EXHIBIT 10.11
EMPLOYMENT AGREEMENT
AGREEMENT effective as of November 1, 2003 between Nalco Company (the
"Company") and Xxxxxxx X. Xxxx ("Executive").
WHEREAS, the Company wishes to retain the services of Executive;
WHEREAS, Executive has been offered, in a separate agreement, the
opportunity to enter into certain equity and option agreements relating to the
Company;
WHEREAS, the Company desires to promote the continued good performance of
Executive by offering this Employment Agreement; and
WHEREAS, the parties desire to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated.
"BASE SALARY" means Executive's annual base salary immediately prior to the
Severance;
"CAUSE" means (i) Executive's conviction of, plea of nolo contendere or
guilty to, or written admission of, the commission of a felony, (ii) any act by
Executive involving moral turpitude, fraud or misrepresentation with respect to
his duties for the Company, or (iii) gross negligence, willful misconduct, or an
unjustified refusal on the part of Executive to perform his duties as an
employee, officer or member of the Company.
"CHANGE OF CONTROL" is an occurrence on which either (i) the Company
ceases, for any reason, to be a member of the same controlled group as Parent
within the meaning of Section 414(b) and (c) of the Code, except that a 50%
ownership test shall be applied in lieu of the 80% ownership test specified in
each of the foregoing Sections of the Code (the "PARENT CONTROLLED GROUP"), or
(ii) all or at least 80% of the assets of the Company and its majority owned (by
voting control) entities are sold to an entity outside the Parent Controlled
Group.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Nalco Company and any successor (whether direct or
indirect) to all or substantially all of the stock, assets or business of Nalco
Company.
"EQUITY AGREEMENTS" means those Agreement(s) pursuant to which Executive is
purchasing certain Units and restricted Units in Nalco Investment Holdings LLC
or a related entity.
"GAINS" means any gains which Executive receives on any Units which are the
subject of the Equity Agreements, as a result of a Company purchase of such
Units at the time Executive's employment with the Company terminates.
"GOOD REASON" means the occurrence of any of the following events without
Executive's written consent, (i) a reduction by the Company in Executive's
annual base salary, or (ii) a material reduction by the Company in Executive's
duties and responsibilities, or the assignment to Executive of duties that are
inconsistent, in a material respect, with the scope of duties and
responsibilities associated with Executive immediately prior to the Change of
Control.
"PARENT" means Nalco Holdings LLC.
"TARGET BONUS" means, with respect to any fiscal year of the Company, the
target annual bonus, assuming achievement of 100% of target, under the
applicable Company annual incentive plan, (currently known as the Management
Incentive Plan) for Executive for such year, but shall exclude any bonus payable
under the Long Term Cash Incentive Plan or its equivalent.
2. Employment. Subject to the terms and conditions stated herein, the
Company shall employ Executive in the initial position of Executive Vice
President and Chief Financial Officer. The Executive shall perform those duties
associated with such position and such other duties as reasonably assigned to
him by the Chief Executive Officer. During his employment, the Executive will
serve the Company faithfully and to the best of his ability and will devote his
full business time, energy, experience and talents to the business of the
Company.
a. The initial base salary payable by the Company to Executive shall be
at an annual rate of $400,000, payable in accordance with the
Company's procedures, and this amount shall be reviewed in accordance
with Company practice for the position in which Executive is employed;
b. Executive shall participate in the Company's annual executive
incentive program, currently known as the Management Incentive Plan
("MIP"), with a target award of 75% of base salary;
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c. Executive shall participate in the various medical, dental,
disability, life insurance, pension, profit sharing and other plans
made generally available by the Company, from time to time, for its
employees, subject to all of the terms and conditions of such plans,
except Executive shall be able to purchase retiree medical insurance
upon retirements at cost (without subsidy from the Company) and
Executive shall be deemed vested in the Profit Sharing and Savings
Plan 401k match program and Executive shall be entitled to the
Executive Death Benefit program;
d. Executive shall be permitted 4 weeks vacation and sick leave in
accordance with Company's established practices.
