ECOLAB INC. ADMINISTRATIVE DOCUMENT FOR NON-QUALIFIED BENEFIT PLANS
Employee Benefits Plan Agreement
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ECOLAB INC. ADMINISTRATIVE DOCUMENT FOR NON-QUALIFIED BENEFIT PLANS
Employee Benefits Plan Agreement
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ADMINISTRATIVE DOCUMENT FOR NON-QUALIFIED BENEFIT PLANS
(As Amended and Restated Effective as of January 1, 2005)
Ecolab Inc. (the “Company”) hereby amends and completely restates this Administrative Document (the “Administrative Document”) which provides for the administration of the non-qualified benefit plans listed on Exhibit A hereto (collectively, the “Plans” and individually, a “Plan”) which have been established by the Company for purposes of providing benefits to certain management and highly compensated employees who perform management and professional functions for the Company and certain related entities. This Administrative Document is incorporated by reference in and is a part of each of the Plans.
Words and phrases used in this Administrative Document and in the Plans with initial capital letters which are defined in the Pension Plan are used in this Administrative Document and in the Plans as so defined, unless otherwise specifically defined herein or in the Plans or the context clearly indicates otherwise. Words and phrases used in this Administrative Document with initial capital letters which are defined in the Plans are used herein as so defined. The following words and phrases when used in this Administrative Document or in the Plans with initial capital letters shall have the following respective meanings, unless the context clearly indicates otherwise or a particular Plan provides differently with respect to its own provisions:
Section 1.1 “ Administrator ” shall mean the person authorized to perform the administrative duties under the Plans pursuant to Section 4.1.
Section 1.2 “ Annual Compensation ” for a Plan Year shall mean the sum of (1) the Executive’s base salary, commission and annual incentive bonuses paid in cash (but not long term incentive bonuses) which are reportable by the Employer for federal income tax purposes as “wages” for such Plan Year, (2) any salary reductions caused as a result of participation in an Employer-sponsored plan which is governed by Section 401(k), 132(f)(4) or 125 of the Code, and (3) any salary reductions caused as a result of participation in the Ecolab Mirror Savings Plan or its precessor plan , and (4) severance pay (not in excess of 52 weeks’ duration effective as of January 1, 2002) which will be deemed to have been paid in regular, payroll dates at the Executive’s regular rate of compensation in effect prior to his termination of employment even if such severance pay is, in fact, paid in a lump sum or other accelerated manner.
Section 1.3 “ Benefit ” shall mean a Mirror Pension Benefit, a Mirror Pre-Retirement Pension Benefit, a SERP Benefit, a SERP Pre-Retirement Benefit, a Mirror Savings Benefit, an Executive Death Benefit or an Executive Disability Benefit, as applicable.
Section 1.4 “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.
Section 1.5 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
Section 1.6 “ Company ” shall mean Ecolab Inc., a Delaware corporation or its successor(s).
Section 1.7 “ Controlled Group ” shall mean the Company and any other corporation or entity, the employees of which, together with employees of the Company, are required by subsection (b) or (c) of Code Section 414 to be treated as if they were employed by a single employer. For purposes of determining whether a “Separation from Service” has occurred, members of the Controlled group will be identified in accordance with Code Section 414(b) or (c), except that in applying Code Section 1563(a)(1), (2), and (3) for purposes of Code Section 414(b) or in applying Treas. Reg. §1.414(c)-2 for purposes of Code Section 414(c), the language “at least 50 percent” shall be used instead of the language “at least 80 percent” each place it appears in such Code and regulations sections.
Section 1.8 “ Employee ” shall mean any person who is designated by an Employer as a common-law employee and who is employed on a full-time or substantially full-time basis.
Section 1.9 “ Employer ” shall mean the Company and any other member of the Controlled Group that adopts or has adopted one or more of the Plans pursuant to Section 6.3.
Section 1.10 “ 409A Guidance ” means Section 409A of the Code and proposed, temporary or final regulations or any other guidance issued thereunder.
Section 1.11 “ Pension Plan ” shall mean the Ecolab Pension Plan, as such plan may be amended from time to time.
Section 1.12 “ Plans ” shall mean those non-qualified benefit plans listed on Exhibit A hereto, as they may be amended from time to time.
Section 1.13 “ Plan Year ” shall mean a calendar year.
Section 1.14 “ Separation from Service ” or to “ Separate from Service ” shall mean any termination of employment with the Controlled Group due to retirement, death, disability or other reason; provided, however, that no Separation from Service is deemed to occur while an Employee (1) is on military leave, sick leave, or other bona fide leave of absence that does not
exceed six (6) months (or, in the case of disability, twelve (12) months), or if longer, the period during which the Employee’s right to reemployment with the Controlled Group is provided either by statute or by contract, or (2) continues to perform services for the Controlled Group (whether as an employee or as an independent contractor) at an annual rate of fifty percent (50%) or more of the average level of services performed over the immediately preceding 36-month period (or the full period in which the Employee provided services if the Employee has been providing services for less than 36 months). For purposes of this Section, “disability” shall mean any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment. Whether an Employee has incurred a Separation from Service shall be determined in accordance with the 409A Guidance.
Section 1.15 “ Specified Employee ” shall have the meaning set forth in Section 6.8.
PAYMENT OF BENEFITS
Section 2.1 Special Offset Provision . Notwithstanding any provision of the Plans to the contrary, if the Administrator (in his or her sole discretion) determines that an Executive or Death Beneficiary is indebted to the Controlled Group at the time of a Benefit payment, the Administrator (in his or her sole discretion) may reduce any such Benefit by the amount of the indebtedness, provided, however, that such reduction does not exceed $5,000 in any Plan Year and the reduction is made at the same time and in the same amount as the debt otherwise would have been due from the Executive. An election by the Administrator not to reduce any such Benefit shall not constitute a waiver of the Controlled Group’s claim for such indebtedness.
Section 2.2 Withholding/Taxes . To the extent required by applicable law, the Company shall withhold (or cause to be withheld) from the Benefit payments any taxes required to be withheld by any federal, state or local government.
Section 2.3 Adjustments . Notwithstanding any provision of the Plans to the contrary, if an Executive or Death Beneficiary receives Benefits for any period that exceed the aggregate Benefits properly payable for such period, the Administrator (in his or her sole discretion) may, to the extent permitted by the 409A Guidance, make any adjustment he or she deems advisable to future Benefits due to the Executive or Death Beneficiary under the Plans until the aggregate amount of such adjustments equals the aggregate amount of the excess Benefits paid. The provisions of this Section shall not be construed to provide the exclusive means of recovering excess payments to an Executive or Death Beneficiary, and the Administrator may take such other action as he or she deems advisable to recover the amount of excess Benefits that were paid to the Executive or Death Beneficiary.
Section 2.4 Death Beneficiary Designations .
(1) Absence of Designation . If the Executive fails to designate a Death Beneficiary under the Plans, or at any other time when there is no existing Death Beneficiary
designated by the Executive, the Executive’s Death Beneficiary shall be his surviving spouse or, if none, his estate.
(2) Ambiguous Death Beneficiary Designation . In the event that the most recent Death Beneficiary designation filed prior to the Executive’s death is ambiguous or incapable of reasonable construction,