EXHIBIT 10A
KEY EXECUTIVE AGREEMENT
THIS AGREEMENT between Nalco Chemical Company, a Delaware corporation
("Nalco"), and (Name) ("Executive"), dated this 1st day of , 19 .
Background
Nalco wishes to attract and retain well-qualified executive and key personnel
and to assure both itself and the Executive of continuity of management in the
event of any actual or threatened change in control of Nalco;
Executive desires to continue his/her employment with Nalco and to retain
his/her position in the event of any actual or threatened change in control of
Nalco;
Accordingly, the parties agree as follows:
Agreement
1. Operation of Agreement. The "effective date of this Agreement" shall be
the date on which a Change in Control (as described in Section 2) occurs.
2. Change in Control: The term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) Nalco is merged or consolidated or reorganized into or with another
corporation or other legal person, and as a result of such merger,
consolidation, or reorganization less than 80% of the outstanding
voting securities or other capital interests of the surviving,
resulting, or acquiring corporation or other legal person are owned
in the aggregate by the stockholders of Nalco immediately prior to
such merger, consolidation, or reorganization; or
(b) Nalco sells all or substantially all of its business and/or assets to
any other corporation or other legal person, less than 80% of the
outstanding voting securities or other capital interests of which are
owned in the aggregate by the stockholders of Nalco, directly or
indirectly, immediately prior to or after
(2)
such sale; or
(c) A report is filed on Schedule 13D or Schedule 14D-1 (or any successor
schedule, form, or report) each as promulgated pursuant to the
Securities Exchange Act of 1934 ("Exchange Act") disclosing that any
person (as the term "Person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) of 20% or more
of the issued and outstanding shares of voting securities of Nalco;
or
(d) During any period of two consecutive years, individuals who at the
beginning of any such period constitute the Board of Directors of
Nalco cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by Nalco's
stockholders, of each new Director of Nalco was approved by a vote of
at least two-thirds of such Directors of Nalco then still in office
who were Directors of Nalco at the beginning of any such period.
3. Employment. Nalco hereby agrees to continue the Executive in its employ
for the period commencing on the effective date of this Agreement and ending on
the earlier to occur of the third anniversary of such date or the 62nd birthday
of the Executive (the "employment period"), to exercise such authority and
perform such executive duties as are commensurate with the authority being
exercised and duties being performed by the Executive immediately prior to the
effective date of this Agreement, which services shall be performed at the
location where the Executive was employed immediately prior to the effective
date of this Agreement. The Executive agrees that during the employment period
he/she shall devote his/her full business time exclusively to his/her aforesaid
executive duties and perform such duties faithfully and efficiently.
4. Compensation, Compensation Plans, Perquisites. During the employment
period, the Executive shall be compensated as follows:
(a) He/she shall receive an annual salary (to be paid in equal semi-
monthly installments) which is not less than his/her annual salary
immediately prior to
(3)
the effective date of this Agreement, with the opportunity for
increases, from time to time, which are in accordance with and
commensurate with Nalco's regular practices.
(b) He/she shall be eligible to participate each year on a reasonable
basis in bonus, stock option, restricted stock, Management Incentive
Plan, Performance Share Plan, and other incentive compensation plans
which provide opportunities to receive compensation which are the
greater of the opportunities provided by Nalco for executives with
comparable duties or the opportunities under any such plans under
which he/she was participating immediately prior to the effective
date of this Agreement.
(c) He/she shall be entitled to receive all employee benefits which are
the greater of the employee benefits provided by Nalco to executives
with comparable duties or the employee benefits to which he/she was
entitled immediately prior to the effective date of this Agreement.
5. Termination. The term "Termination" shall mean any one of the following:
(a) termination by Nalco of the employment of the Executive with Nalco
for any reason other than cause. The term "cause" means willful and
material breach of this Agreement by the Executive, provided however
that unless the Executive's actions are materially damaging Nalco,
the Executive shall be given notice of breach and a reasonable
opportunity to cure the breach before notice of termination is given.
Resignation by the Executive upon occurrence of any of the events
listed in Sections 5(b), 5(c), 5(d) or 5(e) shall not constitute
"cause," or
(b) the Executive's death, or physical or mental incapacity which would
entitle Executive to permanent disability benefits under Nalco's
appropriate plans; or
(c) resignation of the Executive following a significant change in the
nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from that
provided in Section 4, or the breach by Nalco of any provision of
this Agreement; or
(4)
(d) resignation of the Executive following a reasonable determination by
the Executive that, as a result of a change in control of Nalco and a
change in circumstances thereafter significantly affecting his/her
position, he/she is unable to exercise the authorities, powers,
functions, or duties attached to his/her position and contemplated by
Section 3 of this Agreement; or
(e) resignation of the Executive, for any reason, within 90 days after
the first anniversary of the date on which a Change of Control
occurs.