3. Covenants of the Executive.
a. During Executive's employment with the Company and for a period of two
(2) years thereafter, (1) Executive shall not, within any jurisdiction
or marketing area in which the Company (or its subsidiaries) is doing
business, directly or indirectly, own, manage, operate, control,
consult with, be employed by or participate in the ownership,
management, operation or control of any business of the type and
character engaged in or competitive with that conducted by the Company
or its subsidiaries; (2) Executive shall not, directly or indirectly,
employ, solicit for employment or otherwise contract for the services
of any individual who is an employee of the Company or its
subsidiaries; and (3) Executive will not solicit, in competition with
the Company or its subsidiaries, any person who is, or was at any time
within the twelve months prior to the Executive's termination for
employment, a customer of the business conducted by the Company or its
subsidiaries;
b. During Executive's employment with the Company and thereafter, (1)
Executive will not divulge, transmit or otherwise disclose, directly
or indirectly, other than in the regular and proper course of business
of the Company, any confidential knowledge or information regarding
the operations, finances, organization or employees of the Company or
its subsidiaries or confidential or secret processes, services,
techniques, customers or plans of the Company or its subsidiaries and
(2) Executive will not use, directly or indirectly, any confidential
information for the benefit of anyone other than the Company or its
subsidiaries; provided, however, confidential information or knowledge
shall not include information in the public domain through no fault of
Executive;
c. Executive agrees to cooperate with the Company during his employment
and thereafter, including a termination for any reason,
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by making himself reasonably available to testify on behalf of the
Company or subsidiaries in any legal matter and to assist the Company
or its subsidiaries in any legal matter; and
d. Executive agrees that during his employment and thereafter, including
a termination for any reason, he will not make any statements or
representations, or otherwise communicate, directly or indirectly, in
writing, orally or otherwise, or take any action which may, directly
or indirectly, disparage the Company or its subsidiaries, or its or
their employees, owners, consultants or advisors in any manner.
4. Term of Agreement. Executive's rights under Section 5, Severance, of
this Agreement shall be in effect from the date hereof until December 31, 2008
(the "Term"); provided, however, that if a Change in Control shall occur prior
to December 31, 2008, the Term shall then continue until the second anniversary
of such Change of Control or December 31, 2008, whichever is longer.
Notwithstanding the foregoing, Executive's employment at all times shall be
deemed to be an employment at-will and Executive's employment may be terminated
at will by Executive or the Company.
5. Severance.
(a) Termination Without Cause by the Company; by Executive for Good
Reason. If Executive's employment with the Company is terminated during the
Term by the Company without Cause or by Executive for Good Reason, in lieu
of any other severance benefits to which Executive would be entitled under
either any other plan or program of the Company or an existing employment
or severance agreement with the Company, Executive shall be entitled to the
following benefits.
(i) The Company shall pay Executive, within thirty days of the
date of such termination of employment (the "DATE OF TERMINATION") in
a lump sum payment A) accrued unpaid Base Salary through the Date of
Termination, B) any prior year bonus earned but not paid, C) severance
equal to one and one-half (1.5) times Base Salary and Target Bonus.
The Company shall also pay a pro-rata portion of any MIP for the year
of termination based on the portion of the year elapsed through the
date of termination, any such MIP being paid in accordance with the
Company's normal cycle for such payment. This lump sum shall be
reduces by the amount of any Gains (but in no event less than zero),
even if such Gains are to be paid by the Company after the date the
payment is required hereunder.
(ii) Except as otherwise indicated herein, Executive shall
receive any other benefits they are otherwise eligible for
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under other plans or programs of the Company in accordance with their
terms. Executive shall have the right to continue medical or dental
benefits for a period equal to the severance pay period at the active
employee rate. For clarity, the severance pay period shall equal the
number of year(s) used to calculate the payment under Section
3(a)(i)(D).
