FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file numbers 2-90702, 33-18202, 33-55986 and 33-56101
A. Full title of the plan and the address of the plan, if
different from that of the issuer name below:
ECOLAB SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office:
ECOLAB INC.
ECOLAB CENTER
Saint Paul, Minnesota 55102<PAGE>
ECOLAB SAVINGS PLAN
REPORT ON AUDITS OF FINANCIAL STATEMENTS
As of December 31, 1994 and 1993
and
for the years ended December 31, 1994, 1993 and 1992
AND SUPPLEMENTAL SCHEDULES
as of December 31, 1994
and
for the year ended December 31, 1994<PAGE>
INDEX OF FINANCIAL STATEMENTS
Page(s)
Report of Independent Accountants 2
Financial Statements:
Statement of Net Assets Available for Plan
Benefits as of December 31, 1994 and 1993 3
Statement of Income and Changes in Net
Assets Available for Plan Benefits With
Fund Information for the year ended
December 31, 1994 4
Statement of Income and Changes in Net
Assets Available for Plan Benefits With
Fund Information for the year ended
December 31, 1993 5
Statement of Income and Changes in Net
Assets Available for Plan Benefits With
Fund Information for the year ended
December 31, 1992 6
Notes to Financial Statements 7 - 12
Supplemental Schedules:
Line 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1994 13
Line 27d - Schedule of Reportable Transactions
for the year ended December 31, 1994 14
1<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator
Ecolab Savings Plan
We have audited the financial statements of the Ecolab Savings
Plan as listed in the accompanying index on page 1. These
financial statements are the responsibility of the Plan
Administrator. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by the Plan Administrator, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets available
for plan benefits of the Ecolab Savings Plan as of December 31,
1994 and 1993, and the income and changes in net assets available
for plan benefits for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles.
Our December 31, 1994 audit was performed for the purpose of
forming an opinion on the basic financial statements taken as a
whole. The supplemental schedules as listed in the accompanying
index on page 1 are presented for the purpose of additional
analysis and are not a required part of the basic financial
statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statements of income and changes
in net assets available for plan benefits is presented for purposes
of additional analysis rather than to present the net assets
available for plan benefits and changes in net assets available for
plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied
in the audits of the December 31, 1994, 1993 and 1992 basic
financial statements and, in our opinion, are fairly stated, in all
material respects, in relation to the basic financial statements
taken as a whole.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Saint Paul, Minnesota
June 5, 1995
2<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1994 and 1993
<TABLE>
<CAPTION>
(in thousands) 1994 1993
ASSETS
<S> <C> <C>
Investments
Income fund $ 58,152 $ 58,572
Common stock fund 23,485
Ecolab stock fund 78,059 72,834
Participant loans 9,367 8,005
145,578 162,896
Cash
Cash 6,245 4,383
Cash temporarily held from
liquidation of common stock fund 24,510
30,755 4,383
Receivables:
Participant contributions 62 92
Employer contributions 25 588
Interest and dividends 481 356
568 1,036
Total Assets 176,901 168,315
LIABILITIES
Accrued plan expenses 98 88
Payable to brokers for
investments purchased 337
Total Liabilities 98 425
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $176,803 $167,890
<FN>
The accompanying notes are an integral
part of the financial statements.
</FN>
</TABLE>
3<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1994
<TABLE>
<CAPTION>
Common Ecolab
Income Stock Stock Loan
(in thousands) Fund Fund Fund Accounts Total
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 4,358 $ 12 $ 31 $ 516 $ 4,917
Dividends 1,644 1,644
Net appreciation
(depreciation) in the
fair value of
investments 294 (5,889) (5,595)
Total 4,358 306 (4,214) 516 966
Plan expenses (199) (72) (95) (366)
Net income (loss) 4,159 234 (4,309) 516 600
Contributions:
Participants 4,579 3,002 5,746 13,327
Employer 5,131 5,131
Loans granted (2,259) (878) (1,904) 5,041
Loan principal and
interest repayments 1,588 872 1,551 (4,011)
Interfund transfers (2,464) (1,016) 3,480
Distributions to
participants (4,760) (1,343) (3,858) (184) (10,145)
Net increase in net
assets available for
plan benefits 843 871 5,837 1,362 8,913
Net assets available
for plan benefits,
beginning of year 62,415 23,625 73,845 8,005 167,890
Net assets available
for plan benefits,
end of year $63,258 $24,496 $79,682 $9,367 $176,803
<FN>
The accompanying notes are an integral
part of the financial statements.
</FN>
</TABLE>
4
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1993
<TABLE>
<CAPTION>
Common Ecolab
Income Stock Stock Loan
(in thousands) Fund Fund Fund Accounts Total
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 4,567 $ 6 $ 20 $ 427 $ 5,020
Dividends 1,205 1,205
Net appreciation in
the fair value of
investments 2,079 12,234 14,313
Total 4,567 2,085 13,459 427 20,538
Plan expenses (248) (89) (54) (391)
Net income 4,319 1,996 13,405 427 20,147
Contributions:
Participants 4,546 2,734 3,660 10,940
Employer 4,964 4,964
Loans granted (2,465) (855) (1,584) 4,904
Loan principal and
interest repayments 1,480 780 1,243 (3,503)
Interfund transfers (2,476) (302) 2,778
Distributions to
participants (3,375) (479) (1,802) (243) (5,899)
Net increase in net
assets available for
plan benefits 2,029 3,874 22,664 1,585 30,152
Net assets available
for plan benefits,
beginning of year 60,386 19,751 51,181 6,420 137,738
Net assets available
for plan benefits,
end of year $62,415 $23,625 $73,845 $8,005 $167,890
<FN>
The accompanying notes are an integral
part of the financial statements.
</FN>
</TABLE>
5
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1992
<TABLE>
<CAPTION>
Common Ecolab
Income Stock Stock Loan
(in thousands) Fund Fund Fund Accounts Total
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 4,574 $ 9 $ 19 $ 395 $ 4,997
Dividends 940 940
Net appreciation in
the fair value of
investments 1,391 8,790 10,181
Total 4,574 1,400 9,749 395 16,118
Plan expenses (221) (68) (70) (359)
Net income 4,353 1,332 9,679 395 15,759
Contributions:
Participants 4,478 2,275 2,513 9,266
Employer 3,889 3,889
Loans granted (2,200) (796) (1,172) 4,168
Loan principal and
interest repayments 1,314 724 768 (2,806)
Interfund transfers (1,674) 101 1,573
Distributions to
participants (4,318) (934) (1,857) (223) (7,332)
Net increase in net
assets available for
plan benefits 1,953 2,702 15,393 1,534 21,582
Net assets available
for plan benefits,
beginning of year 58,433 17,049 35,788 4,886 116,156
Net assets available
for plan benefits,
end of year $60,386 $19,751 $51,181 $6,420 $137,738
<FN>
The accompanying notes are an integral
part of the financial statements.
</FN>
</TABLE>
6
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan:
The following brief description of the Ecolab Savings Plan (the
"Plan") is provided for general information purposes only.
Participants should refer to the Plan document for complete
information regarding the Plan's definitions, benefits,
eligibility and other matters.
The Plan is a qualified defined contribution plan available to
employees of Ecolab Inc. (the "Company"), and certain of its
subsidiaries. Employees regularly scheduled to work at least 20
hours per week may participate immediately in the Plan if they
are not subject to a collective bargaining agreement which does
not provide for their inclusion. Part-time employees working
less than 20 hours a week must have been employed for a twelve
consecutive month period during which they have worked at least
1,000 hours to be eligible to participate. Employee
participation in the Plan is voluntary. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA") and the Internal Revenue Code of 1986 (the
"Code"), as amended.
Contributions are made to the Plan as "before-tax savings
contributions," "after-tax savings contributions," "employer
matching contributions" or "employer profit sharing
contributions."
Before-tax savings contributions are contributions made by the
Company on behalf of participants who have agreed to have their
taxable compensation reduced. Participants may reduce their
compensation up to 10% (subject to a statutory annual maximum of
$9,240 in 1994, $8,994 in 1993 and $8,728 in 1992) for the
purpose of making before-tax savings contributions to the Plan.
After-tax savings contributions are contributions made by
participants through after-tax payroll deductions. The total of
before-tax savings contributions made on behalf of a participant
and a participant's after-tax savings contributions cannot exceed
16% of a participant's compensation.
Employer matching contributions are made by the Company in an
amount equal to 50% of the total before-tax savings contributions
and after-tax savings contributions for a payroll period which do
not exceed 6% of a participant's eligible compensation for that
period. Employer matching contributions are invested entirely in
the Company's common stock.
Employer profit sharing contributions are discretionary and may
be determined each year by the Board of Directors. Profit
sharing contributions are divided among employees who are not
eligible for a management incentive or equivalent bonus and are
invested entirely in the Company's common stock.
The levels of contributions made by or on behalf of participants
who are "highly compensated," as defined in the Code, are subject
to limitations under the Code based on the level of contributions
made by employees who are not considered highly compensated.
Continued
7
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
1. Description of Plan, (Continued):
After-tax savings contributions, before-tax savings
contributions, profit sharing contributions and income thereon
are always 100% vested. Participants become vested in the
employer matching contributions and income thereon at a rate of
25% each year, after two years of continuous service, until fully
vested after five years of continuous service. Participants also
become fully vested in those contributions in the event of death
or total disability while employed by the Company or retirement
at or after age 65.
Each participant's contribution account is credited with the
participant's contribution, the allocation of employer
contributions, any employer profit sharing contributions and fund
earnings.
Benefits to participants are limited to the amount accumulated in
each participant's account. Upon retirement, death, disability
or separation from service, a distribution may be made to the
participant or beneficiary equal to the vested portion of the
participant's account. An employee distribution or withdrawal
from the Plan may be subject to federal income tax. Forfeitures
of nonvested Company contributions are used to reduce future
employer contributions.
Participants and beneficiaries are permitted to borrow from their
accounts. The total amount of a participant's loan may not
exceed the lesser of (a) $50,000 minus the participant's highest
outstanding loan balance for the previous twelve month period, or
(b) 50% of the participant's vested interest in his or her
account. When a loan is granted, the appropriate account
balances are reduced and a separate loan account is created.
Loan payments, together with interest, are repaid in the time and
at the rate designated by the Plan Administrator.
During 1994, 1993 and 1992 participant contributions were
invested in the following investment funds:
Income Fund - consists primarily of group annuity contracts
issued by insurance companies. The fund may also be invested
in bank or annuity contracts, structured investment
contracts, government and corporate bonds, bank certificates
of deposit, and other investments having primarily fixed
income characteristics. The assets of this fund are managed
by T. Rowe Price Stable Asset Management, Inc.
Common Stock Fund - consists primarily of interests in
common/collective trusts which invest mainly in common stocks
and other equity securities. The assets of this fund were
managed by Wells Fargo Nikko Investment Advisors.
The Common Stock Fund assets invested in the Wells Fargo
Equity Index Fund were liquidated in December 1994 and
invested temporarily in interest bearing cash pending
transfer of the assets to Fidelity Management Trust Company,
the Plan's new trustee, effective January 1, 1995, for
investment in the Fidelity U.S. Equity Index mutual fund,
beginning January 1, 1995. See Note 8.
Continued
8<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
1. Description of Plan, (Continued):
Ecolab Stock Fund - consists primarily of Ecolab Inc. Common
Stock.
The allocation of the participants' before-tax and after-tax
savings contributions to the investment funds is selected by the
participants and may be changed each month. Employer matching
contributions and employer profit sharing contributions are
invested in the Ecolab Stock Fund. As of December 31, 1994,
approximately 5,600 employees were participating in the Plan. At
December 31, 1994, 1993 and 1992, the approximate number of
participants in each investment fund was as follows:
1994 1993 1992
Income Fund 3,500 3,400 3,200
Common Stock Fund 2,600 2,500 2,000
Ecolab Stock Fund 5,600 5,700 3,900
The increase in Plan participants from 1992 to 1993 was
principally due to a discretionary profit sharing contribution.
Although it has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contributions at
any time and to terminate the Plan subject to provisions of
ERISA. In the event of Plan termination, participants will
become 100% vested in their accounts.
2. Summary of Significant Accounting Policies:
VALUATION OF INVESTMENTS:
Investments in the Income Fund are recorded at contract value
determined by the insurance companies in accordance with the
terms of the contracts. Investments in the Ecolab Stock Fund are
recorded at fair market value based on the quoted market price of
the Company's common stock. Investments in the Common Stock Fund
are recorded at the underlying net asset value per unit, which
approximates fair market value. The Loan Accounts of
participants are recorded at the principal value of outstanding
loans which have been granted to participants, plus accrued
interest.
Approximately $3.6 million of assets in the Income Fund are
invested with an insurance company, which was taken over by
regulators and is currently undergoing a reorganization
procedure referred to as a restoration. As a result, the assets
were segregated as of August 12, 1994 and are unavailable for
investment transfers, loans, distributions or withdrawals by
participants until such time that the restoration process
determines the settlement amounts for all of the insurance
company's contract holders. Although the final outcome cannot be
determined at this time, the Plan Administrator does not believe
a significant loss will be incurred on this investment.
Continued
9<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies, (Continued):
INTEREST AND DIVIDENDS:
Interest income is recorded as earned on an accrual basis and
dividend income is recorded on the ex-dividend date.
NET APPRECIATION (DEPRECIATION) IN THE FAIR VALUE OF INVESTMENTS:
The statements of income and changes in net assets available for
Plan benefits includes the net appreciation (depreciation) in the
fair value of investments, which consists of realized gains and
losses on investments sold and the change in unrealized
appreciation (depreciation) on those investments held.
CONTRIBUTIONS:
Participant contributions are recorded in the period the employer
makes the payroll deductions. Employer matching contributions
are accrued based on participant contributions. The 1993
employer profit sharing contribution of $549,000 was divided
equally among eligible participants. No employer profit sharing
contributions were made in 1994 or 1992.
PLAN EXPENSES:
Certain asset management and administrative fees of the Plan have
been charged against Plan income. Other administrative expenses
are paid by the Company.
3. Investments
Investments that represent 5 percent or more of the Plan's net
assets at December 31, 1994 and 1993 are summarized as follows:
Fair Value Cost
(in thousands) 1994 1993 1994 1993
Income Fund $ 58,152 $ 58,572 $ 58,152 $ 58,572
Common Stock Fund 23,485 15,917
Ecolab Stock Fund 78,059 72,834 57,366 45,429
Participant Loans 9,367 8,005
$145,578 $162,896 $115,518 $119,918
At December 31, 1994 the fair value of non-participant directed
investments in the Ecolab Stock Fund approximated $41,208,000.
Continued
10
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
4. Tax Status:
The Plan constitutes a qualified trust under Section 401(a) of
the Code and therefore is exempt from federal income taxes under
provisions of Section 501(a). The Plan also complies with the
provisions of Section 401(k) of the Code. A tax qualification
letter, dated October 26,1994, was received from the Internal
Revenue Service. The letter stated that the Plan, as then
designed was in compliance with the applicable requirements of
the Code. The Plan has been since amended in connection with the
change in fund managers and Plan trustee (See Note 8).
5. Related Party and Party-In-Interest Transactions:
The trustee, Mellon Bank N.A., was authorized under contract
provisions, or by ERISA regulations providing an administrative
or statutory exemption, to invest in funds under its control and
in securities of the Company.
Temporary cash balances are invested on a daily basis in short-
term investment funds under the trustee's control.
In 1994, there were 457 purchases and 228 sales in the various
short-term investment funds, totaling $68,276,000 and
$41,907,000, respectively. In 1993, there were 456 purchases and
230 sales in the various short-term investment funds, totaling
$42,349,000 and $45,397,000, respectively. In 1992, there were
486 purchases and 234 sales in the various short-term investment
funds, totaling $37,277,000 and $34,885,000, respectively.
In 1994, 1993 and 1992 purchases, at cost, of Ecolab Inc. common
stock were $13,348,000, $10,201,000 and $6,375,000, respectively.
In 1994 and 1993, sales, at fair value, of Ecolab Inc. common
stock were $1,945,000 and $193,000, respectively. There were no
sales of Ecolab Inc. common stock in 1992.
Continued
11<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6. Reconciliation of Financial Statements to Form 5500:
Prior to 1994, the Plan filed its Form 5500 on the cash basis and
therefore, net assets available for plan benefits amounts which
are included in the Form 5500 do not include certain receivables
and liabilities which have been included in the financial
statements of the Plan at December 31, 1993. The Plan filed
Form 5500 on the accrual basis for the year ended December 31,
1994.
The following is a reconciliation of net assets available for
plan benefits, as set forth in these financial statements, to the
corresponding amounts included in the Plan's filings on Form
5500:
December 31
(in thousands) 1994 1993
Net assets available for plan
benefits per the
financial statements $176,803 $167,890
Participant contributions receivable (92)
Employer contributions receivable (588)
Accrued plan expenses 88
Net assets available for plan
benefits per the Form 5500 $176,803 $167,298
7. Plan Amendments:
The Plan was amended, effective in 1994, to provide for the
immediate eligibility of employees to participate in the Plan
along with other minor modifications necessary to conform with
law changes or to allow for efficient and equitable Plan
administration.
