
equivalent amount, but no interest or fees (except U.S. Bank's normal
issuance and usage fees and charges and the letter of credit fees)
will be payable on such amount until a drawing is made on such letter
of credit.
4. Reimbursement. Contran promises and agrees to immediately reimburse
U.S. Bank for the amount of any drawing made by any beneficiary under
any letter of credit issued by U.S. Bank upon the application
hereunder of Contran without offset, defense, or counterclaim against
U.S. Bank other than payment resulting from gross negligence of U.S.
Bank and without regard to any claims, offsets, defenses, or
counterclaims that Contran has or may claim to have against its
liability to the beneficiary of such letter of credit. If not
reimbursed on the same Banking Day and if Contran is not then
insolvent or the subject of any insolvency proceeding, the amount so
paid by U.S. Bank will be deemed to be an Advance under the Credit
Line in that amount to Contran as of the date when the draw is paid
and will bear interest at the Prime Rate until repaid or renewed as a
LIBOR loan.
III. CONDITIONS PRECEDENT.
A. Conditions to First Borrowing. The following are conditions precedent which
must be satisfied by the Contran Companies or waived by the Bank Group
Majority prior to the first Advance:
1. Loan Documents. Contran has duly executed (signed, acknowledged where
appropriate, and delivered) the Loan Documents;
2. Guaranties. NCL has executed the Guaranty and the Contran Companies
have executed the Security Documents;
3. Corporate Documents. Each Contran Company has delivered certified true
copies of currently effective (a) articles of incorporation, bylaws,
and similar governance documents (its "organization documents"), (b)
resolutions of its board of directors authorizing it to execute each
of the Loan Documents to which such organization is a party and to
perform the Obligations, and specifying the representative(s) who will
execute the Loan Documents on its behalf (and, for Contran, who may
request Advances) (its "borrowing resolutions"), and (c) an incumbency
certificate executed by its corporate secretary containing specimen
signatures of the representatives who will execute the Loan Documents
and, in the case of Contran, request Advances (its "incumbency
certificate");
4. Representations and Warranties. The representations and warranties
made by the Contran Companies in the Loan Documents are true, complete
and correct in all material respects as of the date upon which the
Loan Documents are executed and the date upon which the first loan is
requested and a duly authorized representative of each Contran Company
has executed a certificate dated as of the date of the first Advance
certifying the continued accuracy and completeness of the
representations and warranties;
5. Legal Opinion. Contran's general counsel has rendered an opinion to
the Bank Group opining that as of the date of the Loan Documents (a)
each Contran Company is a validly existing Delaware corporation, (b)
each Contran Company has been duly authorized to execute each of the
Loan Documents to which such organization is a party and to perform
the Obligations, (c) each of the Loan Documents is the legally valid
and binding obligation of each Contran Company who is a party thereto
and is enforceable in accordance with its terms except as enforcement
may be limited by insolvency or other similar laws affecting the
rights and remedies of creditors generally, general principles of
equity, whether applied by a court of law or equity, and other
generally applicable rules of law, and (d) the Security Documents are
a form sufficient to create a lien on or security interest in all
right, title, and interest of the Contran Companies in the Pledged
Securities;
6. Perfection. The Contran Companies have delivered to the Agent
possession of the certificates evidencing the investments securities
which are part of the Pledged Securities with stock powers signed in
blank and related compliance certificates and the Agent has perfected
its security interest of the Bank Group in any other types or items of
the collateral;
7. Legal Matters. All matters pertaining to the Loan Documents and the
Advances are reasonably satisfactory to the Agent and the Agent has
received all certificates, insurance policies and documents that it
reasonably requires to establish compliance with the terms and
conditions of the Loan Documents.
B. Subsequent Advances. The following are conditions precedent which must be
satisfied by Contran or waived by the Bank Group prior to any Advance
subsequent to the first Advance:
1. No default. No Event of Default or Prospective Default exists on the
date of such Advance after giving effect to such Advance;
2. Representations and Warranties. The representations and warranties
made by the Contran Companies in the Loan Documents continue to be
true, complete and correct in all material respects; and
3. LTV Compliance. After giving effect to the requested Advance, the LTV
will be 40% or less.
IV. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties. Each Contran Company represents and
warrants to the Bank Group that:
1. Corporate Organization. Each Contran Company is a Delaware corporation
which is duly organized and is duly qualified to transact business in
all other states and countries where the failure to be so qualified
would have a material adverse impact on its business operations or
ownership of property;
2. Authorization. Each Contran Company has been duly authorized to
execute each of the Loan Documents to which such organization is a
party and to perform the Obligations;
3. Due Execution and Delivery. Each Loan Document to which such
organization is a party has been duly executed by a representative of
such organization who has been duly authorized to perform such acts;
4. Legally Binding Documents. Each Loan Document is the legally valid and
binding obligation of each Contran Company who is a party to such
document and is enforceable against such organization in accordance
with its terms except as such enforcement may be limited by insolvency
or other similar laws affecting the rights and remedies of creditors
generally, general principles of equity whether applied by a court of
law or equity, and generally applicable rules of law;
5. Accurate Financial Statements. The annual and interim financial
statements of the Contran Companies furnished to the Bank Group
present fairly the financial position of such Contran Companies as of
the date of such financial statements and the results of the
operations and changes in financial position for the annual and
interim periods then ending /1/;
6. No Violations. Neither the execution of the Loan Documents nor the
performance of the Obligations by the Contran Companies is prohibited
by or will subject any Contran Company to any fine, penalty or similar
sanction under, any statute, regulation, or order applicable to such
organization;
7. No Proceedings. There are no civil, criminal, or administrative
proceedings now pending or overtly threatened in writing against any
Contran Company which has not been disclosed in the audited financial
statements which have been provided to the Bank or separately in
writing and which, if adversely determined, would have a material
adverse effect on the ability of the Contran Companies to repay the
Advances and perform their other obligations to the Bank Group under
the Loan Documents;
8. No Breach or Default. No Contran Company is now, or by reason of the
execution of the Loan Documents or performance of the Obligations will
be, in breach of or in default under any "employee pension benefit
plans" or "employee benefit plans" (as those terms are defined by
Section 3 of the Employee Retirement Income Security Act of 1974, as
amended) to which such organization is a party or sponsor in any
material respect or any other material agreement, instrument,
undertaking, or other contract to which such organization is a party
or by which its property is bound if such breach or default would have
a material adverse effect on the ability of the Contran Companies to
repay the Advances and perform their Obligations to the Bank Group
under the Loan Documents;
- --------
/1/ The financial statements for NCL may omit footnote disclosures that
would normally be required under GAAP.
9. Tax Returns; Taxes. Each Contran Company has filed all material tax
returns that it is required by any statute, regulation, or order to
file and has paid when due all material taxes imposed on it or its
property;
10. Compliance with Law. Each Contran Company is in compliance in all
material respects with all statutory laws, regulations, and orders
that are applicable to such organizations and their property
specifically including, but not limited to, environmental laws;
11. Hazardous Material. To the best knowledge of Contran, there is no
hazardous material being released, and no hazardous material has been
released, from or at any real property owned or operated by any
Contran Company in quantities which would trigger such organization's
obligation under applicable environmental laws to report the existence
of such waste or to remove and dispose of such waste or to remediate
the effects of a prior discharge thereof except as disclosed to the
Bank in writing before the date of the Loan Documents;
12. Solvency. No Contran Company is insolvent or the subject of any
insolvency proceedings and each Contran Company has capital which is
reasonably adequate to conduct its business in the manner in which it
intends to conduct such business;
13. Investment Company Act. No Contran Company is an "investment company"
as that term is defined by Section 3(a) of the Investment Company Act
of 1940;
14. No Material Adverse Change. There has been no material adverse change
in the business operations, financial position, or cash flows of the
Contran Companies since the date of the latest annual financial
statement provided to the Bank Group before the date of this
Agreement;
15. Ownership of Pledged Securities. Each Contran Company owns the item or
items of Pledged Securities that such organization purports to own and
such property is free and clear of all liens, security interests, and
claims except to the extent that a security interest is granted to the
Bank Group in the Loan Documents; and
16. Year 2000. The Contran Companies have reviewed and assessed their
business operations and computer systems and applications to address
the "year 2000 problem" (that is, that computer applications and
equipment used by the Contran Companies, directly or indirectly
through third parties, may be unable to properly perform
date-sensitive functions before, during, and after January 1, 2000)
and reasonably believe that the year 2000 problem will not result in a
material adverse change in the Contran Companies' business condition
(financial or otherwise), operations, properties, or prospects, or the
Contran Companies' ability to repay the Advances and perform their
Obligations to the Bank Group under the Loan Documents.
B. Reaffirmation. The Contran Companies will be deemed to reaffirm the
accuracy and completeness of the foregoing representations and warranties
each time that an Advance is requested.
