EXHIBIT 10.69
MANAGEMENT MEMBERS AGREEMENT
CONCERNING
NALCO LLC
DATED AS OF JUNE 11, 2004.
This MANAGEMENT MEMBERS AGREEMENT (the "Agreement") dated as of
June
11, 2004 by and among Nalco LLC (the "Company"), a Delaware limited
liability
company and the Persons who are or after the date hereof become
signatories
hereto (the "Management Members").
RECITALS
WHEREAS, the Company is governed by that certain Second Amended and
Restated Limited Liability Company Operating Agreement (the "LLC
Agreement")
dated as of May 17, 2004.
WHEREAS, the Management Members will be providing services to the
Company or its Affiliates.
WHEREAS, each Management Member will subscribe for and acquire from
the Company, and the Company will issue and sell to each Management
Member, the
Company's Class A Units (the "Units"), in the amounts set forth on
Schedule A to
the LLC Agreement, as the same may be amended from time to time;
WHEREAS, it is a condition to the sale of the Units that the
Management Members enter into this Agreement;
WHEREAS, the Management Members will enter into the Registration
Rights Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby
agree as
follows:
ARTICLE I
Management Members' Representations, Warranties and Agreements
Section 1.01.
Units Unregistered. Each Management Member
acknowledges and represents that such Management Member has been
advised by the
Company that:
(a)
the offer and sale of the Units have not been registered under the
1933 Act;
(b)
the Units must be held and the Management Member must continue to
bear the economic risk of the investment in the Units unless the
offer and sale of such Units are subsequently registered under the
1933 Act and all applicable state securities laws or an exemption
from such registration is available and the Units may never be so
registered;
(c)
there is no established market for the Units and it is not
anticipated that there will be any public market for the Units in
the foreseeable future;
(d)
a restrictive legend in the form set forth below shall be placed on
the certificates representing the Units:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON ______________, HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO CERTAIN TRANSFER AND OTHER
RESTRICTIONS SET FORTH IN THE LIMITED LIABILITY COMPANY
AGREEMENT, DATED AS OF MAY 17, 2004 AMONG NALCO LLC AND
CERTAIN OF ITS MEMBERS, THE MANAGEMENT MEMBERS AGREEMENTS,
DATED AS OF JUNE 11, 2004 AMONG NALCO LLC AND CERTAIN
MANAGEMENT MEMBERS NAMED THEREIN, THE REGISTRATION RIGHTS
AGREEMENT AMONG NALCO LLC AND CERTAIN OF ITS MEMBERS AND,
AMONG OTHER THINGS, MAY NOT BE OFFERED OR SOLD EXCEPT IN
COMPLIANCE WITH SUCH TRANSFER RESTRICTIONS. COPIES OF SUCH
LIMITED LIABILITY COMPANY AGREEMENT, SUCH MANAGEMENT MEMBERS
AGREEMENTS AND SUCH REGISTRATION RIGHTS AGREEMENT ARE ON FILE
WITH THE SECRETARY OF THE LIMITED LIABILITY COMPANY AND ARE
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR. THE
HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE,
AGREES TO BE BOUND BY ALL OF THE APPLICABLE PROVISIONS OF THE
AFORESAID AGREEMENTS.";
(e)
a restrictive legend in the form set forth below shall be placed on
the certificates representing the Units held by Georgia residents:
"THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON
PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE "GEORGIA SECURITIES
ACT OF 1973," AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT."; and
(f)
a notation shall be made in the appropriate records of the Company
indicating that the Units are subject to restrictions on transfer
and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer
instructions may be issued to such transfer agent with respect to
the Units.
Section 1.02.
