SECOND AMENDMENT AGREEMENT
This Second Amendment Agreement dated as of November 3, 2000 (this
"Amendment") among the parties hereto (i) amends the Credit Agreement dated as
of November 6, 1998, as amended by the First Amendment Agreement dated as of
November 5, 1999 (as amended, hereinafter called the "Credit Agreement"),
between Valhi, Inc., a Delaware corporation (the "Borrower"), the Banks party
thereto, and the Administrative Agent and Issuing Bank named therein, and (ii)
also amends the Pledge Agreement described in the Credit Agreement. Capitalized
terms defined in the Credit Agreement and not otherwise defined herein are used
herein with the meanings so defined.
WHEREAS, pursuant to Section 2.17 of the Credit Agreement the Borrower
has requested that the Banks extend the Maturity Date of the Credit Agreement
for a period of 364 days; and
WHEREAS, Societe Generale, Southwest Agency ("SG") has notified the
Borrower and the Banks that SG has decided to exit the Credit Agreement for
strategic reasons and will no longer act as the Administrative Agent for the
Banks or as the Issuing Bank or as a Bank thereunder in the event the other
Banks elect to renew the facility; and
WHEREAS, U.S. Bank National Association ("US Bank") has agreed to
assume the responsibilities of the Administrative Agent for the Banks and to
become the Issuing Bank under the Credit Agreement, and the Banks other than SG
(the "Continuing Banks") have elected to renew the facility in accordance with
the terms of the Credit Agreement, as amended by this Amendment;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. New Agent. The parties hereto agree that, from and after the
Amendment Effective Date (as hereinafter defined), (a) SG shall no longer be a
Bank or the Administrative Agent or the Issuing Bank or the Arranger under the
terms of the Credit Agreement and the other Credit Documents, and (b) US Bank
shall for all purposes be the Agent, the Issuing Bank, and the Arranger under
the Credit Agreement and the other Credit Documents.
2. Amendment of Credit Agreement. From and after the Amendment
Effective Date, the Credit Agreement is hereby amended
as follows:
(a) Section 1.01. Section 1.01 is amended by:
(i) deleting the definition of "Societe Generale" in
its entirety;
(ii) deleting "Societe Generale, Southwest Agency"
from the definitions of the terms "Agent" and "Arranger"
and substituting therefor "U.S. Bank National Association;"
(iii) deleting "Societe Generale, New York Branch"
from the definition of the term "Base Rate" and substituting
therefor "U.S. Bank National Association;"
(iv) deleting each other reference to "Societe
Generale, Southwest Agency" or "Societe Generale" throughout
the Credit Agreement (including without limitation the
Exhibits thereto) and substituting therefor a reference to
"U.S. Bank National Association;"
(v) deleting each reference to the address of SG
throughout the Credit Agreement (including without limitation
the Exhibits thereto) and substituting therefor the address of
U.S. Bank as set forth below its signature on this Amendment;
(vi) deleting the date "September 16, 1998" from the
definition of the term "Agent Fee Letter" and substituting
therefor the date "October, 17, 2000"; and
(vi) deleting the date "November 3, 2000" from the
definition of the term "Maturity Date" and substituting
therefor the date "November 2, 2001".
(b) Section 5.02. Section 5.02 is amended by adding the
following new paragraph (i):
(i) Hostile Tender Offers. Commence any tender offer
pursuant to Section 14(d)(1) of the Exchange Act to acquire
shares of stock of a Person that would result in the Borrower
obtaining a Control Percentage of such Person without either
(i) the prior consent of the 100% of the Banks or (ii) the
agreement of such Person.
(d) Exhibit A. Exhibit A attached to the Credit Agreement is
replaced in its entirety with Exhibit A attached to this Amendment.
(e) Exhibit F. Exhibit F attached to the Credit Agreement is
replaced in its entirety with Exhibit F attached to this Amendment.
(f) Annexes. Annexes I, II and III attached to the Credit
Agreement are replaced in their entirety with Annexes I, II and III
attached to this Amendment.
