SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 57)*
NL INDUSTRIES, INC.
(Name of Issuer)
Common Stock, $0.125 par value
(Title of Class of Securities)
629156407
(CUSIP Number)
STEVEN L. WATSON
THREE LINCOLN CENTRE
SUITE 1700
5430 LBJ FREEWAY
DALLAS, TEXAS 75240-2694
(972) 233-1700
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 26, 1998
(Date of Event which requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tremont Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 9,064,780
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
9,064,780
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
9,064,780
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Valhi, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC and BK
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Valhi Group, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
National City Lines, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NOA, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dixie Holding Company
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dixie Rice Agricultural Corporation, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Louisiana
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Southwest Louisiana Land Company, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not Applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Louisiana
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Contran Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Combined Master Retirement Trust
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP(SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,908,990
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,908,990
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
38,908,990
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
76.1%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
EP
CUSIP No. 629156407
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Harold C. Simmons
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP(SEE
INSTRUCTIONS)
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
Not applicable
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 38,978,465
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
38,978,465
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
-0-
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS) [ X ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
AMENDMENT NO. 57
TO SCHEDULE 13D
This amended statement on Schedule 13D (this "Statement") relates to the
common stock, $0.125 par value per share (the "Shares"), of NL Industries, Inc.,
a New Jersey corporation (the "Company"). This Statement is amended to reflect
(i) the execution on February 26, 1998 of a stipulation of settlement relating
to Seinfeld v. Simmons, et al., and (ii) the execution on March 5, 1998 of a
stipulation of settlement relating to Kahn v. Tremont Corporation, et al. In
both stipulations of settlement, the Company has agreed to transfer, at its
option, Shares or cash in the respective settlements. See Item 5 below.
Items 2, 3, 4, 5 and 7 of this Statement are hereby amended as set forth
below.
Item 2. Identity and Background.
No change except for the addition of the following:
(a) This Statement is filed by (i) Tremont Corporation ("Tremont") and
Valhi, Inc. ("Valhi") as the direct holders of Shares, (ii) by virtue of the
direct and indirect ownership of securities of Tremont and Valhi (as described
below in this Statement), Valhi Group, Inc. ("VGI"), National City Lines, Inc.
("National"), NOA, Inc. ("NOA"), Dixie Holding Company ("Dixie Holding"), Dixie
Rice Agricultural Corporation, Inc. ("Dixie Rice"), Southwest Louisiana Land
Company, Inc. ("Southwest"), Contran Corporation ("Contran") and the Combined
Master Retirement Trust (the "CMRT") and (iii) by virtue of his positions with
Contran and certain of the other entities (as described in this Statement),
Harold C. Simmons (collectively, the "Reporting Persons"). By signing this
Statement, each Reporting Person agrees that this Statement is filed on its or
his behalf.
Valhi and Tremont are the direct holders of approximately 58.3% and 17.7%,
respectively, of the 51,149,614 Shares outstanding as of October 31, 1997
according to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 (the "Outstanding Shares"). Valhi and Tremont together may
be deemed to control the Company. VGI, National, the Harold Simmons Foundation,
Inc. (the "Foundation"), the Contran Deferred Compensation Trust No. 2 (the
"CDCT No. 2"), Valhi, the Company and Valmont Insurance Company ("Valmont") are
the direct holders of approximately 35.1%, 5.2%, 3.7%, 3.5%, 1.5%, 0.5% and
0.5%, respectively, of the outstanding common stock of Tremont. Together, VGI
and National may be deemed to control Tremont. Valhi is the direct holder of
100% of the outstanding stock of Valmont and may be deemed to control Valmont.
VGI, National and Contran are the direct holders of approximately 74.8%, 10.0%
and 7.6%, respectively, of the outstanding common stock of Valhi. Together,
VGI, National and Contran may be deemed to control Valhi. National, NOA and
Dixie Holding are the direct holders of approximately 73.3%, 11.4% and 15.3%,
respectively, of the outstanding common stock of VGI. Together, National, NOA
and Dixie Holding may be deemed to control VGI. Contran and NOA are the direct
holders of approximately 85.7% and 14.3%, respectively, of the outstanding
common stock of National and together may be deemed to control National.
Contran and Southwest are the direct holders of approximately 49.9% and 50.1%,
respectively, of the outstanding common stock of NOA and together may be deemed
to control NOA. Dixie Rice is the direct holder of 100% of the outstanding
common stock of Dixie Holding and may be deemed to control Dixie Holding.
Contran is the direct holder of approximately 88.8% and 54.3% of the outstanding
common stock of Southwest and Dixie Rice, respectively, and may be deemed to
control Southwest and Dixie Rice.
Mr. Harold C. Simmons is chairman of the board, president and chief
executive officer of Valhi, VGI, National, NOA, Dixie Holding and Contran. Mr.
Simmons is also chairman of the board and chief executive officer of Dixie Rice
and Southwest. Additionally, Mr. Simmons is chairman of the board of the
Company and a director of Tremont.
Substantially all of Contran's outstanding voting stock is held by trusts
(collectively, the "Trusts") established for the benefit of certain of Mr.
Harold C. Simmons' children and grandchildren, of which Mr. Simmons is the sole
trustee. As the sole trustee of each of the Trusts, Mr. Simmons has the power
to vote and direct the disposition of the shares of Contran stock held directly
by each of the Trusts. Mr. Simmons, however, disclaims beneficial ownership of
such shares.
The CMRT directly holds approximately 0.1% of the outstanding shares of
Valhi and Tremont common stock, respectively. The CMRT is a trust formed by
Valhi to permit the collective investment by trusts that maintain the assets of
certain employee benefit plans adopted by Valhi and related companies. Mr.
Simmons is the sole trustee of the CMRT and the sole member of the trust
investment committee for the CMRT. Mr. Simmons is a participant in one or more
of the employee benefit plans that invest through the CMRT.
The Foundation directly holds approximately 3.7% of the outstanding Tremont
common stock. The Foundation is a tax-exempt foundation organized for
charitable purposes. Harold C. Simmons is the chairman of the board and chief
executive officer of the Foundation and may be deemed to control the Foundation.
The CDCT No. 2 directly holds approximately 3.5% and 0.2% of the
outstanding shares of Tremont and Valhi common stock, respectively. Boston Safe
Deposit and Trust Company serves as the trustee of the CDCT No. 2. Contran
established the CDCT No. 2 as an irrevocable "rabbi trust" to assist Contran in
meeting certain deferred compensation obligations that it owed to Harold C.