Additional Investment Representations. Each
Management Member represents and warrants that:
(a)
the Management Member's financial situation is such that such
Management Member can afford to bear the economic risk of holding
the Units for an indefinite period of time, has adequate means for
providing for the Management Member's current needs and personal
contingencies, and can afford to suffer a complete loss of the
Management Member's investment in the Units;
(b)
the Management Member's knowledge and experience in financial and
business matters are such that the Management Member is capable of
evaluating the merits and risks of the investment in the Units;
(c)
the Management Member understands that the Units are a speculative
investment which involves a high degree of risk of loss of
Management Member's investment therein, there are substantial
restrictions on the transferability of the Units and, on the date
on
which such Management Member acquires such Units and for an
indefinite period following such date, there will be no public
market for the Units and, accordingly, it may not be possible for
the Management Member to liquidate the Management Member's
investment including in case of emergency, if at all;
(d)
the terms of this Agreement provide that if the Management Member
ceases to provide services to the Company and its Affiliates, the
Company and its Affiliates have the right to repurchase the Units
at
a price which may be less than the Fair Market Value thereof;
(e)
the Management Member understands and has taken cognizance of all
the risk factors related to the purchase of the Units and, other
than as set forth in this Agreement, no representations or
warranties have been made to the Management Member or Management
Member's representatives concerning the Units, the Company, the
Subsidiaries or their respective prospects or other matters;
(f)
the Management Member has been given the opportunity to examine all
documents and to ask questions of, and to receive answers from, the
Company and its representatives concerning the Company and its
subsidiaries, the acquisition of Nalco Company and certain
Subsidiaries of Nalco International S.A.S. by subsidiaries of the
Company, the LLC Agreement, the Company's organizational documents
and the terms and conditions of the purchase of the
Units and to obtain any additional information which the Management
Member deems necessary; and
(g)
all information which the Management Member has provided to the
Company and the Company's representatives concerning the Management
Member and the Management Member's financial position is complete
and correct as of the date of this Agreement.
Section 1.04.
Contingent Bonus. The Company shall cause one of
its Subsidiaries to pay a bonus to Management Members in the
circumstances set
forth in Exhibit A.
ARTICLE II
Transfers; Acceleration
Section 2.01.
Transfer. (a) Until the occurrence of a Qualified
IPO, except as required by law, no Management Member may directly
or indirectly,
sell, contract to sell, give, assign, hypothecate, pledge,
encumber, grant a
security interest in, offer, sell any option or contract to
purchase, purchase
any option or contract to sell, grant any option, right or warrant
to purchase,
lend, or otherwise transfer or dispose of any economic, voting or
other rights
in or to (collectively, "Transfer") any Units except pursuant to
(i) Article XI
of the LLC Agreement, (ii) Sections 2.02 or 2.04 hereof or (iii) a
Transfer to a
Manager Permitted Transferee (each a "Permitted Transfer").
(b)
Following a Qualified IPO and the expiration of any
underwriter or Company "lock-up" period (as provided for in Section
4(a) of the
Registration Rights Agreement or otherwise) applicable to such
Qualified IPO,
each Management Member may only Transfer its Units pursuant to (i)
a Permitted
Transfer, (ii) a Transfer pursuant to Section 2.03, (iii) a
Transfer in
accordance with the Registration Rights Agreement or (iv) a
Transfer conducted
in accordance with the requirements of Rule 144 promulgated under
the 1933 Act;
provided, that no Management Member shall make a Transfer pursuant
to this
clause (iv) without the Company's prior, written approval.
(c)
No Transfer by any Management Member may be made pursuant to
this Article II unless (i) the transferee has agreed in writing to
be bound by
the terms and conditions of this Agreement and the LLC Agreement
(other than if
the Transfer is conducted in accordance with the Registration
Rights Agreement
or the requirements of Rule 144 promulgated under the 1933 Act),
(ii) the
Transfer complies in all respects with the applicable provisions of
this
Agreement, (iii) the Transfer complies in all respects with
applicable federal
and state securities laws, including the 1933 Act and (iv) the
Transfer is made
in compliance with all applicable Company policies and restrictions
(including
any trading "window periods" or other policies regulating insider
trading);
provided, that the conditions to Transfer described in clause (i)
above shall
not apply to a Transfer pursuant Article XI of the LLC Agreement or
Sections
2.02, 2.03 or 2.04 hereof.
