EXHIBIT 10.11
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 1, 2002
("Effective Date"), by and between ONDEO NALCO COMPANY, a Delaware corporation
(the "Company"), and XXXXXXX X. XXX ("Xxx" or the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive and the Company entered into an Employment
Agreement dated June 27, 1999 ("Prior Employment Agreement"); and
WHEREAS, due to the Executive's promotion to Executive Vice President
and Chief Operating Officer of the Company, the Company and the Executive desire
to enter into this Agreement, effective as of the Effective Date, in order to
set forth the terms and conditions of Executive's continued employment with the
Company; and
WHEREAS, the Company and the Executive hereby agree that the terms and
provisions of this Agreement shall supersede the terms of the Prior Employment
Agreement, except as specifically provided below.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the Company and the Executive, each intending to be legally
bound hereby, agree as follows:
1. Employment. Subject to the terms and conditions set forth herein,
the Company shall continue the employment of the Executive as Executive Vice
President and Chief Operating Officer, reporting to the Chairman and Chief
Executive Officer ("CEO"), and the Executive accepts such employment for the
Employment Term (as defined in Section 3 below). During the Employment Term, the
Executive shall also perform such additional duties as may
from time to time be assigned to him by the CEO and Board of Directors
commensurate with the Executive's position, including, but not limited to,
serving as an officer or director of affiliated entities.
2. Performance. During the Employment Term, 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;
provided, however, that it shall not be considered a violation of the foregoing
for the Executive to serve on civic, charitable or industry boards or
committees, or, with the advance written approval of the Board of Directors, on
corporate boards or committees so long as such activities do not interfere with
the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
3. Employment Term.
(a) Subject to earlier termination pursuant to Section 5 below, the
Employment Term shall begin upon the Effective Date and shall initially continue
for a period of three (3) years from such date (the "Initial Term"). The Initial
Term shall be automatically extended for successive additional periods of one
(1) year each commencing on the third anniversary of the Effective Date and each
anniversary thereof (each such period, an "Additional Term") unless either party
shall have given written notice to the other party of non-extension at least
ninety (90) days prior to the end of the then applicable Initial Term or
Additional Term (the Initial Term and the Additional Term or Terms, if
applicable, collectively, the "Employment Term").
(b) Notice of non-extension by the Company shall be deemed a
termination without Cause at the end of the then current Employment Term and
notice of non-extension by
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the Executive shall be deemed a termination without Good Reason at the end of
the then current Employment Term. Notwithstanding the foregoing, the Company's
notice of non-extension of the then current Employment Term shall not constitute
a termination without Cause if such notice is given by the Company to the
Executive after his attainment of age sixty-five (65) provided such employment
termination is specifically permitted as a stated exception from applicable
federal and state discrimination laws based on the Executive's position and
retirement benefits.
4. Compensation and Benefits.
(a) Base Salary. During the Employment Term, the Company shall pay the
Executive a base salary, payable in equal installments in accordance with the
Company's procedures, at an annual rate of Three Hundred and Seventy Thousand US
Dollars (US $370,000), increasing to an annual rate of Four Hundred Thousand US
Dollars (US $400,000) effective April 1, 2002, subject to review by the Company
no less frequently than annually for increase (such base salary, as increased
from time to time, "Base Salary").
(b) Cash Bonuses, Incentive Compensation and Perquisites. During the
Employment Term, the Executive shall be entitled to:
(i) Participation in the Company's annual executive incentive
program, currently known as the Management Incentive Plan (MIP) (the
"Annual Incentive Plan"), and the Company's long-term incentive
program, currently known as the Long-Term Cash Incentive Plan (the
"LTCIP") with initial target award levels of 80% of Base Salary;
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(ii) Participation in the SUEZ equity award or equity-based
programs at a level commensurate with the Executive's position within
the SUEZ Controlled Group (as such term is defined in Exhibit C,
attached hereto);
(iii) Receipt of all fringe benefits and perquisites generally
maintained by the Company from time to time for its senior executives,
in accordance with the respective terms and normal policies of the
Company with regard to each such benefit as in effect from time to
time;
(iv) Such other bonuses and compensation, if any, as the
Company in its sole discretion may award to the Executive;
(v) Participation in the Company's non-qualified deferred
compensation program, subject to the eligibility requirements of such
program;
(vi) Use of an automobile, to be provided by the Company, and,
subject to the terms of the Company's policy, reimbursement for gas,
maintenance and insurance costs and expenses incurred by the Executive
with respect to such automobile together with an additional "gross-up"
payment to cover all income and employment taxes imposed on the
Executive during the Employment Term attributable to imputed income
derived from the personal use of such automobile and the foregoing
payments; and
(vii) The Executive shall also continue to be eligible for
payment of the Retention Bonus (as such term is defined in the Prior
Employment Agreement) in accordance with the terms and provisions of
such agreement during the Employment Term.
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(viii) The Company shall also be obligated to maintain the
Letter of Credit described in Section 12(m) of the Prior employment
Agreement in accordance with the terms of the Prior Employment
Agreement during the Employment Term.
(c) Welfare and Pension Plan Benefits. During the Employment Term, the
Executive shall, in accordance with the terms and conditions of the applicable
plan documents and all applicable laws, be eligible to participate in the
various medical, dental, disability, life insurance, pension, profit sharing and
other qualified and non-qualified supplemental employee benefit plans generally
made available by the Company, from time to time, for its senior executives.
(d) Supplemental Retirement Benefit.