The Plan was amended, effective in 1993, to allow the Company to
make discretionary profit sharing contributions.
The Plan was amended in 1992 to disallow any individuals employed
in the ChemLawn Division of the Company which was sold in May
1992, from participating in the Plan.
8. Subsequent Event:
As discussed in Note 1, effective January 1, 1995, the Plan
changed its Trustee and investment managers. The Plan also
increased the number of investment options available to Plan
participants from three to nine. The options include the Ecolab
Stock Fund, a Managed Income Fund and seven Fidelity mutual
funds. These changes have no effect on the net assets available
for plan benefits.
12<PAGE>
SUPPLEMENTAL SCHEDULES<PAGE>
ECOLAB SAVINGS PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of December 31, 1994
EIN 41-0231510
Plan Number: 003
<TABLE>
<CAPTION>
(Dollars in thousands)
Face Value or
No. of Shares Description Cost Fair Value
<C> <S> <C> <C>
12,905,954 Participant Loans, due $ 9,367
1/95 - 11/2004 (stated
annual interest rates
ranging from 6.0% to
10.50%)
58,152,000 Group Annuity Contracts, $ 58,152 58,152
due 4/95 - 3/99 (stated
annual interest rates
ranging from 5.25% to
9.35%)
3,739,361* Ecolab Inc. Common Stock 57,366 78,059
(par value $1.00 per share)
$115,518 $145,578
<FN>
* Party-in-interest
</FN>
</TABLE>
13<PAGE>
ECOLAB SAVINGS PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1994
EIN 41-0231510
Plan Number: 003
<TABLE>
<CAPTION>
(Dollars in thousands)
Identity Number Number
of Party Relationship of of Net Gain
Involved to Plan Purchases Sales Purchases Proceeds or (Loss)
<S> <C> <C> <C> <C> <C> <C>
Mellon Bank N.A. Trustee 457 228 $68,276 $41,907
Short-term
Investment
Fund
Ecolab Inc. Employer 44 7 13,348 1,945 $ 534
Common Stock
Wells Fargo None 39 33 27,972 27,972
Bank N.A.
Money Market
Fund
Wells Fargo None 21 12 2,097 25,875 7,205
Bank N.A.
Equity Index
Fund
</TABLE>
14<PAGE>
ECOLAB SAVINGS PLAN
EXHIBITS
The following documents are filed as exhibits to this Report:
Exhibit No. Document
(23) Consent of Independent Accountants.
(99) Ecolab Savings Plan - 1995 Revision.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
ECOLAB SAVINGS PLAN
DATE June 28, 1995 By:/s/Diana D. Lewis
Diana D. Lewis
Vice President -
Human Resources of
Ecolab Inc. (Plan Administrator)
15<PAGE>
EXHIBIT INDEX
Paper(P) or
Exhibit No. Document Electronic (E)
(23) Consent of Independent Accountants. E
(99) Ecolab Savings Plan - 1995 Revision. E<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
Registration Statements of Ecolab Inc. on Form S-8 (Registration
Nos. 2-90702, 33-18202, 33-55986 and 33-56101) of our report
dated June 5, 1995, on our audits of the financial statements of
the Ecolab Savings Plan as of December 31, 1994 and 1993 and for
the years ended December 31, 1994, 1993 and 1992, which report is
included in this Annual Report on Form 11-K. We also consent to
the reference to our firm under the caption "Interests of Named
Experts and Counsel" in Registration No. 33-56101, as it relates
to the financial statements referred to above and included in
this Annual Report on Form 11-K.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Saint Paul, Minnesota
June 28, 1995<PAGE>
ECOLAB SAVINGS PLAN
1995 REVISION
ARTICLE I
Description and Purpose
1.1 Plan Name. The name of the Plan is the "Ecolab Savings
Plan."
1.2 Plan Description. The Plan is a profit sharing plan
providing for salary reduction cash or deferred contributions,
employee after-tax contributions, discretionary matching
contributions and discretionary profit sharing contributions.
The Plan is intended to qualify under Code section 401(a) and to
satisfy the requirements of Code sections 401(k) and 401(m).
Notwithstanding the designation of the Plan as a profit sharing
plan, a Participating Employer may make contributions to the Plan
even though such employer has no current or accumulated earnings
and profits.
1.3 Plan Purposes. The purposes of the Plan are to promote
effort and cooperation on the part of participating employees; to
provide a measure of economic security to each such employee by
accumulating contributions for distribution upon retirement, as a
supplement to other resources then available; and to permit
participating employees to share in the profits and growth of the
Participating Employer.<PAGE>
ARTICLE II
Eligibility
2.1 Eligibility. (A) Each Qualified Employee who is regularly
scheduled to work at least twenty hours per week, and is not
classified as a temporary employee under his or her Participating
Employer's job classification policies and procedures will become
eligible to Participate in the Plan on the date on which he or
she first performs an Hour of Actual Service as a Qualified
Employee.
(B) Each other Qualified Employee will become eligible to
participate in the Plan on the date on which he or she has
completed a 12-consecutive-month period of employment in which he
or she has completed at least 1000 Hours of Service.
2.2 Transfer Among Participating Employers. A Participant who
transfers from one Participating Employer to another
Participating Employer as a Qualified Employee will continue to
participate in the Plan as a Qualified Employee of such other
Participating Employer.
2.3 Multiple Employment. A Participant who is simultaneously
employed as a Qualified Employee with more than one Participating
Employer will participate in the Plan as a Qualified Employee of
all such Participating Employers on the basis of his or her
separate Eligible Earnings from each such Participating Employer.
2.4 Termination or Cessation to be a Qualified Employee. No
contribution will be made by or on behalf of a Participant after
the Participant terminates employment with all Participating
Employers, transfers to an Affiliated Organization that has not
adopted the Plan, or transfers to an employment classification
excluded from the definition of "Qualified Employee," except for
any Participating Employer contribution due on account of the
portion of the Plan Year preceding the termination or transfer.
S u c h a Participant will be eligible to resume active
participation in the Plan as of the date on which he or she first
completes an Hour of Actual Service after reemployment with a
Participating Employer as a Qualified Employee.
2.5 C o ndition of Participation. Each eligible Qualified
Employee, as a condition of participation, will be bound by all
of the terms and conditions of the Plan and will furnish to the
A d ministrator such pertinent information and execute such
instruments as the Administrator may require.
2.6 Termination of Participation. A person will cease to be a
Participant as of the later of
(a) his or her termination of employment, or
(b) the date all benefits, if any, to which he or she
is entitled under this Plan have been distributed.<PAGE>
<PAGE>
ARTICLE III
Contributions
3.1 Before-Tax Savings Contributions. (A) Subject to the
limitations of Article IX, for each Plan Year the Participating
Employer of each Participant will make Before-Tax Savings
Contributions to the Trust on behalf of such Participant in the
amount by which the Participant's Eligible Earnings have been
reduced in accordance with the succeeding provisions of this
section. Before-Tax Savings Contributions will be paid to the
Trustee as soon as practicable after the date on which the
Participant would have otherwise received the Eligible Earnings
with respect to which such contribution is made.
(B) Subject to Section 3.3, a Participant may elect to
reduce his or her Eligible Earnings by any one percent increment
from one percent to 10 percent. The percentage so elected will
automatically apply to the Participant's Eligible Earnings as
adjusted from time to time. A Participant's election will be
applied to his or her Eligible Earnings determined without regard
to the limitation of Code section 401(a)(17), but will not, for
any Plan Year, exceed 10% of his or her Eligible Earnings
determined with regard to such limitation. Plan Rules may
specify a maximum percentage for Highly Compensated Employees
that is less than the percentage specified for non-Highly
Compensated Employees.
3.2 After-Tax Savings Contributions. (A) Subject to the
remaining provisions of this Section and to the limitations of
A r t icle IX, each Participant may make After-Tax Savings
Contributions in accordance with Section 3.3. The Participating
Employer will pay the amount of each Participant's After-Tax
Savings Contributions to the Trustee as soon as possible after
the date on which the payroll deduction for such contribution
occurs or on which the Participating Employer receives the
contribution.
(B) After-Tax Savings Contributions may be made by payroll
deduction in any one percent increment of the Participant's
Eligible Earnings of not less than one percent and not greater
than the difference between 16 percent and the percentage of the
Participant's Eligible Earnings that is being reduced pursuant to
Section 3.1. The specified percentage will automatically apply
to the Participant's Eligible Earnings as adjusted from time to
time. A Participant's election will be applied to his or her
Eligible Earnings determined without regard to the limitation of
Code section 401(a)(17) but will not, for any Plan Year, exceed
the percentage specified in the preceding sentence, applied to
his or her Eligible Earnings determined with regard to such
limitation. Plan Rules may specify a maximum percentage for
Highly Compensated Employees that is less than the percentage
specified for non-Highly Compensated Employees.<PAGE>
3.3 Participant Elections. Elections for Eligible Earnings
reductions and After-Tax Savings Contributions under Sections 3.1
and 3.2 will be made in accordance with the telephone election
procedures established by the Administrator and in accordance
with the following rules.
(a) A Participant's Eligible Earning reductions and
After-Tax Savings Contributions will commence on the first
payday that follows the processing of the Participant's
election.
(b) A Participant may change the rate at which
Eligible Earnings reductions or After-Tax Savings
Contributions will be made for the first payday that follows
the processing of the Participant's request for such a
change. The Participant's Eligible Earnings reductions and
After-Tax Savings Contributions will continue at such
changed rate until a further change by the Participant is
processed. Any such change must be to a percentage
increment allowed under Section 3.1 or 3.2, as the case may
be.
(c) A Participant may suspend Eligible Earnings
reductions or After-Tax Savings Contributions as of the
f i r s t payday that follows the processing of the
Participant's request for the suspension. A Participant who
has suspended Eligible Earnings reductions or After-Tax
S a v ings Contributions may resume such reductions or
contributions as of the first payday that follows the
processing of the Participant's request for such resumption.
(d) Eligible Earnings reductions and After-Tax Savings
C o n t ributions for a Participant who has terminated
e m p l oyment, transferred employment to an Affiliated
Organization that has not adopted the Plan or transferred
employment classification to a classification not covered
under this Plan, and who is reemployed with a Participating
Employer or transfers to an employment classification that
is covered under this Plan, as the case may be, will not be
resumed unless the Participant again enrolls in the Plan
following the occurrence of such event.
(e) Participants on a leave of absence, other than a
short-term disability leave during which the Participant
continues to receive Eligible Earnings, will be deemed to
have suspended Eligible Earnings reductions and After-Tax
Savings Contributions as of the payday which next follows
t h e date on which the Administrator processes the
appropriate suspension following receipt of notification of
the commencement of the leave of absence. A Participant's
Eligible Earnings reductions and After-Tax Savings
Contributions will be resumed upon the Participant's return
from a leave of absence of less than six months' duration at<PAGE>
the rate in effect prior to the leave unless the Participant
changes the rate pursuant to paragraph (b). After a
Participant returns from a leave of six months' duration or
more, Eligible Earnings reductions and After-Tax Savings
Contributions will be resumed as of the first payday that
follows the processing of the Participant's request for such
resumption.
(f) Participants' Eligible Earnings reductions and
After-Tax Savings Contributions may be made only on a
continuing payroll period basis and in accordance with Plan
Rules. In the event any election or notice submitted by a
Participant to the Administrator is not processed on a
timely basis, no retroactive adjustments shall be made to
take into account the effect of any such delay.
3.4 Matching Contributions. (A) Subject to the limitations of
Article IX, each Participating Employer will contribute to the
Trust, out of its annual earnings or profits for its fiscal year
ending within the Plan Year in question or out of its accumulated
earnings or profits from prior years, on behalf of each
Participant who was a Qualified Employee of such Participating
Employer during such Plan Year, an amount equal to one-half of
the sum of the lesser of the following amounts, determined for
each payroll period during such Plan Year:
(1) t h e total amount of Before-Tax Savings
Contributions and After-Tax Savings Contributions made for
or by such Participant for such payroll period, and
(2) s i x percent of such Participant's Eligible
Earnings for such payroll period.
Such contributions may, if the Participating Employer's Board of
Directors so determines, be made notwithstanding an insufficiency
of the Participating Employer's current or accumulated profits.
(B) Any Matching Contributions for a Plan Year will be paid
to the Trustee on such date or dates as the Participating
Employer may elect during or following such year; provided,
first, that the total amount of the Participating Employer's
contribution will be paid in full on or before the date required
for filing its federal income tax return for its fiscal year
ending with or within such Plan Year, or such date as duly
extended; and second, that the Participating Employer will either
(1) designate the payment in writing to the Trustee as
a payment on account of such fiscal year, or
(2) claim such payment as a deduction on its federal
income tax return for such fiscal year.
(C) No Matching Contribution will be made with respect to
any portion of a Participant's Before-Tax Contributions that is<PAGE>
forfeited or returned to the Participant pursuant to Section 9.1,
9.2, 9.4 or 9.6. (For this purpose all such forfeitures and
distributions will be deemed to be made first from any Before-Tax
Contributions with respect to which no Matching Contribution was
made.) Any Matching Contribution that is, by reason of errors in
projecting the amount of a Participant's Before-Tax Savings
Contributions or otherwise, allocated to a Participant's Account
and subsequently determined to violate the foregoing provision
will be subtracted from such Account as soon as practicable and
w i l l b e applied to reduce the Participating Employer
contributions that would otherwise be made for the Plan Year in
which such excess contribution was made. If, because of the
passage of time, the Participating Employer contribution for such
Plan Year cannot be reduced, such excess contribution will,
subject to Section 9.6, be allocated, in the discretion of the
Administrator.
(1) among the Accounts of all Participants who made
Before-Tax Savings Contributions as if it were an additional
Matching Contribution for such Plan Year, or
(2) as a corrective contribution pursuant to Section
3.7.
(D) Subject to the provisions of Section 5.5, the Matching
Contributions will be made in the form of common stock of Ecolab
Inc. until such time as the Plan is amended to provide otherwise.
The Participating Employer may designate all or part of a
contribution actually made in cash as a stock contribution, and
to the extent so designated, such contribution will be invested
in the Ecolab Stock Fund and will be treated as a contribution in
the form of stock for purposes of the provisions of this plan
relating to contributions in the form of stock. To the extent
such contribution is made in the form of treasury stock or
authorized but unissued stock, for purposes of determining the
value of the contribution and allocating the contribution to the
Participants' Accounts, the value of such stock will be its fair
market value at the close of business on the day preceding the
day on which the transfer to the Trustee is directed, as
determined by the Administrator. Notwithstanding the foregoing,
to the extent a Matching Contribution made in the form of common
stock of Ecolab Inc. would result in the Trust's owning more than
nine percent of the then outstanding common stock of Ecolab Inc.,
such contribution will be made in the form of cash.
3.5 Profit Sharing Contributions. (A) Each Participating
Employer may, in its sole discretion, make a Profit Sharing
Contribution to the Trust for any Plan Year. Subject to the
limitations of Article IX, such Profit Sharing Contribution will
be allocated among Qualified Employees described in Subsection
(B) in the manner described in Subsection (C).
(B) A Profit Sharing Contribution for a Plan Year will be
allocated only among Participants who, for the Plan Year, are not<PAGE>
eligible to receive a bonus under the Company's Management
Incentive Bonus Program or equivalent plan (sales employees in a
job classification grade 21 or above), other than by reason of a
failure to meet the performance standards or other criteria for a
bonus under such program. To be eligible to share in his or her
Participating Employer's Profit Sharing Contribution for a
particular Plan Year, a Participant must have satisfied the
conditions for eligibility to participate in the Plan, whether or
not he or she has enrolled in the Plan, and be employed with a
Participating Employer or an Affiliated Organization on the last
day of such Plan Year.
(C) The Profit Sharing Contribution for a Plan Year will be
allocated in equal shares among the Participants eligible to
share in such contribution; provided that only a partial share
will be allocated to a Participant who was not eligible to
participate in the Plan during the entire Plan Year. The
allocation to a Participant entitled to a partial share will be
the allocation made to the Participants entitled to a full share
multiplied by a fraction, the numerator of which is the number of
calendar months during the Plan Year in which he or she was
eligible to participate in the Plan, and the denominator of which
is 12.
(D) Profit Sharing Contributions, if any, will be paid to
the Trustee on such date or dates as the Participating Employer
may elect during or following the Plan Year for which they are
made; provided, first, that the total amount of any such Profit
Sharing Contributions for a particular Plan Year will be paid in
full on or before the date required for filing the employer's
federal income tax return for its fiscal year ending with or
within the Plan Year, or such date as duly extended; and, second,
that the Participating Employer will either
(1) designate the payment in writing to the Trustee as
a payment on account of such fiscal year, or
(2) claim such payment as a deduction on its federal
income tax return for such fiscal year.
