EXHIBIT 10.1
LOAN AMENDMENT TO
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
THIS AGREEMENT by the Pension and Employee Benefits Committee of NL
Industries, Inc.("PEBCO"),
WHEREAS, NL Industries, Inc. ("the Company") has previously adopted the
Plan known as "NL Industries, Inc. Retirement Savings Plan NL Industries, Inc."
(the "Plan"); and
WHEREAS, pursuant to Section 11.2 and 13.1 of the Plan, PEBCO has the
authority to amend the Plan; and
NOW, THEREFORE, the parties hereto agree that the Plan is hereby amended,
effective as of January 1, 2000, or such other date required by any appropriate
governmental agency, as follows:
I. Article X of the Plan is amended by the addition of a new Section 10.7
to read as follows:
10.7 Loans to Participants
(a) Who is eligible. Effective January 1, 2000 loans are permitted
to any (i) Participant or (ii) only to the extent required by law, any
former Participant, Beneficiary, or alternate payee under a qualified
domestic relations order described in Section 414(p) of the Code, who is a
"party in interest," as defined in Section 3(14) of the Act, or a
"disqualified person," as defined in Section 4975(e)(2) of the Code, and
(iii) on whose behalf an Account or subaccount is maintained under the
Plan (hereinafter an individual described in clause (i) or (ii) and (iii)
shall be referred to as a "Qualified Participant"). For purposes of this
Section, a "loan" shall include any renewal or modification to an existing
loan hereunder so long as, at the time of any such renewal or
modification, the requirements of this Section are met. Any action taken
by the Committee shall be taken to establish or suspend or terminate a
loan program shall be communicated to Qualified Participants in a time and
manner unlikely to discriminate against any group of Qualified
Participants.
(b) How to apply. A Qualified Participant may borrow from his
vested Account balance under the Plan, subject to the provisions of this
Section and to such additional roles or guidelines as the Committee may
adopt hereunder, by following the application procedure established by the
Trustee. The Qualified Participant shall receive written documents (i)
specifying the terms pursuant to which the requested loan is to be made,
(ii) designating the extent, if any, that the loan will be made from any
one or more of the investment funds established under Article VI in which
the Qualified Participant has an interest, (iii) authorizing the repayment
of the loan through payroll deductions if the Qualified Participant is an
Employee, or authorizing a procedure whereby the Qualified Participant
makes
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repayments if the Qualified Participant is not an Employee, (iv) providing
such additional information and documentation as the Committee or Trustee
shall require, and (v) including a note and security agreement to be duly
executed by the Qualified Participant, pursuant to which the Qualified
Participant promises to repay the note and grants a security interest to
secure repayment of the loan and the note.
(c) Loan Procedures. The Committee shall issue rules or guidelines
("Procedures") which shall be uniformly applicable to all Qualified
Participants similarly situated and such guidelines shall govern the
approval or disapproval of loan application requests, as well as
establishing terms governing loans, repayments, defaults, and other
features of the participant loan program. Such Procedures may complete,
interpret, and add to the provision of this Section 10.7, and to the
extent permitted by law without causing disqualification of the Plan, may
contradict and overrule the provision of this Section 10.7.
(d) Interest rates and fees. The Procedures shall prescribe the
manner for determining the annual rate of interest to be charged on each
loan to a Qualified Participant under the Plan. The annual rate of
interest shall provide the Plan with an annual rate of return commensurate
with the prevailing interest rate charged on similar commercial loans by
persons in the business of lending money for loans which would be made
under similar circumstances, as determined by the Committee. In addition,
the Procedures may provide for assessment of a fee for processing loan
application forms, collection and processing late payments, and similar
administrative expenses which amounts shall be charged directly to the
Account of the affected Qualified Participant. The Committee shall from
time to time prescribe such additional Procedures that it deems to be
necessary or appropriate and which are consistent with proper lending
practices.