V. COVENANTS.
A. Affirmative Covenants. The Contran Companies promise and agree that until
the Advances are repaid and all other Obligations are discharged by
performance, each Contran Company will, unless the Agent otherwise consents
in writing:
1. Preserving Existence. Preserve its legal status and material
franchises and pay all material taxes and fees in connection
therewith;
2. Compliance with Laws and Orders. Comply in all material respects with
all statutory laws, regulations, and orders applicable to it or its
property specifically including, but not limited to, environmental
laws, if noncompliance would or is likely to have a material adverse
effect on the financial condition or business prospects of such
organization or its ability to perform the Obligations;
3. Insurance. Obtain and maintain with responsible carriers or through
self-insurance such workers' compensation, fire with extended coverage
endorsement, public liability and property damage and such other
insurance in such coverage amounts, deductibles and terms as may be
consistent with industry practices and will provide evidence of such
insurance and payment of premiums to the Agent as and when required by
the Agent;
4. Payment and Performance of Debts, Liabilities and Obligations. Pay and
perform when due all material debts and obligations owed to all third
persons, specifically including, but not limited to, its obligations
under any "employee pension benefit plans" or "employee benefit plans"
(as those terms are defined by Section 3 of the Employee Retirement
Income Security Act of 1974, as amended) to which such person is a
party or sponsor in any material respect or any other material
agreement, instrument, undertaking, or other contract to which such
person is a party or by which its property is bound;
5. Books and Records. Keep accurate and complete books and records
relating to the Pledged Securities and its other assets and
liabilities, management and employees, production, marketing,
operations, performance and earnings;
6. Tax Returns. File all tax returns required by statute, regulations,
and orders to be filed and pay all material taxes when due;
7. Financial Statements. Deliver to each member of the Bank Group (a)
unaudited interim consolidated financial statements of Contran within
75 days following the end of each of the first three quarterly
reporting periods of each fiscal year, (b) audited annual consolidated
financial statements of Contran within 120 days following the end of
each fiscal year, accompanied by a copy of an unqualified audit
opinion issued by certified public accountants reasonably satisfactory
to the Bank Group and, if issued, copies of such auditor's "management
letter," and (c) unaudited consolidating financial statements of NCL
within 75 days following the end of each of the first three quarterly
reporting periods and within 120 days of the end of each fiscal year,
which unaudited consolidating financial statements may omit all
footnote disclosures normally required in financial statements
prepared in accordance with GAAP;
8. Auditor Certificates. Deliver to each member of the Bank Group with
the audited annual consolidated financial statements of Contran the
certificate of the auditors addressed to the Agent and certifying,
based only on review of the annual audited financial statements and
the Loan Documents, that the auditors are not aware of any Event of
Default or Prospective Default or, if such auditors are aware of such
event, specifying such events with reasonable particularity; provided,
however, that in connection therewith the auditors shall be under no
obligation to go beyond the bounds of generally accepted auditing
standards for the purpose of certifying such compliance or
non-compliance;
9. Additional Information; Compliance Certificates. Provide to the Agent:
a) A Notice of Borrowing when and as Contran requests Advances;
b) Such additional information as and when reasonably requested by
the Bank Group or the Agent as to the Pledged Securities and the
business operations and financial condition of any one or more of
the Contran Companies;
c) Notice of any material adverse change in the business operation
or financial condition of any Contran Company; and
d) Within 10 Banking Days after any Contran Company receives written
notice thereof, a report of each pending and overtly threatened
claim, litigation, and governmental proceeding which, if
adversely determined, probably would involve an aggregate
liability of $5,000,000 or more;
e) Quarterly and annual compliance certificates, to accompany the
quarterly and annual financial statements, signed by a duly
authorized representative of the Contran Companies which either
(A) certifies that there is no Event of Default or Prospective
Default as of the date of the certificate to the knowledge of the
representative or (B) specifies with reasonable particularity
such events then existing and known to the representative and
outlines its plan for cure thereof;
f) Copies of any filings or reports that any Contran Company files
or makes with any federal or state government department,
commission, or agency regulating investment securities as and
when such filings or reports are filed or made to such government
department, commission, or agency; and
g) If Contran becomes aware of any Event of Default or Prospective
Default between quarterly and annual reporting dates, written
notice of such Event of Default or Prospective Default within 10
days after Contran's senior management learns of such Event of
Default or Prospective Default.
10. Inspection Rights. The Agent will have the right to discuss financial
statements and other books and records with accounting employees and
outside accountants of each Contran Company and the Contran Companies
will ensure that the Agent may exercise and enjoy such rights subject
to the obligation of the Agent to give reasonable advance notice to
the Contran Companies under the circumstances. The Contran Companies
will reimburse the Agent for all reasonable costs and expenses
incurred by the Agent in connection with the foregoing. All employees
and outside accountants are hereby authorized to discuss such matters
with the Agent, to provide such additional books and records and
information as may be reasonably requested by the Agent in connection
therewith, and to bill the Contran Companies for such services. The
Agent also will give prior notice to the Contran Companies of the
intention to discuss such matters with the outside accountants so as
to provide the opportunity to the management of the Contran Companies
to be present at such discussions.
11. Contest Rights. Notwithstanding the foregoing covenants, each Contran
Company will have the right to contest its obligations under statutory
laws, regulations, orders, and contracts (other than the Obligations)
and for payment of taxes as long as (a) such contest is started and
continued in good faith and by appropriate means, (b) adequate
reserves are maintained by the Contran Company engaging in such
contest for performance of the obligation in the event of an outcome
of such contest that is adverse to the Contran Company involved and
(c) the Bank Group is notified of any such contest where an adverse
outcome probably would involve a payment of $5,000,000 or more.
B. Negative Covenants. Each Contran Company promises and agrees that until the
Advances are repaid and all other Obligations have been discharged by
performance, it will not, unless the Bank Group otherwise consents in
writing:
1. Additional Debt. Directly or indirectly (by borrowing, deferred
purchase, guarantee, or otherwise) incur more than $25,000,000 as a
group in funded debt in excess of that immediately available or
outstanding to the Contran Companies on the date of this Agreement
except for loans occurring in the ordinary course of business from the
Contran Companies to each Contran Company and/or Valhi and/or other
affiliates of Contran;
2. Asset Transfers. Transfer any material or essential part of or
interest in their property to any third party except for sales of
inventory and surplus or obsolete equipment, the collection of
accounts, and sales and exchanges of other assets in the ordinary
course of business;
3. Transactions with Affiliates. Engage in any material business
transaction with any affiliate or other third party on terms less
favorable to the Contran Company than those which could be obtained at
the time thereof in arm's-length dealings with a nonaffiliated person;
4. Business Combinations. Engage in any merger, acquisition, or exchange
of equity securities unless the Contran Company is the surviving
corporation and the Contran Companies continue to be in compliance
with all of the terms and conditions of the Loan Documents; or
5. Use of Proceeds. Use the proceeds of any loan for any purpose not
permitted by the Loan Documents.
VI. DEFAULT.
TIME IS OF THE ESSENCE. Contran will be in default under the Loan Documents if:
A. Payment Failure. The Contran Companies fail to make any payment of
principal when due or fail to make any payment of interest, fees or costs
within three Banking Days following the due date;
B. LTV Compliance. The Contran Companies fail to prepay principal or pledge
additional Pledged Securities within three Banking Days following receipt
of written notice from the Agent that the LTV exceeds 40% if and when
required by the Agent under the terms of this Agreement.
C. Misrepresentation. Any Contran Company knowingly misrepresents any material
fact to the Bank Group or the Agent or fails to disclose to the Bank Group
or the Agent a material fact which is necessary to make the facts which
have been disclosed not misleading in the circumstances under which they
are made;
D. Affirmative Covenants. The Contran Companies fail to comply with the
affirmative covenants contained in any of the Loan Documents within 30 days
following the date such compliance is demanded by the Bank Group or, if
such compliance cannot be completed within that 30-day period, fails to
substantially commence compliance within that 30-day period and then to
complete such compliance as soon as possible thereafter but in no event
later than 60 days after such compliance is demanded;
E. Negative Covenants. Any Contran Company breaches any negative covenant
contained in the Loan Documents;
F. Debt Default. Any Contran Company breaches or is in default under any
agreement, instrument, or similar contractual undertaking for the repayment
of funded debt in excess of $5,000,000 or does not pay any trade account
payables which is material or essential to its business, other than those
where the amount or validity is being contested in good faith and by
appropriate means, in the ordinary course of business;
G. Guaranty. Any Contran Company repudiates, breaches, or is in default under
the Guaranty or the Security Documents;
H. Insolvency. Any Contran Company becomes insolvent, the subject of any
voluntary insolvency proceeding or, having become the subject of an
involuntary insolvency proceeding, fails to have the involuntary proceeding
dismissed within 90 days of commencement;
I. Judgments. Any Contran Company becomes a judgment debtor for more than
$5,000,000 if such liability is not either covered by insurance or vacated,
discharged, stayed, or bonded in connection with an appeal within 30 days
of entry of the judgment; or
J. Change in Control. Any person or group of persons, other than the current
holders, hereafter directly or indirectly acquires control of any Contran
Company and such change in control continues for 60 days.
VII. REMEDIES.
A. Suspending Commitment. The members of the Bank Group may suspend their
obligations to make Advances to Contran upon the occurrence of a
Prospective Default or when the LTV is more than 40%.
B. Canceling Commitments. The members of the Bank Group may cancel their
obligations to makes Advances to Contran and accelerate the due date of the
Notes (make payment of all principal, interest, fees and costs immediately
due and payable) without further notice or demand upon the occurrence of an
Event of Default and Contran's failure to cure such Event of Default within
applicable notice and grace periods.
