AGREEMENT REGARDING SHARED INSURANCE

 

 

EXECUTION COPY                                                    CONFIDENTIAL

 

 

 

 

 

 

                      AGREEMENT REGARDING SHARED INSURANCE

 

 

This Agreement Regarding Shared Insurance  (hereinafter the "Agreement") is made

as of the 30th day of October 2003, by and between

 

                       CompX International Inc. ("CompX")

                        Contran Corporation ("Contran");

              Keystone Consolidated Industries, Inc. ("Keystone");

                          Kronos Worldwide, Inc. ("KI")

                           NL Industries, Inc. ("NL");

                   Titanium Metals Corp. ("Titanium Metals");

                                       and

                             Valhi, Inc. ("Valhi");

 

 

 

(For  convenience,  each of the above entities  and/or its  subsidiaries  may be

referred  to as a  "Party,"  and  collectively  they may be  referred  to as the

"Parties").

 

                                WITNESSETH THAT:

 

WHEREAS,  the Parties are affiliated  companies that have been,  are, and in the

future may be insured under a number of shared  insurance  policies that provide

shared limits of available insurance; and

 

WHEREAS,  although as of the date of this  Agreement the Parties  separately and

collectively  never  have  exhausted  the  total  limits of  insurance  coverage

available under any shared insurance agreement,  the Parties wish to ensure that

claims asserted under any of the shared insurance policies by any one Party will

not  unreasonably  deprive other  Parties of insurance  that may be available to

them.

 

 

 

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                                   AGREEMENTS:

 

NOW,  THEREFORE,  in  full  consideration  of the  foregoing  and of the  mutual

agreements  herein  contained,  and intending to be legally  bound,  the Parties

agree as follows:

 

1.       Definitions

 

The following  definitions  will apply to the listed terms  wherever those terms

appear  throughout  the  Agreement  as well as in any  exhibits  or  attachments

thereto. Moreover, each defined term stated in a singular form shall include the

plural form,  each defined term stated in plural form shall include the singular

form, and each defined term stated in the masculine form or in the feminine form

shall include the other.

 

     A.   "Shared  Insurance Policy" shall mean any one or more of the insurance

          policies listed on Exhibit "A" hereto, as well as any past, present or

          future insurance  policies that provide  insurance  coverage to all of

          the Parties to this  Agreement  and where the policy  provides  for an

          aggregate limit for all claims during the policy period.

 

     B.   "Covered  Claim" shall mean any claim for insurance  coverage that any

          Party may assert at any time under any Shared Insurance Policy that is

          covered  in whole or in part  under the terms  and  conditions  of the

          Shared Insurance Policy in question,  or that would be covered but for

          the fact that all  available  limits of insurance  coverage  under the

          Shared  Insurance  Policy in question  already have been  exhausted by

          another claim or claims of any Party.

 

     C.   "Reimbursed  Covered Claim" shall mean any Covered Claim for which any

          Party  actually  has  received a total or partial  insurance  coverage

          under any Shared Insurance Policy.

 

     D.   "Remaining Covered Claim" shall mean any Covered Claim or portion of a

          Covered Claim of any Party for which the available limits of insurance

          coverage under the Shared  Insurance  Policy in question  already have

          been  exhausted by a Reimbursed  Covered Claim or  Reimbursed  Covered

          Claims of any Party or Parties.

 

2. Agreement

 

Whenever the available  limits of insurance  under any Shared  Insurance  Policy

have been exhausted by a Reimbursed  Covered Claim or Reimbursed  Covered Claims

submitted by one or more of the Parties, this Agreement will provide a mechanism

by which the  Parties  will share  financial  responsibility  for all  Remaining

Covered Claims.

 

Financial responsibility for each Remaining Covered Claim shall be divided among

those  Parties  with Covered  Claims for that policy.  Each Party other than the

holder of a particular Remaining Covered Claim shall indemnify and reimburse the

holder of that  Remaining  Covered  Claim  for a  percentage  of that  Remaining

Covered  Claim equal to the  percentage  of Covered  Claims of the  Indemnifying

Party bears to the sum of all Parties' Covered Claims for the particular policy.

 

Any  indemnification  obligation required by this Agreement shall be paid within

60 days after a Party requests in writing  indemnification from another Party or

Parties  with  respect  to a  Remaining  Covered  Claim  and  provides  a  brief

description of the Remaining  Covered Claim,  as well as  identification  of the

Shared  Insurance  Policy  that would,  but for  exhaustion  of limits,  provide

coverage for the  Remaining  Covered  Claim.  If the insurer  issuing the Shared

Insurance  Policy in  question  has taken the  position  that the claim would be

covered and payable but for prior  exhaustion  of available  limits of coverage,

the claim  conclusively  will be  considered  by the  Parties to be a  Remaining

Covered Claim.  If the insurer issuing the Shared  Insurance  Policy in question

has not or will not  expressly  state that a claim  would be covered and payable

but for  exhaustion,  the Parties will attempt in good faith to agree whether or

not the claim is a Remaining  Covered Claim. If the Parties cannot agree whether

a claim is a Remaining  Covered Claim,  the question will be settled pursuant to

the "Dispute Resolution" provisions of this Agreement.

 

3. Confidentiality

 

The  Parties  agree that all  matters  relating  to the terms,  negotiation  and

implementation of this Agreement,  including documents and information exchanged

during  negotiations or relating to indemnification  obligations and claims made

hereunder,  shall be confidential and are not to be disclosed except as required

by law or regulation or by order of court or by  agreement,  in writing,  of the

Parties,  except