(E) All Profit Sharing Contributions will be invested as
provided in Section 3.4(D).
3.6 Rollovers and Transfers. (A) A Participant may, with the
prior consent of the Administrator, contribute to the Trust,
within 60 days of receipt,
(1) the balance of an individual retirement account to
which the only contributions have been one or more eligible
rollover distributions from a plan qualified under Code
section 401(a), or
(2) an eligible rollover distribution from such a
qualified plan.<PAGE>
(B) W i th the prior consent of the Administrator, a
Participant's accounts under another tax-qualified plan may be
transferred directly to the Trust. In no event may such a
transfer be made that would require the Plan to provide any
option with respect to the form or time of distribution or any
other right, benefit or feature not available under the Plan
prior to the transfer.
(C) Any contribution or transfer to the Trust pursuant to
Subsection (A) or (B) must be made in cash. To the extent that
the amount transferred pursuant to Subsection (B) is comprised of
after-tax employee contributions (and earnings attributable to
such contributions) which were separately accounted for under the
transferor plan and the transferor plan was not required by Code
s e c tion 401(a)(11) to provide annuity distributions, the
t r ansferred amount will be credited to the Participant's
After-Tax Savings Contribution Account. To the extent that any
amount so transferred is required to remain subject to the
distribution limitations of Code section 401(k)(2), such amount
w i ll be credited to the Participant's Before-Tax Savings
Contribution Account. Any other funds received by the Trust
under this Section will be credited to the Participant's Rollover
Account.
3.7 Corrective Contributions. For any Plan Year a Participating
Employer may, in its discretion, contribute to the Before-Tax
Contribution Accounts, the Matching Contribution Accounts or both
of Qualified Employees other than Highly Compensated Employees or
any group of such employees such amounts as it deems advisable to
assist the Plan in satisfying the requirements of Sections 9.2,
9.3 and 9.4 for such Plan Year. Such contributions will be
allocated among such accounts in proportion to the Qualified
Employees' Eligible Earnings, in proportion to the Before-Tax
Contributions made for such Qualified Employees or in equal
shares as the Participating Employer will direct at the time such
contribution is made. Except as provided in Section 6.3(B), each
such contribution will be treated, for all purposes of the Plan,
in the same manner as other contributions allocated to the same
account.<PAGE>
ARTICLE IV
Trustee's Accounts and Valuation
4.1 Establishment of Accounts. The following Accounts will be
established and maintained for each Participant:
(a) Before-Tax Savings Contribution Account, to which
there will be credited the amount of Before-Tax Savings
Contributions the Participating Employer has made on the
Participant's behalf and amounts credited to such Account
pursuant to Section 3.7.
(b) After-Tax Savings Contribution Account, to which
there will be credited the amount of such After-Tax Savings
Contributions and amounts credited to such Account pursuant
to Section 3.7. Within such Account, there will be
maintained two subaccounts to separately evidence the amount
of After-Tax Savings Contributions with respect to which
Matching Contributions were made, together with the amount
of the Participant's "Participant Account" as of June 30,
1984, and the amount of After-Tax Savings Contributions with
respect to which no Matching Contributions were made.
Contributions made prior to January 1, 1987, and earnings on
such contributions will be separately identified.
(c) Matching Contribution Account, to which there will
be credited the amount of Matching Contributions made on the
P a r t icipant's behalf and, within such Account, two
subaccounts to separately evidence the amount of Matching
Contributions that, pursuant to Section 5.5, is not subject
to the Participant's investment direction and the amount of
Matching Contributions that is subject to the Participant's
investment direction.
(d) Profit Sharing Contribution Account, to which
there will be credited Profit Sharing Contributions made on
the Participant's behalf.
(e) Rollover Account, to which there will be credited
the amount of any rollover or transfer pursuant to Section
3.6, except such portion as may properly be credited to the
Participant's Before-Tax Savings Contribution Account or
After-Tax Savings Contribution Account.
(f) Loan Account, in which there shall be evidenced
the then outstanding principal and interest amounts due from
the Participant to the Trust pursuant to Section 6.6(G)
4.2 Valuation and Account Adjustment. As of the close of
business on each Valuation Date, each Participant's Accounts
within each investment fund established pursuant to Section 5.1
will be separately adjusted in a uniform and equitable manner for
income, expense, gains and losses of the investment fund since
the last prior adjustment.<PAGE>
4.3 Allocations Do Not Create Rights. The fact that allocations
are made and credited to the Accounts of a Participant will not
vest in the Participant any right, title or interest in or to any
portion of the Fund except at the time or times and upon the
t e r m s and conditions expressly set forth in the Plan.
Notwithstanding any allocation or credit to the Account of any
Participant, the issuance of any statement to the Participant or
the distribution of all or any portion of a Participant's Account
balance, the Administrator may direct the Participant's Account
to be adjusted to the extent necessary to correct any error in
such Account, whether caused by a misapplication of any provision
of the Plan or otherwise, and may recover from the Participant or
t h e Participant's Beneficiary the amount of any excess
distribution. Any such adjustment will be made within a
reasonable time after the error is discovered.<PAGE>
ARTICLE V
Participant Investment Direction
5.1 Establishment of Investment Funds. (A) In order to allow
each Participant to determine the manner in which his or her
Accounts will be invested, the Trustee will maintain, within the
Trust, such separate investment Funds as the Company may from
time to time direct. Except as provided in Section 5.5, each
Participant's Accounts will be invested in the investment Funds
in accordance with the procedures set forth in Sections 5.2 and
5.3. The Company may, from time to time, direct the Trustee to
establish additional investment Funds or to terminate any
existing investment fund.
(B) Except as the Company otherwise directs, the investment
Funds maintained by the Trustee will include the Ecolab Stock
Fund, which will be invested primarily in the common stock of
Ecolab Inc.
5.2 Contribution Investment Directions. (A) Subject to the
provisions of Section 5.5, each Participant may direct the manner
in which future cash contributions made by or for him or her will
be invested among the Funds established pursuant to Section 5.1,
in one percent increments. Investment selections must be made in
the aggregate with respect to all of the Participant's Accounts,
except that a separate investment selection may be made with
respect to the investment of a Rollover Contribution, which
separate investment selection will apply until the Participant
directs a change in the manner in which current Account balances
are invested, at which time the Rollover Account shall become
subject to the same rules, with respect to investment selections,
as the Participant's other Accounts. Each such direction will
first be made in accordance with the telephone investment
procedures established by the Administrator in conjunction with
the Participant's enrollment in the Plan or rollover, as the case
may be.
(B) A Participant may direct a change in the manner in
which future contributions to his or her Accounts will be
invested among the investment Funds. Such a direction will be
subject to the rules set forth in Subsection (A), and will be
effective for contributions received by the Trustee after the
Participant requests such change in accordance with the telephone
investment selection procedures established by the Administrator.
5.3 Transfer Among Investment Funds. (A) Subject to Subsection
(B) and Section 5.5, a Participant may direct the transfer of any
one percent increment of the aggregate of his or her Accounts
among the investment Funds.
(B) A Participant's right to transfer investments will be
subject to, and limited by, restrictions imposed by the managers
of the investment funds involved in the transfer.<PAGE>
(C) Each transfer direction will be given effect not later
than the close of the first banking business day following the
Trustee's receipt of the Participant's transfer direction made in
accordance with the telephone investment selection procedures
established by the Administrator; provided that if the Trustee,
for any reason, is unable to complete the transfer by such time,
it will complete the transfer as soon as practicable.
5.4 Investment Direction Responsibility Resides With
Participants. Neither the Administrator nor the Trustee will
have any authority, discretion, responsibility or liability with
respect to a Participant's selection of the investment funds in
which his or her Accounts will be invested, the entire authority,
discretion and responsibility for, and any results attributable
to, the selection being that of the Participant.
5.5 Ecolab Stock Fund Rules. (A) Except as otherwise provided
in Subsections (B) and (C), each Participant's share of Profit
Sharing Contributions and Matching Contributions, to the extent
made in the form of common stock of Ecolab Inc. (or in cash
designated as a stock contribution pursuant to Section 3.4(D)),
will be invested in the Ecolab Stock Fund notwithstanding a
contrary investment selection of the Participant, and will not be
subject to any change in form pursuant to any Participant's
investment direction.
(B) Notwithstanding any other provisions of the Plan or the
instrument evidencing the Trust, no Participant who is an officer
(as defined by Rule 3b-2 of the Securities and Exchange
Commission) or director of the Company or who owns more than ten
percent of the outstanding shares of any equity security of the
C o m p a n y, will be permitted to direct that additional
contributions to, or existing balances in, his or her Accounts be
further invested in the Ecolab Stock Fund, and additional
contributions to, and existing balances in, the Profit Sharing
Contribution Account or Matching Contribution Account will not be
further invested in the portion of the Ecolab Stock Fund invested
in Ecolab common stock if such investment would cause the
aggregate fair market value of the equity securities held in the
Trust with respect to which reports by such officer, director or
shareholder Participants to the Securities Exchange Commission
would otherwise be required and which are credited to the
A c c o u nts of all such officer, director or shareholder
Participants to equal or exceed twenty percent of the market
value of the securities having a readily ascertainable market
value held in the Trust, determined as of the end of the
preceding Plan Year. If an allocation of a Profit Sharing
Contribution or Matching Contribution in the form of Ecolab Inc.
common stock to the Account of a Participant is prohibited by the
foregoing provisions of this subsection, then, to the extent
required to comply with such provisions, the portion of such
contribution that is so prohibited will be made in the form of
cash, will not be converted to such stock, and will be allocated
to the Accounts of such officer, director or shareholder<PAGE>
Participants. To the extent that, by operation of this
subsection, cash is allocated to a Participant's Account in lieu
of stock, such cash will be held by the Trustee in the cash
subaccount of the Ecolab Stock Fund, and the amount of such cash
allocation will be subject to the same restrictions as is the
stock contributed to Participants' Profit Sharing and Matching
Contribution Accounts. (That is, such amount may not be
transferred to another investment fund nor may the Participant
borrow such amount.)
(C) A Participant's direction to transfer investment of
current Account balances to, or invest future cash contributions
in, the Ecolab Stock Fund will not be effective to the extent
compliance with such direction would result in the Trust's owning
more than nine percent of the outstanding common stock of Ecolab
Inc. Amounts that would otherwise have been invested in the
Ecolab Stock Fund on any date will be reduced pro rata among
Participants on the basis of the amount that each directed to be
so invested, as necessary to meet this limitation. Amounts that
may not be invested in the Ecolab Stock Fund will be invested in
the Fund specified by Plan Rules.
(D) Notwithstanding the provisions of Section 5.3, no
Participant or Beneficiary who is subject to the reporting
requirements under Rule 16 of the Securities and Exchange
Commission may direct a transfer into or out of the Ecolab Stock
Fund more frequently than once in any 30-day period until such
time as such 30-day limitation ceases to be required in order to
exempt such transfers from such reporting requirements.
(E) Any proceeds from a tender of Ecolab Inc. stock will be
a l l o c a ted among the Accounts of the Participants and
Beneficiaries to which the tendered stock was attributable. Such
proceeds will be held in a subaccount of the Ecolab Stock Fund
and invested in the manner prescribed by Plan Rules.
5.6 Voting Ecolab Inc. Stock. (A) Each Participant and
Beneficiary with an interest in the Ecolab Stock Fund will be
afforded the opportunity to direct the manner in which shares of
Ecolab Inc. common stock in the Fund will be voted in connection
with all stockholder actions of Ecolab Inc. In the event of a
public tender or exchange offer for shares of common stock of
Ecolab Inc., each Participant and Beneficiary will be entitled to
direct whether or not the shares in the Fund will be tendered for
sale or exchange in connection with such offer. Solely for
p u rposes of the preceding sentence, each Participant and
Beneficiary is designated as a "named fiduciary" within the
meaning of section 403(a)(1) of ERISA. Each Participant's or
Beneficiary's direction will apply to the number of shares in the
Fund that bears the same ratio to the total shares in the Fund as
t h e value of the Participant's or Beneficiary's Account
investments in the Fund bears to the total value of the Fund.<PAGE>
(B) The Administrator will, prior to each meeting of Ecolab
Inc. stockholders, cause to be furnished to each such Participant
and Beneficiary a copy of any proxy solicitation material
prepared by Ecolab Inc., together with a form requesting
confidential directions on how the shares of Ecolab Inc. stock
attributable to the Participant's or Beneficiary's Account will
be voted on each matter to be brought before such meeting. The
Administrator will use his or her best efforts to ensure that
each Participant and Beneficiary receives such information as
will be distributed to stockholders of Ecolab Inc. in connection
with any public tender or exchange offer for shares of Ecolab
Inc. common stock and that each receives instructions for giving
confidential directions to the Trustee.
(C) The Trustee will hold all directions received from
Participants and Beneficiaries pursuant to this subsection in
strict confidence and will not disclose any such direction to any
person, including any officer or employee of the Company or of an
Affiliated Organization, except as may be required to allow
independent inspectors of election to certify voting results or
to satisfy the requirements of law.
(D) The Trustee will vote the number of full and fractional
shares attributable to each Participant's and Beneficiary's
Account as directed by the Participant or Beneficiary if the
direction is received in time for the direction to be processed.
In the case of a public tender or exchange offer, the Trustee
will tender the shares attributable to a Participant's or
Beneficiary's Account if so directed by the Participant or
Beneficiary, and will not tender shares attributable to the
Account of a Participant or Beneficiary who either directs that
such shares not be tendered or does not furnish a timely
direction to the Trustee.
(E) The Trustee will vote any Ecolab Inc. stock with
respect to which it does not receive timely directions so that
the proportion of such stock voted in any particular manner on
any matter is the same as the proportion of the stock with
respect to which the Trustee has received timely directions which
is so voted. If a public tender or exchange offer is made and
the Trustee holds any Ecolab Inc. stock that is not attributable
to any Participant's or Beneficiary's share of the Ecolab Stock
Fund, the Trustee will tender a portion of such stock so that the
proportion of such stock that is tendered is the same as the
proportion of the stock attributable to Participants' and
Beneficiaries' Accounts for which the Trustee has received
instructions is tendered.
5.7 S p e c ial Restrictions. Notwithstanding any contrary
provision of this Plan, in the event of significant unanticipated
changes in the value or character of any investment fund or of
any asset held in a fund, a change of investment manager, record
keeper or trustee, or other similar event, the Company may, in
its discretion, take such action as it deems necessary to prevent<PAGE>
inequities, losses to the Plan or Participants or other adverse
consequences or for the proper administration of the Plan and
Trust, including but not limited to the following:
(a) Segregate any assets of an investment fund in a
separate fund in which each Participant's and Beneficiary's
interest is proportionate to his or her interest in the
original investment fund and prescribe special rules with
respect to such segregated fund;
(b) Limit or prohibit any withdrawal, loan or transfer
from any one or more of the investment funds;
(c) Limit or prohibit any transfer of funds to or the
investment of contributions in any one or more of the
investment funds;
(d) Suspend distributions from the Plan or from any
investment fund for a period permitted by law.
5.8 Default Investments. (A) If a Participant or Beneficiary
fails to give instructions with respect to the investment of his
or her Accounts in connection with a change in the Trustee or
other termination of an investment Fund in which the Accounts are
invested, the Accounts will be invested in the investment Fund or
Funds then available under the Plan that the Administrator
determines to have investment characteristics most similar to the
Fund or Funds in which the Accounts were previously invested.
(B) I f a Participant or Beneficiary fails to give
instructions with respect to the investment of a contribution to
his or her Accounts, other than a contribution to be invested in
the Ecolab Stock Fund in accordance with Section 5.5, or of the
proceeds from a tender of Ecolab Inc. stock, the contribution or
proceeds will be invested in the Fund specified by Plan Rules.<PAGE>
ARTICLE VI
Withdrawals During Employment and Loans
6.1 Withdrawals from After-Tax Savings Contribution Account.
(A) Subject to the provisions of Subsection (B) and Section 6.4,
a P a r ticipant may withdraw from the After-Tax Savings
Contribution Account an amount not in excess of the amount of the
balance of such Account. Any such withdrawals will be deemed to
have been made first from the contributions in the unmatched
subaccount, then from contributions in the Participating Employer
matched subaccount, then from Fund earnings in the unmatched
subaccount and finally from Fund earnings in the Participating
Employer matched subaccount; provided that, for federal income
tax purposes, all withdrawals will be deemed to be made from
contributions made before 1987 until the aggregate withdrawals
equal the After-Tax Savings Contributions made before 1987 and
t h en proportionately from the remaining contributions and
earnings.
