exhibit102.htm


    Agreement
      and Plan of Merger

    Among

    CompX
      International Inc.

    CompX
      Group, Inc.

    and

    CompX
      KDL LLC

    


    Dated
      as of October 16, 2007


    
      
              

                  
      
      

           
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    TABLE
      OF CONTENTS

    


    Page

     

    
      	
               

            	
              TABLE
                OF CONTENTS

            


    

     

     

    
      	
               

            	
              ARTICLE I.  THE
                MERGER

            


    

     

    
      	
               

            	
              Section 1.1.  The
                Merger

            


    

    
      	
               

            	
              Section 1.2.  Effective
                Time

            


    

    
      	
               

            	
              Section 1.3.  Succession
                of Surviving Company

            


    

    
      	
               

            	
              Section 1.4.  Certificate
                of Formation and Limited Liability Company
                Agreement

            


    

    
      	
               

            	
              Section 1.5.  Officers

            


    

    
      	
               

            	
              Section 1.6.  Continuation,Cancellation
                or Issuance of Membership Interests, Stock or
                Note

            


    

    
      	
               

            	
              Section 1.7.  Taking
                of Necessary Action

            


    

     

    
      	
               

            	
              ARTICLE II.  REPRESENTATIONS
                AND WARRANTIES

            


    

     

    
      	
               

            	
              Section 2.1.  Representations
                and Warranties of CompX

            


    

    
      	
               

            	
              Section 2.1.  Representations
                and Warranties of KDL

            


    

    
      	
               

            	
              Section 2.2.  Representations
                and Warranties of CGI

            


    

     

    
      	
               

            	
              ARTICLE III.  CONDITION
                TO THE MERGER

            


    

     

     

    
      	
               

            	
              ARTICLE IV.  TERMINATION,
                WAIVER AND AMENDMENT

            


    

     

    
      	
               

            	
              Section 4.1.  Right
                of Termination

            


    

    
      	
               

            	
              Section 4.2.  Effect
                of Termination

            


    

     

    
      	
               

            	
              ARTICLE V.  MISCELLANEOUS

            


    

     

    
      	
               

            	
              Section 5.1.  Survival

            


    

    
      	
               

            	
              Section 5.2.  Sole
                Agreement of Parties

            


    

    
      	
               

            	
              Section 5.3.  Waiver;
                Modification or Amendment

            


    

    
      	
               

            	
              Section 5.4.  Further
                Assurances

            


    

    
      	
               

            	
              Section 5.5.  Exhibit;
                Cross-References; Headings

            


    

    
      	
               

            	
              Section 5.6.  Severability

            


    

    
      	
               

            	
              Section 5.7.  Counterparts

            


    

    
      	
               

            	
              Section 5.8.  Applicable
                Law

            


    

     

    
      	
               

            	
              SIGNATURE
                PAGE

            


    

     

     

    
      	
               

            	
              EXHIBIT A  SUBORDINATED
                TERM LOAN PROMISSORY NOTEA

            


    

     

    



    
      
              

                  
      
      

                          
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    AGREEMENT
      AND PLAN OF MERGER

    


    This
      Agreement and Plan of Merger (this “Agreement”) is made as of October
      16, 2007 among CompX International Inc., a Delaware corporation
      (“CompX”), CompX KDL LLC, a Delaware limited liability company of which
      CompX is the sole member (“KDL”), and CompX Group, Inc., a Delaware
      corporation (“CGI”).

    


    Recitals

    


    A.           On
      the date of this Agreement:

    


    (1)  the
      authorized capital stock of CGI consists of 13,000 shares of common stock,
      par
      value $0.01 per share (the “CGI Common Stock”), of which 12,586.82
      shares are outstanding;

    


    (2)  CGI
      is
      the record holder of 2,586,820 shares (the “CGI CompX Class A Common Stock
      Shares”) of class A common stock, par value $0.01 per share (the “CompX
      Class A Common Stock”), of CompX and 10.0 million shares (collectively with
      the CGI CompX Class A Common Stock Shares, the “CGI CompX Common Stock
      Shares”) of the class B common stock, par value $0.01 per share, of CompX
      (the “CompX Class B Common Stock” and collectively with the CompX Class
      A Common Stock, the “CompX Common Stock”);