(iii) Other than the benefits set forth in this Section 5(a), the
Company and its affiliates will have no further obligations hereunder
with respect to Executive following the Date of Termination.
(iv) Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking
other employment or otherwise, nor will any payments hereunder be
subject to offset in respect of any claims which the Company may have
against Executive, nor, shall the amount of any payment or benefit
provided for in this Section 5 be reduced by any compensation earned
as a result of Executive's employment with another employer.
(b) Any Other Termination. If Executive's employment is terminated
during the Term of this Agreement for any reason other than as set forth in
Section 5(a), neither Executive nor his estate shall be entitled to any
severance payments or insurance benefits under this Agreement.
(c) Covenants and Release. As a condition precedent to payment under
this Agreement or payment of severance or grant of any other benefit
hereunder, Executive must comply with, and continue to comply with, the
Covenants and Terms attached hereto as Exhibit A, and sign and deliver a
release to the Company within one week after the termination of Executive's
employment in a form substantially in the form of General Release, attached
hereto as Exhibit B.
6. Termination of Other Benefits and Agreements
(a) The parties mutually terminate, and Executive hereby waives and
releases any and all claims he or she has, either existing or to be earned
in the future relating to, any existing agreement Executive has with the
Company or any of its affiliates, relating to severance, change-in-control,
supplemental retirement benefits, letter of credit or pension benefits
other than those available through the standard Nalco pension plans..
7. Miscellaneous.
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(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of Illinois without reference to the principles
of conflict of laws.
(b) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the severance payable to
Executive in the event of a termination of employment. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than
those expressly set forth herein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties
hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a
waiver of such party's rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.
(d) Severability. If any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by Executive
and shall be assignable by the Company only with the consent of Executive;
provided, however, that the Company shall require any successor to
substantially all of the stock, assets or business of the Company to assume
this Agreement.
(f) Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon the personal or legal representatives,
executors, administrators, successors, including successors to all or
substantially all of the stock, business and/or assets of the Company,
heirs, distributees, devisees and legatees of the parties.
(g) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the execution page of this Agreement,
provided that all notices to the Company shall be directed to the attention
of the Board of Directors of the Company with a copy to the Secretary of
the Company, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.
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(h) Withholding Taxes. The Company may withhold from any amounts
payable under this Agreement such U.S. federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or
regulation.
(i) Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(k) Resignations. Executive agrees to immediately resign any positions
held by him with the Company and its affiliates upon the termination of
Executive's employment.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
NALCO COMPANY
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and Chief
Executive Officer
Dated: 5/14/04 Executive
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By: Xxxxxxx X. Xxxx
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EXHIBIT A
Covenants of the Executive.
1. As a condition for the payments under this Agreement, a) During the
Executive's employment with the Company hereunder and for a period of two (2)
years thereafter, (i) the Executive shall not, within any jurisdiction or
marketing area in which the Company (or its subsidiaries (as such term is
defined below)) is doing business, directly or indirectly, own, manage, operate,
control, consult with, be employed by, or participate in the ownership,
management, operation or control of any business of the type and character
engaged in or competitive with that conducted by the Company (or its
subsidiaries); (ii) the Executive shall not, directly or indirectly, employ,
solicit for employment or otherwise contract for the services of any individual
who is an employee of the Company (or its subsidiaries and affiliates (as such
term is defined below)) at the time of this Agreement or who shall subsequently
become an employee of the Company (or its subsidiaries and affiliates).