Simmons. If the CDCT No. 2 assets are insufficient to satisfy such obligations,
Contran is obligated to satisfy the balance of such obligations as they come
due. Due to the terms of the CDCT No. 2, Contran (i) retains the power to vote
the shares of Tremont and Valhi common stock held directly by the CDCT No. 2,
(ii) retains dispositive power over such shares and (iii) may be deemed the
indirect beneficial owner of such shares.
By virtue of the holding of the offices, the stock ownership and his
service as trustee, all as described above, (a) Mr. Simmons may be deemed to
control the entities described above and (b) Mr. Simmons and certain of such
entities may be deemed to possess indirect beneficial ownership of Shares
directly held by certain of such other entities. However, Mr. Simmons disclaims
such beneficial ownership of the Shares beneficially owned, directly or
indirectly, by any of such entities, except to the extent of his vested
beneficial interest in the Shares held by the CMRT and except to the extent of
his interest as a beneficiary of the CDCT No. 2.
Valmont and the Company directly own 1,000,000 shares and 1,186,200 shares,
respectively, of Valhi common stock. The Reporting Persons understand that the
shares of Valhi common stock owned by Valmont and the Company are treated as
treasury stock by Valhi for voting purposes and for the purposes of this
Statement are not deemed outstanding.
Harold C. Simmons' spouse is the direct owner of 69,475 Shares or
approximately 0.1% of the Outstanding Shares. Mr. Simmons may be deemed to
share indirect beneficial ownership of such Shares. Mr. Simmons disclaims all
such beneficial ownership.
Item 3. Source and Amount of Funds or Other Consideration.
No change except for the addition of the following:
The total amount of funds required by Valhi to acquire the Shares purchased
by it as reported in Item 5(c) was $8,433,142.50 (including commissions). Such
funds were provided by Valhi's cash on hand.
Item 4. Purpose of Transaction.
No change except for the addition of the following:
Valhi purchased the additional Shares reported in Item 5(c) of this
Statement in order to increase its equity interest in the Company. Depending
upon their evaluation of the Company's business and prospects, and upon future
developments (including, but not limited to, performance of the Shares in the
market, availability of funds, alternative uses of funds, and money, stock
market and general economic conditions), any of the Reporting Persons or other
entities that may be deemed to be affiliated with Contran may from time to time
purchase Shares, and any of the Reporting Persons or other entities that may be
deemed to be affiliated with Contran may from time to time dispose of all or a
portion of the Shares held by such person, or cease buying or selling Shares.
Any such additional purchases or sales of the Shares may be in open market or
privately negotiated transactions or otherwise.
Pursuant to two stipulations of settlement among the parties to Kahn v.
Tremont Corporation, et al. and Seinfeld v. Simmons, et al., respectively, the
Company has agreed to transfer, at its option, Shares or cash in the respective
settlements.
Seinfeld v. Simmons, et al. arose out of the 1991 Dutch auction tender
offer by the Company for its Shares. Under the stipulation of settlement dated
February 26, 1998 relating to Seinfeld, Valhi has agreed to transfer to the
Company 750,000 (1.5% of the outstanding NL common stock) Shares, subject to
adjustment depending on the average sales price of the Shares during a fifteen
trading day period ending five trading days prior to the closing, up to a
maximum of 825,000 million Shares (1.6% of the outstanding NL common stock) and
down to a minimum of 675,000 Shares (1.3% of the outstanding NL common stock).
Valhi has the option, in lieu of transferring such Shares, to transfer cash or
cash equivalents equal to the product of such average sales price and the number
of Shares that would otherwise have been transferred to the Company. Valhi has
not yet decided whether it will transfer Shares or cash pursuant to the terms of
this stipulation of settlement.
Kahn v. Tremont Corporation, et al. arose out of the 1991 sale by Valhi of
approximately 15% of the then outstanding Shares to Tremont. Under the
stipulation of settlement dated March 5, 1998 relating to Kahn, Valhi has agreed
to transfer to Tremont 1.2 million Shares (2.3% of the outstanding NL common
stock), subject to adjustment depending on the average sales price of the Shares
during a fifteen trading day period ending five trading days prior to the
closing, up to a maximum of 1.4 million Shares (2.7% of the outstanding NL
common stock) and down to a minimum of 1.0 million Shares (2.0% of the
outstanding NL common stock). Valhi has the option, in lieu of transferring
such Shares, to transfer cash or cash equivalents equal to the product of such
average sales price and the number of Shares that would otherwise have been
transferred to Tremont. Valhi has not yet decided whether it will transfer
Shares or cash pursuant to the terms of this stipulation of settlement.
The stipulations of settlement are subject to the approval of the
respective courts in which the cases are pending and the completion of court
proceedings. If so approved, transfer of shares or cash is expected to occur in
the second or third quarter of 1998.
The descriptions of the stipulations of settlement are qualified in their
entirety by reference to Exhibits 4 and 5 to this Statement, which are
incorporated herein by this reference.
Item 5. Interest in Securities of the Issuer.
No change except for the addition of the following:
(a) Valhi, Tremont and Harold C. Simmons' spouse are the direct beneficial
owners of 29,844,210, 9,064,780 and 69,475 of the Shares, respectively.
By virtue of the relationships described under Item 2 of this Statement:
(1) In addition to the 29,844,210 Shares (approximately 58.3% of the
Outstanding Shares) that Valhi holds directly, Valhi may be deemed to be
the beneficial owner of the 9,064,780 Shares (approximately 17.7% of the
Outstanding Shares) directly held by Tremont;
(2) VGI, National, Dixie Holding, NOA, Dixie Rice, Southwest, Contran
and the CMRT may each be deemed to be the beneficial owner of the
38,908,990 Shares (approximately 76.1% of the Outstanding Shares) directly
held by Valhi and Tremont; and
(3) Harold C. Simmons may be deemed to be the beneficial owner of the
38,978,465 Shares (approximately 76.2% of the Outstanding Shares) directly
held by Valhi, Tremont and Mr. Simmons' spouse.
Except to the extent of his vested beneficial interest in Shares directly held
by the CMRT and to the extent of his interest as a beneficiary of the CDCT No.
2, Mr. Simmons disclaims beneficial ownership of all Shares.
(c) The table below sets forth purchases of the Shares by the Reporting
Persons during the last 60 days. All of such purchases were effected by Valhi
on the New York Stock Exchange.