C. Collecting Payments; Order of Exercise of Remedies. The Bank Group may
collect the overdue payments or the accelerated balance of the Notes at
such times and in such order as the Bank Group selects. All rights and
remedies provided by law, equity and contract are cumulative.
D. Consent to Jurisdiction. Each Contran Company consents to the jurisdiction
and venue of the circuit court of the state of Oregon for Multnomah County
(Portland) and of any federal court located in the state of Oregon for any
proceeding arising out of the Loan Documents, including offsets, defenses,
and counterclaims arising in contract or tort.
E. Offset. Without limiting the generality of the foregoing, each Contran
Company expressly grants to each member of the Bank Group the right to
offset the obligations of the Bank Group to the Contran Companies against
the Obligations without notice or demand upon the occurrence and
continuance of an Event of Default.
F. Jury Trial Waiver. On advice of counsel and in lieu of an arbitration
clause normally required by the agent, each Contran Company waives trial by
jury in any controversy (claim, offset, defense, counterclaim, or
third-party claim whether asserted in tort or contract) arising out of or
in any way related to construction, performance, and/or enforcement of the
Loan Documents.
G. Costs. The prevailing party in the trial or appeal of any civil action or
other proceeding relating to the Loan Documents (including claims and
adversary proceedings in the Bankruptcy Court) will be entitled to the
award of a reasonable attorney fee in addition to costs and disbursements.
If the Bank Group uses an attorney to enforce performance of the
Obligations, the Contran Companies will reimburse the Bank Group for such
costs reasonably incurred on demand whether or not a civil action or other
proceeding is commenced.
VIII. INDEMNITY.
A. Indemnity. The Contran Companies promise and agree to indemnify, defend and
hold harmless each member of the Bank Group from and against all claims and
causes of action (and any direct and reasonable loss, damage, liability,
cost, and expense, including penalties, damages, liens and reasonable
attorney fees and other defense costs resulting therefrom) of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against
any of such member in connection with any investigation, litigation, or
other proceeding, that arises from or relates to the Loan Documents or the
failure of any of the Contran Companies to perform the Obligations, but the
Contran Companies will not be responsible for any portion of such
indemnified claims or causes of action that arise from or relate to the
negligence or willful misconduct of any member of the Bank Group, any
controversies or claims among the members of the Bank Group, or the failure
of a member of the Bank Group to comply with any statute, regulation, or
order applicable to such indemnified party.
B. Durable Nature. This indemnity will survive the satisfaction or discharge
of the Advances by payment, bankruptcy discharge, or otherwise.
IX. AGENCY PROVISIONS.
A. Authorization and Action. Each member of the Bank Group hereby irrevocably
appoints the Agent as its agent for administration of the Advances and
Obligations and authorizes the Agent to take such action and exercise such
powers under this Agreement as are granted to the Bank Group, subject to
the voting/approval provisions of this Article, by the terms of this
Agreement together with such additional actions and powers as are
reasonably incidental thereto. The obligations of the Agent are mechanical
and administrative in nature. Accordingly, the Agent is not by reason of
its role under this Agreement a trustee or fiduciary for any member of the
Bank Group. The Agent will have no obligations except those expressly
stated in this Agreement. As to any matters not expressly provided for in
this Agreement (including, but not limited to, enforcement or collection of
the Notes), the Agent will not be required to exercise any discretion or
take any action, but will be required to act or to refrain from acting upon
the instructions of the Bank Group Majority, and such instructions will be
binding on all members of the Bank Group; provided, however, that the Agent
will not be required to take any action which exposes the Agent to personal
liability or that is contrary to this Agreement or applicable laws,
regulations, or orders.
B. Liability of the Agent. The Agent (including its shareholders, directors,
officers, agents, and employees) will not be liable for any action taken or
inaction by it under or in connection with this Agreement in the absence of
its own gross negligence or willful misconduct. Without thereby limiting
the foregoing sentence, the Agent:
1. May treat the payee of a Note as the holder thereof until the Agent
receives written notice of a transfer thereof signed by such payee in
a form reasonably satisfactory to the Agent;
2. May consult with legal counsel, independent public accountants, and
other experts selected by it and will not be liable for any action
taken or inaction by it in good faith in accordance with the advice of
such counsel, accountants, or experts;
3. Makes no warranty or representation to any Bank and will not be liable
or responsible for the statements, warranties, or representations made
by the Contran Companies or any other person in connection with this
Agreement,
4. Will not have any obligation to inquire as to the performance or
observance of any of the terms, covenants, or conditions of this
Agreement on the part of the Contran Companies or any other person or
to inspect any Pledged Securities, books and records, or other
property of the Contran Companies or any other person;
5. Will not be responsible to any member of the Bank Group for the due
execution, legality, validity, enforceability, genuineness,
perfection, sufficiency, or value of this Agreement, the Notes, or any
other certificate, instrument, or document furnished pursuant to this
Agreement, and
6. Will have no liability under this Agreement or otherwise by acting
upon any notice, consent, certificate, or other instrument, document,
or other writing (whether personally delivered or sent by mail,
messenger, telegram, telex, or facsimile) believed by the Agent to be
genuine and signed by the proper person.
C. Rights of Agent as a Member of the Bank Group. With respect to its
individual commitment, the Advances made by it, and the Note and Guaranty
issued to it, the Agent will have the same rights, powers, and obligations
under this Agreement as any other member of the Bank Group and may exercise
and perform the same as though it were not also the Agent. The Agent and
its affiliates may accept deposits from, lend money to, act as trustee for,
and generally engage in any business with or own securities of the Contran
Companies as if the Agent were not the Agent for the Bank Group and without
any obligation to account therefor to the Bank Group.
D. Independent Credit Decision. Each member of the Bank Group acknowledges
that it has made its own credit analysis and decision before making its
commitment on the basis of such documents and information that it deemed
appropriate and without reliance on any information, analysis, or
recommendation made by the Agent. Each member of the Bank Group also
acknowledges that it will continue to make such independent credit analyses
and decisions in taking or not taking action under this Agreement. Except
for the notices, reports, and other documents and information that the
Agent is specifically required to furnish to the members of the Bank Group
under this Agreement, the Agent will have no obligation to provide to the
members of the Bank Group any additional information concerning the
financial condition, business operations, or property of the Contran
Companies that may come into the possession of the Agent or its affiliates.
E. Indemnification. Each member of the Bank Group agrees to indemnify and hold
harmless the Agent from and against such member's Percentage Interest of
all claims and causes of action (and any resulting loss, damage, liability,
cost, and expense, including penalties, damages, liens and reasonable
attorney fees and other defense costs) of any kind or nature whatsoever
that (i) may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising from this Agreement, (ii) are not reimbursed
to the Agent by the Contran Companies, and (iii) are not the result of the
Agent's gross negligence or willful misconduct. Without limiting the
generality of the foregoing, each member of the Bank Group agrees to
reimburse the Agent for its Percentage Interest of any reasonable
out-of-pocket expenses, including reasonable attorney fees, incurred by the
Agent in connection with the preparation, administration, enforcement, or
legal advice with respect to rights or duties under, the Loan Documents to
the extent that such expenses are not reimbursed by the Contran Companies.
F. Successor Agent. The Agent may resign at any time by giving at least 60
days' prior written notice to the Bank Group and to the Contran Companies.
Upon resignation, the Bank Group Majority will appoint a successor Agent.
If no successor Agent has been appointed and accepted its appointment
within 30 days of receipt of the notice of resignation of the Agent, then
the Agent may appoint its successor which shall be a national bank having
combined capital and surplus of at least $100 million. Upon acceptance by
the successor of its appointment, such successor will succeed to and become
vested with all of the rights, powers, privileges, and duties of the Agent
and the retiring or removed Agent will be discharged from its obligations
as the Agent under this Agreement.
G. Sharing of Payments and Recoveries. If any member of the Bank Group obtains
any payment (whether voluntary, involuntary, by way of offset, or
otherwise) on account of the Note held by it and such payment is in excess
of its Percentage Interest, such member will purchase from the other
members of the Bank Group such participation in the Notes held by them as
is necessary to cause such purchasing member of the Bank Group to share the
excess payment ratably with the other members of the Bank Group. If such
member is thereafter required to return all or any part of the excess
payment, then the purchase of participation by such member of the Bank
Group will be rescinded to the same extent and the purchase price of such
participation (or so much thereof as is recovered) will be refunded.
H. Modifications, Consents, and Waivers. Except as allowed or limited by the
remainder of this section, the Bank Group Majority may in specific
instances modify the terms and conditions of this Agreement, grant consents
requested by the Contran Companies, waive compliance by the Contran
Companies with the terms and conditions of this Agreement but any such
modifications, consent, or waiver must be in writing to be effective.
Notwithstanding any other term or conditions of the Loan Documents, no
modification, consent, or waiver may, unless such modification, consent,
waiver, release, or termination is in writing and is signed by all members
of the Bank Group:
1. Waive any of the conditions precedent specified in Article III of this
Agreement;
2. Increase or decrease the individual commitment of any member of the
Bank Group, or otherwise subject any member of the Bank Group to any
additional obligations without such bank's consent
3. Reduce the amount payable on any Note (including principal, interest,
or fees);
4. Extend the Expiry Date;
5. Change the definition of "Bank Group Majority" or modify this section;
or
6. Authorize the release or termination of any Guaranty or the security
interest of the Bank Group in any material or essential part of or
interest in the Pledged Securities.