(d)
No Transfer by any Management Member may be made pursuant to
this Article II (except pursuant to an effective registration
statement under
the 1933 Act) unless and until such Management Member has first
delivered to the
Company an opinion of counsel (reasonably acceptable in form and
substance to
the Company) that neither registration nor qualification under the
1933 Act and
applicable state securities laws is required in connection with
such Transfer.
Section 2.02. Call Option. (a) If a Management Member's Services to
the Company or any Subsidiary terminate for any of the reasons set
forth in
clauses (i), (ii) or (iii) below (each such event a "Termination
Event"), the
Company shall have the right but not the obligation to purchase,
from time to
time after such termination of Services, any Units held by such
Management
Member for a period of 60 days (subject to extension as provided
below)
immediately following the later of (A) the date of the Termination
Event and (B)
the date that is six (6) months and one day after the date on which
such
Management Member acquired such Unit (the later of (A) and (B), the
"First
Purchase Date"), and such Management Member shall be required to
sell to the
Company, any or all of such Units then held by such Management
Member, at a
price per Unit equal to the applicable purchase price determined
pursuant to
Section 2.02(c):
(i)
if such Management Member's Service with the Company and its
Subsidiaries is terminated due to the Disability or death of the
Management Member;
(ii)
if such Management Member's Service with the Company and its
Subsidiaries is terminated by the Company and its Subsidiaries
without
Cause or by the Management Member for any reason;
(iii) if such Management Member's Service with the Company and its
Subsidiaries is terminated by the Company or any of its
Subsidiaries for
Cause.
(b)
If on the 61st day following the date of the Termination
Event, the Company has not purchased all of a terminated Management
Member's
Units, and the Company has not opted to extend its 60 day election
period
pursuant to Section 2.02(d), the Company shall on or before the
61st day provide
written notice to the Investor Groups of (i) its decision not to
purchase some
or all of such Units and (ii) the number of such Management
Member's Eligible
Units (defined below) which the Company did not purchase, and the
Investor
Groups shall have the right to purchase and such Management Member
shall be
required to sell to the Investor Group(s), any or all of the Units
(the
"Eligible Units") then held by such Management Member at a price
per Unit equal
to the applicable purchase price determined pursuant to Section
2.02(c). The
Investor Groups' rights to purchase such Eligible Units and each
Management
Member's corresponding obligation to sell such Eligible Units shall
terminate on
the 120th day following the date of the Termination Event. Upon
receipt of the
written notice described above, each Investor Group desiring to
purchase Units
shall within 45 days of receipt of the Company's notice provide
written notice
to the Company, specifying that such Investor Group is willing to
purchase
either (i) its PRO RATA share of the Eligible Units (based upon the
number of
Units held by such Investor Group relative to the total number of
Units held by
all of the Investor Groups), (ii) a number of Eligible Units less
than such
Investor Group's PRO RATA share, or (iii) any and all
Units available to be purchased; provided, that the Investor Groups
shall, as
much as reasonably practicable, consult with each other and
coordinate the
exercise of rights such that all Eligible Units are elected to be
purchased.
Upon receipt of the Investor Groups' respective notices, the
Company will notify
the Management Member of the Investor Group(s)' elections and the
Management
Member will be obligated to sell (x) to the Investor Groups making
elections
described in clauses (i) and (ii) of the preceding sentence, the
number of
Eligible Units elected to be purchased by such Investor Groups and
(y) all
remaining Eligible Units, if any, to the Investor Groups making the
election
described in clause (iii) of the preceding sentence to such
Investor Group(s) on
a PRO RATA basis (based upon the number of Units held by such
Investor Group
relative to the total number of Units held by all of the Investor
Groups making
such election), but in no event more that any such Investor Groups
elected to
purchase.
