AGREEMENT AND PLAN OF MERGER
                                  by and among
                                  VALHI, INC.,
                             VALHI ACQUISITION CORP.
                                       and
                               TREMONT CORPORATION
                          Dated as of November 4, 2002


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                                Table of Contents
                                                                           Page

ARTICLE I         THE MERGER..................................................1
 Section 1.1  The Merger......................................................1
 Section 1.2  Effective Time..................................................1
 Section 1.3  Certificate of Incorporation and Bylaws of the
                Surviving Corporation..                 ......................1
 Section 1.4  Directors and Officers of the Surviving Corporation.............1

ARTICLE II    EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
               CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES             1
 Section 2.1  Effect on Capital Stock.........................................1
 Section 2.2  Exchange of Certificates........................................1
 Section 2.3  Certain Adjustments.............................................1

ARTICLE III       REPRESENTATIONS AND WARRANTIES OF VALHI AND SUB.............1
 Section 3.1  Organization....................................................1
 Section 3.2  Capitalization..................................................1
 Section 3.3  Authority.......................................................1
 Section 3.4  No Violations: Consents and Approvals...........................1
 Section 3.5  SEC Documents...................................................1
 Section 3.6  Financial Statements............................................1
 Section 3.7  Absence of Certain Changes......................................1
 Section 3.8  Proxy Statement/Registration Statement..........................1
 Section 3.9  State Anti-Takeover Statutes....................................1
 Section 3.10 Brokers' Fees...................................................1
 Section 3.11 Compliance with Laws............................................1
 Section 3.12 No Litigation...................................................1
 Section 3.13 Employee Matters................................................1
 Section 3.14 Environmental Liability.........................................1
 Section 3.15 Certain Tax Matters.............................................1
 Section 3.16 Interim Operations of Sub.......................................1
 Section 3.17 Knowledge.......................................................1
 Section 3.18 No Undisclosed Information......................................1

ARTICLE IV        REPRESENTATIONS AND WARRANTIES OF TREMONT...................1
 Section 4.1  Organization....................................................1
 Section 4.2  Capitalization..................................................1
 Section 4.3  Authority.......................................................1
 Section 4.4  No Violations: Consents and Approvals...........................1
 Section 4.5  SEC Documents...................................................1
 Section 4.6  Financial Statements............................................1
 Section 4.7  Absence of Certain Changes......................................1
 Section 4.8  Proxy Statement/Registration Statement..........................1
 Section 4.9  State Anti-Takeover Statutes....................................1
 Section 4.10 Brokers' Fees...................................................1
 Section 4.11 Compliance with Laws............................................1
 Section 4.12 No Litigation...................................................1
 Section 4.13 Employee Matters................................................1
 Section 4.14 Intellectual Property...........................................1
 Section 4.15 Required Vote of Tremont Stockholders...........................1
 Section 4.16 Certain Contracts...............................................1
 Section 4.17 Environmental Liability.........................................1
 Section 4.18 Taxes...........................................................1
 Section 4.19 Knowledge.......................................................1
 Section 4.20 No Undisclosed Information......................................1

ARTICLE V         COVENANTS...................................................1
 Section 5.1  Conduct of Business of Tremont..................................1
 Section 5.2  Conduct of Business of Valhi....................................1
 Section 5.3  Tremont Board Recommendation....................................1
 Section 5.4  Access to Information...........................................1
 Section 5.5  Registration Statement and Proxy Statement......................1
 Section 5.6  Tremont Stockholders' Meeting...................................1
 Section 5.7  Reasonable Efforts; Other Actions...............................1
 Section 5.8  Public Announcements............................................1
 Section 5.9  Notification of Certain Matters.................................1
 Section 5.10 Expenses........................................................1
 Section 5.11 Rule 145 Affiliates.............................................1
 Section 5.12 Stock Exchange Listing..........................................1
 Section 5.13 State Anti-Takeover Laws........................................1
 Section 5.14 Tax-Free Transaction............................................1

ARTICLE VI        CONDITIONS PRECEDENT........................................1
 Section 6.1  Conditions to Each Party's Obligation to Effect the Merger......1
 Section 6.2  Conditions to the Obligations of Valhi and
               Sub to Effect the Merger.....              ....................1
 Section 6.3  Conditions to the Obligations of Tremont to Effect the Merger...1

ARTICLE VII       CLOSING.....................................................1
 Section 7.1  Time and Place..................................................1
 Section 7.2  Filings at the Closing..........................................1

ARTICLE VIII      TERMINATION AND ABANDONMENT.................................1
 Section 8.1  Termination by Valhi and/or Tremont.............................1
 Section 8.2  Termination by Valhi............................................1
 Section 8.3  Termination by Tremont..........................................1
 Section 8.4  Procedure for Termination.......................................1
 Section 8.5  Effect of Termination and Abandonment...........................1

ARTICLE IX        SURVIVABILITY; INVESTIGATION................................1
 Section 9.1  Survival of Representations and Warranties......................1
 Section 9.2  Investigation...................................................1

ARTICLE X         MISCELLANEOUS...............................................1
 Section 10.1 Notices.........................................................1
 Section 10.2 Binding Effect..................................................1
 Section 10.3 Consent to Jurisdiction.........................................1
 Section 10.4 Headings........................................................1
 Section 10.5 Exhibits and Schedules..........................................1
 Section 10.6 Certain Definitions.............................................1
 Section 10.7 Governing Law...................................................1
 Section 10.8 Waivers.........................................................1
 Section 10.9 Counterparts....................................................1
 Section 10.10Time Periods....................................................1
 Section 10.11Amendment.......................................................1
 Section 10.12Entire Agreement................................................1
 Section 10.13Severability....................................................1


Exhibits
Exhibit A         Directors and Officers of the Surviving Corporation
Exhibit B         Form of Rule 145 Affiliate Letter

Schedules
Schedule 3.13     Valhi Employee Matters
Schedule 4.7      Absence of Certain Changes
Schedule 4.11     Compliance with Laws
Schedule 4.12     Litigation
Schedule 4.13     Tremont Employee Matters
Schedule 4.16     Certain Contracts
Schedule 5.1      Conduct of Business of Tremont
Schedule 5.1      Conduct of Business of Valhi

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                             Index of Defined Terms

         Term                                                            Section
         ----                                                            -------
Acquisition Proposal.......................................................10.6
Affiliate..................................................................10.6
Agreement..........................................................Introduction
CERCLA.....................................................................3.14
Certificate of Merger...................... ................................1.2
Certificates.............................................................2.2(a)
Closing..................................... ...............................7.1
Closing Date................................. ..............................7.1
Code...................................................................Recitals
Constituent Corporations.................................................1.1(a)
DGCL.....................................................................1.1(a)
Effective Time............................ .................................1.2
ERISA...................................................................3.13(a)
Exchange Act............................... ............................ 3.4(b)
Exchange Agent...........................................................2.2(a)
Exchange Ratio...........................................................2.1(b)
Fairness Opinion...........................................................4.10
GAAP........................................  ..............................3.6
Governmental Authority.....................................................10.6
Intellectual Property......................................................4.14
Law......................................................................3.4(a)
Liens....................................................................3.3(a)
LLC Merger.................................................................10.6
Merger...................................................................1.1(a)
NL SEC Documents...........................................................10.6
NYSE.....................................................................2.2(f)
Person.....................................................................10.6
Proxy Statement..........................................................3.4(b)
Registration Statement...................................................3.4(b)
Rule 145 Affiliate.........................................................5.11
SEC......................................................................3.4(b)
Securities Act................................ .............................3.5
Sub................................................................Introduction
Sub Common Stock........................................................ 2.1(c)
Surviving Corporation....................................................1.1(a)
Taxes....................................................................  4.18
TGI....................................................................Recitals
TGI Merger................................................................ 10.6
Tremont............................................................Introduction
Tremont Benefit Plans...................................................4.13(a)
Tremont Common Stock........................... .........................2.1(a)
Tremont Contracts..........................................................4.18
Tremont ERISA Affiliate.................................................4.13(a)
Tremont Financial Advisor..................................................4.10
Tremont Interim Balance Sheet................... ...........................4.6
Tremont LLC................................................................10.6
Tremont Material Adverse Effect.................. ..........................4.1
Tremont Preferred Stock........................... .........................4.3
Tremont SEC Documents.............................. ........................4.5
Tremont Stockholder Meeting......................... .......................3.8
Tremont Stockholders' Approval...........................................3.4(b)
Valhi............................................................. Introduction
Valhi Benefit Plans.....................................................3.13(a)
Valhi Common Stock............................... .......................2.1(b)
Valhi ERISA Affiliate...................................................3.13(a)
Valhi Interim Balance Sheet...............................................  3.6
Valhi Material Adverse Effect...............................................3.1
Valhi Preferred Stock....................................................3.2(a)
Valhi SEC Documents............................... .........................3.5
Valhi Subsidiaries.........................................................10.6



<PAGE>


                          AGREEMENT AND PLAN OF MERGER

     Agreement  and  Plan  of  Merger,  dated  as  of  November  4,  2002  (this
"Agreement"),  by and among Valhi, Inc., a Delaware corporation ("Valhi"), Valhi
Acquisition Corp., a Delaware  corporation and a direct wholly-owned  subsidiary
of Valhi ("Sub"), and Tremont Corporation, a Delaware corporation ("Tremont").

     WHEREAS,  the board of directors of each of Tremont,  Valhi and Sub deem it
advisable  and  in  the  best  interests  of  its  respective   corporation  and
stockholders that Tremont become a wholly-owned  subsidiary of Valhi pursuant to
the Merger (as defined below) on the terms and subject to the conditions of this
Agreement; and

     WHEREAS,  it is intended that, for Federal income tax purposes,  the Merger
(or if the LLC Merger (as defined below) occurs,  the Merger followed by the LLC
Merger) shall be a tax-free  reorganization as described in the Internal Revenue
Code of 1986,  as amended  (the  "Code"),  with respect to the holders of common
stock,  par value $1.00 per share ("Tremont  Common Stock"),  of Tremont,  other
than Valhi and Tremont Group, Inc., a Delaware corporation ("TGI").

     NOW,   THEREFORE,   in   consideration  of  the  premises  and  the  mutual
representations,  warranties,  covenants,  agreements and  conditions  contained
herein, the parties hereto agree as follows:

                                   ARTICLE I

                                   THE MERGER

     Section 1.1.......The Merger.

            (a) In  accordance  with the  provisions  of this  Agreement and the
Delaware General Corporation Law, as amended (the "DGCL"), at the Effective Time
(as defined  below),  Sub shall be merged (the  "Merger") with and into Tremont,
and Tremont shall be the surviving corporation (hereinafter sometimes called the
"Surviving  Corporation")  in  the  Merger  and  shall  continue  its  corporate
existence under the DGCL. At the Effective  Time, the separate  existence of Sub
shall cease,  and the Surviving  Corporation  shall succeed to and assume all of
the rights and  obligations of Sub.  Tremont and Sub are  hereinafter  sometimes
collectively referred to as the "Constituent Corporations."

            (b) The  Merger  shall  have the  effects  on  Tremont  and Sub,  as
Constituent Corporations of the Merger, provided for under the DGCL.

     Section 1.2 Effective  Time. The Merger shall become  effective at the time
of filing of a certificate of merger with the Secretary of State of the State of
Delaware  in  accordance  with the  provisions  of Section  252 of the DGCL (the
"Certificate  of  Merger").  The date and time  when  the  Merger  shall  become
effective is herein referred to as the "Effective Time."

     Section  1.3  Certificate  of  Incorporation  and  Bylaws of the  Surviving
Corporation.

            (a) At the Effective  Time,  the  Certificate  of  Incorporation  of
Tremont,  as in effect immediately prior to the Effective Time, shall be amended
so  that  the  operative  provisions  read  in  their  entirety  exactly  as the
Certificate  of  Incorporation  of Sub as in  effect  immediately  prior  to the
Effective Time, except that the name of the corporation  specified therein shall
be Tremont Corporation.

            (b) At the  Effective  Time,  the  Bylaws of  Tremont,  as in effect
immediately  prior to the Effective Time, shall be amended so that the operative
provisions  read in their  entirety  exactly  as the  Bylaws of Sub as in effect
immediately prior to the Effective Time, except that the name of the corporation
specified therein shall be Tremont Corporation.

     Section 1.4  Directors  and  Officers  of the  Surviving  Corporation.  The
directors and officers of the Surviving  Corporation  shall be the Persons named
on Exhibit A hereto,  all of whom will hold office from and after the  Effective
Time until their respective successors are duly elected or appointed and qualify
in the manner  provided in the  Certificate of  Incorporation  and Bylaws of the
Surviving  Corporation  or as  otherwise  provided by Law (as defined  below) or
their earlier resignation or removal.

