exhibit104.htm


    SUBORDINATION
      AGREEMENT

    


               THIS
      SUBORDINATION AGREEMENT (this “Agreement” which term shall include all
      amendments and modifications thereto) is made as of this ____ day of October,
      2007 by TIMET FINANCE MANAGEMENT COMPANY, a Delaware corporation (the
“Subordinate Lender”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative
      agent (in such capacity, together with any successor agent, the “Administrative
      Agent”) for the benefit of the Lenders (including, without limitation, the
      Issuing Lender, the Swing Line Lender and the Alternative Currency Lender)
      (as
      defined in the Credit Agreement).  Unless otherwise defined herein,
      all capitalized terms used herein shall have the meanings ascribed to them
      in
      the Credit Agreement referred to below.

    


    Recitals:

    


               A.           CompX
      International, Inc., a Delaware corporation (the “Borrower”), CompX Security
      Products, Inc., CompX Precision Slides, Inc., CompX Marine, Inc., Custom Marine,
      Inc. (f/k/a Custom Marine Acquisition, Inc.), and Livorsi Marine, Inc.
      (collectively, the “Guarantors”), the Administrative Agent and the Lenders have
      entered into a certain Credit Agreement dated as of December 23, 2005, as
      amended by that First Amendment to Credit Agreement dated October, 2007 (as
      amended, the “Credit Agreement” which term shall include all amendments and
      modifications thereto).  As used in this Agreement, (i) the term
“Senior Obligations” means all past, present, and future indebtedness,
      liabilities, and obligations of any nature whatsoever of the Borrower to the
      Lenders in connection with or arising from the Credit Agreement, and the Loan
      Documents (including, without limitation, the Obligations (as defined in the
      Credit Agreement)); and (ii) the term “Subordinated Debt” means all past,
      present, and future indebtedness, liabilities, and obligations of any nature
      whatsoever of the Borrower to the Subordinate Lender, including, without
      limitation, any and all indebtedness, liabilities, and obligations of the
      Borrower to the Subordinate Lender evidenced by that certain Subordinated Term
      Loan Promissory Note dated October ___, 2007 made by Borrower and payable to
      Subordinate Lender in the principal amount of $52,580,190.00 (the “Subordinate
      Note”).

    


               B.           The
      Subordinate Lender has requested the Required Lenders to consent to Subordinate
      Lender making a term loan to the Borrower evidenced by the Subordinate
      Note.

    


               C.           The
      Required Lenders have required, as a condition to the granting of their consent,
      the execution of this Agreement by the Subordinate Lender.

    


               NOW,
      THEREFORE, in consideration of the premises and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      Subordinate Lender hereby agrees with the Administrative Agent (for the benefit
      of the Lenders) as follows:

    


               1.           Amount
      of Subordinated Debt and Recitals.  The Subordinate Lender
      represents and warrants that (a) the outstanding principal amount of the
      Subordinated Debt shall not at any time exceed $52,580,190.00; (b) the above
      Recitals are true, accurate, and correct and are incorporated in this Agreement
      by reference; (c) the Subordinate Lender is the lawful owner of the Subordinated
      Debt, free and clear of all liens, assignments, security interests and other
      encumbrances; and (d) the Subordinate Lender has not previously subordinated
      the
      Subordinated Debt.

    