2. During the Executive's employment with the Company hereunder and
thereafter, (i) the Executive will not divulge, transmit or otherwise disclose
(except as legally compelled by court order, and then only to the extent
required, after prompt notice to the Company of any such order), directly or
indirectly, other than in the regular and proper course of business of the
Company, any confidential knowledge or information with respect to the
operations, finances, organization or employees of the Company (or its
Subsidiaries and Affiliates) or with respect to confidential or secret
processes, services, techniques, customers or plans with respect to the Company
(or its Subsidiaries and Affiliates); and (ii) the Executive will not use,
directly or indirectly, any confidential
information for the benefit of anyone other than the Company (or its
Subsidiaries and Affiliates); provided, however, that the Executive has no
obligation, express or implied, to refrain from using or disclosing to others
any such knowledge or information which is or hereafter shall become available
to the public other than through disclosure by the Executive. All new processes,
techniques, know-how, inventions, plans, products, patents and devices
developed, made or invented by the Executive, alone or with others, while an
employee of the Company which are related to the business of the Company (or its
subsidiaries and affiliates) shall be and become the sole property of the
Company, unless released in writing by the Company, and the Executive hereby
assigns any and all rights therein or thereto to the Company.
(a) All files, records, correspondence, memoranda, notes or other
documents (including, without limitation, those in computer-readable form) or
property relating or belonging to the Company, whether prepared by the Executive
or otherwise coming into his possession in the course of the performance of his
services under this Agreement, shall be the exclusive property of Company and
shall be delivered to Company and not retained by the Executive (including,
without limitations, any copies thereof) upon termination of this Agreement for
any reason whatsoever.
(b) The Executive will communicate and disclose in writing to the
Company both during the term of this Agreement and thereafter, all inventions,
discoveries, improvements, machines, devices, designs, processes, products,
software, treatments, formulae, mixtures and/or compounds whether patentable or
not as well as patents and patent applications (all collectively referred to as
"Inventions") made, conceived, developed or acquired by the Executive or under
which the Executive
acquired the right to grant licenses or become licensed, whether alone or
jointly with others, during the term of this Agreement. All of the Executive's
right, title and interest in, to and under such Inventions, including licenses
and right to grant licenses shall be the sole property of the Company and the
same are hereby assigned to the Company. Any Invention disclosed by the
Executive to anyone within one (1) year after the termination of this Agreement,
which relates to any matters pertaining to, applicable to, or useful in
connection with, the business of the Company shall be deemed to have been made
or conceived or developed by the Executive during the term of this Agreement,
unless proved by the Executive to have been made and conceived and developed
after the termination of this Agreement.
(c) For all of the Executive's Inventions, the Executive will, upon
request of the Company, during the term of this Agreement and thereafter:
(i) execute and deliver all documents which the Company shall
deem necessary or appropriate to assign, transfer and convey to the
Company, all of the Executive's right, title, interest in and to such
Inventions, and enable the Company to file and prosecute applications
for Letters Patent of the United States and any foreign countries on
Inventions as to which the Company wishes to file patent applications;
and
(ii) do all other things (including the giving of evidence in
suits and other proceedings) which the Company shall deem necessary or
appropriate to obtain, maintain, and assert patents for any and all
such Inventions and to assert its rights in any Inventions not
patented.
(d) The Executive's obligations under paragraphs (d) and (e) above do
not apply to Inventions for which no equipment, supplies, facility or
confidential information of the Company was used, and which were developed
entirely on the Executive's own time unless:
(i) the Inventions relate
(A) to the business of the Company; or,
(B) to the Company's actual or demonstrably anticipated
research or development; or,
(C) the Inventions result from any work performed by the
Executive for the Company.
(e) The Executive hereby assigns to the Company the copyright in all
works prepared by the Executive which are either:
(i) within the scope of the Executive's employment; or,
(ii) based upon information acquired from the Company not
normally made available to the public; or,
(iii) commissioned by the Company but not within the Executive's
scope of employment.
The Executive agrees to submit all such works to the Board of Directors for
approval prior to publication or oral dissemination. The Executive also agrees
to do all things (including the giving of evidence in suits and other
proceedings) which the Company shall deem necessary or appropriate to obtain,
maintain, and enable the Company to protect its rights in and to such works.