    


    (3)  NL
      Industries, Inc., a New Jersey corporation that is a parent of CompX
      (“NL”), is the record holder of 10,374 shares of CGI Common
      Stock;

    


    (4)  Titanium
      Metals Corporation, a Delaware corporation that is related to CompX, is the
      sole
      stockholder of TIMET Finance Management Company, a Delaware corporation
      (“TFMC”);

    


    (5)  TFMC
      is
      the record holder of 2,212.82 shares of CGI Common Stock; and

    


    (6)  NL
      and
      TFMC are the only stockholders of CGI.

    


    B.           CGI
      and KDL desire to merge upon the terms set forth in this Agreement.

    


    C.           NL
      and TFMC, as the only stockholders of CGI, and CompX, as
      the sole member of KDL, have each approved and adopted this
      Agreement.

    


    D.           The
      parties to this Agreement desire to consummate the merger in accordance with
      the
      provisions of section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
      amended.

    


    Agreement

    


    In
      consideration of the premises and the covenants and agreements herein contained,
      and for other good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, and intending to be legally bound hereby, the
      parties to this Agreement hereby agree as follows.

    


    ARTICLE I.

    THE
      MERGER

    


    Section 1.1.  The
      Merger.  Upon the terms and subject to the conditions of
      this Agreement and in accordance with the relevant provisions of the Delaware
      General Corporation Law and the Delaware Limited Liability Act, each as amended
      (each, as applicable, the “Applicable Delaware Entity Law”), CGI shall
      merge with and into KDL (the “Merger”) at the Effective Time (as
      defined below).

    


    Section 1.2.  Effective
      Time.  The Merger requires the filing of documents with
      the Secretary of State of the state of Delaware.  The Merger shall be
      effective as of the filing of a certificate of merger with the Secretary of
      State of the state of Delaware or such later time as the certificate of merger
      states the effective time of the Merger shall be (the “Effective
      Time”).

    


    Section 1.3.  Effects
      of the Merger.  As of the Effective Time, the separate
      corporate existence of CGI shall cease and it shall merge with and into KDL
      as
      the surviving company (the “Surviving Company”).  The Merger
      shall have the effects set forth in this Agreement and in the Applicable
      Delaware Entity Law.

    


    Section 1.4.  Certificate
      of Formation and Limited Liability Company
      Agreement.  Upon the Effective Time, the certificate of
      formation and limited liability company agreement of KDL shall be the
      certificate of formation and limited liability company agreement of the
      Surviving Company.

    


    Section 1.5.  Officers.  At
      the Effective Time, the officers of KDL immediately prior to the Effective
      Time
      shall be the officers of the Surviving Company.  Subject to the
      limited liability company agreement of the Surviving Company and the Delaware
      Limited Liability Act, as amended, each of the Surviving Company’s officers
      shall serve until his or her successor is elected or appointed and qualified
      or
      until his or her earlier death, incapacity, resignation or removal.

    


    Section 1.6.  Continuation, Cancellation
      or Issuance of Membership Interests, Stock or Note.  At
      the Effective Time, by virtue of the Merger and without any action on the part
      of any party to this Agreement, the following shall occur:

    


    (a)           each
      limited liability company interest in KDL outstanding prior to the Effective
      Time shall upon the Effective Time remain unchanged and continue to remain
      outstanding as a limited liability company interest in the Surviving
      Company;

    


    (b)           each
      share of the CGI Common Stock outstanding immediately prior to the Effective
      Time shall upon the Effective Time automatically be canceled and retired and
      shall cease to exist.

    


    (c)           each
      CGI CompX Common Stock Share outstanding immediately prior to the Effective
      Time
      shall upon the Effective Time automatically be canceled;

    


    (d)           CompX
      shall issue to NL upon the Effective Time 374,000 new shares of CompX Class
      A
      Common Stock and 10,000,000 new shares of CompX Class B Common Stock
      (collectively, the “New NL CompX Common Stock Shares”);
      and

    


    (e)           CompX
      shall execute and deliver to TFMC a subordinated term loan promissory note
      substantially on the terms set forth on Exhibit A attached to
      this Agreement (the “Promissory Note”).

