Exhibit 10.27

FIFTH AMENDED AND RESTATED

UNSECURED REVOLVING

DEMAND PROMISSORY NOTE

 

$100,000,000.00    December 31, 2012

Section 1. Promise to Pay. For and in consideration of value received, the
undersigned, VALHI, INC., a corporation duly organized under the laws of the
state of Delaware (“Borrower”), promises to pay, in lawful money of the United
States of America, to the order of KRONOS WORLDWIDE, INC., a corporation duly
organized under the laws of the state of Delaware (“Kronos Worldwide”), or the
holder hereof (as applicable, Kronos Worldwide or such holder shall be referred
to as the “Noteholder”), the principal sum of ONE HUNDRED MILLION and NO/100ths
United States Dollars ($100,000,000.00) or such lesser amount as shall equal the
unpaid principal amount of the loan made by the Noteholder to Borrower together
with accrued and unpaid interest on the unpaid principal balance from time to
time pursuant to the terms of this Fifth Amended and Restated Unsecured
Revolving Demand Promissory Note, as it may be amended from time to time (this
“Note”). This Note shall be unsecured and will bear interest on the terms set
forth in Section 7 below. Capitalized terms not otherwise defined shall have the
meanings given to such terms in Section 18 of this Note.

Section 2. Amendment and Restatement. This Note renews, replaces, amends and
restates in its entirety the Fourth Amended and Restated Unsecured Revolving
Demand Promissory Note dated December 19, 2012 in the original principal amount
of $235,000,000.00 payable to the order of the Noteholder and executed by the
Borrower (the “Fourth Amended Note”). The Fourth Amended Note renewed, replaced,
amended and restated the Third Amended and Restated Unsecured Revolving Demand
Promissory Note dated December 31, 2011 in the original principal amount of
$225,000,000.00 payable to the order of the Noteholder and executed by the
Borrower (the “Third Amended Note”). The Third Amended Note renewed, replaced,
amended and restated the Second Amended and Restated Unsecured Revolving Demand
Promissory Note dated June 30, 2011 in the original principal amount of
$175,000,000.00 payable to the order of the Noteholder and executed by the
Borrower (the “Second Amended Note”). The Second Amended Note renewed, replaced,
amended and restated the First Amended and Restated Unsecured Revolving Demand
Promissory Note dated December 31, 2010 in the original principal amount of
$175,000,000.00 payable to the order of the Noteholder and executed by the
Borrower (the “First Amended Note”). The First Amended Note renewed, replaced,
amended and restated the Unsecured Revolving Demand Promissory Note dated
November 10, 2010 in the original principal amount of $100,000,000.00 payable to
the order of the Noteholder and executed by the Borrower (the “Original Note”).
This Note amends and restates in its entirety the Fourth Amended Note, the Third
Amended Note, the Second Amended Note, the First Amended Note and the Original
Note (collectively, the “Prior Notes”); provided that such amendment and
restatement shall operate to renew, amend and modify the rights and obligations
of the parties under each Prior Note, as provided herein, but shall not
extinguish the obligations under each Prior Note, nor effect a novation thereof.
As of the close of business on December 31, 2012, the unpaid principal balance
of the Fourth Amended Note was nil, the accrued and unpaid interest thereon was
nil and the accrued and unpaid commitment fee thereon was nil, which is the
unpaid principal, accrued and unpaid interest and accrued and unpaid commitment
fee owed under this Note as of the close of business on the date of this Note.

Section 3. Place of Payment. All payments will be made at Noteholder’s address
at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697,
Attention: Treasurer, or such other place as the Noteholder may from time to
time appoint in writing.

Section 4. Payments. The unpaid principal balance of this Note and any accrued
and unpaid interest thereon shall be due and payable on the Final Payment Date.
Prior to the Final Payment Date, any accrued and unpaid interest on an unpaid
principal balance shall be paid in arrears quarterly on the last day of each
March, June, September and December, commencing March 31, 2013. All payments on
this Note shall be applied first to accrued and unpaid interest, next to accrued
interest not yet payable and then to principal. If any payment of principal or
interest on this Note shall become due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and the payment shall
be the amount owed on the original payment date.

Section 5. Prepayments. This Note may be prepaid in part or in full at any time
without penalty.

Section 6. Borrowings. Prior to the Final Payment Date, Noteholder expressly
authorizes Borrower to borrow, repay and re-borrow principal under this Note in
increments of $100,000 on a daily basis so long as:

 

  • the aggregate outstanding principal balance does not exceed $100,000,000.00;
and

 

  • no Event of Default has occurred and is continuing.

 

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Notwithstanding anything else in this Note, in no event will Noteholder be
required to lend money to Borrower under this Note and loans under this Note
shall be at the sole and absolute discretion of Noteholder.

