STOCK PURCHASE AGREEMENT
EXHIBIT
10.1
This
Stock Purchase Agreement (the “Agreement”)
is
made and entered into as of March 26, 2007 between Contran Corporation, a
Delaware corporation (“Contran”),
and
Valhi, Inc., a Delaware corporation (“Valhi”).
Recitals
A. Valhi
has
today paid a stock dividend (the “Stock
Dividend”)
to its
stockholders of record as of March 12, 2007 of approximately 56.8 million shares
(the “Shares”) in the aggregate of the common stock, par value $0.01 per share,
of Titanium Metals Corporation, a Delaware corporation and an affiliate of
Valhi.
B. Valhi
is
a member of the consolidated U.S. federal tax return of which Contran is the
parent company (the “Contran
Tax Group”).
C. As
a
member of the Contran Tax Group and pursuant to a tax policy between Valhi
and
Contran, Valhi computes provisions for U.S. income taxes on a separate company
basis using tax elections made by Contran and makes payments to Contran or
receives payments from Contran in amounts it would have paid to or received
from
the U.S. Internal Revenue Service had it not been a member of the Contran Tax
Group but instead had been a separate taxpayer.
D. Upon
the
payment of the Stock Dividend and pursuant to the tax policy between Valhi
and
Contran, Valhi has incurred a tax obligation to Contran, which obligation
is a function of the difference between the aggregate value of the Shares
distributed based on their closing market price on the date of distribution
($36.90 per share) less Valhi's aggregate tax basis in such Shares (the
“Tax
Obligation”).
E. On
the
terms and subject to the conditions of this Agreement, including the release
and
indemnity of the Tax Obligation by Contran, Valhi wishes to today issue 5,000
shares (the “Shares”)
of its
6% series A preferred stock, par value $0.01 per share, of Valhi, to Contran,
and Contran wishes to purchase the Shares (the “Transaction”).
Agreement
The
parties agree as follows:
ARTICLE I.
THE
CLOSING
Section 1. Closing
and Deliveries. The
closing of the purchase and sale of the Shares shall take place effective as
of
March 26, 2007 (the “Closing
Date”).
On
the Closing Date:
(a) Valhi
shall issue and deliver to Contran certificates representing the Shares;
and
(b) Contran
shall undertake responsibility for and shall release Valhi from, and indemnify
Valhi against, the Tax Obligation as set forth in Article IV and Section 5.2
of
this Agreement.
ARTICLE II.
REPRESENTATIONS
AND WARRANTIES OF VALHI
Valhi
hereby represents and warrants to Contran as of the date of this Agreement
as
follows:
Section 2.1. Authority. It
is a corporation validly existing and in good standing under the laws of the
state of its incorporation. It has full corporate power and authority, without
the consent or approval of any other person, to execute and deliver this
Agreement and to consummate the Transaction. All corporate action required
to be
taken by or on behalf of it to authorize the execution, delivery and performance
of this Agreement has been duly and properly taken.
Section 2.2. Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The execution
and delivery of this Agreement and the consummation of the Transaction by it
are
not prohibited by, do not violate or conflict with any provision of, and do
not
result in a default under (a) its charter or bylaws; (b) any material contract,
agreement or other instrument to which it is a party or by which it is bound;
(c) any order, writ, injunction, decree or judgment of any court or governmental
agency applicable to it; or (d) any law, rule or regulation applicable to it,
except in each case for such prohibitions, violations, conflicts or defaults
that would not have a material adverse consequence to the
Transaction.
Section 2.3. Terms
of the Shares. The
certificate of designations, rights and preferences of Valhi’s 6% series A
preferred stock is set forth on Exhibit
A
attached
hereto.
Section 2.4. Title
to the Shares. Upon
consummation of the transactions contemplated by this Agreement, Contran will
acquire good and marketable title to the Shares, free and clear of any liens,
encumbrances, security interests, restrictive agreements, claims or
imperfections of any nature whatsoever, other than restrictions on transfer
imposed by applicable securities laws.