                                   ARTICLE II

          EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
                     CORPORATIONS; EXCHANGE OF CERTIFICATES

     Section 2.1 Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and  without  any  action on the part of Valhi,  Sub,  Tremont or the
holder of any shares of the following securities:

            (a) Cancellation of Treasury Stock and Valhi-Owned Stock. Each share
of Tremont Common Stock (i) that is owned by Valhi, (ii) that is held by Tremont
as treasury  stock and (iii)  assuming the effective  time of the TGI Merger (as
defined  below) has occurred prior to the Effective  Time,  that is owned by TGI
shall,  in each case,  automatically  be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.

            (b) Conversion of Tremont Common Stock.  Subject to Section  2.2(f),
each issued and outstanding  share of Tremont Common Stock (other than shares to
be canceled in accordance with Section 2.1(a) above) shall be converted into 3.4
shares of common stock,  par value $.01 per share  ("Valhi  Common  Stock"),  of
Valhi (the "Exchange Ratio").

            (c) Sub Common Stock. Each share of common stock, par value $.01 per
share,  of Sub ("Sub Common Stock") shall be converted into and become one share
of common stock, par value $1.00 per share, of the Surviving Corporation.

     Section 2.2 Exchange of Certificates.

            (a) Exchange Agent.  As of the Effective  Time,  Valhi shall appoint
Computershare  Investor  Services  LLC or such  other  exchange  agent  mutually
agreeable to Valhi and Tremont to act as exchange agent (the  "Exchange  Agent")
in the Merger.  At or prior to the  Effective  Time,  Valhi shall provide to the
Exchange  Agent,  for the benefit of holders of shares of Tremont  Common Stock,
certificates   representing   Valhi  Common  Stock   issuable  in  exchange  for
certificates  representing  shares of Tremont  Common Stock  pursuant to Section
2.1(b)  ("Certificates")  and an estimated  amount in cash sufficient to satisfy
Valhi's obligations under Sections 2.2(e) and (f)

            (b) As soon as  reasonably  practicable  after the  Effective  Time,
Valhi shall cause the Exchange  Agent to mail to each holder of record of shares
of Tremont  Common Stock whose shares were converted into shares of Valhi Common
Stock  pursuant  to Section  2.1(b)  (i) a letter of  transmittal  (which  shall
specify  that  delivery  shall be  effected,  and risk of loss and  title to the
Certificates  shall pass, only upon delivery of the Certificates to the Exchange
Agent  and  shall be in a form and  have  such  other  provisions  as Valhi  may
reasonably  specify) and (ii) instructions for use in effecting the surrender of
the  Certificates in exchange for  certificates  evidencing  Valhi Common Stock.
Upon  surrender of a Certificate  for  cancellation  to the Exchange Agent or to
such other  agent or agents as may be  appointed  by Valhi,  together  with such
letter of transmittal, duly executed, and such other documents as may reasonably
be required  by the  Exchange  Agent,  the holder of such  Certificate  shall be
entitled to receive in exchange  therefor a certificate  representing the number
of whole  shares of Valhi  Common  Stock to which the holder is entitled  and an
amount  of cash in lieu  of any  fractional  share  of  Valhi  Common  Stock  in
accordance  with  Section  2.2(f),  and the  Certificate  so  surrendered  shall
forthwith  be  canceled.  In the event of a transfer of  ownership  of shares of
Tremont Common Stock that is not registered in the transfer  records of Tremont,
payment  may be made to a  Person  other  than  the  Person  in  whose  name the
Certificate so surrendered is registered if such  Certificate  shall be properly
endorsed or otherwise  be in proper form for transfer and the Person  requesting
such payment  either shall pay any transfer or other taxes required by reason of
such  payment  being made to a Person other than the  registered  holder of such
Certificate  or  establish to the  satisfaction  of Valhi that such tax or taxes
have been paid or are not applicable.  Until surrendered as contemplated by this
Section 2.2,  each  Certificate  shall be deemed at any time after the Effective
Time to  represent  only the right to  receive  upon such  surrender  such whole
number of shares of Valhi Common Stock  provided by Section 2.1(b) and an amount
in cash in lieu of any fractional share of Valhi Common Stock in accordance with
Section  2.2(f).  No interest  will be paid or will accrue on the  consideration
payable upon the surrender of any Certificate or on any cash payable pursuant to
Sections 2.2(e) or (f).

            (c) All shares of Valhi Common Stock delivered,  and cash in lieu of
any  fractional  shares  thereof  paid,  upon the surrender of  Certificates  in
accordance  with the terms of this  Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to such shares.  There shall be no
further  registration of transfers on the stock transfer books of Tremont or its
transfer  agent of the shares of  Tremont  Common  Stock  that were  outstanding
immediately  prior  to  the  Effective  Time.  If,  after  the  Effective  Time,
Certificates  are presented to the Surviving  Corporation  for any reason,  they
shall be canceled and exchanged as provided in this Article II.

            (d) None of  Valhi,  Tremont,  Sub or the  Exchange  Agent  shall be
liable to any Person in respect  of any  shares or funds  delivered  to a public
official pursuant to any applicable abandoned property,  escheat or similar law.
All Certificates and funds held by the Exchange Agent for payment to the holders
of unsurrendered  Certificates that remain unclaimed for twelve months after the
Effective Time shall be redelivered by the Exchange Agent to Valhi, upon demand,
and any holders of Certificates  who have not theretofore  complied with Section
2.2(b) shall  thereafter look only to the Surviving  Corporation for delivery of
any shares or funds, subject to applicable escheat and other similar Laws.

            (e) Distributions  With Respect to Unexchanged  Shares. No dividends
or other  distributions  with  respect to Valhi  Common Stock with a record date
after  the  Effective  Time  shall be paid to the  holder  of any  unsurrendered
Certificate with respect to the Valhi Common Stock represented  thereby,  and no
cash  payment  in lieu of  fractional  shares  shall be paid to any such  holder
pursuant to Section 2.2(f), in each case until the surrender of such Certificate
in accordance with this Article II. Subject to the effect of applicable  escheat
Laws,  as  soon  as  reasonably  practicable  following  surrender  of any  such
Certificate  there  shall be paid to the  holder  of such  Certificate,  without
interest,  (i) at the time of such surrender,  the amount of any cash payable in
lieu of any  fractional  share of Valhi  Common  Stock to which  such  holder is
entitled pursuant to Section 2.2(f) and (ii) if such Certificate is exchangeable
for one or more  whole  shares of Valhi  Common  Stock,  (x) at the time of such
surrender  the amount of  dividends  or other  distributions  with a record date
after the Effective Time  theretofore  paid with respect to such whole shares of
Valhi  Common  Stock and (y) at the  appropriate  payment  date,  the  amount of
dividends or other distributions with a record date after the Effective Time but
prior to such  surrender and with a payment date  subsequent  to such  surrender
payable with respect to such whole shares of Valhi Common Stock.

            (f) No Fractional Shares.  Notwithstanding  anything to the contrary
contained  herein,  no certificates or scrip  representing  fractional shares of
Valhi  Common  Stock  shall  be  issued  upon  the  surrender  for  exchange  of
Certificates,  no  dividend  or  distribution  of  Valhi  shall  relate  to such
fractional  share interests and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Valhi. In lieu of
the issuance of such  fractional  shares,  Valhi shall pay each former holder of
Tremont  Common  Stock an  amount  in cash  equal  to the  product  obtained  by
multiplying (A) the fractional  share interest to which such former holder would
otherwise be entitled by (B) the average  closing  price per share for shares of
Valhi Common Stock as reported by the New York Stock  Exchange  (the "NYSE") (as
reported in The Wall Street  Journal,  or, if not  reported  therein,  any other
authoritative  source)  during the ten trading  days ending on the  business day
that  immediately  precedes the Closing Date. The parties  acknowledge and agree
that any such cash is not separately bargained-for  consideration in the Merger,
but is being  paid  solely  to avoid the  inconvenience  of  issuing  fractional
shares.

            (g) Lost  Certificates.  If any  Certificate  shall  have been lost,
stolen or destroyed,  upon the making of an affidavit of that fact by the Person
claiming such  Certificate  to be lost,  stolen or destroyed and, if required by
the  Surviving  Corporation,  the  posting  by  such  Person  of a bond  in such
reasonable  amount as the Surviving  Corporation may direct as indemnity against
any claim that may be made  against it with  respect  to such  Certificate,  the
Exchange  Agent  shall  issue in  exchange  for such lost,  stolen or  destroyed
Certificate the number of whole shares of Valhi Common Stock to which the holder
is  entitled  and,  if  applicable,   any  unpaid  dividends  and  distributions
deliverable  in respect  thereof and any cash in lieu of fractional  shares,  in
each case pursuant to this Agreement.

     Section  2.3  Certain  Adjustments.  If  between  the date  hereof  and the
Effective  Time,  the  outstanding  shares of Valhi  Common  Stock or of Tremont
Common Stock shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of shares,
or any  dividend or  distribution  shall be declared  thereon with a record date
within such period (other than normal  quarterly cash  dividends),  the Exchange
Ratio shall be adjusted  accordingly to provide to the holders of Tremont Common
Stock the same economic  effect as  contemplated by this Agreement prior to such
reclassification,  recapitalization, split-up, combination, exchange or dividend
provided,  however,  that no  portion  of the  consideration  paid to holders of
Tremont  Common  Stock shall be in the form of anything  other than voting stock
(within the meaning of Sections  368(a)(2)(B)  and  368(a)(1)(C) of the Code) of
Valhi (except as provided in Section 2.2(f) above).

                                  ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF VALHI AND SUB

     Valhi and Sub jointly  and  severally  represent  and warrant to Tremont as
follows:

     Section  3.1  Organization.  Each of Valhi  and Sub is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware.  Valhi owns directly all of the outstanding capital stock of Sub. Each
of Valhi and Sub has all requisite  corporate  power and authority to own, lease
and operate its properties and to carry on its business as now being  conducted.
Each of Valhi and Sub is duly  qualified or licensed and in good  standing to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business  conducted by it makes such  qualifications  or
licenses necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good  standing  would not,  individually  or in the
aggregate,  reasonably  be  expected  to have a material  adverse  effect on the
business,  operations,  financial condition or results of operations of Valhi or
would not  reasonably  be expected to delay or prevent the  consummation  of the
transactions  contemplated  hereby (a "Valhi Material  Adverse  Effect").  Valhi
previously  has  delivered  to  Tremont  accurate  and  complete  copies  of its
Certificate of Incorporation and Bylaws,  and Sub's Certificate of Incorporation
and Bylaws, each as currently in effect.

     Section 3.2 Capitalization.

            (a) The  authorized  capital stock of Valhi  consists of 150,000,000
shares of Valhi Common Stock and 5,000,000  shares of Valhi preferred stock, par
value $.01 per share ("Valhi Preferred Stock"). As of the date hereof, there are
115,118,917 shares of Valhi Common Stock issued and outstanding and no shares of
Valhi Preferred Stock outstanding.  As of the date hereof, there are outstanding
options to purchase 1,180,900 shares of Valhi Common Stock, and 4,065,000 shares
of Valhi  Common  Stock were  reserved for future  issuance  under  Valhi's 1997
Long-Term  Incentive  Plan.  As of the date hereof,  except as set forth in this
Section  3.2(a),  no capital  shares or other  voting  securities  of Valhi were
outstanding  or reserved  for  issuance.  All shares of Valhi Common Stock to be
issued  in the  Merger  at the  Effective  Time  shall  be,  when  issued,  duly
authorized and validly issued,  fully paid and  nonassessable  and free from all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever  (collectively,  "Liens").  There are no bonds, debentures,
notes or other  indebtedness  of Valhi having the right to vote (or  convertible
into, or exchangeable for, securities having the right to vote) on any matter on
which stockholders of Valhi may vote. Except as set forth in this Section 3.2(a)
and for the  transactions  contemplated  by this Agreement  (including,  without
limitation,  the TGI  Merger),  there are no  outstanding  securities,  options,
warrants, calls, rights, commitments,  agreements,  arrangements or undertakings
of any kind to  which  Valhi is a party or  bound,  obligating  Valhi to  issue,
deliver or sell, or cause to be issued,  delivered or sold,  additional  capital
shares,  voting  securities or other ownership  interests of Valhi or obligating
Valhi to issue, grant, extend or enter into any such security,  option, warrant,
call, right,  commitment,  agreement,  arrangement or undertaking.  There are no
outstanding contractual obligations of Valhi to repurchase,  redeem or otherwise
acquire any capital shares of Valhi.

