Fill and Sign the Enpro Industries Incplan for Salaried Employees Secgov Form

SAVINGS PLAN FOR EMPLOYEES OF NL INDUSTRIES, INC. Introduction The Savings Plan for Employees of NL Industries, Inc. (the “New Savings Plan”) was adopted by the Board on February 14, 1989 as a successor Plan to the Savings Plan for Employees of NL Industries, Inc. (the “Savings Plan”). and the effectiveness thereof is subject to shareholder approval. The New Savings Plan was established to permit eligible employees of NL and subsidiaries to continue their participation in a tax-qualified savings plan. The purpose of the New Savings Plan is to provide eligible employees of NL and certain of affiliated companies with the opportunity to increase their current savings and future retirement income by participating in one or more of the funds of the Plan (the “Fund” or “Funds”), including Fund E, which has been established primarily for investment in NL Common Stock. The New Savings Plan provides for voluntary contributions by participants, generally through salary reductions, payroll deductions and cash payments, certain of which are matched, on a discretionary basis, in whole or in part, by employer contributions. All contributions to the New Savings Plan will be remitted to an entity to be designated as trustee by the Company (the “Trustee”). Such contributions and assets together with the income thereon shall comprise the trust fund (the “Trust Fund”) to be held, managed and invested by the Trustee pursuant to the provision of the trust established pursuant to the New Savings Plan (the “Trust”). The Trust Fund will be allocated to the Funds in accordance with the investment elections filed by each participant with the Pension and Employee Benefits Committee of NL Industries, Inc. (“PEBCO”). Contributions utilized to purchase, at private sales or in the open market, shares of NL Common Stock must be at not more than the market price at the time of purchase. There are no restrictions with respect to the maximum or minimum number of shares of NL Common Stock which may be purchased for the account of any participant, other than as may result from general limitations under federal tax laws or the New Savings Plan. All capitalized terms which are not defined herein have the same meaning as set forth in the New Savings Plan. The description of the New Savings Plan set forth herein is qualified in its entirety by reference to the complete text of such plan, a copy of which is attached as Exhibit “B” to this Proxy Statement. Eligibility for Participation Each employee of NL and of subsidiaries, who was a contributing participant to the Baroid Savings Plan on December 31, 1988, shall continue as a Contributing Participant under the New Savings Plan. Each other employee will be eligible to participate in the New Savings Plan as a contributing participant on the first day of the pay period coincident with or next following the eligibility computation period during which he or she shall have performed at least 1,000 hours or six months of service.There are currently approximately 600 employees of NL who will be eligible to participate in the New Savings Plan. Employee Contributions A participant may make Basic After-Tax Contributions equal to any percentage of his or her Compensation in increments of .5 percent, from 1 percent up to and including 8 percent or such other minimum amount as may be established from time to time by PEBCO. A Participant may also elect to make Basic Before-Tax Contributions by reducing his Compensation by an amount equal to any percentage, in increments of .5 percent, from 1 percent up to and including 8 percent, or such other maximum amount as may be established from time to time by PEBCO. A participant whose Basic Contributions are at least 8 percent may mare Supplemental Contribu- tions with before- or after-tax dollars, in increments of 0.5 percent from one to four percent of Compensation or such other maximum amount as may be established from time to time by PEBCO. Contribution Restrictions for Highly Compensated Participants To maintain qualified status under federal tax law, the New Savings Plan must satisfy nondiscrimination tests which limit the contributions of or on behalf of “Highly Compensated Employees” (“HCEs”), as such term is defined in federal tax laws. To prevent violation of these nondiscrimination tests, the maximum employee contribution percentages for HCE’s are changed from time to time as necessary. A Contributing Participant, who is designated as an HCE, may be required either prospectively or retroactively to reduce the amount of pre-tax contributions, in which event such excess shall be redesignated as after-tax or supplemental contributions or returned to such participant. If any excess pre-tax contributions must be returned to an HCE, such amount will be transferred to the employer by the Trustee as soon as administratively practicable following the close of the calendar month in which the pre-tax contributions designation was revised, for inclusion in the participant’s next payment, Any such amounts will be includible in the participant’s gross income and. are subject to withholding of taxes, Employer Contributions Employer Contributions to the New Savings Plan shall be in accordance with three profitability levels as determined by the Board, in its sole discretion, for each plan year in accordance with the following formulae: (a) Twenty-five cents ($.25) for each one dollar ($1.00) of a Contributing Participant’s Basic Contributions which are based on the first 8 percent of his or her Compensation, provided Profitability Level is equal to or above Level A but below Level B; (b) Fifty cents ($.50) for each one dollar ($1.00) of a Contributing Participant’s Basic Contributions