EXHIBIT 10.32
AGREEMENT TO DEFER BONUS PAYMENT
This AGREEMENT TO DEFER BONUS PAYMENT (this "Agreement") is made
effective as of the 10th day of January 2002 between NL Industries, Inc., a New
Jersey corporation (the "Corporation") and Xx. Xxxxxxxx X. Xxxxxx ("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 desires that payment of three hundred forty
thousand four hundred thirty-three dollars ($340,433) of such Special Bonus (the
"Deferred Special Bonus") be deferred until Executive ceases to be an employee
or executive officer of the Corporation or such earlier date as the Corporation,
acting through the Management Development & Compensation Committee of the Board
of Directors ("the Committee"), acting in its sole discretion, may determine,
subject to the conditions specified in Section 1 of this Agreement; and
WHEREAS, the Corporation and Xxxxxx X. Xxxxx 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 Committee in
its sole discretion.
2. The Deferred Special Bonus shall accrue interest beginning on
January __, 2002 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 six and 15/32 percent (6.47%) 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 2002 or after, as the case may be,
pursuant to Code Sections 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 or the Trust 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 therefore 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.
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/ Xxxxxx X. Xxxxx
------------------------------------
Its: Vice President & Controller
EXECUTIVE
/s/ Xx. Xxxxxxxx X. Xxxxxx
------------------------------------
Xx. Xxxxxxxx X. Xxxxxx
TRUST AGREEMENT
This Agreement is made effective as of the 10th day of January,
2002 by and between NL Industries, Inc. (the "Corporation") and Xxxxxx X. Xxxxx
(the "Trustee");
WHEREAS, the Corporation and Xxxxxxxx X. Xxxxxx (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; and
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 as specified in the Deferral Agreement,
subject to the claims of the Corporation's 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) Except as otherwise provided herein, the Trustee shall make
payments to the Executive and his beneficiaries in accordance with the Deferral
Agreement. 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 hereunder or 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.
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 any requirement of
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.
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(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 Chief Financial Officer ("CFO") and the Controller
of the Corporation shall, jointly and severally, have the duty to inform the
Trustee in writing of the Corporation's Insolvency. 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. The Trustee shall in all events be entitled and required to rely on
such representation from the Corporation's Controller or Chief Financial Officer
in making a determination concerning the Corporation's solvency. Pending such
determination, the Trustee shall not make any payments to Executive or his
beneficiaries or any creditors of the Corporation.
(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); such determination shall be made as
described in Section 3(b)(1) above.
(c) Provided that there are sufficient Trust assets, if the
Trustee discontinues making payments from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, 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.
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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 pertaining to Trust Assets 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
obligatons of this section to an employee of the Corporation, such obligations
shall be deemed to be fulfilled by the Trustee. Trustee shall timely file, or
cause to be filed, any and all federal and state tax returns required to be
filed on behalf of the Trust.
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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 (or not
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 any party in
interest, 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.
Futhermore, 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. The Corporation shall, if requested by the Trustee, assume the
defense of any litigation brought against the Trustee or the Trust, in which
event the Corporation shall have no liability to the Trustee for any costs or
expenses of litigation (absent a conflict of interest which reasonably
necessitates the Trustee's hiring separate counsel).
(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 (other
than Executive) 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 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.
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(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.
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 in Section 13(d) below,
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 Trust 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 person or any other
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 with respect to 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.
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(b) The successor Trustee need not examine the records and acts
of any prior Trustee and shall act in regard to the Trust assets, in accordance
with all the terms of this Trust Agreement. 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.
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 or 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 thirty percent (30%) 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 in the election of directors, 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 fifty percent (50%) 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.
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Section 14. Effective Date.
The effective date of this Trust Agreement shall be January ,
2002.
* * * * *
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EXECUTED on the dates of the respective acknowledgments hereto,
to be effective as of the 10th day of January, 2002.
NL Industries, Inc.
/s/ Xxxxxx X. Xxxxx
------------------------------------
Vice President & Controller
- TRUSTOR -
/s/ Xxxxxx X. Xxxxx
------------------------------------
- TRUSTEE -
THE STATE OF TEXAS '
'
COUNTY OF Xxxxxx '
This instrument was acknowledged before me on the 10th day of January,
2002, by Xxxxx X. Xxxxxx.
/s/ Xxxxx X. Xxxxxx
------------------------------------
Notary Public in and for
the State of T E X A S
My Commission Expires:
December 18, 2002
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