ARTICLE III.
REPRESENTATIONS
AND WARRANTIES OF CONTRAN
Contran
hereby represents and warrants to Valhi as of the date of this Agreement as
follows:
Section 3.1. Authority. It
is a corporation validly existing and in good standing under the laws of the
state of Delaware. It has full corporate power and authority, without the
consent or approval of any other person, to execute and deliver this Agreement
and to consummate the Transaction. All corporate and other actions required
to
be taken by or on behalf of it to authorize the execution, delivery and
performance of this Agreement have been duly and properly taken.
Section 3.2. Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The execution
and delivery of this Agreement and the consummation of the Transaction by it
are
not prohibited by, do not violate or conflict with any provision of, and do
not
result in a default under (a) its charter or bylaws; (b) any material contract,
agreement or other instrument to which it is a party or by which it is bound;
(c) any order, writ, injunction, decree or judgment of any court or governmental
agency applicable to it; or (d) any law, rule or regulation applicable to it,
except in each case for such prohibitions, violations, conflicts or defaults
that would not have a material adverse consequence to the
Transaction.
Section 3.3. Purchase
for Investment. It
is purchasing the Shares to be sold and delivered to it hereunder for investment
solely for its own account and not with a view to, or for resale in connection
with, the distribution thereof. It understands that such Shares are restricted
securities under the Securities Act of 1933, as amended (the “Securities
Act”),
and
that such Shares must be held indefinitely unless they are registered under
the
Securities Act and any applicable state securities or blue sky laws or an
exemption from such registration is available.
Section 3.4. Nature
of Purchaser. It
has such knowledge and experience in financial and business matters that it
is
capable of evaluating the merits and risks of the purchase of the
Shares.
ARTICLE IV.
RELEASE
Upon
the
purchase of the Shares pursuant to the terms of this Agreement, Contran from
and
after the Closing releases and forever discharges Valhi from the Tax Obligation.
Notwithstanding the foregoing, if any settlement with the U.S. Internal Revenue
Service, state or local tax authority or court decision which has become final
during any taxable period preceding Closing, including the period beginning
January 1, 2007 and ending on the Closing Date, results in any adjustment to
Valhi’s aggregate tax basis or the aggregate value of the Shares which affects
or relates to the Tax Obligation, then the Tax Obligation shall be re-determined
to give effect to such adjustment as if it had been made as part of or reflected
in the original computation of such Tax Obligation. If the effect of such
adjustment results in an increase or decrease in the Tax Obligation, then such
amount shall promptly be paid to Contran by Valhi or paid to Valhi by Contran,
respectively.
ARTICLE V.
INDEMNIFICATION
Section 5.1. Indemnification
by Valhi From
and after the Closing, Valhi shall defend, indemnify, save and keep harmless
Contran and its successors and assigns against and from all Damages (as defined
below) sustained or incurred by Contran resulting from or arising out of or
by
virtue of any inaccuracy in or breach of any representation or warranty made
by
Valhi in this Agreement or in any closing document delivered to Contran by
Valhi
in connection with this Agreement, or any breach by Valhi of, or failure by
Valhi to comply with, any of its covenants or obligations under this
Agreement.
As
used
in this Agreement, “Damages”
mean
all liabilities, demands, claims, actions or causes of action, regulatory,
legislative or judicial proceedings or investigations, assessments, levies,
losses, fines, penalties, damages, costs and expenses, including, without
limitation: (a) reasonable attorneys’, accountants’, investigators’, and
experts’ fees and expenses sustained or incurred in connection with the defense
or investigation of any such liability, and (b) any and all reasonable costs
and
expenses (including reasonable legal fees and expenses) arising from any Damages
or incurred in an investigation and defense, or in enforcing the indemnification
provisions of this Agreement.