Approximate Price
Per Share
(exclusive of
Date Amount of Shares commissions)
- --------- ---------------- -----------------
12/30/97 5,000 $13.3750
12/31/97 20,000 $13.6250
12/31/97 10,000 $13.6875
01/02/98 2,200 $13.8750
01/02/98 2,800 $14.0000
01/02/98 10,000 $14.6250
01/05/98 4,900 $14.8750
01/05/98 55,000 $15.0000
01/06/98 227,200 $15.1250
01/06/98 200 $15.1250
01/06/98 10,000 $15.1875
01/08/98 163,300 $15.3750
01/08/98 14,000 $15.3750
01/09/98 7,900 $15.2500
01/09/98 18,100 $15.3750
01/12/98 6,500 $15.2500
Item 7. Material to be Filed as Exhibits.
Item 7 is amended and restated as follows:
Exhibit 1 Credit Agreement dated as of December 20, 1995 between Valhi,
Inc. and Societe Generale, Southwest Agency (incorporated by
reference to Exhibit 9 to Amendment No. 53 to this Statement).
Exhibit 2 First Amendment Agreement dated as of December 4, 1996 between
Valhi, Inc. and Societe Generale, Southwest Agency (incorporated
by reference to Exhibit 2 to Amendment No. 55 to this Statement).
Exhibit 3 Second Amendment Agreement dated as of March 17, 1997 between
Valhi, Inc. and Societe Generale, Southwest Agency (incorporated
by reference to Exhibit 3 to Amendment No. 55 to this Statement).
Exhibit 4* Stipulation of Settlement, dated February 26, 1998, among the
parties to Seinfeld v. Simmons, et al. (No. C-336-96), pending in
the Chancery Division of the New Jersey Superior Court.
Exhibit 5* Stipulation of Settlement, dated March 5, 1998, among the parties
to Kahn v. Tremont Corporation, et al. (No. 12339), pending in
the Delaware Chancery Court.
- ----------
* Filed herewith.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: March 6, 1998
/s/ Harold C. Simmons
--------------------------------
Harold C. Simmons
Signing in the capacities listed on Schedule
"A" attached hereto and incorporated herein by
reference.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: March 6, 1998
/s/ J. Landis Martin
--------------------------------
J. Landis Martin
Signing in the capacity listed on Schedule "A"
attached hereto and incorporated herein by
reference.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: March 6, 1998
/s/ Steven L. Watson
--------------------------------
Steven L. Watson
Signing in the capacities listed on Schedule
"A" attached hereto and incorporated herein by
reference.
SCHEDULE A
HAROLD C. SIMMONS, in his individual capacity and as trustee of THE COMBINED
MASTER RETIREMENT TRUST
J. LANDIS MARTIN, as Chairman of the Board, Chief Executive Officer and
President of TREMONT CORPORATION.
STEVEN L. WATSON, as Vice President of each of:
CONTRAN CORPORATION
DIXIE RICE AGRICULTURAL CORPORATION, INC.
DIXIE HOLDING COMPANY
NATIONAL CITY LINES, INC.
NOA, INC.
VALHI, INC.
VALHI GROUP, INC.
SOUTHWEST LOUISIANA LAND COMPANY, INC.
EXHIBIT INDEX
Exhibit 1 Credit Agreement dated as of December 20, 1995 between Valhi,
Inc. and Societe Generale, Southwest Agency (incorporated by
reference to Exhibit 9 to Amendment No. 53 to this Statement).
Exhibit 2 First Amendment Agreement dated as of December 4, 1996 between
Valhi, Inc. and Societe Generale, Southwest Agency (incorporated
by reference to Exhibit 2 to Amendment No. 55 to this Statement).
Exhibit 3 Second Amendment Agreement dated as of March 17, 1997 between
Valhi, Inc. and Societe Generale, Southwest Agency (incorporated
by reference to Exhibit 3 to Amendment No. 55 to this Statement).
Exhibit 4* Stipulation of Settlement, dated February 26, 1998, among the
parties to Seinfeld v. Simmons, et al. (No. C-336-96), pending in
the Chancery Division of the New Jersey Superior Court.
Exhibit 5* Stipulation of Settlement, dated March 5, 1998, among the
parties to Kahn v. Tremont Corporation, et al. (No. 12339),
pending in the Delaware Chancery Court.
- ----------
* Filed herewith.
NICOLETTE & PERKINS, P.A.
3 University Plaza, 5th floor
Hackensack, New Jersey 07601
(201) 488-9080
Attorneys for Plaintiff
SUPERIOR COURT OF NEW JERSEY
BERGEN COUNTY
CHANCERY DIVISION
DOCKET NO. C-336-96
- -----------------------------------------------------------------
:
FRANK DAVID SEINFELD, :
:
Plaintiff, :
:
-against- :
: Civil Action
HAROLD C. SIMMONS, J. LANDIS MARTIN, :
GLENN R. SIMMONS, MICHAEL A. SNETZER, :
KENNETH R. PEAK, JOHN R. SLOAN, :
ELMO R. ZUMWALT, JR., VALHI, INC., :
and NL INDUSTRIES, INC., :
:
Defendants. :
:
- -----------------------------------------------------------------
STIPULATION OF SETTLEMENT
The parties to the above-captioned action, by and through their respective
attorneys, have entered into the following Stipulation of Settlement (the
"Stipulation") subject to the approval of the Superior Court of the State of New
Jersey, Bergen County, Chancery Division, (the "Court"):
WHEREAS,
1. On September 13, 1996, the plaintiff, Frank David Seinfeld
("Plaintiff"), filed the instant action (the "Action") derivatively on behalf of
nominal defendant NL Industries, Inc. ("NL"), naming as defendants the directors
of NL (the "Director Defendants") and NL's majority shareholder, Valhi, Inc.
("Valhi").
2. Plaintiff's complaint (the "Complaint") challenged a Dutch tender
offer (the "Dutch Tender"), announced on August 6, 1991, and completed on
September 11, 1991, pursuant to which NL repurchased 11.3 million shares of its
own stock. Of the 11.3 million shares repurchased by NL, 10.9 million shares
were purchased from Valhi as a result of pro rata provisions in the Dutch
Tender.
3. The Complaint alleged that the Dutch Tender was unfair to NL,
that the Director Defendants, when approving the Dutch Tender, breached their
fiduciary duties of care and loyalty, and that Valhi breached its duty of entire
fairness to NL and its public shareholders.
