EX-10.13 5 file002.htm SEVERANCE AGREEMENT



EXHIBIT 10.13
                               SEVERANCE AGREEMENT

         AGREEMENT effective as of January 1, 2004 between Nalco Company (the
"Company") and Daniel M. Harker ("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/ Stephen N. Landsman
                                         --------------------------------------
                                         Name:  Stephen N. Landsman
                                         Title: Vice President, General Counsel
                                                & Corporate Secretary



Dated: June 30, 2004                  Executive


                                      By: /s/  Daniel M. Harker
                                         ------------------------------