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
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Janice T. Thede Bobby D. O'Brien
Vice President Vice President
NATIONAL CITY LINES, INC.
By: /s/ Bobby D. O'Brien
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Bobby D. O'Brien
Vice President
