Document:

ECOLAB

ECOLAB,

INC.

ADMINISTRATIVE

DOCUMENT FOR NON-QUALIFIED BENEFIT PLANS

 

Fourth

Declaration of Amendment

 

Pursuant to Section 5.1 of the Ecolab Inc.

Administrative Document for Non-Qualified Benefit Plans (“Administrative

Document”), the Company amends the Administrative Document as set for the

below.  Except as specifically described

herein, the terms of this Amendment shall be effective on February 22,

2002.  Words and phrases used herein

with initial capital letters which are defined in the Administrative Document

are used herein as so defined.

 

1.             Effective

as of January 1, 2001, Section 1.2(2) of the Administrative Document is hereby

amended in its entirety to read as follows:

 

                “(2)

any salary reductions caused as a result of participation in any Employer-sponsored

plan which is governed by Sections 401(k), 132(f)(4) or 125 of the Code.”

 

2.             Article

I of the Administrative Document is hereby amended by adding the following new

Section 1.3A thereto, immediately following Section 1.3 thereof, to read as

follows:

 

                “SECTION

1.3A. “Change in Control.”  A

“Change in Control” shall be deemed to have occurred if the event set forth in

any one of the following Subsections shall have occurred:

 

                (1)           any “person” as such term is used in

Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended

(“Exchange Act”) (other than the Company, any trustee or other fiduciary

holding securities under any employee benefit plan of the Company, or any

corporation owned, directly or indirectly, by the stockholders of the Company

in substantially the same proportions as their ownership of stock of the

Company), is or becomes, including pursuant to a tender or exchange offer for

shares of  the common stock of the

Company (“Common Stock”) pursuant to which purchases are made, the “beneficial

owner” (as defined in Rule 13d-3 under the Exchange Act), directly or

indirectly, of securities of the Company representing 25% or more of the

combined voting power of the Company’s then outstanding securities, other than

in a transaction arranged or approved by the Board of Directors of the Company

(the “Board”) prior to its occurrence; provided, however, that if any such

person will become the beneficial owner, directly or indirectly, of securities

of the Company representing 34% or more of the combined voting power of the

Company’s then outstanding securities, a Change in Control will be deemed to

occur whether or not any or all of such beneficial ownership is obtained in a

transaction arranged or approved by the Board prior to its occurrence, and

other than in a transaction in which such person will have executed a written

agreement with the Company (and approved by the Board) on or prior to the date

on which such person becomes the beneficial owner of 25% or more of the

combined voting power of the Company’s then outstanding securities, which

agreement imposes one or more limitations on the amount of such person’s

beneficial ownership of shares of Common Stock, if, and so long as, such

agreement (or any amendment thereto approved by the Board provided that no such

amendment will cure any prior breach of such agreement or any amendment

thereto) continues to be binding on such person and such person is in

compliance (as determined by the Board in its sole discretion) with the terms of

such agreement (including such amendment); provided, however that if any such

person will become the beneficial owner, directly or indirectly, of securities

of the Company representing 50% or more of the combined voting power of the

Company’s then outstanding securities, a Change in Control will be deemed to

occur whether or not such beneficial ownership was held in compliance with such

a binding agreement, and provided further that the provisions if this

Subsection (1) shall not be applicable to a transaction in which a corporation

becomes the owner of all the Company’s outstanding securities in a 

 

 

transaction which complies with the provisions of Subsection (3) of

this Section (e.g., a reverse triangular merger); or

 

                (2)           during any thirty-six consecutive

calendar months, individuals who constitute the Board on the first day of such

period or any new director (other than a director whose initial assumption of

office is in connection with an actual or threatened election contest

including, but not limited to, a consent solicitation, relating to the election

of directors of the Company) whose appointment or election by the Board or

nomination for election by the Company’s stockholders was approved or

recommended by a vote of at least two-thirds (2/3) of the directors then still

in office who were either directors on the first day of such period, or whose

appointment, election or nomination for election was previously so approved or

recommended, shall cease for any reason to constitute at least a majority thereof;

or

 