    


    The
      other
      parties agree that CompX has joined this Agreement to accommodate the structure
      of the Transaction as expressed by the other parties and all the parties agree
      that the cancellation of the CGI CompX Common Stock Shares shall not be deemed
      an “acquisition” by CompX under paragraph B(v)(g) of Article Four of CompX’s
      restated certificate of incorporation.

    


    Section 1.7.  Taking
      of Necessary Action.  In case at any time after the
      Effective Time any further action is necessary to carry out the purposes of
      this
      Agreement or to vest the Surviving Company with full title to all assets,
      rights, approvals, immunities and franchises of CGI, the officers and directors,
      or the former officers and directors, as the case may be, of CGI and the
      Surviving Company shall take all such action, at the expense of the Surviving
      Company.

    


    ARTICLE II.

    REPRESENTATIONS
      AND WARRANTIES

    


    Section 2.1.  Representations
      and Warranties of CompX.  CompX hereby represents and
      warrants to each other party to this Agreement as of the date of this Agreement,
      and as of the Effective Time as if made at such time, as follows:

    


    (a)           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 the Promissory Note and to consummate the
      transactions contemplated by this Agreement (collectively, the
“Transactions”).  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.

    


    (b)           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
      Promissory Note when executed will be duly executed and delivered by it and
      shall constitute its lawful, valid and binding obligation, enforceable in
      accordance with its terms.  The execution and delivery of this
      Agreement and the Promissory Note and the consummation of the Transactions
      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
      Transactions.

    


    (c)           Title
      to New NL CompX Common Stock Shares.  At the Effective Time, the
      New NL CompX Common Stock Shares shall be validly issued and non-assessable
      and
      NL will acquire good and marketable title to the New NL CompX Common Stock
      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.

    


    Section 2.1.  Representations
      and Warranties of KDL.  KDL hereby represents and
      warrants to each other party to this Agreement as of the date of this Agreement,
      and as of the Effective Time as if made at such time, as follows:

    


    (a)           Authority.  It
      is a limited liability company validly existing and in good standing under
      the
      laws of the state of its formation.  It has full power and authority,
      without the consent or approval of any other person, to execute and deliver
      this
      Agreement and to consummate the Transactions.  All 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.

    


    (b)           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
      Transactions 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 certificate of
      formation or limited liability company agreement; (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
      Transactions.

    


    Section 2.2.  Representations
      and Warranties of CGI.  CGI hereby represents and
      warrants to each other party to this Agreement as of the date of this Agreement,
      and as of the Effective Time as if made at such time, as follows:

    


    (a)           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 Transactions.  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.

    


    (b)           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
      Transactions 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 Transactions.

    


    (c)           Title
      to CGI CompX Common Stock Shares.  It has, and at all times
      immediately prior to the Effective Time will have, good and marketable title
      to
      the CGI CompX Common Stock 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.

    CONDITION
      TO THE MERGER

    


    The
      obligation of each party to consummate the transactions to be performed by
      it
      pursuant to this Agreement is subject to the satisfaction of all applicable
      material regulatory approvals.

    


    ARTICLE IV.

    TERMINATION,
      WAIVER AND AMENDMENT

    


    Section 4.1.  Right
      of Termination.  This Agreement and the transactions
      contemplated herein may be terminated and abandoned at any time prior to the
      Effective Time by the mutual consent of all of the parties to this
      Agreement.

    


    Section 4.2.  Effect
      of Termination  In the event of the termination and
      abandonment hereof, pursuant to the provisions of
Section 4.1, this Agreement shall become void and have no
      effect, without any liability on the part of any party to this Agreement, or
      its
      respective directors, officers, stockholders or members, as applicable, with
      respect to this Agreement, except for liability of the party for its respective
      expenses.