(e) Loan amount limits. Whenever loans are permitted, each
Qualified Participant eligible to take a loan under the Procedures shall
be entitled to borrow from his Account an amount which is not in excess of
the lesser of (i) $50,000, or (ii) one-half (1/2) of the present value of
the vested Account balance of the Qualified Participant under the Plan as
of the most recent valuation date. No Qualified Participant shall be
entitled to a loan from the Trustee if the amount of the loan is less than
the minimum ($1000). Any renewal or modification of an existing loan
hereunder shall be deemed to be a new loan for purposes of this Section.
Any loan shall be secured by up to one-half of such Qualified
Participant's vested interest in his Account balance, as measured
immediately after the origination of each loan hereunder.
However, to the extent not inconsistent with the requirements of
applicable provisions of the Code and ERISA, the Committee or the Trustee,
in their discretion, may reduce the maximum loans allowed to reflect or
anticipate any potential fluctuation in the value of plan investments in
funds which may be affected by stock market performance. Similarly, if the
Committee or the Trustee determines that it is not reasonable or prudent,
in the interest of Participants or Beneficiaries, to liquidate the
requested amount from any of the Investment Funds, the amount to be paid
to each Qualified Participant who designated that a loan be made from such
Investment Fund shall be reduced unless the Qualified Participant agrees
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to that portion of the loan being made from other Investment Funds.
(f) Number of loans. Except as may otherwise be prescribed by the
Committee in the Procedures, no Qualified Participant shall be entitled to
originate, renew or modify more than one loan during any single calendar
year, and if a Qualified Participant who has an outstanding loan requests
an additional loan, the entire outstanding loan shall be repaid before a
new loan can be processed.
(g) Repayment schedule and method. Any loan originated, renewed or
modified with respect to a Qualified Participant who is an Employee shall
be repaid by payroll deduction pursuant to a substantially level
amortization schedule as provided in the Procedures issued by the
Committee (with payments not less frequently than quarterly) over the term
of the loan, or any loan issued hereunder to a Qualified Participant who
is not an Employee shall be repaid by money order or certified check in
accordance with a substantially level amortization schedule as provided in
the Procedures (with payments not less frequently than quarterly) over the
term of the loan. No loan shall have a maturity date in excess of five (5)
years. Any loan may be prepaid at any time, without penalty, provided that
the full amount of the loan, plus all interest accrued and unpaid thereon,
is prepaid at one time.
(h) Accounting for loans and repayments. Any loan to a Qualified
Participant hereunder shall be considered to be an earmarked investment of
the Qualified Participant's Account. All costs, charges, fees or expenses
in connection with acquisition and disposition of such investment of the
Qualified Participant's Account shall be charged directly to such
Qualified Participant's Account. The amount necessary to pay the loan to
the Qualified Participant shall be taken proportionately from each of the
Investment Funds in which the Qualified Participant's Account is invested,
unless otherwise agreed in the loan application or otherwise provided in
the Procedures. Repayments of principal and interest on a loan shall be
made to the Investment Funds in the same proportion as contributions would
be made pursuant to the Qualified Participant's then effective investment
election for new contributions.
(i) Authority to approve or disapprove loan requests. The Committee
shall have the authority to delegate the power to review and approve or
disapprove loans to such agents as the Committee shall deem proper,
provided that any such agents shall act only in accordance with the
Procedures established by the Committee pursuant to this Section, A loan
may be denied or granted in reduced amount if the Committee or its agent
determines that the Qualified Participant is not reasonably and prudently
able to liquidate the necessary amount from any funds in this Account.
(j) Recordkeeping. The Trustee shall convert all or any part of the
Qualified Participant's Account in the aggregate amount necessary to make
payment of the loan from the Trust Fund to the extent designated in the
loan application and shall transfer cash to the Qualified Participant in
such aggregate amount. The Trustee shall maintain sufficient records to
permit an accurate crediting of repayments of the loan.