                (3)           there is consummated a merger or

consolidation of the Company or any direct or indirect subsidiary of the

Company with any other corporation, other than a merger or consolidation which

would result in the voting securities of the Company outstanding immediately

prior to such merger or consolidation continuing to represent (either by

remaining outstanding or by being converted into voting securities of the

surviving entity or any parent thereof) more than 50% of the combined voting

power of the securities of the Company or such surviving entity or any parent

thereof outstanding immediately after such merger or consolidation, and in

which no “person” (as defined under Subsection (1) above) acquires 50% or more

of the combined voting power of the securities of the Company or such surviving

entity or parent thereof outstanding immediately after such merger or

consolidation; or

 

                (4)           the stockholders of the Company

approve a plan of complete liquidation or dissolution of the Company or there

is consummated an agreement for the sale or disposition by the Company of all

or substantially all of the Company’s assets, other than a sale or disposition

by the Company of all or substantially all of the Company’s assets to an

entity, more than 50% of the combined voting power of the voting securities of

which are owned by stockholders of the Company in substantially the same

proportions as their ownership of the Company immediately prior to such sale.”

 

                IN

WITNESS WHEREOF, the Company has caused this instrument to be executed by its

duly authorized officer and its corporate seal affixed, this 27 day of

February, 2002.

 

	

   

  	

  ECOLAB, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/

  	

  Steven L. Fritze

  	

   

  
	

   

  	

  Title: Senior Vice President – Finance and

  Controller

  
	

   

  	

   

  
	

  (Seal)

  	

   

  
	

   

  	

   

  
	

  Attest: 

  	

  /s/

  	

  Kenneth A. Iverson

  	

   

  	

   

  
								

 

2CHANGE-IN-CONTROL SEVERANCE COMPENSATION PLAN

 

ECOLAB INC.

 

CHANGE IN CONTROL SEVERANCE COMPENSATION POLICY

 

ARTICLE I  -

INTRODUCTION

 

Section 1.1      Background.  The Board of Directors (the “Board”) of

Ecolab Inc. (the “Company”) has considered the effect a Change in Control of

the Company may have on certain Executives of the Company.  The Board recognizes and understands the

concern such Executives have for their careers and their personal financial

security in the event of a Change in Control of the Company.  As a result, absent appropriate assurances,

such Executives are likely to seek more secure career opportunities elsewhere

if a Change in Control of the Company is perceived to be a real possibility, or

if a Change in Control transaction is proposed or threatened.

 

Section 1.2      Purpose.  This Policy is designed to encourage

Executives to remain employees of the Company and its Subsidiaries

notwithstanding the time pressure and financial uncertainty which may result

from a proposed or threatened Change in Control transaction and notwithstanding

the outcome of any such proposed transaction, to enable Executives to make

career decisions and to assure fair treatment of such Executives in the event

of a Change in Control of the Company.

 

ARTICLE II - ESTABLISHMENT OF THE POLICY

 

Section 2.1      Establishment

of Policy.  As of the Effective

Date, the Company establishes this severance compensation Policy known as the

“Change in Control Severance Compensation Policy” (this “Policy”).

 

Section 2.2      Applicability

of Policy.  The benefits provided by

this Policy shall be available to all Executives who, at or after the Effective

Date, meet the eligibility requirements of Article IV hereof.

 

Section 2.3      Contractual

Right to Benefits.  Subject to the

provisions of Article VIII hereof, this Policy establishes and vests in each

Participant a contractual right to the benefits to which he or she is entitled

hereunder, enforceable by the Participant against the Company on the terms and

subject to the conditions hereof.

 

ARTICLE III  -

DEFINITIONS AND CONSTRUCTION

 

Section 3.1      Definitions.  The following terms shall have the following

meanings when used in this Policy with initial capital letters:

 

(a)         “Base Pay” of a Participant

means the Participant’s annual base salary rate as in effect on the Termination

Date from the Participant’s Employer(s); provided, however, that any reductions

in Base Pay following the date of the Change in Control will not be taken into

account when determining Base Pay hereunder.

 

 

(b)         “Board” means the Board of

Directors of the Company.