(B) To the extent that contributions to a Participant's
After-Tax Savings Contribution Account were matched by Matching
Contributions (by reason of Participants' Before-Tax Savings
Contributions for a Plan Year being less than six percent of
Compensation), a Participant who withdraws such contributions or
the earnings attributable to them will not be entitled to have
Before-Tax, After-Tax or Matching Contributions made on his or
her behalf for the three-month period commencing with the first
month following the date on which the withdrawal distribution is
made; provided, however, that such suspension will not be applied
if the amount withdrawn is such that there remains in the
After-Tax Savings Contribution Account after the withdrawal an
amount equal to the After-Tax Savings Contributions made over the
preceding six months, and such withdrawal distribution is made
for one or more of the following purposes:
(1) To purchase, or make substantial capital
improvements to, the Participant's principal residence;
(2) To pay tuition or other expenses for the education
of the Participant or any of his or her dependents;
(3) To pay expenses for the medical, dental or other
health care of the Participant or any of his or her
dependents; or
(4) To make a deposit to an Individual Retirement
A c c ount for the Participant (other than a rollover
Individual Retirement Account).
6.2 W i t hdrawals from Rollover Account. Subject to the
provisions of Section 6.4, a Participant may withdraw from the
Rollover Account an amount not in excess of the balance of such
Account; provided that no such withdrawal may be made until the
aggregate amount of contributions withdrawn from the<PAGE>
Participant's After-Tax Savings Contributions Account equals or
exceeds the aggregate contributions made to such Account. No
withdrawal from a Rollover Account will be made without the
consent of the Participant's spouse if such account contains any
amount transferred directly from a plan required by Code section
401(a)(11) to provide annuity distributions.
6.3 Hardship Withdrawals from Before-Tax Savings Contribution
Account. (A) Subject to the provisions of Section 6.4, a
Participant may withdraw from his or her Before-Tax Savings
Contribution Account an amount not in excess of the amount of
Before-Tax Savings Contributions made on the Participant's behalf
on or prior to the date of distribution, reduced by the amount of
Before-Tax Savings Contributions previously distributed from such
Account and further reduced by the total outstanding balance of
all loans to the Participant charged to such Account. Such
withdrawal will be made only if the Administrator determines that
the distribution is made on account of an immediate and heavy
financial need of the Participant and is necessary to satisfy
such financial need.
(B) The amount subject to withdrawal will include any
e a rnings credited to the Participant's Before-Tax Savings
Contribution Account on or before December 31, 1988, to the
extent not previously withdrawn or distributed, and will exclude
any corrective contributions made to the Participant's Before-Tax
Savings Contribution Account pursuant to Section 3.7 and any
M a t ching Contributions redesignated as Before-Tax Savings
Contributions pursuant to Section 9.2(D)(2).
(C) A distribution will be deemed to be made on account of
an immediate and heavy financial need only if the Participant
establishes that the withdrawal is made on account of:
(1) expenses for medical care, described in section
213(d) of the Code, incurred or to be incurred by the
Participant, the Participant's spouse or the Participant's
dependent (as described in Code Section 152);
(2) costs directly related to the purchase (excluding
m o r tgage payments) of a principal residence of the
Participant;
(3) p a y ment of tuition and related educational
expenses for the next year of post-secondary education for
the Participant or his or her spouse, child or other
dependent; or
(4) payments necessary to prevent the eviction of the
P a r ticipant from his or her principal residence or
foreclosure of the mortgage on the Participant's principal
residence.<PAGE>
(D) A distribution will be deemed to be necessary to
satisfy the immediate and heavy financial need of the Participant
only if the Administrator determines that each of the following
requirements is satisfied.
(1) The distribution is not in excess of the sum of
the amount of the immediate and heavy financial need of the
Participant plus, if elected by the Participant, the amount
o f federal taxes required to be withheld from the
distribution.
(2) The Participant has received all withdrawals and
has taken all nontaxable loans available under all qualified
plans maintained by any Affiliated Organization.
(3) All Before-Tax Savings Contributions and After-Tax
Savings Contributions under this Plan and all elective
deferrals and after-tax employee contributions under all
other plan maintained by any Affiliated Organization by or
on behalf of the Participant will be suspended for a period
of at least twelve months following the date of the
distribution.
(4) For the Participant's taxable year following the
t a x a ble year during which he or she received the
distribution, the amount of Before-Tax Savings Contributions
and elective contributions under all other qualified plans
maintained by any Affiliated Organization that may be made
on the Participant's behalf under Code Section 402(g) and
Section 9.1 of the Plan will be reduced by the sum of
Before-Tax Savings Contributions and such other elective
contributions made on the Participant's behalf for the
t a x a ble year during which he or she received the
distribution.
(E) The Administrator's determination of the existence of a
Participant's financial hardship and the amount that may be
withdrawn to satisfy the need created by such hardship will be
made in accordance with Treasury Regulations and will be final
and binding on the Participant. Such withdrawal distribution will
be made as soon as administratively practicable following the
Administrator's determination that a financial hardship exists
and will be based on the amount of the Participant's Before-Tax
Contribution Account balance on the date of the distribution.
The Administrator will not be obligated to supervise or otherwise
verify that amounts withdrawn are applied in the manner specified
in the Participant's withdrawal application.
6.4 Rules for Withdrawals. (A) No Participant may make more
than two withdrawals during any Plan Year under this article;
provided that this rule will not limit hardship withdrawals under
Section 6.3.<PAGE>
(B) A withdrawal other than a hardship withdrawal under
Section 6.3 may not be made in an amount less than the lesser of
Two Hundred Dollars or the balance of the Account from which the
withdrawal is made.
(C) A withdrawal distribution will be made only upon the
Participant's application in the manner prescribed by the
Administrator.
(D) Withdrawals will be made on a substantially pro rata
basis among the investment funds in which the Accounts or
subaccounts from which the withdrawal is made are invested.
(E) The provisions of Section 8.8 will apply to any
withdrawal distribution that constitutes an eligible rollover
distribution within the meaning of Code Section 402(c).
(F) No Participant who has outstanding any loan from the
Plan will be entitled to make any withdrawal, other than a
hardship withdrawal under Section 6.3, to the extent that the
outstanding balance of the loans would exceed fifty percent (50%)
of the Participant's vested Account balance immediately after the
withdrawal.
6.5 No Withdrawals from Matching Contribution or Profit Sharing
Accounts. In no case may a Participant make a withdrawal from
the Matching Contribution Account or Profit Sharing Account while
employed with an Affiliated Organization.
6.6 Plan Loans. (A) Each Participant and Beneficiary who is
employed by an Affiliated Organization or is otherwise a "party
in interest" within the meaning of the Employee Retirement Income
Security Act of 1974 is entitled to borrow funds from the Trust,
by loan application to the Administrator in the manner prescribed
by Plan Rule, subject, however, to the succeeding provisions of
this section.
(1) The amount of the loan may not cause the aggregate
amount of outstanding loans to the borrower to exceed the
lesser of:
(a) $50,000, reduced by the excess of (i) the
borrower's highest outstanding loan balance during the
12-month period ending on the date of the loan over
(ii) the loan balance outstanding immediately prior to
the loan; and
(b) 50% of the borrower's vested interest in the
Accounts under the Plan on the date of the loan,
determined, in the case of a Participant who is
actively employed with a Participating Employer, as if
the Participant had terminated employment on such date.<PAGE>
(2) No individual loan will be made in an amount less
than $500.
(3) No more than two loans may be made to any borrower
during any Plan Year.
(4) No borrower may have outstanding at any time more
than one loan with a maturity date more than five years from
the date of the loan or more than one loan with a maturity
date five years or less from the date of the loan.
(5) No loan will be made from any portion of the
b o r r ower's Account that consists of Profit Sharing
Contributions or Matching Contributions made, or deemed to
be made, in the form of Ecolab Inc. common stock.
(6) No loan will be made to any person who fails to
satisfy uniform, commercially reasonable standards, related
solely to ability to repay, established by Plan Rules.
(7) No loan will be made to a Beneficiary, and the
Administrator will not commence processing a Beneficiary's
loan application, prior to the Administrator's determination
of the identity of and amount distributable to such
Beneficiary.
(B) Subject to the restriction of clause (5) of Subsection
(A), a loan will be charged against the borrower's Accounts in
the following order: Before-Tax Savings Contribution Account;
Rollover Account; Matching Contribution Account; Profit Sharing
Account; and After-Tax Savings Contribution Account. No loan
will be charged against any Account until the funds available for
loans in any prior Account in such order have been exhausted.
The loan proceeds will be obtained on a substantially pro rata
basis from the investment fund or funds in which the Account or
Accounts from which the loan is to be made are invested,
disregarding any amounts described in clause (5) of Subsection
(A).
(C) Each loan will bear interest on the unpaid principal
balance at the rate charged for a loan for a similar term with
similar security by the commercial lending institution designated
by the Administrator from time to time as of the first banking
day of the last month of the calendar quarter preceding the
quarter in which the loan is made.
(D) T h e borrower must execute a customary form of
promissory note which:
(1) Creates in the Trust a valid first lien against
one-half of the borrower's entire right, title and interest
in and to his or her Accounts in the Plan as of the date of
the loan;<PAGE>
(2) Provide for a maturity date not exceeding five
years from the date of the loan or, if the Administrator
determines at the time the loan is made that the proceeds of
the loan are to be used to purchase a house, townhome,
apartment, condominium or mobile home used, or intended to
be used within a reasonable time after the loan is made, as
the borrower's principal residence, not exceeding ten years
from the date of the loan;
(3) Provide for payments of principal and interest in
equal installments of such frequency, not less frequently
than quarterly, in such minimum amounts and for such maximum
period as the Plan Rules prescribe;
(4) Provide that upon default in payment or otherwise,
and upon the borrower's death, the unpaid indebtedness will
be accelerated and satisfied from any distribution then due
and from the vested balance of the borrower's Accounts that
c o u l d then be distributed to the borrower or any
Beneficiary, and that the date on which repayment of any
remaining part of such unpaid indebtedness is due will be
extended, and interest will continue to accrue, to such date
as the borrower or Beneficiary will be due to receive a
distribution from the Plan.
(E) In addition to the documents described in Subsection
(D), each Participant who is employed by a Participating Employer
must authorize the Participating Employer to deduct from the
Participant's pay the amount of payments due under the terms of
any such loan, and each borrower must provide such documents as
may from time to time be required by Plan Rules.
(F) The borrower will receive a clear statement of the
c h arges involved in the proposed loan transaction, which
statement will include the dollar amount of the loan, the annual
rate of the finance charge and the aggregate amount of the
finance charge to the date of maturity.
(G) Each loan will be a loan by the Trust Fund, but for
trust accounting purposes the loan will be deemed made from the
borrower's own Accounts, and the note executed by the borrower
will be deemed to be an asset of such Accounts. Upon making a
loan, the borrower's Account or Accounts and the investment fund
or funds from which the loan is made will be reduced by an amount
equal to the principal balance of the loan, and a Loan Account
will be established for the borrower with an initial balance
equal to the principal amount of such loan. All such Loan
Accounts will be excluded for purposes of determining and
allocating the net earnings (or losses) of the Trust pursuant to
Section 4.2. A borrower's repayments of principal and payments
of interest will be credited to the Accounts from which the loan
proceeds were obtained in reverse of the order in which the loan
amount was taken from such Accounts until the amount borrowed
from each such Account has been fully replaced by principal<PAGE>
repayments. Upon the Trustee's receipt of a loan payment, the
Loan Account of the borrower will be reduced by the amount of the
p r i n cipal payment credited to such borrower's Accounts.
Repayments of loan principal and payments of interest will be
invested among the investment funds in accordance with the
borrower's most recent investment directions with respect to new
contributions under the Plan, but if no contributions are
currently being made to the borrower's Accounts and the borrower
does not file a new investment direction, such repayments will be
invested in the Fund specified by Plan Rules.
(H) The Administrator will establish a means pursuant to
which a borrower may make loan repayments by payroll deduction or
other periodic payments. The outstanding balance of any loan,
including any accrued interest, may be repaid in whole or in part
at any time prior to the maturity date without penalty.
(I) If at any time a Participant who has not become
entitled to a distribution of his or her Accounts would otherwise
default in payment, the Participant will be deemed to have made a
withdrawal from the After-Tax Savings Contribution Account in an
amount equal to the lesser of the balance of such Account or the
amount of the loan payment then due and to have applied such
withdrawal toward repayment of the loan. The amount deemed
withdrawn will be charged against the Participant's After-Tax
Savings Contribution Account and will be credited as a loan
repayment in the manner specified in Subsection (G).
(J) To the extent that any distribution to, or withdrawal
by, the Participant, other than a hardship withdrawal under
Section 6.3, would reduce the Participant's Account balance to
less than twice the amount of the loans to the Participant then
outstanding, such distribution or withdrawal will be applied to
repay the loans.
(K) Any fee imposed by the Trustee or another third party
for initiating or maintaining a Participant's loan will be
charged against the Participant's accounts as a special expense
of administration.
(L) By borrowing from the Trust, the Participant waives any
right he or she may have to require the Trustee to produce an
original copy of any document related to the loan, including the
Participant's note, and agrees that the Trustee may enforce the
Participant's obligation by producing a copy of any such document
produced by microfilm, digital storage or similar method.
(M) Plan Rules may specify such other terms and conditions
as may be necessary or desirable for the administration of loans
under this section.<PAGE>
ARTICLE VII
Vesting and Forfeitures
7.1 Vesting. (A) Each Participant will always have a fully
vested, nonforfeitable interest in his or her Before-Tax Savings
Contribution Account, After-Tax Savings Contribution Account,
Rollover Account and Profit Sharing Account.
(B) A Participant will acquire a fully vested
nonforfeitable interest in the Matching Contribution Account upon
attaining his or her Normal Retirement Date while employed with
an Affiliated Organization.
(C) A Participant will acquire a fully vested,
nonforfeitable interest in his or her Matching Contribution
Account if he or she dies or becomes Disabled while employed with
an Affiliated Organization.
(D) A Participant whose employment terminates prior to his
or her Normal Retirement Date other than by reason of death or
becoming Disabled will acquire a vested, nonforfeitable interest
in his or her Matching Contribution Account to the extent set
forth in the following schedule.
Years of Continuous
Service Vested Percentage
Less than two years 0%
two years but less than three years 25%
three years but less than four years 50%
four years but less than five years 75%
five or more years 100%
7.2 Forfeiture Upon Distribution. (A) I f the entire vested
balance of a Participant's Accounts is distributed not later than
the last day of the second Plan Year following the Plan Year
during which his or her employment with the Participating
Employer and other Affiliated Organizations terminates, and if
the amount of such distribution was not more than $3,500.00 or
the distribution was made with the Participant's consent, the
nonvested portion of the Participant's Matching Contribution
Account will, at the time of such distribution, be forfeited. A
Participant who has no vested interest in any Account at
termination of employment will be deemed to have received
distribution of the entire vested balance in such Accounts upon
such termination.
(B) If such Participant (i) received a distribution of less
than the entire balance of his or her Accounts, (ii) resumes
employment with a Participating Employer as a Qualified Employee,
and (iii) repays to the Trustee in a single lump sum the full
amount distributed (excluding the portion attributable to the
After-Tax Savings Contribution Account balance) before the<PAGE>
earlier of (a) five years following the date of reemployment with
the Participating Employer as a Qualified Employee or (b) the
date on which he or she incurs five consecutive One-Year Breaks
in Service following the distribution, then, the Participating
Employer will restore the amount forfeited to the Participant's
Matching Contribution Account, unadjusted for any change in value
occurring after the Valuation Date as of which the amount of the
distribution was determined. Such restoration will be made from
forfeitures that arise for the Plan Year for which such
restoration is to be made. To the extent such forfeitures are
insufficient for such purpose, the Participating Employer will
contribute the amount required to restore such Accounts.
7.3 Other Forfeitures. (A) Except as provided in Section 7.2,
the nonvested portions of a Participant's Matching Contribution
Account will continue to be held in a separate subaccount of such
Account until the Participant incurs five consecutive One-Year
Breaks in Service, at which time such portion of the Account will
be forfeited. If the Participant resumes employment with an
Affiliated Organization prior to incurring five consecutive One-
Year Breaks in Service, such subaccount will be disregarded and
its balance will be included in the Participant's Matching
Contribution Account balance. During the period that such
suspense account is in existence, it will be invested in
accordance with Plan Rules.
(B) A Participant's vested interest in each subaccount
created under Subsection (A) at any given time will not be less
than the amount "X" determined by the formula: X = P(AB + (R x
D)) - (R x D), where P is the Participant's vested percentage at
the time of determination; AB is the subaccount balance at the
time of determination; D is the amount of the distribution; and R
i s the ratio of the subaccount balance at the time of
determination, to the subaccount balance immediately following
the distribution. For purposes of determining a Participant's
vested interest in the portion of the Matching Contribution
Account that has been restored as provided in Subsection (A), the
foregoing formula will be applied, with the term "Matching
Contribution Account balance" being substituted for "subaccount
balance" wherever the latter term is used.