(i) Benefit Payable. The Executive shall be entitled to
receive a supplemental retirement benefit (the "Supplemental Benefit")
from the Company which shall be calculated pursuant to this Section
4(d) and paid on a non-qualified plan basis upon the termination of the
Executive's employment with the Company, subject to the provisions of
Section 4(d)(iv) hereof applicable upon a Change in Control. The
Supplemental Benefit shall be an annual benefit determined pursuant to
the following formula: (X) minus (Y), as adjusted by (Z), where:
(X) equals two percent (2%) of the Executive's "Final Average
Earnings," as such term is currently defined in the ONDEO Nalco Company
Retirement Income Plan, as amended and restated effective as of January
1, 2001 and as in effect as of
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the date hereof, a copy of which is attached hereto as Exhibit B (the
"RIP") multiplied by the sum of: (I) his total "Years of Benefit
Service," as currently defined in the RIP, for the period of his actual
employment with the Company and (2) the Additional Pension Credit as
defined in, and provided under, Section 6(a) hereof, if applicable;
(Y) equals the sum of: (1) the U.S. Social Security primary
pension benefits, if any, payable to the Executive (or the then accrued
value thereof), (2) the total tax-qualified benefits payable to the
Executive (or the then accrued value thereof) under the RIP, as in
effect at the time of such payment (or any successor plan then in
effect) and (3) all benefits payable to the Executive (or the then
accrued value thereof) under any non-qualified defined benefit type
plan, arrangement or agreement between the Executive and the Company
including but not limited to the Agreement to Restore Benefits Reduced
by ERISA-Related Limits between the Executive and the Company, to the
extent attributable to benefit payments under the RIP (but excluding
any amounts payable to or on behalf of the Executive in respect of a
defined contribution or profit sharing plan of the Company or its
Subsidiaries (as defined below)); and
(Z) equals the applicable actuarial (or other) benefit
adjustments provided under the RIP and this Agreement.
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(ii) For purposes of calculating the Supplemental Benefit, the
Executive's Final Average Earnings and his Years of Benefit Service
shall be determined as of the date of the termination of his
employment, or, in the event a Change in Control occurs, as of the date
of such Change in Control, in accordance with Section 4(d)(iv) hereof,
and, if applicable, Section 6(a)(I)(vi) hereof. Unless otherwise
provided herein, the Supplemental Benefit shall be calculated and paid
to the Executive in accordance with, and subject to, the terms of the
RIP. All capitalized terms used in this Section 4(d) that are not
defined herein shall have the meanings ascribed to them in the RIP.
(iii) Time and Method of Payment of Supplemental Benefit
(Generally). Subject to Sections 4(d)(iv) and (viii) below, the
Supplemental Benefit shall be payable to the Executive, in accordance
with his election, upon his Normal, Early, Late or Vested Retirement
Date. For purposes of determining the Executive's eligibility to
commence receiving payment of the Supplemental Benefit on one of the
foregoing dates, all vesting requirements in the RIP shall be deemed to
have been satisfied. The Supplemental Benefit shall be payable to the
Executive, in accordance with his election, in any one of the following
benefit distribution options: (i) Life Annuity Option; (ii) Contingent
Annuity Option; (iii) Level Income Option; and (iv) Lump Sum Option, as
described in the RIP. Except as provided in Sections 4(d)(iv) and
(viii) hereof, the Executive shall be required to elect the time and
form in which his Supplemental Benefit shall be paid to him at least
one year prior to the date of the termination of his employment. The
Executive shall be permitted to change his elections provided that such
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modification shall not be effective until the first anniversary of the
date such change has been made. In the event that the Executive fails
to make any election as to the time and form in which the Supplemental
Benefit will be paid, the Supplemental Benefit will be automatically
paid to the Executive in a single sum cash payment as soon as practical
following his termination of employment with the Company. If the
Executive dies prior to the date he is scheduled to begin receiving his
Supplemental Benefit, such benefit shall be paid to the Executive's
surviving spouse in either a single sum cash payment or a
pre-retirement survivor annuity provided under the terms of Article
VIII of the RIP, as elected by the Executive at least one year prior to
termination of his employment; provided, however, that the
pre-retirement survivor annuity available under the RIP shall be deemed
to be a 75 percent joint and survivor annuity notwithstanding anything
to the contrary in the RIP. In the event there is no election in effect
at the time of the Executive's death, the Supplemental Benefit shall be
paid to the surviving spouse in a single sum cash payment.
(iv) Time and Method of Payment of Supplement Benefit Upon A
Change in Control. Subject to the provisions of Section 4(d)(viii)
below, in the event that a Change in Control (as defined in Exhibit B,
attached hereto) occurs prior to the date of the Executive's
termination of employment with the Company hereunder, the Supplemental
Benefit then accrued shall be paid to the Executive in a single sum
cash payment as soon as administratively feasible following such Change
in Control, notwithstanding any benefit payment election made by him
pursuant to Section 4(d)(iii). The Supplemental Benefit then accrued
shall be
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calculated on the basis of the Executive's Final Average Earnings and
Years of Benefit Service determined as of the date of the Change in
Control, subject to offset by all amounts payable to the Executive
listed in Section 4(d)(i)(Y), as adjusted by Section 4(d)(i)(Z) above,
determined as of the date of the Change in Control.
(v) Continued Accrual of Supplemental Benefit Following Change
in Control. In the event that the Executive continues working for the
Company following the Change in Control pursuant to this Agreement, the
Executive shall continue to accrue the Supplemental Benefit payable
hereunder. Upon the Executive's termination of employment with the
Company, the Executive shall be entitled to payment of the Supplemental
Benefit in accordance with the benefit payment election made by the
Executive pursuant to Section 4(d)(iii) above subject to adjustment in
accordance with Section 4(d)(vi) below.
(vi) Adjusted Supplemental Benefit Following Change in
Control. The Supplemental Benefit payable to the Executive under
Section 4(d)(v) above shall be calculated in accordance with the
benefit formula set forth in Section 4(d)(i) above, except that (I) the
offset provided in Section 4(d)(i)(Y), as adjusted by Section
4(d)(i)(Z) above, shall also include the single sum dollar amount of
the Supplemental Benefit paid to the Executive pursuant to Section
4(d)(iv) above and (II) the Supplemental Benefit payable to the
Executive shall be further adjusted in accordance with the provisions
of this Section 4(d)(vi) and Sections 4(d)(vii) and (viii) below. If
the Executive's employment is terminated by the Company without Cause
or by the Executive for Good Reason either (X)
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following a Change in Control or (Y) within ninety (90) days prior to a
Change in Control, and, in either case, the Executive satisfies the
conditions of subsection (vii) below, then solely for purposes of
applying the actuarial reduction provided in the RIP in calculating the
Executive's Supplemental Benefit, the Executive shall be deemed to have
attained an age equal to the greater of: (A) age 55 or (B) the
Executive's age at the time of his employment termination, as increased
by the period of the Additional Pension Credit provided in Section 6(a)
of this Agreement. The Supplemental Benefit shall be subject to further
actuarial reduction in accordance with the RIP if payments commence
after the Executive's attainment of age 55 but prior to attainment of
age 62. In no event shall the Executive be entitled to the above
forbearance of the actuarial reduction if the Executive's employment is
terminated by the Company for Cause, or due to his death or Disability,
or if the Executive terminates employment without Good Reason, whether
before or after a Change in Control, or if the Executive does not
satisfy subsection (vii) below, if applicable.