(c)
In the event of a purchase by the Company pursuant to Section
2.02(a) and/or the Investor Group(s) pursuant to Section 2.02(b)
(each a "Units
Buyer"), the purchase price shall be:
(i)
in the case of a Termination Event specified in Section
2.02(a)(i) or 2.02(a)(ii) a price per Unit equal to the most
recently
determined Fair Market Value, and
(ii)
in the case of a Termination Event specified in Section
2.02(a)(iii), a price per Unit equal to the lesser of (1) Fair
Market
Value and (2) Cost.
(d)
The Units Buyer may pay the purchase price for such Units (i)
by delivery of funds deposited into an account designated by the
Management
Member, a bank cashier's check, a certified check or a company
check of the
Units Buyer for the purchase price; (ii) if the Units Buyer is the
Company and
is prohibited from paying cash by financing or liquidity
constraints and is
unable to pay the purchase price as provided in clause (iii), by
delaying the
exercise of the purchase right described under Section 2.02(a)
until the earlier
of (x) when the financing restrictions lapse and (y) when the
Company is able to
pay the purchase price as provided in clause (iii); or (iii) if the
Units Buyer
is the Company and has the right to purchase such Units during the
period
following a Qualified IPO (including in respect of a purchase that
was delayed
pursuant to clause (ii)), by delivery of a number of shares of
Issuer Common
Stock determined by dividing (A) the aggregate purchase price of
the Units being
sold by such Management Member by (B) the Public Share FMV as of
the close of
trading on the trading day immediately prior to the delivery
thereof to the
Management Member. Notwithstanding anything to the contrary in this
Agreement,
the Units Buyer may deduct and withhold from the amounts otherwise
payable
pursuant to this Agreement such amounts as necessary to comply with
the Internal
Revenue Code of 1986, as amended (the "Code"), or any other
provision of
applicable law, with respect to the making of such payment.
(e)
Notwithstanding anything to the contrary elsewhere herein,
the Company shall not be obligated to purchase any Units at any
time pursuant to
this Section 2.02, regardless of whether it has delivered a notice
of its
election to purchase any such Units, (i) to the extent that (A) the
purchase of
such Units (together with any other purchases of Units pursuant to
Sections 2.02
or 2.03 hereof, or pursuant to similar provisions in any other
agreements with
other investors of which the Company has at such time been given or
has given
notice) or (B) in the
event of an election to purchase such Units with shares of Issuer
Common Stock,
the issuance of such shares by the IPO Entity, the purchase of such
shares by
the Company or the distribution of such shares to the Management
Member would
result (x) in a violation of any law, statute, rule, regulation,
policy, order,
writ, injunction, decree or judgment promulgated or entered by any
governmental
authority applicable to the Company or any of its Subsidiaries or
any of its or
their assets (including any unavailability of a registration
statement or
exemption from registration necessary to allow delivery of shares
of Issuer
Common Stock to the Management Member), (y) after giving effect
thereto
(including any dividends or other distributions or loans from a
Subsidiary of
the Company to the Company in connection therewith), in a Financing
Default or
(z) in the Company being required to disgorge any profit to the IPO
Entity
pursuant to Section 16(b) of the 1934 Act, (ii) if immediately
prior to such
purchase of Units, issuance of Issuer Common Stock or purchase of
shares of
Issuer Common Stock, as the case may be, there exists a Financing
Default which
prohibits such issuance or purchase (including any dividends or
other
distributions or loans from a Subsidiary of the Company to the
Company in
connection therewith), or (iii) if the Company does not have funds
available to
effect such purchase of Units or Issuer Common Stock. The Company
shall within
30 days of learning of any such fact so notify the Management
Member that it is
not obligated to purchase such Units and has deferred its right to
make such
purchase until such violation, potential liability under the 1933
Act or 1934
Act, Financing Default or unavailability of funds would not result
therefrom or
has ceased. The Company agrees to use commercially reasonable
efforts to cure
any such Financing Default that is curable. To the extent that,
pursuant to this
Section 2.02(e), the Company is not obligated to pay for a
Management Member's
Units in accordance with one of the payment methods described in
the first
sentence of Section 2.02(d), the Company shall, except as otherwise
permitted by
this Section 2.02(e), be required to pay for such Units pursuant to
an alternate
method of payment described in the first sentence of Section
2.02(d).
