EXHIBIT 10.1
AMENDED AND RESTATED
EXECUTIVE SEVERANCE AGREEMENT
This Amended and Restated Executive Severance Agreement is made effective
as of the 24th day of July, 1996, by and between NL INDUSTRIES, INC., a New
Jersey corporation (hereinafter called the "Company"), and J. Xxxxxx Xxxxxx
(hereinafter called the "Executive") and supersedes the Executive Severance
Agreement dated December 31, 1991, between the Company and Executive.
To assure the Company that it will have the continued services of
Executive and the availability of Executive's advice and counsel and to induce
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and Executive agree as follows:
1. Termination.
a. General. This Agreement is not an employment contract nor does
it in any way alter the status of Executive as an at-will
employee of the Company serving at the pleasure of the
Company's Board of Directors. Executive's employment with the
Company may be terminated without notice (except as required
by Section 2 hereof) at any time, for any reason (i) by
resolution approved by Directors constituting a majority of
all of the Directors then holding office or (ii) by Executive.
b. Termination by the Company. Executive shall be entitled to the
severance benefits set forth in Sections 3 and 4 upon
termination of Executive's employment by the Company unless
such termination is for cause (as defined below). Executive's
termination of employment with the Company by virtue of death,
disability (as defined below), or retirement (as defined
below) shall not be considered as a termination of Executive
by the Company. For purposes of this Agreement, "cause" shall
mean (i) Executive's conviction of any criminal violation
involving dishonesty, fraud or breach of trust or any felony
or (ii) Executive's willful engagement in gross misconduct in
the performance of his duties that materially and adversely
affects the financial condition of the Company. The Executive
shall be deemed to have a "disability" if, by reason of
physical or mental incapacity, Executive becomes unable to
perform his normal duties for more than 180 days in the
aggregate (excluding infrequent and temporary absence due to
ordinary transitory illness) during any 12-month period.
Executive shall be deemed to have "retired" upon Executive
reaching the age of 65; provided that Executive is no longer
employed by the Company.
c. Termination by the Employee. Executive shall not be entitled
to the severance benefits set forth in Sections 3 and 4 of
this Agreement upon termination of Executive's employment with
the Company by Executive unless such termination is for good
reason. For purposes of this Agreement, "good reason" shall
mean the occurrence of any one of the following events without
Executive's consent:
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(i) the assignment of Executive to any duties substantially
inconsistent with his position, duties, responsibilities
or status with the Company immediately prior to such
assignment, or a substantial reduction of the duties or
responsibilities, as compared with the duties or
responsibilities immediately prior to such reduction, it
being expressly understood that a promotion of another
executive to a position senior to Executive shall not in
and of itself be deemed to constitute "good reason"
under this Section 1.c(i);
(ii) a reduction by the Company in the amount of Executive's annual
base salary as in effect as of the date of this agreement or
as the same may be increased from time to time, except for
across-the-board salary reductions similarly affecting all
executives of the Company; or
(iii) the Company repudiates this Agreement or fails to obtain a
satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated by Section 9.a.
hereof.
2. Notice of Certain Terminations. In the event that either (i) the
Company shall terminate Executive for cause or (ii) Executive shall
resign for good reason, then any such termination shall be
communicated by written notice to the other party hereto. Any such
notice shall specify (a) the effective date of termination, which
shall not be more than 30 days after the date the notice is
delivered (the "Termination Date"); and (b) in reasonable detail the
facts and circumstances underlying a determination that the
termination is for cause or for good reason, as the case may be. If
within 15 days after any notice is given, the party receiving such
notice notifies the other party that a good faith dispute exists
concerning the characterization of the termination, the Termination
Date shall be the date on which such dispute is finally resolved
either by written agreement of the parties or by a final judicial
determination. Notwithstanding the pendency of any such dispute, the
Company shall continue Executive and his dependents as participants
in all medical, dental and any other health insurance and similar
benefit plans of the Company in which he and they were participating
when the notice giving rise to the dispute was given, until the
dispute is finally resolved. Benefits provided under this Section 2
are in addition to all other amounts due under this Agreement and
shall not be offset against, or reduce any other amounts due under,
this Agreement.