(vii) Special Rules Relating to Employment Following Change in
Control. If, prior to a Change in Control, the buyer (or other
successor to the Company) (hereinafter "Newco") provides written notice
to the Executive that it wishes him to remain employed by Newco on all
of the terms and conditions hereinafter except that his position shall
be that of an executive consultant assisting in transition issues, and
reporting only to the Chairman or chief executive officer of Newco, the
Executive will not be deemed to have Good Reason for purposes of
terminating and receiving the forbearance of the actuarial
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reduction under subsection (vi) above as a result of the change in
position until the end of the one year period following the Change in
Control. The foregoing shall not, however, limit the Executive's right
to terminate for Good Reason pursuant to Section 6(a) hereof and
receive his Supplemental Benefit under subsection (vi) above, but
without the benefit of the forbearance of the actuarial reduction under
subsection (vi) above.
(viii) Effect of Reassignment. In the event that the
Executive's employment is terminated due to Reassignment (as defined in
Section 5(c)(iv) hereof), the Executive will be entitled to commence
payment of his Supplemental Benefit at any time he elects provided he
has completed six (6) months of such Reassignment or earlier upon any
termination of employment after such Reassignment. Payment of the
Supplemental Benefit shall be made to the Executive in accordance with
the benefit payment option he elects pursuant to Section 4(d)(iii)
above. The Company shall have the obligation to pay the Executive's
Supplemental Benefit if the Executive's employment with the Company
terminates due to Reassignment. However, if the Reassignment occurs in
connection with or after a Change in Control, the Company shall not
have the obligation to pay the Supplemental Benefit. In this event,
SUEZ shall be required to assume, in writing, the obligation to pay the
Supplemental Benefit to the Executive as a condition of the
Reassignment. In no event shall the Executive be entitled to the
forbearance of the actuarial reduction provided in Section 4(d)(vi) if
his termination is due to Reassignment in connection with or after a
Change in Control.
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(ix) As soon as administratively feasible following the
execution of this Agreement, the Company shall immediately establish,
and commence the funding of, an irrevocable "rabbi trust" for purposes
of funding the Supplemental Benefit payable to the Executive hereunder.
The Company shall have the obligation to fully fund the Supplemental
Benefit payable to the Executive from the irrevocable "rabbi trust," on
an ongoing basis based on annual projections, through the Executive's
attainment of age fifty-five (55) or earlier termination of employment
on an ongoing basis based on annual projections. Additional
contributions in respect of the Supplemental Benefit shall be made to
the "rabbi trust" annually as needed to keep it fully funded on a
yearly basis.
(e) Vacation; Sick Leave. During the Employment Term, the Executive
shall be entitled to vacation and sick leave in accordance with the Company's
established practices with respect to its senior executives.
(f) Expenses. The Executive shall be reimbursed by the Company for all
reasonable expenses actually incurred by him in connection with the performance
of his duties hereunder in accordance with policies established by the Company
from time to time and upon presentation of appropriate documentation.
5. Termination. (a) General Rules. If not terminated earlier in
accordance with the next sentence, the employment of the Executive hereunder
shall terminate at the end of the Employment Term as provided in Section 2
above. The employment of the Executive hereunder and the Employment Term may be
terminated earlier at any time by written notice (i) by the Company with or
without Cause (as defined in Section 5(c)(i) below), (ii) by the Executive with
or without Good Reason (as defined in Section 5(c)(ii) below) other than
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Voluntary Retirement, as defined herein, (iii) by the Executive due to voluntary
retirement by the Executive after attainment of age 62 ("Voluntary Retirement"),
(iv) by the Company due to the Executive's Disability (as provided in 5(b)
below), (v) by the Company due to the Reassignment of the Executive (as provided
in Section 5(c)(iv) below) or (vi) by the Executive due to his death.
(b) Disability Procedures. At any time after a Disability (as defined
in Section 5(b)(iii) below) occurs, provided the Executive has not then returned
to his duties on a regular full-time basis, the Company may terminate the
Executive's employment effective forthwith after giving notice to the Executive
of such termination provided that the Board of Directors, upon advice of a
medical doctor selected in accordance with Section 5(c)(iii) hereof, determines
that either: (i) the Executive has been incapable of performing his essential
duties and responsibilities under the Agreement for the period specified in
Section 5(c)(iii) below or (ii) based on the Executive's current incapacity, it
is likely that the Executive will remain incapable of performing his essential
duties and responsibilities under the Agreement for the period specified in
Section 5(c)(iii) below.
(c) For purposes of this Agreement,
(i) "Cause" shall mean: (A) the Executive's conviction of,
plea of nolo contendere or guilty, to, or written admission of the
commission of, a felony, (B) any breach by the Executive of any
material provision of this Agreement; (C) any act by the Executive
involving moral turpitude, fraud or misrepresentation with respect to
his duties for the Company; or (D) gross negligence or willful
misconduct on the part of the Executive in the performance of his
duties as an employee, officer or member of the Company; provided,
however, that the Company may not terminate the Executive's employment
under clauses (B), (C)
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or (D) unless the Company first gives the Executive notice of its
intention to terminate and of the grounds for such termination within
90 days after such event or circumstance is first brought to the
attention of the Board of Directors by the senior Human Resources
Officer or senior Legal Officer of the Company, and in the case of a
breach set forth in clause (B) above, the Executive either has not,
within 30 days following receipt of such notice, cured such Cause, or
in the event such Cause is curable but cannot be cured within such
30-day period, has not taken all reasonable steps to cure such Cause.
