AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger, dated as of November 4, 2002, is entered
into by and among Valhi, Inc., a Delaware corporation ("Valhi"),  Tremont Group,
Inc., a Delaware corporation ("TGI"), and Valhi Acquisition Corp. II, a Delaware
corporation and a wholly-owned subsidiary of Valhi ("Sub").

     WHEREAS,  there are currently outstanding 5,141.421 shares of common stock,
par value $.01 per share ("TGI Common  Stock"),  of TGI,  4,113.421 of which are
owned by Valhi  and  1,028.000  of which  are owned by NL  Industries,  Inc.,  a
Delaware corporation ("NL"); and

     WHEREAS,  the board of  directors  of each of Valhi,  TGI and Sub deems the
Merger (as  defined  below) to be  desirable  and in the best  interests  of its
respective corporation and stockholders.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and  of the  mutual
agreements and covenants contained herein, the parties hereto agree as follows:

     1. The Merger.  Upon the terms and subject to the  conditions  set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"),  Sub shall be merged with and into TGI (the  "Merger") at the Effective
Time (as defined below). TGI shall be the surviving  corporation (the "Surviving
Corporation") in the Merger. From and after the Effective Time, the identity and
separate  corporate  existence  of Sub shall cease and TGI shall  succeed to and
assume all the rights and obligations of Sub.

     2. The Effective  Time.  The parties shall file a certificate  of merger or
other appropriate documents (the "Certificate of Merger") executed in accordance
with the DGCL and shall make all other filings or recordings  required under the
DGCL. The Merger shall become  effective  upon the filing of the  Certificate of
Merger with the  Secretary of State of the State of  Delaware,  or at such later
time that TGI and Sub shall have agreed upon and  designated  in such filings in
accordance with applicable law (the time the Merger becomes  effective being the
"Effective Time").

     3.  Effects of the Merger.  The Merger  shall have the effects set forth in
the DGCL.

     4.   Certificate  of   Incorporation   and  Bylaws.   The   Certificate  of
Incorporation  of Sub, as in effect  immediately  prior to the  Effective  Time,
shall be the Certificate of  Incorporation of the Surviving  Corporation  except
that the name of the  corporation  specified  therein  shall be "Tremont  Group,
Inc.," until duly amended in accordance  with applicable law. The Bylaws of Sub,
as in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving  Corporation  (the "Bylaws")  except that the name of the  corporation
specified  therein  shall be  "Tremont  Group,  Inc.,"  until  duly  amended  in
accordance with applicable law.

     5. Directors and Officers.  The directors of Sub  immediately  prior to the
Effective Time shall be the directors of the Surviving Corporation, each of whom
shall  serve in  accordance  with the DGCL and the Bylaws.  The  officers of Sub
immediately  prior to the Effective  Time shall be the officers of the Surviving
Corporation,  each  of  whom  shall  serve  until  the  earlier  of  his  or her
resignation  or  removal  or until  his or her  successor  is duly  elected  and
qualified, as the case may be.

     6. Conversion of Shares.  By virtue of the Merger and without any action on
the part of any holder of capital  stock of Valhi,  TGI or Sub, at the Effective
Time:

          (a) each share of TGI  Common  Stock that is owned by Valhi or is held
     by TGI as treasury  stock shall be  converted  into and become one share of
     common stock, par value $.01 per share, of the Surviving Corporation;

          (b) subject to Section 7, each share of TGI Common Stock that is owned
     by NL shall be converted into 3,400 shares (the "Merger  Shares") of common
     stock,  par value $.01 per share ("Valhi Common  Stock"),  of Valhi,  or an
     aggregate of 3,495,200 shares of Valhi Common Stock; and

          (c) each share of common stock,  par value $.01 per share ("Sub Common
     Stock"), of Sub shall automatically be canceled and retired and shall cease
     to exist, and no consideration shall be delivered in exchange therefore.

     7. Dissenting Shares. Notwithstanding anything to the contrary contained in
this  Agreement,  holders of TGI Common Stock with respect to which  dissenters'
rights,  if any,  are granted by reason of the Merger  under the DGCL and who do
not vote in favor of the Merger and  otherwise  comply  with  Section 262 of the
DGCL  ("Dissenting  Shares"),  shall not be entitled  to shares of Valhi  Common
Stock  pursuant to Section 6 hereof  unless and until the holder  thereof  shall
have failed to perfect or shall have effectively withdrawn or lost such holder's
right to  dissent  from the  Merger  under the DGCL,  and shall be  entitled  to
receive only the payment provided for by Section 262 of the DGCL. If such holder
shall have failed to perfect or shall have  effectively  withdrawn  or lost such
holder's dissenters' rights under the DGCL, such holders Dissenting Shares shall
thereupon  be deemed to  represent  shares of Valhi Common Stock as set forth in
Section 6 hereof.

