EXHIBIT 10.49
AGREEMENT TO DEFER BONUS PAYMENT
This AGREEMENT TO DEFER BONUS PAYMENT (this "Agreement") is made effective
as of the 20th day of February 1998 between NL Industries, Inc., a New Jersey
corporation (the "Corporation") and J. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Executive").
WHEREAS, Executive was awarded a Special Bonus in recognition of his
performance which substantially contributed to the success of the Corporation;
WHEREAS, The Corporation and Executive desire to defer payment of
$1,508,300 (the "Deferred Special Bonus") which Executive, in the absence of
this Agreement, would be entitled to receive immediately with respect to
services performed by Executive for the Corporation; and
WHEREAS, the Corporation and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as trustee, will enter into
an agreement (the "Trust Agreement") which establishes an irrevocable trust (the
"Trust") which is intended to hold and invest an amount of funds equal to the
Deferred Special Bonus until such bonus is paid to Executive pursuant to this
Agreement;
NOW, THEREFORE, in consideration of the agreements set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Deferred Special Bonus shall be paid to Executive, or his
designated beneficiaries, upon the earliest to occur of (a) the termination of
Executive's employment (including Executive's resignation) for any reason, (b)
Executive's death, or (c) such date as shall be determined by the Management
Development and Compensation Committee of the Board of Directors (the
"Committee") in its sole discretion.
2. The Deferred Special Bonus shall accrue interest beginning on
February 20, 1998 up to and including the date such amount is paid to Executive
pursuant to Paragraph 1 hereof (the "Deferred Payment Date") and the entire
amount of such accrued interest shall be paid to Executive, or his designated
beneficiaries, on the Deferred Payment Date. Such interest shall accrue at the
rate of eight and one-half percent (8.50%) per annum. Interest accrued pursuant
to this Paragraph 2 shall compound on a semi-annual basis and shall be computed
for the actual number of days elapsed on the basis of a year consisting of 365
or 366 days.
3. The Corporation shall immediately enter into the Trust Agreement
and thereby establish the Trust. The Corporation shall contribute an amount
equal to the Deferred Special Bonus to the Trust.
4. Subject to the terms of the Trust Agreement, the Corporation may
satisfy its payment obligations to Executive, or to his designated
beneficiaries, under this Agreement by (a) directing the Trustee to make such
payments from the principal and /or earnings of the Trust, (b)
making such payments directly from the Corporation's internal funds, or (c) by
any combination of (a) and (b), provided that all payments to Executive, or to
his designated beneficiaries, pursuant to this Agreement shall be made in
immediately available funds.
5. The Corporation shall withhold, either from the Deferred Special
Bonus in the year such amount is paid to Executive pursuant to Paragraph 1
hereof, or from any salary, bonus or other compensatory payment made to
Executive as the Corporation in its sole discretion may determine, such amounts
as is required by law to be withheld in 1996 or after, as the case may be,
pursuant to Code 3101 and 3121(v)(2) or successor provisions thereof.
6. Title to and beneficial ownership of any assets, whether cash or
investments and whether held by the Corporation or the Trust, which the
Corporation may earmark to meet its payment obligations to Executive under this
Agreement, shall at all times remain in the Corporation or the Trust, as
applicable, and Executive and his designated beneficiaries shall not have any
property interest whatsoever in any specific assets of the Corporation or the
Trust. Any right of the Executive or any of his designated beneficiaries to
receive payments from the Corporation under this Agreement shall be no greater
than the right of any unsecured general creditor of the Corporation.
7. The right of Executive or any other person to any payment under
this Agreement shall not be assigned, transferred, pledged or encumbered except
by will or by the laws of descent and distribution.
8. If the Committee shall find that any person to whom any payment
is payable under this Agreement is unable to care for his or her affairs because
of illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian or other legal
representative) may be paid to the spouse, a child, a parent, a brother or
sister, or the person or persons designated by the Executive in writing, or, in
the absence of any of the foregoing, to any one or more persons deemed by the
Committee to be appropriate. Any such payment shall be a complete discharge of
the liabilities of the Corporation under this Agreement.
9. Nothing contained herein shall be construed as conferring upon
Executive the right to continue in the employ of the Corporation as an executive
or in any other capacity.