    


    ARTICLE V.

    MISCELLANEOUS

    


    Section 5.1.  
      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 5.2.  Sole
      Agreement of Parties.  This Agreement and the documents
      referred to herein constitute the full understanding of the parties and a
      complete and exclusive statement of the terms and conditions of their agreement
      relating to the subject matter hereof and supersede any and all prior
      agreements, whether written or oral, that may exist between the parties with
      respect thereto.

    


    Section 5.3.  Waiver;
      Modification or Amendment.  Any of the terms or
      conditions of this Agreement may be waived at any time by the party that is
      entitled to the benefits thereof.  This Agreement may not be modified
      or amended except in a writing signed by all of the parties.

    


    Section 5.4.  Further
      Assurances.  Each party hereto agrees to execute any and
      all documents, and to perform such other acts, whether before or after the
      Effective Time, that may be reasonably necessary or expedient to further the
      purposes of this Agreement or to further assure the benefits intended to be
      conferred hereby.

    


    Section 5.5.  Exhibit;
      Cross-References; Headings.  The exhibit to this
      Agreement is incorporated herein and made a part hereof for all
      purposes.  All sections and articles referred to herein are sections
      and articles of this Agreement and the exhibit referred to herein is the exhibit
      attached to this Agreement.  Descriptive headings as to the contents
      of particular articles and sections are for convenience only and shall not
      control or affect the meaning or construction of any provision of this
      Agreement.

    


    Section 5.6.  Severability.  In
      the event that any provision of this Agreement is held to be illegal, invalid
      or
      unenforceable under present or future laws, then (i) such provision shall be
      fully severable and this Agreement shall be construed and enforced as if such
      illegal, invalid or unenforceable provision were not a part hereof; (ii) the
      remaining provisions of this Agreement shall remain in full force and effect
      and
      shall not be affected by such illegal, invalid or unenforceable provision or
      by
      its severance from this Agreement; and (iii) there shall be added automatically
      as a part of this Agreement a provision as similar in terms to such illegal,
      invalid or unenforceable provision as may be possible and still be legal, valid
      and enforceable.

    


    Section 5.7.  Counterparts.  This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute on and the same
      instrument.

    


    Section 5.8.  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.

    


    



    
      
              

                  
      
            

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SIGNATURE
      PAGE

    


    


    The
      parties hereto have executed this Agreement as of the date first above
      written.

    


    
      	 	
              CompX
                International Inc.

               

               

               

               

              By:       /s/
                Darryl R. Halbert

              Darryl
                R. Halbert, Vice President

            
	 	 
	 	
              CompX
                Group, Inc.

               

               

               

               

              By:       /s/
                Gregory M. Swalwell

              Gregory
                M. Swalwell, Vice President

            
	 	 
	 	
              CompX
                KDL LLC

               

               

               

               

              By:       /s/
                Kelly D. Luttmer

              Kelly
                D. Luttmer, Vice President

            


    

    


    



    
      
              

                  
      
      

                  
    

        
        

      

      
        
        

        
          

        

      

      
        
        

              

                  EXHIBIT A      
      

                  
      
      

                  SUBORDINATED
            TERM LOAN PROMISSORY
            NOTE      
      

                  
      
      

                  $43,149,990.00   October
            [__],
            2007      
      

                  
      
    

      

    


    


    For
      and
      in consideration of value received, the undersigned, COMPX INTERNATIONAL
      INC., a corporation duly organized under the laws of Delaware
      (“Maker”), promises to pay to the order of TIMET FINANCE MANAGEMENT
      COMPANY, a corporation duly organized under the laws of Delaware
      (“Payee”), at its address 1007 Orange Street, Suite 1414, Wilmington, Delaware
      19801, in lawful money of the United States of America, the principal sum of
      Forty Three Million One Hundred Forty Nine Thousand Nine Hundred and Ninety
      United States Dollars ($43,149,990.00) together with interest from the date
      hereof on the amount of principal from time to time outstanding at a rate equal
      to the three month United States LIBOR rate as quoted from time to time by
      The
      Wall Street Journal or other reliable source, plus one percent (1.00%) per
      annum. Interest shall be calculated on the basis of a year of 365/366 days
      and
      for the actual number of days (including the first, but excluding the last
      day)
      elapsed and shall be paid in arrears quarterly on the last day of each March,
      June, September and December, commencing December 31, 2007.

