INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "Agreement"), effective as
of January 1, 2000, amends and supersedes that certain Intercorporate Services
Agreement effective as of January 1, 1999 by and between CONTRAN CORPORATION, a
Delaware corporation ("Contran"), and VALHI, INC., a Delaware corporation
("Valhi").
Recitals
A. Without direct compensation from Valhi, employees and agents of
Contran and affiliates of Contran perform (i) management, financial and
administrative functions for Valhi and (ii) pilot services and aircraft
management functions with respect to certain aircraft owned or leased by Valhi.
B. Without direct compensation from Contran, employees and agents of
Valhi perform certain management, financial and administrative functions for
Contran.
C. Neither Contran nor Valhi separately maintain the full internal
capability to perform all necessary management, financial and administrative
functions that such corporation requires.
D. The cost of maintaining the additional personnel by each party
necessary to perform the functions provided by the other party pursuant to this
Agreement would exceed the amount charged to such party that is contained in the
net fee set forth in Section 4 of this Agreement and the terms of this Agreement
are no less favorable to each party than could otherwise be obtained from a
third party for comparable services.
E. Each party desires to continue receiving the services presently
provided by the other party and the other party 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 by Contran. Contran agrees to make
available to Valhi, upon request, the following services (the "Contran
Services") to be rendered by the internal staff of Contran and affiliates of
Contran:
(a) Consultation and assistance in the development and
implementation of Valhi'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 Valhi;
(c) Pilot services and aircraft management functions with
respect to aircraft owned or leased by Valhi; and
(d) Such other services as may be requested by Valhi from time
to time.
Section 2. Services to be Provided by Valhi. Valhi agrees to make
available to Contran, upon request, the following services (the "Valhi
Services," and collectively with the Contran Services, the "Services") to be
rendered by the internal staff of Valhi:
(a) 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;
(b) Consultation and assistance in cash management and in
arranging financing necessary to implement the business plans of
Contran;
(c) 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;
(d) Consultation and assistance in performing internal audit
and control functions;
(e) Consultation and assistance with respect to insurance and
risk management;
(f) Consultation and assistance with respect to employee
benefit plans and incentive compensation arrangements; and
(g) Such other services as may be requested by Contran from
time to time.
Section 3. Miscellaneous Services. It is the intent of the parties
hereto that each party to this Agreement provide (a "Providing Party") only such
Services as are requested by the other party (a "Receiving Party") in connection
with (i) routine management, financial and administrative functions related to
the ongoing operations of the Receiving Party and not with respect to special
projects, including corporate investments, acquisitions and divestitures and
(ii) with respect to Contran Services, pilot services and routine aircraft
management functions for aircraft owned or leased by Valhi. The parties hereto
contemplate that the Services rendered by a Providing Party in connection with
the conduct of each Receiving Party'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. Each Receiving Party 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 each Providing Party assumes no
liability for any expenses or services other than those stated in this Agreement
to be provided by such party. With respect to aircraft covered by this
Agreement, Valhi shall continue to bear all costs associated with such
aircraft's ownership, storage, operation, maintenance, insurance, taxes, fees
and pilot expenses, other than such pilot's employment and benefits. In addition
to the amounts charged to a Receiving Party for Services provided pursuant to
this Agreement, such Receiving Party will pay the Providing Party the amount of
out-of-pocket costs incurred by the Providing Party in rendering such Services.
Section 4. Net Fee for Services. Valhi agrees to pay to Contran a net
fee of $169,250 quarterly, commencing as of January 1, 2000, pursuant to this
Agreement.
Section 5. Original Term. Subject to the provisions of Section 6
hereof, the original term of this Agreement shall be from January 1, 2000 to
December 31, 2000.
Section 6. 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 Contran or Valhi 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 7. Limitation of Liability. In providing Services hereunder,
each Providing Party shall have a duty to act, and to cause its agents to act,
in a reasonably prudent manner, but no Providing Party nor any officer,
director, employee or agent of such party nor or its affiliates shall be liable
to a Receiving Party for any error of judgment or mistake of law or for any loss
incurred by the Receiving Party 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 the Providing Party.
Section 8. Indemnification. Each Receiving Party shall indemnify and
hold harmless the Providing Party, 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 such Providing Party or person may become
subject arising out of the Services provided by such Providing Party to the
Receiving Party 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 9. 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 10. Notices. All communications hereunder shall be in writing
and shall be addressed, if intended for Contran, to Three Lincoln Centre, 5430
LBJ Freeway, Suite 1700, Dallas, Texas 75240, Attention: Chairman of the Board,
or such other address as it shall have furnished to Valhi in writing, and if
intended for Valhi, to Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700,
Dallas, Texas 75240, Attention: President or such other address as it shall have
furnished to Contran in writing.
Section 11. 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 12. Successor and Assigns. This Agreement shall be binding upon
and inure to the benefit of Contran and Valhi 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 13. 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.
CONTRAN CORPORATION
By:
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Steven L. Watson
President
VALHI, INC.
By:
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Bobby D. O'Brien
Vice President