7.4 Reallocation of Forfeitures. All forfeitures occurring
under this article in a Plan Year will be allocated as of the
last day of such Plan Year as follows:
(1) Such forfeitures will first be applied to restore
the accounts of Participants as provided in Section 7.2(B);
and
(2) Any remaining forfeitures will be allocated to the
M a t ching Contribution Accounts of those Participants
eligible to receive a Matching Contribution for such Plan
Year. Such allocation will be made in the same manner and
among the same Participants as the Matching Contribution for<PAGE>
such Plan Year is allocated, or would have been allocated if
made, and will reduce the Matching Contribution for such
Plan Year. <PAGE>
ARTICLE VIII
Distributions After Termination
8.1 Time of Distribution. (A) Following a Participant's
termination of employment or earlier attainment of age 70-1/2,
the Administrator will direct the Trustee to distribute to the
Participant or, if the Participant has died, to the Beneficiary,
the value of the Participant's vested interest in the Accounts.
The amount of such distribution will be equal to the aggregate
balance of the Participant's vested interest in his or her
Accounts on the date of the distribution. Subject to the
remaining subsections of this section, distribution will be made
in accordance with the following provisions.
(1) If the aggregate balance of the Participant's
vested interest in his or her Accounts at the time of the
distribution is not more than $3500, distribution will be
made not later than the end of the month in which occurs the
first anniversary of the termination of the Participant's
employment. This clause will not apply, however, if the
Participant's vested account balance exceeded $3500 at the
time of any previous distribution to the Participant.
(2) Except as provided in clause (1), distribution to
t h e P a rticipant will be made on or as soon as
administratively practicable following such date as the
Participant directs in accordance with the distribution
procedures specified by Plan Rules, which date will be no
later than the date specified under Subsection (B).
(3) Any distribution to the Participant's Beneficiary
will be made not later than five years after the date of the
Participant's death; provided, that, if the Participant's
surviving spouse is the Beneficiary, the Participant and
such spouse were married throughout the one-year period
ending at the Participant's death, and the value of the
Participant's Account exceeds $3500, such spouse may elect,
by a signed, written notice delivered to the Administrator
prior to distribution, to defer the distribution to a
specified date not later than the date the Participant would
have attained age 70-1/2. If the Participant's surviving
spouse dies prior to distribution of benefits to such
spouse, distribution will be made as soon as practicable
after such spouse's death.
(B) (1) Except as provided in clause (2), each
Participant's Account balance will be distributed not later
than the earlier of -
(a) the sixtieth day following the close of the
Plan Year during which there occurs the latest of -
(i) the date the Participant terminates
employment;<PAGE>
(ii) t h e Participant's Normal Retirement
Date; and
(iii) t h e tenth anniversary of the
Participant's commencement of participation in the
Plan; and
(b) April 1 of the calendar year following the
calendar year during which the Participant attains age
70-1/2.
(2) A Participant whose Account is not distributable
under clause (1) of Subsection (A) may, by written notice to
the Administrator, defer distribution to a date not later
than the date specified in item (1)(b). The notice must be
delivered to the Administrator not later than 30 days prior
to the date specified in item (1)(a) and must specify the
date on which and the form in which, distribution is to be
made.
8.2 Form of Distribution. (A) Distribution of a Participant's
Account will be made in a single lump sum if such distribution is
made following termination of the Participant's employment and
either
(1) The total vested balance of the Participant's
Account does not, at the time of distribution, exceed $3500;
or
(2) The distribution is made to a Beneficiary who was
not the Participant's spouse throughout the one-year period
ending at the Participant's death.
(B) Notwithstanding any contrary provision of this article,
distribution to a Participant will commence no later than April 1
of the calendar year following the year in which the Participant
attains age seventy and one-half, whether or not the Participant
has then terminated employment.
(1) Prior to termination of employment, such
distribution will be made in substantially equal annual
installments in amounts which, as of the date distribution
commences, would reasonably be expected to result in the
Participant's Account balance, as of that date and as
increased by subsequent contributions and Fund earnings,
being distributed in accordance with the provisions of
Subsection (D). Any Rollover Account to which any amount
has been transferred under Section 3.6 from a plan required
to provide annuity distributions, however, will be applied
to purchase a commercial annuity contract that conforms to
the requirements of subsection (E) unless the Participant
m a k e s an election under subsection (C) to receive
installment distributions and the Participant's spouse
consents to such election.<PAGE>
(2) Any amount remaining in the Participant's Accounts
on the date employment terminates will be distributed in
accordance with the provisions of this Article applied
without regard to this subsection, but subject to Subsection
(G).
(C) A distribution not subject to subsection (A) or (B)
will be made in a lump sum unless the Participant (or the
Beneficiary who is the Participant's surviving spouse) elects to
receive distribution in the form of installments or a commercial
annuity contract. An election by the Participant must be made
within the 90-day period ending on the date of distribution.
(D) Installment distributions elected by the Participant or
a Participant's surviving spouse will be made in accordance with
the following rules.
(1) Distribution in the form of installments will be
made over the Participant's life or over a period that does
not exceed the life expectancy of the Participant or, if the
Participant's Beneficiary is the Participant's spouse, over
the lives of the Participant and such spouse or over a
period that does not exceed the joint and survivor life
expectancy of the Participant and such spouse, with life
expectancies being determined as of the date distribution
commences.
(2) I n stallment distributions to a Participant's
surviving spouse will be made in substantially equal
payments over a period not exceeding such spouse's life
e x p ectancy determined as of the date of the first
installment. Any amounts remaining unpaid at the spouse's
death will be paid in a cash lump sum as soon as practicable
after the Administrator receives notice of such spouse's
death.
(3) Installment distributions must be at least $875.00
per quarter.
(4) A Participant or Beneficiary who is receiving
installment payments from the Trust may at any time request
distribution of all or any portion of the undistributed
vested Account balance.
(5) If the Participant dies after distribution has
commenced but before his or her entire interest has been
distributed, distribution of the remaining interest will be
made to the Beneficiary in a cash lump sum as soon as
practicable after the Participant's death or, if the
Participant's spouse is the Beneficiary, by continuation of
t h e installment payments over the remainder of the
installment period, with any payments remaining unpaid at
such spouse's death being made in a cash lump sum as soon as
practicable after such spouse's death.<PAGE>
(6) Life expectancies will be determined by using the
expected return multiples set forth in Treasury Regulation
72-9.
(E) (1) Each annuity contract purchased for a Participant
will provide for payment in the form of a joint and fifty
percent survivor benefit with the Participant's spouse as
joint annuitant if the Participant is married as of the
first day of the period for which the first annuity payment
is made or in the form of a single life annuity if the
Participant is not then married, commencing at such time (on
or prior to the April 1 following the date on which the
Participant attains age 70-1/2) as the Participant elects.
(2) The annuity contract will provide that a married
Participant may, with the consent of his or her spouse,
elect to receive a single life annuity within the ninety day
period ending on the first day of the period for which an
annuity benefit is payable.
(3) E a c h annuity contract purchased for a
Participant's surviving spouse will provide for payment of a
single life annuity for such spouse, commencing at such date
as the spouse elects, but not later than the date the
Participant would have attained age 70-1/2.
(4) No such contract will be subject to transfer or to
exchange for another annuity contract that does not conform
to the requirements of this subsection.
(5) No such contract will be subject to surrender or
encumbrance without the consent of the Participant's spouse
-
(a) b e fore commencement of payments to the
Participant under such contract at any time while the
Participant is married, or
(b) a t a ny time during the life of the
Participant's spouse after payments to the Participant
have commenced in the form of a joint and survivor
annuity with the Participant's spouse as the contingent
survivor annuitant.
(F) If distribution of the Participant's Accounts is made
in a lump sum, to the extent that one or more of the
Participant's Accounts is invested in the Ecolab Stock Fund on
the Valuation Date as of which the distribution is determined,
distribution of such Account will be made in shares of Ecolab
I n c. common stock or cash, whichever the Participant or
Beneficiary, as the case may be, elects; provided, first, that
only a whole number of shares may be distributed in kind and the
balance of any distribution will be paid in cash; and second,<PAGE>
that, if the Participant or Beneficiary fails to elect, any
distribution will be made in cash.
(G) Notwithstanding any contrary provision of the Plan,
d i s t ributions will be made in accordance with Treasury
Regulations under Code section 401(a)(9), including Treasury
Regulation section 1.401(a)(9)-2, and any provisions of the Plan
reflecting Code section 401(a)(9) take precedence over any
distribution options that are inconsistent with Code section
401(a)(9).
8.3 Beneficiary Designation. (A) (1) Each Participant may
designate, upon forms furnished by the Administrator, one or more
persons to be primary Beneficiaries or alternative Beneficiaries
for all or a specified fractional part of his or her aggregate
Accounts and may change or revoke any such designation from time
to time. No such designation, change or revocation will be
effective unless executed by the Participant and received by the
Administrator during the Participant's lifetime. Except as
provided in Subsection (B), no such change or revocation will
require the consent of any person.
(2) If a Participant
(a) fails to designate a Beneficiary, or
(b) revokes a Beneficiary designation without
naming another Beneficiary, or
(c) designates as Beneficiaries one or more
persons none of whom survives the Participant,
for all or any portion of the Participant's Accounts, such
Accounts or portion will be distributed to the first class
of the following classes of automatic Beneficiaries that
includes a member surviving the Participant:
Participant's spouse;
Participant's issue, per stirpes and not per
capita;
Representative of Participant's estate.
(3) W h en used in this section and, unless the
designation otherwise specifies, when used in a Beneficiary
designation: the term "per stirpes" means in equal shares
among living children and the issue (taken collectively) of
each deceased child, with such issue taking by right of
r e p resentation; "children" means issue of the first
generation; and "issue" means all persons who are descended
from the person referred to, either by legitimate birth or
legal adoption. The automatic Beneficiaries specified above
a n d, unless the designation otherwise specifies, the
Beneficiaries designated by the Participant, will become
f i xed as of the Participant's death so that, if a<PAGE>
Beneficiary survives the Participant but dies before the
receipt of all payments due such Beneficiary, any remaining
payments will be made to the representative of such
Beneficiary's estate. Any designation of a Beneficiary by
name that is accompanied by a description of relationship to
the Participant will be given effect without regard to
whether the relationship to the Participant exists either at
the time the designation is made or at the Participant's
death. Any designation of a Beneficiary only by statement
of relationship to the Participant will be effective only to
d e s i g nate the person or persons standing in such
relationship to the Participant at the Participant's death.
Unless the designation otherwise provides, if two or more
beneficiaries are designated and not all of them survive the
Participant, the portion to which a deceased beneficiary
would have been entitled will be divided among the surviving
beneficiaries in proportion to the share each was designated
to receive. If the designation does not otherwise provide,
each beneficiary will be entitled to an equal share.
(B) Notwithstanding Subsection (A), if the Participant and
his or her spouse have been married throughout the one-year
period ending on the date of the Participant's death, no
designation of a Beneficiary other than the Participant's spouse
will be effective unless such spouse consents to the designation.
Any such consent will be effective only with respect to the
Beneficiary or class of Beneficiaries so designated and only with
respect to the spouse who so consented.
8.4 Assignment, Alienation of Benefits. (A) Except as required
under a qualified domestic relations order or by the terms of any
loan from the Trust, no benefit under the Plan may in any manner
be anticipated, alienated, sold, transferred, assigned, pledged,
encumbered or charged, and any attempt to do so will be void; and
no such benefit will in any manner be liable for, or subject to,
the debts, contracts, liabilities, engagements or torts of the
person entitled to such benefit.
(B) T o the extent provided in a qualified domestic
r e lations order, distribution of benefits assigned to an
alternate payee by such order may be distributed to the alternate
payee prior to the Participant's earliest retirement age. The
terms "qualified domestic relations order," "alternate payee" and
"earliest retirement age" have the meanings given in Code section
414(p).
8.5 Payment in Event of Incapacity. If any person entitled to
receive any payment under the Plan is physically, mentally, or
legally incapable of receiving or acknowledging receipt of the
payment, and no legal representative has been appointed for such
person, the Administrator in his discretion may (but will not be
required to) cause any sum otherwise payable to such person to be
paid to any one or more as may be chosen by the Administrator
from the following: the Beneficiaries, if any, designated by such<PAGE>
person, the institution maintaining such person, a custodian for
such person under the Uniform Transfers to Minors Act of any
state or such person's spouse, children, parents or other
relatives by blood or marriage. Any payment so made will be a
complete discharge of all liability under the Plan with respect
to any such payment.
8.6 Payment Satisfies Claims. Any payment to or for the benefit
of any Participant, legal representative or Beneficiary in
accordance with the provisions of the Plan will, to the extent of
such payment, be in full satisfaction of all claims against the
Trustee, the Administrator and the Participating Employer, any of
whom may require the payee to execute a receipted release as a
condition precedent to such payment.
8.7 Disposition if Distributee Cannot be Located. If the
Administrator is unable to locate a Participant or Beneficiary to
whom a distribution is due, the Participant's Accounts will
continue to be held in the Fund until such time as the
Administrator has located the Participant or Beneficiary or the
Participant or Beneficiary makes a proper claim for the benefit,
as the case may be. If the Administrator is unable to locate any
person entitled to receive any distribution under this Plan at
t h e time distribution to such person is required, the
Administrator may open an interest bearing, federally insured
account in the name of such person at a bank or savings
association and, notwithstanding any installment distribution
election previously made by such person, direct the Trustee to
deposit the full amount of the benefits payable to such person in
such account.
8.8 Direct Rollovers and Transfers. (A) To the extent a
distribution on or after December 31, 1992, is an eligible
rollover distribution, within the meaning of Code section 402(c),
to a Participant, the spouse of a deceased Participant or a
s p o u s e alternate payee under Code section 414(p), the
Administrator will, if so instructed by the distributee in
accordance with Plan Rules, direct the Trustee to make the
distribution to an eligible retirement account, within the
meaning of Code section 402(c). The foregoing provision will not
apply if the aggregate taxable distributions to be made to the
distributee during the calendar year are less than $200 or, if
less than the entire taxable amount of the distribution is to be
distributed to the eligible retirement account, such amount is
less than $500.
(B) If a Participant ceases to be an Employee, the
Administrator will, if so directed by the Participant, direct the
Trustee to transfer the balance of the Participant's Accounts to
the trustee of another plan qualified under section 401 of the
Code in which the Participant is or may become a participant, if
such other trustee is willing to accept such transfer.<PAGE>
ARTICLE IX
Contribution Limitations
9.1 Before-Tax Savings Contribution Dollar Limitation. The
aggregate amount of Before-Tax Savings Contributions and other
"elective deferrals" (within the meaning of the Code section
402(g)(3)) under any other qualified plan maintained by any
Affiliated Organization with respect to a Participant for any
t a x a b le year of the Participant may not exceed $7000
(automatically adjusted for increases in the cost of living in
accordance with Treasury Regulations). The limitation for any
Participant who received a hardship distribution under Article VI
will, for the year following the year in which such distribution
was made, be reduced as provided in Section 6.3(C)(4). If the
foregoing limitation is exceeded for any taxable year of the
Participant, the amount of Before-Tax Savings Contributions in
excess of such limitation, increased by Fund earnings or
decreased by Fund losses attributable to the excess, will be
returned to the Participant. Such distribution may be made at
any time after the excess contributions are received, but not
later than April 15 of the taxable year following the taxable
year to which such limitation relates. The amount returned to a
Participant who has made elective deferrals for the calendar year
other than pursuant to Section 3.1 will, to the extent of such
other elective deferrals, be determined in accordance with
written allocation instructions received by the Administrator
from the Participant not later than March 1 of the taxable year
following the taxable year with respect to which the Before-Tax
Savings Contributions were made. The amount of Fund earnings or
losses attributable to Before-Tax Savings Contributions returned
to a Participant pursuant to this Section will be determined in
the manner specified in Section 9.5.
9.2 Actual Deferral Percentage Limitations. (A) Notwithstanding
Section 3.1, to the extent deemed necessary by the Administrator
in order to comply with the requirements of Code section
401(k)(3), as set forth in Subsection (B), the Administrator may,
in his or her discretion exercised uniformly among Participants
similarly situated, prospectively decrease the rate at which a
Participant's Eligible Earnings will be reduced.
(B) (1) The requirements of Code section 401(k)(3) will be
satisfied for any Plan Year if, for that Plan Year, the Plan
satisfies the requirements of Code section 410(b)(1) with respect
to "eligible Employees" and either of the following tests.
(a) The "actual deferral percentage" for eligible
Employees who are Highly Compensated Employees is not
more than the product of the actual deferral percentage
for all other eligible Employees, multiplied by one and
one-quarter.
(b) The excess of the actual deferral percentage
for eligible Employees who are Highly Compensated<PAGE>
Employees over the actual deferral percentage for all
o t h er eligible Employees is not more than two
percentage points and the actual deferral percentage
for such Highly Compensated Employees is not more than
the product of the actual deferral percentage of all
other eligible Employees, multiplied by two.