(ii) "Good Reason" shall mean the occurrence of the following
events without the Executive's written consent, provided that such
occurrence is not cured within thirty (30) days of the Executive giving
the Company written notice thereof and such written notice is given
within ninety (90) days following the Executive's first knowledge of
the occurrence of the event: (A) a reduction in the Executive's rate of
Base Salary while an employee of the Company; (B) a breach by the
Company of any material provision of this Agreement; (C) the Company's
requiring the Executive to be based at any office or location located
more than eighty (80) miles from the Company's current executive
offices in Naperville, Illinois area; provided, however, that a
Reassignment during the Employment Term shall not constitute grounds
for a "Good Reason" termination by the Executive hereunder; or (D)
failure of the Company to comply with the requirements of Section 6(e)
with regard to delivery and renewal of the Letter of Credit (as defined
below). The Executive shall also be entitled to terminate for Good
Reason by resigning for any reason or no reason (and without any
required
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notice) during the thirty (30) day period commencing on the first
anniversary of a Change in Control (as defined in Exhibit C, attached
hereto); provided, however, the Executive will only be permitted to
terminate for Good Reason during such period if SUEZ does not offer the
Executive a Directed Reassignment prior to such thirty (30) day period.
Notwithstanding anything herein to the contrary, any change of the
Executive's position with the Company to which the Executive consents
in writing shall not constitute Good Reason.
(iii) "Disability" shall mean the mental or physical
incapacity of the Executive such that (A) he qualifies for long-term
disability benefits under a Company-sponsored long-term disability
policy or (B) the Executive has been incapable (or is likely to be
incapable) as a result of illness, disease, mental or physical
disability, disorder, infirmity, or impairment or similar cause of
performing his essential duties and responsibilities for any period of
one hundred eighty (180) days (whether or not consecutive) in any
consecutive three hundred sixty-five (365) day period. Disability shall
be determined by an approved medical doctor selected by the Company and
the Executive. If the Company and the Executive cannot agree on a
medical doctor, each party shall select a medical doctor and the two
doctors shall select a third who shall be the approved medical doctor
for this purpose.
(iv) "Reassignment" shall mean a transfer of the Executive to
a position at SUEZ or any of its affiliates (the "SUEZ
Group")(including any consequential re-location) either: (A) where such
position is comparable to the Executive's position hereunder in terms
of level, responsibility, accountability
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and reporting and where the compensation to be provided to the
Executive is comparable to the compensation provided to other similarly
situated executives with similar positions, responsibilities,
accountability and reporting at such SUEZ Group entity that is within
the ability of the Executive to perform (a "Directed Reassignment") or
(B) upon mutual consent of the Executive and either SUEZ (or its
successor) or the Company (an "Agreed Reassignment"). Neither a
Directed Reassignment nor an Agreed Reassignment shall constitute the
basis for a (i) termination of the Executive by the Company Without
Cause or (ii) a termination by the Executive for Good Reason. If a
Reassignment occurs after a Change in Control, SUEZ will be required to
assume, in writing, the obligation to pay the Supplemental Benefit to
the Executive, as a condition of the Reassignment. Upon the effective
date of the Executive's Reassignment, his employment with the Company
shall be terminated and he shall be entitled to the payments and
benefits set forth in Section 6(b) hereof.
6. Payments and Benefits upon Termination. (a) (I) Termination For Good
Reason or Without Cause. If, during the Employment Term, the Executive
terminates his employment with the Company for Good Reason or the Executive's
employment is terminated by the Company without Cause, (other than for
Disability), the Company shall have no liability or further obligation to the
Executive except that the Executive shall be entitled to receive:
(ii) within 30 days after such termination of employment, any
earned but unpaid Base Salary for the period prior to termination and
any declared but unpaid bonuses for prior periods which have ended at
the time of such termination ("Entitlements");
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(iii) at the time such bonuses or payments would otherwise
have been paid, a pro rata portion of the annual bonus he would have
received under the Company's Annual Incentive Plan had he remained
employed by the Company for the full fiscal year in which his
termination occurs, multiplied by the ratio of the number of days of
his employment by the Company during such fiscal year to 365 (the "Pro
Rata Bonus") and a pro rata portion of any payment he would have
received under the Company's LTCIP had he remained employed by the
Company for the full long-term incentive period or periods in which his
termination occurs, multiplied by the ratio of the number of days of
his employment by the Company during such period to the full number of
days in such period (the "Pro Rata Long-Term Incentive") (such amounts
to be referred to herein collectively as the "Pro Rata Bonus and
Incentive Payments");
(iv) to the extent applicable, at the time provided in Section
4(d) hereof, the Supplemental Benefit;
(v) at the time provided in such plan, any rights to which he
is entitled in accordance with plan provisions under any employee
benefit plan, program or arrangement, fringe benefit or incentive plan,
including with respect to life insurance ("Rights");
(vi) within 30 days after such termination of employment,
severance pay (the "Severance Pay") in a single sum cash payment in the
aggregate equal to the product of two (2) times the sum of the
Executive's Base Salary and his target annual bonus, assuming
achievement of 100% of target under the Annual Incentive Plan in effect
for the fiscal year in which his termination occurs; and
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(vii) as additional severance, the Executive shall be deemed
to have completed two (2) additional years of service ("Additional
Pension Credit") for purposes of determining his "Years of Benefit
Service" under the Supplemental Benefit provided hereunder and, if
applicable, under any other employee benefit plan or program of the
Company or its Subsidiaries the value of payments or benefits under
which is measured with respect to years of service (but, two (2) years
of additional service shall not be given for purposes of determining
the Executive's age or his "Final Average Earnings").
