EXHIBIT
10.1

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (the “Agreement”) is made and entered into as of
March 26, 2007 between Contran Corporation, a Delaware corporation (“Contran”),
and Valhi, Inc., a Delaware corporation (“Valhi”).

Recitals

A. Valhi has today paid a stock dividend (the “Stock Dividend”) to its
stockholders of record as of March 12, 2007 of approximately 56.8 million shares
(the “Shares”) in the aggregate of the common stock, par value $0.01 per share,
of Titanium Metals Corporation, a Delaware corporation and an affiliate of
Valhi.

B. Valhi is a member of the consolidated U.S. federal tax return of which
Contran is the parent company (the “Contran Tax Group”).

C. As a member of the Contran Tax Group and pursuant to a tax policy between
Valhi and Contran, Valhi computes provisions for U.S. income taxes on a separate
company basis using tax elections made by Contran and makes payments to Contran
or receives payments from Contran in amounts it would have paid to or received
from the U.S. Internal Revenue Service had it not been a member of the Contran
Tax Group but instead had been a separate taxpayer.

D. Upon the payment of the Stock Dividend and pursuant to the tax policy between
Valhi and Contran, Valhi has incurred a tax obligation to Contran, which
obligation is a function of the difference between the aggregate value of the
Shares distributed based on their closing market price on the date of
distribution ($36.90 per share) less Valhi's aggregate tax basis in such Shares
(the “Tax Obligation”).

E. On the terms and subject to the conditions of this Agreement, including the
release and indemnity of the Tax Obligation by Contran, Valhi wishes to today
issue 5,000 shares (the “Shares”) of its 6% series A preferred stock, par value
$0.01 per share, of Valhi, to Contran, and Contran wishes to purchase the Shares
(the “Transaction”).

Agreement

The parties agree as follows:

ARTICLE I.
THE CLOSING

Section 1.  Closing and Deliveries.  The closing of the purchase and sale of the
Shares shall take place effective as of March 26, 2007 (the “Closing Date”). On
the Closing Date:

(a) Valhi shall issue and deliver to Contran certificates representing the
Shares; and

(b) Contran shall undertake responsibility for and shall release Valhi from, and
indemnify Valhi against, the Tax Obligation as set forth in Article IV and
Section 5.2 of this Agreement.

ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF VALHI

Valhi hereby represents and warrants to Contran as of the date of this Agreement
as follows:

Section 2.1.  Authority.  It is a corporation validly existing and in good
standing under the laws of the state of its incorporation. It has full corporate
power and authority, without the consent or approval of any other person, to
execute and deliver this Agreement and to consummate the Transaction. All
corporate action required to be taken by or on behalf of it to authorize the
execution, delivery and performance of this Agreement has been duly and properly
taken.

 
 

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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 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 Transaction.

Section 2.3.  Terms of the Shares.  The certificate of designations, rights and
preferences of Valhi’s 6% series A preferred stock is set forth on Exhibit A
attached hereto.

Section 2.4.  Title to the Shares.  Upon consummation of the transactions
contemplated by this Agreement, Contran will acquire good and marketable title
to the 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.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF CONTRAN

Contran hereby represents and warrants to Valhi as of the date of this Agreement
as follows:

Section 3.1.  Authority.  It is a corporation validly existing and in good
standing under the laws of the state of Delaware. It has full corporate power
and authority, without the consent or approval of any other person, to execute
and deliver this Agreement and to consummate the Transaction. All corporate and
other actions required to be taken by or on behalf of it to authorize the
execution, delivery and performance of this Agreement have 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 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 Transaction.

Section 3.3.  Purchase for Investment.  It is purchasing the Shares to be sold
and delivered to it hereunder 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 Shares are restricted securities under the Securities Act
of 1933, as amended (the “Securities Act”), and that such 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 3.4.  Nature of Purchaser.  It has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the purchase of the Shares.

