NALCO HOLDING COMPANY
	 

	 
		2004 STOCK INCENTIVE PLAN
	 

	 
		 
	 

	 
		FORM OF
	 

	 
		NONQUALIFIED STOCK OPTION
		AGREEMENT
	 

	 
		 
	 

	 
		THIS AGREEMENT, is made effective as of May
		6, 2005 (the “Date of
		Grant”), between Nalco Holding
		Company (the “Company”) and Gregory N. Nelson (the
		“Participant”).
	 

	 
		R
		E C
		I T
		A L
		S:
	 

	 
		WHEREAS, the Company has adopted the Plan
		(as defined below), the terms of which are hereby incorporated by reference and
		made a part of this Agreement; and
	 

	 
		WHEREAS, the Committee has determined that
		it would be in the best interests of the Company and its stockholders to grant
		the Options provided for herein to the Participant pursuant to the Plan and the
		terms set forth herein;
	 

	 
		NOW, THEREFORE, in consideration of the
		mutual covenants hereinafter set forth, the parties agree as follows:
	 

	 
		1. Definitions.
		Whenever the following terms are used in this Agreement, they shall have the
		meanings set forth below. Capitalized terms not otherwise defined herein shall
		have the same meanings as in the Plan.
	 

	 
		(a) Cause:
		“Cause” as defined in an employment agreement between the Participant
		and the Company or its Affiliates or, if not defined therein or if there is no
		such agreement, “Cause” shall mean (i) the commission by the
		Participant of an act of fraud or embezzlement, (ii) the indictment or
		conviction of the Participant for a felony or a crime involving moral turpitude
		or a plea by the Participant of guilty or nolo contendere involving such a
		crime, (iii) the malfeasance or willful misconduct by the Participant in the
		performance of the Participant’s duties, (iv) the violation by the
		Participant of a written Company policy regarding employment, including without
		limitation substance abuse, sexual harassment or discrimination, (v) the
		willful failure of the Participant to render services to the Company or any of
		its Subsidiaries which failure amounts to a material neglect of the
		Participant’s duties to the Company or any of its Subsidiaries (other than
		as a result of mental or physical incapacity) (vi) the repeated failure of the
		Participant to comply with reasonable directives of the Board or the chief
		executive officer of the Company consistent with the Participant’s duties
		or (vii) the material breach by the Participant of any of the provisions of any
		agreement between the Participant, on the one hand, and the Company or an
		Affiliate of the Company, on the other hand.
	 

	 
		(b) Disability:
		“Disability” as defined in an employment agreement then in effect
		between the Participant and the Company or its Affiliates or if not defined
		therein or if there is no such agreement, “Disability” shall mean the
		inability of a Participant to perform the essential functions of the
		Participant’s job, with or without reasonable accommodation, by reason of
		a 
	 

	 
		 
	 



	 
	 

	 

	 
		physical or mental infirmity, for a
		continuous period of six months or for an aggregate of nine months in a
		twenty-four month period. The period of six months shall be deemed continuous
		unless such Participant returns to work for at least 30 consecutive business
		days during such period and performs during such period at the level and
		competence that existed prior to the beginning of the six-month period. 
	 

	  

	 
		(c) Expiration Date: The tenth anniversary of the Date of Grant.
	 

	 
		(d) Plan: The
		Nalco Holding Company 2004 Stock Incentive Plan, as from time to time
		amended.
	 

	 
		(e) Vested
		Portion: At any time, the portion
		of an Option which has become vested, as described in Section 3 of this
		Agreement.
	 

	 
		2. Grant of
		Options. The Company hereby grants to
		the Participant the right and option to purchase (the “Option”), on the terms and conditions hereinafter set
		forth, 43,330 Shares, subject to adjustment as set forth in the Plan. The
		exercise price shall be $17.25 per Share (the “Option Price”). The Options are intended to be nonqualified
		stock options, and are not intended to be treated as ISOs that comply with
		Section 422 of the Code.
	 

	 
			
				
				   
				

			 	
				
				  3.
				

			 	
				
				  Vesting of the
				  Options.
				

			 

 

	 
		(a) Vesting of
		the Option. Subject to the
		Participant’s continued Employment with the Company and its Affiliates,
		the Option shall vest and become exercisable with respect to one-fourth of the
		Shares subject to the Option on the first anniversary of the Date of Grant and
		shall vest and become exercisable with respect to an additional one-fourth of
		the Shares subject to the Option on each subsequent anniversary of the Date of
		Grant, until such Shares subject to the Option are 100% vested and
		exercisable.
	 

