Exhibit 99.4
SEVERANCE
AGREEMENT
AGREEMENT effective as of August 22, 2008
between Nalco Company, (the “Company”) and Eric G.
Melin (“Executive”).
WHEREAS, Executive has been offered employment
with the Company, and an opportunity to receive certain equity
grants relating to Executive’s commencement of employment
with the Company; and
WHEREAS, the Company desires to promote the good
performance of Executive by offering this Severance Agreement;
and
WHEREAS, the parties desire to enter into this
Severance 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.
“Agreement” means this Severance Agreement.
“Base Salary”
means Executive’s annual base
salary immediately prior to the Termination Date.
“Beneficial Owner”
or “Beneficial
Ownership” shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended from time to
time.
“Board” means the Board of Directors of the
Company.
“Cause” means any of the following:
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the
Executive’s conviction of i) a felony, or ii)
misdemeanor, excluding a petty offense (as defined in Illinois or a
comparable misdemeanor under the laws of another state), involving
fraud, dishonesty or moral turpitude;
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the
Executive’s material breach of this Agreement, provided that
such breach is not cured within ten (10) days after delivery to the
Executive of a notice from the Board requesting cure;
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the willful or
intentional misconduct by the Executive in the performance of his
duties under this Agreement, including a material breach of the
Company’s Code of Conduct;
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the willful or
intentional failure by the Executive to comply (to the best of his
ability) with a specific, written direction of the
Board;
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the
Executive’s failure to cooperate in any audit or
investigation of the Company’s financial statements or
reports and filings with the Securities and Exchange Commission, or
the business practices of the Company or its direct or indirect
subsidiaries;
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the
Executive’s continued failure to perform his substantial job
functions after written notice from the Board requesting such
performance; or
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the
Executive’s material violation of a material written policy
of the Company.
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“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.
“Employment Letter
Agreement” means
the employment letter agreement between Executive and the Company,
dated as of August 22, 2008, as may be amended from time to
time.
“Executive” shall have the meaning indicated
above.
“Person” means an individual, a partnership, a
corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or
political subdivision thereof.
“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 Amended and Restated Management
Incentive Plan) for Executive for such year.
“Term” has the meaning set forth in Section 2 of this
Agreement.
“Termination Date”
has the meaning set forth in Section
3 of this Agreement.
2.
Term of Agreement . This Agreement shall be in
effect from the date hereof until December 31, 2010 (the
“Initial Term”). After the expiration of the
Initial Term, this Agreement shall be automatically extended for a
three-year period, and thereafter further automatic extensions for
three years (the “Additional Terms”). If the
Company notifies Executive during the six month period immediately
before the expiration of the Initial Term or any Additional Term
that the Company has determined in its reasonable discretion that
the benefits offered in this Agreement no longer represent the
majority practice for similarly situated public, chemical companies
(the “Notice”), this Agreement shall expire without
further renewal one year after the date of the
Notice. 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 by Executive or
the Company for any reason or no reason.
3.
Severance Upon Termination Without Cause by the
Company. If Executive’s employment with the Company and
its subsidiaries is terminated during the Term by the Company
without Cause (the effective date of either such termination
hereafter referred to as the “Termination Date”),
Executive shall be entitled to the following payments and benefits
subject to the Executive’s timely execution of a General
Release as provided in Section 6 herein:
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The Company
shall pay Executive, within fifteen business days after the
Termination Date in a lump sum payment (i) accrued but unpaid Base
Salary through the Termination Date, and (ii) any prior year bonus
earned but not paid.
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The Company
shall pay Executive, six months and one day after the Termination
Date, severance equal to one and one-half (1.5x) times his Base
Salary and Target Bonus. Notwithstanding the above, to the extent
permitted by Section 409A of the Code, a portion of the payment
equal to two times the compensation limit specified in Code Section
401(a)(17) shall be paid within fifteen days of the Termination
Date.
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In addition,
the Executive shall be entitled to a pro-rata portion of the annual
management incentive plan amount for the year of termination based
on the portion of the year elapsed through the termination and the
pro-rata portion shall be calculated based on actual performance
over the entire performance period and any such payment shall be
made on March 15 of the year following termination or, to the
extent required by Section 409A of the Code, six months and one day
following termination, if later.
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Except as
otherwise indicated herein, Executive shall receive any other
benefits he is otherwise eligible for under other plans or programs
of the Company in accordance with their terms. Executive
shall have the right to continue medical and/or dental benefits for
a period of eighteen months following the Termination Date at the
active employee rate.
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The Company
will provide the Executive with reasonable outplacement services
during the twenty-four (24) month period following the Termination
Date (for these purposes, reasonable outplacement services would
not exceed a cost to the Company of $10,000).
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Other than the
benefits set forth in this Section 3, the Company and its
affiliates will have no further obligations hereunder with respect
to Executive following the Termination Date.
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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 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.
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4.
Other
Terminations . Nothing in this Agreement shall be
construed to prevent the Company or any of its subsidiaries from
terminating Executive’s employment for any reason or no
reason. If Executive’s employment is terminated (a) by the
Company for Cause, (b) due to Executive’s death or permanent
disability, or (c) due to Executive’s resignation, the
Company shall have no obligation to make any payments or provide
any benefits under this Agreement.
5.
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 general release to the Company within one week after the
termination of Executive’s employment in the form of
General Release , attached hereto as Exhibit B , it
being understood and agreed that the Executive shall not be
entitled to any benefits provided hereunder unless and until he has
signed and delivered such General Release to the Company and any
revocation period applicable to such General Release expires
without revocation by the Executive.
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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.
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Entire
Agreement/Amendments .
This Agreement contains the entire understanding of the parties
with respect to the subject matter herein. 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.
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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.
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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.
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Assignmen t. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company
to any successor to all or substantially all of the business and/or
assets of the Company provided the Company shall require such
successor to expressly assume and agree to perform this
Agreement.
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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.
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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 as follows:
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If to the
Executive:
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At the address
(or to facsimile number) shown
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on the records
of the Company
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If to the
Company:
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Nalco
Company
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1601 West Diehl
Road
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Naperville, IL
60563-1198
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Attention: Vice
President and General Counsel
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Fax No.:
630-305-2840
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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.
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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.
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Resignations . Executive agrees to immediately resign any
positions held by him with the Company and its affiliates upon the
termination of Executive’s employment.
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Award of
Fees Against Executive. If the Company files suit against
the Executive to enforce any provision of the Agreement and a court
of competent jurisdiction finds or holds in favor of the Company on
any matter, Executive shall reimburse the Company its court costs,
litigation expenses and reasonable attorneys fees incurred in
prosecuting and maintaining such suit.
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* * * * *
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
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NALCO
COMPANY
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By:
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Name:
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Stephen N.
Landsman
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Title:
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Vice President
and General Counsel
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Executive
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By:
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Eric G.
Melin
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EXHIBIT A
Covenants of the
Executive
1.
As a condition for the payments under
this Agreement, 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 and affiliates) is doing
business, directly or indirectly, own, manage, operate, control,
consult with, profit from, 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 and
affiliates); (ii) the Executive shall not, directly or indirectly,
employ, solicit for employment or otherwise contract for the
services of (or assist any other company, business or person in
employing, soliciting for employment or otherwise contracting for
the services of) any individual who is an employee of the Company
(or its subsidiaries and affiliates) at the time of this Agreement
or who shall subsequently become an employee of the Company (or its
subsidiaries and affiliates).
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