EXHIBIT 10.13
SEVERANCE AGREEMENT
AGREEMENT effective as of January 1, 2004 between Nalco Company (the
"Company") and Xxxxxx X. Xxxxxx ("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 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.
"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 thirty
days of the date of such termination of employment (the "DATE
OF TERMINATION") in a lump sum payment A) accrued unpaid Base
Salary through the Date of Termination, B) any prior year
bonus earned but not paid, C) severance equal to one and
one-half (1.5)
times Base Salary and Target Bonus. The Company shall also pay
a pro-rata portion of any 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. This lump sum shall be reduced by the amount
of any Gains (but in no event less than zero), even if such
Gains are to be paid by the Company after the date the payment
is required hereunder.
(ii) Except as otherwise indicated herein, Executive
shall receive any other benefits they are otherwise eligible
for under other plans or programs of the Company in accordance
with their terms. Executive shall have the right to continue
medical or dental benefits for a period equal to the severance
pay period at the active employee rate. For clarity, the
severance pay period shall equal the number of year(s) used to
calculate the payment under Section 3(a)(i)(D).
(iii) Other than the benefits set forth in this
Section 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.
4. Termination of Other Benefits and Agreements
(a) The parties mutually terminate, and Executive hereby
waives and releases any and all claims he or she has, either existing
or to be earned in the future relating to, any existing agreement
Executive has with the Company or any of its affiliates, relating to
severance, change-in-control, supplemental retirement benefits, letter
of credit or pension benefits other than those available through the
standard Nalco pension plans. Further, the parties mutually terminate
the following agreements:__________.
5. 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.
(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.
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. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President, General Counsel
& Corporate Secretary
Dated: June 30, 2004 Executive
-------------
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