(2) For purposes of this subsection,
(a) "eligible Employee" means a Qualified
Employee who is eligible to have Before-Tax Savings
Contributions made on his or her behalf for the Plan
Year in question or would be so eligible but for a
suspension imposed under Section 6.3(D)(3); and
(b) "actual deferral percentage," with respect to
e i ther of the two groups of eligible Employees
referenced above, is the average of the ratios,
calculated separately for each eligible Employee in the
particular group of the amount of Before-Tax Savings
Contributions on the eligible Employee's behalf for
that Plan Year, to the employee's Testing Wages for the
portion of the Plan Year during which he or she was an
eligible Employee. In computing the actual deferral
percentage, the following rules will apply.
(i) If aggregation of Testing Wages and
Before-Tax Savings Contributions is required under
Section 12.20(C) and 12.38(C), the actual deferral
percentage of the Highly Compensated Employee to
whom the aggregate amounts are attributed is the
actual deferral percentage determined for the
group of all eligible family members, treating
such group as a single eligible Employee.
(ii) If any eligible Employee is required to
be aggregated with more than one family group
under Section 12.20(C), all the groups with which
such Employee is aggregated will be treated as a
single family group.
(iii) A n y B e f ore-Tax Savings
Contributions made on behalf of an eligible
Employee who is not a Highly Compensated Employee
that are in excess of the limitation of Section
9.1 or that are distributed to the Employee
pursuant to Section 9.6(C) or 9.7(D) will be
excluded.
(iv) Except as otherwise provided in Treasury
Regulations, Before-Tax Contributions taken into
account pursuant to Section 9.3(C)(3) in
determining the actual contribution percentage
under Section 9.3(B)(2) will be excluded.<PAGE>
(v) Elective contributions under any other
plan that is aggregated with this Plan to satisfy
the requirements of Code section 410(b) will be
taken into account.
(vi) To the extent provided in Treasury
Regulations, elective contributions made under any
o t h er cash or deferred arrangement of the
P a rticipating Employer or another Affiliated
Organization on behalf of any eligible Employee
who is a Highly Compensated Employee will be taken
into account.
(vii) To the extent determined by the
Administrator and permitted under Treasury
Regulations, qualified nonelective contributions
w i l l be treated as Before-Tax Savings
Contributions.
(C) If, for any Plan Year, the requirements of Subsection
(B) are not satisfied, the Administrator will determine the
amount by which Before-Tax Savings Contributions made on behalf
of each Highly Compensated Employee for the Plan Year exceeds the
permissible amount as determined under Subsection (B). The
determination will be made by successively decreasing the rate of
Eligible Earnings reductions for Highly Compensated Employees
who, during the Plan Year, had the greatest percentage of
Eligible Earnings reductions made on their behalf, to the next
lower percentage, then again decreasing the percentage of such
H i ghly Compensated Employees Eligible Earnings reductions,
together with the percentage of Eligible Earnings reductions of
such Highly Compensated Employees who were already at such lower
percentage, to the next lower percentage, and continuing such
procedure for as many percentage decreases as the Administrator
d e ems necessary. The Administrator may, in his or her
discretion, make such reductions in any amount, in lieu of one
percent increments.
(D) At such time as the Administrator specifies on or
following the last day of the Plan Year for which such
determination is made, within two and one-half months if
practicable, but in no case later than the last day of the
following Plan Year, the excess will be corrected by taking any
one or more of the following steps.
(1) The amount of excess Before-Tax Savings
Contributions so determined, increased by Fund earnings or
decreased by Fund losses attributable to such excess as
determined under Section 9.5, will be returned to each such
Highly Compensated Employee. The amount to be returned
pursuant to the foregoing sentence with respect to any Plan
Year will be reduced by the portion of the amount, if any,
distributed pursuant to Section 9.1 that is attributable to
Before-Tax Savings Contributions that relate to such Plan<PAGE>
Y e ar, determined by assuming that Before-Tax Savings
Contributions in excess of the limitation described in
Section 9.1 for a given taxable year are the first
contributions made for a Plan Year falling within such
taxable year.
(2) All or any portion of the Matching Contribution
for the Plan Year with respect to which the determination is
made will be redesignated as Before-Tax Savings
Contributions (and, except as provided in Section 6.3(B),
will have all of the characteristics of Before-Tax Savings
Contributions) for all, or any similarly situated group of,
eligible Employees.
(3) The Participating Employer will make an additional
contribution for the Plan Year pursuant to Section 3.7.
(E) Any excess amount determined under Subsection (C) for a
Highly Compensated Employee whose actual deferral percentage is
determined under item (i) of Subsection (B)(2)(b) will be
allocated among all persons whose contributions are aggregated to
determine such percentage in proportion to the amount of Before-
Tax Savings Contributions made on behalf of each with respect to
the Plan Year.
9.3 A c tual Contribution Percentage Limitations. (A)
Notwithstanding Sections 3.2 and 3.4,, for any Plan Year, the
Aggregate After-Tax Savings Contributions and Matching
Contributions may be made on behalf of Participants who are
Highly Compensated Employees with respect to that Plan Year only
to the extent that either of the following tests is satisfied.
(1) The "actual contribution percentage" for eligible
Employees who are Highly Compensated Employees is not more
than the product of the actual contribution percentage for
all other "eligible Employees," multiplied by one and one-
quarter.
(2) The excess of the actual contribution percentage
for eligible Employees who are Highly Compensated Employees
over the actual contribution percentage for all other
eligible Employees is not more than two percentage points
a n d t he actual contribution percentage for Highly
Compensated Employees is not more than the product of the
actual contribution percentage for all other eligible
Employees, multiplied by two.
(B) For purposes of this section,
(1) "eligible Employee" means a Qualified Employee who
is eligible to make After-Tax Savings Contributions or to
have Matching Contributions made on his or her behalf for
the Plan Year in question or would have been so eligible if<PAGE>
h e o r she had elected to make Before-Tax Savings
Contributions for such Plan Year, and
(2) the "actual contribution percentage" with respect
to either of the two groups of eligible Employees referenced
above, is the average of the ratios, calculated separately
for each eligible Employee in the particular group of the
aggregate amount of After-Tax Savings Contributions and
Matching Contributions made on behalf of the Employee, to
the Employee's Testing Wages for the portion of the Plan
Year during which he or she was an eligible Employee. In
computing the "actual contribution percentage" the following
rules will apply.
(a) If aggregation of Testing Wages, After-Tax
Savings Contributions and Matching Contributions is
required under Section 12.20(C) and 12.38(C), the
actual contribution percentage of the Highly
Compensated Employee to whom the aggregate amounts are
a t tributed is the actual contribution percentage
determined for the group of all eligible family
members, treating such group as a single eligible
Employee.
(b) If any eligible Employee is required to be
aggregated with more than one family group under
Section 12.20(C), all the groups with which such
Employee is aggregated will be treated as a single
family group.
(c) Matching contributions (within the meaning of
Code section 401(m)(4)(A)) and after-tax contributions
made under any other plan that is aggregated with this
Plan to satisfy the requirements of Code section 410(b)
will be taken into account.
(d) To the extent required by Treasury
Regulations, matching contributions (within the meaning
o f Code section 401(m)(4)(A)) and after-tax
contributions made under any other qualified plan of
any Affiliated Organization on behalf of or by any
eligible Employee who is a Highly Compensated Employee
will be taken into account.
(e) Except as otherwise provided in Treasury
Regulations, Matching Contributions taken into account
pursuant to Section 9.2(C)(2) in determining the actual
deferral percentage under Section 9.2(B)(2)(b) will be
excluded.
(f) Matching Contributions taken into account for
purposes of the minimum contribution required by
Section 14.3(A) will be excluded.<PAGE>
(g) To the extent determined by the Administrator
a n d permitted by Treasury Regulations, qualified
nonelective contributions will be treated as After-Tax
Savings Contributions.
(C) If, for any Plan Year, the requirements of Subsection
(A) are not satisfied, the Administrator will determine the
amount by which Aggregate After-Tax Contributions and Matching
Contributions made on behalf of each Highly Compensated Employee
for the Plan Year exceeds the permissible amount as determined
under Subsection (A), such determination being made in accordance
with the procedure described in Section 9.2(C) with respect to
r e d uctions of Eligible Earnings. At such time as the
Administrator specifies on or following the last day of the Plan
Year for which such determination is made, within two and one-
half months if practicable, but in no case later than the last
day of the following Plan Year, the excess will be corrected by
taking any one or more of the following steps.
(1) T h e amount of excess After-Tax Savings
Contributions and Matching Contributions so determined with
respect to each Highly Compensated Employee and family
member, increased by Fund earnings or decreased by Fund
losses attributable to such excess, will be distributed to
such person; provided, however, that to the extent the
excess Matching Contributions would not be fully vested if
retained in the Plan, such excess will be forfeited rather
than distributed, and any such forfeitures will be applied
as provided in Section 3.4(C). The amount of distributable
Fund earnings or losses will be determined in the manner
specified in Section 9.5. Any excess amount to be
distributed will be taken in the following order.
(a) Unmatched After-Tax Savings Contributions.
(b) Matched After-Tax Savings Contributions and
the Matching Contributions attributable to them.
(c) Matching Contributions attributable to
Before-Tax Savings Contributions.
(2) The Participating Employer will make an additional
Matching Contribution for the Plan Year pursuant to Section
3.7.
(3) A l l or any portion of Before-Tax Savings
Contributions for the Plan Year for which the determination
is made will, in accordance with Treasury Regulations, be
taken into account in determining the actual contribution
percentage as if they were Matching Contributions.
(D) Any excess amount determined under Subsection (C) for a
Highly Compensated Employee whose actual contribution percentage
is determined under item (a) of Subsection (B)(2) will be<PAGE>
allocated among all persons whose contributions are aggregated to
determine such percentage in proportion to the amount of Matching
Contributions made on behalf of each with respect to the Plan
Year.
9.4 Multiple Use Limitation. (A) This section applies for any
Plan Year for which the aggregate limit of the actual deferral
percentage test under Section 9.2 and the actual contribution
percentage test under Section 9.3 is exceeded. For purposes of
this subsection, the aggregate limit is the greater of:
(1) The sum of:
(a) the product of one and one-quarter,
multiplied by the greater of:
(i) t h e actual deferral percentage, as
determined under Section 9.2(B)(2)(b), for the
Plan Year for eligible Employees who are not
Highly Compensated Employees, or
(ii) the actual contribution percentage, as
determined under Section 9.3(B)(2), for the Plan
Year for eligible Employees who are not Highly
Compensated Employees;
plus
(b) the sum of two percentage points plus the
lesser of the actual deferral percentage determined
under item (i) of clause (a) above or the actual
contribution percentage determined under item (ii) of
clause (a) above, with such sum in no case exceeding
twice the lesser of such actual deferral percentage or
actual contribution percentage;
or
(2) The sum of:
(a) the product of one and one-quarter,
multiplied by the lesser of:
(i) t h e actual deferral percentage, as
determined under Section 9.2(B)(2)(b), for the
Plan Year for eligible Employees who are not
Highly Compensated Employees, or
(ii) the actual contribution percentage, as
determined under Section 9.3(B)(2), for the Plan
Year for eligible Employees who are not Highly
Compensated Employees;
plus<PAGE>
(b) the sum of two percentage points plus the
greater of the actual deferral percentage determined
under item (i) of clause (a) above or the actual
contribution percentage determined under item (ii) of
clause (a) above, with such sum in no case exceeding
twice the lesser of such actual deferral percentage or
actual contribution percentage.
(B) I f , for any Plan Year, the calculations under
Subsection (A) require that this section be applied, the
Administrator will determine the amount by which the aggregated
After-Tax Savings Contributions and Matching Contributions made
on behalf of each Highly Compensated Employee for the Plan Year
causes the excess amount determined under Subsection (A), such
determination being made in accordance with the provisions of
Section 9.3(C). At such time as the Administrator specifies on
or following the last day of the Plan Year for which such
determination is made, within two and one-half months if
practicable, but in no case later than the last day of the
following Plan Year, the excess will be corrected by taking any
one or more of the steps described in Sections 9.2(D) and 9.3(C).
9.5 Earnings on Excess Contributions. (A) The amount of Fund
earnings or losses with respect to the excess amount of
contributions returned to a Highly Compensated Employee pursuant
to the foregoing provisions of this article will be the sum of
the earnings or losses attributable to such excess amount for the
Plan Year with respect to which the determination is being made,
as determined in accordance with Subsection (B), plus the
earnings or losses attributable to such excess amount for the
period between the end of that Plan Year and the date on which
such excess contributions are distributed to the Participant as
determined in accordance with Subsection (C).
(B) The earnings or losses attributable to such excess
amount for the Plan Year is the product of the total earnings or
losses for the Participant's Account to which the excess
contributions were credited for the Plan Year, multiplied by a
fraction, the numerator of which is the excess amount of
contributions made on the Participant's behalf to such Account
for the Plan Year, and the denominator of which is the closing
balance of such Account for the Plan Year, decreased by the
amount of earnings credited to that Account, or increased by the
amount of losses debited to that Account, for the Plan Year.
(C) The earnings or losses attributable to such excess
amount for the period between the end of the Plan Year for which
the determination is being made and the date on which such excess
contributions are distributed to the Participant will be the
amount determined in a reasonable manner permitted under Treasury
Regulations, including the product of ten percent of the earnings
or losses attributable to such excess amount for the Plan Year,
as determined in accordance with Subsection (B), multiplied by
the number of calendar months during the period for which the<PAGE>
determination is being made, with a distribution being made on or
before the fifteenth day of a month being deemed to have been
made on the last day of the preceding month and a distribution
being made after the fifteenth day of a month being deemed to
have been made on the first day of the following month.
9.6 A g gregate Defined Contribution Limitations. (A)
Notwithstanding any contrary provisions of this Plan, there will
not be allocated to any Participant's Accounts for a Limitation
Y e a r any amount that would cause the aggregate "annual
additions," with respect to the Participant for the Limitation
Year to exceed the lesser of:
(1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code section 415(b)(1)(A); and
(2) 25% of the Participant's Section 415 Wages for the
Limitation Year.
(B) For purposes of Subsection (A), the "annual additions"
with respect to a Participant for a Limitation Year are the sum
of -
(1) the aggregate amount of Before-Tax Savings, After-
Tax Savings, Matching and Profit Sharing Contributions and
forfeitures allocated to the Participant's Accounts under
the Plan for the Limitation Year (including any Before-Tax
Savings Contributions, After-Tax Savings Contributions and
Matching Contributions that are distributed or forfeited
pursuant to Section 9.2, 9.3 or 9.4, but excluding any
Before-Tax Savings Contributions in excess of the limitation
of Section 9.1 that are distributed to the Participant by
the April 15 following the Plan Year to which such
contributions relate) and employer contributions, employee
contributions and forfeitures allocated to the Participant's
accounts under any other qualified defined contribution plan
maintained by any Affiliated Organization for the Limitation
Year; plus
(2) t h e amount, if any, attributable to post-
retirement medical benefits that is allocated to a separate
account for the Participant as a "key employee" (as defined
in Section 14.3(C)), to the extent required under Code
section 419A(d)(1).
(C) (1) If the Administrator, in his or her discretion,
determines that the limitation under Subsection (A) would
otherwise be exceeded, to the extent necessary to prevent
such excess from occurring, the amount of a Participant's
After-Tax Savings Contributions and, if further reduction is
r e quired, Eligible Earnings reductions and Before-Tax
Savings Contributions will be prospectively reduced.<PAGE>
(2) I f a further reduction of contributions is
required, the amount of the Profit Sharing Contribution that
would otherwise be allocated to the Participants' Profit
Sharing Contribution Account will be reduced and the
aggregate amount of the Profit Sharing Contribution for the
Limitation Year will be reduced by the same amount.
(3) If, in spite of such reductions and as a result of
r e a s o nable error in estimating the amount of the
Participant's Eligible Earnings, Before-Tax Savings
Contributions, other elective deferrals within the meaning
of Code section 402(g)(3), After-Tax Savings Contributions
or Section 415 Wages, the limitation would otherwise be
exceeded, then, to the extent required to prevent such
excess,
(a) the amount of the Participant's After-Tax
Savings Contributions will be distributed to the
Participant and any Matching Contributions attributable
to the amount distributed, together with earnings on
such contributions, will be forfeited, and
(b) if a further excess would otherwise exist,
the amount of Before-Tax Savings Contributions made for
the Participant will be distributed to the Participant
and any Matching Contributions attributable to the
amount so distributed, together with earnings on such
contributions, will be forfeited, and
(c) if a further excess would otherwise exist,
the amount of such excess will be held in a suspense
account for the Participant's benefit and shall be used
t o reduce the amount of Participating Employer
contributions which otherwise would have been made on
his or her behalf for the next succeeding Limitation
Y e a r and, to the extent necessary, subsequent
Limitation Years; provided, that, if the Participant is
not employed with a Participating Employer as of the
end of the Limitation Year during which such excess
amount has not yet been exhausted in the form of
reduced Participating Employer contributions, such
amount shall be held unallocated in a suspense account
and shall be allocated to all other Participants for
the next succeeding Limitation Year and, to the extent
n e cessary, subsequent Limitation Years, prior to
Participating Employer contributions being made for
such succeeding Limitation Year, and shall operate to
r e duce the amount of Participating Employer
contributions for such succeeding Limitation Year or
Years.