            (b) The authorized  capital stock of Sub consists of 1,000 shares of
Sub  Common  Stock,  all of which are  issued and  outstanding  and are  validly
issued,  fully  paid and  nonassessable.  As of the date  hereof,  there  are no
outstanding  options  entitling  the holders  thereof to purchase  shares of Sub
Common Stock.

     Section 3.3 Authority.  Each of Valhi and Sub has full corporate  power and
authority  to  execute  and  deliver  this   Agreement  and  to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
and the consummation of the transactions  contemplated hereby have been duly and
validly  authorized and approved by the boards of directors of Valhi and Sub and
by Valhi as the sole  stockholder of Sub, and no other corporate  proceedings on
the  part of  Valhi or Sub are  necessary  to  authorize  this  Agreement  or to
consummate the transactions  contemplated  hereby.  This Agreement has been duly
and validly  executed and delivered by each of Valhi and Sub and,  assuming this
Agreement   constitutes  a  legal,  valid  and  binding  agreement  of  Tremont,
constitutes a legal,  valid and binding  agreement of Valhi and Sub, as the case
may be, enforceable against each of them in accordance with its terms.

     Section 3.4 No Violations: Consents and Approvals.

            (a) Neither the  execution  and delivery of this  Agreement  nor the
consummation of the transactions contemplated hereby nor compliance by Valhi and
Sub with any of the provisions hereof conflicts with, violates or results in any
breach of (i) any provision of the  Certificate  of  Incorporation  or Bylaws of
either  of  Valhi  or  Sub,   (ii)  any  contract,   agreement,   instrument  or
understanding  to which Valhi or Sub is a party or by which Valhi, Sub or any of
their  respective  assets or  properties is bound,  or (iii) any law,  judgment,
decree,  order,  statute,  rule or regulation (a "Law") of any  jurisdiction  or
Governmental  Authority (as defined below)  applicable to Valhi or Sub or any of
their respective assets or properties,  other than, in the case of the foregoing
clauses (ii) and (iii),  such  conflicts,  violations or breaches that would not
reasonably  be expected  to have a Valhi  Material  Adverse  Effect or for which
Valhi  or Sub have  received  or,  prior  to the  Merger,  shall  have  received
appropriate consents or waivers.

            (b)  No   consent,   approval,   order  or   authorization   of,  or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to Valhi in  connection  with the  execution  and delivery of
this  Agreement  by  Valhi  or Sub or the  consummation  by  Valhi or Sub of the
transactions  contemplated hereby, except for (i) the filing with the Securities
and Exchange  Commission  (the "SEC") of (x) a proxy  statement  relating to the
approval by Tremont's  stockholders  as set forth in Section 4.15 (the  "Tremont
Stockholders'  Approval") of this  Agreement and the  transactions  contemplated
hereby (as amended or  supplemented  from time to time, the "Proxy  Statement"),
(y) a  registration  statement  on  Form  S-4 (or  other  appropriate  form)  in
connection  with the  registration of the Valhi Common Stock to be issued in the
Merger  (as  amended  or  supplemented  from  time to  time,  the  "Registration
Statement") and (z) such reports under Section 13(a) of the Securities  Exchange
Act of 1934, as amended (the "Exchange  Act"),  as may be required in connection
with this Agreement and the transactions contemplated hereby, (ii) the filing of
the  Certificate  of Merger with the Secretary of State of the State of Delaware
and (iii) such other consents, approvals, orders, authorizations, registrations,
declarations,  licenses  and filings (A) as may be required  under (1)  federal,
state or local  environmental  laws or (2) the "blue sky" laws of various states
or (B) that,  if not obtained or made,  would  reasonably  be expected to have a
Valhi Material Adverse Effect.

     Section 3.5 SEC Documents.  Valhi has timely filed or will timely file with
the SEC all documents (the "Valhi SEC Documents") required to be filed under the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act,
in each case since December 31, 1999. As of their  respective  dates,  the Valhi
SEC  Documents  (other than  preliminary  materials)  complied  in all  material
respects with the  requirements  of the  Securities Act and the Exchange Act, as
the  case  may be,  and in each  case  the  rules  and  regulations  promulgated
thereunder  applicable  to such  Valhi  SEC  Documents.  None of the  Valhi  SEC
Documents at the time of filing and effectiveness contained any untrue statement
of a material  fact or omitted to state a material  fact  required  to be stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances  under which they were made, not misleading,  except to the extent
such statements have been modified or superseded by later Valhi SEC Documents.

     Section  3.6  Financial  Statements.  As of  their  respective  dates,  the
financial  statements  of Valhi  (including,  in each case,  any related  notes)
included in the Valhi SEC Documents complied as to form in all material respects
with applicable accounting  requirements and the published rules and regulations
of the SEC with respect  thereto,  were prepared in accordance  with  accounting
principles  generally accepted in the United States of America ("GAAP") (except,
in the case of unaudited financial statements,  as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated  therein or in the notes thereto) and present fairly the  consolidated
financial position of Valhi as at the dates thereof and the consolidated results
of its  operations  and  statements  of cash flows for the  periods  then ended.
Valhi's  balance sheet  included in its Form 10-Q for the quarter ended June 30,
2002 shall be referred to as the "Valhi Interim Balance Sheet."

     Section 3.7 Absence of Certain  Changes.  Except as  disclosed in the Valhi
SEC Documents and for the transactions  contemplated  hereby,  since the date of
the Valhi  Interim  Balance  Sheet,  there has not been any change or event that
would have, or would  reasonably be expected to have, a Valhi  Material  Adverse
Effect.

     Section 3.8 Proxy Statement/Registration Statement. None of the information
regarding  Valhi  or  Sub to be  supplied  by  Valhi  or Sub  for  inclusion  or
incorporation by reference in the Registration  Statement or the Proxy Statement
will,  in the  case  of the  Registration  Statement,  at the  time  it  becomes
effective and at the Effective Time, and, in the case of the Proxy Statement, at
the time of its mailing to  stockholders of Tremont and at the time of Tremont's
stockholders  meeting for the  purpose of  obtaining  the Tremont  Stockholders'
Approval (the "Tremont Stockholder Meeting"),  contain any untrue statement of a
material fact or omit to state any material  fact required to be stated  therein
or necessary in order to make the statements  therein not misleading in light of
the  circumstances  when made.  If at any time prior to the  Effective  Time any
event with  respect to Valhi or Sub shall occur that is required to be described
in the Proxy  Statement or the  Registration  Statement,  such event shall be so
described,  and an amendment or supplement  shall be promptly filed with the SEC
and, as required by Law,  disseminated to the stockholders of Tremont. The Proxy
Statement and the  Registration  Statement  will (with respect to Valhi and Sub)
comply as to form in all material respects with the provisions of the Securities
Act and the Exchange Act.

     Section 3.9 State Anti-Takeover  Statutes.  Each of Valhi and Sub has taken
all action  necessary,  if any, to exempt the transactions  contemplated  hereby
from the operation of any "business combination," "moratorium," "control share,"
"fair price," "interested stockholder," "affiliated transactions" or other state
anti-takeover statute or regulation.

     Section  3.10  Brokers'  Fees.  Neither  Valhi  nor Sub nor any of  Valhi's
Affiliates  (other than  Tremont) or their  respective  officers,  directors  or
agents has  employed  any broker,  finder or  financial  advisor or incurred any
liability for any broker's fees, commissions,  or financial advisory or finder's
fees in connection with any of the transactions  contemplated by this Agreement,
other than McDonald Investments Inc.

     Section  3.11  Compliance  with Laws.  Except as disclosed in the Valhi SEC
Documents or the NL SEC Documents (as defined below) filed with the SEC prior to
the date hereof,  to the knowledge of Valhi,  none of Valhi nor any of the Valhi
Subsidiaries (as defined below) has violated or failed to comply with any Law of
any Governmental Authority applicable to its business, properties or operations,
and Valhi has not received notification of asserted present or past violation or
failure to comply,  except for  violations and failures to comply that would not
reasonably be expected to have a Valhi Material Adverse Effect.

     Section 3.12 No Litigation.  Except as set forth in the Valhi SEC Documents
or the  NL SEC  Documents,  there  is no  claim,  litigation,  investigation  or
proceeding  by any  Person or  Governmental  Authority  pending  or, to  Valhi's
knowledge,  threatened,  against  Valhi or the  Valhi  Subsidiaries  that  would
reasonably be anticipated to have a Valhi Material Adverse Effect,  nor is there
any judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator  outstanding against Valhi or the Valhi Subsidiaries having, or that,
insofar as  reasonably  can be  foreseen,  in the  future  would  reasonably  be
anticipated to have a Valhi Material Adverse Effect.

     Section  3.13  Employee  Matters.  Except  as set forth on  Schedule  3.13:

            (a) With respect to each employee benefit plan,  policy or agreement
covering  employees,  former employees or directors (or their beneficiaries ) of
Valhi or of any trade or  business,  whether or not  incorporated  that would be
deemed a "single  employer"  within the  meaning of Section  4001(b) of ERISA (a
"Valhi ERISA  Affiliate"),  including  without  limitation any employee  benefit
plans  within the  meaning of Section  3(3) of the  Employee  Retirement  Income
Security  Act of 1974,  as amended  ("ERISA"),  and any  employment,  retention,
severance  or  change in  control  agreement,  in each  case that is  sponsored,
maintained  or  contributed  to or required to be  contributed  to by Valhi or a
Valhi ERISA Affiliate (collectively,  the "Valhi Benefit Plans"), since the date
of the Valhi Interim  Balance Sheet,  there have been no new plans adopted,  nor
changes, additions or modification to any Valhi Benefit Plan, nor as of the date
hereof,  any plans to adopt,  change, add or modify any Valhi Benefit Plan which
either  individually  or in the aggregate  would have a Valhi  Material  Adverse
Effect.

            (b) All  contributions and other payments required to have been made
by Valhi or any  Valhi  ERISA  Affiliate  to any Valhi  Benefit  Plan (or to any
Person  pursuant  to the terms  thereof)  have  been made or the  amount of such
payment  or  contribution   obligation  has  been  reflected  in  the  financial
statements in Valhi's  Quarterly  Report on Form 10-Q for the quarter ended June
30, 2002.

            (c) Each of the  Valhi  Benefit  Plans  intended  to be  "qualified"
within the meaning of Section 401(a) of the Code and any trust that forms a part
of any of the Valhi  Benefit  Plans that is intended to be exempt under  Section
501(a) or Section  501(c)(9) of the Code has been determined by the IRS to be so
qualified or exempt,  as the case may be, and no circumstances  exist that could
reasonably be expected to result in the  revocation  of any such  determination.
Each of the  Valhi  Benefit  Plans  is and has  been  operated  in all  material
respects  in  compliance  with its  terms  and all  applicable  laws,  rules and
regulations  governing such plan, including,  without limitation,  ERISA and the
Code.

            (d) With respect to the Valhi Benefit Plans, individually and in the
aggregate, no event has occurred,  there does not now exist any condition or set
of  circumstances,  that could  reasonably  be expected to subject  Valhi or any
Valhi ERISA Affiliate to any material liability arising under the Code, ERISA or
any other applicable Law, or under any indemnity agreement to which Valhi or any
Valhi ERISA Affiliate is a party, excluding liability relating to benefit claims
and funding obligations payable in the ordinary course.

     Section 3.14 Environmental Liability.  Except as disclosed in the Valhi SEC
Documents or the NL SEC Documents, there are no legal, administrative,  arbitral
or other proceedings,  claims,  actions, causes of action, private environmental
investigations or remediation  activities or governmental  investigations of any
nature pending or, to Valhi's  knowledge,  threatened against Valhi or the Valhi
Subsidiaries  seeking to impose,  or that could reasonably be expected to result
in the  imposition of any  liability or  obligation  arising under common law or
under  any  local,  state  or  federal  environmental  Law,  including,  without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of  1980,  as  amended  ("CERCLA"),  which  liability  or  obligation  could
reasonably be expected to result in a Valhi Material Adverse Effect.  To Valhi's
knowledge,  there is no reasonable basis for any such proceeding,  claim, action
or governmental investigation that would impose any liability or obligation that
could reasonably be expected to result in a Valhi Material Adverse Effect.

     Section 3.15 Certain Tax Matters.  Neither Valhi nor, to Valhi's knowledge,
any other person,  has taken or agreed to take any action that could  reasonably
be expected to prevent  the Merger  (or,  if the LLC Merger  occurs,  the Merger
followed by the LLC Merger) from constituting a  "reorganization"  under Section
368(a) of the Code with  respect to the  holders of Tremont  Common  Stock other
than  Valhi  and  TGI.  Valhi  is not  aware  of any  agreement,  plan or  other
circumstance that could reasonably be expected to prevent such qualification.