(f) Notwithstanding anything to the contrary contained in this
Section 2.02, any Units which the Company has elected to purchase
from a
Management Member, but which in accordance with Section 2.02(e) are
not
purchased at the applicable time provided in this Section 2.02,
shall be
purchased by the Company on the tenth Business Day after such date
or dates that
it is no longer permitted to defer purchasing such Units under
Section 2.02(e),
and the Company shall give such Management Member five Business
Days prior
notice of any such purchase.
Section 2.03. Put Right. (a) Subject to the Call Right described in
Section 2.02, following a Qualified IPO and for so long as no
Termination Event
pursuant to Section 2.02(a)(iii) shall have occurred with respect
to a
Management Member, such Management Member shall have the right, but
not the
obligation, to sell (the "Put Right") beginning on the later of (x)
the first
date immediately following the expiration of any Company or
underwriter
"lock-up" period applicable to such Qualified IPO and (y) the date
that is at
least six (6) months and one day after, the Sale Date ( the later
of (x) and (y)
shall be referred to as the "First Put Date"), and the Company
shall be required
to purchase from such Management Member, a number of such
Management Member's
Units as determined by such Management Member, at a price per Unit
equal to the
Fair Market Value as of the date the Management Member exercises
such Put Right.
For the avoidance of doubt, subject to the Call Right described in
Section 2.02,
a Management Member shall remain entitled to the Put Right
following a
Termination Event pursuant to Sections 2.02(a)(i) or (ii) with
respect to such
Management Member.
(b) Each Management Member who desires to sell any of his or her
Units following the applicable First Put Date shall send written
notice to the
Company of his or her intention to sell such Units pursuant to this
Section
2.03. Subject to the exercise of any Call Right pursuant to Section
2.02, the
closing of the purchase shall take place at the principal office of
the Company
on a date specified by the Company no later than 30 days after the
giving of
such notice.
(c) At the closing of a purchase pursuant to a Put Right, the
Company will pay to the Management Member the purchase price for
such Units
(determined in accordance with Section 2.03(a)) by delivery of a
number of
shares of Issuer Common Stock determined by dividing (A) the
aggregate purchase
price of the Units being sold by such Management Member by (B) the
Public Share
FMV as of the close of trading on the trading day immediately prior
to the
delivery thereof to the Management Member.
(d) Notwithstanding anything to the contrary elsewhere herein, the
Company shall not be obligated to purchase any Units at any time
pursuant to
this Section 2.03 (i) to the extent that (A) the purchase of such
Units
(together with any other purchases of Units pursuant to Sections
2.02 or 2.03
hereof, or pursuant to similar provisions in any other agreements
with other
investors of which the Company has at such time been given or has
given notice)
or (B) the issuance of shares by the IPO Entity or the purchase of
such shares
by the Company would result (x) in a violation of any law, statute,
rule,
regulation, policy, order, writ, injunction, decree or judgment
promulgated or
entered by any governmental authority applicable to the Company or
any of its
Subsidiaries or any of its or their assets (including any
unavailability of a
registration statement or exemption from registration necessary to
allow
delivery of shares of Issuer Common Stock to the Management
Member(s)), (y)
after giving effect thereto, in a Financing Default or (z) in the
Company being
required to disgorge any profit to the IPO Entity pursuant to
Section
