Internal Memorandum

To:               Harold Simmons                        Date:    July 23, 2003

From:             Lanny Martin

Subject: Consulting Agreement


Harold:

The NL Finance  department  needs  something in writing to confirm my consulting
arrangement with NL Industries.

As agreed, I will provide consulting  services to you and NL Industries relating
to NL's  product  liability  (including  lead  paint  cases)  and  environmental
matters.  I will work with Rob Graham,  Dave  Garten,  outside  counsel,  Marcus
Martin and others in an effort to control the costs of the  overall  efforts and
to achieve the best results reasonably possible.

NL will compensate me at a rate of $600,000 [50,000 per month starting  8/15/03]
per annum  beginning on the  effective  date of my stepping down as CEO of NL on
July  2003.  NL will also  reimburse  me for  reasonable  business  expenses  in
connection with my consultation.

I will be given the normal  indemnity from NL acting as its agent in the matters
described above.

This  agreement is  terminable  at any time by either of us. Only the  indemnity
continues following termination.

My NL stock options will remain  outstanding until termination of this agreement
at which  time I will have 90 days to  exercise  any  vested  options  remaining
outstanding.

If you agree  with the  above  would you  please  sign and  return to me. I will
forward to NL's finance department.

Sincerely,



- -------------------------------------------
/s/J. Landis Martin
Lanny Martin

Agreed and Accepted:



- --------------------------------------------
/s/Harold C. Simmons
Harold C. Simmons