     Section  3.16  Interim  Operations  of Sub.  Sub was formed  solely for the
purpose of engaging in the Merger and has not engaged in any business activities
or conducted any operations other than in connection with the Merger.

     Section 3.17 Knowledge.

            The phrases "to Valhi's  knowledge"  or "to the  knowledge of Valhi"
shall mean the actual knowledge of any executive officer of Valhi.

     Section 3.18 No Undisclosed  Information.  To Valhi's knowledge,  Valhi has
not failed to disclose to Tremont any fact material to the business, properties,
prospects, operations, financial condition or results of operations of Valhi. To
Valhi's  knowledge,  no  representation or warranty by Valhi or Sub contained in
this Agreement and no statement contained in any document (including  historical
financial statements and the Schedules to this Agreement),  certificate or other
writing  furnished  or to be  furnished  by  Valhi  to  Tremont  or  any  of its
representatives  pursuant to the  provisions  hereof or in  connection  with the
transactions  contemplated hereby, contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary,  in
light  of the  circumstances  under  which  it was  made,  in  order to make the
statements  herein or therein not misleading.  Notwithstanding  the foregoing or
any other provision  herein,  Valhi has made no  representation or warranty with
respect to any financial or other projections made by Valhi.

                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF TREMONT

     Tremont represents and warrants to Valhi and Sub as follows:

     Section 4.1 Organization.  Tremont is a corporation duly organized, validly
existing and in good standing  under the laws of the State of Delaware.  Tremont
has all requisite  corporate  power and authority to own,  lease and operate its
properties and to carry on its business as now being conducted.  Tremont is duly
qualified or licensed and in good  standing to do business in each  jurisdiction
in which the  property  owned,  leased or  operated  by it or the  nature of the
business conducted by it makes such qualifications or licenses necessary, except
in such jurisdictions  where the failure to be so duly qualified or licensed and
in good standing  would not,  individually  or in the  aggregate,  reasonably be
expected  to  have  a  material  adverse  effect  on the  business,  operations,
financial  condition or results of operations of Tremont or would not reasonably
be  expected  to  delay  or  prevent  the   consummation  of  the   transactions
contemplated  hereby (a "Tremont Material Adverse Effect").  Tremont  previously
has  delivered  to Valhi  accurate  and complete  copies of its  Certificate  of
Incorporation and Bylaws, each as currently in effect.

     Section  4.2  Capitalization.  The  authorized  capital  stock  of  Tremont
consists of 14,000,000  shares of Tremont  Common Stock and 1,000,000  shares of
Tremont preferred stock, par value $1.00 per share ("Tremont  Preferred Stock").
As of the date hereof, there are 6,424,858 shares of Tremont Common Stock issued
and  outstanding  (net of 1,392,101  shares held in Tremont's  treasury)  and no
shares of Tremont Preferred Stock outstanding.  As of the date hereof, there are
outstanding  no options to purchase  shares of Tremont  Common Stock.  As of the
date hereof, except as set forth in this Section 4.2, no capital shares or other
voting securities of Tremont were issued,  reserved for issuance or outstanding.
There are no bonds,  debentures,  notes or other  indebtedness of Tremont having
the right to vote (or convertible into, or exchangeable  for,  securities having
the right to vote) on any  matter on which  stockholders  of  Tremont  may vote.
There  are  no  outstanding  securities,   options,   warrants,  calls,  rights,
commitments,  agreements,  arrangements  or  undertakings  of any  kind to which
Tremont is a party or bound,  obligating  Tremont to issue,  deliver or sell, or
cause  to be  issued,  delivered  or sold,  additional  capital  shares,  voting
securities  or other  ownership  interests of Tremont or  obligating  Tremont to
issue, grant,  extend or enter into any such security,  option,  warrant,  call,
right,  commitment,   agreement,   arrangement  or  undertaking.  There  are  no
outstanding  contractual  obligations  of  Tremont  to  repurchase,   redeem  or
otherwise acquire any capital shares of Tremont.

     Section 4.3 Authority.  Tremont has full  corporate  power and authority to
execute  and  deliver  this  Agreement  and  to  consummate   the   transactions
contemplated  hereby.  The  execution  and  delivery of this  Agreement  and the
consummation of the transactions  contemplated hereby have been duly and validly
authorized  and approved by the board of directors of Tremont,  and,  except for
the  requisite  approval of this  Agreement  and the  transactions  contemplated
hereby,  no other corporate  proceedings on the part of Tremont are necessary to
authorize this Agreement or to consummate the transactions  contemplated hereby.
This Agreement has been duly and validly  executed and delivered by Tremont and,
assuming  this  Agreement  constitutes a legal,  valid and binding  agreement of
Valhi,  constitutes a legal, valid and binding agreement of Tremont  enforceable
against it in accordance with its terms.

     Section 4.4 No Violations: Consents and Approvals.

            (a) Neither the  execution  and delivery of this  Agreement  nor the
consummation of the transactions  contemplated  hereby nor compliance by Tremont
with any of the provisions  hereof  conflicts  with,  violates or results in any
breach of (i) any provision of the  Certificate  of  Incorporation  or Bylaws of
Tremont,  (ii) any contract,  agreement,  instrument or  understanding  to which
Tremont is a party or by which  Tremont or any of its  assets or  properties  is
bound, or (iii) any Law of any jurisdiction or Governmental Authority applicable
to Tremont or any of its assets or  properties,  other than,  in the case of the
foregoing  clauses (ii) and (iii),  such conflicts,  violations or breaches that
would not  reasonably be expected to have a Tremont  Material  Adverse Effect or
for which  Tremont has  received or,  prior to the Merger,  shall have  received
appropriate consents or waivers.

            (b)  No   consent,   approval,   order  or   authorization   of,  or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to Tremont in  connection  with the execution and delivery of
this  Agreement by Tremont or the  consummation  by Tremont of the  transactions
contemplated  hereby,  except for (i) the  filing  with the SEC of (x) the Proxy
Statement,  (y) the  Registration  Statement  and (z) such reports under Section
13(a) of the Exchange Act as may be required in connection  with this  Agreement
and the transactions  contemplated hereby, (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and (iii) such other
consents,  approvals,  orders,  authorizations,   registrations,   declarations,
licenses and filings (A) as may be required  under (1)  federal,  state or local
environmental  laws or (2) the "blue sky" laws of various states or (B) that, if
not obtained or made,  would  reasonably be expected to have a Tremont  Material
Adverse Effect.

     Section 4.5 SEC  Documents.  Tremont  has timely  filed or will timely file
with the SEC all documents  (the "Tremont SEC  Documents")  required to be filed
under the Securities and the Exchange Act, in each case since December 31, 1999.
As of their respective  dates, the Tremont SEC Documents (other than preliminary
materials)  complied  in all  material  respects  with the  requirements  of the
Securities  Act and the  Exchange  Act, as the case may be, and in each case the
rules and  regulations  promulgated  thereunder  applicable  to such Tremont SEC
Documents.  None  of the  Tremont  SEC  Documents  at the  time  of  filing  and
effectiveness  contained  any untrue  statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading,  except to the extent  such  statements  have been  modified or
superseded by later Tremont SEC Documents.

     Section  4.6  Financial  Statements.  As of  their  respective  dates,  the
financial  statements of Tremont  (including,  in each case,  any related notes)
included  in the  Tremont  SEC  Documents  complied  as to form in all  material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the SEC with respect  thereto,  were prepared in accordance  with
GAAP (except,  in the case of unaudited  financial  statements,  as permitted by
Form 10-Q of the SEC) applied on a consistent  basis during the periods involved
(except as may be indicated  therein or in the notes thereto) and present fairly
the consolidated  financial  position of Tremont as at the dates thereof and the
consolidated  results of its  operations  and  statements  of cash flows for the
periods then ended.  Tremont's  balance sheet  included in its Form 10-Q for the
quarter ended June 30, 2002 shall be referred to as the "Tremont Interim Balance
Sheet."

     Section 4.7 Absence of Certain Changes.  Except as disclosed in the Tremont
SEC Documents or on Schedule 4.7 and for the transactions  contemplated  hereby,
since the date of the  Tremont  Interim  Balance  Sheet,  there has not been any
change or event that would have,  or would  reasonably  be  expected to have,  a
Tremont Material Adverse Effect.

     Section 4.8 Proxy Statement/Registration Statement. None of the information
regarding  Tremont to be supplied by Tremont for inclusion or  incorporation  by
reference in the Registration Statement or the Proxy Statement will, in the case
of the  Registration  Statement,  at the time it  becomes  effective  and at the
Effective  Time,  and,  in the case of the Proxy  Statement,  at the time of its
mailing to  stockholders  of Tremont and at the time of the Tremont  Stockholder
Meeting,  contain any untrue  statement of a material  fact or omit to state any
material  fact  required to be stated  therein or necessary in order to make the
statements therein not misleading in light of the circumstances when made. If at
any time prior to the  Effective  Time any event with  respect to Tremont  shall
occur  that  is  required  to  be  described  in  the  Proxy  Statement  or  the
Registration  Statement,  such event shall be so described,  and an amendment or
supplement  shall  be  promptly  filed  with the SEC and,  as  required  by Law,
disseminated  to the  stockholders  of  Tremont.  The  Proxy  Statement  and the
Registration  Statement will (with respect to Tremont)  comply as to form in all
material  respects with the  provisions of the  Securities  Act and the Exchange
Act.

     Section  4.9 State  Anti-Takeover  Statutes.  Tremont  has taken all action
necessary,  if any,  to exempt the  transactions  contemplated  hereby  from the
operation of any "business  combination,"  "moratorium,"  "control share," "fair
price,"  "interested  stockholder,"  "affiliated  transactions"  or other  state
anti-takeover statute or regulation.

     Section 4.10 Brokers'  Fees.  Neither  Tremont nor Sub nor any of Tremont's
Affiliates (other than Valhi) or their respective officers,  directors or agents
has employed any broker,  finder or financial  advisor or incurred any liability
for any broker's fees,  commissions,  or financial  advisory or finder's fees in
connection with any of the  transactions  contemplated by this Agreement,  other
than Morgan Joseph & Co. Inc. (the "Tremont Financial  Advisor").  Substantially
concurrently  herewith,  Tremont's  board of directors or the special  committee
thereof has received the opinion of the Tremont  Financial Advisor to the effect
that, on the date thereof,  the  consideration  to be received by holders (other
than Valhi and its  Affiliates)  of shares of Tremont  Common Stock  pursuant to
this  Agreement  is fair from a  financial  point of view to such  holders  (the
"Fairness Opinion").

     Section 4.11 Compliance  with Laws.  Except as disclosed in the Tremont SEC
Documents  filed with the SEC prior to the date hereof or on Schedule  4.11,  to
the knowledge of Tremont,  Tremont has not violated or failed to comply with any
Law of any  Governmental  Authority  applicable to its  business,  properties or
operations,  and Tremont has not received  notification  of asserted  present or
past  violation  or failure to comply,  except for  violations  and  failures to
comply that would not reasonably be expected to have a Tremont  Material Adverse
Effect.

     Section  4.12  No  Litigation.  Except  as set  forth  in the  Tremont  SEC
Documents or on Schedule 4.12, there is no claim,  litigation,  investigation or
proceeding  by any Person or  Governmental  Authority  pending or, to  Tremont's
knowledge  threatened,  against Tremont that would  reasonably be anticipated to
have a Tremont  Material  Adverse  Effect,  nor is there any  judgment,  decree,
injunction,   rule  or  order  of  any  Governmental   Authority  or  arbitrator
outstanding  against  Tremont  having,  or that,  insofar as  reasonably  can be
foreseen,  in the  future  would  reasonably  be  anticipated  to have a Tremont
Material Adverse Effect.

     Section 4.13 Employee Matters.

            (a) Schedule 4.13 contains a true and complete list of each employee
benefit  plan,  policy or  agreement  covering  employees,  former  employees or
directors of any of Tremont or their  beneficiaries,  or  providing  benefits to
such  persons in respect of  services  provided  to any such  entity,  including
without limitation any employee benefit plans within the meaning of Section 3(3)
of  ERISA,  and any  employment,  retention,  severance  or  change  in  control
agreement,  in each case that is  sponsored,  maintained  or  contributed  to or
required to be contributed to by Tremont or by any trade or business, whether or
not  incorporated (a "Tremont ERISA  Affiliate")  that would be deemed a "single
employer"  within the  meaning of Section  4001(b) of ERISA  (collectively,  the
"Tremont  Benefit  Plans").  Other  than as set forth on  Schedule  4.13,  since
December 31, 1999, there have been no new plans adopted, nor changes,  additions
or modification to any Tremont Benefit Plan. As of the date hereof,  Tremont has
no plans to adopt, change, add or modify any Tremont Benefit Plan.