10 This Agreement shall be binding upon and inure to the benefit of
the Corporation, it successors and assigns, and the Executive and his heirs,
executors, administrators and legal representatives.
11. This Agreement contains the entire agreement of and between the
parties with respect to the subject matter hereof, and supersedes any prior
understandings, agreements, or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
In the event of any conflict between the terms and provisions of this Agreement
and the terms and provisions of any employment or severance agreement entered
into by the parties hereto, the terms and provisions of this Agreement shall
govern.
2
12. The Agreement shall be governed by the laws of the State of
Texas without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Texas or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of Texas.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
NL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President & General Counsel
EXECUTIVE
/s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
3
TRUST AGREEMENT
This Agreement is made effective as of the 20th day of February,
1998 by and between NL Industries, Inc. (the "Corporation") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(the "Trustee");
WHEREAS, the Corporation and J. ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Executive") have
entered into the Agreement to Defer Bonus Payment (the "Deferral Agreement")
attached hereto as Exhibit A;
WHEREAS, the Corporation has incurred or expects to incur liability
under the terms of such Deferral Agreement with respect to the Executive;
WHEREAS, the Corporation wishes to establish a trust (hereinafter
called the "Trust") and to contribute to the Trust assets that shall be held
therein, subject to the claims of the Corporation's creditors in the event of
the Corporation's Insolvency, as herein defined, until paid to the Executive and
his beneficiaries in such manner and at such times as specified in the Deferral
Agreement;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Deferral Agreement as an unfunded plan maintained for the purpose of providing
deferred compensation for a member of the select group of management or highly
compensated employees for purposes of Title I of the Employee Retirement Income
Security Act of 1974;
WHEREAS, it is the intention of the Corporation to make
contributions to the Trust to provide itself with a source of funds to assist it
in the meeting of its liabilities under the Deferral Agreement;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust
(a) The Corporation hereby deposits with the Trustee in trust $100
or such other amount as determined by the Corporation, which shall become the
principal of the Trust to be held, administered and disposed of by the Trustee
as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the
Corporation is the grantor, within the meaning of subpart E, part I, subchapter
J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of the Corporation and shall be used
exclusively for the uses and purposes of
1
the Executive and general creditors as herein set forth. The Executive and his
beneficiaries shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Deferral
Agreement and this Trust Agreement shall be mere unsecured contractual rights of
the Executive and his beneficiaries against the Corporation. Any assets held by
the Trust will be subject to the claims of the Corporation's general creditors
under federal and state law in the event of Insolvency, as defined in Section
3(a) herein.
(e) The Corporation shall make additional deposits of cash or other
property in trust with the Trustee in accordance with the terms of the Deferral
Agreement to augment the principal to be held, administered and disposed of by
the Trustee as provided in this Trust Agreement. Neither the Trustee nor the
Executive or any of his beneficiaries shall have any right to compel additional
deposits, except as may be required by the terms of the Deferral Agreement.
Section 2. Payments to Executive and His Beneficiaries.
(a) The Corporation shall deliver to the Trustee a written schedule
(the "Payment Schedule") that indicates the amounts payable in respect of the
Executive (and his beneficiaries), that provides the amounts so payable, the
form in which such amount is to be paid, and the dates for payment of such
amounts. Except as otherwise provided herein, the Trustee shall make payments to
the Executive and his beneficiaries in accordance with such Payment Schedule.
The Corporation may amend or modify such Payment Schedule from time to time by
providing the Trustee with written notice of such amendments. The Trustee may
conclusively rely on such Payment Schedule. The Trustee shall make provision for
the reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Deferral Agreement and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by the Corporation.
(b) The entitlement of the Executive or his beneficiaries to
benefits under the Deferral Agreement shall be determined by the Corporation in
accordance with the terms of the Deferral Agreement, and any claim for such
benefits shall be considered and reviewed under the terms of the Deferral
Agreement.
(c) The Corporation may make payment of benefits directly to the
Executive or his beneficiaries as they become due under the terms of the
Deferral Agreement. The Corporation shall notify the Trustee of its decision to
make payment of benefits directly prior to the time amounts are payable to the
Executive or his beneficiaries. Such payments by the Corporation shall not amend
the Payment Schedule unless the Corporation specifically amends said Schedule in
writing. In addition, if the principal of the Trust, and any earnings thereon,
are not sufficient to make payments of benefits in accordance with the Payment
Schedule, the Corporation shall make the balance of each such payment as it
falls due. The Trustee shall notify the Corporation where principal and earnings
are not sufficient.