               2.           Subordination
      to Senior Obligations.  The Subordinate Lender hereby
      subordinates and postpones the payment and the time of payment of the
      Subordinated Debt to and in favor of the payment and the time of payment of
      the
      Senior Obligations.  So long as all or any part of the Senior
      Obligations remain unpaid, the Subordinate Lender shall not, without the prior
      written consent of the Required Lenders, ask, demand, sue for, set off, accept,
      or receive any payment of all or any part of the Subordinated Debt; provided,
      that until the occurrence of an Event of Default (as defined in the Credit
      Agreement), the Subordinate Lender may receive payment of that portion of the
      Subordinated Debt consisting of scheduled principal payments (including
      prepayments) and accrued unpaid interest in accordance with the terms of the
      Subordinate Note as in effect on the date hereof, if, after giving pro forma
      effect to such payment or prepayment, an Event of Default would not
      exist.  The Subordinate Lender agrees not to subordinate, grant a
      security interest or lien on, assign, or transfer all or any part of the
      Subordinated Debt to any other person without the prior written consent of
      the
      Required Lenders.  Subordinate Lender will not, without the prior
      written consent of the Required Lenders: (a) commence, or join with any other
      creditor in commencing, any bankruptcy, reorganization, insolvency or similar
      proceedings with respect to Borrower or any Guarantor; or (b) extend, amend,
      modify or renew any of the Borrower's obligations under the Subordinated Debt
      or
      the documents evidencing or executed or delivered in connection with the
      Subordinated Debt, or release any surety or security for such obligations or
      obtain collateral security or exercise any other right under the Subordinated
      Debt, or the documents evidencing or executed or delivered in connection with
      the Subordinated Debt.

    


               3.           Distributions,
      etc.  In the event of any distribution, division, or application,
      partial or complete, voluntary or involuntary, by operation of law or otherwise,
      of all or any part of the assets of the Borrower or any Guarantor or the
      proceeds thereof to creditors of the Borrower or any Guarantor or to any
      indebtedness, liabilities, and obligations of the Borrower or any Guarantor
      by
      reason of the liquidation, dissolution, or other winding up of the Borrower
      or
      any Guarantor or the business of the Borrower or any Guarantor or in the event
      of any sale, receivership, insolvency, or bankruptcy proceeding, or assignment
      for the benefit of creditors, or any proceeding by or against the Borrower
      or
      any Guarantor for any relief under the Bankruptcy Code or any insolvency law
      or
      other laws relating to the relief of debtors, readjustment of indebtedness,
      reorganizations, compositions, or extensions, then and in any such event,
      Lenders shall first be entitled to receive payment in full of all amounts due
      and owing under the Senior Obligations before the Subordinate Lender shall
      be
      entitled to receive any payment in respect of the Subordinated
      Debt.

    


               4.           Receipt
      of Payments by Subordinate Lender.  Should any payment or
      distribution not permitted by the provisions of this Agreement be received
      by
      the Subordinate Lender upon or with respect to all or any part of the
      Subordinated Debt, the Subordinate Lender will deliver the same to the
      Administrative Agent in precisely the form received (except for the endorsement
      or assignment of the Subordinate Lender where necessary) for application to
      the
      Senior Obligations (whether due or not due and in such order and manner as
      the
      Required Lenders may elect) and, until so delivered, the same shall be held
      in
      trust by the Subordinate Lender as property of the Administrative Agent (on
      behalf of the Lenders). In the event of the failure of the Subordinate Lender
      to
      make any such endorsement or assignment, the Administrative Agent, or any of
      its
      officers or employees on behalf of the Lenders, is hereby irrevocably authorized
      to make the same.

    


               5.           Endorsement,
      etc.  So as to secure the performance by the Subordinate Lender
      of the provisions of this Agreement and the payment of the Senior Obligations,
      the Subordinate Lender assigns, pledges, and grants to the Administrative Agent
      (on behalf of the Lenders) a security interest in the Subordinated Note to
      the
      extent of outstanding principal and accrued interest due
      thereon.  Upon the request of the Required Lenders, the Subordinate
      Lender shall endorse, assign, and deliver to the Administrative Agent in a
      manner acceptable to the Administrative Agent all notes, instruments, and
      agreements evidencing, securing, guaranteeing, or made in connection with the
      Subordinated Note.  Subordinate Lender will endorse on any and all
      instruments evidencing the Subordinated Note a statement satisfactory to
      Administrative Agent stating that the obligations evidenced by such instrument
      and the rights of the holders thereof are subordinated to the claims of Lenders
      as provided in this Agreement.  The Subordinate Lender and the
      Borrower each will further mark their books of account in such a manner as
      shall
      be effective to give proper notice of the effect of this
      Agreement.  Upon the occurrence of an Event of Default under the
      Senior Obligations, Lenders shall be entitled to collect and receive payments
      of
      outstanding principal and accrued interest then due and payable under the
      Subordinated Note until such time as all outstanding principal and accrued
      interest due and payable to the Lenders under the Senior Obligations has been
      repaid.  Other than the grant to the Administrative Agent (on behalf
      of the Lenders) of a security interest in the Subordinated Note as provided
      herein, nothing in this Agreement shall be construed to provide that the
      Subordinate Lender is responsible for, or has guaranteed the payment of, the
      Senior Obligations.