            (b)  With  respect  to  each  Tremont  Benefit  Plan,   Tremont  has
previously  delivered or made available to Valhi or its representatives true and
complete  copies of the  following:  (i) the plan  document  and all  amendments
thereto  (or,  if such plan is  unwritten,  a true and  complete  summary of its
terms);  (ii) any related trust or other funding  vehicle;  (iii) if applicable,
the two most recent Internal Revenue Service Forms 5500 and related attachments;
(iv) if  applicable,  the most recent  Internal  Revenue  Service  determination
letter; and (v) any material correspondence or employee communications.

            (c) Except as set forth on  Schedule  4.13,  all  contributions  and
other  payments  required  to have been made by  Tremont  or any  Tremont  ERISA
Affiliate to any Tremont  Benefit  Plan (or to any Person  pursuant to the terms
thereof) have been made or the amount of such payment or contribution obligation
has been reflected in the financial  statements in Tremont's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2002.

            (d)  Except  as set  forth on  Schedule  4.13,  each of the  Tremont
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code and any trust that  forms a part of any of the  Tremont  Benefit  Plans
that is intended to be exempt under Section  501(a) or Section  501(c)(9) of the
Code has been  determined  by the IRS to be so qualified or exempt,  as the case
may be, and no  circumstances  exist that could reasonably be expected to result
in the revocation of any such  determination.  Each of the Tremont Benefit Plans
is and has been operated in all material  respects in compliance  with its terms
and all applicable laws, rules and regulations  governing such plan,  including,
without limitation, ERISA and the Code.

            (e)  Except as set  forth on  Schedule  4.13,  with  respect  to the
Tremont Benefit Plans, individually and in the aggregate, no event has occurred,
there  does not now exist any  condition  or set of  circumstances,  that  could
reasonably be expected to subject  Tremont or any Tremont ERISA Affiliate to any
material liability arising under the Code, ERISA or any other applicable Law, or
under any indemnity agreement to which Tremont or any Tremont ERISA Affiliate is
a party,  excluding liability relating to benefit claims and funding obligations
payable in the ordinary course.

            (f) Other than  continuation  coverage required to be provided under
Section 4980B of the Code or Part 6 of Title I of ERISA or otherwise as provided
by state law or as set forth on Schedule 4.13, none of the Tremont Benefit Plans
that are "welfare plans," within the meaning of Section 3(1) of ERISA,  provides
for any  benefits  with  respect  to  current or former  employees  for  periods
extending  beyond their retirement or other  termination of service,  other than
benefits the full cost of which is borne by such former employees.

            (g) Except as otherwise  disclosed to Valhi, the consummation of the
Merger will not, either alone or in combination with another event undertaken by
Tremont  prior to the date hereof,  (i) entitle any current or former  employee,
agent,   independent   contractor  or  officer  of  Tremont  to  severance  pay,
unemployment  compensation  or any other  payment,  (ii)  accelerate the time of
payment or vesting or increase the amount of compensation due any such employee,
officer,  agent or  independent  contractor  or (iii)  constitute  a "change  in
control" under any Tremont Benefit Plan.

     Section 4.14 Intellectual  Property.  Title to all registered  Intellectual
Property  is  recorded  on  records in the name of  Tremont  and,  to the extent
applicable,  all affidavits of continued use and  incontestability in respect of
such registered  intellectual  property have been timely filed.  Tremont owns or
possesses  licenses or other valid rights to use, and upon  consummation  of the
transactions contemplated by this Agreement, the Surviving Corporation shall own
or possess  licenses or other  valid  rights to use  (without  the making of any
payment to others or the obligation to grant rights to others in exchange),  all
Intellectual  Property  necessary  to the conduct of the  business of Tremont as
currently  conducted,  including,  without limitation,  all releases required in
connection  with quotes,  testimonials  or  likenesses  utilized in editorial or
promotional  material.  Tremont's right title and interest in such  Intellectual
Property  is not being  opposed  by any  claim or  demand or in any  proceeding,
action,  litigation  or order to which  Tremont or any Person who has  granted a
license or other right to use  Intellectual  Property to Tremont or who has been
granted a license or other right to use Intellectual  Property by Tremont,  is a
party or subject,  nor to the knowledge of Tremont,  is any such claim,  demand,
proceeding,  action,  litigation, or court order threatened.  The conduct of the
business  of Tremont as  currently  conducted  does not  materially  infringe or
conflict with any  intellectual  property of others.  As used in this Agreement,
"Intellectual  Property"  means (i) all U.S.  and foreign  trademarks,  patents,
service marks, trade names, copyrights, mask works and designs that are pending,
applied for, granted,  or registered in any country or jurisdiction of the world
and that are owned by Tremont and used in connection with its business; (ii) all
unregistered trademarks,  patents, service marks, and trade names that are owned
by Tremont and used in  connection  with its  business;  and (iii) all licenses,
contracts,  permissions and other  agreements  relating to the business to which
Tremont is a party relating in any way to rights in any of the foregoing.

     Section 4.15 Required Vote of Tremont Stockholders. The affirmative vote of
the holders of a majority of the  outstanding  shares of Tremont Common Stock is
required to approve the Merger.  No other vote of the stockholders of Tremont is
required by Law, the  Certificate of  Incorporation  or the Bylaws of Tremont or
otherwise  in order for Tremont to  consummate  the Merger and the  transactions
contemplated hereby.

     Section  4.16  Certain  Contracts.  Except as  disclosed in the Tremont SEC
Documents, Tremont is not a party to or bound by (i) any "material contract" (as
such term is defined in Item  601(b)(10) of Regulation S-K of the SEC), (ii) any
non-competition  agreement or any other agreement or obligation that purports to
limit in any material  respect the manner in which,  or the  localities in that,
all or any material portion of the business of Tremont is or would be conducted,
(iii) any exclusive supply or purchase  contracts or any exclusive  requirements
contracts  or (iv) any  contract  or other  agreement  that  would  prohibit  or
materially  delay the  consummation  of the  Merger  or any of the  transactions
contemplated by this Agreement (collectively,  the "Tremont Contracts"). Tremont
has  delivered to Valhi or provided to Valhi for review,  prior to the execution
of this  Agreement,  complete and correct  copies of all Tremont  Contracts  not
filed as exhibits to the Tremont SEC Documents.  Each Tremont  Contract is valid
and  binding  on  Tremont  and is in full  force and  effect,  and  Tremont  has
performed in all material  respects all obligations  required to be performed by
it to date under each Tremont Contract,  except where such  noncompliance  would
not reasonably be expected to result in a Tremont  Material  Adverse Effect.  To
Tremont's knowledge, Tremont has not received notice of any violation or default
under (nor does there exist any  condition  that with the passage of time or the
giving of notice or both would result in such a violation or default  under) any
Tremont Contract.

     Section 4.17  Environmental  Liability.  Except as disclosed in the Tremont
SEC  Documents,   there  are  no  legal,   administrative,   arbitral  or  other
proceedings,   claims,   actions,   causes  of  action,   private  environmental
investigations or remediation  activities or governmental  investigations of any
nature pending or, to Tremont's knowledge, threatened against Tremont seeking to
impose,  or that could reasonably be expected to result in the imposition of any
liability or obligation  arising  under common law or under any local,  state or
federal  environmental  Law,  including,   without  limitation,   CERCLA,  which
liability  or  obligation  could  reasonably  be expected to result in a Tremont
Material Adverse Effect.  To Tremont's  knowledge,  there is no reasonable basis
for any such proceeding,  claim, action or governmental investigation that would
impose any liability or obligation  that could  reasonably be expected to result
in a Tremont Material Adverse Effect.

     Section 4.18 Taxes.  Except as set forth on Schedule 4.18,  Tremont has (i)
filed all Tax  returns  and  reports  required  to be filed by it (after  giving
effect to any filing  extension  properly  granted by a  Governmental  Authority
having  authority  to do so) and all such  returns and reports are  accurate and
complete in all material respects; and (ii) paid all Taxes shown on such returns
and  reports as  required  to be paid by it,  and,  except as  disclosed  in the
Tremont SEC Documents,  the most recent  financial  statements  contained in the
Tremont SEC Documents reflect an adequate reserve for all material Taxes payable
by Tremont for all taxable periods and portions thereof through the date of such
financial  statements.  Since the date of the  Tremont  Interim  Balance  Sheet,
Tremont has not  incurred  any  material  liability  for Taxes other than in the
ordinary course of business.  To Tremont's  knowledge,  no deficiencies  for any
Taxes have been proposed,  asserted or assessed against Tremont, and no requests
for  waivers of the time to assess any such Taxes are  pending.  As used in this
Agreement,  "Taxes" shall include all federal,  state, local and foreign income,
property,  sales, excise and other taxes, tariffs or governmental charges of any
nature  whatsoever,  together with penalties,  interest or additions to Tax with
respect thereto.

     Section 4.19  Knowledge.

            The  phrases  "to  Tremont's  knowledge"  or "to  the  knowledge  of
Tremont" shall mean the actual knowledge of any executive officer of Tremont.

     Section 4.20 No Undisclosed  Information.  To Tremont's knowledge,  Tremont
has not  failed  to  disclose  to  Valhi  any  fact  material  to the  business,
properties,  prospects, operations, financial condition or results of operations
of Tremont.  To Tremont's  knowledge,  no  representation or warranty by Tremont
contained  in  this  Agreement  and  no  statement  contained  in  any  document
(including historical financial statements and the Schedules to this Agreement),
certificate or other writing furnished or to be furnished by Tremont to Valhi or
any of its  representatives  pursuant to the provisions  hereof or in connection
with the transactions  contemplated hereby,  contains or will contain any untrue
statement  of  material  fact or omits or will omit to state any  material  fact
necessary,  in light of the  circumstances  under which it was made, in order to
make the  statements  herein or  therein  not  misleading.  Notwithstanding  the
foregoing or any other provision  herein,  Tremont has made no representation or
warranty with respect to any financial or other projections made by Tremont.

                                    ARTICLE V

                                    COVENANTS

     Section 5.1 Conduct of Business of Tremont. During the period from the date
of this Agreement to the Effective  Time,  Tremont shall carry on its businesses
in the usual,  regular and ordinary course in  substantially  the same manner as
heretofore conducted and, to the extent consistent  therewith,  use commercially
reasonable  efforts  to  preserve  intact  its  current  business  organization,
goodwill and ongoing  businesses;  provided,  however,  and without limiting the
generality of the  foregoing,  during the period from the date of this Agreement
to the Effective  Time,  except as expressly  permitted or  contemplated by this
Agreement,  as  shall  be  consented  by  Valhi  (which  consent  shall  not  be
unreasonably withheld or delayed) or as set forth on Schedule 5.1, Tremont shall
not and shall not authorize or commit or agree to:

            (a) (i) except for  dividends  paid on Tremont  Common  Stock in the
ordinary course of Tremont's business,  consistent with past practice,  declare,
set aside or pay any dividends on, or make any other distributions in respect of
any of Tremont's capital shares,  (ii) split,  combine or reclassify any capital
stock or other  partnership  interests or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of such
capital shares or partnership  interests or (iii) purchase,  redeem or otherwise
acquire  any  capital  shares of Tremont or any  options,  warrants or rights to
acquire,  or security  convertible  into,  such  capital  shares or  partnership
interests;

            (b) issue,  deliver or sell,  or grant any option or other  right in
respect  of,  any  capital  shares,  any  other  voting  securities   (including
partnership  interests) of Tremont or any  securities  convertible  into, or any
rights,  warrants or options to acquire,  any such shares,  voting securities or
convertible securities;

            (c) except as otherwise  contemplated by this  Agreement,  amend the
certificate or articles of incorporation, bylaws, partnership agreement or other
comparable charter or organizational documents of Tremont;

            (d) merge or consolidate with any Person;

            (e) (i)  acquire or agree to  acquire  by  merging or  consolidating
with, or by purchasing all or a substantial  portion of the equity securities or
all or substantially all of the assets of, or by any other manner,  any business
or any  corporation,  partnership,  limited  liability  company,  joint venture,
association,  business trust or other business  organization or division thereof
or  interest  therein;  (ii)  subject  to any Lien or sell,  lease or  otherwise
dispose  of any  material  assets  or assign or  encumber  the right to  receive
income,  dividends,  distributions  and the like except pursuant to contracts or
agreements  in effect at the date of this  Agreement  and set forth on  Schedule
5.1;  (iii)  make or agree  to make  any new  capital  expenditures,  except  in
accordance with budgets relating to Tremont that have been previously  delivered
to and approved by Valhi; or (iv) incur any  indebtedness  for borrowed money or
guarantee  any  such  indebtedness  of  another  Person,  issue or sell any debt
securities  or  warrants  or other  rights to  acquire  any debt  securities  of
Tremont,  guarantee any debt securities of another Person,  enter into any "keep
well" or other  agreement  to maintain  any  financial  statement  condition  of
another Person or enter into any  arrangement  having the economic effect of any
of the  foregoing,  prepay or  refinance  any  indebtedness  or make any  loans,
advances or capital contributions to, or investments in, any other Person;