    


    Principal
      payments of $205,200 will be due and payable quarterly on the last day of each
      March, June, September and December commencing September 30, 2008, with any
      and
      all remaining outstanding principal and any accrued unpaid interest due on
      September 30, 2014 (the “Maturity Date”). All payments on this Note shall be
      applied first to accrued and unpaid interest, next to accrued interest not
      yet
      payable, and then to principal against the scheduled principal payments from
      earliest to latest. Maker may prepay principal at any time without penalty.
      In
      the event that principal or interest is not paid within five days of when due
      or
      declared due, interest shall thereafter accrue on the full amount of such
      payment at the rate of United States LIBOR plus three percent (3%) per
      annum.

    


    Notice
      of
      written demand for payment shall be made by Payee to Maker by certified mail,
      postage prepaid and return receipt requested to Maker’s address as set forth
      under its signature below. The demand for payment or any other communication
      shall be deemed given and effective as of the date of delivery or upon receipt
      as set forth on the return receipt.

    


    Upon
      the
      occurrence and during the continuation of an Event of Default (as defined
      below), Payee shall have all of the rights and remedies provided in the
      applicable Uniform Commercial Code, this Note or any other agreement between
      Maker and in favor of Payee, as well as those rights and remedies provided
      by
      any other applicable law, rule or regulation. In conjunction with and in
      addition to the foregoing rights and remedies of Payee, Payee may declare all
      indebtedness due under this Note, although otherwise unmatured, to be due and
      payable immediately without notice or demand whatsoever. All rights and remedies
      of the holder are cumulative and may be exercised singly or concurrently. The
      exercise of any right or remedy will not be a waiver of any other right or
      remedy.

    


    For
      purposes of this Note, an Event of Default shall mean any one of the following
      events:

    


    (a)           Maker
      fails to pay quarterly principal payments when due or interest payments within
      30 days of becoming due;


    
      
              

                  
      
      

           
    

        
        

      

      
        
        

        
          

        

      

      
        
        

              

                  SUBORDINATED
            TERM LOAN PROMISSORY
            NOTE      
      

                  
      
      

                  $43,149,990.00     October
            [__],
            2007      
      

                  
      
    

      

    


    


    (b)           Maker
      otherwise fails to perform or observe any other provision contained in this
      Note
      and such breach or failure to perform shall continue for a period of thirty
      days
      after notice thereof shall have been given to Makers by the holder
      hereof;

    


    (c)           Maker
      defaults under any loan, extension of credit, security agreement, or any other
      agreement, in favor of any other creditor or person that may materially affect
      Maker’s ability to repay this Note or perform Maker’s obligations under this
      Note; or

    


    (d)           Maker
      becomes insolvent, a receiver is appointed for any part of Maker’s property,
      Maker makes an assignment for the benefit of creditors, or any proceeding is
      commenced either by Maker or against Maker under any bankruptcy or insolvency
      laws.

    


    In
      the
      event Payee incurs costs in collecting on this Note, this Note is placed in
      the
      hands of any attorney for collection, suit is filed on this Note or if
      proceedings are had in bankruptcy, receivership, reorganization, or other legal
      or judicial proceedings for the collection of this Note, Maker agrees to pay
      on
      demand to Payee all expenses and costs of collection, including, but not limited
      to, reasonable attorneys’ fees incurred in connection with any such collection,
      suit, or proceeding, in addition to the principal and interest then
      due.

