GUARANTY
For
valuable consideration, Valhi Holding Company (“VHC”) hereby unconditionally
guarantees payment and performance of all obligations of Contran Corporation
(“Contran”) to U.S. Bank National Association (“U.S. Bank”) under that certain
Loan Agreement dated as of September 3, 1998 (as it has been modified and
amended) executed by Contran in favor of U.S. Bank. That loan agreement, as
previously or hereafter modified or amended, is referred to herein as the “Loan
Agreement.” Capitalized terms used in this guaranty (this “Guaranty”) have the
meanings assigned to those terms in the Loan Agreement, unless otherwise
specified herein.
1. Consideration.
VHC acknowledges that U.S. Bank is willing to make Advances only on the
condition that VHC executes this Guaranty and thereby promises and agrees to
pay
and perform the Obligations as a direct and primary obligation of VHC. VHC
and
Contran are part of an affiliated group of companies whose business operations
are integrated and financial reporting is consolidated. VHC is fully informed
as
to the business operations and Financial affairs of Contran. VHC acknowledges
that VHC has received and will receive benefit from the Advances.
2. Waivers.
VHC 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;
2.3 Claims
and defenses that would require U.S. Bank to (i) proceed first against Contran
or the Pledged Securities before U.S. Bank can proceed against VHC, (ii) provide
to VHC any information in the possession or control of U.S. Bank relating to
the
status of the relationship between Contran and U.S. Bank, the financial
condition of Contran, the nature, status, location, or estimated value of the
Pledged Securities or any action, inaction, or forbearance by U.S. Bank 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, 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 U.S. Bank of or with respect
to any right or remedy that U.S. Bank 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.
3. Consent.
Without thereby limiting the generality of the foregoing waivers, VHC 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 VHC and in such order and for such consideration as U.S. Bank may
consider appropriate.
4. Insolvency
Proceedings. If Contran becomes the subject of any bankruptcy case,
receivership case, or other insolvency case or proceeding, VHC authorizes U.S.
Bank to make Advances and extend credit to such person as the debtor or
debtor-in possession and repayment of such Advances will be covered by this
Guaranty. This Guaranty specifically includes any amount that U.S. Bank may
be
required to repay on account of an avoided transfer or preference. Regardless
of
the payment or performance of the debts and the obligations hereby guaranteed,
the liability of VHC to U.S. Bank 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 Event of Default
by Contran under the Loan Documents and continuing only for so long as such
default continues to exist, VHC subordinates VHC’s claims against and equity
interests in Contran (including the rights to payment, collection, or
enforcement of any present or future debt or obligation of Contran to VHC)
so as
to provide, to the maximum extent practicable, that the debts and obligations
of
Contran to U.S. Bank will be paid and performed, before any debts or obligations
of Contran to VHC are paid or performed, or any distribution is made on account
of the equity securities of Contran that are owned or held by VHC. VHC agrees
that any money that VHC might receive on account of such debts, obligations,
equity securities, or contribution rights will be deemed to be held in trust
by
VHC for the benefit of U.S. Bank and will be delivered immediately to U.S.
Bank
upon receipt.
6. Representations
and Warranties. VHC represents and warrants to U.S. Bank that:
6.1 This
Guaranty, and any accompanying Security Documents are enforceable against VHC
in
accordance with the terms hereof, 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 any accompanying Security Documents nor
performance by VHC of the obligations hereunder or thereunder (a) is prohibited
by, or will result in a fine, penalty, or similar sanction under, any applicable
law, regulation, or court or administrative order, (b) will violate VHC’s
organizational documents, or (c) will breach, or constitute an event of default
under, any agreement, instrument, mortgage, indenture, or other contract to
which VHC is a party, or by which it or its property is bound.
7. Organization
Documents. VHC promptly will provide U.S. Bank with copies of its
organizational 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
that such reimbursement is made.
9. Jury
Trial Waiver. VHC 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 GUARANTY.
10. Governing
Law. This Guaranty is governed by the substantive provisions of Oregon law,
without regard to principles of conflict of laws.
11. Consent
to Jurisdiction. VHC 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 VHC’s
liability and obligations under this Guaranty for performance of the Obligations
are primary and are joint and several with Contran. VHC may not assign its
obligations hereunder.
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 VHC, and its successors, and shall
inure to the benefit of U.S. Bank, and its successors and assigns.
12.4 This
Guaranty may be delivered by facsimile transmission. If VHC delivers this
Guaranty by facsimile transmission, such delivery will constitute the promise
of
VHC to deliver the manually-signed version of this Guaranty to U.S. Bank as
soon
as reasonably possible.
12.5 Statutory
Notice. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES, AND
COMMITMENTS MADE BY U.S. BANK CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
THAT
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 U.S. BANK TO BE
ENFORCEABLE.
Dated
as
of October 28, 2005.
VALHI
HOLDING COMPANY
By: /s/
Xxxxxx X. Xxxxxxxx
Xxxxxx
X.
Xxxxxxxx
Vice
President and Assistant Treasurer
