INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "Agreement"), effective as
of January 1, 1999, amends and supersedes that certain Intercorporate Services
Agreement effective as of January 1, 1998 between VALHI, INC., a Delaware
corporation ("Valhi"), and COMPX INTERNATIONAL INC., a Delaware corporation
("Recipient").
Recitals
A. Employees and agents of Valhi and affiliates of Valhi perform
management, financial and administrative functions for Recipient without direct
compensation from Recipient.
B. Recipient does not separately maintain the full internal capability
to perform all necessary management, financial and administrative functions that
Recipient requires.
C. The cost of maintaining the additional personnel by Recipient
necessary to perform the functions provided for by this Agreement would exceed
the fee set forth in Section 3 of this Agreement and that the terms of this
Agreement are no less favorable to Recipient than could otherwise be obtained
from a third party for comparable services.
D. Recipient desires to continue receiving the management, financial
and administrative services presently provided by Valhi and affiliates of Valhi
and Valhi is willing to continue to provide such services under the terms of
this Agreement.
Agreement
For and in consideration of the mutual premises, representations and
covenants herein contained, the parties hereto mutually agree as follows:
Section 1. Services to be Provided. Valhi agrees to make available to
Recipient the following services (the "Services") to be rendered by the internal
staff of Valhi and affiliates of Valhi:
(a) Consultation and assistance in the development and
implementation of Recipient's corporate business strategies,
plans and objectives;
(b) Consultation and assistance in management and conduct of
corporate affairs and corporate governance consistent with the
charter and bylaws of Recipient;
(c) Consultation and assistance in maintenance of financial
records and controls, including preparation and review of
periodic financial statements and reports to be filed with
public and regulatory entities and those required to be
prepared for financial institutions or pursuant to indentures
and credit agreements;
(d) Consultation and assistance in cash management and in
arranging financing necessary to implement the business plans
of Recipient;
(e) Consultation and assistance in tax management and
administration, including, without limitation, preparation and
filing of tax returns, tax reporting, examinations by
government authorities and tax planning;
(f) Consultation and assistance in performing internal audit and
control functions;
(g) Consultation and assistance with respect to employee benefit
plans and incentive compensation arrangements; and
(h) Such other services as may be requested by Recipient or deemed
necessary and proper from time to time.
Section 2. Miscellaneous Services. It is the intent of the parties
hereto that Valhi provide only the Services requested by Recipient in connection
with routine management, financial and administrative functions related to the
ongoing operations of Recipient and not with respect to special projects,
including corporate investments, acquisitions and divestitures. The parties
hereto contemplate that the Services rendered in connection with the conduct of
Recipient's business will be on a scale compared to that existing on the
effective date of this Agreement, adjusted for internal corporate growth or
contraction, but not for major corporate acquisitions or divestitures, and that
adjustments may be required to the terms of this Agreement in the event of such
major corporate acquisitions, divestitures or special projects. Recipient will
continue to bear all other costs required for outside services including, but
not limited to, the outside services of attorneys, auditors, trustees,
consultants, transfer agents and registrars, and it is expressly understood that
Valhi assumes no liability for any expenses or services other than those stated
in Section 1. In addition to the fee paid to Valhi by Recipient for the Services
provided pursuant to this Agreement, Recipient will pay to Valhi the amount of
out-of-pocket costs incurred by Valhi in rendering such Services.
Section 3. Fee for Services. Recipient agrees to pay to Valhi $81,000
quarterly, commencing as of January 1, 1999, pursuant to this Agreement.
Section 4. Original Term. Subject to the provisions of Section 5
hereof, the original term of this Agreement shall be from January 1, 1999 to
December 31, 1999.
Section 5. Extensions. This Agreement shall be extended on a
quarter-to-quarter basis after the expiration of its original term unless
written notification is given by Valhi or Recipient thirty (30) days in advance
of the first day of each successive quarter or unless it is superseded by a
subsequent written agreement of the parties hereto.
Section 6. Limitation of Liability. In providing its Services
hereunder, Valhi shall have a duty to act, and to cause its agents to act, in a
reasonably prudent manner, but neither Valhi nor any officer, director, employee
or agent of Valhi or its affiliates shall be liable to Recipient for any error
of judgment or mistake of law or for any loss incurred by Recipient in
connection with the matter to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Valhi.
Section 7. Indemnification of Valhi by Recipient. Recipient shall
indemnify and hold harmless Valhi, its affiliates and their respective officers,
directors and employees from and against any and all losses, liabilities,
claims, damages, costs and expenses (including attorneys' fees and other
expenses of litigation) to which Valhi or any such person may become subject
arising out of the Services provided by Valhi to Recipient hereunder, provided
that such indemnity shall not protect any person against any liability to which
such person would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on the part of such person.
Section 8. Further Assurances. Each of the parties will make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as the other party may reasonably request and as may reasonably
be required in order to effectuate the purposes of this Agreement and to carry
out the terms hereof.
Section 9. Notices. All communications hereunder shall be in writing
and shall be addressed, if intended for Valhi, to Three Lincoln Centre, 0000 XXX
Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: President, or such other
address as it shall have furnished to Recipient in writing, and if intended for
Recipient, to Two Greenspoint Plaza, 00000 Xxxxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000, Attention: Chairman of the Board, or such other address as
it shall have furnished to Valhi in writing.
Section 10. Amendment and Modification. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated other than by
agreement in writing signed by the parties hereto.
Section 11. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Valhi and Recipient and their respective
successors and assigns, except that neither party may assign its rights under
this Agreement without the prior written consent of the other party.
Section 12. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the state of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
VALHI, INC.
By:
Xxxxxx X. Xxxxxx
President
COMPX INTERNATIONAL INC.
By:
Xxxxxx X. Xxxxxxxxxxx
Chairman of the Board,
President and Chief
Executive Officer