    


               6.           Consents,
      Waivers, etc.  The Subordinate Lender hereby consents that at any
      time and from time to time and with or without consideration, the Administrative
      Agent and Lenders may, without further consent of or notice to the Subordinate
      Lender and without in any manner affecting, impairing, lessening, or releasing
      any of the provisions of this Agreement, renew, extend, change the manner,
      time,
      place, and terms of payment of, sell, exchange, release, substitute, surrender,
      realize upon, modify, waive, grant indulgences with respect to, and otherwise
      deal with in any manner: (a) all or any part of the Senior Obligations; (b)
      all
      or any of the Loan Documents; (c) all or any part of any property at any time
      securing all or any part of the Senior Obligations; and (d) any person at any
      time primarily or secondarily liable for all or any part of the Senior
      Obligations and/or any collateral and security therefor. The Subordinate Lender
      hereby waives demand, presentment for payment, protest, notice of dishonor
      and
      of protest with respect to the Subordinated Debt, notice of acceptance of this
      Agreement by the Administrative Agent and Lenders, notice of the making of
      any
      of the Senior Obligations, and notice of the occurrence of an event of default
      under any of the Loan Documents.

    


               7.           Notices
      and Communications.  All notices and other communications
      hereunder shall be in writing and shall be effective when sent by certified
      mail, return receipt requested: (a) if to the Subordinate Lender at 1007 Orange
      Street, Suite 1414, Wilmington, Delaware 19801, or at such other address as
      the
      Subordinate Lender shall have furnished in writing to the Administrative Agent
      or Lender, or (b) if to the Administrative Agent or Lenders, addressed to such
      address as set forth in the Credit Agreement.

    


               8.           Transfer
      or Assignment of Obligations.  If any of the Senior Obligations
      should be transferred or assigned by the Lenders, this Agreement will inure
      to
      the benefit of the Lenders’ transferee or assignee to the extent of such
      transfer or assignment, provided that the Lenders shall continue to have the
      unimpaired right to enforce this Agreement as to any of the Senior Obligations
      not so transferred or assigned.

    