4. Plaintiff's claim was based upon the following contentions:
(a) That Valhi was party to a loan agreement (the "Loan") with a
consortium of banks, that restricted Valhi's ability to borrow other funds, and
that was collateralized, inter alia, by Valhi's shares of NL stock;
(b) That, by March 1991, Valhi formed the belief that it would be
prudent to resell to NL, 10 million shares of its stock and use the proceeds to
repay the Loan;
(c) That, in contemplation of the sale, Valhi utilized its control of
NL to cause it to repurchase, during May, June, and July of 1991 (the
"Repurchase Period"), 773,000 of its own shares in the open market. During the
Repurchase Period, NL's stock price rose from $12 to over $15;
(d) That, with NL's stock price over $15 per share, NL announced a
self tender offer in the form of the Dutch Tender for 10 million shares with an
overallotment option of 1.3 million shares. Under the Dutch Tender, stockholders
were permitted to tender stock at prices ranging from $14.50 to $17.50. NL
agreed to pay the same price to all stockholders who tendered stock at or below
the price necessary to purchase the 10 millionth share. The Dutch Tender was
designed to enable Valhi, which intended to tender all of its shares, to
dominate the Dutch Tender since it was willing to tender at a below market
price, a price that was unattractive to other stockholders but was nevertheless
above what Valhi could anticipate realizing in an arm's length negotiation.
Valhi tendered its 43,515,960 shares, constituting approximately 68% of NL's
stock, on the last day of the Dutch Tender at $16, a price slightly below the
market close on that day of $16.25 per share;
(e) That Valhi did, in fact, dominate the Dutch Tender. 97% of
the shares purchased by NL were purchased from Valhi at a price of $16 per
share.
5. On December 23, 1996, defendants served their answer.
Defendants denied all wrongdoing and asserted several affirmative defenses
including, inter alia, the doctrine of laches, the doctrine of equitable
estoppel, the doctrine of waiver, and the entire controversy doctrine.
6. Pursuant to a Case Scheduling Order dated April 14, 1997, which
set a trial date of November 10, 1997, the parties conducted extensive discovery
on an expedited basis.
7. Plaintiff propounded and responded to document requests and
interrogatories; he deposed 14 witnesses and defended the three depositions
conducted by defendants. He reviewed thousands of pages of documents and
materials produced by defendants and non-parties; and he conducted such other
investigations as he deemed necessary.
8. On July 17, 1997, Plaintiff moved to compel the production of
documents withheld by the defendants on the ground of privilege. The motion was
briefed and argued. After a hearing held on September 26, 1997, Plaintiff's
motion was granted.
9. The parties completed discovery and prepared for trial, which had
been adjourned from November 10, 1997. In connection therewith, Plaintiff
retained experts to testify with respect to valuation issues, and with
respect to NL's repurchase activities. With a final pre-trial conference
scheduled for March 1998, the parties determined, after arm's-length
negotiations, to compromise and settle the Action in accordance with the terms
set forth below.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, subject to the approval
of the Court, pursuant to New Jersey Court Rules 4:32-4 and 4:32-5, that any and
all claims, rights, causes of action, suits, matters and issues, liquidated or
non-liquidated, contingent or absolute, state or federal, that have been, could
have been, or in the future could be asserted in any court of any jurisdiction
by the plaintiffs derivatively in the right and on behalf of NL, or as
representatives of all shareholders of NL in their capacity as such, NL, or its
stockholders, and each of them, and their present or former directors, officers,
agents, employees, attorneys, accountants, representatives, advisers, investment
bankers, commercial bankers, trustees, parents, affiliates, subsidiaries,
general or limited partners, stockholders, heirs, executors, administrators,
successors and assigns, against the defendants, or any of their respective
present or former directors, officers, agents, employees, attorneys,
accountants,representatives, advisers, investment bankers, commercial bankers,
trustees, parents, affiliates, subsidiaries, general or limited partners,
stockholders, heirs, executors, administrators, successors and assigns, or
anyone else (the "Released Persons") in connection with, or that arise out of or
relate to, the subject matter of the Action, or which are or could have been
asserted against the Released Persons in the Action (collectively, the "Settled
Claims"), except for any claims to enforce the terms or conditions of the
Stipulation, shall be fully, finally, and forever compromised, settled,
discharged, dismissed with prejudice and released pursuant to the terms and
conditions set forth herein (the "Settlement").
The Settlement
1. In consideration for the full settlement, satisfaction, compromise and
release of the Settled Claims, the parties to the Action have agreed to settle
the Litigation upon the following terms:
a. On the Effective Date, as defined below, Valhi shall transfer to
NL 750,000 shares of NL common stock, provided that:
(i) If the average per share closing sales prices of NL
common stock as reported on the New York Stock Exchange ("NYSE") composite
transactions reporting system (as reported in the New York City edition of the
Wall Street Journal or, if not reported therein, another authoritative source
acceptable to all parties) for the fifteen trading days (the "Averaging Period")
ending on (and including) the fifth trading day prior to the Effective Date
(rounded to four decimal points, the "Average Price"), is greater than $21 per
share, then the number of NL shares to be transferred shall be reduced to an
amount equal to the quotient resulting from the division of 15,750,000 ($21.00 X
750,000) by the Average Price, but in no event shall the number of NL shares to
be transferred be fewer than 675,000;
(ii) If the Average Price is less than $17 per share, then the
number of NL shares to be transferred shall be increased to an amount equal to
the quotient resulting from the division of 12,750,000 ($17.00 X 750,000) by the
Average Price, but in no event shall the number of NL shares to be transferred
be more than 825,000.
b. On the Effective Date, Valhi shall have the option, in lieu of
transferring stock, to transfer cash or cash equivalents to NL in an amount
equal to the product resulting from the multiplication of the Average Price and
the number of shares of NL stock that would otherwise have been transferred to
NL pursuant to (a) above.
c. The Effective Date shall be the date upon which the Court's
Order and Final Judgment approving the Settlement becomes final, as set forth in
Paragraph 5 below.
Submission and Application to Court
2. As soon as practicable after the execution of the Stipulation, the
parties hereto shall jointly apply to the Court for an order in the form
attached hereto as Exhibit A (the "Scheduling Order"), which shall include
provisions that:
a. a settlement hearing (the "Settlement Hearing") be held to
determine whether the Court should (i) approve the Settlement pursuant to New
Jersey Court Rules 4:32-4 and 4:32-5 as fair, reasonable, and adequate and in
the best interests of NL's stockholders, (ii) enter an Order and Final Judgment
dismissing the Action with prejudice, each party to bear its own costs (except
as provided herein) and extinguish, release and enjoin prosecution of any and
all Settled Claims, and (iii) hear such other matters as the Court may deem
necessary and appropriate; and
b. a copy of the Notice of Pendency of Derivative Action, Proposed
Settlement of Derivative Action and Settlement Hearing and Right to Appear (the
"Notice"), substantially in the form attached hereto as Exhibit B, be sent to
all shareholders of record of NL as of the date of the Scheduling Order, and
further provide that the distribution of the Notice substantially in the manner
set forth in the Scheduling Order herein constitutes the best notice practicable
under the circumstances, meets the requirements of applicable law and due
process, is due and sufficient notice of all matters relating to the Settlement
and fully satisfies the requirements of due process and of Rules 4:32-4 and
4:32-5 of the New Jersey Court Rules.