Section 5.2. Indemnification
by Contran. From
and after the Closing, Contran shall defend, indemnify, save and keep harmless
Valhi and its successors and assigns against and from all Damages sustained
or
incurred by Valhi resulting from or arising out of or by virtue of:
(a) the
Tax
Obligation or adjustments, modifications or changes to the Tax Obligation now
existing or arising in the future, subject to the provisions set forth in
Article IV; and
(b) any
inaccuracy in or breach of any representation or warranty made by Contran in
this Agreement or in any closing document delivered to Contran by Valhi in
connection with this Agreement, or any breach by Contran of, or failure by
Contran to comply with, any of its covenants or obligations under this
Agreement.
ARTICLE VI.
GENERAL
PROVISIONS
Section 6.1.
Survival. The
representations, warranties covenants and other agreements set forth in this
Agreement shall survive the execution of this Agreement and the consummation
of
the transactions contemplated herein.
Section 6.2. Amendment
and Waiver. No
amendment or waiver of any provision of this Agreement shall in any event be
effective unless the same shall be in a writing referring to this Agreement
and
signed by the parties hereto, and then such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
Section 6.3. Parties
and Interest. This
Agreement shall bind and inure to the benefit of the parties named herein and
their respective heirs, successors and assigns.
Section 6.4. Entire
Transaction. This
Agreement contains the entire understanding among the parties with respect
to
the transactions contemplated hereby and supersedes all other agreements and
understandings among the parties with respect to the subject matter of this
Agreement.
Section 6.5. Applicable
Law. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the state of Delaware, without giving effect to any choice of law or
conflict of law provision or rule (whether of the state of Delaware or any
other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the state of Delaware.
Section 6.6.
Severability. If
any provision of this Agreement is found to violate any statute, regulation,
rule, order or decree of any governmental authority, court, agency or exchange,
such invalidity shall not be deemed to effect any other provision hereof or
the
validity of the remainder of this Agreement and such invalid provision shall
be
deemed deleted to the minimum extent necessary to cure such
violation.
Section 6.7. Notice. All
notices, requests, demands and other communications hereunder shall be in
writing and shall be sent by registered or certified mail, postage prepaid
as
follows:
If
toValhi: Valhi,
Inc.
0000
XXX
Xxxxxxx
Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000-0000
Attention: Secretary
If
to
Contran: Contran
Corporation
5430
LBJ
Freeway
Three
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000-0000
Attention: General
Counsel
Section 6.8. Headings. The
sections and other headings contained in this Agreement are for reference
purposes only and shall not effect in any way the meaning or interpretation
of
this Agreement.
The
parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the date first written above.
VALHI,
INC.
By:
Xxxxxxx
X. Xxxxxxxx, Vice President
CONTRAN
CORPORATION
By:
Xxxxx
X. X’Xxxxx, Vice President
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Exhibit
A
Certificate
of Designations, Rights and Preferences of 6% Series A Preferred Stock of Valhi,
Inc.
CERTIFICATE
OF DESIGNATIONS, RIGHTS AND PREFERENCES OF
6%
SERIES A PREFERRED STOCK
Pursuant
to Section 151 of the
General
Corporation Law of the State of Delaware
Valhi,
Inc.,
a
Delaware corporation (the “Corporation”),
certifies as follows:
FIRST:
The
Certificate of Incorporation of the Corporation authorizes the issuance of
5,000,000 shares of Preferred Stock, par value $.01 per share, and, further,
authorizes the Board of Directors of the Corporation, subject to the limitations
prescribed by law and the provisions of the Certificate of Incorporation, to
provide for the issuance of shares of the Preferred Stock or to provide for
the
issuance of shares of the Preferred Stock in one or more series, to establish
from time to time the number of shares to be included in each such series and
to
fix the designations, voting powers, preference rights and qualifications,
limitations or restrictions of the shares of the Preferred Stock of each such
series.