               9.           Miscellaneous.  This
      Agreement shall not be affected, impaired, or released by the delay or failure
      of the Administrative Agent or any of the Lenders to exercise any of their
      respective rights and remedies against the Borrower or any Guarantor or under
      any of the Loan Documents or against any collateral or security for the Senior
      Obligations. No delay or failure on the part of the Administrative Agent or
      any
      of the Lenders to exercise any of its rights or remedies hereunder or now or
      hereafter existing at law or in equity or by statute or otherwise, or any
      partial or single exercise thereof, shall constitute a waiver thereof. All
      such
      rights and remedies are cumulative and may be exercised singly or concurrently
      and the exercise of any one or more of them will not be a waiver of any
      other.  No waiver of any of its rights and remedies hereunder and no
      modification or amendment of this Agreement shall be deemed to be made by the
      Administrative Agent and Lenders unless the same shall be in writing, duly
      signed by the Administrative Agent on behalf of the Lenders, and each such
      waiver, if any, shall apply only with respect to the specific instance involved
      and shall in no way impair the rights and remedies of the Administrative Agent
      and Lenders hereunder in any other respect at any other time. The Administrative
      Agent and Lenders shall have the right to grant participations in the Senior
      Obligations to others at any time and from time to time, and the Administrative
      Agent and Lenders may divulge to any such participant or potential participant
      all information, reports, financial statements, and documents obtained in
      connection with this Agreement, any of the Loan Documents, or otherwise. If
      any
      term of this Agreement or any obligation thereunder shall be held to be invalid,
      illegal, or unenforceable, the remainder of this Agreement and any other
      application of such term shall not be affected thereby.  This
      Agreement may be executed in duplicate originals or in several counterparts,
      each of which shall be deemed an original but all of which together shall
      constitute one instrument, and it shall not be necessary in making proof hereof
      to produce or account for more than one such duplicate, original, or
      counterpart.  This Agreement shall be binding upon the heirs, personal
      representatives, successors, and assigns of the Subordinate Lender and shall
      inure to the benefit of the successors and assigns of the Administrative Agent
      and Lenders. As used herein, the singular number shall include the plural,
      the
      plural the singular, and the use of the masculine, feminine, or neuter gender
      shall include all genders, as the context may require, and the term “person”
shall include an individual, a corporation, an association, a partnership,
      a
      trust, and an organization. The paragraph headings of this Agreement are for
      convenience only and shall not limit or otherwise affect any of the terms
      hereof. This Agreement shall be governed by and construed in accordance with
      the
      laws of the State of North Carolina and shall be deemed to be executed,
      delivered, and accepted in the State of North Carolina.

    


    [SIGNATURE
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               IN
      WITNESS WHEREOF, the Subordinate Lender has caused this Agreement to be
      signed, sealed, and delivered on the day and year first written
      above.

    


    SUBORDINATE
      LENDER:

    


    TIMET
      FINANCE MANAGEMENT COMPANY,

    a
      Delaware corporation

    [CORPORATE
      SEAL}

    


    By:                                                                (SEAL)

    Name:                                                                           

    Title:                                                                           

    


    


    


    [ADDITIONAL
      SIGNATURE PAGES FOLLOW]

    



    
      
              

                  
      
      

                            
                          
      

                      
    

         

      

      
         

        
          

        

      

      
         

      

    


    


               The
      Borrower and the Guarantors join in the execution of this Agreement so as to
      signify their acceptance of and agreement and consent to the provisions of
      this
      Agreement.

    


    BORROWER:

    


    COMPX
      INTERNATIONAL, INC.,

    a
      Delaware corporation

    [CORPORATE
      SEAL}

    


    By:                                                                (SEAL)

    Name:                                                                           

    Title:                                                                           

    


    


                                                          GUARANTORS:

    


                                                          COMPX
      SECURITY PRODUCTS, INC.

    


    [CORPORATE
      SEAL}

                                                          By:                                                                (SEAL)

                                                          Name:                      

                                                          Title:                                                                           

    


                                                          COMPX
      PRECISION SLIDES, INC.

    


    [CORPORATE
      SEAL}

                                                          By:                                                                (SEAL)

                                                          Name:                      

                                                          Title:                                                                           

    


                                                          COMPX
      MARINE, INC.

    


    [CORPORATE
      SEAL}

                                                          By:                                                                (SEAL)

                                                          Name:                      

                                                          Title:                                                                           

    


                                                          CUSTOM
      MARINE, INC.

    


    [CORPORATE
      SEAL}

                                                          By:                                                                (SEAL)

                                                          Name:                      

                                                          Title:                                                                           

    


                                                          LIVORSI
      MARINE, INC.

    


    [CORPORATE
      SEAL}

                                                          By:                                                                (SEAL)

                                                          Name:                      

                                                          Title:                                                                           

    ACCEPTED
      BY:                                                                ADMINISTRATIVE
      AGENT:

    


    WACHOVIA
      BANK, NATIONAL
      ASSOCIATION,

    a
      national banking
      association

    


    By:                                                                

    Name:                      

    Title: