Document:

Certificate of Designation

    

      Exhibit
        4.1

      

      AMENDED
        AND RESTATED

      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 thereof.

       

      THIRD:
        As of
        March 29, 2007, the Board of Directors of the Corporation duly adopted, and
        the
        Sole Stockholder of the Series A Preferred stock consented to, the following
        resolutions, authorizing the amendment and restatement of the certificate
        of
        designations, rights and preferences of the 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
        amendment and restatement of the designations, preferences, rights and
        limitations of the Series A Preferred Stock 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).

       

      “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, only when and as authorized and declared 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.
        If, as
        and when declared, such dividends shall be payable quarterly in arrears on
        each
        Dividend Payment Date. Any dividend payable on the Series A Preferred Stock
        for
        any full or 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)  Dividends
        on the Series A Preferred Stock that are not declared or paid for any full
        or
        partial Dividend Period shall not accrue or accumulate under any
        circumstances.

       

      (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 not declaring or paying any
        dividend on the Series A Preferred Stock for any full or partial Dividend
        Period. 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, including
        without limitation not declaring or paying any dividend on the Series A
        Preferred Stock for any full or partial Dividend Period.

       

      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 declared and unpaid dividends (and only to the extent
        declared and unpaid) for the full or partial Dividend Period in which the
        liquidation, dissolution or winding up occurs, 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 29th
        day of
        March, 2007.

       

      Valhi,
        Inc.

      

      

      

      

      By: 

      Gregory
        M. Swalwell

      Vice
        President and ControllerConsent Agreement

    

      Exhibit
        10.2

      

      CONSENT
        AGREEMENT

      

      

      This
        Consent Agreement (the “Agreement”)
        is
        made and entered into as of March 29, 2007 between Contran Corporation, a
        Delaware corporation (“Contran”),
        and
        Valhi, Inc., a Delaware corporation (“Valhi”).

      

      Recitals

      

      A. On
        March
        26, 2007, Valhi issued to Contran 5,000 shares of its 6% Series A Preferred
        Stock, par value $.01 per share (“Series A Preferred Stock”) under the terms of
        a Stock Purchase Agreement dated March 26, 2007 (“Stock Purchase
        Agreement”).

      

      B. On
        the
        terms and subject to the conditions of this Agreement, Valhi and Contran
        now
        wish to amend certain terms of the Series A Preferred Stock, to be effective
        March 26, 2007, which amendment will remove the cumulative nature of the
        dividends on the Series A Preferred Stock.

      

      

      Agreement

      

      The
        parties agree as follows:

      

      ARTICLE I.

      THE
        AMENDMENT

      

      Section 1.1.  Certificate
        of Designations, Rights and Preferences.  
        Notwithstanding the certificate of designations, rights and preferences attached
        to Exhibit A to the Stock Purchase Agreement (the “Prior Certificate”),
        effective March 26, 2007 the certificate of designations, rights and preferences
        of the Series A Preferred Stock shall be as set forth on Exhibit A attached
        hereto. 

      

      Section 1.2.  Prior
        Cumulative Dividends.  
        Notwithstanding the terms of the Prior Certificate, Contran agrees to completely
        waive any rights to any dividend which may be deemed to have accrued to Contran
        on the Series A Preferred Stock under the terms of the Prior Certificate.
        

      

      Section 1.3.  No
        Other Changes.  
        All of the other terms, provisions and conditions of the Stock Purchase
        Agreement shall remain hereafter unchanged in effect. 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      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.

      

      

      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.

      

      ARTICLE IV.

      GENERAL
        PROVISIONS

      

      Section 4.1.  
        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 4.2. 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 4.3.  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 4.4.  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 4.5.  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 4.6.
         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 4.7.  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.

      5430
        LBJ
        Freeway

      Three
        Lincoln Centre, Suite 1700

      Dallas,
        Texas 75240-2697

      Attention:  Secretary

      

      If
        to
        Contran: Contran
        Corporation

      5430
        LBJ
        Freeway

      Three
        Lincoln Centre, Suite 1700

      Dallas,
        Texas 75240-2697

      Attention:  General
        Counsel

      

      Section 4.8.  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:  

      Gregory
        M. Swalwell, Vice President

      

      

      CONTRAN
        CORPORATION

      

      

      

      

      By:  

      Bobby
        D. O’Brien, Vice President

      

      
        
          
            

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      Exhibit
        A

      Certificate
        of Designations, Rights and Preferences of 6% Series A Preferred Stock of
        Valhi,
        Inc.

      

      AMENDED
        AND RESTATED

      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 thereof.

       

      THIRD:
        As of
        March 29, 2007, the Board of Directors of the Corporation duly adopted, and
        the
        Sole Stockholder of the Series A Preferred stock consented to, the following
        resolutions, authorizing the amendment and restatement of the certificate
        of
        designations, rights and preferences of the 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
        amendment and restatement of the designations, preferences, rights and
        limitations of the Series A Preferred Stock 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).

       

      “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, only when and as authorized and declared 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.
        If, as
        and when declared, such dividends shall be payable quarterly in arrears on
        each
        Dividend Payment Date. Any dividend payable on the Series A Preferred Stock
        for
        any full or 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)  Dividends
        on the Series A Preferred Stock that are not declared or paid for any full
        or
        partial Dividend Period shall not accrue or accumulate under any
        circumstances.

       

      (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 not declaring or paying any
        dividend on the Series A Preferred Stock for any full or partial Dividend
        Period. 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, including
        without limitation not declaring or paying any dividend on the Series A
        Preferred Stock for any full or partial Dividend Period.

       

      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 declared and unpaid dividends (and only to the extent
        declared and unpaid) for the full or partial Dividend Period in which the
        liquidation, dissolution or winding up occurs, 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 29th
        day of
        March, 2007.

       

      Valhi,
        Inc.

      

      

      

      

      
        	 	
                By:

              	 	 

      

      Gregory
        M. Swalwell

      Vice
        President and Controller

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