NON-PLAN INDUCEMENT AWARD
NON-PLAN
INDUCEMENT AWARD
150,000
Shares
THIS
AGREEMENT, is made effective as of March 7, 2008, between Nalco Holding Company,
a Delaware corporation (the “Company”) and J. Xxxx Xxxxxxx
(“Fyrwald”).
R E C I T A L S:
WHEREAS,
in connection with Fyrwald’s hiring as an officer of the Company, the Company
and Fyrwald have entered into an Employment Letter Agreement and a Severance
Agreement both dated as of February 22, 2008.
WHEREAS,
in connection with Fyrwald’s hiring as an officer of the Company, the
Compensation Committee has determined that it would be in the best interests of
the Company and its stockholders to grant the Options provided for herein to
Fyrwald under the terms and conditions set forth herein.
WHEREAS,
the grant of Options under this Agreement is being made to Fyrwald as an
inducement grant outside of the Amended and Restated Nalco Holding Company 2004
Stock Incentive Plan in accordance with New York Stock Exchange Rule
303A(8).
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth, the
parties agree as follows:
1. Definitions. Capitalized
terms not otherwise defined herein shall have the same meanings as in Fyrwald’s
Severance Agreement. Whenever the following terms are used in this
Agreement, they shall have the meanings set forth below.
(a) Date of
Grant: March 7, 2008.
(b) Expiration
Date: The tenth anniversary of the Date of Grant.
(c) Plan:
The Amended and Restated Nalco Holding Company 2004 Stock Incentive Plan, as
from time to time amended.
(d) Vested
Portion: At any time, the portion of an Option which has become vested,
as described in Section 3 of this Agreement.
2. Grant of
Options. The Company hereby grants to Fyrwald the right and
option to purchase (the “Option”), on the terms and conditions hereinafter set
forth, 150,000 Shares of the Company’s Common Shares, subject to adjustment in
accordance with the terms hereof. The exercise price shall be the
closing price per Share as quoted on the New York Stock Exchange on March 7,
2008 ($20.84) (the “Option Price”). The Options are intended to be
nonqualified stock options, and are not intended to be treated as Incentive
Stock Options that comply with Section 422 of the Code.
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3.
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Vesting of the
Options.
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(a) Vesting of the
Option. Subject to Fyrwald’s continued employment with the
Company and its Affiliates, the Option shall vest and become exercisable with
respect to one-half of the Shares subject to the Option on March 6, 2011 and
shall vest and become exercisable with respect to the other one-half of the
Shares subject to the Option on March 6, 2012.
(b)
Termination of
Employment. If Fyrwald’s employment with the Company and its
Affiliates terminates due to (i) death, (ii) Permanent Disability, (iii) the
Company’s termination of Fyrwald’s employment without Cause, or (iv) Fyrwald’s
termination of his employment for Good Reason, then any unvested portion of the
Option shall immediately vest and become exercisable in full. If
Fyrwald’s employment with the Company and its Affiliates terminates for any
other reason, then the Option, to the extent not then vested and exercisable,
shall be immediately canceled by the Company without consideration.
(c) Change of
Control. Notwithstanding any other provision of this Agreement
to the contrary, in the event of a Change of Control the Option shall, to the
extent not then vested, immediately become fully vested and
exercisable.
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4.
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Exercise of
Options.
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(a) Period of
Exercise. Subject to the provisions of this Agreement, Fyrwald
may exercise all or any part of the Vested Portion of the Option at any time
prior to the Expiration Date. Notwithstanding the foregoing, if
Fyrwald’s Employment terminates prior to the Expiration Date, the Vested Portion
of the Option shall remain exercisable for the period set forth
below:
(i) Death or Permanent
Disability. If Fyrwald’s Employment with the Company and its
Affiliates is terminated due to Fyrwald’s death or Permanent Disability, Fyrwald
or his estate may exercise the Option for a period ending on the earlier of (A)
one year following the date of such termination and (B) the Expiration
Date
(ii) Termination by the Company
without Cause or Termination by Fyrwald for Good Reason. If
Fyrwald’s Employment with the Company and its Affiliates is terminated (a) by
the Company without Cause or (b) by Fyrwald for Good Reason, Fyrwald may
exercise the Vested Portion of the Option for a period ending on the earlier of
(A) 90 days following the date of such termination and (B) the Expiration Date;
and
(iii) Termination by the Company
for Cause or by Fyrwald not for Good Reason. If Fyrwald’s
Employment with the Company and its Affiliates is terminated by the Company for
Cause or by Fyrwald not for Good Reason, the Vested Portion of the Option shall
immediately terminate in full and cease to be exercisable.
(b) Method of
Exercise.