            (f) make or rescind  any Tax  election  (unless  required  by Law or
necessary to preserve any of Tremont's subsidiaries as a partnership for federal
income tax purposes);

            (g) (i) change in any material manner any of its methods, principles
or  practices of  accounting  for GAAP or (ii) settle or  compromise  any claim,
action,  suit,  litigation,  proceeding,  arbitration,  investigation,  audit or
controversy  relating to Taxes, or change any of its methods of reporting income
or deductions  for Tax purposes from those  employed in the  preparation  of the
applicable Tax return for the most recently  completed  taxable year except,  in
the case of clause (i), as may be required by the SEC, applicable Law or GAAP;

            (h) adopt any new employee benefit plan,  incentive plan,  severance
plan, bonus plan, stock option or similar plan, grant new stock options or stock
appreciation rights or amend any existing plan or rights, except such changes as
are  required  by Law or that  are  not  more  favorable  to  participants  than
provisions presently in effect;

            (i)  except  as  contractually  required  pursuant  to the  terms of
agreements existing on the date hereof,  pay,  discharge,  settle or satisfy any
claims,  liabilities or objections (absolute,  accrued,  asserted or unasserted,
contingent or otherwise),  other than the payment,  discharge or satisfaction in
the ordinary  course of business  consistent with past practice or in accordance
with  their  terms,  of  liabilities   reflected  or  reserved  against  in,  or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of Tremont  included in the  Tremont SEC  Documents  or incurred in the
ordinary course of business consistent with past practice;

            (j) settle any stockholder derivative or class action claims arising
out of or in connection with any of the transactions contemplated hereby; or

            (k)  take  any  action   that  would   result  in  (i)  any  of  the
representations  and  warranties  of such party  (without  giving  effect to any
"knowledge"  qualification) set forth in this Agreement that are qualified as to
materiality  becoming untrue,  (ii) any of such  representations  and warranties
(without  giving  effect  to any  "knowledge"  qualification)  that  are  not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Merger set forth in Sections 6.1 or 6.2 not being satisfied.

     Section 5.2  Conduct of Business of Valhi.  During the period from the date
of this Agreement to the Effective Time,  Valhi shall carry on its businesses in
the usual,  regular  and  ordinary  course in  substantially  the same manner as
heretofore conducted and, to the extent consistent  therewith,  use commercially
reasonable  efforts  to  preserve  intact  its  current  business  organization,
goodwill and ongoing  businesses;  provided,  however,  and without limiting the
generality of the  foregoing,  during the period from the date of this Agreement
to the Effective  Time,  except as expressly  permitted or  contemplated by this
Agreement,  as shall  be  consented  by  Tremont  (which  consent  shall  not be
unreasonably  withheld or delayed) or as set forth on Schedule 5.2,  Valhi shall
not and shall not authorize or commit or agree to:

            (a) (i)  except  for  dividends  paid on Valhi  Common  Stock in the
ordinary course of Valhi's business, consistent with past practice, declare, set
aside or pay any dividends on, or make any other distributions in respect of any
of Valhi's capital shares,  (ii) split,  combine or reclassify any capital stock
or other  partnership  interests or issue or authorize the issuance of any other
securities  in  respect  of, in lieu of or in  substitution  for  shares of such
capital shares or partnership  interests or (iii) purchase,  redeem or otherwise
acquire  any  capital  shares  of Valhi or any  options,  warrants  or rights to
acquire,  or security  convertible  into,  such  capital  shares or  partnership
interests;

            (b) except as otherwise  contemplated by this  Agreement,  amend the
certificate or articles of incorporation, bylaws, partnership agreement or other
comparable charter or organizational documents of Valhi;

            (c) merge or consolidate with any Person;

            (d) acquire or agree to acquire by merging or consolidating with, or
by purchasing  all or a substantial  portion of the equity  securities or all or
substantially all of the assets of, or by any other manner,  any business or any
corporation, partnership, limited liability company, joint venture, association,
business trust or other business  organization  or division  thereof or interest
therein; or

            (e)  take  any  action   that  would   result  in  (i)  any  of  the
representations  and  warranties  of such party  (without  giving  effect to any
"knowledge"  qualification) set forth in this Agreement that are qualified as to
materiality  becoming untrue,  (ii) any of such  representations  and warranties
(without  giving  effect  to any  "knowledge"  qualification)  that  are  not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Merger set forth in Sections 6.1 or 6.3 not being satisfied.

     Section 5.3 Tremont Board Recommendation. In connection with the Merger and
the Tremont Stockholders'  Approval, the board of directors of Tremont shall (i)
unless  this  Agreement  is earlier  terminated  in  accordance  with its terms,
recommend  to the  holders  of Tremont  Common  Stock that they vote in favor of
approval of this Agreement and the transactions  contemplated hereby and use all
commercially  reasonable  efforts  to  obtain  the  necessary  approvals  by the
stockholders  of Tremont of this  Agreement  and the  transactions  contemplated
hereby and (ii) otherwise comply with all legal requirements  applicable to such
approval.

     Section 5.4 Access to Information.

            (a) From the date of this  Agreement  until the Effective  Time, (i)
each of Valhi and Tremont, upon reasonable notice, will provide to the other and
their  respective  lenders and authorized  representatives  (including  counsel,
environmental  and other  consultants,  accountants  and  auditors)  full access
during normal business hours to all facilities,  personnel and operations and to
all books and records of Tremont,  Valhi and Sub, (ii) each of Valhi and Tremont
will  permit the other to make such  inspections  as it may  reasonably  require
(including  without limitation any air, water or soil testing or sampling deemed
necessary)  and (iii) each of  Tremont  and Valhi  will  cause its  officers  to
furnish  the  other  party  with such  financial  and  operating  data and other
information  with respect to its business and  properties as the other party may
from time to time reasonably request.

            (b) Valhi and Tremont will hold and will cause their representatives
to hold in  confidence,  all documents and  information  furnished in connection
with this  Agreement.  Other than documents or information  (i) available to the
public,  (ii) that are or become  known by Valhi or Tremont  from a source other
than  Tremont  or  Valhi,  as the  case  may be,  other  than by a  breach  of a
confidentiality  obligation  owed to  Tremont or Valhi,  respectively,  or (iii)
required by Law to be disclosed.

     Section  5.5  Registration  Statement  and  Proxy  Statement.  As  soon  as
practicable following the date of this Agreement, Tremont shall prepare and file
with the SEC a  preliminary  Proxy  Statement in form and  substance  reasonably
satisfactory to each of Valhi and Tremont, and Valhi shall prepare and file with
the SEC the  Registration  Statement,  in  which  the  Proxy  Statement  will be
included.  Each of Valhi and Tremont shall use its reasonable commercial efforts
to (i)  respond  to any  comments  of the SEC and  (ii)  have  the  Registration
Statement  declared  effective  under  the  Securities  Act  and the  rules  and
regulations  promulgated thereunder as promptly as practicable after such filing
and to keep  the  Registration  Statement  effective  as  long as is  reasonably
necessary to consummate the Merger.  Tremont will use its reasonable  commercial
efforts  to cause  the Proxy  Statement  to be  mailed  to its  stockholders  as
promptly as practicable after the Registration  Statement is declared  effective
under the  Securities  Act.  Each party will  notify the other  promptly  of the
receipt  of any  comments  from  the  SEC  and of any  request  by the  SEC  for
amendments or supplements to the  Registration  Statement or the Proxy Statement
or for  additional  information  and will  supply the other  with  copies of all
correspondence  between  such party or any of its  representatives  and the SEC,
with respect to the Registration Statement or the Proxy Statement.  Whenever any
event occurs that is required to be set forth in an amendment or  supplement  to
the Registration Statement or the Proxy Statement, Valhi or Tremont, as the case
may be, shall  promptly  inform the other of such  occurrences  and cooperate in
filing with the SEC and/or mailing to the stockholders of Tremont such amendment
or supplement.  The Proxy Statement  shall,  subject to Section 5.3, include the
recommendation of the board of directors of Tremont in favor of approval of this
Agreement and the transactions  contemplated  hereby.  The Proxy Statement shall
also include the Fairness Opinion of the Tremont Financial Advisor.  Valhi shall
take any action  required to be taken under any applicable  state  securities or
"blue  sky" laws in  connection  with the  issuance  of the Valhi  Common  Stock
pursuant to the Merger,  and Tremont  shall furnish all  information  concerning
Tremont and the holders of shares of Tremont  Common Stock and rights to acquire
such shares pursuant to the Tremont Option Plans as may be reasonably  requested
in connection  with any such action.  Valhi will use its  reasonable  commercial
efforts to obtain,  prior to the effective date of the  Registration  Statement,
all necessary  state  securities or "blue sky" permits or approvals  required to
carry out the transactions contemplated hereby.

     Section  5.6  Tremont  Stockholders'  Meeting.  Tremont  will,  as  soon as
practicable following the date of this Agreement (but in no event sooner than 30
days  following the date the Proxy  Statement is mailed to the  stockholders  of
Tremont),  duly call,  give notice of, convene and hold the Tremont  Stockholder
Meeting for the purpose of obtaining the Tremont  Stockholders'  Approval as set
forth in Section 4.15.  Subject to Section 5.3, Tremont will,  through its board
of directors,  recommend to its stockholders  approval of this Agreement and the
transactions contemplated hereby.

     Section 5.7 Reasonable Efforts; Other Actions.  Tremont, Valhi and Sub each
shall use all commercially  reasonable  efforts promptly to take, or cause to be
taken,  all  other  actions  and do,  or  cause  to be done,  all  other  things
necessary,  proper or  appropriate  under  applicable Law to consummate and make
effective the transactions  contemplated by this Agreement,  including,  without
limitation,  (i) the  taking of any  actions  required  to  qualify  the  Merger
treatment as a tax-free reorganization within the meaning of Code Section 368(a)
and (ii) the obtaining of all necessary consents, approvals or waivers under its
material contracts. If, at any time after the Effective Time, any further action
is  necessary or  desirable  to carry out the  purposes of this  Agreement,  the
officers and  directors of the parties  hereto shall use  reasonable  commercial
efforts to take all such action.

     Section  5.8 Public  Announcements.  Before  issuing  any press  release or
otherwise  making any public  statements with respect to the Merger,  Valhi, Sub
and Tremont will consult with each other as to its form and  substance and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by Law or the rules of the NYSE.

     Section  5.9  Notification  of Certain  Matters.  Each of Tremont and Valhi
shall  give  prompt  notice to the other  party of (i) any  notice  of, or other
communication relating to, a default or event that, with notice of lapse of time
or both,  would become a default,  received by it subsequent to the date of this
Agreement and prior to the Effective  Time,  under any contract to which it is a
party or is  subject  that could  reasonably  be  expected  to result in a Valhi
Material Adverse Effect or a Tremont  Material  Adverse Effect,  as the case may
be, (ii) any notice or other  communication  from any third party  alleging that
the consent of such third party is or may be  required  in  connection  with the
transactions  contemplated  by  this  Agreement,   (iii)  any  change  in  their
respective financial condition, properties, businesses or results of operations,
or the occurrence of any event that is reasonably expected to result in any such
change, that in any such event could reasonably be expected to result in a Valhi
Material  Adverse Effect or Tremont Material  Adverse,  as the case may be, (iv)
the  occurrence or existence of any event that would,  or could with the passage
of time or otherwise,  make any representation or warranty contained herein that
is qualified as to materiality untrue in any respect or any such  representation
or warranty that is not so qualified  becoming untrue in any material respect or
(v) the  failure by it to comply  with or satisfy in any  material  respect  any
covenant,  condition or  agreement to be complied  with or satisfied by it under
this Agreement;  provided, however, that the delivery of notice pursuant to this
Section 5.9 shall not limit or otherwise affect the remedies available hereunder
to the  party  receiving  such  notice.  Each  party  shall  use its  reasonable
commercial efforts to prevent or promptly remedy the same.

     Section 5.10 Expenses.  Valhi and Sub, on the one hand, and Tremont, on the
other hand,  shall bear their  respective  expenses  incurred in connection with
this Agreement and the transactions  contemplated hereby,  except that Valhi and
Tremont shall each pay one-half of the expenses  incurred in connection with the
printing and mailing of the Proxy Statement and the Registration Statement.