(f) The Executive hereby releases and allows the Company to use, for
any lawful purpose, any voice reproduction, photograph, or other video likeness
of the Executive made in the scope of the Executive's employment.
(g) All expenses incident to any action required by the Company to
assign Inventions or copyrights to the Company or so taken in its behalf
pursuant to the terms of this Agreement shall be borne by the Company, including
a reasonable payment for the Executive's time and expenses involved if not then
in the Company's employ, which payment for such time shall not amount to more
than double the Executive's Base Salary for a period of time at the rate being
paid to the Executive by the Company at the time of termination of employment.
3. The Executive acknowledges that a breach of his covenants contained
herein may cause irreparable damage to the Company (its subsidiaries and
affiliates), the exact amount of which will be difficult to ascertain, that the
remedies at law for any such breach will be inadequate and that the payments and
other benefits, in the Severance Agreement, are additional consideration for the
covenants contained in herein. Accordingly, the Executive agrees that if he
breaches any of the covenants contained herein, in addition to any other remedy
which may be available at law or in equity, the Company shall be entitled to
specific performance and injunctive relief. In addition, the breach of any of
the covenants contained herein shall entitle the Company to permanently
withhold, and, if applicable, to recover from the Executive any future payments,
benefits, or other than entitlements, of any type owned by the Company to
Executive under the Severance Agreement, any other agreement or plan. The
Company and the Executive further acknowledge that the time, scope, geographic
area and other
provisions herein have been specifically negotiated by sophisticated commercial
parties and agree that all such provisions are reasonable under the
circumstances of the activities contemplated by this Agreement. In the event
that the covenants herein shall be determined by any court of competent
jurisdiction to be unenforceable by reason of their extending for too great a
period of time or over too great a geographical area or by reason of their being
too extensive in any other respect, they shall be interpreted to extend only
over the maximum period of time for which they may be enforceable and/or over
the maximum geographical area as to which they may be enforceable and/or to the
maximum extent in all other respects as to which they may be enforceable, all as
determined by such court in such action.
4. The Executive agrees to cooperate with the Company during his
employment hereunder and thereafter (including following the Executive's
termination of employment for any reason), by making himself reasonably
available to testify on behalf of the Company in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and to
assist the Company, in any such action, suit, or proceeding, by providing
information and meeting and consulting with the Company's Board of Directors or
its representatives or counsel, or representatives or counsel to the Company, as
reasonably requested; provided, however that the same does not materially
interfere with his then current professional activities or important personal
activities and is not contrary to the best interests of the Executive. The
Company agrees to reimburse the Executive, on an after-tax basis, for all
expenses including pre-approved legal expenses, actually incurred in connection
with his provision of testimony or assistance.
5. The Executive agrees that, during his employment and thereafter
(including following the Executive's termination of employment for any reason)
he will not make statements or representations, or otherwise communicate,
directly or indirectly, in writing, orally, or otherwise, or take any action
which may, directly or indirectly, disparage the Company, its subsidiaries or or
its or their respective officers, directors, employees, advisors, businesses or
reputations. The Company agrees that it shall advise the members of the Board of
Directors and its senior officers not to disparage the Executive and the Company
shall use its reasonable business efforts to prevent them from doing so;
provided, however, the Company's obligations to the Executive in the immediately
preceding sentence shall not apply to any oral, written or electronic
statements, representations or other communications made internally at the
Company by any member of the Board of Directors or any of the Company's senior
officers if such oral, written or electronic statements, representations or
other communications are made by any of the foregoing individuals in the course
of such individual's duties, responsibilities or obligations to the Company.
Notwithstanding the foregoing, nothing in this Agreement shall preclude the
Executive or a representative of the Company from making truthful statements or
disclosures that are required by applicable law, regulation or legal process.