(II) In the event that the Executive's employment is terminated (i) by
the Executive for Good Reason or by the Company without Cause after a Change in
Control or (ii) the Executive's employment is terminated by the Company without
Cause or the Executive terminates employment for Good Reason and, in either
case, such termination is effective within ninety (90) days prior to a Change in
Control, in addition to the payments and benefits described in (I) above, the
Executive shall be entitled to receive an amount equal to the product of (x) two
(2) and (y) the greater of (aa) the target award percentage of Base Salary of
the last long-term incentive award granted to him prior to his employment
termination or (bb) the target award percentage of Base Salary of the last
long-term incentive award granted to him prior to the Change in Control under
the Company's LTCIP, and (z) his Base Salary in effect for the fiscal year in
which the Executive's termination occurs.
(III) In addition, upon a termination for Good Reason or Without Cause,
the Company shall provide the Executive (and his eligible dependents) with
continued coverage under the Company's group health plans for a twenty-four (24)
month period following his termination of employment with the Company; provided,
however, such continued coverage
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shall immediately cease upon the Executive's becoming eligible for coverage
under a subsequent employer's group health plan. Arrangement for such continued
participation in the Company's group health plan shall be accomplished, at the
Company's election, either through the Company's continuation of the Executive's
coverage on a single or family-coverage basis, as applicable, under the
Company's group health plan or for the Company's direct payment of the
applicable monthly insurance premiums for the continued coverage for a period of
eighteen (18) months following the Executive's termination of employment (the
"COBRA Period"), subject, at all times to the Executive's eligibility for
continued coverage under COBRA. If the Company elects to provide coverage
through COBRA at the end of the COBRA Period (whether or not eighteen (18)
months following the Executive's termination of employment), and continuing for
six (6) months thereafter, provided the Executive is not then eligible for
participation in a subsequent employer's group health plan, the Company shall
pay the Executive a lump sum, on a monthly basis, equal to the monthly dollar
amount then charged by the Company for continuation coverage under the Company's
health insurance plan pursuant to COBRA. Notwithstanding the foregoing, the
continuation period for group health benefits under Section 4980B of the Code by
reason of the Executive's termination of employment with the Company shall be
measured from his actual date of termination of employment.
(IV) As a condition of receiving the payments and benefits provided
under this Section 6(a), other than the Entitlements, the Rights and the
Supplemental Benefit, the Executive shall be required to execute a release (in
such form as reasonably requested by the Company) releasing the Company and its
Affiliates (as such term is defined in Section 7(a) below) from any and all
obligations and liabilities to the Executive arising from or in connection with
the Executive's employment or termination of employment with the Company and any
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disagreements with respect to such employment, except that such release shall
not release the Company from its obligations to pay the Executive the
Entitlements and the Rights provided for in this Section 6(a) and such release
shall not apply with respect to any rights of the Executive to indemnification
under the Company's Certificate of Incorporation or By-Laws.
(b) Termination Due to Voluntary Retirement, Death, Disability or
Reassignment. If, during the Employment Term, the Executive terminates
employment due to Voluntary Retirement or his death, or his employment is
terminated by the Company due to Disability or Reassignment, the Company shall
have no liability or further obligation to the Executive except as follows: the
Executive (or his estate or designated beneficiaries under any Company-sponsored
employee benefit plan in the event of his death) shall be entitled to receive:
(i) any Entitlements within 30 days of such termination of
employment or, if later, the date such Entitlements would otherwise be
paid to
(ii) active employees of the Company;
(iii) the Pro Rata Bonus and Incentive Payments, at the time
such payments would be paid to active employees;
(iv) at the time provided in Section 4(d) hereof, the
Supplemental Benefit; and
(v) any Rights at the time provided in the relevant plans.
In the event of any employment termination of the Executive described
in this Section 6(b) (other than termination due to Reassignment), the Executive
or his legally appointed representative, in the event of his death or Disability
(if applicable) shall be required to execute a release in the form described in
Section 6(a) hereof as a condition of receiving the payments and
20
benefits provided under this Section 6(b) hereof, other than the Entitlements,
the Rights, and the Supplemental Benefit.
(c) Termination For Cause or Without Good Reason. If, during the
Employment Term, the Executive's employment is terminated by the Company for
Cause or by the Executive other than for Good Reason, Voluntary Retirement or
death, the Company shall have no liability or further obligation to the
Executive except as follows: the Executive shall be entitled to receive:
(i) within 30 days of such termination of employment, any
earned but unpaid Base Salary for the period prior to termination;
(ii) any other earned but unpaid amounts including any
declared but unpaid bonuses for prior periods which have ended at the
time of such termination;
(iii) at the time provided in Section 4(d) hereof, the
Supplemental Benefit; and
(iv) any Rights at the time provided in the relevant plans.
(d) The payments made pursuant to this Section 6 and Section 8 below,
if any, other than the Entitlements, shall be excluded from all pension and
benefit calculations under the employee benefit plans of the Company.
(e) Letter of Credit. Within 120 days after the date of full execution
of this Agreement, the Company shall deliver to the Executive an irrevocable
letter of credit drawn on a commercial bank or other financial institution
having total assets of at least $6 billion and selected by the Company (the
"Letter of Credit") running in favor of the Executive. The Letter of Credit
shall initially cover the amounts due under Sections 6(a)(I)(v) (and, upon a
Change in
21
Control, 6(a)(II)) hereof, assuming the latest levels of compensation in
existence for the Executive prior to the initial Letter of Credit, a renewal
Letter of Credit, or a Change in Control (less legally required withholding (the
"Withholding)), and shall be payable upon presentation of (i) an affidavit
truthfully stating that (A) the aforesaid amounts are due the Executive, (B) the
aforesaid amounts have not been paid by the Company to the Executive within 30
days of the applicable termination, (C) the Executive has executed and delivered
(and not revoked) the Release required by Section 6(a)(IV) hereof, (D) the
Executive has delivered, at least 30 days prior to the date of the affidavit, a
notice to the Company (pursuant to the notice requirement herein) that he is
entitled to such amounts and they have not been paid (with a copy of the opinion
referred to in clause (E) of this sentence), and (E) that attached to the
affidavit is an opinion of a national law firm of at least 400 attorneys that
clause (A) of this sentence is correct (including both the right to receive and
the amount), based on the facts provided to such law firm by the Executive after
due inquiry of the Executive and review of available documents, and (ii) the
opinion referred to in clause (E) of this sentence. The Company shall pay all
amounts and take all actions necessary to maintain the Letter of Credit while
the Executive is employed by the Company (adjusted as specified above) and for
six (6) months thereafter (or until the Executive is paid the amount due him or
has presented the Letter of Credit); provided, that upon termination of the
Executive's employment by reason of death or Disability, by the Company with
Cause, or by the Executive without Good Reason, the Executive (or his estate in
the event of his death) shall promptly return such Letter of Credit to the
Company for cancellation. Failure of the Company to timely obtain or renew the
Letter of Credit or to obtain a replacement Letter of Credit at least 90 days
prior to its expiration shall be deemed a Good Reason event. Upon tender by the
Company of the amounts covered by the Letter of Credit, or tender of a
22
replacement Letter of Credit, the Executive shall return the Letter of Credit in
his possession to the Company for cancellation. Neither presentation of the
Letter of Credit nor the opinion of counsel shall be binding upon the Company,
and the Company may challenge the Executive's rights to such payments and any
refund thereof (plus interest) under Section 9(e) hereof. The Company shall
promptly deposit with the applicable government agency the Withholding upon draw
down of the Letter of Credit, whether or not it intends to challenge the
Executive's right to retain the draw down.