	 
		(b) Termination
		of Employment. If the
		Participant’s Employment with the Company and its Affiliates terminates
		for any reason, the Option, to the extent not then vested and exercisable,
		shall be immediately canceled by the Company without consideration.
	 

	 
			
				
				   
				

			 	
				
				  4.
				

			 	
				
				  Exercise of Options.
				

			 

 

	 
		(a) Period of
		Exercise. Subject to the provisions of
		the Plan and this Agreement, the Participant may exercise all or any part of
		the Vested Portion of the Option at any time prior to the Expiration Date.
		Notwithstanding the foregoing, if the Participant’s Employment terminates
		prior to the Expiration Date, the Vested Portion of the Option shall remain
		exercisable for the period set forth below:
	 

	 
		(i) Death or
		Disability. If the Participant’s
		Employment with the Company and its Affiliates is terminated due to the
		Participant’s death or Disability, the Participant may exercise the Vested
		Portion of an Option for a period ending on the earlier of (A) one year
		following the date of such termination and (B) the Expiration Date
	 

	 
		(ii) Termination
		by the Company without Cause or Termination by the Participant. If the Participant’s Employment with the Company
		and its Affiliates is
	 

	 
		 
	 



	 
	 

	 

	 
		terminated (a) by the Company without Cause
		or (b) by the Participant, the Participant may exercise the Vested Portion of
		the Option for a period ending on the earlier of (A) 90 days following the date
		of such termination and (B) the Expiration Date; and
	 

	 
		(iii) Termination
		by the Company for Cause. If the
		Participant’s Employment with the Company and its Affiliates is terminated
		by the Company for Cause, the Vested
		Portion of the Option shall immediately terminate in full and cease to be
		exercisable.
	 

	 
		Notwithstanding the above, the options may
		only be exercised during a period in which the Company can transfer registered
		shares to the Participants. He period of exercise shall be equitably adjusted
		in the event that the Company does not have available to it property registered
		shares at the time of an attempted exercise.
	 

	 
			
				
				   
				

			 	
				
				  (b)
				

			 	
				
				  Method of
				  Exercise.
				

			 

 

	 
		(i) Subject to
		Section 4(a) of this Agreement, the Vested Portion of the Option may be
		exercised by delivering to the Company at its principal office written notice
		of intent to so exercise; provided that
		the Option may be exercised with respect to whole Shares only. Such notice
		shall specify the number of Shares for which the Option is being exercised and
		shall be accompanied by payment in full of the aggregate Option Price. Payment
		of the aggregate Option Price may be made (A) in cash, or its equivalent, (B)
		to the extent permitted by the Committee, by transferring Shares having a Fair
		Market Value equal to the aggregate Option Price for the Shares being purchased
		to the Company and satisfying such other requirements as may be imposed by the
		Committee; provided that such Shares have been held by the Participant for
		no less than six months (or such other period as established from time to time
		by the Committee or generally accepted accounting principles), (C) if there is
		a public market for the Shares at such time, subject to such rules as may be
		established by the Committee, through delivery of irrevocable instructions to a
		broker to sell the Shares otherwise deliverable upon the exercise of the Option
		and to deliver promptly to the Company an amount equal to the aggregate Option
		Price for the shares being purchased or (D) such other method as approved by
		the Committee. No Participant shall have any rights to dividends or other
		rights of a stockholder with respect to the Shares subject to the Option until
		the Participant has given written notice of exercise of the Option, paid in
		full for such Shares and, if applicable, has satisfied any other conditions
		imposed by the Committee pursuant to the Plan.
	 

	 
		(ii) Notwithstanding any other provision of the Plan or this
		Agreement to the contrary, absent an available exemption to registration or
		qualification, the Option may not be exercised prior to the completion of any
		registration or qualification of the Option or the Shares under applicable
		state and federal securities or other laws, or under any ruling or regulation
		of any governmental body or national securities exchange that the Committee
		shall in its sole reasonable discretion determine to be necessary or
		advisable.
	 