Notwithstanding the foregoing, the Bank Group Majority will have the
right to authorize the Agent to release parts of and/or interests in
Pledged Securities from time to time to accommodate ordinary course of
business transactions by the Contran Companies and the Agent may
release additional pledged securities as provided in II.B.10 of this
Agreement as long as the LTV is maintained at or below 40%.
X. MISCELLANEOUS.
A. Binding Successors. The Loan Documents will bind the successors and assigns
of the Contran Companies and will bind and inure to the benefit of the
successors and assigns of each member of the Bank Group and the Agent.
B. Participants and Assignees. Each member of the Bank Group will be entitled
to sell no more than 75% participation in its percentage interest in the
Loan Documents (including the Advances made thereunder) and will be
entitled to propose to the Contran Companies partial assignment of its
rights and delegation of its duties to no more than two financial
institutions. While the Contran Companies will have the right prior to an
Event of Default or Prospective Default to consent to any such assignment
and delegation, each Contran Company covenants that its consent will not be
unreasonably withheld. Any such sale or assignment shall be subject to the
condition that the Bank Group member pay Agent an administrative fee in the
amount of $2,000 per participant or assignee.
Upon the sale of a participation or a partial assignment, the participant
or assignee shall be entitled to receive directly from the Contran
Companies copies of all reports, certificates and other information,
including the financial statements, as and when such information is
provided to the member of the Bank Group participating or assigning such
interest.
C. Non-Waiver. No term or condition of the Loan Documents shall be deemed
waived nor shall the grounds for the claim of estoppel be established by a
course of performance, oral understanding or other circumstances. Terms and
conditions may be waived or amended only in writing executed by the Bank
Group or, in appropriate circumstances, the Bank Group Majority.
D. Communications. Whenever any communication is required by the terms of the
Loan Documents or by law, it will be deemed delivered when delivered
personally or by facsimile machine or on the third Banking Day after it is
mailed in a postage prepaid envelope addressed to the intended recipient at
the address specified below or such other address as a party may hereafter
specify by written notice to the other parties.
E. Costs. The Contran Companies will pay on demand all reasonable direct costs
and expenses, including reasonable attorney fees, incurred by the Agent in
drafting, negotiating, modifying and reviewing the Loan Documents.
F. Counterparts. The Loan Documents may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which, taken together shall constitute one and the same contract.
G. Statutory Statement. Under Oregon Law, most agreements, promises and
commitments made by a financial institution after October 3, 1989,
concerning Advances and other credit extensions which are not for personal,
family or household purposes or secured solely by the borrower's residence
must be in writing, express consideration and be signed by the financial
institution to be enforceable.
U.S. BANK NATIONAL ASSOCIATION CONTRAN CORPORATION
for itself and as the Agent for
the Bank Group
By: /s/ Janice T. Thede By: /s/ Bobby D. O'Brien
------------------------------- --------------------------
Janice T. Thede Bobby D. O'Brien
Vice President Vice President
NATIONAL CITY LINES, INC.
By: /s/ Bobby D. O'Brien
--------------------------
Bobby D. O'Brien
Vice President
U.S. BANK NATIONAL ASSOCIATION Commitment Amount $25,000,000
By: /s/ Janice T. Thede
------------------------------------
Janice T. Thede
Vice President
$25,000,000 September 3, 1998
NOTE
For value and pursuant to a loan agreement of even date (the "Loan Agreement"),
CONTRAN CORPORATION, a Delaware corporation ("Contran"), promises and agrees to
pay to the order or assigns of the Bank Group, c/o U.S. BANK NATIONAL
ASSOCIATION (the "Agent"), National Corporate Banking, 555 S.W. Oak Street,
Portland, Oregon 97204 (or at such other address as the Bank Group may hereafter
specify in writing from time to time), the principal sum of $25,000,000, or such
lesser amount as Contran actually borrows from the Bank Group under the Loan
Agreement and this Note, plus interest, fees, and costs, as provided for in this
Note. All terms, which are not specifically defined in the Note, will have the
meanings given to them in the Loan Agreement.
1. Use of Proceeds. Contran will use the money borrowed from the Bank Group
under this Note only for the Allowed Uses.
2. Availability. As long as there is no event of Prospective Default and no
uncured Event of Default, Contran will have the right to borrow from the
Bank Group until the Expiry Date up to the amount Available.
Contran will have the right to borrow, repay, and reborrow from time to
time under the Note subject only to Availability and LTV, payment of the
breakage charge in the event of prepayment of a LIBOR Advance, and
Contran's ability under the Loan Agreement to unilaterally make additional
reductions in the aggregate commitment of the Bank Group.
3. Fees. Contran will pay the following fees to the Bank Group:
a) The Commitment Fee quarterly in arrears; and
b) If and when required by the Bank Group, a late payment fee equal to 5%
of the amount of any interest or principal payment or cost
reimbursement not paid within 5 days following the due date.
4. Repayment of Principal. Contran will repay without notice or demand the
entire outstanding principal balance of the Note on the Expiry Date.
5. Prepayment; Breakage Charge. Contran will have the right to prepay
principal at any time but will pay a breakage charge on prepayment of a
LIBOR Advance. The breakage charge will include a processing fee and will
be calculated by the Bank Group to enable it to recover reasonable
redeployment costs and loss of income for the remainder of the Interest
Period. Contran will pay the breakage charge whether the prepayment is
voluntary or is paid after the Agent has accelerated the due date of this
Note.
6. Interest. Before an Event of Default, interest will accrue at either the
Prime Rate or, if properly selected by Contran as provided in the Loan
Agreement, on LIBOR Advances (which must be in the minimum amount of
$1,000,000, and in multiples of $500,000 in excess of the minimum amount)
at the LIBOR for the Interest Period selected by Contran. The LIBOR is
quoted by the Agent as of 8:30 a.m. each Banking Day. Once accepted, the
LIBOR will be applicable for the entire Interest Period.
Contran will pay interest on LIBOR Loans as of the end of each Interest
Period and, if the 6-month Interest Period is selected, as of the end of
the first 90 days in such 6-month Interest Period and will pay interest on
Prime Rate Loans monthly in arrears as of the end of each calendar month.
The interest payment will be due within five days following receipt from
the Agent of the Note holder's billing for such interest.
Interest will accrue at the Default Rate as of the occurrence of any Event
of Default and until such Default is cured or the Note is paid in full and
will be payable at such rate on a weekly basis as of the last Banking Day
of each calendar week.
7. Costs. The prevailing party in the trial or appeal of any civil action or
insolvency (liquidation, reorganization or receivership) claim or
proceeding on any claim (including setoffs, defenses, counterclaims and
third-party claims) whether arising in tort or contract) arising from or
related to this Note or the Bank Group's commitment will be entitled to
reasonable attorney fees in addition to its costs and disbursements.
8. Waivers. Contran waives acceptance, presentment, dishonor, notice of
dishonor, and defenses and claims in recoupment and based on suretyship
(such as extensions, modifications, and impairment of recourse rights)
and/or impairment of Collateral.
9. Default; Remedies. Contran will be in default under this Note if:
a) Contran fails to make any payment of principal when due under this
Note or fails to make any payment of interest, fees or costs within
three Banking Days following the due date under this Note; or
b) Contran is otherwise in default under the Loan Agreement.
Upon the occurrence of an Event of Default and with the consent of the Bank
Group Majority, the Agent will have the right to accelerate the due date of
this Note and/or to exercise all other rights and remedies specified in the
Loan Documents or otherwise available at law.
10. Governing Law. The substantive provisions of Oregon law (that is, without
regard for any choice of law provisions which would make the law of another
jurisdiction applicable) will govern the construction and enforcement of
this Note.
11. Jury Trial Waiver. On advice of counsel and in lieu of an arbitration
clause normally required by the agent, each Contran Company waives trial by
jury in any controversy (claim, offset, defense, counterclaim, or
third-party claim whether asserted in tort or contract) arising out of or
in any way related to construction, performance, and/or enforcement of this
instrument.
12. Successors and Assigns. This Note will bind and inure to the benefit of the
respective successors and assigns of Contran, the Contran Companies, the
Agent, and the Bank Group (including its participants), but Contran will
not have the right by reason of this paragraph to assign its rights or
delegate its Obligations under the Note or the other Loan Documents without
the Bank Group's prior written consent.
13. Guaranty/Security. Payment of this Note and performance of the Obligations
are:
a) Unconditionally guaranteed by the Contran Companies; and
b) Secured by first priority security interests in the Pledged
Securities.
14. Statutory Warning. Under Oregon law, most agreements, promises and
commitments made by a financial institution after October 3, 1989,
concerning loans and other credit extensions which are not for personal,
family or household purposes or secured solely by the borrower's residence
must be in writing, express consideration and be signed by the financial
institution to be enforceable.