     8.  Condition to the Merger.  In order for the Merger to be effective,  the
Merger shall have received the  requisite  approval of the holders of Sub Common
Stock and TGI Common Stock pursuant to the DGCL.

     9. Certain Understandings.

          (a) TGI has been advised and  understands  that the Merger Shares have
     not been and will not be registered  under the  Securities  Act of 1933, as
     amended, or any applicable state securities or "blue sky" laws.

          (b) Each  certificate  representing  the Merger  Shares shall bear the
     following legend:

               "THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN
               REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE
               "ACT"),  OR THE  SECURITIES  LAWS  OF ANY  STATE  AND  MAY NOT BE
               TRANSFERRED,  SOLD, ASSIGNED, PLEDGED,  HYPOTHECATED OR OTHERWISE
               DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION  UNLESS VALHI HAS
               BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY
               TO VALHI,  TO THE EFFECT THAT SUCH  TRANSFER,  SALE,  ASSIGNMENT,
               PLEDGE,  HYPOTHECATION  OR  OTHER  DISPOSITION  MAY  BE  EFFECTED
               WITHOUT  REGISTRATION  UNDER THE ACT AND UNDER  APPLICABLE  STATE
               SECURITIES OR 'BLUE SKY' LAWS."

     10. Termination.  This Agreement may be terminated at any time prior to the
Effective Time,  whether before or after approval by the  stockholders of Sub or
TGI,  by the  mutual  written  consent  of Valhi,  Sub and TGI.  In the event of
termination  of this  Agreement  by the parties  hereto,  this  Agreement  shall
forthwith become void.

     11.  Amendment.  This Agreement may be amended by the parties hereto at any
time before or after approval hereof by the stockholders of TGI or Sub, provided
that after any such  approval  no  amendment  shall be made that (i) changes the
number of shares of TGI Common  Stock are to be  converted  into shares of Valhi
Common  Stock  pursuant  to  Section  6(b)  hereof,  (ii) in any way  materially
adversely  affects the rights of holders of shares of TGI Common  Stock or (iii)
changes any of the principal terms of this  Agreement,  in each case without 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.

     12. General Provisions

          (a) Further Assurances. From time to time, as and when required by the
     Surviving  Corporation  or by its  successors  or  assigns,  there shall be
     executed and delivered on behalf of Sub such  instruments,  and there shall
     be taken or cause to be taken by it all such  further  action,  as shall be
     appropriate,  advisable or necessary to vest, perfect or confirm, of record
     or otherwise,  in the Surviving  Corporation title to and possession of all
     property,  interests,  assets,  rights,  privileges,   immunities,  powers,
     franchises  and authority of Sub and otherwise to carry out the purposes of
     this Agreement, and the officers and directors of the Surviving Corporation
     are fully authorized in the name and on behalf of Sub or otherwise, to take
     any and all  such  action  and to  execute  and  deliver  any and all  such
     instruments.

          (b)  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.

          (c) Entire Agreement; No Third-Party Beneficiaries. This Agreement and
     the other agreements entered into in connection herewith (i) constitute the
     entire  Agreement and supersedes all prior  agreements and  understandings,
     both written and oral, among the parties with respect to the subject matter
     of this Agreement and (ii) are not intended to confer upon any Person other
     than the parties hereto any rights or remedies.

          (d) Governing Law. This Agreement  shall be governed by, and construed
     in accordance  with,  the laws of the State of Delaware,  regardless of the
     laws that might otherwise govern under applicable principles of conflict of
     laws thereof.

          (e)  Assignment.  Neither  this  Agreement  nor  any  of  the  rights,
     interests  or  obligations  under  this  Agreement  shall  be  assigned  or
     delegated,  in whole or in part, by operation of law or otherwise by any of
     the parties without the prior written consent of the other parties. Subject
     to the preceding  sentence,  this Agreement will be binding upon,  inure to
     the benefit  of, and be  enforceable  by, the parties and their  respective
     successors and assigns.



<PAGE>


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

                                   VALHI, INC.



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

                                   VALHI ACQUISITION CORP. II



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

                                  TREMONT GROUP, INC.



                        By:       /s/ Steven L. Watson
                                  ------------------------------------------
                                  Steven L. Watson
                                  President