SECOND:
The
Board of Directors of the Corporation, as of February 28, 2007, duly adopted
the
following resolutions, authorizing the creation and issuance of a series of
said
Preferred Stock to be known as 6% Series A Preferred Stock:
RESOLVED,
the
Board of Directors, pursuant to the authority vested in it by the provisions
of
the Certificate of Incorporation of the Corporation, hereby authorizes the
issuance of a series of the Corporation’s Preferred Stock, par value $.01 per
share, consisting of 5,000 shares of which are authorized to be issued under
the
Corporation’s Certificate of Incorporation (such 5,000 shares being hereinafter
referred to as the “Series
A Preferred Stock”),
of
the Corporation and hereby fixes the number, designations, preferences, rights
and limitations thereof in addition to those set forth in said Certificate
of
Incorporation as follows:
Section 1. Certain
Definitions.
As used
in this Certificate, the following terms shall have the following meanings,
unless the context otherwise requires:
“Board
of Directors”
means
either the board of directors of the Corporation or any duly authorized
committee of such board.
“Business
Day”
means
any day other than a Saturday, Sunday or a day on which state or U.S. federally
chartered banking institutions in New York, New York are not required to be
open.
“Capital
Stock”
of
any
Person means any and all shares, interests, participations or other equivalents
however designated of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such Person and any rights
(other than debt securities convertible or exchangeable into an equity
interest), warrants or options to acquire an equity interest in such Person
that
are traded on an established national or regional trading market or exchange,
including but not limited to the common stock, par value $.01 per share, of
Valhi, Inc., a Delaware corporation.
“Certificate”
means
this Certificate of Designations, Rights and Preferences of 6% Series A
Preferred Stock.
“Certificate
of Incorporation”
means
the Certificate of Incorporation of the Corporation, as amended from time to
time.
“Common
Stock”
means
the voting Common Stock, $.01 par value per share, of the Corporation and any
other stock of any class of the Corporation that has no preference in respect
of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
“Corporation”
means
Valhi, Inc., a Delaware corporation, and its successors.
“Dividend
Payment Date”
means
March 31, June 30, September 30 and December 31, of each year, or if any such
date is not a Business Day, on the next succeeding Business Day.
“Dividend
Period”
means
the period beginning on, and including, a Dividend Payment Date and ending
on,
and excluding, the immediately succeeding Dividend Payment Date.
“Liquidation
Preference”
has
the
meaning assigned to such term in Section
4(a).
“Original
Issue Date”
has
the
meaning assigned to such term in Section
3(a).
“Outstanding”
means,
when used with respect to Series A Preferred Stock, as of any date of
determination, all shares of Series A Preferred Stock outstanding as of such
date; provided
further
that, in
determining whether the holders of Series A Preferred Stock have given any
request, demand, authorization, direction, notice, consent or waiver or taken
any other action hereunder, Series A Preferred Stock owned by the Corporation
shall be deemed not to be outstanding.
“Parity
Stock”
has
the
meaning assigned to such term in Section
2.
“Person”
means
an individual, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
“Record
Date”
means
with respect to the dividends payable on March 31, June 30, September 30 and
December 31 of each year, March 15, June 15, September 15 and December 15
of each year, respectively, or such other record date, not more than 60 days
and
not less than 10 days preceding the applicable Dividend Payment Date, as may
be
fixed by the Board of Directors.
“Senior
Stock”
has
the
meaning assigned to such term in Section
2.
“Series
A Preferred Stock”
has
the
meaning assigned to such term in the Resolution set forth in the Preamble
hereto.
Section 2. Rank.