Notices
3. All costs incurred in identifying and notifying NL's stockholders of
the Settlement, including the printing and copying of the Notice, as set forth
in the Scheduling Order (attached hereto as Exhibit A) shall be paid by NL.
Final Order and Judgment
4. If the Settlement (including any modification thereto made with the
consent of the parties as provided for herein) is approved by the Court, the
parties shall promptly request the Court to enter an Order and Final Judgment
substantially in the form attached hereto as Exhibit C, which among other
things:
a. approves the Settlement, adjudges the terms thereof to be fair,
reasonable, adequate and in the best interests of NL, directs consummation of
the Settlement in accordance with the terms and conditions of the Stipulation,
and reserves jurisdiction to supervise the consummation of such Settlement;
b. determines that the requirements of Rules 4:32-4 and 4:32-5 of
the New Jersey Court Rules and due process have been satisfied in connection
with Notice to NL's stockholders and that the Plaintiff served as an adequate
representative of NL in the Action;
c. dismisses the Action with prejudice as to all Released Persons,
extinguishing, discharging and releasing any and all Settled Claims as against
Plaintiff and all stockholders, without costs except as herein provided, said
dismissal subject only to compliance by the parties and the stockholders with
the terms of this Stipulation and any Order of the Court concerning this
Stipulation, and permanently enjoining Plaintiff and any stockholder from
asserting, commencing, prosecuting or continuing either directly, individually,
representatively, derivatively or in any other capacity any of the Settled
Claims; and
d. awards attorneys' fees and expenses to counsel for Plaintiff as
provided in paragraph 8 herein.
Finality of Settlement
5. The approval of the Settlement shall be considered final ("Final" or
"Finally Approved") for purposes of this Stipulation: (i) upon entry of the
Order and Final Judgment approving the Settlement; and (ii) upon the expiration
of any applicable appeal period for the appeal of the Order and Final Judgment
without an appeal having been filed or, if an appeal is taken, upon entry of an
order affirming the Order and Final Judgment appealed from and the expiration of
any applicable period for the reconsideration, rehearing or appeal of such
affirmance without any motion for reconsideration or rehearing or further appeal
having been filed.
Right to Withdraw from the Settlement
6. a. Each of the parties shall have the option to withdraw from and
terminate the Settlement in the event that (i) either the Scheduling Order or
the Order and Final Judgment referred to above are not entered substantially in
the forms specified herein, including such modifications thereto as may be
ordered by the Court with the consent of the parties, or (ii) the Settlement is
not approved by the Court or is disapproved or substantially modified upon
appeal.
b. In the event the Settlement proposed herein is not approved by
the Court, or the Court approves the Settlement but such approval is reversed or
vacated on appeal, reconsideration or otherwise, and such order reversing or
vacating the Settlement becomes final by lapse of time or otherwise, or if any
of the conditions to such Settlement are not fulfilled, then the Settlement
proposed herein shall be of no further force and effect, and this Stipulation
and all negotiations, proceedings and statements relating thereto and any
amendment thereof shall be null and void and without prejudice to any party
hereto, and each party shall be restored to his, her or its respective position
as it existed prior to the execution of this Stipulation.
Defendants' Denial of Liability
7. The defendants in the Action continue to disclaim any liability
whatsoever relating to any of the Settled Claims, expressly deny having engaged
in any wrongful or illegal activity, or having violated any law or regulation or
duty, expressly deny that any person or entity has suffered any harm or damages
as a result of the Settled Claims, and are making this Settlement solely to
avoid the distraction, burden and expense occasioned by continued litigation.
The defendants believe they have acted with the utmost candor and honesty, and
have at all times acted in the best interests of NL's stockholders. Without
conceding any infirmity in their defenses against the Settled Claims, the
defendants are agreeing to the Settlement solely to avoid the substantial
burden, expense, distraction and inconvenience of continued litigation.
Attorneys' Fees
8. At the hearing, counsel for Plaintiff will apply for an award of
attorneys' fees in an amount to be determined by the Court, but not to exceed
$3,000,000 payable by NL. Defendants agree that they will not object to the
application of Plaintiff's counsel for attorney's fees within the aforesaid
limit. Counsel for Plaintiff will also seek reimbursement of costs and expenses
reasonably incurred in connection with the prosecution of this Action, including
the reimbursement of experts' fees.
9. Subject to the terms and conditions of this Stipulation, the payment
of attorneys' fees shall be made nine months after the approval by the Superior
Court of the Settlement provided that (i) the date upon which the time for the
filing or noticing of any appeal of the final order has expired, or (ii) if
there is an appeal or appeals, such appeal has been completed in a manner that
affirms and leaves in place the final order, of all proceedings in the New
Jersey courts arising out of the appeal or appeals including, but not limited
to, the expiration of all deadlines for motions for reconsideration or petitions
for certiorari, all proceedings ordered on remand, and all proceedings arising
out of any subsequent appeal or appeals following decisions on remand. Payment
of costs and expenses shall occur on the Effective Date.
Authority
10. Each of the attorneys executing the Stipulation on behalf of one or
more of the parties hereto warrants and represents that he or she has been duly
authorized and empowered to execute this Stipulation on behalf of his or her
respective client or clients.
Stipulation Not An Admission
11. The provisions contained in the Stipulation and all negotiations,
statements and proceedings in connection therewith shall not be deemed a
presumption, a concession or an admission by any defendant of any fault,
liability or wrongdoing as to any fact or claim alleged or asserted in the
Action or any other actions or proceedings (all of which Defendants continue to
deny), and shall not be interpreted, construed, deemed, invoked, offered or
received in evidence or otherwise used by any person in these or any other
actions or proceedings, whether civil, criminal or administrative, except in a
proceeding to enforce the terms or conditions of this Stipulation.
Counterparts
12. This Stipulation may be executed in any number of actual or telecopied
counterparts and by each of the different parties thereto on several
counterparts, each of which when so executed and delivered shall be an original.
