EXHIBIT 10.7
EXECUTION VERSION
THIS TRANSACTION FEE AGREEMENT is dated November 4, 2003 (this
"AGREEMENT") and is among Nalco Company, a Delaware corporation (the "COMPANY"),
Xxxxxxx, Xxxxx & Co. ("GS"), Apollo Management V, L.P. ("APOLLO") and Blackstone
Management Partners IV L.L.C., a Delaware limited liability company ("BMP").
Each of GS, Apollo and BMP are referred to herein as a "SPONSOR MANAGEMENT
ENTITY" and collectively as the "SPONSOR MANAGEMENT ENTITIES".
BACKGROUND
1. Nalco Holdings LLC, Xxx Holding Company and Nalco International
S.A.S. entered into a Stock Purchase Agreement dated as of August 31, 2003 (the
"SPA"), pursuant to which Nalco Holdings LLC will acquire the Company and
certain subsidiaries of Nalco International S.A.S. (together with Nalco, the
"ACQUIRED BUSINESS").
2. The Sponsor Management Entities have expertise in the areas of
finance, strategy, investment and acquisitions relating to the Company and its
business and have facilitated the transactions referred to above and certain
other related transactions (collectively, the "TRANSACTIONS") through their
provision of financial and structural analysis, due diligence investigations,
other advice and negotiation assistance with all relevant parties to the
Transactions and the financing thereof.
3. The Company believes that having GS Capital Partners 2000, L.P., GS
Capital Partners 2000 Offshore L.P., GS Capital Partners 2000 GmbH & Co.
Beteiligungs KG, GS Capital Partners 2000 Employee Fund, L.P., Xxxxxxx Xxxxx
Direct Investment Fund 2000, L.P., Apollo Investment Fund V, L.P., Apollo/Nalco
Investment LLC, Blackstone Capital Partners IV L.P., Blackstone Family
Investment Partnership IV-A L.P. and Blackstone Capital Partners IV-A L.P.
(collectively, the "CO-INVESTORS") as indirect beneficial stockholders of the
Company as a result of the Transactions will be of substantial benefit to the
Company and that the Sponsor Management Entities' provision of financial and
structural analysis, due diligence investigations, other advice and negotiation
assistance with all relevant parties to the Transactions and the financing
thereof has been of substantial benefit to the Company and warrants payment of
the fees described in this Agreement.
4. The investment by the Co-Investors, as described above, is being
made on the basis that the Company will pay the fees described below.
AGREEMENT
The parties agree as follows:
SECTION 1. TRANSACTION AND ADVISORY FEES. In consideration of the
Sponsor Management Entities undertaking the financial and structural analysis,
due diligence investigations, other advice and negotiation assistance necessary
in order to enable the
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Transactions to be consummated, the Company will pay to each Sponsor Management
Entity, at the Effective Time (as defined herein), the following transaction and
advisory fee:
(a) to BMP a fee of $27,906,977;
(b) to Apollo a fee of $27,906,977; and
(c) to GS a fee of $19,186,046.
SECTION 2. INDEMNIFICATION. The Company will indemnify and hold
harmless the Sponsor Management Entities, their affiliates and their respective
partners (both general and limited), members (both managing and otherwise),
officers, directors, employees, agents and representatives (each such person
being an "INDEMNIFIED PARTY") from and against any and all losses, claims,
damages and liabilities, whether joint or several (the "LIABILITIES"), related
to, arising out of or in connection with this Agreement, whether or not pending
or threatened, whether or not an Indemnified Party is a party, whether or not
resulting in any liability and whether or not such action, claim, suit,
investigation or proceeding is initiated or brought by the Company. The Company
will reimburse any Indemnified Party for all reasonable costs and expenses
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with investigating, preparing, pursuing, defending or assisting in
the defense of any action, claim, suit, investigation or proceeding for which
the Indemnified Party would be entitled to indemnification under the terms of
the previous sentence, or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto. The Company will not be liable
under the foregoing indemnification provision with respect to any particular
loss, claim, damage, liability, cost or expense of an Indemnified Party that is
determined by a court, in a final judgment from which no further appeal may be
taken, to have resulted primarily from the gross negligence or willful
misconduct of such Indemnified Party. If an Indemnified Party is reimbursed
hereunder for any expenses, such reimbursement of expenses will be refunded to
the extent it is finally judicially determined that the Liabilities in question
resulted primarily from the gross negligence or willful misconduct of such
Indemnified Party.
