EXHIBIT (10)E(vii)


 


AMENDMENT NO. 3 TO


ECOLAB INC. 2001
NON-EMPLOYEE DIRECTOR


STOCK OPTION AND DEFERRED
COMPENSATION PLAN


(as Amended and Restated
Effective as of May 1, 2004)


 


WHEREAS,
Ecolab Inc. (the “Company”) adopted an amended and restated 2001 Non-Employee
Director Stock Option and Deferred Compensation Plan, effective as of May 1,
2004 (the “Plan”);


 


WHEREAS,
the Plan was previously amended by Amendment No. 1 to address changes
required by Section 409A of the Code and by Amendment No. 2 to effect
certain additional changes relating to exercisability and duration of Periodic
Options granted on or after May 2, 2008;


 


WHEREAS,
the Company wishes to adopt additional changes to the Plan to comply with the
final regulations issued under Section 409A of the Code; and


 


WHEREAS,
the Company wishes to amend certain provisions of the Plan relating to  future grants of Periodic Options, and to
amend the terms of certain options currently outstanding under the Plan, in
each case to permit cashless exercises of such options on the terms and
conditions provided below.


 


NOW
THEREFORE, pursuant to the amending power reserved to the Company’s Board of
Directors by Section 14.1 of the Plan, the Board of Directors adopted this
Amendment No. 3 to the Plan on October 31, 2008.


 


Section 1


 


Section 8.1(b) is
amended and restated to read as follows:


 


“(b)         Time
of Distribution.  Distribution of a
Participant’s Pre-2005 Sub-Account to a Participant will be made (to the extent
a distribution is in the form of a lump sum) or commence (to the extent a
distribution is in the form of installments) as soon as administratively
practicable after the next Credit Date after the Participant ceases to be a
member of the Board; provided that if a lump sum distribution from a
Participant’s Share Account would otherwise be made after the record date for a
dividend but before the payment date for such dividend, the distribution will
be delayed and made as soon as administratively practicable after the earnings
credits have been made to the Share Account pursuant to Section 6.2 on the
payment date of the dividend.


 


Distribution of a Participant’s Post-2004
Sub-Account will be made as soon as administratively practicable but not more
than 90 days after the next Credit Date after the Participant’s Termination of
Service, provided if a lump sum distribution from a Participant’s Share Account
would otherwise be made after the record date for a dividend but before the
payment date for such dividend, the distribution may be delayed and made as
soon as administratively practicable after the earnings credit has been made to
the Share Account pursuant to Section 6.2 on the payment date of the
dividend, provided the distribution is made within 90 days after the next
Credit Date after the Participant’s Termination of Service.


 

















 


If, at his Termination of Service, a
Participant is considered to be a ‘specified employee,’ as defined under Code Section 409A,
no distribution will be made before the date that is six months after the
Participant’s Termination of Service, or if earlier, upon the Participant’s
death.


 


The date as of which a distribution is due
under this Section 8.1(b) is referred to in this Plan as the ‘Time of
Distribution.’”


 


Section 2


 


Section 8.3(b) is
amended by adding the following language to the end of such Section:


 


“Distribution of a Participant’s Post-2004
Sub-Account to a Beneficiary will be made as soon as administratively
practicable but not later than 90 days after the next Credit Date after the
date of the Participant’s death; provided that if a distribution from the
Participant’s Share Account would otherwise be made after the record date for a
dividend but before the payment date for such dividend, the distribution may be
delayed and made as soon as administratively practicable after the earnings
credit has been made to the Share Account pursuant to Section 6.2 on the
payment date of the dividend, provided distribution is made not later than 90
days after the next Credit Date after the Participant’s death.”


 


Section 3


 


Section 11.1 is amended
by adding the following sentence to the end of such Section:


 


“The trustee of the Trust shall not be
permitted to locate any portion of the Trust assets outside of the United
States in violation of Section 409A(b)(1) of the Code.”


 


Section 4


 


Section 15
is amended by adding a new Section 15.16A as follows:


 


“15.16A         Option Exercise Shares.  “Option Exercise Shares” means Shares that
are issuable upon the exercise of a Periodic Option that is: (i) currently
held by, or later issued to, an individual who is a Qualified Director as of October 31,
2008; or (ii) issued after October 31, 2008 to an individual who
subsequently becomes a Qualified Director after October 31, 2008.  For purposes of Section 9.6, Option
Exercise Shares will be valued at the Market Price on the exercise date.


 


by
amending and restating Section 15.22, to read as follows:


 


“15.22             Previously Acquired Shares.  “Previously Acquired Shares” means Shares
that (i) are already owned by the Participant and that are, by virtue of
the Participant’s holding period or other attributes, acceptable to the
Administrator; or (ii) are Option Exercise Shares.


 


and by adding a new Section 15.31A
as follows:


 


2

















 


“15.31A          Termination of Service.  For purposes of distribution of a Participant’s
post-2004 Sub-Account, ‘Termination of Service’ means the individual has ceased
to be a member of the Board and has ceased to provide services as an
independent contractor (including as a member of the board of directors) of the
Company and any other entity with whom the Company would be treated as a single
employer under Section 414(b) or 414(c) of the Code.  In all cases, the individual’s Termination of
Service must constitute a ‘separation from service’ under Section 409A of
the Code.”


 


Section 5


 


In addition to the
amendments provided above, the terms of all “Elective Options” and “Reload
Options” (as such terms were defined in the Plan prior to its amendment on May 1,
2004) held by individuals who are Qualified Directors as of October 31,
2008, are hereby amended to provide that the Administrator, in its sole
discretion and upon terms and conditions established by the Administrator, may
accept, as payment for the purchase price of the Shares to be purchased upon
exercise of any such Elective Option or Reload Option, Shares that are issuable
upon the exercise of such options (valued at the Market Price on the exercise
date), other than in any case in which the Qualified Director will receive a
Reload Option in connection with the exercise.


 


IN WITNESS WHEREOF, Ecolab
Inc. has executed this Amendment No. 3 this 31st day of October, 2008.


 


	
   

  	
  ECOLAB INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael L. Meyer

  
	
   

  	
   

  	
  Michael L. Meyer

  
	
   

  	
   

  	
  Senior Vice President – Human Resources

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Sarah Z. Erickson

  	
   

  	
   

  
	
   

  	
  Sarah Z. Erickson

  	
   

  	
   

  
	
   

  	
  Associate General Counsel – Corporate and Assistant Secretary

  	
   

  	
   

  



 


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