(i) Subject
to Section 4(a) of this Agreement, the Vested Portion of the Option may be
exercised by delivering to the Company at its principal office written notice of
intent to so exercise; provided that the
Option may be exercised with respect to whole Shares only. Such
notice shall specify the number of Shares for which the Option is being
exercised and shall be accompanied by payment in full of the aggregate Option
Price. Payment of the aggregate Option Price may be made (A) in cash,
or its equivalent, (B) to the extent permitted by the Committee, by transferring
Shares having a Fair Market Value equal to the aggregate Option Price for the
Shares being purchased to the Company and satisfying such other requirements as
may be imposed by the Committee; provided that such
Shares have been held by Fyrwald for no less than six months (or such other
period as established from time to time by the Committee or generally accepted
accounting principles), (C) if there is a public market for the Shares at such
time, subject to such rules as may be established by the Committee, through
delivery of irrevocable instructions to a broker to sell the Shares otherwise
deliverable upon the exercise of the Option and to deliver promptly to the
Company an amount equal to the aggregate Option Price for the shares being
purchased or (D) such other method as approved by the
Committee. Fyrwald shall not have any rights to dividends or other
rights of a stockholder with respect to the Shares subject to the Option until
Fyrwald has given written notice of exercise of the Option, paid in full the
exercise price for such Shares and, if applicable, has satisfied any other
conditions imposed by the Committee.
(ii) Notwithstanding
any other provision of this Agreement to the contrary, absent an available
exemption to registration or qualification, the Option may not be exercised
prior to the completion of any registration or qualification of the Option or
the Shares under applicable state and federal securities or other laws, or under
any ruling or regulation of any governmental body or national securities
exchange that the Committee shall in its sole reasonable discretion determine to
be necessary or advisable.
(iii)
Upon the Company’s determination that an Option has been validly exercised as to
any of the Shares, the Company shall issue certificates in Fyrwald’s name for
such Shares. However, the Company shall not be liable to Fyrwald for
damages relating to any delays in issuing the certificates to Fyrwald, any loss
by Fyrwald of the certificates, or any mistakes or errors in the issuance of the
certificates or in the certificates themselves.
(iv)
In the event of Fyrwald’s death, the Option shall remain vested and exercisable
by Fyrwald’s executor or administrator, or the person or persons to whom
Fyrwald’s rights under this Agreement shall pass by will or by the laws of
descent and distribution as the case may be, to the extent set forth in Section
4(a) of this Agreement. Any heir or legatee of Fyrwald shall take
rights herein granted subject to the terms and conditions hereof.
5. No Right to Continued
Employment. This Agreement shall not be construed as giving
Fyrwald the right to be retained in the employ of, or in any consulting
relationship to, the Company or any Affiliate. Further, the Company
or its Affiliate may at any time dismiss Fyrwald or discontinue any consulting
relationship, free from any liability or any claim under this Agreement, except
as otherwise expressly provided herein.
6. Legend on
Certificates. The certificates representing the Shares
purchased by exercise of the Option shall be subject to such stop transfer
orders and other restrictions as the Committee may deem reasonably advisable to
reflect the provisions of this Agreement or under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock exchange
upon which such Shares are listed, any applicable federal or state laws and the
Company’s Certificate of Incorporation and Bylaws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
7. Transferability. Unless
otherwise determined by the Committee, the Option may not be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by
Fyrwald otherwise than by will or by the laws of descent and distribution, and
any such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance. During Fyrwald’s
lifetime, the Option is exercisable only by Fyrwald.
8. Withholding. Fyrwald
may be required to pay to the Company or its Affiliate and the Company or its
Affiliate shall have the right and is hereby authorized to withhold from any
payment due or transfer made under the Option or from any compensation or other
amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding taxes in respect
of the Option, its exercise, or any payment or transfer under the Option and to
take such action as may be necessary in the option of the Company to satisfy all
obligations for the payment of such taxes.
9. Securities
Laws. Upon the acquisition of any Shares pursuant to the
exercise of the Option, Fyrwald will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.
10. Notices. Any notice
under this Agreement shall be addressed to the Company in care of its General
Counsel addressed to the principal executive office of the Company and to
Fyrwald at the address appearing in the personnel records of the Company for
Fyrwald or to either party at such other address as either party hereto may
hereafter designate in writing to the other. Any such notice shall be
deemed effective upon receipt thereof by the addressee.
11. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Illinois without regard to conflicts of laws.
12. Signature in
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.
13. Plan
Terms. Although the Options have not been issued under the
Plan, the Parties agree that the following provisions of the Plan shall be
applicable to the Options granted hereby: Sections 4(a), 4(c), 6(c),
6(e), 9, 10, 11, 14, 15(b), 15(c) and 16 (it being understood, however, that all
references to “the Plan” in those sections shall be deemed to be references to
“this Agreement” for the purposes of the Options and this
Agreement).
IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the parties
hereto.
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Nalco
Holding Company
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________________________________
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By: Xxxxxxx
X. Xxxxxxxx
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Its: Vice
President and General Counsel
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_______________________________
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J.
Xxxx Xxxxxxx
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