 

(c)         “Change in Control” of the

Company shall be deemed to have occurred if the events set forth in any one of

the following paragraphs shall have occurred:

 

(i)                any “person” as such term is

used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company,

any trustee or other fiduciary holding securities under any employee benefit

Policy of the Company or any corporation owned, directly or indirectly, by the

stockholders of the Company in substantially the same proportions as their

ownership of stock of the Company), is or becomes, including pursuant to a

tender or exchange offer for shares of Common Stock pursuant to which purchases

are made, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange

Act), directly or indirectly, of securities of the Company representing 25% or

more of the combined voting power of the Company’s then outstanding securities,

other than in a transaction arranged or approved by the Board prior to its

occurrence; provided, however, that if any such person will become the

beneficial owner, directly or indirectly, of securities of the Company

representing 34% or more of the combined voting power of the Company’s then

outstanding securities, a Change in Control will be deemed to occur whether or

not any or all of such beneficial ownership is obtained in a transaction

arranged or approved by the Board prior to its occurrence, and other than in a

transaction in which such person will have executed a written agreement with

the Company (and approved by the Board) on or prior to the date in which such

person becomes the beneficial owner of 25% or more of the combined voting power

of the Company’s then outstanding securities, which agreement imposes one or

more limitations on the amount of such person’s beneficial ownership of shares

of Common Stock, if, and so long as, such agreement (or any amendment thereto

approved by the Board provided that no such amendment will cure any prior

breach of such agreement or any amendment thereto) continues to be binding on

such person and such person is in compliance (as determined by the Board in its

sole discretion) with the terms of such agreement (including such amendment);

provided, however, that if any such person will become the beneficial owner,

directly or indirectly, of securities of the Company representing 50% or more

of the combined voting power of the Company’s then outstanding securities, a

Change in Control will be deemed to occur whether or not such beneficial

ownership was held in compliance with such a binding agreement, and provided

further that the provisions of this subparagraph (i) shall not be applicable to

a transaction in which a corporation becomes the owner of all the Company’s

outstanding securities in a transaction which complies with the provisions of

subparagraph (iii) of this Section 3.1(c) (e.g., a reverse triangular merger);

or

 

(ii)               during any thirty-six consecutive

calendar months, individuals who constitute the Board on the first day of such

period or any new director (other than a director whose initial assumption of

office is in connection with an actual or threatened election contest

including, but not limited to, a consent solicitation, relating to the election

of directors of the Company) whose appointment or election by the Board or

nomination for election by the Company’s stockholders

 

2

 

 was approved or recommended by a vote of at

least two-thirds (2/3) of the directors then still in office who were either

directors on the first day of such period, or whose appointment, election or

nomination for election was previously so approved or recommended, shall cease

for any reason to constitute at least a majority thereof; or

 

(iii)              there

is consummated a merger or consolidation of the Company or any direct or

indirect subsidiary of the Company with any other corporation, other than a

merger or consolidation which would result in the voting securities of the

Company outstanding immediately prior to such merger or consolidation

continuing to represent (either by remaining outstanding or by being converted

into voting securities of the surviving entity or any parent thereof) more than

50% of the combined voting power of the securities of the Company or such

surviving entity or any parent thereof outstanding immediately after such

merger or consolidation, and in which no “person” (as defined under Subsection

(i) above) acquires 50% or more of the combined voting power of the securities

of the Company or such surviving entity or parent thereof outstanding immediately

after such merger or consolidation; or

 

(iv)             the stockholders of the Company

approve a Policy of complete liquidation or dissolution of the Company or there

is consummated an agreement for the sale or disposition by the Company of all

or substantially all of the Company’s assets, other than a sale or disposition

by the Company of all or substantially all of the Company’s assets to an

entity, more than 50% of the combined voting power of the voting securities of

which are owned by stockholders of the Company in substantially the same

proportions as their ownership of the Company immediately prior to such sale.

 

(d)         “Code” means the Internal

Revenue Code of 1986, as amended.

 

(e)         “Company” means Ecolab Inc., a

Delaware corporation, and any successor thereto as provided in Section 7.1

hereof.

 

(f)          “Effective Date” means February

22, 2002.

 

(g)         “Employer” means the Company,

any Subsidiary or any “affiliated organization” which employs an

Executive.  For purposes of this Policy,

an “affiliated organization” is the Company and (i) any corporation that is a

member of a controlled group of corporations (within the meaning of Code

Section 1563(a) without regard to Code Sections 1563(a)(4) and 1563(e)(3)(C))

that includes the Company, (ii) any trade or business (whether or not

incorporated) that is controlled (within the meaning of Code Section 414(c)) by

the Company, (iii) any member of an “affiliated service group” (within the

meaning of Code Section 414(m)) of which the Company is a member or (iv) any

other organization that, together with the Company, is treated as a single

employer pursuant to Code Section 414(o) or the regulations thereunder;

provided that the provisions of Code Section 1563(a) shall be applied by

substituting the phrase “more than 50 percent” for the phrase “at least 80

percent” wherever it appears in such Code Section.

