SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is executed on October 5,
2004 but effective as of October 1, 2004, among NL Industries, Inc., a New
Jersey corporation ("NL"), TIMET Finance Management Company, a Delaware
corporation ("TFMC" and together with NL, the "Stockholders"), and CompX Group,
Inc., a Delaware corporation ("CGI").
Recitals
A. The Stockholders are beneficial owners of shares (the "CompX Shares") of
either class A or class B common stock, par value $0.01 per share, of CompX
International Inc., a Delaware corporation ("CompX").
B. Each of the Stockholders wishes to subscribe for one thousandth of a
share of common stock, par value $0.01 per share, of CGI (the "CGI Shares"), for
each CompX Share they contribute to CGI on the terms and subject to the
conditions of this Agreement (each time a contribution is made shall be referred
to as a "Transaction").
C. The certificate of incorporation and the bylaws of CGI, to which the
Stockholders have agreed in connection with the transactions contemplated by
this Agreement are attached as Exhibits A and B, respectively, to this
Agreement.
Agreement
The parties agree as follows:
ARTICLE I.
THE TRANSACTION
Section 1.1. Initial Contribution of CompX Shares for CGI Shares. In
consideration of CGI's issuance of one thousandth of a CGI Share for each CompX
Share the Stockholders contribute to CGI on the date hereof, each of NL and TFMC
hereby contributes and delivers to CGI the following CompX Shares:
Shares of CompX Shares of CompX Total CompX
Class A Class B Shares
Stockholder Common Stock Common Stock Contributed
---------------- -------------- -------------- --------------
NL.............. 374,000 10,000,000 10,374,000
---------------- -------------- -------------- --------------
TFMC............ 2,212,820 0 2,212,820
---------------- -------------- -------------- --------------
Certificates representing such CompX Shares are hereby delivered accompanied by
stock powers duly endorsed in blank or the holder has made an irrevocable
request to transfer such CompX Shares to such brokerage accounts designated by
CGI.
Section 1.2. Subsequent Contributions of CompX Shares for CGI Shares. In
consideration of CGI's issuance of one thousandth of a CGI Share for each CompX
Share the Stockholders may contribute to CGI in the future, each of the
Stockholders may in the future contribute and deliver CompX Shares to CGI.
Certificates representing such CompX Shares shall be delivered accompanied by
stock powers duly endorsed in blank or the holder shall make an irrevocable
request to transfer such CompX Shares to such brokerage accounts designated by
CGI on the date of the respective contribution.
Section 1.3. Voting Agreement. Each of the parties as a condition to all
Transactions shall execute and deliver to the other parties a Voting Agreement
substantially in the form of Exhibit C attached hereto (the "Voting Agreement").
Section 1.4. Sales of CompX Shares Contributed by TFMC. CGI agrees that it
will not sell any of the CompX Shares contributed to CGI by TFMC (as such number
of CompX Shares may be adjusted from time to time pursuant to stock splits of,
stock dividends on, or recapitalizations of, such CompX Shares) pursuant to this
Agreement without the express written consent of TFMC.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders hereby individually represents and warrants to CGI
as of the date of this Agreement, and each time a Stockholder subsequently
contributes CompX Shares to CGI as though made on the date of such contribution,
as follows.
Section 2.1. Authority. It is validly existing and in good standing under
the laws of the state of its incorporation. It has the power and authority,
without the consent or approval of any other person, to execute and deliver this
Agreement and to consummate the respective Transaction. All action required to
be taken by or on behalf of it to authorize the execution, delivery and
performance of this Agreement and the respective Transaction 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 respective 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 respective Transaction.
Section 2.3. Ownership of CompX Shares. It is the beneficial owner of the
CompX Shares it will contribute to CGI in the respective Transaction and upon
consummation of the respective Transaction CGI will acquire good and marketable
title to such CompX Shares free and clear of any liens, encumbrances, security
interests, restrictive agreements, claims or imperfections of any nature
whatsoever, other than restrictions on transfer imposed by applicable securities
laws and any liens of third party lending institutions exiting as of the date
hereof that have been disclosed to the other parties to this Agreement.
Section 2.4. Acquisition for Investment. It is acquiring the CGI Shares
issued and delivered to it in the respective Transaction for investment solely
for its own account and not with a view to, or for resale in connection with,
the distribution thereof. It understands that such CGI Shares are restricted
securities under the Securities Act of 1933, as amended (the "Securities Act"),
and that such CGI Shares must be held indefinitely unless they are registered
under the Securities Act and any applicable state securities or blue sky laws or
an exemption from such registration is available.