The
Series A Preferred Stock shall, with respect to rights upon liquidation,
dissolution or winding up of the Corporation, rank (a) senior to all classes
or
series of Common Stock and to any other class or series of equity securities
issued by the Corporation not referred to in clauses (b) or (c) of this
paragraph, (b) on a parity with all equity securities issued by the Corporation
in the future, the terms of which specifically provide that such equity
securities rank on a parity with the Series A Preferred Stock with respect
to
dividend rights or rights upon the liquidation, dissolution or winding up of
the
Corporation (“Parity
Stock”)
and
(c) junior to all equity securities issued by the Corporation in the future
the
terms of which specifically provide that such equity securities rank senior
to
the Series A Preferred Stock with respect to dividend rights or rights upon
the
liquidation, dissolution or winding up of the Corporation (“Senior
Stock”).
The
term “equity securities” shall not include convertible debt
securities.
Section 3. Dividends.
(a) Holders
of the then Outstanding shares of Series A Preferred Stock shall be entitled
to
receive, when and as authorized by the Board of Directors, out of funds legally
available for the payment of dividends, cash dividends at the rate of 6% of
the
$133,466.75 per share Liquidation Preference per annum. Such dividends shall
accrue from the first date on which any Series A Preferred Stock is issued
(the
“Original
Issue Date”)
and
shall be payable quarterly in arrears on each Dividend Payment Date. Any
dividend payable on the Series A Preferred Stock for any partial dividend period
will be computed on the basis of a 360-day year consisting of twelve 30-day
months. Dividends will be payable to holders of record as they appear in the
stock records of the Corporation at the close of business on the applicable
Record Date.
(b) No
dividends on shares of Series A Preferred Stock shall be declared by the
Corporation or paid or set apart for payment by the Corporation at such time
as
the terms and provisions of any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibit such declaration, payment
or
setting apart for payment or provide that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default thereunder,
or
if such declaration or payment shall be restricted or prohibited by
law.
(c) Notwithstanding
the foregoing, dividends on the Series A Preferred Stock shall accrue whether
or
not the terms and provisions set forth in Section
3(b)
hereof
at any time prohibit the current payment of dividends, whether or not the
Corporation has earnings, whether or not there are funds legally available
for
the payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on the Series A Preferred Stock will accumulate
as
of the Dividend Payment Date on which they first become payable, but interest
will not accrue on any amount of accrued but unpaid dividends on the Series
A
Preferred Stock.
(d) Nothing
contained herein shall prevent or restrict the Corporation from the declaration,
payment or set aside for payment or any other distribution of cash or other
property, directly or indirectly, on or with respect to any shares of the Common
Stock, or shares of any other class or series of equity securities ranking
junior to or on a parity with the Series A Preferred Stock as to dividends
or
upon liquidation, including without limitation accrued and unpaid dividends
on
the Series A Preferred Stock. Further, nothing contained herein shall prevent
or
restrict the Corporation from redeeming, purchasing or otherwise acquiring
for
any consideration (or any moneys be paid to or made available for a sinking
fund
for the redemption of any such shares) by the Corporation any shares of Common
Stock, or any shares of equity securities ranking junior to or on a parity
with
the Series A Preferred Stock as to dividends or upon liquidation.
(e) When
dividends are not paid in full (or a sum sufficient for such full payment is
not
so set apart) on the Series A Preferred Stock and the shares of any other class
or series of equity securities ranking on a parity as to dividends with the
Series A Preferred Stock, all dividends declared upon the Series A Preferred
Stock and any other class or series of such equity securities ranking on a
parity as to dividends with the Series A Preferred Stock shall be declared
pro
rata
so that
the amount of dividends declared per share of Series A Preferred Stock and
such
other class or series of such equity securities shall in all cases bear to
each
other the same ratio that accrued dividends per share on the Series A Preferred
Stock and such other class or series of such equity securities (which shall
not
include any accrual in respect of unpaid dividends for prior dividend periods
if
such other class or series of equity securities does not have a cumulative
dividend) bear to each other. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on Series A
Preferred Stock which may be in arrears.