2
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary When the Corporation Is Insolvent.
(a) The Trustee shall not make any payments to the Executive or his
beneficiaries if the Corporation is Insolvent. Notwithstanding any other
provision of this Trust Agreement, all determinations by the Trustee under this
Trust Agreement regarding whether the Corporation is solvent or Insolvent should
be based solely on the written representation to the Trustee from the
Corporation's Controller or Chief Financial Officer without independent
investigation by the Trustee. The Corporation shall be considered "Insolvent"
for purposes of this Trust Agreement if (i) the Corporation is unable to pay its
debts as they become due, or (ii) the Corporation is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided
in Section 1(d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of the Corporation under federal and state law as
set forth below.
(1) The Board of Directors, the Chief Executive Officer, the
Chief Financial Officer ("CFO") and the Controller of the Corporation shall have
the duty to inform the Trustee in writing of the Corporation's Insolvency with
respect to any payment date on the Payment Schedule. If a person claiming to be
a creditor of the Corporation alleges in writing to the Trustee that the
Corporation has become Insolvent, the Trustee shall determine whether the
Corporation is Insolvent; such determination shall be made based solely on
written representation from the Corporation's Controller or Chief Financial
Officer. Pending such determination, the Trustee shall not make any payments to
Executive or his beneficiaries.
(2) Unless the Trustee has received notice from the
Corporation that the Corporation is Insolvent, the Trustee shall have no duty at
any time to inquire whether the Corporation is Insolvent. The Trustee shall in
all events rely on such representation from the Corporation in making a
determination concerning the Corporation's solvency.
(3) In the event that the Corporation's Controller or Chief
Financial Officer has notified the Trustee in writing of the Corporation's
Insolvency, the Trustee shall not make any payments to the Executive or his
beneficiaries and shall hold the assets of the Trust for the benefit of the
Corporation's general creditors. Nothing in this Trust Agreement shall in any
way diminish or impair any rights of the Executive or his beneficiaries to
pursue their rights as general creditors of the Corporation with respect to
payments due under the Deferral Agreement or otherwise.
(4) The Trustee shall resume making payments to the Executive
or his beneficiaries in accordance with Section 2 of this Trust Agreement only
after the Trustee has determined that the Corporation is not Insolvent (or is no
longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues making payments from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments,
3
the first payment following such discontinuance shall include the aggregate
amount of all payments due to the Executive or his beneficiaries under the terms
of the Deferral Agreement for the period of such discontinuance, less the
aggregate amount of any payments made to the Executive or his beneficiaries by
the Corporation in lieu of the payments provided for hereunder during any such
period of discontinuance.
Section 4. Payments to the Corporation.
Except as provided in Section 3 hereof, the Corporation shall have
no right or power to direct the Trustee to return to the Corporation or to
divert to others any of the Trust assets before all payments have been made to
the Executive or his beneficiaries pursuant to the terms of the Deferral
Agreement.
Section 5. Investment Authority.
In no event may the Trustee invest in securities (including stock or
rights to acquire stock) or obligations issued by the Corporation, other than a
de minimis amount held in common investment vehicles in which the Trustee
invests. All rights associated with assets of the Trust shall be exercised,
solely in accordance with the directions of the Corporation, by the Trustee or
the person designated by the Trustee, and shall in no event be exercisable by or
rest with the Executive.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.
Section 7. Accounting by the Trustee.
The Trustee shall keep records of such investments, receipts,
disbursements, and all other transactions required to be made, as shall be
agreed upon in writing between the Corporation and the Trustee. Within 60 days
following the close of each calendar year and within 60 days after the removal
or resignation of the Trustee, the Trustee shall deliver to the Corporation a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
In the event the Trustee delegates the obligations of this section to an
employee of the Corporation, such obligations shall be deemed to be fulfilled by
the Trustee.
4
Section 8. Responsibility of the Trustee.