CONTRAN CORPORATION
By: /s/ Bobby D. O'Brien
-----------------------
Bobby D. O'Brien
Vice President
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
September 3, 1998
PAYMENT GUARANTY
For value and pursuant to a loan agreement of even date (the "Loan Agreement")
among Contran Corporation, a Delaware corporation ("Contran"), the undersigned
corporation (the "Affiliate"), U.S. Bank National Association, a national bank
("U.S. Bank"), and certain other banks and financial institutions referred to
therein as the "Bank Group," the Affiliate unconditionally guarantees that
Contran and the Affiliate will promptly pay and perform the Obligations under
the Loan Documents. All of the capitalized terms which are not defined in this
guaranty (this "Guaranty") will have the meanings in this Guaranty that are
given to such terms in the Loan Agreement.
1. Consideration. The Affiliate acknowledges that the members of the Bank
Group are willing to make Advances only on the condition that the Affiliate
executes this Guaranty and thereby promises and agrees to pay and perform
the Obligations as a direct and primary obligation of the Affiliate. The
Affiliate and Contran are part of an affiliated group of companies (the
"Contran Companies") whose business operations are integrated and financial
reporting is consolidated. The Affiliate is fully informed as to the
business operations and financial affairs of Contran and the other members
of the Contran Companies. The Affiliate acknowledges that the Affiliate has
received and will receive benefit from the Advances.
2. Waivers. The Affiliate hereby waives:
2.1. Acceptance, presentment (including notice of dishonor), and demand;
2.2. Claims and defenses of subrogation, contribution, indemnity,
exoneration, recourse, reimbursement, and substitution against Contran
and its property to the full extent necessary to prevent any payments
or other transfers from Contran to the Bank Group from being made for
the benefit of an "insider" in determining whether such payments or
other transfers constitute avoidable transfers or preferences under
section 547 of the Bankruptcy Code;
2.3. Claims and defenses that would require the Bank Group to (i) proceed
first against Contran or the Pledged Securities before the Bank Group
can proceed against the Affiliate, (ii) provide to the Affiliate any
information in the possession or control of the Bank Group or the
Agent relating to the status of the relationship between Contran and
the Bank Group, the financial condition of Contran, the nature,
status, location or estimated value of the Pledged Securities or any
action, inaction, or forbearance by the Bank Group against Contran or
the Pledged Securities;
2.4. Claims and defenses based on recoupment or any other disability or
defense of Contran other than repayment of the Loan and failure of
consideration, including claims such as duress, lack of capacity,
illegality, fraud, statute of limitations, accord and satisfaction,
impairment of recourse, discharge of Contran through insolvency
proceedings or otherwise, the manner, order, or timing of any
foreclosure or disposition rights, election of remedies, or the
forbearance by the Bank Group of or with respect to any right or
remedy that the Bank Group may have against Contran or the Pledged
Securities; and
2.5. Claims and defenses based on suretyship, including extension of due
dates, material modifications, and impairment of rights of recourse
and/or of Pledged Securities. /1/
3. Consent. Without thereby limiting the generality of the foregoing waivers,
the Affiliate consents to forbearance, material modification, extension of
due dates, compromise, and discharge of the debts and obligations hereby
guaranteed, and to partial or full releases, impairment, and abandonment of
any item or items of the Pledged Securities without prior notice to or
consent of the Affiliate and in such order and for such consideration as
the Bank Group may consider appropriate.
4. Insolvency Proceedings. In the event that Contran becomes the subject of
any insolvency proceedings (bankruptcy, receivership, etc.), the Affiliate
authorizes the Bank Group to make Advances (loans) and extend credit to
such person as the debtor or debtor in possession and repayment of such
Advances and/or extensions of credit will be covered by this Guaranty. This
Guaranty specifically includes any amount that the Bank Group may be
required to repay on account of an avoided transfer or preference.
Regardless of the payment or performance of the debts and obligations
hereby guaranteed, the liability of the Affiliate to the Bank Group will
continue until 10 days after the expiration of the longest of any
potentially applicable federal or state statute of limitations relating to
preferences and fraudulent transfers.
5. Subordination of Claims and Equity Interests. Effective upon an uncured
default by Contran under the Loan Documents and continuing only for so long
as such default continues to exist, the Affiliate subordinates the
Affiliate's claims against and equity security interests in Contran
(including the rights to payment, collection, or enforcement of any present
or future debt or obligation of Contran to the Affiliate) so as to provide,
to the maximum extent practicable, that the debts and obligations of
Contran to the Bank Group will be paid and performed before any debts or
obligations of Contran to the Affiliate are paid or performed or any
distribution is made on account of the equity securities of Contran that
are owned or held by the Affiliate. The Affiliate agrees that any money
that the Affiliate might receive on account of such debts, obligations,
equity securities, or contribution rights will be deemed to be held in
trust by the Affiliate for the benefit of the Bank Group and will be
delivered immediately to the Agent upon receipt.
- --------------------
/1/ If the Affiliate's liability under this Guaranty might be governed by
California law, then the Affiliate also waives all suretyship rights and
defenses that are provided by any subrogation, reimbursement, election of
remedies, antideficiency, or other laws (statutory provisions and judicial
decisions) of California, including, but not limited to, CCP sections 580a,
580b, 580d, and 726.
6. Representations and Warranties. The Affiliate represents and warrants to
the Bank Group that:
6.1. This Guaranty, and any accompanying Security Documents are enforceable
against the Affiliate in accordance with its terns subject to the
effect of insolvency (including bankruptcy, reorganization, and
receivership), moratorium, and other similar laws affecting the rights
and remedies of creditors generally, general principles of equity,
whether applied by a court of law or equity, and other generally
applicable rules of law; and
6.2. Neither the execution of this Guaranty and accompanying Security
Documents nor performance by the Affiliate of the Obligations (a) is
prohibited by, or will result in a fine, penalty, or similar sanction
under, any applicable statutory law, regulation, or court or
administrative order, (b) will violate any of its organization
documents (articles, bylaws, etc.), or (c) will breach, or constitute
an event of default under, any agreement, instrument, mortgage,
indenture, or other contract to which the Affiliate is a party or by
which it or its property is bound.
7. Organization Documents. The Affiliate will promptly provide the Bank Group
with copies of its organization documents and the resolutions authorizing
this Guaranty and any accompanying Security Documents.
8. Costs. The prevailing party in the trial or appeal of any civil action or
insolvency proceeding to construe or enforce this Guaranty and/or to defend
any claims, offsets, defenses, counterclaims, and third-party claims that
are asserted under contract, tort, or other common law theories will be
entitled to recover reasonable attorney fees in addition to costs and
disbursements and such fees, costs, and disbursements will bear interest at
the default rate specified in the Note from the date when reimbursement is
requested in writing until the date when such reimbursement is made.
9. Jury Trial Waiver. On advice of counsel and in lieu of an arbitration
clause normally required by the agent, the Affiliate waives trial by jury
in any controversy (claim, offset, defense, counterclaim, or third-party
claim whether asserted in tort or contract) arising out of or in any way
related to construction, performance, and/or enforcement of this document.
10. Governing Law. This Guaranty is governed by the substantive provisions
(that is, without regard for the rules for conflict of laws) of Oregon law.
11. Consent to Jurisdiction. The Affiliate irrevocably submits to the
jurisdiction of any state and federal court sitting in Portland, Oregon, in
any action or proceeding relating to this Guaranty and waives any and all
claims that such forum is inconvenient or that there is a more convenient
forum located elsewhere.
12. Miscellaneous.
12.1.The Affiliate's liability and obligations under this Guaranty for
performance of the Obligations are primary, are joint and several with
Contran, and extend to each member of the Bank Group as well as to the
Bank Group as a whole and to the Agent.
12.2.This is an irrevocable, continuing guaranty and will remain in force
until such time as all Obligations have been discharged in full.
12.3.This Guaranty will bind and inure to the benefit of the Affiliate,
the Agent, each member of the Bank Group, and their respective
successors and assigns.
12.4.In this Guaranty, single pronouns are gender and number neutral and
can refer to men, women, entities, and multiple parties if and when
the context so requires.
12.5.A duplicate counterpart of this Guaranty will be executed for each
Bank. This Guaranty may be delivered by facsimile signature. If the
Affiliate delivers this Guaranty by facsimile, such delivery will
constitute the promise of that person to deliver the manually-signed
version of this Guaranty to the Agent as soon as reasonably possible.
12.6.Statutory Warning. Under Oregon law, most agreements, promises and
commitments made by a financial institution concerning Advances and
other credit extensions which are not for personal, family or
household purposes or secured solely by the borrower's principal
residence must be in writing, express consideration and be teed by the
financial institution to be enforceable.
NATIONAL CITY LINES, INC.
By: /s/ Bobby D. O'Brien
----------------------
Bobby D. O'Brien
Vice President
SECURITIES PLEDGE AGREEMENT
This Securities Pledge Agreement dated as of September 3, 1998, is among Contran
Corporation, a Delaware corporation ("Contran"), National City Lines, Inc., a
Delaware corporation ("NCL"), and U.S. Bank National Association ("U.S. Bank"),
as agent for certain banks and financial institutions (the "Bank Group"), and is
executed pursuant to a loan agreement of even date (the "Loan Agreement").
Recitals
A. The Bank Group is providing loans and extensions of credit
("Advances") to Contran under the Loan Agreement. All capitalized words that are
not specifically defined in this Securities Pledge Agreement are defined in the
Loan Agreement.