3. Pledge Agreement. From and after the Amendment Effective Date, the
parties agree that US Bank shall, as successor Agent, be the holder of the liens
and security interests created by the Pledge Agreement. In order to effect the
intent of this transfer of liens and security interest to US Bank, as Agent from
and after the Amendment Effective Date, SG and the Borrower shall notify NL
Industries of such transfer of liens and security interests to US Bank with
respect to the Pledged Shares issued by NL Industries, and the Borrower shall
thereafter cause NL Industries, within 10 Business Days following the Amendment
Effective Date, to send written notice to US Bank (i) acknowledging that such
liens and security interests are held by US Bank, (ii) expressly agreeing to
remit any and all dividends and distributions on account of the Pledged Shares
issued by NL Industries (other than cash dividends) remitted after the Amendment
Effective Date directly to US Bank, as Agent, at US Bank's address as set forth
on Annex III to this Amendment, and (iii) upon receipt of any notice from US
Bank, as Agent, that a Default has occurred and is continuing under the Credit
Agreement, to remit all cash dividends and any and all other distributions on
account of the Pledged Shares issued by NL Industries directly to US Bank, as
Agent, at the same address. In addition, the Borrower and US Bank, as successor
Agent and individually as the new holder of the Collateral Account referred to
in the Pledge Agreement, as hereinafter amended, hereby agree that the Pledge
Agreement is amended as follows (it being expressly agreed that SG and each
Continuing Bank, by their signatures below, consent to such amendments and that
US Bank, as the new holder of the Collateral Account, by its signature below as
a continuing Bank, consents to the provisions of amended Section 7(e) of the
Pledge Agreement described below):
(a) Introduction Paragraph A. Paragraph A is amended by
restating such paragraph in its entirety as follows:
A. The Borrower has entered into the Credit Agreement
dated as of November 6, 1998, as amended (as the same may be
further amended from time to time, the "Credit Agreement"),
among the Borrower, the financial institutions party thereto
(the "Banks"), and U.S. Bank National Association, as the
Agent, the Issuing Bank and the Arranger.
(b) Definitions. The definition of "UCC" is hereby amended by
replacing each reference to "Texas" therein with a reference to "New
York," and the definition of "Collateral Account" in Section 1 is
restated in its entirety as follows:
"Collateral Account" means a deposit account
established by the Agent with U.S. Bank National Association
designated as the "Collateral Account US Bank for Valhi,
Inc.".
(c) Section 6. Section 6 is amended by deleting "Societe
Generale, New York Branch" and substituting therefor "U.S.
Bank National Association."
(d) Section 7. Paragraph (f) of Section 7 is amended by
deleting "Societe Generale, New York Branch" and substituting therefor
"U.S. Bank National Association," and Paragraph (e) is restated in its
entirety as follow:
(e) UCC Provisions. Each of the parties hereto agrees that,
for purposes of Article 8 and Article 9 of the UCC, (i) the Collateral
Account is a "securities account" (as defined in Section 8-501 of the
UCC); (ii) U.S. Bank National Association is a "securities
intermediary" (as defined in Section 8-102(a)(14) of the UCC) and U.S.
Bank National Association's "jurisdiction" (for purposes of Section
8-110 of the UCC) is the State of New York; (iii) the Agent is the
"entitlement holder" having the "security entitlements" (as such terms
are defined in Section 8-102 of the UCC) with respect to all financial
assets credited to the Collateral Account (and the Agent will cause
U.S. Bank National Association to identify the Agent as such in its
records); and (iv) all investments and instruments for the credit of
the Collateral Account are to be treated as "financial assets" under
Section 8-102 of the UCC. Each of the parties hereto further agrees
that, for purposes of the UCC, the Borrower has granted, and hereby
confirms that it has granted, to the Agent a security interest in the
Collateral Account and in all interests or security entitlements of the
Borrower relating to the Collateral Account.
(e) Section 19. Section 19 is restated in its entirety as
follows:
This Pledge Agreement shall be construed in
accordance with and governed by the laws of the State of New
York, except as otherwise provided by mandatory provisions of
law and except to the extent that remedies provided by the
laws of any jurisdiction other than New York are governed by
the laws of such jurisdiction.
4. Outstanding SG Letter of Credit. The parties hereto agree as follows
with respect to SG's Letter of Credit No.40820 (the "SG Letter of Credit") which
was issued pursuant to the Credit Agreement before giving effect to this
Amendment and remains the only Letter of Credit outstanding as of the date
hereof:
(a) On or before the Amendment Effective Date, the Borrower
shall deliver to SG acceptable cash collateral to secure the
obligations of the Borrower in connection with the SG Letter of Credit.
SG shall retain such cash collateral in its possession until the SG
Letter of Credit is returned to SG for cancellation, whereupon SG shall
return such cash collateral to the Borrower, plus any interest or
earnings thereon. The Borrower hereby grants to SG a security interest
in such cash collateral, plus any interest or earnings thereon, to
secure the reimbursement obligations of the Borrower in connection with
the SG Letter of Credit and agrees that SG may apply the proceeds of
such cash collateral to satisfy any such obligations of the Borrower in
the event there is a drawing under the SG Letter of Credit prior to its
return to SG for cancellation.