3. Termination Benefits. Subject to the conditions set forth in Section
1 and Section 6.b. hereof, the Company shall make the following
payments (subject to any applicable payroll or other taxes required
to be withheld) to Executive within 15 days of the Termination Date:
a. Base Salary and Bonus. Two times Executive's effective annual
base salary at the Termination Date plus two times Executive's
level "B" target bonus under the Company's Employee Incentive
Bonus Plan as in effect at the Termination Date, it being
understood that such level shall in any event be a minimum of
100% of Executive's effective annual base salary.
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b. Accrued Amounts. (i) Accrued but unpaid salary and bonus
through the Termination Date and (ii) unpaid salary with
respect to any vacation days accrued but not taken as of the
Termination Date.
4. Other Benefits. Subject to the conditions set forth in Sections 1
and 6.b. hereof, the following benefits (subject to any applicable
payroll or other taxes required to be withheld) shall be paid or
provided to Executive within 15 days of the Termination Date:
a. Insurance Benefits. Medical, dental and any other health
insurance, life insurance, accidental death and dismemberment
insurance and disability protection no less favorable to
Executive and his dependents covered thereby (including with
respect to any costs borne by Executive) than the greater of
the coverage provided on the date of execution of this
Agreement or the coverage provided by Company immediately
prior to the Termination Date for the period beginning on the
Termination Date and ending on the first to occur of (i) the
date of Executive's re-employment or (ii) the second
anniversary of the Termination Date.
5. Retirement Plan. Following retirement and attainment of ages
specified in the Retirement Plan of NL Industries, Inc. (the "NL
Pension Plan"), Executive shall be entitled to all pension benefits
which are available to him under the NL Pension Plan in effect on
the Termination Date.
6. Benefits Valuation and Limitation.
a. Promptly following any Termination Date, and as of that date,
the Company will notify Executive of the itemized and
aggregate cash value of the payments and benefits, as
determined under Section 280G of the Code, received or to be
received by Executive in connection with the termination of
his employment (whether payable pursuant to the terms of this
Agreement or otherwise). At the same time, the Company shall
advise Executive of the portion of such payments or benefits
which constitute parachute payments within the meaning of the
Code and which may subject Executive to the payment of excise
taxes pursuant to Section 4999 and the expected amount of such
taxes (such payments or benefits being hereinafter referred to
as "Parachute Payments").
b. Notwithstanding the provisions of Sections 3 and 4 hereof, if
all or any portion of the payments or benefits provided under
Sections 3 or 4 either alone or together with other payments
or benefits which Executive has received or is then entitled
to receive from the Company and any of its subsidiaries would
constitute Parachute Payments, such payments or benefits
provided to Executive under Sections 3 and 4 shall be reduced
to the extent necessary so that no portion thereof shall be
subject to the excise tax imposed by Section 4999 of the Code;
but only if, by reason of such reduction, Executive's net
after tax benefit shall exceed the net after tax benefit if
such reduction were not made.
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"Net after tax benefit" for purposes of this Section 6.b.
shall mean the sum of (i) the total amount payable to
Executive under Sections 3 and 4 hereof, plus (ii) all other
payments and benefits which Executive has received or is then
entitled to receive from the Company and any of its
subsidiaries that would constitute a Parachute Payment, less
(iii) the amount of federal income taxes payable with respect
to the payment and benefits described in (i) and (ii) above
calculated at the maximum marginal income tax rate for each
year in which such payments and benefits shall be paid to
Executive (based upon the rate in effect for such year as set
forth in the Code at the Termination Date), less (iv) the
amount of excise taxes imposed with respect to the payments
and benefits described in (i) and (ii) above by Section 4999
of the Code.