 

3

 

(h)         “Exchange Act” means the

Securities Exchange Act of 1934, as amended.

 

(i)          “Executive” means any person

who is designated as an officer of the Company by the Board and who is employed

by an Employer as a salaried employee on a substantially full-time basis, other

than a person who is designated solely as an assistant officer.

 

(j)          “Good Reason” means, without

the express written consent of the Participant:

 

(i)                the assignment to the

Participant of any duties inconsistent in any substantial respect with the

Participant’s position, authority or responsibilities as in effect during the

90-day period immediately preceding the Change in Control which assignment

results in a substantial diminution in such position, authority or

responsibilities or any other substantial adverse change in such

position (including titles), authority or responsibilities, excluding an

isolated, insubstantial and inadvertent action not taken in bad faith and which

is remedied by the Employer as set forth below.

 

(ii)               any failure by the Employer to

furnish the Participant with compensation and benefits at a level substantially

equal to or exceeding those received by the Participant from the Employer

during the 90-day period preceding the Change in Control, other than (A) an

insubstantial and inadvertent failure remedied by the Employer as set forth

below, (B) a reduction in compensation which is applied to all non-union

employees of the Employer in the same dollar amount or percentage or (C) a

reduction or modification of any employee benefit program covering

substantially all of the employees of the Employer, which reduction or

modification generally applies to all employees covered under such program;

 

(iii)              the Employer’s requiring the

Participant to be based or to perform services at any office or location that

is in excess of 50 miles from the principal location of the Participant’s work

during the 90-day period immediately preceding the Change in Control, except

for travel reasonably required in the performance of the Participant’s

responsibilities;

 

(iv)             the failure by the Employer to

comply with any requirements existing in any deferred compensation or other

policy of the Employer, which require the establishment and funding of a trust

or trusts following a Change in Control, unless remedied by the Employer as set

forth below; or

 

(v)              the failure by the Company to

obtain the assumption and agreement to perform the obligations under this

Policy by any successor as contemplated by Section 7.1 hereof.

 

Before a

termination by the Participant under this Section 3.1(j) will constitute

termination for Good Reason, the Participant must give the Company a Notice of

Termination within 30 calendar days of the occurrence of the event that

constitutes Good Reason.  Failure to

provide such Notice of Termination within such 30-day period shall be

conclusive proof that the Participant shall not have Good Reason to terminate

employment.

 

4

 

For purposes of

subparagraphs (i), (ii) and (iv) of this Section 3.1(j), Good Reason shall

exist only if the Employer fails to remedy the event or events constituting

Good Reason within 15 calendar days after receipt of the Notice of Termination

from the Participant.  If the

Participant determines that Good Reason for termination exists and timely files

a Notice of Termination, such determination shall be presumed to be true and

the Company will have the burden of proving that Good Reason does not exist.

 

(k)         “Incentive Pay” means the target

bonus as notified to the Participant for the year in which the Termination Date

occurs under the Management Incentive Plan or the Management Performance

Incentive Plan, as applicable to the Participant, or if such Plan or Plans are

no longer in effect, the annual bonus, incentive or other payment of

compensation in addition to Base Pay, made or to be made in regard to services

rendered in any year or other annual measurement period pursuant to any bonus,

incentive, performance, or similar agreement, policy, Policy, program or

arrangement of the Employer or any successor thereto.

 

(l)          “Just Cause” means without the

written consent of the Company, the Participant (i) participates in dishonesty,

fraud, misrepresentation, embezzlement or deliberate injury or attempted

injury, in each case related to the Company, an Employer or a Subsidiary, (ii)

commits any unlawful or criminal activity of a serious nature, (iii) commits

any intentional and deliberate breach of a duty or duties that, individually or

in the aggregate, are material in relation to the Participant’s overall duties

or (iv) materially breaches any confidentiality or noncompete agreement entered

into with the Company or an Employer. 

The Company shall have the burden of proving that Just Cause exists.

 

For purposes of

this Policy, the Participant shall not be deemed to have been terminated for

“Just Cause” hereunder unless (A) the Participant receives a Notice of

Termination setting forth the grounds for the termination at least 30 calendar

days prior to the specified Termination Date, (B) if requested by the

Participant, the Participant (and/or the Participant’s counsel or other

representative) is granted a hearing before the full Board and (C) a majority

of the members of the full Board determine that the Participant violated one or

more of the provisions of the definition of “Just Cause” set forth above.