ARTICLE IV.
RELEASE

Upon the purchase of the Shares pursuant to the terms of this Agreement, Contran
from and after the Closing releases and forever discharges Valhi from the Tax
Obligation. Notwithstanding the foregoing, if any settlement with the U.S.
Internal Revenue Service, state or local tax authority or court decision which
has become final during any taxable period preceding Closing, including the
period beginning January 1, 2007 and ending on the Closing Date, results in any
adjustment to Valhi’s aggregate tax basis or the aggregate value of the Shares
which affects or relates to the Tax Obligation, then the Tax Obligation shall be
re-determined to give effect to such adjustment as if it had been made as part
of or reflected in the original computation of such Tax Obligation. If the
effect of such adjustment results in an increase or decrease in the Tax
Obligation, then such amount shall promptly be paid to Contran by Valhi or paid
to Valhi by Contran, respectively.

 
 

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ARTICLE V.
INDEMNIFICATION

Section 5.1.  Indemnification by Valhi  From and after the Closing, Valhi shall
defend, indemnify, save and keep harmless Contran and its successors and assigns
against and from all Damages (as defined below) sustained or incurred by Contran
resulting from or arising out of or by virtue of any inaccuracy in or breach of
any representation or warranty made by Valhi in this Agreement or in any closing
document delivered to Contran by Valhi in connection with this Agreement, or any
breach by Valhi of, or failure by Valhi to comply with, any of its covenants or
obligations under this Agreement.

As used in this Agreement, “Damages” mean all liabilities, demands, claims,
actions or causes of action, regulatory, legislative or judicial proceedings or
investigations, assessments, levies, losses, fines, penalties, damages, costs
and expenses, including, without limitation: (a) reasonable attorneys’,
accountants’, investigators’, and experts’ fees and expenses sustained or
incurred in connection with the defense or investigation of any such liability,
and (b) any and all reasonable costs and expenses (including reasonable legal
fees and expenses) arising from any Damages or incurred in an investigation and
defense, or in enforcing the indemnification provisions of this Agreement.

Section 5.2.  Indemnification by Contran.  From and after the Closing, Contran
shall defend, indemnify, save and keep harmless Valhi and its successors and
assigns against and from all Damages sustained or incurred by Valhi resulting
from or arising out of or by virtue of:

(a) the Tax Obligation or adjustments, modifications or changes to the Tax
Obligation now existing or arising in the future, subject to the provisions set
forth in Article IV; and

(b) any inaccuracy in or breach of any representation or warranty made by
Contran in this Agreement or in any closing document delivered to Contran by
Valhi in connection with this Agreement, or any breach by Contran of, or failure
by Contran to comply with, any of its covenants or obligations under this
Agreement.

ARTICLE VI.
GENERAL PROVISIONS

Section 6.1.   Survival.  The representations, warranties covenants and other
agreements set forth in this Agreement shall survive the execution of this
Agreement and the consummation of the transactions contemplated herein.

Section 6.2. 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 6.3.  Parties and Interest.  This Agreement shall bind and inure to the
benefit of the parties named herein and their respective heirs, successors and
assigns.

Section 6.4.  Entire Transaction.  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 6.5.  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 6.6.  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.

 
 

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Section 6.7.  Notice.  All notices, requests, demands and other communications
hereunder shall be in writing and shall be sent by registered or certified mail,
postage prepaid as follows:
 
If toValhi: Valhi, Inc.
5430 LBJ Freeway
Three Lincoln Centre, Suite 1700
Dallas, Texas 75240-2697
Attention:  Secretary

If to Contran: Contran Corporation
5430 LBJ Freeway
Three Lincoln Centre, Suite 1700
Dallas, Texas 75240-2697
Attention:  General Counsel

Section 6.8.  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.

The parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the date first written above.

VALHI, INC.

By:  
Gregory M. Swalwell, Vice President

CONTRAN CORPORATION

By:  
Bobby D. O’Brien, Vice President

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Exhibit A
Certificate of Designations, Rights and Preferences of 6% Series A Preferred
Stock of Valhi, Inc.