Section 7. Interest. The unpaid principal balance of this Note shall bear
interest at the rate per annum of the Prime Rate plus one percent (1.00%). In
the event that an Event of Default occurs and is continuing, the unpaid
principal amount shall bear interest from the Event of Default at the rate per
annum of the Prime Rate plus four percent (4.00%) until such time as the Event
of Default is cured. Accrued interest on the unpaid principal of this Note shall
be computed on the basis of a 365- or 366-day year for actual days (including
the first, but excluding the last day) elapsed, but in no event shall such
computation result in an amount of accrued interest that would exceed accrued
interest on the unpaid principal balance during the same period at the Maximum
Rate. Notwithstanding anything to the contrary, this Note is expressly limited
so that in no contingency or event whatsoever shall the amount paid or agreed to
be paid to the Noteholder exceed the Maximum Rate. If, from any circumstances
whatsoever, the Noteholder shall ever receive as interest an amount that would
exceed the Maximum Rate, such amount that would be excessive interest shall be
applied to the reduction of the unpaid principal balance and not to the payment
of interest, and if the principal amount of this Note is paid in full, any
remaining excess shall be paid to Borrower, and in such event, the Noteholder
shall not be subject to any penalties provided by any laws for contracting for,
charging, taking, reserving or receiving interest in excess of the highest
lawful rate permissible under applicable law. All sums paid or agreed to be paid
to Noteholder for the use, forbearance or detention of the indebtedness of the
Borrower to Noteholder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full of the principal (including the period of any
renewal or extension thereof) so that the interest on account of such
indebtedness shall not exceed the Maximum Rate. If at any time the Contract Rate
is limited to the Maximum Rate, any subsequent reductions in the Contract Rate
shall not reduce the rate of interest on this Note below the Maximum Rate until
the total amount of interest accrued equals the amount of interest that would
have accrued if the Contract Rate had not been limited by the Maximum Rate. In
the event that, upon the Final Payment Date, the total amount of interest paid
or accrued on this Note is less than the amount of interest that would have
accrued if the Contract Rate had not been limited by the Maximum Rate, then at
such time, to the extent permitted by law, in addition to the principal and any
other amounts Borrower owes to the Noteholder, the Borrower shall pay to the
Noteholder an amount equal to the difference between: (i) the lesser of the
amount of interest that would have accrued if the Contract Rate had not been
limited by the Maximum Rate or the amount of interest that would have accrued if
the Maximum Rate had at all times been in effect; and (ii) the amount of
interest actually paid on this Note.

Section 8. Fees and Expenses. On the last day of each March, June, September and
December, commencing March 31, 2013, and on the Final Payment Date, Borrower
shall pay to Noteholder the Unused Commitment Fee for such period, provided,
however, Borrower will not owe any Unused Commitment Fee for any part of such
period (prorated as applicable) that the Noteholder is a net borrower of money
from the Borrower. In addition, Borrower and any guarantor jointly and severally
agree to pay on the Final Payment Date to Noteholder any other cost or expense
reasonably incurred by Noteholder in connection with Noteholder’s commitment to
Borrower pursuant to the terms of this Note, including without limitation any
other cost reasonably incurred by Noteholder pursuant to the terms of any credit
facility of Noteholder.

Section 9. Remedy. Upon the occurrence and during the continuation of an Event
of Default, the Noteholder shall have all of the rights and remedies provided in
the applicable Uniform Commercial Code, this Note or any other agreement among
Borrower and in favor of the Noteholder, as well as those rights and remedies
provided by any other applicable law, rule or regulation. In conjunction with
and in addition to the foregoing rights and remedies of the Noteholder, the
Noteholder may declare all indebtedness due under this Note, although otherwise
unmatured, to be due and payable immediately without notice or demand
whatsoever. All rights and remedies of the Noteholder are cumulative and may be
exercised singly or concurrently. The failure to exercise any right or remedy
will not be a waiver of such right or remedy.

Section 10. Right of Offset. The Noteholder shall have the right of offset
against amounts that may be due by the Noteholder now or in the future to
Borrower against amounts due under this Note.

 

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Section 11. Record of Outstanding Indebtedness. The date and amount of each
repayment of principal outstanding under this Note or interest thereon shall be
recorded by Noteholder in its records. The principal balance outstanding and all
accrued or accruing interest owed under this Note as recorded by Noteholder in
its records shall be the best evidence of the principal balance outstanding and
all accrued or accruing interest owed under this Note; provided that the failure
of Noteholder to so record or any error in so recording or computing any such
amount owed shall not limit or otherwise affect the obligations of the Borrower
under this Note to repay the principal balance outstanding and all accrued or
accruing interest.

Section 12. Waiver. Borrower and each surety, endorser, guarantor, and other
party now or subsequently liable for payment of this Note, severally waive
demand, presentment for payment, notice of nonpayment, notice of dishonor,
protest, notice of protest, notice of the intention to accelerate, notice of
acceleration, diligence in collecting or bringing suit against any party liable
on this Note, and further agree to any and all extensions, renewals,
modifications, partial payments, substitutions of evidence of indebtedness, and
the taking or release of any collateral with or without notice before or after
demand by the Noteholder for payment under this Note.