 

(m)        “Notice of Termination” means (i)

a written notice of termination by the Company to the Executive or (ii) a

written notice of termination for Good Reason by the Executive to the Company,

in either case, setting forth in reasonable detail the specific reason for

termination and the facts and circumstances claimed to provide a basis for

termination of employment under the provision indicated.

 

(n)         “Participant” means an Executive

who meets the eligibility requirements of Article IV hereof, other than an

Executive who has entered into an employment, severance or other similar

agreement with the Company (other than a stock option or restricted stock

agreement or other form of participation document entered into pursuant to an

Employer-sponsored plan which may incidentally refer to accelerated vesting or

accelerated payment upon a change in control (as defined in such separate plan

or document)) which becomes operative upon the occurrence of a change in

control of the Company (as defined in such agreement).

 

5

 

(o)         “Policy” means this Change in

Control Severance Compensation Policy.

 

(p)         “Protection Period” means the

period of time commencing on the date of the first occurrence of a Change in

Control and continuing until the second anniversary of the occurrence of the

Change in Control.

 

(q)         “Severance Payment” means the

payment of severance compensation as provided in Article V hereof.

 

(r)          “Subsidiary” means any

corporation or other legal entity a majority of the securities entitled to vote

generally in the election of directors of which are owned by the Company or

another Subsidiary of the Company.

 

(s)         “Termination Date” means, (i)

with respect to a termination by the Employer, the date on which the

Participant’s employment is terminated as stated in the Notice of Termination

and (ii) with respect to a termination by the Participant for Good Reason, the

date that is 15 calendar days following the Company’s receipt of the Notice of

Termination.

 

Section 3.2      Status

of Policy/Applicable Law.

 

(a)         This Policy is classified as a “payroll

practice” under Department of Labor Regulation Section 2510.3-1(b) and, as such

is not subject to the provisions of the Employee Retirement Income Security Act

of 1974, as amended.  The Policy will be

interpreted and administered accordingly.

 

(b)         This Policy shall be administered,

construed and enforced according to the laws of the State of Minnesota.

 

Section 3.3      Severability.  If a provision of this Policy shall be held

illegal or invalid, the illegality or invalidity shall not affect the remaining

parts of this Policy and this Policy shall be construed and enforced as if the

illegal or invalid provision had not been included.

 

ARTICLE IV  -

ELIGIBILITY

 

Section 4.1      Participation.  Each person who is an Executive on the

Effective Date shall be a Participant on the Effective Date.  Thereafter, each other person who becomes an

Executive prior to both (a) a Change in Control and (b), unless specifically

provided for by the Board at the time a Participant is elected as an Executive,

the date a notice of termination of the Policy is provided under Section

8.1(a), shall automatically become a Participant on the day on which such

person becomes an Executive.

 

Section 4.2      Duration

of Participation.  A Participant

shall cease to be a Participant and shall have no rights hereunder, without

further action, when he or she ceases to be an Executive, unless such

Participant is then entitled to payment of a Severance Payment as provided in

Section 5.1 hereof.  A Participant

entitled to a Severance Payment shall remain a Participant in this Policy until

the full amount of the Severance Payment has been paid to the Participant.

 

6

 

ARTICLE V  - SEVERANCE

PAYMENTS

 

Section 5.1      Right

to Severance Payment.

 

(a)         Subject to Subsection (c) hereof, a

Participant shall be entitled to receive from the Company a Severance Payment

in the amount provided in Section 5.2 hereof if there has been a Change in

Control and if, after a Change in Control and within the Protection Period, (i)

the Participant’s employment by an Employer shall be terminated by the Employer

without Just Cause or (ii) the Participant shall terminate employment with an

Employer for Good Reason.

 

(b)         Notwithstanding anything to the

contrary contained in this Policy, any termination of employment of the

Participant or removal of the Participant from the office or position in the

Company that occurs prior to a Change in Control but which the Participant

reasonably demonstrates occurred at the request of a third party who had taken

steps reasonably calculated to effect the Change in Control shall be deemed to

be a termination or removal of the Participant after a Change in Control for

purposes of this Policy.