(a) The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Corporation in connection,
directly or indirectly, with, the terms of the Deferral Agreement or this Trust.
In the event of a dispute between the Corporation and a party, the Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) The Corporation agrees to indemnify and hold the Trustee
harmless from any and all costs, fees, expenses (including without limitation
attorney's fees and expenses), claims or lawsuits by any person or entity,
liabilities or obligations of any type or nature arising or related, directly or
indirectly, to the Deferral Agreement, this Trust or any action or failure to
act by the Trustee in connection in any way with any of the foregoing.
Furthermore, if the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Corporation agrees to indemnify the Trustee
against the Trustee's costs, expenses and liabilities (including, without
limitation, attorneys' fees and expenses) relating thereto and to be solely
liable for such payments. If the Corporation does not pay such costs, expenses
and liabilities in a reasonably timely manner, the Trustee may obtain payment
from the Trust.
(c) The Trustee may consult with legal counsel (who may also be
counsel for the Corporation generally) with respect to any of its duties or
obligations hereunder.
(d) The Trustee may hire and the Corporation may make available to
the Trustee agents, accountants, actuaries, investment advisors, financial
consultants or other professionals to assist it in performing any of its duties
or obligations hereunder. In addition, the Trustee may delegate any of its
duties under this Trust to employees and management of the Corporation and the
Trustee may conclusively rely on the reports of such employees and management
without further investigation.
(e) The Trustee shall have, without exclusion, all powers conferred
on the Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
the Trustee shall have no power to name a beneficiary of the policy other than
the Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have any power
that could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
5
Section 9. Compensation and Expenses of Trustee.
The Corporation shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid from the Trust.
Section 10. Resignation and Removal of Trustee.
(a) The Trustee may resign at any time by written notice to the
Corporation, which shall be effective 15 days after receipt of such notice
unless the Corporation and the Trustee agree otherwise.
(b) The Trustee may be removed by the Corporation on 15 days notice
to the Trustee or upon shorter notice accepted by the Trustee.
(c) Upon a Change of Control, as defined herein, the Trustee may not
be removed by the Corporation for 18 months.
(d) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 30 days after receipt of notice
of resignation, removal or transfer, unless the Corporation extends the time
limit.
(e) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraphs (a) or (b) of this section. If no such
appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
the Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 11. Appointment of Successor.
(a) If the Trustee resigns or is removed in accordance with Section
10(a) or (b) hereof, the Corporation may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace the Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by the Corporation or the
successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
the Corporation shall indemnify and defend the successor Trustee from any claim
or liability resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it becomes successor
Trustee.
6
Section 12. Amendment or Termination.
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Corporation. Notwithstanding the foregoing, no
such amendment shall conflict with the terms of the Deferral Agreement or shall
make the Trust revocable.
(b) The Trust shall not terminate until the date on which the
Executive and his beneficiaries are no longer entitled to any payments pursuant
to the terms of the Deferral Agreement. Upon termination of the Trust any assets
remaining in the Trust shall be returned to the Corporation.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) No amount payable to the Executive or any of his beneficiaries
under this Trust Agreement may be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Texas.
(d) For purposes of this Trust, Change of Control shall mean the
purchase or other acquisition by any person, entity or group of persons, within
the meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or more of
either the outstanding shares of common stock or the combined voting power of
the Corporation's then outstanding voting securities entitled to vote generally,
or the approval by the stockholders of the Corporation of a reorganization,
merger, or consolidation, in each case, with respect to which persons who were
stockholders of the Corporation immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Corporation's then outstanding
securities, or a liquidation or dissolution of the Corporation or of the sale of
all or substantially all of the Corporation's assets.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be February 20,
1998.
* * * * *
7
EXECUTED on the dates of the respective acknowledgments hereto, to
be effective as of the 20th day of February, 1998.
NL Industries, Inc.
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, V.P.
- TRUSTOR -
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
- TRUSTEE -
THE STATE OF TEXAS
COUNTY OF ▇▇▇▇▇▇
This instrument was acknowledged before me on the 20th day of
February, 1998, by ▇▇▇▇▇ ▇▇▇▇.
/s/ ▇▇▇▇▇ ▇▇▇▇
Notary Public in and for
the State of T E X A S
My Commission Expires:
11/29/01
8