Section 13. Costs and Attorneys’ Fees. In addition to any other amounts payable
to Noteholder pursuant to the terms of this Note, in the event the Noteholder
incurs costs in collecting on this Note, this Note is placed in the hands of any
attorney for collection, suit is filed on this Note or if proceedings are had in
bankruptcy, receivership, reorganization, or other legal or judicial proceedings
for the collection of this Note, Borrower and any guarantor jointly and
severally agree to pay on demand to the Noteholder all expenses and costs of
collection, including, but not limited to, reasonable attorneys’ fees incurred
in connection with any such collection, suit, or proceeding, in addition to the
principal and interest then due.

Section 14. Time of Essence. Time is of the essence with respect to all of
Borrower’s obligations and agreements under this Note.

Section 15. Jurisdiction and Venue. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS. BORROWER CONSENTS TO
JURISDICTION IN THE COURTS LOCATED IN DALLAS, TEXAS

Section 16. Notice. Any notice or demand required by this Note shall be deemed
to have been given and received on the earlier of (i) when the notice or demand
is actually received by the recipient or (ii) 72 hours after the notice is
deposited in the United States mail, certified or registered, with postage
prepaid, and addressed to the recipient. The address for giving notice or demand
under this Note (i) to the Noteholder shall be the place of payment specified in
Section 3 or such other place as the Noteholder may specify in writing to the
Borrower and (ii) to Borrower shall be the address below the Borrower’s
signature or such other place as the Borrower may specify in writing to the
Noteholder.

Section 17. Successors and Assigns. All of the covenants, obligations, promises
and agreements contained in this Note made by Borrower shall be binding upon its
successors and permitted assigns, as applicable. Notwithstanding the foregoing,
Borrower shall not assign this Note or its performance under this Note without
the prior written consent of the Noteholder.

Section 18. Definitions. For purposes of this Note, the following terms shall
have the following meanings:

(a) “Basis Point” shall mean 1/100th of 1 percent.

(b) “Business Day” shall mean any day banks are open in the state of Texas.

(c) “Contract Rate” means the amount of any interest (including fees, charges or
expenses or any other amounts that, under applicable law, are deemed interest)
contracted for, charged or received by or for the account of Noteholder.

 

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(d) “Event of Default” wherever used herein, means any one of the following
events:

(i) the Borrower fails to pay any amount due on this Note and/or any fees or
sums due under or in connection with this Note after any such payment otherwise
becomes due and payable and three Business Days after demand for such payment;

(ii) the Borrower otherwise fails to perform or observe any other provision
contained in this Note and such breach or failure to perform shall continue for
a period of thirty days after notice thereof shall have been given to the
Borrower by the Noteholder;

(iii) a case shall be commenced against Borrower, or Borrower shall file a
petition commencing a case, under any provision of the Federal Bankruptcy Code
of 1978, as amended, or shall seek relief under any provision of any other
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter in
effect, or shall consent to the filing of any petition against it under such
law, or Borrower shall make an assignment for the benefit of its creditors, or
shall admit in writing its inability to pay its debts generally as they become
due, or shall consent to the appointment of a receiver, trustee or liquidator of
Borrower or all or any part of its property; or

(iv) an event occurs that, with notice or lapse of time, or both, would become
any of the foregoing Events of Default.

(e) “Final Payment Date” shall mean the earlier of:

 

  • written demand by the Noteholder for payment of all or part of the unpaid
principal, the accrued and unpaid interest thereon and the accrued and unpaid
commitment fee thereon, but in any event no earlier than December 31, 2014; or

 

  • acceleration as provided herein.

(f) “Maximum Rate” shall mean the highest lawful rate permissible under
applicable law for the use, forbearance or detention of money.

(g) “Prime Rate” shall mean the fluctuating interest rate per annum in effect
from time to time equal to the base rate on corporate loans as reported as the
Prime Rate in the Money Rates column of The Wall Street Journal or other
reliable source.

(h) “Unused Commitment Amount” for any period on after the date of this Note
shall mean the average on each day of such period of the difference between
(A) $100,000,000.00 and (B) the amount of the unpaid principal balance of this
Note.

(i) “Unused Commitment Fee” shall mean the product of (A) 50 Basis Points per
annum (pro rated to take into account that the fee is payable quarterly, or such
shorter period if applicable) and (B) the Unused Commitment Amount.

 

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BORROWER: VALHI, INC. By:       Gregory M. Swalwell   Vice President and
Controller Address: 5430 LBJ Freeway, Suite 1700 Dallas, Texas 75240-2697

As of the date hereof, Kronos Worldwide, Inc., as the Noteholder, hereby agrees
that this Note renews, replaces, amends and restates in its entirety each Prior
Note (but shall not extinguish the obligations under each Prior Note, nor effect
a novation thereof), and that the unpaid principal of nil, the accrued and
unpaid interest thereon of nil and the accrued and unpaid commitment fee thereon
of nil that was owed under the Fourth Amended Note as of the close of business
on December 31, 2012 are the unpaid principal, the accrued and unpaid interest
thereon and the accrued and unpaid commitment fee thereon, respectively, owed
under this Note as of the close of business on the date of this Note.

 

KRONOS WORLDWIDE, INC. By:       Tim C. Hafer   Vice President and Controller

 

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