which is based on the first 8 percent of his or her Compensation provided Profitability Level is equal to or above Level B but below Level C; and (c) Seventy-five cents ($.75) for each one dollar ($1.00) of a Contributing Participant’s Basic Contributions which is based on the first 8 percent of his or her Compensation provided Profitability Level is equal to or above Level C. Employer Contributions, if any, will be made solely in cash and will be remitted to the Trustee as soon as practicable after the end of each year and within the period provided for under applicable federal tax laws. However, Employer Contributions to Fund E may be made in NL Common Stock or in cash. Rollover Contributions Any employee who would otherwise be eligible to participate in the New Savings Plan but for the fact that such person has not yet completed the service requirement may make, with the consent of PEBCO, a Rollover Contribution to the New. Savings Plan. In general, a Rollover Contribution consists of all or part of an amount distributed to the participant or employee (other than the participant’s own contributions) from (i) another qualified plan or (II) an individual retirement plan whose value is attributable solely to a rollover distribution from another such qualified plan. In addition to a Rollover Contribution described above, PEBCO may direct the Trustee to accept a cash contribution transferred directly to the Trust Fund from the trustee of another qualified trust (including contributions by the employee to such trust) on behalf of a participant or employee who participated in that trust. Investment Funds Each Contributing Participant may elect to invest any and all contributions made on his or her behalf in whole percentages in any one or a combination of the following Funds: (a)Fund B — which shall be invested pursuant to the provisions of one or more guaranteed investment contracts between the Trustee and one or more insurance carriers (the “Insurer”) under which the Insurer, subject to certain terms and conditions, guarantees that it will preserve the principal value of Plan Contributions allocated to Fund B and also guarantees payment of interest at minimum annual rates fixed under the Contracts; (b)Fund C — which shall be managed with the objective of attaining a high rate of growth in value of principal with a commensurate degree of risk. Monies designated for investment in Fund C shall be invested in any securities, including but without being limited to governmental or corporate obligations or participations therein, trust and participation certificates, preferred and common stocks, certificates of deposit and any other evidences of indebtedness of ownership (excluding securities or other property of the Company or of its subsidiaries or affiliates, as such terms- are defined under Rule 405 promulgated under the Securities Act of 1933, as amended), whether or not such property is of the class in which trustees are authorized by law or any rule of court to invest trust funds; (c)Fund E — which shall be invested by the Trustee primarily in NL Common Stock; and (d)Fund G — which shall hold shares of Employer Stock received by the Trustee as a result of the Restructuring, to the extent that such shares are, in the case of Employees of NL and its subsidiaries, Baroid Common Stock, and to the extent that participants to whose accounts such Employer Stock is allocated elect to retain such stock in the form received in lieu of exchanging such stock for stock in which such Participant’s account may be invested through Fund G. No additional contributions or transfers to this Fund will be permitted. After the allocation of assets of the Trust Fund to any of the Funds, other than Fund B, the Trustee may temporarily invest and reinvest any such assets in securities with maturities of one year or less issued or guaranteed by the Government of the United States of America or by any agency or instrumentality thereof, or in the name of the Trustee in any savings accounts or certificates of deposit in any banks, or may maintain cash balances consistent with the liquidity needs of the Plan. Administration PEBCO will administer the New Savings Plan. PEBCO, which must have a minimum of at least three members, is appointed by the Board, and such members are subject to removal by the Board at any time. In addition to the other authority granted to PEBCO in the New Savings Plan, PEBCO, shall prescribe such forms and make such rules as it deems necessary for the proper administration of the Plan, and shall correct any defect, supply any omission and reconcile any inconsistency of the New Savings Plan. Federal Income Tax Information General Information. The New Savings Plan is intended to qualify for the favorable tax treatment applicable to plans qualified under Section 401(a) of the Internal Revenue Code of 1986, (the “1986 Code”) and the Trust is intended to be exempt from taxation under Section 501 (a) of the Internal Revenue Code (the “Code”). In addition, the New Savings Plan is intended to satisfy the requirements of Section 401(k) of the 1986 Code, as subsequently amended. A letter ruling from the Internal Revenue Service will be requested to the effect that the New Savings Plan will qualify under Sections 401(a) and 401(k) oft he 1986 Code and that the trust will be exempt under Section 501(a) of the code, Federal income Tax ConsequencesContributions. Participants will not have current taxable income for federal income tax purposes as a result of Employer Contributions, Pre-Tax Contributions or earnings and increments thereon while New Savings Plan assets are held in the Trust Fund prior to actual distributions to the participant. However, such contributions will be included in the electing