For purposes of this Section 6.b., Executive's base amount,
the present value of the Parachute Payments, the amount of the
excise tax and all other appropriate matters shall be
determined by the Company's independent auditors in accordance
with the principles of Section 280G of the Code and based upon
the advice of tax counsel selected by the Company, which tax
counsel shall be reasonably satisfactory to Executive.
7. Mitigation. Executive is not required to seek other employment or
otherwise mitigate the amount of any payments to be made by the
Company pursuant to this Agreement. Except as otherwise provided in
Section 4.a. of this Agreement, the amount of any payments or other
benefits provided for in this Agreement shall not be reduced by any
compensation earned by Executive as the result of employment by
another employer after the Termination Date, or otherwise.
8. Continuing Obligations. Executive hereby agrees that all documents,
records, techniques, business secrets and other information which
have come and will come into his possession from time to time during
his employment by the Company shall be deemed to be confidential and
proprietary to the Company, and Executive further agrees to retain
in confidence any confidential information known to him concerning
the Company and its subsidiaries and their respective businesses so
long as such information is not publicly disclosed.
9. Successors.
a. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company, by Agreement in form and substance reasonably
satisfactory to Executive to expressly assume and agree to
perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no
such succession had taken place. For purposes of this
Agreement, any determination as to whether the Company has
engaged in a transaction involving all or substantially all of
the business and/or assets of the Company shall be made by the
Board of Directors in its sole discretion, which determination
shall be final and binding on the parties. For purposes of
this Agreement, "Company" shall mean NL Industries, Inc. and
any successor to its business and/or assets as aforesaid which
assumes and agrees
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to perform this Agreement or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of
law or otherwise.
b. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any
amounts are payable to him hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's devisee, legatee or
other designee or, if there be no such designee, to
Executive's estate.
10. Notices. For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be
deemed to have been duly given when actually delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Xx. X. Xxxxxx Xxxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to the Company:
NL Industries, Inc.
00000 Xxxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
ATTENTION: General Counsel
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal
laws, and not the conflicts laws, of the State of Texas.
12. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by Executive and a duly authorized
officer of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent
time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement.
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13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full
force and effect.
14. Non-assignability. This Agreement is personal in nature and neither
of the parties hereto shall, without the written consent of the
other, assign or transfer this Agreement or any rights or
obligations hereunder, except as provided in Section 9. Without
limiting the foregoing, Executive's right to receive payments
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a
transfer by his will or trust or by the laws of descent or
distribution, and in the event of any attempted assignment or
transfer contrary to this paragraph the Company shall have no
liability to pay any amount so attempted to be assigned or
transferred.
15. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect through December 31 of 2000.
16. Enforcement Costs. In the event that either party files an action
against the other in any court to collect, enforce, protect or
preserve its rights under this Agreement, the prevailing party in
such action shall be entitled to receive reimbursement from such
other party of all reasonable costs and expenses, including
attorneys' fees, which such prevailing party incurred in prosecuting
or defending such action, as the case may be.
17. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original but all of which
taken together will constitute one and the same instrument.
18. Unsecured Obligation. All rights of Executive and Executive's spouse
or other beneficiary under this Agreement shall at all times be
entirely unfunded and no provision shall at any time be made with
respect to segregating assets of the Company or payment of any
amounts due hereunder. Neither Executive nor his spouse or other
beneficiary shall have any interest in or rights against any
specific assets of the Company, and Executive and his spouse or
other beneficiary shall have only the rights of a general unsecured
creditor of the Company.
* * * *
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IN WITNESS WHEREOF, the parties have caused this Amended and
Restated Executive Severance Agreement to be executed and delivered effective as
of the date first written above.
The Company:
NL INDUSTRIES, INC.
By_________________________________
Xxxxxx X. Xxxxxxx,
Chairman of the Board
Executive:
____________________________________
J. Xxxxxx Xxxxxx
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