SECTION 3. EFFECTIVE TIME. This Agreement will become effective (the
"EFFECTIVE TIME") as of the Closing (as defined in the SPA). At the Effective
Time, the Company will make the payments to the Sponsor Management Entities
pursuant to Section 1 by wire transfer of same-day funds to the bank account
designated by the payee in writing.
SECTION 4. TERM. This Agreement will remain in effect as of and from
the Effective Time until payment in full of the transaction and advisory fee
described in Section 1 in accordance with Section 3. The provisions of Sections
2, 5 and 6 will survive the termination of this Agreement.
SECTION 5. PERMISSIBLE ACTIVITIES. Subject to applicable law, nothing
herein will in any way preclude the Sponsor Management Entities or their
affiliates (other than the Company or its subsidiaries and their respective
employees) or their respective partners (both general and limited), members
(both managing and otherwise), officers, directors, employees, agents or
representatives from engaging in any business activities or from performing
services for its or their own account or for the account of others, including
for companies that may be in competition with the business conducted by the
Company.
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SECTION 6. MISCELLANEOUS.
(a) No amendment or waiver of any provision of this Agreement, or
consent to any departure by any party hereto from any such provision, will be
effective unless it is in writing and signed by the parties hereto. Any
amendment, waiver or consent will be effective only in the specific instance and
for the specific purpose for which given. The waiver by any party of any breach
of this Agreement will not operate as or be construed to be a waiver by such
party of any subsequent breach.
(b) Any notices or other communications required or permitted hereunder
will be sufficiently given if delivered personally or sent by facsimile with
confirmed receipt, or by overnight courier, addressed as follows or to such
other address of which the parties may have given written notice:
if to GS:
Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Fax: (000) 000-0000
with a copy (which will not constitute notice) to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx
Fax: (000) 000-0000
if to Apollo:
Apollo Management V, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy (which will not constitute notice) to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx
Fax: (000) 000-0000
if to BMP:
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c/o The Blackstone Group L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxx
Facsimile: (000) 000-0000
with a copy (which will not constitute notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
if to the Company:
Nalco Company
0000 X. Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
Unless otherwise specified herein, such notices or other communications will be
deemed received (i) on the date delivered, if delivered personally or sent by
facsimile with confirmed receipt, and (ii) one business day after being sent by
overnight courier.
(c) This Agreement will constitute the entire agreement between the
parties with respect to the subject matter hereof, and will supersede all
previous oral and written (and all contemporaneous oral) negotiations,
commitments, agreements and understandings relating hereto.
(d) This Agreement will be governed by, and construed in accordance
with, the laws of the State of New York.
(e) The provisions of this Agreement will be binding upon and inure to
the benefit of the parties hereto and their permitted transferees and their
respective successors, each of which permitted transferees will agree, in
writing in form and substance satisfactory to the Sponsor Management Entities,
to become a party hereto and be bound to the same extent as its transferor
hereby. Subject to the next sentence, no Person other than the parties hereto
and their successors and permitted assigns is intended to be a beneficiary of
this Agreement. The parties acknowledge and agree that the Co-Investors and
their affiliates and their respective partners (both general and limited),
members (both managing and otherwise), officers, directors, employees, agents
and representatives are intended to be third-party beneficiaries under Section 2
of this Agreement.
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(f) This Agreement may be executed by one or more parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together will be deemed to constitute one and the same instrument.
(g) Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction will, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Transaction Fee Agreement on the date first written above.
NALCO HOLDINGS, LLC
By: /s/ Xxxxx Xxx
------------------------------------------
Name: Xxxxx Xxx
Title: Vice President
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: Vice President
XXXXXXX, SACHS & CO.
By: /s/ Xxxxxxx Xxxxx
------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
APOLLO MANAGEMENT V, L.P.
By AIF V MANAGEMENT, INC., its General Partner
By: /s/ Xxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
BLACKSTONE MANAGEMENT PARTNERS IV L.L.C.
By: /s/ Xxxxx Xxx
------------------------------------------
Name: Xxxxx Xxx
Title: Member