participant’s wages for FICA (Social Security) and FUTA (unemployment) tax purposes for the year in which the contribution is made. Some states, cities and counties may impose taxes on Pre-Tax Contributions in the year in which they are contributed to the New Savings Plan. Payroll deductions made for Basic After-Tax or Supplemental Contributions under the New Savings Plan which are part of a participant’s current salary are includable in the participant’s gross income and are subject to withholding for federal income tax purposes. Participants are not entitled to a federal income tax deduction for such contributions. Such contributions (but not earnings thereon) are not taxable a second time when withdrawn or distributed. Employer Contributions and Pre-Tax Contributions generally are deductible from the Employer’s gross income for federal income tax purposes, within prescribed statutory limitations. Limitations on Other Contributions. Under Section 415 of the 1986 Code, the maximum “annual addition” to a participant’s account under the New Savings Plan cannot exceed the lesser of (I) $30,000 (as adjusted for cost-of living increases) or (ii) 25% of Compensation after reduction for pre-tax contributions to the New Savings Plan and to other benefit plans. In addition, Section 415 of the 1986 Code prescribed a combined limitation, whereby total benefits available to an employee who participated both in defined contribution plans (a savings plan and an employee stock ownership plan, for example) and defined benefit plans (pension plans) may not exceed the maximum prescribed by the 1986 Code. To the extent necessary to avoid exceeding the combined limitations on benefits and contributions, PEBCO will adjust the projected annual benefit under one or more defined benefit plans under which a participant is covered. Distributions 10 Percent Additional Tax on Early Withdrawals. Withdrawals of taxable portions of a participant’s account balance generally are subject to a 10 percent additional tax on top of the regular federal income tax. The 10 percent additional tax does not, however, apply to withdrawals and distributions which are or were: (a) made on or after age 59½, death or disability (as defined in applicable federal tax regulations); (b) made after termination of employment as a part of a series of substantially equal periodic installments (at least annually) over the life (or life expectancy) of the participant or the joint lives (or joint life expectancies) of the participant and any beneficiaries; (c) made after termination of employment after the attainment of age 55; (d) not in excess of the amount of deductible medical expenses (in excess of 7% of adjusted gross income) incurred by the participant; (e) paid to an alternate payee pursuant to a Qualified Domestic Relations Order (as defined in the 1986 Code); (f) properly rolled over to another qualified plan or an individual retirement account or annuity; or (g) properly returned excess deferrals and excess contributions described above. Taxation of Lump Sum Distributions. Under the 1986 Code, 10-year averaging tax treatment from qualified lump sum distributions generally is replaced by a 5-year averaging of distributions after December 31, 1986, and capital gains treatment is phased out over five years. Participants are entitled to elect five-year averaging only once during their lifetime and only after age 59½. Participants who had attained age 50 by January 1, 1986 may make a one-time election either before or after age 59½ to use either 10-year averaging applying 1986 tax rates or 5-year averaging applying the tax rates in effect at the time of the election. Any capital gain portion of the distribution can be taxed as capital gain at a fixed rate of 20 percent. Hardship Withdrawals. Beginning in 1989, hardship withdrawals of pre-tax contributions will be limited to the aggregate amount of such contributions and may not include the investment earnings on those contributions. Any amounts so withdrawn will be subject to ordinary income tax as well as the 10 percent additional tax on early withdrawals, if applicable. Rollovers. A participant who receives a lump sum distribution by reason of termination of employment or attainment of age 59½ may defer taxation and avoid the 10 percent penalty taxes (described above) by contributing all of the amount distributed in excess of his After-Tax Basic and Supplemental Contributions to an Individual Retirement Account, an Individual Retirement Annuity. an annuity plan described in Section 403(a) of the 1986 Code or, if the terms of another qualified plan permit, into such plan. Partial distributions of at least 50 percent of the balance to the credit of the participant under the New Savings Plan may be eligible to be rolled over (provided certain conditions are satisfied). However, any subsequent distribution from the New Savings Plan would not be a lump sum distribution eligible for special forward income averaging, and such a rollover would result in loss of the deferral on any net unrealized appreciation of NL Common Stock. Beginning with distributions in 1987, rollovers of such partial distributions are restricted to distributions due to termination of employment, death or disability.* * * * The foregoing summaries are intended to be general in nature and are based on interpretations of both present and prior federal tax laws, regulations (final, temporary and proposed) and the conference report on the Tax Reform Act of 1986 and may be inaccurate if such laws or regulations are changed or are interpreted in a manner different from that discussed. THE BOARD OF DIRECTORS OF NL INDUSTRIES, INC., UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE SAVINGS PLAN FOR EMPLOYEES OF NL INDUSTRIES, INC.