COLLATERAL AGREEMENT
This Collateral Agreement (this "Agreement") is made by and between Xxxxx
Xxxx Agricultural Corporation, Inc., a Louisiana corporation ("Xxxxx"), and
Valhi Holding Company, a Delaware corporation ("VHC"), as of the 25th day of
August, 2005.
Recitals
A. Dixie and Southern Methodist University ("SMU") have entered into that
certain Loan and Pledge Agreement dated August 18, 1986 (the "Loan Agreement"),
pursuant to which SMU has agreed to advance Xxxxx up to $1,500,000.00 in loans.
B. SMU requires, among other things, that Xxxxx pledge shares of stock with
a market value of not less than two hundred percent (200%) of the outstanding
principal balance of the loans advanced under the Loan Agreement.
C. Xxxxx does not currently hold securities that will qualify as collateral
under the Loan Agreement.
D. On August 24, 2005, in order to assist Dixie with its pledge obligation,
Contran Corporation, a Delaware corporation and an affiliate of Xxxxx and VHC
("Contran"), had pledged 50,000 shares (the "Old Shares") of the common stock,
par value $0.01 per share (the "Valhi Common Stock"), of Valhi, Inc., a Delaware
corporation, for a collateral fee Dixie paid to Contran.
E. On August 25, 2005, Contran contributed the Old Shares to VHC subject to
all existing liens.
F. VHC has agreed to pledge 50,000 shares of the Valhi Common Stock as
collateral under the Loan Agreement in exchange for the Old Shares.
Agreement
In consideration of the mutual premises, representations and covenants
herein contained, the parties hereto mutually agree as follows.
Section 1. VHC agrees to pledge, as collateral under the Loan Agreement,
50,000 shares of Valhi Common Stock owned by VHC, or such greater number of
shares that shall have from time to time a market value of at least the value
required by the Loan Agreement (the "New Shares").
Section 2. As consideration for pledging the New Shares, Xxxxx shall pay to
VHC a fee equal to an annual rate of 0.5% of the average daily principal loan
balance outstanding, during periods in which any portion of the New Shares are
pledged, under the Loan Agreement, payable quarterly on each March 31, June 30,
September 30, and December 31.
Section 3. Xxxxx agrees to indemnify VHC against any loss or incremental
cost resulting from the pledge of the New Shares under the Loan Agreement.
Section 4. Xxxxx agrees to use its best efforts to deliver stock
certificates representing the Old Shares to VHC shortly after the delivery of
the New Shares to SMU.
Section 5. The Agreement may be terminated by either party hereto by giving
the other party thirty (30) days written notice of such termination.
Executed as of the date first above written.
XXXXX XXXX AGRICULTURAL CORPORATION, INC.
By:/s/ Xxxxx X. X'Xxxxx
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Xxxxx X. X'Xxxxx, Vice President
VALHI HOLDING COMPANY
By:/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, Vice President
