INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "Agreement"), effective as of
January 1, 2003, amends and supersedes that certain Intercorporate Services
Agreement effective as of January 1, 2002 by and between CONTRAN CORPORATION, a
Delaware corporation ("Contran"), and VALHI, INC., a Delaware corporation
("Recipient").
Recitals
A. Without direct compensation from Recipient, employees and agents of
Contran and affiliates of Contran perform (i) management, legal, financial and
administrative functions for Recipient and (ii) pilot services and aircraft
management functions with respect to certain aircraft owned or leased by
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 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 services presently provided
by Contran and affiliates of Contran and Contran 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. Contran agrees to make available to
Recipient, upon request, the following services (the "Services") to be rendered
by the internal staff of Contran and affiliates of Contran:
(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 with respect to employee benefit plans
and incentive compensation arrangements;
(g) Pilot services and aircraft management functions with respect to
aircraft owned or leased by Recipient;
(h) Certain administration and management services with respect to
Recipient's insurance and risk management needs, including, without
limitations, administration of Recipient's:
(i) property and casualty insurance program,
(ii) claims management program,
(iii) property loss control program, and
(i) Such other services as may be requested by Recipient from time to
time.
This Agreement does not apply to, and the Services provided for herein do not
include, any services that Harold C. Simmons, Glenn R. Simmons or Steven L.
Watson may provide to Recipient in their roles as members of Recipient's board
of directors or any other activity related to such board of directors.
Section 2. Miscellaneous Services. It is the intent of the parties hereto
that Contran provide only the Services requested by Recipient in connection with
routine 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 Contran assumes no liability for any expenses or
services other than those stated in Section 1. In addition to the fee paid to
Contran by Recipient for the Services provided pursuant to this Agreement,
Recipient will pay to Contran the amount of out-of-pocket costs incurred by
Contran in rendering such Services.
Section 3. Fee for Services. Recipient agrees to pay to Contran $1,064,750
quarterly on the first business day of each quarter, commencing as of January 1,
2003, 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, 2003 to December
31, 2003.
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 Contran 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,
Contran shall have a duty to act, and to cause its agents to act, in a
reasonably prudent manner, but neither Contran nor any officer, director,
employee or agent of Contran 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
Contran.
Section 7. Indemnification of Contran by Recipient. Recipient shall
indemnify and hold harmless Contran, 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 Contran or any such person may become
subject arising out of the Services provided by Contran to the 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. Confidentiality. Except as otherwise required by applicable law,
each of the parties agrees that it will maintain in confidence all confidential
information regarding the other party supplied to it in the course of the
performance of this Agreement.
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 Recipient in writing, and if
intended for Recipient, 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 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 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: /s/Steven L. Watson
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Steven L. Watson, President
VALHI, INC.
By: /s/Bobby D. O'Brien
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Bobby D. O'Brien, Vice President