9.7 Aggregate Defined Contribution/Defined Benefit Limitations.
(A) In no event will the amount of a Participant's annual
additions under the Plan exceed an amount that would cause the<PAGE>
decimal equivalent of the sum of the "defined benefit fraction"
plus the "defined contribution fraction" to exceed one.
(B) The "defined benefit fraction" is a fraction, the
numerator of which is the Participant's aggregate projected
annual benefit under all defined benefit pension plans maintained
by the Participating Employer or another Affiliated Organization
(determined as of the end of the Limitation Year), and the
denominator of which is the lesser of:
(1) 125% of the maximum dollar benefit limitation in
effect for the Limitation Year under such defined benefit
pension plans; and
(2) 140% of the average Section 415 Wages of the
Participant during the three consecutive Limitation Years
during which he or she was a Participant in any such defined
benefit pension plan that produce the highest average;
provided that,
if the Participant was a participant in one or more defined
benefit plans maintained by a Participating Employer or an
Affiliated Organization which were in existence on July 1, 1982
and which, individually and in the aggregate satisfied the
requirements of Code section 415 in effect at the end of the 1982
Limitation Year, the denominator shall not be less than one
hundred twenty-five percent of the Participant's aggregate
projected annual benefit under all such plans as of the end of
the last Limitation Year beginning before January 1, 1983.
(C) The "defined contribution fraction" is a fraction, the
numerator of which is the sum of the annual additions to the
Participant's accounts for the Limitation Year under this Plan
and any other defined contribution plans maintained by the
P a rticipant's Employer or another Affiliated Organization,
determined in the manner described in Section 9.6, and the
denominator of which is the aggregate of the lesser of:
(1) 125% of the maximum annual addition dollar limit
in effect for the Limitation Year under such defined
contributions plans; and
(2) 140% of 25% of the Participant's Section 415 Wages
for the Limitation Year,
applied for all years during which the Participant was employed
with the Participating Employer or another Affiliated
Organization, without regard to whether there was a defined
contribution plan in effect during all such years; provided,
that, if the Plan satisfied the applicable provisions of Code
section 415 as in effect for all Limitation Years beginning
before January 1, 1987, then the numerator of this fraction will
be adjusted by permanently subtracting an amount, determined as
of such date, so that the sum of the defined contribution<PAGE>
fraction and the defined benefit fraction computed under Code
section 415(e)(1) does not exceed 1.0 for such Limitation Year;
and provided further, that annual additions for any Limitation
Year beginning before January 1, 1987 will be determined by
taking into account only such amounts as were treated as annual
additions under Code section 415 as in effect for such year.
(D) If the annual additions that would otherwise be made
with respect to a Participant for a Limitation Year would cause
t h e l imitation of Subsection (A) to be exceeded, the
Participant's benefit under one or more defined benefit pension
plans maintained by the Participating Employer or another
Affiliated Organization will, to the extent provided in such
plans, be reduced to the extent necessary to prevent such excess
from occurring, and, if a sufficient reduction cannot be made
under such plans, the provisions of Section 9.6(C) will be
applied to reduce the amount of the annual additions to the
Participant's Accounts under this Plan for such Limitation Year
to the extent necessary to prevent such excess.
9.8 Administrator's Discretion. Notwithstanding the foregoing
provisions of this article, the Administrator may, in his or her
discretion, apply the provisions of Sections 9.1 through 9.7 in
any manner permitted by Treasury Regulations that will cause the
Plan to satisfy the limitations of the Code incorporated in such
sections, and the Administrator's good faith application of
Treasury Regulations will be binding on all Participants and
Beneficiaries.<PAGE>
ARTICLE X
Service Rules
10.1 Continuous Service. (A) The term "Continuous Service,"
with respect to an Employee, means the sum of the Employee's
"initial employment year service," plus the Employee's "completed
Plan Year service," plus the Employee's "termination year
service."
(1) An Employee's "initial employment year service"
will be equal to one year for the year in which his or her
employment commencement date or reemployment commencement
date (as defined in clause (2) below) occurs, as the case
may be.
(2) An Employee's "completed Plan Year service" shall
be the aggregate of the Employee's Plan Years of service
with a Participating Employer or with another Affiliated
Organization, commencing as of the first day of the Plan
Year next following the Employee's employment commencement
date or reemployment commencement date, as the case may be,
and ending with the last day of the Plan Year immediately
preceding the Employee's employment severance date, as
determined in accordance with the following rules:
(a) an Employee's "employment commencement date"
is the date on which he or she first performs an Hour
of Actual Service;
(b) a n Employee's "reemployment commencement
date" is the first date, following a period of
severance from employment which is not required to be
taken into account under either item (d) or (e), on
which he or she performs an Hour of Actual Service;
(c) f o r purposes of this section only, an
Employee's "employment severance date" is the earlier
to occur of:
(i) the date on which the Employee
t e rminates employment with the Participating
Employer and all other Affiliated Organizations
because he or she quits, retires, is discharged or
dies; or
(ii) the first anniversary of the first date
of a period during which he or she remains absent
from service (with or without pay) with the
Participating Employer or with another Affiliated
Organization for any reason other than a quit,
retirement, discharge or death following the
e m ployment commencement date or reemployment
commencement date, as the case may be;<PAGE>
provided, however, that if an Employee becomes absent
after December 31, 1984 on account of (i) the pregnancy
of such Employee, (ii) the birth of a child of such
Employee, (iii) the placement of a child with such
Employee on account of the adoption of such child by
such Employee or (iv) the Employee's caring for such
child immediately following such birth or placement,
then the Employee's employment severance date shall not
be earlier than the first anniversary of the date such
absence commenced or the date on which the absence
ceases to be on account of one or more of such reasons,
whichever first occurs; provided further that this
proviso shall not apply unless such Employee furnishes,
upon the Administrator's request, such information as
the Administrator shall require to determine the
r e asons for the Employee's absence or continued
absence;
(d) if the Employee's employment is severed by
reason of a quit, discharge or retirement and he or she
subsequently performs an Hour of Actual Service within
twelve months following the employment severance date,
the period of such severance shall be taken into
account;
(e) if the Employee's employment is severed by
reason of a quit, discharge or retirement during an
absence from service of twelve months or less for any
reason other than a quit, discharge, retirement or
death and he or she subsequently performs an Hour of
Actual Service within twelve months following the date
on which such absence commenced, the period of such
severance shall be taken into account;
(3) Subject to the provisions of items (d) and (e) of
clause (2), an Employee's "termination year service" will be
equal to one year if he or she completes at least one
thousand Hours of Service during the Plan Year in which the
E m ployee terminates employment with the Participating
Employer and with all other Affiliated Organizations, and he
or she will not be granted any Continuous Service for such
year if he or she completes less than one thousand Hours of
Service during such year. For purposes of determining the
number of Hours of Service completed by the Employee during
such Plan Year, the Employee will be deemed to have
completed forty-five Hours of Service for each seven
consecutive day period during which he or she completes at
least one Hour of Service.
(B) To the extent provided in Subsection (A), service by a
non-resident alien in a foreign country with a foreign subsidiary
which is not an Affiliated Organization but whose income is
included in the consolidated financial statements of the Company,<PAGE>
will be deemed to be Continuous Service for purposes of the Plan
in the event such person ever becomes a Participant.
(C) To the extent provided in Subsection (A), service by a
person who, although employed with an Affiliated Organization, is
not a Qualified Employee, or who is a leased employee, within the
meaning of Code section 414(n)(2), of an Affiliated Organization,
will be deemed to be Continuous Service for purposes of the Plan,
and shall be taken into account under the Plan in the event such
person ever becomes a Participant.
(D) N o twithstanding the foregoing provisions of this
section, the period of a Participant's service in the employ of a
corporation or other organization whose business is acquired by a
Participating Employer, prior to such acquisition, may be taken
into account if specifically provided by the Board of Directors
of the Company, but only to the extent so provided, except that,
in the case of an employee of Guardian Pest Control, Inc. and
Apest, Inc. who became an employee of a Participating Employer
upon its acquisition of the business of such corporation, service
with such corporation since such employee's last date of hire or
rehire by such corporation prior to such acquisition shall be
taken into account under this Plan as if such service were for a
Participating Employer.
(E) N o twithstanding the foregoing provisions of this
section, if a Participant who was employed in the Magnus division
of Economics Laboratory, Inc. at the time of the sale of such
division to Man-Gill Chemical Company continued in the employ of
such purchaser, or any subsidiary of which such purchaser owns at
least one-half of the voting stock, after such sale, then the
period of such Participant's employment with Man-Gill Chemical
Company, or such subsidiary, shall be taken into account as if
such service were for a Participating Employer, but only for
purposes of determining the Participant's vested interest in the
Matching Contribution Account.
10.2 Hour of Service. (A) Subject to the remaining subsections
of this section, the term "Hour of Service," with respect to an
Employee, includes and is limited to -
(1) each "Hour of Actual Service," which is an hour
for which the Employee is paid, or entitled to payment, for
the performance of duties for a Participating Employer or
another Affiliated Organization;
(2) each hour for which the Employee is paid, or
entitled to payment, by a Participating Employer or another
Affiliated Organization on account of a period of time
during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness (including disability), layoff,
jury duty, military duty or leave of absence;<PAGE>
(3) each hour for which the Employee is not paid or
entitled to payment but which is required by federal law to
be credited to the Employee on account of his or her
military service or similar duties; and
(4) each hour for which backpay, irrespective of
mitigation of damages, is either awarded or agreed to by a
Participating Employer or another Affiliated Organization;
provided, first, that Hours of Service taken into account
under clause (1) or (2) will not also be taken into account
under this clause (4); and second, that Hours of Service
taken into account under this clause (4) that relate to
periods specified in clause (2) will be subject to the rules
under Subsection (B).
(B) T h e following rules will apply for purposes of
determining the Hours of Service completed by an Employee under
Subsection (A)(2):
(1) No more than 501 hours will be credited to the
Employee on account of any single continuous period during
which the Employee performs no duties (whether or not such
period occurs in a single Computation Period).
(2) No more than the number of hours regularly
scheduled for the performance of duties for the period
during which no duties are performed will be credited to the
Employee for such period.
(3) The Employee will not be credited with hours for
which payments are made or due under a plan maintained
s o l e ly for the purpose of complying with workers'
c o m pensation, unemployment compensation or disability
insurance laws, or for which payments are made solely to
reimburse medical or medically related expenses.
(4) A payment will be deemed to be made by or due from
a Participating Employer or another Affiliated Organization,
regardless of whether such payment is made by or due from
t h e Participating Employer or another Affiliated
Organization directly or indirectly through a trust fund or
insurer to which the Participating Employer or another
Affiliated Organization contributes or pays premiums.
(5) If the payment made or due is calculated on the
basis of units of time, the number of Hours of Service to be
credited will be the number of regularly scheduled working
hours included in the units of time on the basis of which
the payment is calculated.
(6) If the payment made or due is not calculated on
the basis of units of time, the number of Hours of Service
to be credited will be equal to the amount of the payment,
divided by the Employee's most recent hourly rate of<PAGE>
compensation before the period during which no duties are
performed.
(C) Hours of Service will be credited -
(1) in the case of Hours of Service described in
Subsection (A)(1), to the Computation Period in which the
duties are performed;
(2) in the case of Hours of Service described in
Subsection (A)(2), to the Computation Period or Periods in
which the period during which no duties are performed
occurs; provided, that, if the payment is not calculated on
the basis of units of time, the Hours of Service will not be
allocated between more than the first two Computation
Periods of such period;
(3) in the case of Hours of Service described in
Subsection (A)(4), to the Computation Period or Periods to
which the award or agreement for backpay pertains.
(D) For purposes of determining the number of Hours of
Service completed by an Employee during a particular period of
time,
(1) subject to Subsection (B), an Employee who is not
subject to the overtime provisions of the Fair Labor
Standards Act of 1938, as amended, will be credited with 45
Hours of Service for each seven consecutive days, or
fraction thereof, during which he or she completes at least
one Hour of Service as an Employee;
(2) each other Employee shall be credited with the
number of Hours of Service he or she actually completes
during such period of time.
10.3 One-Year Break in Service. An Employee will incur a "One-
Year Break in Service" if the period commencing on the employment
severance date (as defined in Section 10.1(A)(2)(c)) and ending
on the reemployment commencement date (as defined in Section
10.1(A)(2)(b)) is equal to or in excess of one year.<PAGE>
ARTICLE XI
Adoption, Amendment and Termination
11.1 A d option by Affiliated Organizations. An Affiliated
Organization may adopt this Plan and become a Participating
Employer with the prior approval of the Administrator by
furnishing a certified copy of a resolution of its Board of
Directors adopting the Plan. Any adoption of the Plan by an
Affiliated Organization, however, must either be authorized by
the Board of Directors of the Company in advance or be ratified
by such Board prior to the end of the fiscal year of such
Affiliated Organization in which it adopts the Plan.
11.2 Authority to Amend and Procedure. (A) The Company reserves
the right to amend the Plan at any time, to any extent that it
may deem advisable. Each amendment will be stated in a written
instrument, executed in the name of the Company by its authorized
officer; with the corporate seal affixed, attested by its
Secretary or an Assistant Secretary. Upon the execution of such
instrument, the Plan will be deemed to have been amended as set
forth in the instrument, and all Participants and Participating
Employers will be bound by the amendment; provided, first, that
no amendment will increase the duties or liabilities of the
Trustee without its written consent; and, second, that no
amendment will have any retroactive effect so as to deprive any
Participant, or any Beneficiary of a deceased Participant, of any
benefit already accrued or of any option with respect to the form
of such benefit that is protected by Code section 411(d)(6),
except that any amendment that is required to conform the Plan
with government regulations so as to qualify the Trust for income
tax exemption may be made retroactively to the Effective Date of
the Plan or to any later date.
(B) If the schedule for determining the extent to which
benefits under the Plan are vested is changed, whether by
amendment or on account of the Plan's becoming or ceasing to be a
top-heavy plan, each Participant with at least three years of
Continuous Service may elect to have his or her vested benefits
determined without regard to such change by giving written notice
of such election to the Administrator within the period
beginning on the date such change was adopted (or the Plan's top
heavy status changed) and ending 60 days after the latest of (a)
the date such change is adopted, (b) the date such change becomes
effective or (c) the date the Participant is issued notice of
such change by the Administrator or the Trustee. Except as
o t herwise provided in an amendment permitted by Treasury
Regulations, if an optional form of benefit payment protected
under Code section 411(d)(6) is eliminated, each Participant may
elect to have that portion of the value of his or her Accounts
that was accrued as of the date of such elimination, distributed
in the optional form of benefit payment that was eliminated.
(C) The provisions of the Plan in effect at the termination
of a Participant's employment will, except as specifically<PAGE>
provided otherwise by a subsequent amendment, continue to apply
to such Participant.
11.3 Authority to Terminate and Procedure. The Company expects
to continue the Plan indefinitely but reserves the right to
t e rminate the Plan in its entirety at any time. Each
Participating Employer expects to continue its participation in
the Plan indefinitely but reserves the right to cease its
participation in the Plan at any time. The Plan will terminate
in its entirety or with respect to a particular Participating
Employer as of the date specified by the Company or such
Participating Employer, as the case may be, to the Trustee in a
written notice executed in the manner of an amendment.
11.4 Vesting Upon Termination, Partial Termination or Discon-
tinuance of Contributions. Upon termination of the Plan or upon
the complete discontinuance of contributions by all Participating
Employers, the Accounts of each Participant who is an Employee of
a Participating Employer or another affiliated organization will,
to the extent funded, vest in full. Upon a partial termination
of the Plan, the Accounts of each Participant as to whom the Plan
has been partially terminated will, to the extent funded, vest in
full.
11.5 Distribution Following Termination, Partial Termination or
Discontinuance of Contributions. After termination or partial
termination of the Plan or the complete discontinuance of
contributions under the Plan, the Trustee will continue to hold
and distribute the Fund at the times and in the manner provided
by Article VIII as if such event had not occurred or, if the
Administrator so directs in accordance with Treasury Regulations,
will distribute to each Participant the entire balance of his or
her Accounts.<PAGE>
ARTICLE XII
Definitions, Construction and Interpretations
The definitions and the rules of construction and interpretations
set forth in this article will be applied in construing this
instrument unless the context otherwise indicates.
