EXHIBIT 10.40

                      INTERCORPORATE SERVICES AGREEMENT

      This INTERCORPORATE SERVICES AGREEMENT (the "Agreement"),  effective as of
January 1, 1996,  amends and  supersedes  that certain  Intercorporate  Services
Agreement effective as of January 1, 1995 by and between VALHI, INC., a Delaware
corporation ("Valhi"), and NL INDUSTRIES, INC., a New Jersey corporation ("NL").

                                   Recitals

            Employees  and  agents  of Valhi  and  affiliates  of Valhi  perform
management,  financial  and  administrative  functions  for  NL  without  direct
compensation from NL.

            NL does not  separately  maintain the full  internal  capability  to
perform all necessary management, financial and administrative functions that NL
requires.

            Valhi desires to have the services of certain personnel of NL and NL
is willing to provide such services under the terms of this Agreement.

            The  cost of  maintaining  the  additional  personnel  necessary  to
perform the  functions  provided for by this  Agreement  would exceed the amount
charged to such party that is contained in the net fee set forth in Section 4 of
this  Agreement and that the terms of this  Agreement  are no less  favorable to
each party than could  otherwise be obtained  from a third party for  comparable
services.

            Each party desires to continue  receiving the management,  financial
and  administrative  services  presently  provided  by the  other  party and its
affiliates  and each party is willing to continue to provide such services under
the terms of this Agreement.

                                  Agreement

      For and in  consideration  of the  mutual  premises,  representations  and
covenants herein contained, the parties hereto mutually agree as follows:

      Section Valhi  Services to be Provided.  Valhi agrees to make available to
NL, upon request,  the following  services (the "Valhi Services") to be rendered
by the internal staff of Valhi and affiliates of Valhi:

                  Consultation   and   assistance   in   the   development   and
      implementation   of  NL's  corporate   business   strategies,   plans  and
      objectives;

                  Consultation  and  assistance  in  management  and  conduct of
      corporate affairs and corporate governance consistent with the charter and
      bylaws of NL;

                  Consultation   and  assistance  in  maintenance  of  financial
      records  and  controls,  including  preparation  and  review  of  periodic
      financial  statements  and reports to be filed with public and  regulatory
      entities and those required to be prepared for financial  institutions  or
      pursuant to indentures and credit agreements;



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                  Consultation   and  assistance  in  cash   management  and  in
      arranging financing necessary to implement the business plans of NL;

                  Consultation    and   assistance   in   tax   management   and
      administration,  including, without limitation,  preparation and filing of
      tax returns, tax reporting, examinations by government authorities and tax
      planning; and

                  Such other  services  as may be  requested  by NL from time to
time.

      Section NL Services to be Provided.  NL agrees to make available to Valhi,
upon request,  the following  services (the "NL Services," and collectively with
the Valhi Services, the "Services") to be rendered by the internal staff of NL:

                  The services of Joseph S. Compofelice to act as Executive Vice
      President of Valhi,  which Valhi and NL agree shall involve  substantially
      such  time as has  been  allocated  in the  past  and is  currently  being
      devoted;

                  The  services of NL's  internal  audit  personnel in providing
      consultation  and  assistance in  performing  internal  audit  projects as
      requested from time to time; and

                  Such other  services as may be requested by Valhi from time to
time.

      Section  Miscellaneous  Services.  It is the intent of the parties  hereto
that each  party to this  Agreement  provide  (a  "Providing  Party")  only such
Services as are requested by the other party (a "Receiving Party") in connection
with routine management,  financial and administrative  functions related to the
ongoing  operations  of the  Receiving  Party and not with  respect  to  special
projects,  including corporate investments,  acquisitions and divestitures.  The
parties hereto  contemplate  that the Services  rendered by a Providing Party in
connection  with the conduct of each  Receiving  Party's  business  will be on a
scale  compared  to that  existing  on the  effective  date  of this  Agreement,
adjusted  for  internal  corporate  growth  or  contraction,  but not for  major
corporate acquisitions or divestitures,  and that adjustments may be required to
the terms of this Agreement in the event of such major  corporate  acquisitions,
divestitures or special projects. Each Receiving Party will continue to bear all
other costs  required for outside  services  including,  but not limited to, the
outside services of attorneys, auditors, trustees, consultants,  transfer agents
and registrars, and it is expressly understood that each Providing Party assumes
no  liability  for any  expenses  or  services  other than those  stated in this
Agreement to be provided by such party.  In addition to the amounts charged to a
Receiving Party for Services provided pursuant to this Agreement, such Receiving
Party will pay the Providing Party the amount of out-of-pocket costs incurred by
the Providing Party in rendering such Services.