 

(c)         Notwithstanding anything to the contrary

contained in this Policy, a Participant shall not be entitled to receive any

Severance Payment hereunder unless and until he or she has signed and returned

to the Company a release in the form prescribed by the Company and the

applicable rescission period for such release has expired.

 

Section 5.2      Amount

of Severance Payment.

 

(a)         Each Participant entitled to a

Severance Payment under this Policy shall receive the following Severance

Payment from the Company.

 

(i)             A lump sum cash payment in an

amount equal to two times the sum of (A) the Participant’s Base Pay plus (B)

Incentive Pay; provided, however, that the amount of such cash payment

determined pursuant to this Section 5.2(a)(i) shall be reduced by an amount

equal to the aggregate amount of any other cash payments in the nature of

severance payments paid or payable by the Company or the Employer or any

Subsidiary pursuant to any agreement, policy, program, arrangement or

requirement of statutory or common law (other than this Policy or cash payments

received in lieu of stock incentives);

 

(ii)            A lump sum cash payment in an amount

equal to (A) the Incentive Pay for the year in which the Termination Date

occurs, pro rated to reflect time worked during the year in which the

Termination Date occurs (i.e., days worked during the year divided by

365 days times the Incentive Pay expressed as a dollar amount) and (B) reduced

by any amounts paid under the terms of the applicable incentive bonus Policy

itself for the same period of time;

 

(iii)           Reasonable fees for outplacement

services, by a firm selected by the Company and at the expense of the Company,

in an amount not in excess of 20% of Base Pay; and

 

7

 

(iv)           Eligibility for continuation coverage

pursuant to Section 4980B of the Code (or any successor provision thereto)

under the Employer’s medical, dental and other group health plans, or successor

plans as in effect from time to time; provided, however, that (A) the Company

shall reimburse the Participant, on a semi-annual basis, for any costs incurred

in securing such continuation coverage that are in excess of the costs that

would have been incurred by the Participant immediately prior to the

Termination Date to obtain such coverage and (B) such reimbursements shall in

no event continue beyond a period of eighteen (18) months following the

Termination Date.

 

(b)         Notwithstanding any provision of this

Policy to the contrary, if any amount or benefit to be paid or provided under

this Policy or any other plan or agreement between the Participant and an

Employer would be an “Excess Parachute Payment,” within the meaning of Section

280G of the Code, or any successor provision thereto, but for the application

of this sentence, then the payments and benefits to be paid or provided under

this Policy shall be reduced to the minimum extent necessary (but in no event

to less than zero) so that no portion of any such payment or benefit, as so

reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing

reduction shall be made only if and to the extent that such reduction

would result in an increase in the aggregate payment and benefits to be

provided to the Participant, determined on an after-tax basis (taking into

account the excise tax imposed pursuant to Section 4999 of the Code, or any

successor provision thereto, any tax imposed by any comparable provision of

state law, and any applicable federal, state and local income taxes).  If requested by the Participant or the

Employer, the determination of whether any reduction in such payments or

benefits to be provided under this Policy or otherwise is required pursuant to

the preceding sentence shall be made by the Company’s independent accountants,

at the expense of the Company, and the determination of the Company’s

independent accounts shall be final and binding on all persons.   The fact that the Participant’s right to

payments or benefits may be reduced by reason of the limitations contained in

this Section 5.2(b) shall not of itself limit or otherwise affect any other

rights of the Participant pursuant to this Policy.  In the event that any payment or benefit intended to be provided

under this Policy or otherwise is required to be reduced pursuant to this

Section, the Participant (in his or her sole discretion) shall be entitled to

designate the payments and/or benefits to be so reduced in order to give effect

to this Section.  The Employer shall

provide the Participant with all information reasonably requested by the

Participant to permit the Participant to make such designation.  In the event that the Participant fails to

make such designation within ten business days of receiving such information,

the Employer may effect such reduction in any manner it deems appropriate.

 

(c)         The Participant shall not be required

to mitigate damages or the amount of his or her Severance Payment by seeking

other employment or otherwise, nor shall the amount of such payment be reduced

by any compensation earned by the Participant as a result of employment after the

termination of his or her employment by an Employer.