The executed signature page(s) from each actual or telecopied counterpart may be
joined together and attached to one such original and shall constitute one and
the same instrument.
Waiver
13. The waiver by any party of any breach of this Stipulation shall not be
deemed or construed as a waiver of any other breach, whether prior, subsequent,
or contemporaneous, of this Stipulation.
Entire Agreement; Amendments
14. This Stipulation constitutes the entire agreement among the parties
with respect to the subject matter hereof, and may not be amended, or any of its
provisions waived, except by a writing executed by all of the parties hereto.
15. This Stipulation, upon becoming operative, shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs, executors and administrators and upon any corporation,
partnership or entity into or with which any party may merge or consolidate.
16. All of the exhibits hereto are incorporated herein by reference as if
set forth herein verbatim, and the terms of all exhibits are expressly made part
of this Stipulation.
Governing Law
17. This Stipulation shall be construed and enforced in accordance with
the laws of the State of New Jersey, without regard to conflict of law
principles.
Best Efforts
18. The parties hereto and their attorneys agree to cooperate fully with
one another in seeking the Court's approval of this Stipulation and the
Settlement and to use their best efforts to effect the confirmation of this
Stipulation and the Settlement.
LOWENSTEIN, SANDLER, KOHL,
FISHER & BOYLAN
By:
-----------------------------
Lawrence M. Rolnick
65 Livingston Avenue
Roseland, New Jersey 07068
(201) 992-8700
Attorneys for Defendants
NICOLETTE & PERKINS, P.A.
By:
-----------------------------
David A. Nicolette
3 University Plaza, 5th floor
Hackensack, New Jersey 07601
(201) 488-9080
Attorneys for Plaintiff
Dated: February , 1998
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
ALAN RUSSELL KAHN, )
)
Plaintiff, )
) Civil Action No. 12339
v. )
)
TREMONT CORPORATION, SUSAN E. )
ALDERTON, RICHARD J. BOUSHKA, )
J. LANDIS MARTIN, GLENN R. )
SIMMONS, HAROLD C. SIMMONS, )
MICHAEL A. SNETZER, THOMAS P. )
STAFFORD, AVY H. STEIN and )
VALHI, INC., )
)
Defendants. )
STIPULATION OF SETTLEMENT
The parties to the above-captioned action, by and through their respective
attorneys, have entered into the following Stipulation of Settlement (the
"Stipulation") subject to the approval of the Court of Chancery of the State of
Delaware in and for New Castle County (the "Court"):
WHEREAS,
1. On November 1, 1991, plaintiff Alan R. Kahn ("Plaintiff") filed
the instant action (the "Action"), naming as defendants the directors (the
"Director Defendants") of nominal defendant Tremont Corporation ("Tremont") and
its alleged controlling shareholder, Valhi, Inc. ("Valhi").
2. The complaint in the Action (the "Complaint") challenged the sale
of 7.8 million shares of common stock of NL Industries, Inc. (the "Block") to
Tremont by Valhi (the "Block Sale"). The Complaint alleged that the Block Sale
was unfair to Tremont, that the Director Defendants, when approving the Block
Sale, had breached their fiduciary duties of care and loyalty, and that Valhi
had breached its duty of entire fairness to Tremont and its public shareholders.
3. Defendants answered the Complaint on November 25, 1991. After
Plaintiff served discovery requests upon defendants in December 1991, defendants
moved, on January 16, 1992, to dismiss the Complaint, pursuant to Chancery Rule
23.1, on the ground that Plaintiff had failed to make pre-suit demand upon
Tremont's directors, and failed to allege facts to demonstrate that such demand
would have been futile. Defendants asserted that demand was not excused because
the Block Sale was approved by a committee of assertedly independent directors
(the "Special Committee"). At the same time, defendants moved to stay further
discovery.
4. Plaintiff opposed both motions. After the submission of briefs,
then Chancellor William T. Allen, in a Memorandum Opinion dated August 21, 1992,
deferred determination of defendants' motion to dismiss and permitted limited
discovery related to the issue of the independence of the members of the Special
Committee.
5. Thereafter, Plaintiff conducted discovery, including the
deposition of each member of the Special Committee, defendants Avy H. Stein
("Stein"), Richard J. Boushka ("Boushka"), and Thomas P. Stafford ("Stafford"),
concerning their independence at the time of the Block Sale.
6. Upon the completion of such discovery, the parties submitted
further briefs in connection with defendants' motion to dismiss. In a
Memorandum Opinion, dated April 21, 1994, the Chancellor denied defendants'
motion to dismiss and lifted his stay of discovery. The Chancellor determined
that the Complaint adequately alleged that a majority of the Tremont board at
the time the Action was commenced lacked independence. Further, the Chancellor
held that the Complaint alleged sufficient facts to create a reasonable doubt
that the members of the Special Committee were not independent.
7. With the stay lifted, Plaintiff engaged in discovery. He
propounded and responded to document requests and interrogatories; he deposed
each of the defendants, as well as employees of Continental Partners, financial
advisor to the Special Committee, and expert witnesses retained by defendants;
he issued subpoenas to Salomon Brothers, D.F. King & Co., First Chicago Trust
Company, First Southwest Securities, and the New York Stock Exchange; he
reviewed thousands of pages of documents and materials produced by defendants
and non-parties; and he conducted such other investigations as he deemed
necessary.
8. Beginning on May 31, 1995, and continuing through June 9, 1995,
the parties tried this Action before Chancellor Allen.
9. On March 21, 1996, the Chancellor issued a Memorandum Opinion.
In its Opinion, the Court found that the Special Committee had operated
effectively, thereby shifting the
burden of proving the unfairness of the Block Sale to Plaintiff. The Court also
found that the price paid by Tremont for the Block was fair, and that the
defendants did not violate their duty of disclosure or otherwise engage in
unfair dealing. On April 16, 1996, judgment was entered for defendants.
10. Plaintiff filed his Notice of Appeal on April 18, 1996. Oral
argument before the Supreme Court of Delaware was held on December 12, 1996.
11. By Order, dated January 8, 1997, the Supreme Court scheduled the
appeal for rehearing and determination en banc. On February 25, 1997, the
Supreme Court heard further oral argument.
12. On June 10, 1997, the Supreme Court, en banc, reversed the
judgment of the Chancery Court and remanded the action, issuing three separate
opinions. A majority of the Court rejected the Chancellor's finding that the
Special Committee had adequately represented Tremont's interests, and held that,
as a result, the burden of proof should not have been shifted to Plaintiff.