(f) Any
dividend payment made on shares of the Series A Preferred Stock shall be
credited against the accrued but unpaid dividends due as designated by the
Corporation. Holders of the Series A Preferred Stock shall not be entitled
to
any dividend, whether payable in cash, property or shares of Capital Stock
in
excess of full accrued dividends on the Series A Preferred Stock as described
above.
Section 4. Liquidation
Preference.
(a) Upon
any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, the holders of shares of Series A Preferred Stock then
Outstanding are entitled to be paid out of the assets of the Corporation,
legally available for distribution to its stockholders, a liquidation preference
of $133,466.75 per share of Series A Preferred Stock (the “Liquidation
Preference”),
plus
an amount equal to any accrued and unpaid dividends (whether or not declared)
to
the date of payment, before any distribution of assets is made to holders of
Common Stock or any other class or series of equity securities that ranks junior
to the Series A Preferred Stock as to liquidation rights.
(b) In
the
event that, upon any such voluntary or involuntary liquidation, dissolution
or
winding up, the available assets of the Corporation are insufficient to pay
the
amount of the liquidating distributions on all Outstanding shares of Series
A
Preferred Stock and the corresponding amounts payable on all shares of each
other class or series of equity securities ranking on a parity with the Series
A
Preferred Stock as to liquidation rights, then the holders of the Series A
Preferred Stock and each such other class or series of equity securities shall
share proportionately in any such distribution of assets in proportion to the
full liquidating distributions to which they would otherwise be respectively
entitled.
(c) After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Series A Preferred Stock will have no right or claim
to
any of the remaining assets of the Corporation.
(d) Written
notice of any such liquidation, dissolution or winding up of the Corporation,
stating the payment date or dates when, and the place or places where, the
amounts distributable in such circumstances shall be payable, shall be given
by
first class mail, postage pre-paid, not less than 30 nor more than 60 days
prior
to the payment date stated therein, to each record holder of the Series A
Preferred Stock at the respective addresses of such holders as the same shall
appear on the stock transfer records of the Corporation.
(e) The
consolidation or merger of the Corporation with or into any other corporation,
trust or entity or of any other corporation with or into the Corporation, or
the
sale, lease or conveyance of all or substantially all of the property or
business of the Corporation, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Corporation.
Section 5. Voting
Rights.
(a) Holders
of the Series A Preferred Stock will not have any voting rights, except as
set
forth below or as otherwise provided in the Certificate of Incorporation, by
law
or pursuant to agreements among the holders of voting equity securities of
the
Corporation.
(b) The
affirmative vote of holders of at least two-thirds of the Outstanding shares
of
the Series A Preferred Stock and all other Parity Stock with like voting rights,
voting as a single class, in person or by proxy, at a special meeting called
for
the purpose, or by written consent in lieu of meeting, shall be required to
alter, repeal or amend, whether by merger, consolidation, combination,
reclassification or otherwise, any provisions of the Certificate of
Incorporation if the amendment would amend, alter or affect the powers,
preferences or rights of the Series A Preferred Stock, so as to adversely affect
the holders thereof; provided,
however,
that
any increase in the amount of the authorized common stock or authorized
preferred stock or the creation and issuance of other series of common stock
or
preferred stock will not be deemed to materially and adversely affect such
powers, preferences or special rights.
Section 6. Consolidation,
Merger and Sale of Assets.
The
Corporation, without the consent of the holders of any of the Outstanding Series
A Preferred Stock, may consolidate with or merge into any other Person or
convey, transfer or lease all or substantially all of its assets to any Person
or may permit any Person to consolidate with or merge into, or transfer or
lease
all or substantially all its properties to the Corporation.
Section 7. Headings.
The
headings of the Sections of this Certificate are for convenience of reference
only and shall not define, limit or affect any of the provisions
hereof.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in
its
name and on its behalf on this 26th
day of
March, 2007.
Valhi,
Inc.
By:
|
Xxxxxxx
X. Xxxxxxxx
Vice
President and Controller