B. One of the conditions precedent to the members of the Bank
Group making any Advances to Contran is that the Contran Companies execute this
Securities Pledge Agreement and perfect the security interest of the Bank Group
created by this Securities Pledge Agreement by delivering to the Agent the
certificates representing the Pledged Securities (as defined below) and stock
powers executed in blank.
NOW, THEREFORE, for value, it is agreed that:
1. Pledge. The Contran Companies hereby pledge, assign, transfer, and
grant a security interest to the Agent for the Bank Group in and to all
of the following investment securities (including any certificates,
voting rights, owner prerogatives, dividends, redemptions, and other
cash and non-cash distributions, and other entitlements related
thereto):
6,000,000 shares of Valhi, Inc., a Delaware corporation,
all profits, products and other proceeds thereof (the "Pledged
Securities"), to secure performance of the Obligations. Without
limiting the generality of the foregoing, the Loan Agreement requires
the pledge of additional investment securities in certain
circumstances. When pledged, such additional investment securities will
immediately become part of the Pledged Securities and, therefore, be
subject to the terms and conditions of this Securities Pledge
Agreement.
2. Representations and Warranties. The Contran Companies represent and
warrant to the Bank Group that:
a) NCL is and will continue to be the sole legal and beneficial
owner and holder of the Pledged Securities;
b) Neither the execution nor the performance of this Securities
Pledge Agreement violates any statutory law, regulation, rule
or order applicable to any Contran Company or any agreement,
instrument, or indenture to which any Contran Company is a
party or by which such person's property is bound; and
c) The Pledged Securities are not subject to any security
interest, lien, or adverse claim other than the security
interest granted in this Securities Pledge Agreement.
3. Perfection. The Contran Companies will promptly deliver the
certificates representing the Pledged Securities to the Agent and will
promptly issue any additional documents, such as stock powers, and to
take any additional action, such as notification to intermediaries,
that the Agent reasonably believes are necessary or appropriate to
perfect the security interest created by this Securities Pledge
Agreement.
4. Voting; Cash Proceeds. The Contran Companies will have the right before
an Event of Default to:
a) Exercise all voting rights attendant to the Pledged
Securities; and
b) Receive and use all distributions (which includes any and all
dividends) made on account of the Pledged Securities without
accounting to the Bank Group for such distributions.
Notwithstanding the foregoing, no Contran Company will, as the
owner of the Pledged Securities, vote for or consent to any
merger, share exchange, transfer (sale, lease, exchange,
mortgage, pledge, dedication or other disposition) of assets
outside of the ordinary course of business or other business
combination involving the issuer(s) of the Pledged Securities
or the dissolution of the issuer(s) of the Pledged Securities
without the prior written consent of the Bank Group, which
will not be unreasonably withheld or delayed.
Following an Event of Default, the Bank Group will have the exclusive
right to vote and to receive, demand, sue for and use all
distributions, proceeds, or other payments on account of the Pledged
Securities. In the event any Contran Company receives any distribution
or payment after an Event of Default, such person will hold such
distribution or payment as the agent for the Bank Group in the form
received and will comply with the orders of the Agent with respect
thereto.
5. Custodial Matters. The Agent's only duty hereunder is to use reasonable
care in the custody and preservation of the certificates.
6. Default. The Contran Companies will be in default under this
Securities Pledge Agreement if:
a) An Event of Default occurs under the Loan Agreement;
b) Any representation or warranty made in this Securities Pledge
Agreement is false or misleading in any material respect; or
c) The Contran Companies breach any promise or agreement made in
this Securities Pledge Agreement.
7. Remedies. TIME IS OF THE ESSENCE. Upon Default, the Agent will have
right to dispose of the Pledged Securities in one or more transactions
in accordance with applicable federal and state securities laws and the
Uniform Commercial Code. These rights are cumulative with the rights of
the Bank Group at law and under the other agreements that the Bank
Group has with the Contran Companies.
In the event the Agent is unable to dispose of the Pledged Securities
by public sale because of limitations imposed by federal or state
securities laws (or is unwilling to invest the time and money necessary
to register the Pledged Securities or obtain an exemption from
registration requirements), and the Agent desires to dispose of the
Pledged Securities by private sale(s), then the Agent will give the
Contran Companies and the issuers of the Pledged Securities at least 10
days' prior written notice of the Agent's intention to conduct a
private sale and may at any time thereafter conduct a private sale or
sales of all or portions of the Pledged Securities without further
notice to the Contran Companies.
8. Costs and Expenses.
a) Each Contran Company promises and agrees to reimburse the
Agent for all advances made by the Agent to protect and
preserve the Pledged Securities and for all reasonable costs
and expenses incurred by the Agent (including attorney and
brokerage fees) in exercising its rights and remedies against
the Pledged Securities, and to pay interest on such amounts at
the Default Rate from the date reimbursement is demanded until
the amount is paid in immediately available funds.
b) The prevailing party in the trial or appeal of any civil
action or insolvency proceeding to collect on or construe this
Securities Pledge Agreement will be entitled to the award of a
reasonable attorney fee in addition to its costs and
disbursements. If the Agent uses an attorney to assist in
enforcement of this Securities Pledge Agreement, the Contran
Companies will reimburse the Agent on demand for that expense
even if no action or proceeding is commenced.
9. Jurisdiction. The Contran Companies irrevocably submit to the
jurisdiction of any state or federal court sitting in Portland, Oregon,
in any action or proceeding relating to this Securities Pledge
Agreement and waive any and all claims that such forum is inconvenient
or that there is a more convenient forum located elsewhere.
10. Waiver of Jury Trial. On advice of counsel and in lieu of an
arbitration clause normally required by the Agent, each Contran Company
hereby waives trial by jury in any controversy (claim, defense, offset,
counterclaim, or third-party claim whether asserted in tort or
contract) arising out of or in any way related to construction,
performance, and/or enforcement of this Securities Pledge Agreement.
11. Miscellaneous.
a) This Securities Pledge Agreement will bind the successors and
assigns of the Contran Companies and will inure to the benefit
of the participants, successors, and assigns of the Agent,
each member of the Bank Group and the Bank Group as a whole.
b) The substantive (but not conflicts) law of the state of Oregon
will govern construction and enforcement of this Securities
Pledge Agreement.
c) No provision of this Securities Pledge Agreement can or will
be waived or modified by conduct or oral agreement either
before or after this Securities Pledge Agreement is executed.
U.S. BANK NATIONAL ASSOCIATION CONTRAN CORPORATION
for itself and as the Agent for
the Bank Group
By: /s/ Janice T. Thede By: /s/ Bobby D. O'Brien
------------------ ----------------------
Janice T. Thede Bobby D. O'Brien
Vice President Vice President
NATIONAL CITY LINES, INC.
By: /s/ Bobby D. O'Brien
----------------------
Bobby D. O'Brien
Vice President
EXTENSION AGREEMENT
This Extension Agreement ("Agreement") is entered into as of September 2,
1999, among Contran Corporation, a Delaware corporation ("Contran"), National
City Lines, Inc., a Delaware corporation ("NCL"), and U.S. Bank National
Association ("U.S. Bank").
RECITALS
A. Contran, NCL (collectively, the "Contran Companies"), and U.S. Bank are
parties to a loan agreement dated as of September 3, 1998 (the "1998 Loan
Agreement"), and certain related note, guaranty, and pledge agreements (the
"1998 Loan Documents").
B. Capitalized terms used in this Agreement that are not defined herein
have the meaning assigned to those terms in the 1998 Loan Agreement.
C. The parties desire to extend the Expiry Date of the 1998 Loan Documents
for an additional 364 days (to August 31, 2000).
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Contran Companies and U.S. Bank agree as
follows:
AGREEMENT
1. Each Contran Company represents and warrants to U.S. Bank that: (a) it
is in good standing under the laws of the state of its formation, (b) it has
been authorized to execute and perform its obligations under this Agreement and
the 1998 Loan Documents (as modified by this Agreement), (c) the individual
executing this Agreement on its behalf has been duly authorized to take such
action, (d) the 1998 Loan Documents (as amended by this Agreement) are
enforceable against it in accordance with their respective terms, subject only
to the effect of insolvency and other similar laws affecting the rights and
remedies of creditors generally, general principles of equity whether applied by
a court of law or equity, and general applicable rules of law, (e) all financial
information previously provided to U.S. Bank presents fairly its financial
position as of the date of such financial information and the results of its
operations and changes in financial position for the period in question, (f) the
representations and warranties made to U.S. Bank in the 1998 Loan Documents
continue to be true and correct in all material respects, and (g) the Contran
Companies are not in default in any material respect under the 1998 Loan
Documents as of the date of this Agreement.
2. U.S. Bank hereby extends the Expiry Date, and therefore its commitment
to make Advances to the Contran Companies on the terms and conditions of the
1998 Loan Documents, to August 31, 2000.
3. This Agreement will become effective only when each of the Contran
Companies and U.S. Bank has signed it and has sent a copy of the signed document
to the other parties to this Agreement (which may be accomplished by facsimile
transmission). Each party to this Agreement will deliver manually signed
counterparts of this Agreement to the other.
4. Except as specified in paragraph 2 of this Agreement, all of the terms
and conditions of the 1998 Loan Agreement and the 1998 Loan Documents remain in
full force and effect.