      Section  Net  Fee for  Services.  Valhi  agrees  to pay to NL a net fee of
$2,500 quarterly,  commencing as of January 1, 1996, pursuant to this Agreement,
which net fee  includes  reimbursements  of  $36,000  for  certain  NL  Services
provided in 1995. In addition to the net fee:

                  Valhi shall pay to NL an  additional  amount  equal to the sum
of:




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                  the  product of (x) $600,  (y) the  number of days  devoted by
            NL's  internal  auditors  to  providing  NL  Services  described  in
            Subsection  2(b) and (z) the number of internal  auditors  providing
            such NL Services; and

                        all related out-of-pocket expenses;

                  Valhi  shall pay to NL  additional  amounts  plus all  related
      out-of-pocket  costs, all as agreed to by the parties, for all NL Services
      provided under Subsection 2(c); and

                  NL shall  credit or pay to Valhi  additional  amounts plus all
      related  out-of-pocket  costs,  all as agreed to by the  parties,  for all
      Valhi Services provided under Subsection 1(f).

      Section Original Term.  Subject to the provisions of Section 6 hereof, the
original  term of this  Agreement  shall be from January 1, 1996 to December 31,
1996.

      Section   Extensions.    This   Agreement   shall   be   extended   on   a
quarter-to-quarter  basis  after the  expiration  of its  original  term  unless
written  notification is given by Valhi or NL thirty (30) days in advance of the
first day of each successive  quarter or unless it is superseded by a subsequent
written agreement of the parties hereto.

      Section  Limitation of Liability.  In providing Services  hereunder,  each
Providing  Party shall have a duty to act,  and to cause its agents to act, in a
reasonably  prudent manner,  but no Providing  Party nor any officer,  director,
employee  or agent of such  party  nor or its  affiliates  shall be  liable to a
Receiving  Party for any error of  judgment  or  mistake  of law or for any loss
incurred  by the  Receiving  Party in  connection  with the matter to which this
Agreement relates,  except a loss resulting from willful misfeasance,  bad faith
or gross negligence on the part of the Providing Party.

      Section  Indemnification.  Each Receiving  Party shall  indemnify and hold
harmless the Providing  Party,  its  affiliates and their  respective  officers,
directors  and  employees  from and  against  any and all  losses,  liabilities,
claims,  damages,  costs  and  expenses  (including  attorneys'  fees and  other
expenses of litigation) to which such Providing Party may become subject arising
out of the Services  provided by such  Providing  Party to the  Receiving  Party
hereunder, provided that such indemnity shall not protect any person against any
liability to which such person  would  otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on the part of such person.

      Section  Further  Assurances.  Each of the  parties  will  make,  execute,
acknowledge and deliver such other instruments and documents,  and take all such
other actions,  as the other party may reasonably  request and as may reasonably
be required in order to effectuate  the purposes of this  Agreement and to carry
out the terms hereof.

      Section  Notices.  All  communications  hereunder  shall be in writing and
shall be addressed,  if intended for Valhi,  to Three Lincoln  Centre,  5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240,  Attention:  President,  or such other
address as it shall have furnished to NL in



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writing,  and if intended for NL, to Two  Greenspoint  Plaza,  16825  Northchase
Drive, Suite 1200, Houston,  Texas 77060,  Attention:  President,  or such other
address as it shall have furnished to Valhi in writing.

      Section  Amendment and  Modification.  Neither this Agreement nor any term
hereof may be changed, waived,  discharged or terminated other than by agreement
in writing signed by the parties hereto.

      Section  Successor and Assigns.  This Agreement  shall be binding upon and
inure to the  benefit  of  Valhi  and NL and  their  respective  successors  and
assigns,  except that neither  party may assign its rights under this  Agreement
without the prior written consent of the other party.

      Section  Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Texas.


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IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be duly
executed and delivered as of the date first above written.



                            VALHI, INC.




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



                            NL INDUSTRIES, INC.




                            By: /s/ J. Landis Martin
                                J. Landis Martin
                                 President and Chief Executive Officer



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