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(k) Effect of loans on Participant's Accounts. The unpaid balance
owed by a Qualified Participant on a loan under the Plan shall not reduce
the amount credited to him under the Plan. However, from the time of
payment of the proceeds of the loan to the Qualified Participant, his
Account balances shall be deemed invested, to the extent of such unpaid
loan balance, in such loan until the complete repayment thereof or
distribution from such Account. Unless the Procedures provide a different
ordering, at the time a loan is made, the amount loaned shall first be
deemed an investment of, and allocated to, the following sequence of
sub-accounts, and for purposes of this Paragraph where reference is made
to Basic and Supplemental Pre-Tax Contributions or Basic and Supplemental
After-Tax Contributions, such terms shall mean the lesser of the actual
amount of such unwithdrawn or unloaned contributions or the current market
value thereof as of the applicable Valuation Date:
1. Basic and Supplemental Alter-Tax Contributions made
prior to 1987 to the Predecessor Plan;
2. post-1986 Basic and Supplemental After-Tax
Contributions, and all or part of the increments earned on all Basic
and Supplemental After-Tax Contributions made to the Plan and/or the
Predecessor Plan;
3. that portion of his account balance attributable to
Employer Contributions which are fully vested, including increments
earned thereon, made to the Plan and/or the Predecessor Plan. For
purposes of determining his vested percentage at the time of such
loan, a Participant who has completed at least 1,000 Hours of
Service or six Months of Service in a calendar year at the time of
the loan shall be deemed to have completed one year of Vesting
Service for that calendar year;
4. Employer Contributions made prior to January 1, 1974 to
the Predecessor Plan, including increments earned thereon, Rollover
Contributions and direct rollovers from another qualified trust as
described in subparagraphs 4.10(b) and (c) including increments
thereon;
5. Basic and Supplemental Pre-Tax Contributions, made to
the Plan and/or the Predecessor Plan.
(l) Effect of loan on withdrawals. Except for the application of a
Qualified Participant's Account balance to repayment of a loan in the
event of a default, no withdrawal may be made by a Qualified Participant
of any amount deemed invested in the outstanding balance of a loan.
(m) Effect of loan on distributions after termination of service.
The amount actually paid in any distribution otherwise payable to a
Qualified Participant shall be reduced by the amount owed (including any
accrued interest) on all loans of the Qualified Participant at the time of
such distribution. The Trustee shall apply the pledged portion (including
accrued interest) of the Qualified Participant's Account to be distributed
or paid toward the
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liquidation of the Qualified Participant's indebtedness to the Plan and
the Trustee. Such reduction shall constitute a complete discharge of all
liability to the Plan and the Trustee for the loan to the extent of such
reduction.
(n) Repayment issues. All loans under the Plan shall be secured by
the Qualified Participant's vested Account balance; provided, however,
that repayment shall be secured by the Qualified Participant's vested
interest in his Account only for such time, and to the extent that, a
portion of each loan is allocated to such Account. Unless the Procedures
provide a different ordering, any loan repayment amounts shall be credited
to the Qualified Participant's sub-accounts in the following order, but
only as reflects the extent to which loan proceeds were taken from any of
these sub-accounts:
1. Basic and Supplemental Pre-Tax Contributions, made to
the Plan and/or the Predecessor Plan;
2. Employer Contributions made prior to January 1, 1974 to
the Predecessor Plan, including increments earned thereon, Rollover
Contributions and direct rollovers from another qualified mist as
described in subparagraphs 4.10(b) and (c) including increments
thereon;
3. that portion of his account balance attributable to
Employer Contributions which are fully vested, including increments
earned thereon, made to the Plan and/or the Predecessor Plan;
4. post-1986 Basic and Supplemental After-Tax
Contributions, and all or part of the increments earned on all Basic
and Supplemental After-Tax Contributions made to the Plan and/or the
Predecessor Plan;
5. Basic and Supplemental After-Tax Contributions made
prior to 1987 to the Predecessor Plan.
If at any time prior to the full repayment of a loan, the Participant
should cease to be a Participant by reason of his termination of
employment for any reason, or the Plan should terminate, the unpaid
balance owed by the Participant on the loan and all accrued but unpaid
interest shall be due and payable immediately. The Participant or his
Beneficiary may make all repayments due on outstanding loans by certified
check or money order within the grace period provided for in the
Procedures.
The Procedures shall provide for methods of adjusting payment dates and
amounts in the event of those kinds of approved leave without pay for
which special repayment rules are authorized or mandated by law.