7. Covenants of the Executive. (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); provided, however, that this subparagraph (ii)
shall not apply to the Executive's personal secretary at the time of
termination; and (iii) the Executive will not solicit, in competition with the
Company, any person who is, or was at any time within the twelve months prior to
his termination of employment, a customer of the business conducted by the
Company (or its Subsidiaries). For purposes of determining whether to
permanently withhold, or recover, payments from the Executive pursuant to
Section 7(d) hereof; the Board of Directors
23
shall reasonably determine what constitutes a competing business; provided that
(x) the scope of businesses and the jurisdictions and marketing areas within
which the Executive has agreed not to compete pursuant to clause (a)(i) of this
Section 7 shall, for any challenged activity of the Executive, be determined as
of the date of any such activity and (y) the Executive's ownership of securities
of two percent (2%) or less of any publicly traded class of securities of a
public company shall not be considered to be competition with the Company. For
purposes of this Section 7 and Section 6(a), the term "Subsidiary" shall mean a
corporation in which the Company owns a 50% (or greater) ownership interest,
determined in accordance with Section 424 of the Code and the term "Affiliate"
shall mean the ultimate parent of the Company ("Ultimate Parent") and the
Subsidiaries of the Ultimate Parent determined as aforesaid but substituting the
Ultimate Parent for the Company.
(b) 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
24
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.
(c) 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.
(d) 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
25
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.
(e) 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.
(f) 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,
26
(C) the Inventions result from any work performed by
the Executive for the Company.
(g) 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.
(h) 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.
(i) 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.
27
(j) The Executive acknowledges that a breach of his covenants contained
in this Section 7 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 Pro Rata
Bonus and Incentive Payments, the Severance Pay the Additional Pension Credit
and any other payments and benefits, other than the Entitlements, the Rights and
the Supplemental Benefit payable to the Executive under Section 6(a) or 6(b) of
this Agreement are additional consideration for the covenants contained in this
Section 7. Accordingly, the Executive agrees that if he breaches any of the
covenants contained in this Section 7, 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 in this Section 7 shall entitle the Company to permanently
withhold, and, if applicable, to recover from the Executive any amounts paid
with respect to, the Pro Rata Bonus and Incentive Payments, Severance Pay, the
Additional Pension Credit and any other payments and benefits, other than the
Entitlements, the Rights and the Supplemental Benefit payable to the Executive
pursuant to Section 6(a) or 6(b) hereof. The Company shall provide the Executive
with at least five days prior written notice before withholding of any payment
provided for in the immediately preceding sentence.
(k) The Company and the Executive further acknowledge that the time,
scope, geographic area and other provisions of this Section 7 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 agreements in this Section
7 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
28
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.
(l) 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, and, if during the period
following the Employment Term, the Company requests the Executive's cooperation
for a period of greater than 8 hours per month, the Company agrees to reimburse
the Executive at a rate of $250.00 per hour.
(m) 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
29
Company, its Subsidiaries or Affiliates 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.
8. Special Tax Provision. (a) Except as otherwise provided in this
Section 8, in the event it shall be determined that any amount or benefit paid
with respect to the Executive, (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company or any person
affiliated with the Company), as a result of any change in ownership of the
Company covered by Code Section 280G(b)(2) ("Change in Control") (collectively,
the "Covered Payments") is subject to the excise tax imposed by Section 4999 of
the Code and/or any interest or penalties with respect to such excise tax (such
excise tax is hereinafter referred to as the "Excise Tax"), the Company shall
pay to the Executive an additional payment (the "Tax Reimbursement Payment") in
an amount such that after payment by the Executive of all taxes (including any
Excise Tax) (including, without limitation, income taxes) imposed upon the Tax
Reimbursement Payment, the Executive retains an amount of the
30
Tax Reimbursement Payment equal to the Excise Tax imposed upon the Covered
Payments. Notwithstanding the foregoing, this Section 8 will apply with respect
to Covered Payments which are subject to the Excise Tax by reason of a Change in
Control only where the Executive is terminated without Cause by the Company or
resigns for Good Reason from the Company's employ within two years of such
Change in Control.
(b) For purposes of determining the amount of the Tax Reimbursement
Payment, the Executive shall be deemed to (i) pay Federal income taxes at the
highest applicable marginal rate of Federal income taxation for the calendar
year in which the Tax Reimbursement Payment is to be made and (ii) pay any
applicable state and local income taxes at the highest applicable marginal rate
of income taxation for the calendar year in which the Tax Reimbursement Payment
is to be made, net of the maximum reduction in Federal income taxes which could
be obtained from deduction of such state and local taxes if paid in such year.