6. Termination Payment. In the event of Termination of the Executive:
(a) Nalco shall pay to the Executive, within 30 days of Termination
(without actuarial reduction), (i) a lump sum equal to salary
payments for the remainder of the employment period at the same
salary rate in effect on the date of Termination; (ii) an amount of
annual bonus (including, but not limited to, the Management Incentive
Plan) covering the monthly periods from January 1 of the year of
Termination through the end of the employment period, at the greater
of (A) the bonus rate for the bonus year immediately prior to the
date of Termination, or (B) the estimated bonus rate (assuming a 100%
performance rate) for the remaining portion of the employment period;
and (iii) under Performance Share Plans granted before the date of
Change of Control, all amounts which would have been awarded but for
the Termination (assuming 100% payout), the stock portion of the
grants to be paid in cash.
(b) the Executive shall be entitled to and shall receive from Nalco (i)
in addition to the benefits provided under any pension benefit plan
maintained by Nalco, the pension benefits the Executive would have
accrued under such plan if the Executive had remained in the employ
of Nalco through the employment period, which benefits will be paid
concurrently with, and in addition to, the benefits provided under
such pension plan.
(c) the Executive shall be entitled to and shall receive all employee
benefits (including, but not limited to, coverage under any medical
insurance, life
(5)
insurance arrangements or programs) to which the Executive would have
been entitled under all employee benefit plans, programs or
arrangements maintained by Nalco if the Executive had remained in the
employ of Nalco through the employment period.
7. Non-Competition. The Executive agrees to continue all non-competition and
confidentiality provisions during the employment period as specified in his/her
existing employment agreement, except in the event of Termination in which case
the non-competition provisions shall not apply.
8. Taxes. In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by Nalco, any affiliate or associated
company, trusts established by Nalco, any affiliate or associated company, for
the benefit of its employees, to or for the Executive's benefit (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise) (a "Payment") would be subject to the excise tax imposed by
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties
hereinafter collectively referred to as the "Excise Tax"), the Executive shall
be entitled to receive an additional payment (a "Gross-Up Payment") in an amount
calculated such that the sum of the Payment and the Gross-Up Payment, net of all
applicable taxes, would be the same as what the Payment would be, net of all
applicable taxes, if no Excise Tax were payable. The Company shall pay the
Gross-Up Payment to the Executive not later than ten days before the date the
Excise Tax is due and payable (excluding any extensions of time for filing
obtained by the Employee). In the event the employee does not receive the Gross-
Up Payment when due, interest shall accrue on any unpaid portion at the rate of
12% per year, compounded monthly .
9. Legal Fees and Expenses:
(a) It is the intent of Nalco that the Executive shall not be required to
incur the expenses associated with the enforcement of his/her rights
under this Agreement by litigation or other legal action, because the
cost and expense thereof would substantially detract from the
benefits intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that
(6)
Nalco has failed to comply with any of its obligations under this
Agreement, or in the event that Nalco or any other person takes any
action to declare this Agreement void and/or unenforceable, or
institutes any litigation designed to deny, and/or to recover from,
the Executive the benefits intended to be provided to the Executive
hereunder, Nalco irrevocably authorizes the Executive from time to
time to retain counsel of his/her choice, at the expense of Nalco as
hereafter provided, to represent the Executive in connection with the
initiation or defense of any litigation, arbitration, and/or other
legal action, whether by or against Nalco or any director, officer,
stockholder, or other person affiliated with Nalco, in any
jurisdiction. Nalco shall pay and be solely responsible for any and
all attorneys' and related fees and expenses incurred by the
Executive as a result of Nalco's failure to perform this Agreement or
any provision hereof or as a result of Nalco or any person contesting
the validity and/or enforceability of this Agreement or any provision
hereof.
(b) Within thirty (30) days after the effective date of this Agreement,
the total value of performance of Nalco's obligations under this
Agreement shall be secured by an irrevocable clean letter of credit,
a conformed copy of which is attached hereto as Exhibit I and is
incorporated herein by reference (the "Letter of Credit") issued by
The First National Bank of Chicago (the "Bank") for the benefit of
the Executive and providing that the total amount of all payments due
to be paid by Nalco to the Executive under this Agreement shall be
paid on a regular, periodic basis upon presentation by the Executive
to the Bank of a statement or statements prepared by the Executive's
counsel that such payments are due and owing, and that Nalco has not
performed its obligation to make such payments. Nalco shall pay all
amounts and take all action necessary to maintain the Letter of
Credit during the employment period and for two years thereafter and
notwithstanding Nalco's complete discharge of such obligations, in
the event such Letter of Credit shall be terminated or not renewed,
Nalco shall obtain a replacement irrevocable clean letter of credit
on substantially the same terms and conditions as contained in the
Letter of Credit drawn upon a commercial bank or other financial
institution having total assets of at least $6 billion selected by
Nalco or any similar arrangement which, in any case, assures the
Executive of the benefits of this Agreement.
(7)
10. Notices. Any notices, requests, demands, and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he/she has
filed in writing with Nalco or, in the case of Nalco, at its principal executive
offices.
11. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate, or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by operation
of law.
12. Governing Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Illinois.
13. Amendment. This Agreement may be amended or canceled by mutual agreement
of the parties in writing without the consent of any other person and, so long
as the Executive lives, no person, other than the parties hereto, shall have any
rights under or interest in this Agreement or the subject matter hereof.
14. Successors to the Company. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of Nalco and any
successor of Nalco.
15. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
Agreed: Nalco Chemical Company
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(Name of Executive) (Name of Nalco Authorized Signatory)
(Title of Executive) (Title)