     Section 5.11 Rule 145  Affiliates.  Tremont shall deliver to Valhi a letter
identifying  all  Persons  who,  as of the date  hereof,  may be deemed to be an
"affiliate"  thereof for purposes of Rule 145 under the  Securities Act (a "Rule
145 Affiliate") and shall advise Valhi in writing of any Persons who become Rule
145  Affiliates  prior to the Effective  Time.  Tremont shall use all reasonable
efforts to cause each Person who is so  identified  as a Rule 145  Affiliate  to
deliver  to  Valhi,  no later  than  the  earlier  of the 30th day  prior to the
Effective Time or the date such Person  becomes a Rule 145 Affiliate,  a written
agreement substantially in the form of Exhibit B hereto.

     Section 5.12 Stock Exchange Listing. Valhi shall file a listing application
on or before the Closing and thereafter shall take all action to effect approval
to list on the NYSE, the Valhi Common Stock to be issued pursuant to the Merger.

     Section  5.13 State  Anti-Takeover  Laws.  If any "fair  price" or "control
share  acquisition"  statute or other  similar  anti-takeover  regulation  shall
become applicable to the transactions contemplated hereby, Valhi and Tremont and
their  respective  board of  directors  shall  use their  reasonable  commercial
efforts to grant such  approvals and to take such other actions as are necessary
so that the transactions  contemplated  hereby may be consummated as promptly as
practicable  on the terms  contemplated  hereby  and shall  otherwise  use their
reasonable  commercial  efforts to eliminate  the effects of any such statute or
regulation on the transactions contemplated hereby.

     Section  5.14  Tax-Free  Transaction.  From  and  after  the  date  of this
Agreement,  each party hereto  shall use its  reasonable  commercial  efforts to
cause the Merger (or, if the LLC Merger occurs,  the Merger  followed by the LLC
Merger) to qualify,  and shall not take, or cause to be taken,  any actions that
could  reasonably  be  expected  to prevent  the Merger  (or,  if the LLC Merger
occurs,   the  Merger   followed  by  the  LLC  Merger)  from  qualifying  as  a
"reorganization" under Section 368(a) of the Code with respect to the holders of
Tremont Common Stock other than Valhi and TGI.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective  obligations  of each party to effect the Merger  shall be subject to
the  fulfillment  at or  prior  to the  Closing  Date of  each of the  following
conditions:

            (a) Registration  Statement.  The Registration  Statement shall have
become  effective in accordance  with the provisions of the  Securities  Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and remain in effect.  All necessary state  securities or
blue sky authorizations shall have been received.

            (b) Stockholder Approval.  The requisite vote of the stockholders of
Tremont necessary to consummate the transactions  contemplated by this Agreement
shall have been obtained.

            (c) Consents and Approvals.  All necessary consents and approvals of
any  United  States  or  any  other  Governmental  Authority  required  for  the
consummation of the transactions  contemplated by this Agreement shall have been
obtained.

            (d) Listing.  The Valhi Common Stock issued in the Merger shall have
been authorized for listing on the NYSE.

            (e) No  Orders.  No  temporary  restraining  order,  preliminary  or
permanent   injunction   or  other  order  issued  by  any  court  of  competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or any of the other transactions  contemplated  hereby shall be in
effect.

            (f)  "Blue  Sky"  Permits.  Valhi  shall  have  received  all  state
securities or "blue sky" permits and other authorizations necessary to issue the
Valhi Common Stock pursuant to this Agreement.

     Section 6.2  Conditions to the  Obligations  of Valhi and Sub to Effect the
Merger.  The  obligation  of Valhi and Sub to effect  the  Merger and to perform
under this  Agreement is subject to the  fulfillment on or before to the Closing
Date of the  following  additional  conditions,  any one or more of which may be
waived, in writing, by Valhi and Sub:

            (a) Representations  Accurate. The representations and warranties of
Tremont contained herein shall be true and correct on the date of this Agreement
and at and on the Closing  Date as though such  representations  and  warranties
were made at and on such date,  except to the extent that the  representation or
warranty is expressly limited by its terms to another date. This condition shall
be deemed satisfied unless any or all breaches of Tremont's  representations and
warranties  in  this  Agreement   (without  giving  effect  to  any  materiality
qualification  or  limitation)  is  reasonably  expected  to result in a Tremont
Material  Adverse  Effect or is reasonably  expected to prevent or materially to
burden  or  impair  the  ability  of  Tremont  to  consummate  the  transactions
contemplated by this Agreement.  In addition,  a  representation  or warranty of
Tremont  shall not be deemed to be  untrue or  incorrect  if (i) any of  Valhi's
executive  officers had actual and conscious (and not  constructive,  imputed or
implied)  knowledge on the date hereof that such  representation or warranty was
untrue or incorrect or (ii) such representation or warranty was true on the date
hereof and Valhi caused such  representation or warranty to subsequently  become
untrue or incorrect.

            (b)  Performance.  Tremont  shall  have  complied,  in all  material
respects,  with all  agreements,  obligations  and  conditions  required by this
Agreement to be complied with by it on or prior to the Closing Date.

            (c)  Certificates.  Valhi and Sub  shall  have  received  (i) a duly
executed  certificate  signed by the  President  or a Vice  President of Tremont
certifying as to compliance  with the conditions  set forth in Sections  6.2(a),
(b) and (h) and (ii) a duly  executed  certificate  signed by the  Secretary  of
Tremont certifying the accuracy and completeness of the resolutions of the board
of  directors  of  Tremont   approving  this  Agreement,   the  Merger  and  the
transactions contemplated hereby.

            (d) Certified Certificate of Incorporation. Valhi and Sub shall have
received  a  certificate  of the  Secretary  of State of the  State of  Delaware
certifying  the  Certificate  of  Incorporation  of Tremont  and all  amendments
thereof, dated not more than ten days prior to the Closing Date.

            (e) Good  Standing.  Valhi and Sub shall have received a certificate
of good standing,  or its  equivalent,  dated no more than ten days prior to the
Closing  Date,  from the State of Delaware and each other state in which Tremont
is qualified to do business.

            (f) Consents.  Valhi and Sub shall have received  copies of consents
of all third parties necessary for Tremont to execute,  deliver and perform this
Agreement and consummate the Merger.

            (g) Tax Opinion.  Valhi and Sub shall have received an executed copy
of a tax opinion of Locke  Liddell & Sapp LLP,  Valhi's  legal  counsel,  to the
effect that the Merger (or, if the LLC Merger occurs, the Merger followed by the
LLC  Merger)  will  constitute  a  reorganization  within the meaning of Section
368(a) of the Code with  respect to the  holders of Tremont  Common  Stock other
than Valhi and TGI and,  if the LLC Merger  occurs,  a complete  liquidation  of
Tremont under Section 332 of the Code with respect to Valhi.

            (h) No Material  Adverse  Change.  Since the date of this Agreement,
there shall have been no change that could reasonably be expected to result in a
Tremont Material Adverse Effect.

            (i) Agreements  with Rule 145  Affiliates.  Valhi and Sub shall have
received  from each Person who is a Rule 145  Affiliate  under  Section  5.11 an
executed  copy of the written  agreement  referred  to in Section  5.11 and such
agreements shall be in full force and effect and there shall be no breach, or in
existence  any facts that with passage of time or otherwise  could  constitute a
breach, thereof.

            (j) Certificate of Merger. Tremont shall have delivered to Valhi the
Certificate of Merger as executed by duly authorized officers of Tremont.

     Section 6.3 Conditions to the  Obligations of Tremont to Effect the Merger.
The  obligation  of Tremont  to effect  the  Merger  and to  perform  under this
Agreement  is subject to the  fulfillment  on or before the Closing  Date of the
following  additional  conditions,  any one or more of which may be  waived,  in
writing, by Tremont:

            (a) Representations  Accurate. The representations and warranties of
Valhi  contained  herein shall be true and correct on the date of this Agreement
and at and on the Closing  Date as though such  representations  and  warranties
were made at and on such date,  except to the extent that the  representation or
warranty is expressly limited by its terms to another date. This condition shall
be deemed  satisfied unless any or all breaches of Valhi's  representations  and
warranties  in  this  Agreement   (without  giving  effect  to  any  materiality
qualification  or  limitation)  is  reasonably  expected  to  result  in a Valhi
Material  Adverse  Effect or is reasonably  expected to prevent or materially to
burden  or  impair  the  ability  of  Valhi  to  consummate   the   transactions
contemplated by this Agreement.  In addition,  a  representation  or warranty of
Valhi  shall  not be  deemed  to be  untrue  or  incorrect  if any of  Tremont's
executive  officers had actual and conscious (and not  constructive,  imputed or
implied)  knowledge on the date hereof that such  representation or warranty was
untrue or incorrect.

            (b) Performance.  Valhi and Sub shall have complied, in all material
respects,  with all  agreements,  obligations  and  conditions  required by this
Agreement to be complied with by them on or prior to the Closing Date.

            (c)  Certificates.  Tremont  shall have received (i) a duly executed
certificate signed by the President or a Vice President of each of Valhi and Sub
certifying as to compliance  with the conditions  set forth in Sections  6.3(a),
(b) and (h) and (ii) a duly executed certificate signed by the Secretary of each
of Valhi and Sub certifying the accuracy and  completeness of the resolutions of
the board of directors of each of Valhi and Sub approving  this  Agreement,  the
Merger and the transactions contemplated hereby.

            (d)  Certified  Certificates  of  Incorporation.  Tremont shall have
received  certificates  of the  Secretary  of  State of the  State  of  Delaware
certifying the  Certificate  of  Incorporation  of Valhi and the  Certificate of
Incorporation  of Sub and all amendments  thereof,  dated not more than ten days
prior to the Closing Date.

            (e) Good Standing. Tremont shall have received a certificate of good
standing,  or its  equivalent,  dated no more than ten days prior to the Closing
Date, from the State of Delaware and each other state in which Valhi and Sub are
qualified to do business.

            (f) Consents.  Tremont shall have received copies of consents of all
third parties  necessary for Valhi and Sub to execute,  deliver and perform this
Agreement and consummate the Merger.

            (g) Tax Opinion.  Tremont  shall have received an executed copy of a
tax opinion of Piper Rudnick LLP, legal counsel to the Special  Committee of the
Board of  Directors  of  Tremont,  to the effect that the Merger (or, if the LLC
Merger  occurs,  the  Merger  followed  by the LLC  Merger)  will  constitute  a
reorganization  within the meaning of Section 368(a) of the Code with respect to
shareholders of Tremont other than Valhi or TGI.

            (h) No Material  Adverse  Change.  Since the date of this Agreement,
there shall have been no change that could reasonably be expected to result in a
Valhi Material Adverse Effect.

            (i)  Certificate of Merger.  Sub shall have delivered to Tremont the
Certificate of Merger, executed by duly authorized officers of Sub.

                                   ARTICLE VII

                                     CLOSING

     Section 7.1 Time and Place.  Subject to the  provisions  of Articles VI and
VIII, the closing of the Merger (the "Closing")  shall take place at the offices
of Locke Liddell & Sapp LLP, 2200 Ross Avenue,  Suite 2200,  Dallas,  Texas,  as
soon as  practicable,  but in no event later than the second  business day after
the date on which each of the  conditions  set forth in  Article VI (other  than
those  conditions  that by their  nature are to be  satisfied at the Closing but
subject to such  conditions) have been satisfied or waived,  in writing,  by the
party or parties  entitled to the benefit of such  conditions;  or at such other
place or on such other date as Valhi, Sub and Tremont may, in writing,  mutually
agree.  The date on which the Closing  actually  occurs is herein referred to as
the "Closing Date."

     Section 7.2 Filings at the Closing.  Subject to the  provisions of Articles
VI and VIII, Tremont,  Valhi and Sub shall cause to be executed and filed at the
Closing the  Certificate of Merger and shall cause the  Certificate of Merger to
be recorded in accordance  with the applicable  provisions of the DGCL and shall
take any and all other  lawful  actions and do any and all other  lawful  things
necessary to cause the Merger to become effective.

                                  ARTICLE VIII

                           TERMINATION AND ABANDONMENT

     Section 8.1  Termination  by Valhi and/or  Tremont.  This  Agreement may be
terminated  at any time prior to the  Effective  Time,  whether  before or after
approval  of this  Agreement  and the  transactions  contemplated  hereby by the
stockholders of Tremont:

            (a) by the mutual consent of Valhi and Tremont;

            (b)  by  either  Valhi  or  Tremont,   if  any  court  of  competent
jurisdiction or other  Governmental  Authority shall have issued an order (other
than a temporary  restraining order), decree or ruling or taken any other action
restraining,  enjoining or  otherwise  prohibiting  the Merger,  and such order,
decree, ruling or other action shall have become final and nonappealable;

            (c)  by  either  Valhi  or  Tremont,  if the  Tremont  Stockholders'
Approval is not obtained at the Tremont Stockholder Meeting;

            (d) by either  Valhi or Tremont,  if the Tremont  Financial  Advisor
shall have  withdrawn,  modified  or changed  its  Fairness  Opinion in a manner
adverse to the holders of Tremont Common Stock; or

            (e) by either  Valhi or Tremont,  if the Merger  shall not have been
consummated  by February 28, 2003,  provided that a party in material  breach of
this Agreement may not terminate this Agreement pursuant to this Section 8.1(e).