    


    It
      is
      agreed that time is of the essence on this Note. The failure of the holder
      of
      this Note to exercise any remedy shall not constitute a waiver on the part
      of
      the holder of the right to exercise any remedy at any other time. It is the
      intention of Maker and Payee to conform strictly to applicable usury laws,
      if
      any. Accordingly, notwithstanding anything to the contrary in this Note or
      any
      other agreement entered into in connection herewith, it is agreed as follows:
      (i) the aggregate of all interest and any other charges constituting interest
      under applicable law and contracted for, chargeable or receivable under this
      Note or otherwise in connection with the obligation evidenced hereby shall
      under
      no circumstances exceed the maximum amount of interest permitted by applicable
      law, if any, and any excess shall be deemed a mistake and canceled automatically
      and, if theretofore paid, shall, at the option of Payee, be refunded to Maker
      or
      credited on the principal amount of this Note; and (ii) in the event that the
      entire unpaid balance of this Note is declared due and payable by Payee, then
      earned interest may never include more than the maximum amount permitted by
      applicable law, if any, and any unearned interest shall be canceled
      automatically and, if theretofore paid, shall at the option of Payee, either
      be
      refunded to Maker or credited on the principal amount of this Note.

    


    Maker
      expressly waives demand and presentment for payment, notice of nonpayment,
      protest, notice of protest, notice of dishonor, notice of intention to
      accelerate, notice of acceleration, bringing of suit and diligence in taking
      any
      action to collect amounts called for hereunder and is and shall be liable for
      the payment of all sums owing and to be owing hereon, regardless of and without
      any notice, diligence, act or omission as or with respect to the collection
      of
      any amount called for hereunder or in connection with any right, lien, interest
      or property at any and all times had or existing as security for any amount
      called for hereunder.


    
      
              

                  
      
      

                               
    

        
        

      

      
        
        

        
          

        

      

      
        
        

              

                  SUBORDINATED
            TERM LOAN PROMISSORY
            NOTE      
      

                  
      
      

                  $43,149,990.00   October
            [__],
            2007      
      

                  
      
    

      

    


    


    If
      any
      payment of principal on this Note shall become due on a Saturday, Sunday or
      public holiday under the laws of Delaware, United States of America, on which
      banks are not open for business, such payment shall be made on the next
      succeeding business day in which banks are open for business.

    


    Pursuant
      to the terms of that certain Subordination Agreement dated October [__], 2007, executed
      by
      the Payee, the Maker and certain subsidiaries of the Maker, the indebtedness
      evidenced by this Note is subordinate and junior in right of payment, to all
      principal, interest, charges, expenses and attorneys’ fees arising out of or
      relating to all indebtedness, liabilities and obligations of Maker arising
      under
      that certain Credit Agreement dated December 23, 2005, as amended by that
      certain First Amendment to Credit Agreement dated October [__], 2007, by
      and
      between Maker and the Administrative Agent and Lenders set forth therein and
      all
      other amendments and modifications thereto, and the Loan Documents (as defined
      in such Credit Agreement), whether outstanding on the date of this Note or
      subsequently incurred to renew, extend, modify, or otherwise amend such superior
      indebtedness (the “Superior Debt”). Superior Debt shall continue to be Superior
      Debt and entitled to the benefits of these subordination provisions irrespective
      of any amendment, modification, or waiver of any term of the Superior Debt
      or
      extension or renewal of the Superior Debt.

    


    This
      Note
      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..

    


    MAKER:

    


    COMPX
      INTERNATIONAL INC.

    


    


    


    By:              

     

    Name:                                                                

     

    Title:              

     

    Address:                                                                

     


    
      
              

                  
      
      

                                 
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    CERTIFICATE
      OF SECRETARY

    OF

    CompX
      Group, Inc.

    
      


    

    


    The
      undersigned, being the secretary of CompX Group, Inc., a Delaware corporation
      (“CompX Group”), does hereby certify pursuant to Section 251 of the
      General Corporation Law of the state of Delaware that the stockholders of CompX
      Group duly adopted this Agreement and Plan of Merger by a written consent to
      action without a meeting pursuant to and in accordance with Section 228 of
      the
      General Corporation Law of the state of Delaware.

    


    


    


    


    /s/
      A.
      Andrew R.
      Louis                                                                      

    A.
      Andrew R. Louis, Secretary

    


    Date:  October
      16, 2007