(c) (i) (A) In the event that the Company's outside legal counsel
(based on calculations made by a benefits consulting firm appointed by the
Company or by the Company's independent certified public accountants) or the
Company's independent certified public accountants (the "Tax Advisor")
determines, for any reason whatsoever, the correct amount of the Tax
Reimbursement Payment to be less than the amount determined at the time the Tax
Reimbursement Payment was made, the Executive shall repay to the Company, within
thirty days after the time that the amount of such reduction in Tax
Reimbursement Payment is determined by the Tax Advisor, the portion of the prior
Tax Reimbursement Payment attributable to such reduction (including the portion
of the Tax Reimbursement Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the portion of the Tax Reimbursement
Payment being repaid by the Executive, using the assumptions and
31
methodology utilized to calculate the Tax Reimbursement Payment (unless
manifestly erroneous)), plus interest on the amount of such repayment at the
rate provided in Section 6621(a)(1) of the Code.
(B) In the event that the determination set forth in (A) above is made
by the Tax Advisor after the filing by the Executive of any of his tax returns
for the calendar year in which the change in ownership event covered by Code
Section 280G(b)(2) occurred but prior to the date the statute of limitations has
expired for refund claims, the Executive shall file at the request of the
Company an amended tax return in accordance with the Tax Advisor's
determination, but no portion of the Tax Reimbursement Payment shall be required
to be refunded to the Company until actual refund or credit of such portion has
been made to the Executive, and interest payable to the Company shall not exceed
the interest received or credited to the Executive by such tax authority for the
period it held such portion (less any tax the Executive must pay on such
interest and which the Executive is unable to deduct as a result of payment of
the refund). In the event that the Excise Tax is later determined by the Tax
Advisor or the Internal Revenue Service to exceed the amount taken into account
hereunder at the time the Tax Reimbursement Payment is made (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalties
payable with respect to such excess) once the amount of such excess is finally
determined.
(ii) In the event of any controversy with the Internal Revenue
Service (or other taxing authority) under this Section 8, the Executive
shall permit the Company to control issues related to this Section 8,
provided that such issues do
32
not potentially materially adversely affect the Executive; provided
further, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax thereon, including interest and penalties, which is payable
to the Executive pursuant to the provisions of Section 8(a) hereof. In
the event any issues do potentially materially adversely affect the
Executive, the Executive and the Company shall in good faith cooperate
so as not to jeopardize resolution of the issues, but if the parties
cannot agree the Company shall make the final determination with regard
to the issues; provided further, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax thereon, including interest and penalties,
which is payable to the Executive pursuant to the provisions of Section
8(a) hereof. In the event of any conference with any taxing authority
as to the Excise Tax or associated income taxes, the Executive shall
permit a representative of the Company to accompany the Executive, and
the Executive and his representative shall cooperate with the Company
and its representative.
(iii) With regard to any initial filing for a refund or any
other action required pursuant to this Section 8 (other than by mutual
agreement) or, if not required, agreed to by the Company and the
Executive, the Executive shall cooperate fully with the Company.
33
(d) The Company shall use its best efforts to cause the Tax Advisor to
promptly deliver the initial determination required hereunder within forty-five
(45) days after the change in ownership covered by Section 280G(b)(2) of the
Code. The Tax Reimbursement Payment, or any portion thereof, payable by the
Company shall be paid not later than the thirtieth (30th) day following the
determination by the Tax Advisor or as soon as practicable thereafter. The
amount of such payment shall be subject to later adjustment in accordance with
the determination of the Tax Advisor as provided herein.
(e) The Company shall be responsible for all charges of the Tax
Advisor, any benefits consulting firm appointed by the Company and the Company's
independent certified accountants.
(f) The Executive and the Company shall mutually agree on and
promulgate further guidelines in accordance with this Section 8 to the extent,
if any, necessary to effect the reversal of excessive, or a shortfall in, Tax
Reimbursement Payments.
(g) The payments made pursuant to Section 8 hereof shall be excluded
from all pension and benefit calculations under the employee benefit plans of
the Company.
9. Notices. Any notices required or permitted hereunder shall be in
writing and shall be deemed to have been given when personally delivered or when
mailed, certified or registered mail, postage prepaid, to the following
addresses:
If to the Executive:
Xxxxxxx X. Xxx
000 Xxxxx
Xxxxxxxxxx, XX 00000
34
If to the Company:
ONDEO Nalco Company
Xxx XXXXX Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
10. General.
(a) Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Illinois applicable to contracts executed and to be performed entirely within
said State.
(b) Construction and Severability. If any provision of this Agreement
shall be held invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired, and the parties undertake
to implement all efforts which are necessary, desirable and sufficient to amend,
supplement or substitute all and any such invalid, illegal or unenforceable
provisions with enforceable and valid provisions which would produce as nearly
as may be possible the result previously intended by the parties without
renegotiation of any material terms and conditions stipulated herein.
(c) Assignability. The Executive may not assign his interest in or
delegate his duties under this Agreement. This Agreement is for the employment
of the Executive, personally, and the services to be rendered by him under this
Agreement must be rendered by him and no other person. The Executive represents
and warrants to the Company that the Executive has no contracts or agreements of
any nature that the Executive has entered into with any other person, firm or
corporation that contain any restraints on the Executive's ability to perform
his obligations under this Agreement. This Agreement shall be binding upon and
inure
35
to the benefit of the Company and its successors and assigns. Notwithstanding
anything else in this Agreement to the contrary, the Company shall assign this
Agreement to, and all rights hereunder shall inure to the benefit of, any
person, firm or corporation resulting from the reorganization of the Company or
succeeding to the business or assets of the Company by purchase, merger or
consolidation and the Company shall require the assignee to assume this
Agreement in writing.