(b) On or after the Amendment Effective Date, US Bank shall
issue, as Issuing Bank under the Credit Agreement, as amended by this
Amendment, a letter of credit for the benefit of the beneficiary of the
SG Letter of Credit, in substantially the same form as the SG Letter of
Credit and otherwise acceptable to the Borrower and to such beneficiary
(hereinafter, the US Bank Letter of Credit), and shall deliver it to
the Borrower, whereupon the Borrower shall arrange with the beneficiary
of the SG Letter of Credit for such US Bank letter of Credit to be
substituted for the SG Letter of Credit.
5. Replacement Notes. Each of SG, US Bank and Comerica agree to return
to the Borrower, following the Amendment Effective Date, the Notes issued
pursuant to the Credit Agreement in their favor, marked on their face (i) in the
case of SG, "cancelled" and (ii) in the case of each of US Bank and Comerica,
"replaced by note issued pursuant to Second Amendment Agreement."
6. Agreements with respect to Societe Generale. Each of the parties
hereto confirms and agrees that from and after the Amendment Effective Date SG
shall no longer have obligations under the Credit Agreement as Agent, Issuing
Bank, Arranger or a Bank, provided however that SG shall continue to benefit
from the provisions of Article VII of the Credit Agreement as to any actions
taken by it while it was Agent under the Credit Agreement and the other Credit
Documents. SG and each of the Banks further agree that from and after the
Amendment Effective Date, no Bank other than SG shall have any continuing
obligations in respect of the SG Letter of Credit.
7. Representations and Warranties; No Default. The Borrower hereby
represents and warrants to each of the parties to this Amendment that each of
the representations and warranties set forth in the Credit Agreement are true
and correct as of the date of this Amendment and no Default has occurred and is
continuing as of the date of this Amendment.
8. Effectiveness of Amendment. This Amendment shall become effective on
November 3, 2000 (the "Amendment Effective Date") provided that US Bank, acting
as the new Agent, has confirmed in writing to each of the parties to this
Amendment on such date that:
(a) Amendment Counterparts. US Bank has received a counterpart
of this Amendment executed by each of the parties hereto,
(b) Borrower's Certificate. US Bank has received a Certificate
of Secretary or Assistant Secretary of the Borrower which certifies (i)
the title, authority and true signature of the officer of the Borrower
executing this Amendment on behalf of the Borrower, (ii) that the
Borrower's Certificate of Incorporation and Bylaws have not changed
since the delivery of those certified to the Banks as of the date of
the original closing of the Credit Agreement, and (iii) resolutions of
the Borrower's Board of Directors authorizing the continuation of the
facility provided by the Credit Agreement, as amended hereby,
(c) Form U-1. US Bank has received a Federal Reserve Form U-1
dated as of November 3, 2000 duly completed and executed by the
Borrower and US Bank in its capacity as the new Agent,
(d) New Notes. US Bank has received (i) a Note payable to the
order of US Bank in the principal amount of $25,000,000, and a Note
payable to the order of Comerica Bank in the principal amount of
$15,000,000, each duly executed by the Borrower and in the form of
Exhibit A attached to this Amendment,
(e) SG Payoff and Cash Collateral. US Bank has received
written confirmation from SG that upon SG's receipt of the Required SG
Payoff Amount (as hereinafter defined), SG shall automatically
thereafter hold the Pledged Shares and Stock Powers referred to in
paragraph (f) below for the benefit of US Bank, as Agent under the
Credit Agreement, as amended by this Amendment after giving effect
thereto, and shall remit such Pledged Shares and Stock Powers to US
Bank as instructed by US Bank on the Amendment Effective Date.
"Required SG Payoff Amount" means an amount equal to the sum of (i) the
cash collateral contemplated by Section 4 of this Amendment, for the
sole benefit of SG, to secure the Borrower's obligations to SG in
connection with the SG Letter of Credit, and (ii) in its capacity as
Agent (prior to giving effect to this Amendment) for the ratable
benefit of each Bank (prior to giving effect to this Amendment) an
amount equal to the sum of (x) the aggregate outstanding amount of the
Advances, together with accrued and unpaid interest thereon, and any
accrued and unpaid fees or other amounts due pursuant to the Credit
Agreement as of the Maturity Date (without giving effect to this
Amendment).