CERTIFICATE OF DESIGNATIONS, RIGHTS AND PREFERENCES OF
6% SERIES A PREFERRED STOCK
 
 
 
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware

 
Valhi, Inc., a Delaware corporation (the “Corporation”), certifies as follows:
 
FIRST: The Certificate of Incorporation of the Corporation authorizes the
issuance of 5,000,000 shares of Preferred Stock, par value $.01 per share, and,
further, authorizes the Board of Directors of the Corporation, subject to the
limitations prescribed by law and the provisions of the Certificate of
Incorporation, to provide for the issuance of shares of the Preferred Stock or
to provide for the issuance of shares of the Preferred Stock in one or more
series, to establish from time to time the number of shares to be included in
each such series and to fix the designations, voting powers, preference rights
and qualifications, limitations or restrictions of the shares of the Preferred
Stock of each such series.
 
SECOND: The Board of Directors of the Corporation, as of February 28, 2007, duly
adopted the following resolutions, authorizing the creation and issuance of a
series of said Preferred Stock to be known as 6% Series A Preferred Stock:
 
RESOLVED, the Board of Directors, pursuant to the authority vested in it by the
provisions of the Certificate of Incorporation of the Corporation, hereby
authorizes the issuance of a series of the Corporation’s Preferred Stock, par
value $.01 per share, consisting of 5,000 shares of which are authorized to be
issued under the Corporation’s Certificate of Incorporation (such 5,000 shares
being hereinafter referred to as the “Series A Preferred Stock”), of the
Corporation and hereby fixes the number, designations, preferences, rights and
limitations thereof in addition to those set forth in said Certificate of
Incorporation as follows:
 
Section 1.  Certain Definitions. As used in this Certificate, the following
terms shall have the following meanings, unless the context otherwise requires:
 
“Board of Directors” means either the board of directors of the Corporation or
any duly authorized committee of such board.
 
“Business Day” means any day other than a Saturday, Sunday or a day on which
state or U.S. federally chartered banking institutions in New York, New York are
not required to be open.
 
“Capital Stock” of any Person means any and all shares, interests,
participations or other equivalents however designated of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person and any rights (other than debt securities convertible
or exchangeable into an equity interest), warrants or options to acquire an
equity interest in such Person that are traded on an established national or
regional trading market or exchange, including but not limited to the common
stock, par value $.01 per share, of Valhi, Inc., a Delaware corporation.
 
“Certificate” means this Certificate of Designations, Rights and Preferences of
6% Series A Preferred Stock.
 
“Certificate of Incorporation” means the Certificate of Incorporation of the
Corporation, as amended from time to time.
 
“Common Stock” means the voting Common Stock, $.01 par value per share, of the
Corporation and any other stock of any class of the Corporation that has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation.
 
“Corporation” means Valhi, Inc., a Delaware corporation, and its successors.
 
“Dividend Payment Date” means March 31, June 30, September 30 and December 31,
of each year, or if any such date is not a Business Day, on the next succeeding
Business Day.
 
 
 

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“Dividend Period” means the period beginning on, and including, a Dividend
Payment Date and ending on, and excluding, the immediately succeeding Dividend
Payment Date.
 
“Liquidation Preference” has the meaning assigned to such term in Section 4(a).
 
“Original Issue Date” has the meaning assigned to such term in Section 3(a).
 
“Outstanding” means, when used with respect to Series A Preferred Stock, as of
any date of determination, all shares of Series A Preferred Stock outstanding as
of such date; provided further that, in determining whether the holders of
Series A Preferred Stock have given any request, demand, authorization,
direction, notice, consent or waiver or taken any other action hereunder, Series
A Preferred Stock owned by the Corporation shall be deemed not to be
outstanding.
 
“Parity Stock” has the meaning assigned to such term in Section 2.
 
“Person” means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
 
“Record Date” means with respect to the dividends payable on March 31, June 30,
September 30 and December 31 of each year, March 15, June 15, September 15 and
December 15 of each year, respectively, or such other record date, not more than
60 days and not less than 10 days preceding the applicable Dividend Payment
Date, as may be fixed by the Board of Directors.
 