13. The Supreme Court also vacated the Chancellor's findings with
respect to the fairness of the price paid by Tremont for the Block because, the
Court found, the Chancellor had made such findings in a procedural construct
which required Plaintiff to prove that such price was unfair.
14. The Court remanded the case with the directive that the Chancery
Court make a new determination of the entire fairness of the transaction, with
the burden of proof on the defendants.
15. On July 29, 1997, defendants moved for entry of judgment on
remand, based upon the existing record. On August 28, 1997, Plaintiff cross-
moved for entry of judgment, and also moved, in the event that his motion for
judgment were denied, to reopen the record to introduce newly discovered
evidence.
16. In a Letter Opinion dated October 27, 1997, the Court denied,
without prejudice, the motions of both sides for entry of judgment, and granted
Plaintiff's motion to reopen the record, permitting both sides to introduce
additional evidence. On November 10, 1997, the Court entered an Order on those
rulings and delineated the testimony and other evidence which it would consider
at the hearing on remand.
17. The parties engaged in further discovery, with each party
deposing the experts expected to testify at the hearing, and with Plaintiff
further deposing defendants Simmons and Stein, and Gidon Cohen of Continental
Partners.
18. The hearing commenced on February 3, 1998. At the conclusion of
the first day, the parties agreed to compromise and settle the Action on the
terms set forth below.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, subject to the
approval of the Court, pursuant to Chancery Court Rule 23.1, that any and all
claims, rights, causes of action, suits, matters and issues, liquidated or non-
liquidated, contingent or absolute, state or federal, that have been, could have
been, or in the future could be asserted in any court of any jurisdiction by the
plaintiff derivatively in the right and on behalf of Tremont, or as
representative of all shareholders of Tremont in his capacity as such, Tremont,
or its stockholders, and each of them, and their present or former directors,
officers, agents, employees, attorneys, accountants, representatives, advisers,
investment bankers, commercial bankers, trustees, parents, affiliates,
subsidiaries, general or limited partners, stockholders, heirs, executors,
administrators, successors and assigns, against the defendants, or any of their
respective present or former directors, officers, agents, employees, attorneys,
accountants, representatives, advisers, investment bankers, commercial bankers,
trustees, parents, affiliates, subsidiaries, general or limited partners,
stockholders, heirs, executors, administrators, successors and assigns, or
anyone else (the "Released Persons") in connection with, or that arise out of or
relate to, the subject matter of the Action, or which are or could have been
asserted against the Released Persons in the Action (collectively, the "Settled
Claims"), except for any claims to enforce the terms or conditions of the
Stipulation, shall be fully, finally, and forever compromised, settled,
discharged, dismissed with prejudice and released pursuant to the terms and
conditions set forth herein (the "Settlement").
The Settlement
1. In consideration for the full settlement, satisfaction,
compromise and release of the Settled Claims, the parties to the Action have
agreed to settle the Action upon the following terms:
a. On the Effective Date, as defined below, Valhi shall transfer to
Tremont 1.2 million shares of NL common stock, provided that:
(i) If the average per share closing sales price of NL common stock
as reported on the New York Stock Exchange ("NYSE") composite transactions
reporting system (as reported in the New York City edition of the Wall Street
Journal or, if not reported therein, another authoritative source acceptable to
all parties) for the fifteen trading days (the "Averaging Period") ending on
(and including) the fifth trading day prior to the Effective Date (rounded to
four decimal points, the "Average Price") is greater than $21 per share, then
the number of NL shares to be transferred shall be reduced to an amount equal to
the quotient resulting from the division of 25,200,000 ($21.00 X 1,200,000) by
the Average Price, but in no event shall the number of NL shares to be
transferred be fewer than 1 million;
(ii) If the Average Price is less than $17 per share, then the number
of NL shares to be transferred shall be increased to an amount equal to the
quotient resulting from the division of 20,400,000 ($17.00 X 1,200,000) by the
Average Price, but in no event shall the number of NL shares to be transferred
be more than 1.4 million.
b. On the Effective Date, Valhi shall have the option, in lieu of
transferring stock, to transfer cash or cash equivalents in an amount equal to
the product resulting from the multiplication of the Average Price and the
number of shares that would otherwise have been transferred to Tremont pursuant
to q 1(a) above.
c. The Effective Date shall be the date upon which the Court's Order
and Final Judgment approving the Settlement becomes final, as set forth in
Paragraph 5 below.
d. This Stipulation incorporates by reference, as if fully set forth
herein and fully updated, each representation and warranty of Valhi contained in
the stock purchase agreement between Tremont and Valhi, dated October 30, 1991.
Submission and Application to Court
2. As soon as practicable after the execution of the Stipulation,
the parties hereto shall jointly apply to the Court for an order in the form
attached hereto as Exhibit A (the "Scheduling Order"), which shall include
provisions that:
a. a settlement hearing (the "Settlement Hearing") be held to
determine whether the Court should (i) approve the Settlement pursuant to
Chancery Court Rule 23.1 as fair, reasonable, and adequate and in the best
interests of Tremont, (ii) enter an Order and Final Judgment dismissing the
Action with prejudice, each party to bear its own costs (except as provided
herein) and extinguish, release and enjoin prosecution of any and all Settled
Claims, and (iii) hear such other matters as the Court may deem necessary and
appropriate; and
b. a copy of the Notice of Pendency of Derivative Action, Proposed
Settlement of Derivative Action, Settlement Hearing and Right to Appear (the
"Notice"), substantially in the form attached hereto as Exhibit B, be sent to
all shareholders of record of Tremont as of the date of the Scheduling Order,
and further that the distribution of the Notice substantially in the manner set
forth in the Scheduling Order herein constitutes the best notice practicable
under the circumstances, meets the requirements of applicable law and due
process, is due and sufficient notice of all matters relating to the Settlement
and fully satisfies the requirements of due process and of Rule 23.1 of the
Chancery Court Rules.
Notices
3. All costs incurred in identifying and notifying Tremont's
stockholders of the Settlement, including the printing and copying of the
Notice, as set forth in the Scheduling Order (attached hereto as Exhibit A) will
be paid by Tremont.