	 
		(iii) Upon the
		Company’s determination that an Option has been validly
	 

	  

	 
		 
	 



	 
	 

	 

	 
		exercised as to any of the Shares, the
		Company shall issue certificates in the Participant’s name for such
		Shares. However, the Company shall not be liable to the Participant for damages
		relating to any delays in issuing the certificates to the Participant, any loss
		by the Participant of the certificates, or any mistakes or errors in the
		issuance of the certificates or in the certificates themselves.
	 

	 
		(iv) In the event of the Participant’s
		death, the Vested Portion of the Option shall remain vested and exercisable by
		the Participant’s executor or administrator, or the person or persons to
		whom the Participant’s rights under this Agreement shall pass by will or
		by the laws of descent and distribution as the case may be, to the extent set
		forth in Section 4(a) of this Agreement. Any heir or legatee of the Participant
		shall take rights herein granted subject to the terms and conditions
		hereof.
	 

	 
		5. No Right to
		Continued Employment. Neither the Plan
		nor this Agreement shall be construed as giving the Participant the right to be
		retained in the employ of, or in any consulting relationship to, the Company or
		any Affiliate. Further, the Company or its Affiliate may at any time dismiss
		the Participant or discontinue any consulting relationship, free from any
		liability or any claim under the Plan or this Agreement, except as otherwise
		expressly provided herein.
	 

	 
		6. Legend on
		Certificates. The certificates
		representing the Shares purchased by exercise of the Option shall be subject to
		such stop transfer orders and other restrictions as the Committee may deem
		reasonably advisable under the Plan or the rules, regulations, and other
		requirements of the Securities and Exchange Commission, any stock exchange upon
		which such Shares are listed, any applicable federal or state laws and the
		Company’s Certificate of Incorporation and Bylaws, and the Committee may
		cause a legend or legends to be put on any such certificates to make
		appropriate reference to such restrictions.
	 

	 
		7. Transferability.
		Unless otherwise determined by the Committee, the Option may not be assigned,
		alienated, pledged, attached, sold or otherwise transferred or encumbered by
		the Participant otherwise than by will or by the laws of descent and
		distribution, and any such purported assignment, alienation, pledge,
		attachment, sale, transfer or encumbrance shall be void and unenforceable
		against the Company or any Affiliate; provided that
		the designation of a beneficiary shall not constitute an assignment,
		alienation, pledge, attachment, sale, transfer or encumbrance. During the
		Participant’s lifetime, the Option is exercisable only by the
		Participant.
	 

	 
		8. Withholding. The
		Participant may be required to pay to the Company or its Affiliate and the
		Company or its Affiliate shall have the right and is hereby authorized to
		withhold from any payment due or transfer made under the Option or under the
		Plan or from any compensation or other amount owing to a Participant the amount
		(in cash, Shares, other securities, other Awards or other property) of any
		applicable withholding taxes in respect of the Option, its exercise, or any
		payment or transfer under the Option or under the Plan and to take such action
		as may be necessary in the option of the Company to satisfy all obligations for
		the payment of such taxes.
	 

	 
		9. Securities
		Laws. Upon the acquisition of any
		Shares pursuant to the
	 

	 
		 
	 



	 
	 

	 

	 
		exercise of the Option, the Participant will
		make or enter into such written representations, warranties and agreements as
		the Committee may reasonably request in order to comply with applicable
		securities laws or with this Agreement. 
	 

	 
		10. Notices. Any
		notice under this Agreement shall be addressed to the Company in care of its
		Chief Financial Officer and a copy to the Chief Executive Officer, each copy
		addressed to the principal executive office of the Company and to the
		Participant at the address appearing in the personnel records of the Company
		for the Participant or to either party at such other address as either party
		hereto may hereafter designate in writing to the other. Any such notice shall
		be deemed effective upon receipt thereof by the addressee.
	 

	 
		11. Governing
		Law. This Agreement shall be governed
		by and construed in accordance with the laws of the State of New York without
		regard to conflicts of laws.
	 

	 
		12. Signature
		in 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.
	 

	 
		IN WITNESS WHEREOF, this Agreement has been
		executed and delivered by the parties hereto.
	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  Nalco Holding Company
				

			 
	
				
				

			 	
				
				   
				

			 	
				
				  By: 
				

			 	
				
				  
 /S/ Stephen N. Landsman
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Its:
				

			 	
				
				  Vice President
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  /S/ Gregory N. Nelson
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Participant