(o) Defaults. In the event of failure to make any payment of
principal or interest under a loan when due, the loan shall be in default
("Default") and all the unpaid balance owed by the Qualified Participant
and all accrued but unpaid interest shall be due and
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payable immediately. Immediately after the expiration of any grace period
provided for in the Procedures following a Default, the Plan and the
Trustee may apply the vested Account balance of the Qualified Participant
to pay the loan, in whole or in part, and take any other action or remedy
as allowed by law, provided that no application of a Qualified
Participant's vested Account balance shall occur prior to the time such
vested Account balance is otherwise distributable under the terms of the
Plan except as permitted by the Code and the Act. The amount paid under
any withdrawal or distribution from the vested Account balance of a
Qualified Participant following a Default shall be reduced by the amount
of any loan in Default and such amount shall be applied to the unpaid loan
balance and any accrued but unpaid interest thereon.
In the event of a default and after the expiration of any grace period
provided for in the Procedures, any amounts of the defaulted part of the loan
and to sub-account eligible for withdrawal shall be offset against the loan in
order to effect an actual default and immediate distribution. If some or all of
the loan is attributed to sub-accounts not eligible for withdrawal, but assets
are available in sub-accounts eligible for withdrawal, assets of the subaccounts
used for the loan shall be traded for assets of sub-accounts eligible for
withdrawal on a dollar for dollar basis to the extent necessary to permit offset
and immediate distribution of the loan. To the extent that the loan still cannot
be offset and immediately distributed, the default shall result in a deemed
distribution, but the loan will remain a debt to the Plan and, to the extent
required by law or by the procedures, interest will continue to accrue until the
date the loan is repad or the account is distributed,
II. Section 6.1 of the Plan is amended to provide for a new investment
fund by the addition or a new subsection (f) to read as follows:
(f) The Loan Fund, which shall be maintained for the sole purpose
of accounting for the outstanding balance of loans to Participants in
accordance with Paragraph 10.7. Provided, however, any loan to a
Participant shall not be considered as an investment in the Loan Fund, but
instead shall be considered to be an earmarked investment of the
Participant's account.
III. Article VI of the Plan is further amended by the addition of a new
Section 6.10 to read as follows:
6.11 Loans. Notwithstanding any other provision of this Article
VI, contributions of a Participant may, subject to paragraph 10.7, be
invested in loans to the Participant.
IV. Section 7.4 of the Plan is amended and restated to read as follows
(the underlined words indicate the changes):
7.4 Statement of Participant's Account. As soon as practicable after
the completion of a Plan Year, an individual statement of account shall be
issued to each Participant showing the value of his interest in each Fund, and
any loans pursuant to paragraph 10.7.
V. The first sentence of Section 9.1 (a) of the Plan is amended by the
insertion of the words "(other than amounts invested in the Loan Fund)"
immediately after the words "all vested
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amounts then credited to his account"; and by the insertion of the words
"including amounts invested in the Loan Fund" immediately after the words
"exceeds $3,500".
VI. The third to last sentence of 'Section 9. l(a) of the Plan is amended
by the insertion of the words "(and the Loan Fund)" immediately after the words
"NL Stock Fund and the Dresser - Tremont Fund".
VII. Section 16.3 of the Plan is amended by the addition of the following
sentence at the end thereof:
The prohibition against assignment or alienation of benefits contained in
this Paragraph 16.3 shall not apply to any loan to a Participant made
under the Plan if' such loan is secured by the Participant's account in
the Plan and is exempt from the tax imposed by Section 4975 of the Code by
reason of Section 4975(d)(a) thereof.
IN WITNESS WHEREOF, on behalf of NL Industries, Inc., the Pension and
Employee Benefits Committee has caused this Amendment to be executed this 1st
day of December, 1999 to be effective as of January 1, 2000.
PENSION AND EMPLOYEE BENEFITS
COMMITTEE OF NL INDUSTRIES, INC.
By: /s/ Robert D. Hardy
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Name: Robert D. Hardy
Title: Chairman