Final Order and Judgment
4. If the Settlement (including any modification thereto made with
the consent of the parties as provided for herein) is approved by the Court, the
parties shall promptly request the Court to enter an Order and Final Judgment
substantially in the form attached hereto as Exhibit C, which among other
things:
a. approves the Settlement, adjudges the terms thereof to be fair,
reasonable, adequate and in the best interests of Tremont's stockholders,
directs consummation of the Settlement in accordance with the terms and
conditions of the Stipulation, and reserves jurisdiction to supervise the
consummation of such Settlement;
b. determines that the requirements of Rule 23.1 of the Chancery
Court Rules and due process have been satisfied in connection with Notice to
Tremont's stockholders and that the Plaintiff served as an adequate
representative of Tremont in the Action;
c. dismisses the Action with prejudice as to all Released Persons,
extinguishing, discharging and releasing any and all Settled Claims as against
Plaintiff and all stockholders, without costs except as herein provided, said
dismissal subject only to compliance by the parties and the stockholders with
the terms of this Stipulation and any Order of the Court concerning this
Stipulation, and permanently enjoining Plaintiff and any stockholder from
asserting, commencing, prosecuting or continuing either directly, individually,
representatively, derivatively or in any other capacity any of the Settled
Claims; and
d. awards attorneys' fees and expenses to counsel for Plaintiff as
provided in paragraph 8 herein.
Finality of Settlement
5. The approval of the Settlement shall be considered final ("Final"
or "Finally Approved") for purposes of this Stipulation: (i) upon entry of the
Order and Final Judgment approving the Settlement; and (ii) upon the expiration
of any applicable appeal period for the appeal of the Order and Final Judgment
without an appeal having been filed or, if an appeal is taken, upon entry of an
order affirming the Order and Final Judgment appealed from and the expiration of
any applicable period for the reconsideration, rehearing or appeal of such
affirmance without any motion for reconsideration or rehearing or further appeal
having been filed.
Right to Withdraw from the Settlement
6. a. Each of the parties shall have the option to withdraw from
and terminate the Settlement in the event that (i) either the Scheduling Order
or the Order and Final Judgment referred to above are not entered substantially
in the forms specified herein, including such modifications thereto as may be
ordered by the Court with the consent of the parties, or (ii) the Settlement is
not approved by the Court or is disapproved or substantially modified upon
appeal.
b. In the event the Settlement proposed herein is not approved
by the Court, or the Court approves the Settlement but such approval is reversed
or vacated on appeal, reconsideration or otherwise, and such order reversing or
vacating the Settlement becomes final by lapse of time or otherwise, or if any
of the conditions to such Settlement are not fulfilled, then the Settlement
proposed herein shall be of no further force and effect, and this Stipulation
and all negotiations, proceedings and statements relating thereto and any
amendment thereof shall be null and void and without prejudice to any party
hereto, and each party shall be restored to his, her or its respective position
as it existed prior to the execution of this Stipulation.
Attorneys' Fees
7. At the Settlement Hearing, counsel for Plaintiff will apply for
an award of attorneys' fees in an amount to be determined by the Court, but not
to exceed $5,000,000 payable by Tremont. Defendants agree that they will not
object to the application of Plaintiff's counsel for attorneys' fees within the
aforesaid limit. Counsel for Plaintiff will also seek reimbursement of costs
and expenses reasonably incurred in connection with the prosecution of this
Action, including the reimbursement of experts' fees.
8. Subject to the terms and conditions of this Stipulation, the
payment shall be made ten (10) business days after the later of the following
events: (i) the date upon which the time for the filing or noticing of any
appeal of the final order expires, or (ii) if there is an appeal or appeals, the
completion, in a manner that affirms and leaves in place the final order, of all
proceedings in the Delaware Supreme Court arising out of the appeal or appeals
(including, but not limited to, the expiration of all deadlines for motions for
reconsideration or petitions for certiorari, all proceedings ordered on remand,
and all proceedings arising out of any subsequent appeal or appeals following
decisions on remand).
Authority
9. Each of the attorneys executing the Stipulation on behalf of one
or more of the parties hereto warrants and represents that he or she has been
duly authorized and empowered to execute this Stipulation on behalf of his or
her respective client or clients.
Stipulation Not An Admission
10. The provisions contained in the Stipulation and all negotiations,
statements and proceedings in connection therewith shall not be deemed a
presumption, a concession or an admission by any defendant of any fault,
liability or wrongdoing as to any fact or claim alleged or asserted in the
Action or any other actions or proceedings (all of which Defendants continue to
deny) and shall not be interpreted, construed, deemed, invoked, offered or
received in evidence or otherwise used by any person in these or any other
actions or proceedings, whether civil, criminal or administrative, except in a
proceeding to enforce the terms or conditions of this Stipulation.
Counterparts
11. This Stipulation may be executed in any number of actual or
telecopied counterparts and by each of the different parties thereto on several
counterparts, each of which when so executed and delivered shall be an original.
The executed signature page(s) from each actual or telecopied counterpart may be
joined together and attached to one such original and shall constitute one and
the same instrument.
Waiver
12. The waiver by any party of any breach of this Stipulation shall
not be deemed or construed as a waiver of any other breach, whether prior,
subsequent, or contemporaneous, of this Stipulation.
Entire Agreement; Amendments
13. This Stipulation constitutes the entire agreement among the
parties with respect to the subject matter hereof, and may not be amended, or
any of its provisions waived, except by a writing executed by all of the parties
hereto.
14. This Stipulation, upon becoming operative, shall be binding upon
and inure to the benefit of the parties hereto and their respective successors,
assigns, heirs, executors and administrators and upon any corporation,
partnership or entity into or with which any party may merge or consolidate.
15. All of the exhibits hereto are incorporated herein by reference
as if set forth herein verbatim, and the terms of all exhibits are expressly
made part of this Stipulation.
Governing Law
16. This Stipulation shall be construed and enforced in accordance
with the laws of the State of Delaware, without regard to conflict of law
principles.
Best Efforts
17. The parties hereto and their attorneys agree to cooperate fully
with one another in seeking the Court's approval of this Stipulation and the
Settlement and to use their best efforts to effect the confirmation of this
Stipulation and the Settlement.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
----------------------------------------
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
MORRIS, JAMES, HITCHENS & WILLIAMS
----------------------------------------
222 Delaware Avenue
P.O. Box 2306
Wilmington, DE 19899
(302) 888-6800
Attorneys for Defendants Harold C. Simmons, Susan E.
Alderton, J. Landis Martin, Glenn R. Simmons, Michael
A. Snetzer, and Valhi, Inc.
RICHARDS, LAYTON & FINGER
----------------------------------------
One Rodney Square
P.O. Box 551
Wilmington, DE 19801
(302) 658-6541
Attorneys for Defendants Tremont Corporation, Richard
J. Boushka, Thomas P. Stafford, and Avy H. Stein
Dated: February , 1998