EXHIBIT B
General Release
In consideration of Nalco's promises under this Agreement, * individually, and *
successors, assigns, heirs, and agents, and each and all of them, hereby
unconditionally and forever release, acquit, and discharge Nalco, its
subsidiaries and affiliates, and each of their respective officers, directors,
stockholders, employees, agents, and attorneys from any and all claims, demands,
liabilities, and causes of action of every kind, nature and description
whatsoever whether known or unknown, or suspected to exist, which * ever had or
may now have up to the date of signing this Agreement, against Nalco, or any of
them, including, any claim arising out of or relating to (i) any aspect of *'s
employment with Nalco, including the termination of such employment; (ii) any
federal, state, local or other government statute, regulation or ordinance,
including but not limited to, Title VII of the Civil Rights Act of 1964, as
amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act,
29 U.S.C. sec. 621 et. seq. as amended by the Older Workers' Benefit Protection
Act of 1990, the Americans with Disabilities Act, the Family and Medical Leave
Act, the Employee Retirement Income Security Act, and the Rehabilitation Act of
1973, The Worker Adjustment and Retraining Notification Act and (iii) the common
law of the state wherein * resides or any other jurisdiction, including without
limitation, intentional infliction of emotional distress, breach of contract and
any claims for consequential and/or punitive damages for any reason. It is the
intention of * that in executing this Agreement * is providing a General Release
and that it shall be an effective bar to each and every claim, demand and cause
of action, either known or unknown, for all acts, or omissions of Nalco
occurring prior to and up to the date this Agreement is executed. This release
includes but is not limited to:
o any claims for assault, battery, wrongful termination, defamation, invasion
of privacy, intentional infliction of emotional distress, or any other tort
or common law claims;
o any claims for the breach of any written, implied or oral contract;
o any claims of discrimination, harassment or retaliation based on such
things as age, national origin, ancestry, race, religion, sex (including
sexual harassment), sexual orientation, or physical or mental disability or
medical condition or any other protected status;
o any claims for benefits or monetary equivalent of benefits except as
provided in this Agreement; and
o any entitlement to reinstatement to your previous position with or rehire
or reemployment by Nalco.
Also waived are any rights to attorneys' fees, compensation or other recovery as
the result of any legal action brought by * or on *'s behalf by any other party,
based on any right * has released and waived under this Agreement. Excepted from
this release are claims challenging the validity of this Agreement under the Age
Discrimination in Employment Act. *'s release under the Age Discrimination in
Employment Act does not apply to any claims that arise or may arise based on
events that take place after the date * signs this Agreement. Also not released
are any claims * may have for a) Worker's Compensation benefits, b) accrued
wages, accrued but unused vacation pay, and accrued commissions, if any, up to
the date of termination, c) any vested pension benefits, or d) any right to
unemployment benefits.
Additional Provisions
A. * acknowledges and agrees that:
o * is entering into this Agreement knowingly and voluntarily and of *'s
own free will and not because of any threats or duress;
o * has been advised by this Agreement to consult with an attorney
before signing this Agreement;
o * understands that * may take up to 21 days to consider this Agreement
before signing it;
o * is not otherwise entitled to severance pay, and ________________;
o After * signs this Agreement, * will have 7 days to revoke it;
o If * wants to revoke it, * must deliver a written notice of revocation
to Xxxxxxxxxx Xxxxx, Manager Employee Services at Nalco headquarters
in Naperville, IL. If * does not revoke it within 7 days after having
signed it, this Agreement will become final between and enforceable by
the parties; and
o If * chooses to revoke this Agreement within 7 days after * signs it,
* will not receive severance pay, or ______________.
Any violation by * of the covenants, commitments, or obligations, in this
Agreement release Nalco from its obligation to make severance payments or
provide any other benefits promised in this Agreement. Nalco's right to stop
payments and withhold benefits shall be without prejudice to any other remedy
available to Nalco for breach of this Agreement. Notwithstanding the above,
Nalco shall not be released from providing benefits, and shall not stop payments
or withhold benefits because * has filed a claim challenging the validity of
this Agreement under the Age Discrimination in Employment Act.