(f) Transfer of Pledged Shares and related items. US Bank has
received written confirmation from SG (i) that SG has in its possession
all certificates evidencing the Pledged Shares described in the Pledge
Agreement, Stock Powers with respect thereto executed by the Borrower
in blank, and each supplement to the Pledge Agreement delivered to SG
prior to the date of this Amendment and reflecting the addition of
Pledged Shares, and (ii) that, upon the request of US Bank following
the Amendment Effective Date, SG shall deliver all of such certificates
Stock Powers and supplements to US Bank for holding as Agent under the
terms of the Credit Documents.
9. Counterparts. This Amendment may be executed in any number of
counterparts which together shall constitute an instrument.
10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
11. ENTIRE AGREEMENT. THIS AMENDMENT AND THE CREDIT AGREEMENT AND OTHER
CREDIT DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES PERTAINING TO
THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ALL PRIOR AND
CONTEMPORANEOUS AGREEMENTS, UNDERTAKINGS, UNDERSTANDINGS, REPRESENTATIONS OR
OTHER ARRANGEMENTS, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, OF THE PARTIES
IN CONNECTION HEREWITH EXCEPT TO THE EXTENT EXPRESSLY INCORPORATED OR
SPECIFICALLY REFERRED TO HEREIN OR THEREIN.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers duly authorized as of the date first
written above.
VALHI, INC.
By:______________________________
Name:____________________________
Title:___________________________
SOCIETE GENERALE, SOUTHWEST AGENCY
By:______________________________
Name:____________________________
Title:___________________________
U.S. BANK NATIONAL ASSOCIATION,
as new Administrative Agent, Issuing Bank
and Arranger
By:______________________________
Name:____________________________
Title:___________________________
CONTINUING BANKS:
COMERICA BANK
By:______________________________
Name:____________________________
Title:___________________________
U.S. BANK NATIONAL ASSOCIATION
By:______________________________
Name:____________________________
Title:___________________________
DEPARTING BANK:
SOCIETE GENERALE, SOUTHWEST AGENCY
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$ [date of issuance]
---------------------
For value received, the undersigned, Valhi, Inc., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of (the
"Bank") the principal sum of ___________________ and no/100 Dollars ($ ) or, if
less, the aggregate outstanding principal amount of the Advances (as defined in
the Credit Agreement referred to below) made by the Bank to the Borrower,
together with interest on the unpaid principal amount of each such Advance from
the date of such Advance until such principal amount is paid in full, at such
interest rates, and at such times, as are specified in the Credit Agreement.
This Note is the Promissory Note referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Credit Agreement dated as of
November 6, 1998, as amended (as the same may be further amended or modified
from time to time, the "Credit Agreement") among the Borrower, the Bank, the
other financial institutions parties thereto, and U.S. Bank National
Association, as the Administrative Agent (the "Agent"), the Issuing Bank, and
the Arranger. Capitalized terms used in this Note that are defined in the Credit
Agreement and not otherwise defined in this Note have the meanings assigned to
such terms in the Credit Agreement. The Credit Agreement, among other things,
(a) provides for the making of Advances by the Bank to the Borrower from time to
time in an aggregate amount not to exceed at any time outstanding the Dollar
amount first above mentioned and (b) contains provisions for acceleration of the
maturity of this Note upon the happening of certain events stated in the Credit
Agreement and for prepayments of principal prior to the maturity of this Note
upon the terms and conditions specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Agent at 555 Southwest Oak Street, Suite 400, Portland,
Oregon 97204 (or at such other location or address as may be specified by the
Agent in writing to the Borrower) in same day funds. The Bank shall record all
Advances and payments of principal made under this Note, but no failure of the
Bank to make such recordings shall affect the Borrower's repayment obligations
under this Note.
Except as specifically provided in the Credit Agreement, the Borrower
hereby waives presentment, demand, protest, notice of intent to accelerate,
notice of acceleration, and any other notice of any kind. No failure to
exercise, and no delay in exercising, any rights hereunder on the part of the
holder of this Note shall operate as a waiver of such rights.
<PAGE>
This Note shall be governed by and construed in accordance with the
laws of the state of New York.
VALHI, INC.
By:
-----------------------
Name:
----------------------
Title:
---------------------
<PAGE>
EXHIBIT F
FORM OF US BANK LETTER OF CREDIT APPLICATION
<PAGE>
ANNEX I
COMMITMENTS
Comerica $15,000,000
USBank $25,000,000
------------
Total Commitments $40,000,000
<PAGE>
ANNEX II
APPLICABLE LENDING OFFICES FOR BANKS
<PAGE>
ANNEX III
ADDRESSES FOR NOTICES