“Senior Stock” has the meaning assigned to such term in Section 2.
 
“Series A Preferred Stock” has the meaning assigned to such term in the
Resolution set forth in the Preamble hereto.
 
Section 2.  Rank. The Series A Preferred Stock shall, with respect to rights
upon liquidation, dissolution or winding up of the Corporation, rank (a) senior
to all classes or series of Common Stock and to any other class or series of
equity securities issued by the Corporation not referred to in clauses (b) or
(c) of this paragraph, (b) on a parity with all equity securities issued by the
Corporation in the future, the terms of which specifically provide that such
equity securities rank on a parity with the Series A Preferred Stock with
respect to dividend rights or rights upon the liquidation, dissolution or
winding up of the Corporation (“Parity Stock”) and (c) junior to all equity
securities issued by the Corporation in the future the terms of which
specifically provide that such equity securities rank senior to the Series A
Preferred Stock with respect to dividend rights or rights upon the liquidation,
dissolution or winding up of the Corporation (“Senior Stock”). The term “equity
securities” shall not include convertible debt securities.
 
Section 3.  Dividends.
 
(a) Holders of the then Outstanding shares of Series A Preferred Stock shall be
entitled to receive, when and as authorized by the Board of Directors, out of
funds legally available for the payment of dividends, cash dividends at the rate
of 6% of the $133,466.75 per share Liquidation Preference per annum. Such
dividends shall accrue from the first date on which any Series A Preferred Stock
is issued (the “Original Issue Date”) and shall be payable quarterly in arrears
on each Dividend Payment Date. Any dividend payable on the Series A Preferred
Stock for any partial dividend period will be computed on the basis of a 360-day
year consisting of twelve 30-day months. Dividends will be payable to holders of
record as they appear in the stock records of the Corporation at the close of
business on the applicable Record Date.
 
(b) No dividends on shares of Series A Preferred Stock shall be declared by the
Corporation or paid or set apart for payment by the Corporation at such time as
the terms and provisions of any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibit such declaration, payment or
setting apart for payment or provide that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default thereunder, or
if such declaration or payment shall be restricted or prohibited by law.
 
(c) Notwithstanding the foregoing, dividends on the Series A Preferred Stock
shall accrue whether or not the terms and provisions set forth in Section 3(b)
hereof at any time prohibit the current payment of dividends, whether or not the
Corporation has earnings, whether or not there are funds legally available for
the payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on the Series A Preferred Stock will accumulate as
of the Dividend Payment Date on which they first become payable, but interest
will not accrue on any amount of accrued but unpaid dividends on the Series A
Preferred Stock.
 
 
 

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(d) Nothing contained herein shall prevent or restrict the Corporation from the
declaration, payment or set aside for payment or any other distribution of cash
or other property, directly or indirectly, on or with respect to any shares of
the Common Stock, or shares of any other class or series of equity securities
ranking junior to or on a parity with the Series A Preferred Stock as to
dividends or upon liquidation, including without limitation accrued and unpaid
dividends on the Series A Preferred Stock. Further, nothing contained herein
shall prevent or restrict the Corporation from redeeming, purchasing or
otherwise acquiring for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such shares) by the
Corporation any shares of Common Stock, or any shares of equity securities
ranking junior to or on a parity with the Series A Preferred Stock as to
dividends or upon liquidation.
 
(e) When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) on the Series A Preferred Stock and the shares of
any other class or series of equity securities ranking on a parity as to
dividends with the Series A Preferred Stock, all dividends declared upon the
Series A Preferred Stock and any other class or series of such equity securities
ranking on a parity as to dividends with the Series A Preferred Stock shall be
declared pro rata so that the amount of dividends declared per share of Series A
Preferred Stock and such other class or series of such equity securities shall
in all cases bear to each other the same ratio that accrued dividends per share
on the Series A Preferred Stock and such other class or series of such equity
securities (which shall not include any accrual in respect of unpaid dividends
for prior dividend periods if such other class or series of equity securities
does not have a cumulative dividend) bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on Series A Preferred Stock which may be in arrears.
 