(d) Enforcement Costs. If, following a Change in Control, any contest
or dispute shall arise under this Agreement involving the termination of the
Executive's employment with the Company or involving the failure or refusal of
the Company to perform fully in accordance with the terms hereof, the Company
shall advance the Executive or pay directly on his behalf, all reasonable legal
fees and expenses, and fees and expenses described in Section 10(e) hereof, if
any, incurred or, in the case of fees and expenses for which payment is required
before the services are rendered, to be incurred within the next 30 days, by the
Executive in connection with such contest or dispute upon presentation of an
itemized xxxx to the Company regarding any such fees and expenses along with
proof reasonably satisfactory to the Company that such expenses have been
incurred or will be incurred within the next 30 days by the Executive; provided,
however, that in the event the resolution of any such contest or dispute
includes a finding that the Executive's claims in such contest or dispute are
frivolous or brought in bad faith, the Executive shall be required to reimburse
the Company, for all sums advanced to the Executive pursuant to this Section
10(d) in connection with such contest or dispute, together with interest in an
amount equal to the prime rate published by The Chase Manhattan Bank, N.A. in
the Wall Street Journal from time to time in effect, but in no event higher than
the maximum legal rate permissible under applicable law, such interest to accrue
from the date the Company
36
makes payment to the Executive hereunder through the date of the Executive's
repayment thereof.
(e) Arbitration. (i) The parties shall use their reasonable best
efforts and good will to settle all disputes by amicable negotiations. The
Company and the Executive agree that any dispute, controversy or claim arising
out of, relating to or in connection with this Agreement, or the termination of
this Agreement or the termination of the Executive's employment hereunder that
is not amicably resolved by negotiation shall be finally settled by arbitration,
under and in accordance with the Rules of Commercial Arbitration of the American
Arbitration Association then in effect, as set forth below, in Chicago,
Illinois, or such other place agreed to by the parties.
(ii) Any such arbitration shall be heard before a panel
consisting of one (1) to three (3) arbitrators, each of whom shall be
impartial. All arbitrators shall be appointed in the first instance by
agreement between the parties hereto. If the parties cannot agree upon
a single arbitrator, each of the Company and the Executive shall be
entitled to appoint one arbitrator. These two appointed arbitrators
shall then appoint a third arbitrator by their mutual agreement.
(iii) The award of the arbitrator or panel of arbitrators
shall be in writing and state the reasons upon which it is based. It
may be made public only with the consent of the parties. Any monetary
award shall be in U.S. dollars.
(iv) Each of the parties hereto accepts the exclusive
jurisdiction of the arbitrator or panel of arbitrators appointed in
accordance herewith. The award of the arbitrator or arbitral panel
shall be final and binding on the parties, who
37
undertake to carry it out without delay. Judgment on the award rendered
by the arbitrator or arbitral panel may be entered in any court having
jurisdiction thereof.
(v) The arbitrator or panel of arbitrators may also award
interim relief and grant specific performance. Notwithstanding the
foregoing, each party reserves the right to apply to any court of
competent jurisdiction for any provisional measure, including
injunctive relief, to enforce the terms of this Agreement.
(vi) Unless the provisions of Section 10(d) hereof apply, the
Company and the Executive shall each pay fifty percent (50%) of all
costs of the arbitrator or panel of arbitrators and of the American
Arbitration Association. The arbitrator may award to the party
prevailing on any matter or issue within the arbitration, his or its
legal fees and disbursements (including the costs of the American
Arbitration Association and the arbitrator) related to such matter or
issue provided that the party is successful overall on a material
portion of the arbitration, provided, however, the Company shall only
be entitled to an award of legal fees and disbursements if the
resolution of any such contest or dispute includes a finding that the
Executive's claims in such contest or dispute were frivolous or brought
in bad faith.
(f) Compliance with Rules and Policies. The Executive shall perform all
services in all material respects in accordance with the applicable policies,
procedures and rules established by the Company, including, but not limited to,
the By-Laws of the Company. In addition, the Executive, where applicable, shall
comply in all material respects with all laws,
38
rules and regulations that are generally applicable to the Company, and its
employees, directors and officers.
(g) Withholding. The Company shall withhold from all amounts due
hereunder any applicable withholding taxes payable to federal, state, local or
foreign taxing authorities.
(h) Entire Agreement: Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof, supersedes all prior agreements and undertakings, both written and oral,
and may not be modified or amended in any way except in writing by the parties
hereto. Notwithstanding the foregoing, the following agreements are not
superseded by this Agreement and are to remain in effect: (i) the Death Benefit
Agreement, if any, between the Company and the Executive, which the Company, in
its discretion, may replace with an insured benefit; and (ii) the Agreement, if
any, to Restore Benefits Reduced by ERISA-Related Limits between the Company and
the Executive; and (iii) Sections 5 and Section 12(m) of the Prior Employment
Agreement, attached hereto as Exhibit A.
(i) Duration. Notwithstanding the Employment Term hereunder, the
applicable sections of this Agreement shall continue for so long as any
obligations remain under this Agreement.
(j) Survival. The covenants set forth in Section 7 of this Agreement
shall survive and shall continue to be binding upon the Executive
notwithstanding the termination of this Agreement for any reason whatsoever. The
Company's obligation to provide the Executive with the Supplemental Benefit
under Section 4(d) of this Agreement shall survive the termination of this
Agreement.
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(k) Waiver. No waiver by either party hereto of any of the requirements
imposed by this Agreement on, or any breach of any condition or provision of
this Agreement to be performed by, the other party shall be deemed a waiver of a
similar or dissimilar requirement, provision or condition of this Agreement at
the same or any prior or subsequent time. Any such waiver shall be express and
in writing, and there shall be no waiver by conduct.
(l) Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto executed this Agreement as of the day and year first written
above.
ONDEO NALCO COMPANY
Date:
--------------------------- ---------------------------------
Name:
Title:
Date:
--------------------------- ---------------------------------
XXXXXXX X. XXX
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EXHIBIT A
---------
[Copy of existing Employment Agreement for Xxxxxxx X. Xxx to be attached.]
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EXHIBIT B
---------
[Copy of ONDEO Nalco Company Retirement Income Plan to be attached.]
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EXHIBIT C
---------
For purposes of this Agreement, a "Change in Control" shall be deemed
to have occurred upon the happening of either of the following events:
(a) the effective date as of which the Company ceases, for any reason,
to be a member of the same controlled group as SUEZ within the meaning of
Section 414(b) and (c) of the Internal Revenue Code of 1986, as amended ("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 "SUEZ
Controlled Group");
(b) the closing date of the sale of all or at least 80% of the assets
of the Company and its majority owned (by voting control) entities to an entity
outside the SUEZ Controlled Group.
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