 

Section 5.3      Time

of Severance Payment.  The Severance

Payment to which a Participant is entitled shall be paid to the Participant by

the Company in cash and in full, not later than 30 calendar days after the

Participant’s Termination Date (or, if later, the date on which both the

 

8

 

Excess Parachute Payment calculations described in

Section 5.2(b) are completed and the date the applicable rescission period for

the release required in Section 5.1(c) has expired, but in no event shall

payment be made later than 90 calendar days after the Termination Date).  If such a Participant should die before all

amounts payable to him have been paid, such unpaid amounts shall be paid to the

Participant’s spouse, if living, otherwise to the personal representative of

the Participant’s estate.

 

Section 5.4      Liability

for Payment.  The Company shall be

solely liable for and shall pay the Severance Payments (or cause the Severance

Payments to be paid) to the Executive.

 

ARTICLE VI  - OTHER

RIGHTS AND BENEFITS NOT AFFECTED

 

Section 6.1      Other

Benefits.  Except as provided in

Section 5.2(b), neither the provisions of this Policy nor the Severance Payment

provided for hereunder shall reduce or increase any amounts otherwise payable,

or in any other way affect a Participant’s rights as an employee of an

Employer, whether existing now or hereafter, under any benefit, incentive,

retirement, stock option, stock bonus, stock purchase or employment agreement,

policy (other than this Policy), program or arrangement (collectively, the

“Other Plans”), except to the extent specifically provided under such Other

Plans.

 

Section 6.2      Certain

Limitations.  This Policy does not

constitute a contract of employment or impose on any Participant, the Company

or any other Employer any obligation to retain any Participant as an employee

or in any other capacity, to change or not change the status, terms or

conditions of any Participant’s employment, or to change or not change the

Employer’s policies regarding termination of employment.

 

ARTICLE VII  -

SUCCESSORS

 

Section 7.1      Successors.  Without limiting the obligations of any

person or entity under applicable law, the Company shall require any successor

or assignee, whether direct or indirect, by purchase, merger, consolidation or

otherwise, to all or substantially all the business or assets of the Company,

expressly and unconditionally to assume and agree to perform the Company’s

obligations under this Policy, in the same manner and to the same extent that

the Company would be required to perform if no such succession or assignment

had taken place.  In such event, the

term “Company,” as used in this Policy, shall mean the Company as hereinbefore

defined and any successor assignee to the business or assets which by reason

hereof becomes bound by the terms and provisions of this Policy.

 

ARTICLE VIII  -

DURATION, AMENDMENT AND TERMINATION

 

Section 8.1             Duration/Termination.

 

(a)         This Policy will become effective on

the Effective Date and will terminate as to all Participants:  (i) if a Change in Control has not occurred,

the date that is 2 years following the giving of notice to each Executive who

is a Participant on the date of the notice that the Board has determined (by

resolution adopted by a majority of the members of the Board) that the Policy

will terminate; and (ii) if a Change in Control has occurred, the expiration of

the Protection Period.

 

9

 

(b)         Notwithstanding the foregoing, if a

Change in Control occurs, this Policy shall continue in full force and effect,

and shall not terminate or expire until after all Participants who were

Participants on the date of the Change in Control who became entitled to a

Severance Payment hereunder shall have received such payment in full.

 

Section 8.2      Amendment.  Unless a Change in Control has previously

occurred, this Policy may be amended in any respect by resolution adopted by a

majority of the members of the Board; provided, however, that no such amendment

shall adversely affect the rights of a Participant under this Policy without

the Participant’s consent unless such amendment does not become effective until

the date that is two years following the giving of notice to all Participants

of the adoption of such amendment by the Board.  If a Change in Control occurs, notwithstanding the foregoing,

this Policy no longer shall be subject to amendment, change, substitution,

deletion or revocation in any respect.

 

Section 8.3      Form

of Amendment/Termination.  The form

of any proper amendment or termination of this Policy shall be a written

instrument signed by a duly authorized officer or officers of the Company,

certifying that the amendment or termination has been approved by the Board as

provided in Sections 8.1 or 8.2 hereof. 

A proper amendment of this Policy automatically shall effect a

corresponding amendment to all Participants’ rights hereunder.  A proper termination of this Policy

automatically shall effect a termination of all Participants’ rights and

benefits hereunder without further action.

 

ARTICLE IX  -

MISCELLANEOUS

 

Section 9.1      Legal

Fees and Expenses/Binding Arbitration.