(f) Any dividend payment made on shares of the Series A Preferred Stock shall be
credited against the accrued but unpaid dividends due as designated by the
Corporation. Holders of the Series A Preferred Stock shall not be entitled to
any dividend, whether payable in cash, property or shares of Capital Stock in
excess of full accrued dividends on the Series A Preferred Stock as described
above.
 
Section 4.  Liquidation Preference.
 
(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation, the holders of shares of Series A Preferred
Stock then Outstanding are entitled to be paid out of the assets of the
Corporation, legally available for distribution to its stockholders, a
liquidation preference of $133,466.75 per share of Series A Preferred Stock (the
“Liquidation Preference”), plus an amount equal to any accrued and unpaid
dividends (whether or not declared) to the date of payment, before any
distribution of assets is made to holders of Common Stock or any other class or
series of equity securities that ranks junior to the Series A Preferred Stock as
to liquidation rights.
 
(b) In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Corporation are
insufficient to pay the amount of the liquidating distributions on all
Outstanding shares of Series A Preferred Stock and the corresponding amounts
payable on all shares of each other class or series of equity securities ranking
on a parity with the Series A Preferred Stock as to liquidation rights, then the
holders of the Series A Preferred Stock and each such other class or series of
equity securities shall share proportionately in any such distribution of assets
in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.
 
(c) After payment of the full amount of the liquidating distributions to which
they are entitled, the holders of Series A Preferred Stock will have no right or
claim to any of the remaining assets of the Corporation.
 
(d) Written notice of any such liquidation, dissolution or winding up of the
Corporation, stating the payment date or dates when, and the place or places
where, the amounts distributable in such circumstances shall be payable, shall
be given by first class mail, postage pre-paid, not less than 30 nor more than
60 days prior to the payment date stated therein, to each record holder of the
Series A Preferred Stock at the respective addresses of such holders as the same
shall appear on the stock transfer records of the Corporation.
 
(e) The consolidation or merger of the Corporation with or into any other
corporation, trust or entity or of any other corporation with or into the
Corporation, or the sale, lease or conveyance of all or substantially all of the
property or business of the Corporation, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Corporation.
 
Section 5.  Voting Rights.
 
(a) Holders of the Series A Preferred Stock will not have any voting rights,
except as set forth below or as otherwise provided in the Certificate of
Incorporation, by law or pursuant to agreements among the holders of voting
equity securities of the Corporation.
 
 
 

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(b) The affirmative vote of holders of at least two-thirds of the Outstanding
shares of the Series A Preferred Stock and all other Parity Stock with like
voting rights, voting as a single class, in person or by proxy, at a special
meeting called for the purpose, or by written consent in lieu of meeting, shall
be required to alter, repeal or amend, whether by merger, consolidation,
combination, reclassification or otherwise, any provisions of the Certificate of
Incorporation if the amendment would amend, alter or affect the powers,
preferences or rights of the Series A Preferred Stock, so as to adversely affect
the holders thereof; provided, however, that any increase in the amount of the
authorized common stock or authorized preferred stock or the creation and
issuance of other series of common stock or preferred stock will not be deemed
to materially and adversely affect such powers, preferences or special rights.
 
Section 6.  Consolidation, Merger and Sale of Assets. The Corporation, without
the consent of the holders of any of the Outstanding Series A Preferred Stock,
may consolidate with or merge into any other Person or convey, transfer or lease
all or substantially all of its assets to any Person or may permit any Person to
consolidate with or merge into, or transfer or lease all or substantially all
its properties to the Corporation.
 
Section 7.  Headings. The headings of the Sections of this Certificate are for
convenience of reference only and shall not define, limit or affect any of the
provisions hereof.
 
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in
its name and on its behalf on this 26th day of March, 2007.
 
Valhi, Inc.

 
By:
   

Gregory M. Swalwell
Vice President and Controller