STATUTORY NOTICE: Under Oregon law, most agreements, promises, and
commitments made by Lender after October 3, 1989, concerning loans and other
credit extensions which are not for personal, family, or household purposes or
secured solely by the Borrower's residence must be in writing, express
consideration, and be signed by Lender to be enforceable.
U.S. BANK NATIONAL ASSOCIATION CONTRAN CORPORATION
By: /s/ Janice T. Thede By: /s/ Bobby D. O'Brien
------------------------------- --------------------------------
Janice T. Thede Bobby D. O'Brien
Vice President Vice President and Treasurer
NATIONAL CITY LINES, INC.
By: /s/ Bobby D. O'Brien
--------------------------------
Bobby D. O'Brien
Vice President and Treasurer
AMENDED AND RESTATED
CONTRAN DEFERRED COMPENSATION TRUST NO. 2
This Amended and Restated Agreement is made this 11th day of February,
1999 by and between Contran Corporation, a Delaware corporation ("Company") and
Boston Safe Deposit and Trust Company, a Massachusetts business trust
("Trustee");
WHEREAS, Company and NationsBank of Texas, N.A. ("Former Trustee")
have previously entered into the Contran Deferred Compensation Trust No. 2
dated October 1, 1995 (hereinafter called "Trust");
WHEREAS, NationsBank of Texas, N.A. requested to be removed as Trustee
of the Trust effective January 2, 1998;
WHEREAS, Boston Safe Deposit and Trust Company accepted the appointment
as trustee of the Trust effective January 2, 1998;
WHEREAS, the Company and Trustee amended and restated the Trust
effective January 2, 1998 as the Contran Deferred Compensation Trust No. 2,
Amended and Restated;
WHEREAS, the restated Trust was amended first on July 16, 1998;
WHEREAS, the Company and Trustee desire to further amend and restate
the Trust as of January 1, 1999 as the Amended and Restated Contran Deferred
Compensation Trust No. 2;
WHEREAS, Company has adopted the nonqualified deferred compensation
Plan(s) as listed in Appendix A (the "Plans");
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan(s) with respect to the individuals participating in such
Plan(s);
WHEREAS, Company has established a Trust and wishes to contribute to
the Trust assets that shall be held therein, subject to the claims of Company's
creditors in the event of Company's Insolvency, as herein defined, until paid to
Plan participants and their beneficiaries in such manner and at such times as
specified in the Plan(s);
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Plan(s) as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan(s); and
WHEREAS, for purposes of this Trust Agreement, the term "subsidiary" of
Company shall mean an entity that is controlled by Company directly or
indirectly through one or more intermediaries;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) Company deposited with Former Trustee in trust:
(i) 260,458 shares of the common stock, par value $0.01
per share, of Valhi, Inc., a Delaware corporation and subsidiary of
Company;
(ii) 97,065 shares of the common stock, par value
$1.00 per share, of Tremont Corporation, a Delaware
corporation and subsidiary of Company; and
(iii) 134, 720 shares of the common stock, par value $1.00
per share, of Keystone Consolidated Industries, Inc.,
a Delaware corporation and subsidiary of Company;
all of which shares became the principal of the Trust to be
held, administered and disposed of by Trustee as provided in this Trust
Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be grantor trust, of which Company is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in any assets of the Trust. Any rights
created under the Plan(s) and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits. The
foregoing shall not modify any obligation of Company under the Plan(s).
Section 2. Payments to Plan Participants and Their Beneficiaries.
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan(s)), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment Schedule. The Trustee
shall make provision for the reporting and withholding of any federal, state or
local taxes as Company shall direct in writing to be withheld with respect to
the payment of benefits pursuant to the terms of the Plan(s) and shall promptly
pay to the Company in cash such amounts withheld. The Company shall pay such
amounts withheld to the appropriate taxing authorities.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan(s) shall be determined by Company or such party as it
shall designate under the Plan(s), and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plans(s).
(c) Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan(s).
Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan(s), Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company where principal and earnings are not
sufficient but shall not have a duty to require that supplemental payments be
made to Plan participants or supplemental contributions be made to the Trust.
(d) Company determination of Payment Schedules and a participant's
entitlement to benefits shall be made annually by Company with respect to the
deferred compensation accrued each year and may not thereafter be modified by
Company without the participant's consent. For purposes of this Section 2(d) all
Company actions with respect to a participant prior to the time of his death,
disability, retirement or termination shall be by the members of its Board of
Directors at such time, and all Company actions with respect to a participant
following his death, disability, retirement or termination shall be by the
members of its Board of Directors immediately prior to the participant's death,
disability, retirement or termination.
(e) As soon as possible after the occurrence of a Change of Control,
any real estate held in a real estate subtrust of this Trust shall be
distributed to the Plan participants or beneficiaries for whom such assets are
held under such subtrust, and within one hundred and eighty (180) days following
such a Change of Control, the Trustee shall distribute any remaining benefits to
which a Plan participant or beneficiary is entitled by a lump sum payment in
cash.
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform the Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in writing
to Trustee that Company has become Insolvent, Trustee shall determine whether
Company is Insolvent and, pending such determination, Trustee shall discontinue
payment of benefits to Plan participants or their beneficiaries. In all cases,
Trustee shall be entitled to conclusively rely upon the written certification of
the continuing Directors of the Company when determining whether Company is
insolvent.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to benefits due under the
Plan(s) or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that Company is not Insolvent (or is
no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan(s) (as certified
by Company) for the period of such discontinuance, less the aggregate amount of
any payments made to Plan participants or their beneficiaries by Company in lieu
of the payments provided for hereunder during any such period of discontinuance.
Section 4. Payments to Company.
Except as provided in Sections 2(a), 3 or 5(c) hereof, or as provided
in Section 7 of the Plan, after the Trust has become irrevocable, Company shall
have no right or power to direct Trustee to return to Company or to divert to
others any of the Trust assets before all payment of benefits have been made to
Plan participants and their beneficiaries pursuant to the terms of the Plan(s).
Section 5. Investment Authority.
(a) Except as limited by Section 5(b), the Trustee shall have the
powers, rights and duties in addition to those provided elsewhere in this
agreement or by law to be exercised only pursuant to the direction of the
Company or an investment manager appointed by the Company: to invest and
reinvest part or all of the trust fund in any real property, securities
(including stock or rights to acquire stock) or obligations issued by Company or
subsidiaries of the Company, stocks, mutual fund shares (including proprietary
funds of the Trustee or its affiliates), partnership interests, venture capital
investments, bonds, debentures, notes, commercial paper, treasury bills, any
common, commingled or collective trust funds (including proprietary funds of the
Trustee or its affiliates), or pooled investment funds, any deposit accounts or
funds maintained by a legal reserve life insurance company in accordance with an
agreement between the Trustee and such insurance company or a group annuity
contract issued by such insurance company to the Trustee as contractholder, any
interest-bearing deposits held by any bank or similar financial institution
(including Trustee or its affiliates ), and to diversify such investments so as
to minimize the risk of large losses unless under the circumstances it is
clearly prudent no to do so. In no event shall the Trust invest directly in real
estate. Trust assets shall be limited to domestic United States assets or
securities which may be held through the Depository Trust Company.
(b) Trustee shall not have any investment discretion with respect to
the assets of the Trust and shall not sell or otherwise dispose of any assets
that are deposited by the Company with the Trust unless it is directed to do so
by Company in writing. All rights associated with assets of the Trust shall be
exercised by Company or the person designated by Company, and shall in no event
be exercisable by or rest with Plan participants. Voting rights with respect to
Trust assets will be exercised by the Company.
(c) Company shall have the right at anytime, and from time to time in
its sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust. This right is exercisable by Company in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
(d) To settle, compromise or submit to arbitration any claims, debt or
damages due or owing to or from the Trust; to commence or defend suits or legal
proceedings to protect any interest of the Trust; and to represent the Trust in
all suits or legal proceedings in any court or before any other body or
tribunal;
(e) To take all action necessary to pay for authorized transactions,
including borrowing or raising monies from any lender, including Trustee, in its
corporate capacity in conjunction with its duties under this Agreement and upon
such terms and conditions as Trustee may deem advisable to settle security
purchases and/or foreign exchange or contracts for foreign exchange, and
securing the repayments thereof by pledging all or any part of the Trust.
Trustee shall be entitled to collect from the Trust sufficient cash for
reimbursement, and if such cash is insufficient, dispose of the assets of the
Trust to the extent necessary to obtain reimbursement.
(f) To appoint with prior written approval of Company custodians,
subcustodians or subtrustees, domestic or foreign (including affiliates of
Trustee), as to part or all of the Trust; provided, however, that Trustee shall
not be liable for the acts or omissions of any subcustodian appointed under this
Section 5.