 

(a)         It is the intent of the Company that

Participants not be required to incur any expenses associated with the

enforcement of rights under this Policy because the cost and expense thereof

would substantially detract from the benefits intended to be extended to

Participants hereunder.  Accordingly, if

the Company or any Employer, as the case may be, has failed to comply with any

of its obligations under this Policy or in the event that the Company or any

Employer, or any other person takes any action to declare this Policy void or

unenforceable, or institutes any litigation designed to deny, or to recover

from, a Participant the benefits intended to be provided to the Participant

hereunder, the Company and each Employer irrevocably authorizes the Participant

from time to time to retain counsel of his or her choice, at the expense of the

Company, as hereafter provided, to represent the Participant in connection with

the initiation or defense of any legal action, whether by or against the

Company or any Employer, in any jurisdiction. 

The Company shall pay or cause to be paid and shall be solely responsible

for any and all reasonable attorneys’ fees and expenses incurred by the

Participant in enforcing his or her rights hereunder individually (but not as a

representative of any class) as a result of the Company’s or any Employer’s,

failure to perform this Policy or any provision hereof or as a result of the

Company or any Employer, or any person contesting the validity or

enforceability of this Policy or any provision hereof.

 

(b)         Notwithstanding any provision of this

Policy to the contrary, (including, without limitation, determining whether a

termination is for Just Cause or with Good Reason) any 

 

10

 

dispute or

controversy arising under or in connection with this Policy shall be settled by

binding arbitration, conducted before a panel of three arbitrators sitting in a

location selected by the Participant within 50 miles from the location of his

or her job with his or her Employer, in accordance with current Employment

Dispute rules of the American Arbitration Association (“AAA”) then in

effect.  Within fifteen days after the

commencement of arbitration, each of the Company and the Participant shall

select one person to act as arbitrator, and the two selected shall select a

third arbitrator within ten days of their appointment.  If the arbitrators are unable or fail to

agree upon the third arbitrator, the third arbitrator shall be selected by the

AAA.  Judgment shall be entered on the

award of the arbitrator in any court having jurisdiction.  All expenses of such arbitration, including

the fees and expenses of the counsel for the Participant, shall be borne by the

Company.

 

Section 9.2      Withholding

of Taxes.  The Employer may withhold

from any amounts payable under this Policy all foreign, federal, provincial,

state, city or other taxes as shall be required pursuant to any law or

government regulation or ruling.

 

Section 9.3      Successors.

 

(a)         This Policy shall inure to the benefit

of and be enforceable by the Participant’s personal or legal representatives,

executors, administrators, successors, heirs, distributees and/or legatees.

 

(b)         The rights under this Policy are

personal in nature and neither the Company nor any Participant shall, without

the consent of the other, assign, transfer or delegate any rights or

obligations hereunder except as expressly provided in Section 7.2 hereof.  Without limiting the generality of the

foregoing, the Participant’s right to receive a Severance Payment hereunder

shall not be assignable, transferable or delegable, whether by pledge, creation

of a security interest or otherwise, other than by a transfer by his or her

will or by the laws of descent and distribution and, in the event of any

attempted assignment or transfer contrary to this Section 9.3(b), the Company,

shall have no liability to pay any amount so attempted to be assigned,

transferred or delegated.

 

(c)         The Company and each Participant

recognize that each party will have no adequate remedy at law for breach by the

other of any of the agreements contained herein and, in the event of any such

breach, the Company, and each Participant hereby agree and consent that the

other shall be entitled to a decree of specific performance, mandamus or other

appropriate remedy to enforce performance of this Policy.

 

Section 9.4      Notices.  For all purposes of this Policy, all

communications, including without limitation notices, consents, requests or

approvals provided for herein shall be in writing and shall be deemed to have

been duly given when delivered or five business days after having been mailed

by registered or certified mail, return receipt requested, postage prepaid,

addressed to the Company, (to the attention of the General Counsel of the

Company), at its principal executive office and to any Participant at his or

her principal residence as shown in the relevant records of the Employer, or to

such other address as any party may have furnished to the other in writing

 

11

 

and in accordance herewith, except that notices of change

of address shall be effective only upon receipt.

 

Executed this 27

day of February, 2002, to be effective on the Effective Date.

 

	

   

  	

   

  	

  ECOLAB, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By: 

  	

  /s/ Steven L. Fritze

  
	

   

  	

   

  	

  Title:

  	

  Senior Vice President —

  
	

   

  	

   

  	

   

  	

  Finance and Controller

  
						

 

12

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