EXHIBIT 10.10
SEVERANCE AGREEMENT
AGREEMENT effective as of January 1, 2004 between Nalco Company (the
"Company") and Xxxxxxx X. Xxx ("Executive").
WHEREAS, Executive is currently a valued employee of the Company;
WHEREAS, Executive has been offered the opportunity to enter into certain
equity and option agreements relating to the Company; and
WHEREAS, the Company desires to promote the continued good performance of
Executive by offering this Severance 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 Agreements executed simultaneously with
this Agreement pursuant to which Executive is purchasing certain Units and
restricted Units in Nalco LLC.
"GAINS" means any gains which Executive receives in cash on any Units which
are the subject of the Equity Agreement, as a result of a Company purchase of
such Units at the time Executive's employment with the Company terminates
pursuant to the Company's call rights in the Equity Agreements.
"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.
"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.
"PARENT" means Nalco Holdings LLC.
2. Term of Agreement. 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.
3. 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 sixty days of the
date of such termination of employment (the "DATE OF TERMINATION") in
a lump sum payment A) accrued unpaid Base
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Salary through the Date of Termination, B) any prior year bonus earned
but not paid, C) severance equal to two (2) times Base Salary and
Target Bonus. The Company shall also pay a pro-rata portion of any
Management Incentive Bonus for the year of termination based on the
portion of the year elapsed through the date of termination, any such
Management Incentive Bonus being paid in accordance with the Company's
normal cycle for such payment. The amount in Section 3(a)(i)(C) shall
be reduced by the amount of any Gains (but in no event less than zero)
received by Executive as a result of the exercise of the Company call
option after a termination pursuant to the Equity Agreements.
(ii) Except as otherwise indicated herein, Executive shall
receive any other benefits they are otherwise eligible for 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 48 month 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)(C).
(iii) Other than the benefits set forth in this Section 3(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 3 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 3(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.
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4. Bridging for Purposes of Retirement Income Plan
If the Executive's employment is terminated without Cause and the Executive has
not attained age 55, the Executive's severance pay under this Agreement will be
paid in the form and amounts as if he had continued to be actively employed,
until the Executive attains age 55. If the severance pay is insufficient to be
paid in the full regular paychecks, the severance pay shall be prorated over the
period. If there is severance pay remaining when the Executive attains age 55,
the remaining balance shall then be paid in a lump sum to the Executive. This
arrangement will enable the Executive to elect the benefits of early retirement
on the 1st day of the month following his 55th birthday. Upon retirement, the
Executive will qualify for all retirement benefits then generally available to
retirees.
5. 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, including without limitation that
Employment Agreement dated January 1, 2002, relating to severance payments,
payments upon a change-in-control, non-qualified or supplemental retirement
benefits, letter of credit or pension benefits other than those available
through the standard Nalco pension plans.
6. Miscellaneous.
(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.
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(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.
(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
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Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
Dated: June 30, 2004 Executive
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By: /s/ Xxxxxxx X. Xxx
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Xxxxxxx X. Xxx