(g) To hold property in nominee name, in bearer form, or in book entry
form, in a clearinghouse corporation or in a depository (including an affiliate
of Trustee), so long as Trustee's records clearly indicate that the assets held
are a part of the Trust; provided, however, that Trustee shall not be
responsible for any losses resulting from the deposit or maintenance of
securities or other property (in accordance with market practice, custom, or
regulation) with any recognized foreign or domestic clearing facility,
book-entry system, centralized custodial depository, or similar organization;
and
(h) To settle indirect investments in Real Estate (the "Real Estate")
and exercise such other powers as may be required in connection with the Fund's
investments in Real Estate. The Trustee shall have no responsibility or
discretion with respect to the ownership, management, administration, operation
or control of any Real Estate. To the extent permitted by law, the Trustee shall
be indemnified by the Company, to the extent not paid by the Fund, from all
claims, liabilities, losses, damages and expenses, including reasonable
attorneys' fees and expenses, arising from or in connection with any matter
relating to any Real Estate held in the Trust and which give rise to: (i) any
violation of any applicable environmental or health or safety law, ordinance,
regualtion or ruling; or (ii) the presence, use, generation, storage, release,
threatened release, or containment, treatment or disposal of any petroleum,
including crude oil or any fraction thereof, hazardous substances, pollutants or
contaminants as defined in the Comprehensive Environmental Response Compensation
and Liability Act, as amended (CERCLA) or hazardous, toxic or dangerous
substances or materials as many of these terms may be defined under any federal
or state law in the broadest sense from time to time. This indemnification shall
survive the sale or other disposition of any Real Estate investment of the Fund
or the termination of this Agreement.
(i) Generally to do all acts, whether or not expressly authorized,
which the Trustee may deem necessary or desirable for the protection of the
Trust.
Notwithstanding anything to the contrary contained in this Trust
Agreement, in the event of a Change in Control as defined in Section 14(d), the
Trustee shall have and exercise investment discretion with respect to all assets
of the Trust.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 30 days following the close of each calendar year
and within 30 days after the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last preceding year to the
date of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held in the
Trust at the end of such year or as of the date of such removal or resignation,
as the case may be.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan(s) (as certified to the Trustee by the
Company) or this Trust and is given in writing by Company. In the event of a
dispute between Company and a party, Trustee may apply to a court of competent
jurisdiction to resolve the dispute. Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including without limitation,
reasonable attorney's fees and expenses) arising out of or relating to any
action or inaction taken by Trustee in reliance upon direction, request or
approval given by the Company.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
(g) Notwithstanding anything in this Agreement to the contrary, the
Trustee shall not be responsible or liable for any losses to the Trust resulting
from any event beyond the reasonable control of the Trustee, its agents, or
subcustodians, including but not limited to nationalization, strikes,
expropriation, devaluation, seizure, or similar action by any governmental
authority, de facto, or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, levies or other charges affecting the Trust's property; or
the breakdown, failure or malfunction of any utilities or telecommunications
systems; or any order or regulation of any banking or securities industry
including changes in market rules and market conditions affecting the execution
or settlement of transactions; or acts or war, terrorism, insurrection or
revolution; or acts of God; or any other similar or third-party event. This
Section shall survive the termination of this Trust Agreement.
Section 9. Contractual Income and Settlement.
(a) Trustee shall credit the Trust Fund with income and maturity
proceeds on securities on contractual payment date net of any taxes or upon
actual receipt as agreed between Trustee and Company. To the extent Company and
Trustee have agreed to credit income on contractual payment date, Trustee may
reverse such accounting entries with back value to the contractual payment date
if Trustee reasonable believes that such amount will not be received by it
within a reasonable time but in no event later than two weeks following
contractual payment date.
(b) Trustee will attend to the settlement of securities transactions on
the basis of either contractual settlement day accounting or actual settlement
day accounting as agreed between Company and Trustee. To the extent Company and
Trustee have agreed to settle certain securities transactions on the basis of
contractual settlement date accounting, Trustee may reverse with back value to
the contractual settlement day an entry relating to such contractual settlement
where the related transactions remain unsettled but in no event later than two
weeks following contractual settlement date.
(c) Settlements of transactions may be effected in trading and
processing practices customary in the jurisdiction or market where the
transaction occurs. The Company acknowledges that this may, in certain
circumstances, require the delivery of cash or securities (or other property)
without the concurrent receipt of securities (or other property) or cash and in
such circumstances, the Company shall have sole responsibility for nonreceipt of
payment (or late payment) by the counterparty.
Section 10. Compensation and Expense of Trustee.
(a) Company shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid from the Trust.
(b) If Trustee advances cash or securities for any purpose, including
the purchase or sale of foreign exchange or of contracts for foreign exchange,
or in the event that Trustee shall incur or be assessed taxes, interest,
charges, expenses, assessments, or other liabilities in connection with the
performance of this Agreement, except such as may arise from its own negligent
action, negligent failure to act or willful misconduct, any property at any time
held for the Trust Fund under this agreement shall be security therefor and
Trustee shall be entitled to collect from the Trust Fund sufficient cash for
reimbursement, and if such cash is insufficient, dispose of the assets of the
Trust Fund held under this Agreement to the extent necessary to obtain
reimbursement. To the extent Trustee advances funds to the Trust for
disbursement or to effect the settlement of purchase transactions, Trustee shall
be entitled to collect from the Trust Fund any amount equal to what would have
been earned on the sums advanced (an amount approximating the "federal funds"
interest rate) and with respect to foreign assets, the rate applicable to the
appropriate foreign market.
Section 11. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective thirty (30) days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Prior to a Change of Control, Trustee may be removed by Company on
thirty (30) days notice or upon shorter notice accepted by Trustee.
(c) Upon Change of Control, as defined herein, Trustee may not be
removed by Company for one year.
(d) If Trustee resigns within one year of a Change of Control, as
defined herein, Trustee shall select a successor trustee in accordance with the
provisions of Section 12(b) hereof prior to the effective date of Trustee's
resignation or removal.
Section 12. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with Section 11(a)
or (b) hereof, Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor Trustee
to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the provisions of
Section 11(d) hereof and selects a successor trustee, Trustee may appoint any
third party such as a bank trust department or other party that may be granted
corporate trustee powers under state law. The appointment of a successor trustee
shall be effective when accepted in writing by the new trustee. The new trustee
shall have all the rights and powers of the former Trustee, including ownership
rights in Trust assets. The former Trustee shall execute any instrument
necessary or reasonably requested by the successor trustee to evidence the
transfer.
(c) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 6 and 7 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
Section 13. Amendment or Termination.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan(s) or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan(s). Upon termination of the Trust any assets remaining
in the Trust shall be returned to Company.
(c) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan(s), Company may terminate
this Trust prior to the time all benefit payments under the Plan(s) have been
made. All assets in the Trust at termination shall be returned to Company.
(d) Notwithstanding any other provision in this Trust Agreement, this
Trust Agreement may not be amended within one year of the occurrence of a Change
of Control.
Section 14. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Texas.
(d) For purposes of this Trust, Change of Control shall mean either
(1) the purchase or other acquisition by any person, entity or group of persons,
within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of
1934 ("Act"), or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined voting
power of Company's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of Company of a reorganization,
merger, or consolidation, in each case, with respect to which persons who were
stockholders of Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Company's then outstanding securities,
or a liquidation or dissolution of Company or of the sale of all or
substantially all of Company's assets; or (2) the cessation to serve for any
reason of Harold C. Simmons as Trustee of the Harold C. Simmons Family Trust No.
1, u/a January 1, 1964 and/or the Harold C. Simmons Family Trust No. 2 u/a
January 1, 1964.
The Trustee shall have no independent duty of inquiry with
respect to the occurrence of a Change in Control. Company shall furnish the
Trustee with written notice of the occurrence of a Change in Control. Absent
such notice, if any Plan participant shall provide the Trustee with written
notice of a possible Change of Control, the Trustee may request that the Company
furnish evidence to determine whether a Change of Control has occurred. In
performing any of its obligations or taking any discretionary action under this
Trust Agreement which is dependent upon a Change of Control having occurred, the
Trustee may rely on its determination, including any determination based upon an
opinion of counsel (who may be counsel to the Company or the Trustee) or upon
information provided by the continuing Directors of the Company or otherwise
available to the Trustee, that a Change of Control has occurred. For this
purpose, the continuing Directors of the Company as of the time of a possible
change of control or insolvency are the persons who were directors immediately
prior to such possible change of control or insolvency.
(e) Under no circumstances shall Trustee be liable for any indirect,
consequential, or special damages with respect to its role as Trustee.
(f) Notwithstanding anything to the contrary contained elsewhere in
this Trust Agreement, any reference to the Plan or Plan provisions which require
knowledge or interpretation of the Plan shall impose a duty upon the Company to
communicate such knowledge or interpretation to the Trustee. The Trustee shall
have no obligation to know or interpret any portion of the Plan and shall in no
way be liable for any proper action taken contrary to the Plan.
(g) Company and Trustee hereby each represent and warrant to the other
that it has full authority to enter into this Agreement upon the terms and
conditions hereof and that the individual executing this Agreement on their
behalf has the requisite authority to bind Company or Trustee to this Agreement.
Section 15. Effective Date.
The effective date of this Amended and Restated Contran Deferred
Compensation Trust No. 2 Agreement shall be January 1, 1999.
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CONTRAN CORPORATION BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Steven L. Watson By: /s/ John F. McCarrick
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Steven L. Watson Printed Name: John F. McCarrick
President Title: Vice President
APPENDIX A
List of Nonqualified Deferred Compensation Plan(s)
1. Amended and Restated Deferred Compensation Agreement, As Of January 1, 1999
(Originally Established October 31, 1984) between Contran Corporation, a
Delaware corporation, and Harold C. Simmons, a resident of Dallas, Texas.