     Section 8.2 Termination by Valhi. This Agreement may be terminated by Valhi
at any time prior to the Effective  Time,  whether  before or after  approval of
this Agreement and the transactions  contemplated  hereby by the stockholders of
Tremont if:

            (a) (i) Tremont shall have failed to comply in any material  respect
with any of the  covenants  or  agreements  contained  in this  Agreement  to be
complied with by Tremont at or prior to such date of  termination  or (ii) there
exists a breach of any  representation  or warranty of Tremont contained in this
Agreement such that the closing conditions set forth in Section 6.2(a) would not
be  satisfied,  provided,  however,  that with respect to either (i) or (ii), if
such failure or breach is capable of being  cured,  such failure or breach shall
not have been cured  within 15 days of delivery to Tremont of written  notice of
such failure or breach; or

            (b)  the  board  of  directors  of  Tremont  shall  have  failed  to
recommend,  or shall have withdrawn,  modified or changed its  recommendation of
this  Agreement  or the  Merger  in a manner  adverse  to  Valhi  or shall  have
recommended or issued a neutral  recommendation  with respect to any proposal in
respect  of an  Acquisition  Proposal  with a  Person  other  than  Valhi or any
Affiliate of Valhi (or the Tremont board of directors or any  committee  thereof
shall have resolved to do any of the foregoing).

     Section 8.3  Termination  by Tremont.  This  Agreement may be terminated by
Tremont  at any time  prior  to the  Effective  Time,  whether  before  or after
approval  of this  Agreement  and the  transactions  contemplated  hereby by the
stockholders of Tremont if:

            (a) (i) Valhi or Sub  shall  have  failed to comply in any  material
respect with any of the covenants or agreements  contained in this  Agreement to
be complied with by Valhi or Sub at or prior to such date of termination or (ii)
there  exists  a  breach  of any  representation  or  warranty  of  Valhi or Sub
contained  in this  Agreement  such  that the  closing  conditions  set forth in
Section 6.3(a) would not be satisfied,  provided, however, that, with respect to
either (i) or (ii),  if such failure or breach is capable of being  cured,  such
failure or breach  shall not have been cured within 15 days of delivery to Valhi
or Sub of written notice of such failure or breach;

            (b)  the  board  of  directors  of  Tremont  shall  have  failed  to
recommend,  or shall have withdrawn,  modified or changed its recommendation of,
this  Agreement  or the  Merger  in a manner  adverse  to  Valhi  or shall  have
recommended or issued a neutral  recommendation  with respect to any proposal in
respect  of an  Acquisition  Proposal  with a  Person  other  than  Valhi or any
Affiliate of Valhi (or the Tremont board of directors or any  committee  thereof
shall have resolved to do any of the foregoing), in each case in order to permit
Tremont to execute a definitive  agreement for a transaction  contemplated by an
Acquisition  Proposal  from a third party that the board of directors of Tremont
determines in its good faith judgment (based on, among other things, the written
advice of an  independent  financial  advisor)  to be no less  favorable  to its
stockholders than the Merger, taking into account all relevant factors.

     Section 8.4  Procedure for  Termination.  In the event of  termination  and
abandonment  of the Merger by Valhi or Tremont  pursuant to this  Article  VIII,
written notice thereof shall forthwith be given to the other.

     Section  8.5  Effect  of  Termination  and  Abandonment.  In the  event  of
termination  of this Agreement and  abandonment  of the Merger  pursuant to this
Article VIII,  no party hereto (or any of its directors or officers)  shall have
any liability or further obligation to any other party to this Agreement, except
as provided in this Section 8.5 and in Sections 5.4(b), 5.8 and 5.10. Nothing in
this Section 8.5 shall relieve any party from  liability  for willful  breach of
this Agreement.

                                   ARTICLE IX

                          SURVIVABILITY; INVESTIGATION

     Section  9.1  Survival  of  Representations  and  Warranties.  None  of the
representations,  warranties and covenants of Tremont, Valhi or Sub will survive
the Effective Time.

     Section 9.2 Investigation. The respective representations and warranties of
Valhi, Sub and Tremont contained herein or in any certificate or other documents
delivered  prior to or at the Closing  shall not be deemed  waived or  otherwise
affected by any investigation made by any party hereto.

                                    ARTICLE X

                                  MISCELLANEOUS

     Section 10.1 Notices.

            All notices shall be in writing delivered as follows: If to Valhi or
Sub, to:

                  Valhi, Inc.
                  5430 LBJ Freeway, Suite 1700
                  Dallas, TX  75240
                  Attention:        J. Mark Hollingsworth
                                    Vice President and General Counsel
                  Facsimile No.:    (972) 448-1445

                  With a copy (which copy shall not constitute notice) to:

                  Locke Liddell & Sapp LLP
                  2200 Ross Avenue, Suite 2200
                  Dallas, TX  75206
                  Attention:        Don M. Glendenning, Esq.
                  Facsimile No.:    (214) 740-8800

         If to Tremont, to:

                  Tremont Corporation
                  1999 Broadway, Suite 4300
                  Denver, CO  80202
                  Attention:      Robert E. Musgraves
                                  Vice President, General Counsel and Secretary
                  Facsimile No.:  (303) 296-9645

                  With a copy (which copy shall not constitute notice) to:

                  Piper Rudnick LLP
                  1251 Avenue of the Americas
                  New York, NY  10020-1104
                  Attention:  Theodore Altman, Esq.
                  Facsimile No.:  (212) 835-6001

or to such other address as may have been  designated in a prior notice pursuant
to this  Section  10.1.  Notices  shall be deemed to be  effectively  served and
delivered (a) when delivered  personally,  (b) when sent by telephone  facsimile
(with a copy mailed by first-class  U.S.  mail),  (c) one business day following
deposit with a recognized  national  air courier  service or (d) three  business
days after  being  deposited  in the United  States  mail in a sealed  envelope,
postage prepaid, return receipt requested, to the appropriate party.

     Section 10.2 Binding Effect.  Except as may be otherwise  provided  herein,
this  Agreement  will be binding  upon and inure to the  benefit of the  parties
hereto and their respective  successors and permitted assigns,  but neither this
Agreement nor any of the rights or  obligations  hereunder  shall be assigned by
any of the  parties  hereto  without  the  prior  written  consent  of the other
parties. Except as otherwise specifically provided in this Agreement, nothing in
this  Agreement  is intended or will be  construed to confer on any Person other
than the parties hereto any rights or benefits hereunder.

     Section  10.3  Consent  to  Jurisdiction.  Each of the  parties  hereto (a)
consents to submit  itself to the  personal  jurisdiction  of any federal  court
located in the State of  Delaware or any  Delaware  state court in the event any
dispute arises out of this Agreement or any of the transactions  contemplated by
this  Agreement,  (b) agrees  that it will not  attempt  to deny or defeat  such
personal  jurisdiction  by motion or other request for leave from any such court
and (c) agrees that it will not bring any action  relating to this  Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.

     Section 10.4 Headings. The headings and table of contents contained in this
Agreement are intended  solely for convenience of reference and will be given no
effect in the construction or interpretation of this Agreement.

     Section 10.5 Exhibits and Schedules.

            The Exhibits and  Schedules  referred to in this  Agreement  will be
deemed to be a part of this Agreement.

     Section 10.6 Certain Definitions.

            For purposes of this Agreement:

            "Acquisition  Proposal" means any bona fide proposal with respect to
a merger,  consolidation,  share exchange,  tender offer or similar  transaction
involving Tremont or any purchase or other acquisition of all or any significant
portion of the assets of or any equity interest in Tremont.

            An  "Affiliate"  of any Person means another Person that directly or
indirectly,  through one or more intermediaries,  controls, is controlled by, or
is under common control with, such first Person.

            "Governmental   Authority"   means  any  federal,   state  or  local
government or any court,  administrative  or regulatory  agency or commission or
other governmental  authority or agency,  domestic or foreign federal,  state or
local government or agency, domestic or foreign.

            "LLC Merger" means the merger of the Surviving  Corporation  and TGI
with and into a limited  liability  company ("Tremont LLC") all of the interests
in which are  wholly-owned  directly by Valhi,  with Tremont LLC  surviving  the
mergers,  provided that (i)  immediately  following such mergers  Tremont LLC is
treated as a disregarded entity pursuant to Treas. Reg. ss.  1.7701-3(b)(1)(ii),
and (ii) at such time,  Valhi has no plan or intention  to cause  Tremont LLC to
make an election  pursuant to Treas.  Reg. ss.  1.7701-3(c) or to take any other
action  which  would  result in Tremont LLC not being  treated as a  disregarded
entity.

            "NL SEC  Documents"  means all documents  required to be filed under
the Securities Act and the Exchange Act by NL Industries, Inc.

            "Person"  means an  individual,  corporation,  partnership,  limited
liability   company,   joint  venture,   associations,   trust,   unincorporated
organization or other entity.

            "TGI  Merger"  means the  merger of Valhi  Acquisition  Corp.  II, a
Delaware  corporation and a wholly-owned  subsidiary of Valhi, with and into TGI
pursuant  to the  Agreement  and Plan of Merger,  of even date  herewith,  among
Valhi, TGI and Valhi Acquisition Corp. II.

            "Valhi Subsidiaries" means NL Industries, Inc., CompX International,
Inc. and Waste Control Specialists LLC.

     Section 10.7 Governing Law.

            This Agreement will be governed by the laws of the State of Delaware
without regard to conflict of laws principles thereof.

     Section 10.8 Waivers.  Compliance with the provisions of this Agreement may
be waived only by means of a written instrument  specifically  referring to this
Agreement and signed by the party waiving compliance.  No course of dealing, nor
any failure or delay in exercising any right, will be construed as a waiver, and
no single or  partial  exercise  of a right will  preclude  any other or further
exercise of that or any other right.

     Section 10.9  Counterparts.  This  Agreement may be executed in one or more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

     Section 10.10 Time Periods. Unless "business days" is specified, any action
required  hereunder  to be taken  within a certain  number of days will be taken
within that number of calendar days; provided, however, that if the last day for
taking such action falls on a weekend or a holiday, the period during which such
action may be taken will be automatically extended to the next business day.

     Section 10.11  Amendment.  Subject to compliance  with applicable Law, this
Agreement may be amended by the parties at any time before or after the approval
of Tremont's  stockholders;  provided,  however,  that after any such  approval,
there may not be, without further  approval of such the stockholders of Tremont,
any  amendment  of this  Agreement  that  changes  the amount or the form of the
consideration  to be delivered to the holders of Tremont Common Stock hereunder,
or which by Law  otherwise  expressly  requires  the  further  approval  of such
stockholders.  This  Agreement  may not be amended  except by an  instrument  in
writing signed on behalf of each of the parties hereto.

     Section  10.12 Entire  Agreement.  This  Agreement and the  agreements  and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement  of the  agreement  among the parties  concerning  the subject  matter
hereof. All negotiations  among the parties are merged into this Agreement,  and
there  are  no  representations,   warranties,  covenants,   understandings,  or
agreements,  oral or otherwise, in relation thereto among the parties other than
those incorporated herein and to be delivered hereunder.

     Section 10.13  Severability.  If any one or more of the  provisions of this
Agreement shall be held to be invalid,  illegal or unenforceable,  the validity,
legality or enforceability  of the remaining  provisions of this Agreement shall
not be affected  thereby.  To the extent permitted by applicable Law, each party
waives  any  provision  of Law that  renders  any  provision  of this  Agreement
invalid, illegal or unenforceable in any respect.



<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
signed by their  respective duly authorized  officers as of the date first above
written.

                                      VALHI, INC.



                             By:      /s/ Bobby D. O'Brien
                                      ----------------------------------------
                                      Bobby D. O'Brien
                                      Vice President, Chief Financial Officer
                                       and Treasurer

                                      VALHI ACQUISITION CORP.



                             By:      /s/ Bobby D. O'Brien
                                      ----------------------------------------
                                      Bobby D. O'Brien
                                      Vice President, Chief Financial Officer
                                       and Treasurer

                                      TREMONT CORPORATION



                             By:      /s/ Robert E. Musgraves
                                      ----------------------------------------
                                      Robert E. Musgraves
                                      Vice President, General Counsel
                                       and Secretary