EXHIBIT (10)P
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
February 22, 2002, the Company established this severance
compensation Policy known as the “Change in Control Severance
Compensation Policy” (this “policy”). The
Company is hereby amending and restating the Policy effective as of
the Effective Date.
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 anyone of the following paragraphs shall have
occurred:
(i)
any “person” as such
term is used in Sections B(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 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
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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 January 1, 2005.
(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.
(h)
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
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(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; or
(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.
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.
For purposes 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
30 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
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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)
“ Not