Section 2.5. Nature of Stockholder. It has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the acquisition of CGI Shares issued and delivered to it in the
respective Transaction.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF CGI
CGI hereby represents and warrants to each of the Stockholders as of the
date of this Agreement, and each time a Stockholder subsequently contributes
CompX Shares to CGI as though made on the date of such contribution, as follows.
Section 3.1. Authority. It is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation.
It has the corporate power and authority, without the consent or approval of any
other person, to execute and deliver this Agreement and to consummate the
respective Transaction. All corporate action required to be taken by or on
behalf of it to authorize the execution, delivery and performance of this
Agreement and the respective Transaction has 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 respective 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 respective Transaction.
Section 3.3. Issuance of CGI Shares. Upon the consummation of each
Transaction, the CGI Shares issued in such Transaction will be validly issued,
fully paid and non-assessable shares and the respective Stockholder receiving
such shares will acquire good and marketable title to such shares free and clear
of any liens, encumbrances, security interests, restrictive agreements, claims
or imperfections of any nature whatsoever, other than restrictions on transfer
imposed by applicable securities laws, except that NL's CGI Shares will be
subject to the restrictions of the Voting Agreement.
Section 3.4. Acquisition for Investment. It is acquiring the CompX Shares
contributed and delivered to it in the respective Transaction for investment
solely for its own account and not with a view to, or for resale in connection
with, the distribution thereof. It understands that such CompX Shares are
restricted securities under the Securities Act and that such CompX Shares must
be held indefinitely unless they are registered under the Securities Act and any
applicable state securities or blue sky laws or an exemption from such
registration is available.
Section 3.5. Nature of CGI. It has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the acquiring of the CompX Shares contributed and delivered to it in
the respective Transaction.
ARTICLE IV.
GENERAL PROVISIONS
Section 4.1. Restricted Shares. Each of the Stockholders hereby consents to
the placing of a legend on any stock certificates evidencing CGI Shares issued
to it in a Transaction stating that such CGI Shares are restricted securities.
NL agrees to the placing of a legend on any stock certificates evidencing its
CGI Shares stating that such CGI Shares are subject to the Voting Agreement.
Section 4.2. Access to Information. Each of the Stockholders shall provide
CGI and its representatives access to all information with respect to the
business of CompX possessed by such party and reasonably requested by CGI. CGI
shall provide each of the Stockholders and its respective representatives access
to all information with respect to the business of CGI possessed by CGI and
reasonably requested by such Stockholder.
Section 4.3. Survival. The representations and warranties set forth in this
Agreement shall survive the execution of this Agreement and the consummation of
the transactions contemplated herein.
Section 4.4. 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 4.5. Parties and Interest. This Agreement shall bind and inure to
the benefit of the parties named herein and their respective successors and
assigns.
Section 4.6. Entire Agreement. 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 4.7. 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 4.8. 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 4.9. Notice. All notices and other communications that are required
to be or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person or transmitted by
confirmed telecopy or upon receipt after dispatch by overnight courier or by
certified or registered mail, postage prepaid, to the party to whom the notice
is given. Notices shall be given to the address for the respective party
appearing under the party's signature to this Agreement or to such other address
as such party may designate by giving notice of such change of address to the
other parties to this Agreement.
Section 4.10. 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.
Section 4.11. Counterparts. This Agreement may be executed in counterparts
each of which will be an original and all of which taken together shall
constitute one and the same agreement.
Section 4.12. Expenses. Except as otherwise expressly provided herein, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated hereby.
The parties hereto have caused this Agreement to be executed by their duly
authorized officers on October 5, 2004 but effective as of October 1, 2004.
NL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President,
General Counsel and Secretary
Address: Three Lincoln Centre
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FAX: ▇▇▇.▇▇▇.▇▇▇▇
Attention: General Counsel
TIMET FINANCE MANAGEMENT COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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FAX: ▇▇▇.▇▇▇.▇▇▇▇
Attention: General Counsel
COMPX GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President,
General Counsel and Secretary
Address: Three Lincoln Centre
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: ▇▇▇.▇▇▇.▇▇▇▇
Attention: General Counsel