12.1 Account. An "Account" with respect to a Participant is any
or all of the accounts maintained on his or her behalf pursuant
to Section 4.1, as the context requires.
12.2 A c t i ve Participant. An "Active Participant" is a
Participant who is a Qualified Employee.
12.3 Administrator. The "Administrator" of the Plan is the Vice
President-Human Resources of the Company or the person to whom
administrative duties are delegated pursuant to Section 13.1, as
the context requires.
12.4 Affiliated Organization. An "Affiliated Organization" is
the Company and: any corporation that is a member of a controlled
group of corporations (within the meaning of section 1563(a) of
t h e Code without regard to Code sections 1563(a)(4) and
1563(e)(3)(C)) that includes the Company; any trade or business
(whether or not incorporated) that is controlled (within the
meaning of Code section 414(c)) by the Company; any member of an
"affiliated service group" (within the meaning of Code section
414(m)) of which the Company is a member; or any other
organization that, together with the Company, is treated as a
single employer pursuant to Code section 414(o) and Treasury
Regulations; provided, that, for purposes of applying the
limitations set forth at Sections 9.6 and 9.7, Code section
1563(a) will be applied by substituting the phrase "more than 50
percent" for the phrase "at least 80 percent" wherever it appears
in such Code section.
12.5 A f t er-Tax Savings Contributions. "After-Tax Savings
Contributions" are contributions made by Participants on an
after-tax basis pursuant to Section 3.2.
12.6 After-Tax Savings Contribution Account. The "After Tax
Savings Contribution Account" is the subaccount established under
Section 4.1(b) to evidence a Participant's After-Tax Savings
Contributions.
12.7 Before-Tax Savings Contributions. "Before-Tax Savings
Contributions" are contributions made pursuant to Section 3.1.
12.8 Before-Tax Savings Contribution Account. The "Before-Tax
Savings Contribution Account" is the subaccount established under
Section 4.1(a) to evidence Before-Tax Savings Contributions made
on behalf of a Participant.<PAGE>
12.9 Beneficiary. A "Beneficiary" is a person designated under
the provisions of Section 8.3 as the distributee of benefits
payable after the death of a Participant; provided that such a
person will not become a Beneficiary, and will have no interest
in or rights under the Plan, until the Participant has died.
12.10 Code. The "Code" or "Internal Revenue Code" is the
Internal Revenue Code of 1986, as amended. Any reference to a
specific provision of the Code will include a reference to such
provision as it may be amended from time to time and to any
successor provision.
12.11 Company. The "Company" is Ecolab Inc. and any
successor.
12.12 C o nsent of Spouse. Whenever the consent of a
Participant's spouse is required with respect to any act of the
Participant, such consent will be deemed to have been obtained
only if:
(a) t h e Participant's spouse executes a written
consent to such act, which consent acknowledges the effect
of such act and is witnessed by the Administrator or a
notary public; or
(b) the Administrator determines that no such consent
can be obtained because the Participant has no spouse,
because the Participant's spouse cannot be located, or
because of such other circumstances as may, under Treasury
Regulations, justify the lack of such consent.
A n y s uch consent by the Participant's spouse or such
determination by the Administrator that such spouse's consent is
not required will be effective only with respect to the
particular spouse of the Participant who so consented or with
respect to whom such determination was made. Any such consent by
the Participant's spouse to an act of the Participant under the
Plan will be irrevocable with respect to that act.
12.13 Disabled. A Participant will be considered to be
"Disabled" only if the Administrator determines that, by reason
of illness, bodily injury or disease, he or she is entitled to
receive disability income benefits under the Ecolab Long Term
Disability Plan or, if he or she is not a participant in that
plan, under the Social Security Act.
12.14 Effective Date. The "Effective Date" of the Plan is
January 1, 1977, the date as of which the Plan was first
established.
12.15 Eligible Earnings. (A) The "Eligible Earnings" of a
Participant for any period are the sum of the amounts paid for
that period for service as an Employee as base salary and wages,
overtime pay, shift differential premium, commissions, annual<PAGE>
incentive bonuses paid in the form of cash (but not long-term
incentive bonuses), vacation pay and short-term disability
benefits paid by the Participating Employer, increased by the
amount of Before-Tax Savings Contributions made on behalf of the
Participant for that period and by the net amount of compensation
reductions experienced by the Participant during such Plan Year
under any Code section 125 cafeteria plan maintained by the
Participating Employer. Eligible Earnings will not include
severance pay, any remuneration paid after the end of the month
following the month in which the Participant's employment
terminated, amounts deferred or paid under an agreement between
the Participating Employer and the Participant that is not a plan
qualified under Internal Revenue Code Section 401(a), any
Matching Contributions or Profit Sharing Contributions,
contributions made by the Participating Employer under any other
employee benefit plan, or amounts realized by the Participant
upon the exercise of a nonqualified stock option, the lapse of
restrictions applicable to restricted stock or any disposition of
stock acquired under a qualified or incentive stock option.
(B) Notwithstanding Subsection (A), in no event will a
Participant's Eligible Earnings for any Plan Year be taken into
account to the extent they exceed
(1) $200,000 for Plan Years beginning before 1994, and
(2) $150,000 for Plan Years beginning after 1993;
provided, that the dollar limitation for each Plan Year will be
adjusted for cost of living increases to such larger amount as
may be in effect for such Plan Year under Code section
401(a)(17).
(C) I n the case of a Participant who is a Highly
Compensated Employee described in clause (1) of Section 12.20(A),
or of a Highly Compensated Employee described in clause (2) or
(3) of Section 12.20(A) whose Eligible Earnings for the Plan Year
is not less than the Eligible Earnings of at least ten other
Highly Compensated Employees (determined in each case without
regard to Section 12.20(C)), the limitation set forth in
S u b section (B) will be applied to the Participant, the
Participant's spouse and the Participant's lineal descendants who
have not attained age nineteen prior to the end of the Plan Year
in question as if they were a single Participant.
12.16 Employee. An "Employee" is an individual who performs
services as a common-law employee for a Participating Employer or
another Affiliated Organization.
12.17 Fund. The "Fund" is the total of all of the assets of
every kind and nature, both principal and income, held in the
Trust at any particular time or, if the context so requires, one
or more of the investment funds described in Section 5.1.<PAGE>
12.18 Governing Law. To the extent that state law is not
preempted by provisions of the Employee Retirement Income
Security Act of 1974 or any other laws of the United States, this
Plan will be administered, construed, and enforced according to
the internal, substantive laws of the State of Minnesota, without
regard to its conflict of laws rules.
12.19 Headings. The headings of articles and sections are
included solely for convenience. If there exists any conflict
between such headings and the text of the Plan, the text will
control.
12.20 H i g h ly Compensated Employee. (A) A "Highly
Compensated Employee" for any Plan Year is any employee of a
Participating Employer or another Affiliated Organization who -
(1) at any time during such Plan Year or the preceding
Plan Year, owns or owned (or is considered as owning or
having owned within the meaning of Code section 318) more
t h a n five percent of the outstanding stock of the
Participating Employer or another Affiliated Organization or
stock possessing more than five percent of the total
combined voting power of all outstanding stock of the
Participating Employer or another Affiliated Organization,
or
(2) during the Plan Year preceding such Plan Year -
(a) received Testing Wages in excess of $75,000
(or such dollar amount, adjusted to reflect increases
in the cost of living, as in effect under Code section
414(q)(1)(B) for the calendar year during which the
Plan Year in question begins), or
(b) received Testing Wages in excess of $50,000
(or such dollar amount, adjusted to reflect increases
in the cost of living, as in effect under Code section
414(q)(1)(C) for the calendar year during which the
Plan Year in question begins) and whose Testing Wages
exceeded the Testing Wages of at least 80 percent of
all employees of the Participating Employer and other
Affiliated Organizations, excluding, for purposes of
determining the number of employees in such group but
not for purposes of determining the specific employees
comprising the group, all employees of the
Participating Employer and other Affiliated
Organizations who
(i) have completed less than six months of
service with the Participating Employer and other
Affiliated Organizations,<PAGE>
(ii) normally work fewer than 17-1/2 hours
per week for the Participating Employer and other
Affiliated Organizations,
(iii) normally work for the Participating
Employer and other Affiliated Organizations during
not more than six months during any calendar year,
(iv) have not attained age 21,
(v) e x c ept to the extent provided in
Treasury Regulations, are described in clause (a)
of Section 12.34, and excluding for purposes of
determining both the number of employees in such
group and the specific employees comprising the
group, all of such employees who are described in
clause (b) of Section 12.34, or
(c) w a s a t any time an officer of the
P a r ticipating Employer or another Affiliated
Organization (an administrative executive in regular
and continued service with the Participating Employer
or Affiliated Organization) and received Testing Wages
in excess of 50% of the amount in effect under Code
section 415(b)(1)(A) for the calendar year during which
the Plan Year in question begins, but in no case will
there be taken into account more than the lesser of (i)
50 persons, or (ii) the greater of three persons or 10
percent of the aggregate number of employees of the
Participating Employer and other Affiliated
Organizations excluding, for purposes of determining
the number of such officers, any employees that are
excluded pursuant to clause (b); or, if no officer of
t h e Participating Employer and other Affiliated
Organizations received Testing Wages in excess of such
amount, the officer of the Participating Employer or
Affiliated Organization with the highest Testing Wages
for the Plan Year, or
(3) during such Plan Year, is described in items (a),
(b) or (c) of clause (2) and received Testing Wages in an
amount that is not less than the amount of Testing Wages
received by at least 100 other employees.
(B) For purposes of this section, an "employee" is any
individual who,
(1) during the Plan Year for which the determination
is being made performs services as a common law employee for
a Participating Employer or another Affiliated Organization,
(2) a self-employed individual treated as an employee
pursuant to Code section 401(c)(1), or<PAGE>
(3) a leased employee who is treated as an employee of
t h e Participating Employer or another Affiliated
O r g a nization pursuant to Code section 414(n)(2) or
414(o)(2);
(C) For purposes of applying Sections 9.2, 9.3 and 9.4, any
employee who is the spouse, a lineal ascendant or descendant or
the spouse of a lineal ascendant or descendant of a Highly
Compensated Employee described in clause (1) of Subsection (A),
or of a Highly Compensated Employee described in clause (2) or
(3) of Subsection (A) whose Testing Wages for the Plan Year is
not less than the Testing Wages of at least ten other Highly
Compensated Employees, will not be considered a separate employee
of the Participating Employer and any Eligible Earnings with
respect to such employee, and any contributions allocated to the
employee's Accounts under this Plan if the employee is a
Participant, will be deemed to have been paid to, or allocated to
the Accounts of such Highly Compensated Employee.
12.21 Limitation Year. The Limitation Year is the Plan Year
or, for prior periods, the 12-consecutive-month period to which
the limitations of Code section 415 were applied.
12.22 Loan Account. The "Loan Account" is the bookkeeping
account established pursuant to Section 6.6(G) to reflect the
outstanding balance of any loan to the Participant.
12.23 Matching Contribution Account. The "Matching
Contribution Account" is the account established pursuant to
clause (c) of Section 4.1 to evidence Matching Contributions made
on behalf of a Participant.
12.24 Matching Contributions. "Matching Contributions" means
contributions made pursuant to Section 3.4 or 3.7; provided that
for purposes of Article IX, "Matching Contributions" will include
forfeitures allocated to the Participant's Matching Contribution
Account.
12.25 Normal Retirement Date. The "Normal Retirement Date"
of a Participant is the date on which he or she attains age 65.
12.26 Number and Gender. Wherever appropriate, the singular
number may be read as the plural, the plural may be read as the
singular, and the masculine gender may be read as the feminine
gender.
12.27 Participant. A "Participant" is a current or former
Qualified Employee who has satisfied the eligibility requirements
of Article II, following initial hire or rehire, as the case may
be, with respect to whom contributions have been made and whose
Account balances have not yet been fully distributed.
12.28 Participating Employer. A "Participating Employer" is
the Company and any other Affiliated Organization that has<PAGE>
adopted the Plan, or all of them collectively, as the context
requires, and their respective successors. An Affiliated
Organization will cease to be a Participating Employer upon a
termination of the Plan as to its Employees or upon its ceasing
to be an Affiliated Organization.
12.29 Plan. The "Plan" is that set forth in this instrument
as it may be amended from time to time.
12.30 Plan Rule. A "Plan Rule" is a rule adopted by the
Administrator by formal instrument, by pronouncement or by
practice. Each Plan Rule will be uniform and nondiscriminatory
with respect to similarly situated Employees.
12.31 Plan Year. A "Plan Year" is the 12 month period
beginning on January 1 of each calendar year and ending on
December 31 of such calendar year.
12.32 Profit Sharing Account. The "Profit Sharing Account"
is the account established pursuant to clause (d) of Section 4.1
to evidence Profit Sharing Contributions made on behalf of a
Participant.
12.33 P r o f it Sharing Contributions. "Profit Sharing
Contributions" means contributions made pursuant to Section 3.5.
12.34 Qualified Employee. A "Qualified Employee" is any
person who performs services for a Participating Employer as a
common-law employee subject, however, to the following rules.
(a) A person covered by a collective bargaining
agreement, for whom retirement benefits were the subject of
good faith bargaining between such person's representative
and the Participating Employer, and who is not, as a result
of such bargaining, specifically covered by this Plan will
be excluded.
(b) A nonresident alien who receives no earned income
(within the meaning of Code section 911(d)(2)) from a
Participating Employer that constitutes income from sources
within the United States (within the meaning of Code section
861(a)(3)) will be excluded.
(c) A United States citizen or resident who is
regularly employed on a full-time, permanent basis in the
service of a foreign subsidiary of a Participating Employer,
with respect to which subsidiary such Participating Employer
has entered into an agreement under Section 3121(1) of the
Code, will be deemed to be an Employee of such Participating
Employer for the purpose of continuing participation in the
Plan, but only if contributions under a funded plan of
deferred compensation, which is sponsored by such foreign
subsidiary, are not provided for such person by such foreign<PAGE>
subsidiary or by any other employer with respect to the
remuneration paid to him or her by such foreign subsidiary.
12.35 Rollover Account. The "Rollover Account" is the
account established pursuant to clause (e) of Section 4.1 to
evidence the amounts, if any, rolled over from an individual
retirement arrangement or another qualified plan, or transferred
d i r ectly from another qualified plan with respect to a
Participant, pursuant to Section 3.6.
12.36 Section 415 Wages. (A) A person's "Section 415 Wages"
for any period is the sum of all remuneration received by such
person during such period from a Participating Employer or other
Affiliated Organization that constitutes "compensation" within
the meaning of Code section 415(c)(3) and Treasury Regulations.
(B) The Administrator may, in his or her discretion, for
any Plan Year, determine the items of remuneration that, in
accordance with Treasury Regulations, will be included in Section
415 Wages for such Plan Year; provided that for each purpose
under this Plan, the Administrator's determination will be
uniform throughout any Plan Year.
(C) Section 415 Wages will not include the amount by which
a Participant's wages or salary is reduced under Code section 125
or 401(k).
12.37 Termination of Employment. For purposes of determining
entitlement to a distribution under this Plan, a Participant will
be deemed to have terminated employment only if he or she has
completely severed his or her employment relationship with all
Participating Employers and other Affiliated Organizations or if
he or she becomes Disabled. Neither transfer of employment among
Participating Employers and other Affiliated Organizations nor
absence from active service by reason of short-term disability
leave or any other leave of absence will constitute a termination
of employment. The following rules will apply notwithstanding
the preceding sentences.
(a) A Participant who, in conjunction with the
disposition of all or any portion of a business operation of
the Participating Employer or an Affiliated Organization
which is not a disposition of a subsidiary or substantially
all of the assets used in a trade or business of the
Participating Employer or Affiliated Organization within the
meaning of Code section 401(k)(10)(A) with respect to which
the requirements of Code section 401(k)(10)(B) and (C) are
satisfied, transfers employment to the acquiror of such
business operation or to any affiliate of such acquiror will
not be considered to have terminated employment. If a
Participant is deemed to have continued employment by reason
of the preceding sentence, such sentence will continue to
apply to such Participant in the event of any subsequent
transfer of employment in conjunction with the disposition<PAGE>
of all or any portion of a business operation of the initial
a c quiror or any subsequent acquirors that is not a
d i sposition of a subsidiary of such acquiror or of
substantially all of the assets used in a trade or business
of such acquiror within the meaning of Code section
401(k)(10)(A) with respect to which the requirements of Code
section 401(k)(10)(B) and (C) are satisfied. Except in
conjunction with such a disposition of a subsidiary or
substantially all of the assets used in a trade or business
of the seller that satisfies the requirements of Code
section 401(k)(10)(B) and (C), such a Participant will be
considered to have terminated employment only when he or she
has severed the employment relationship with all such
acquirors and their affiliates.
(b) A Participant who (i) is absent from active
service with all Affiliated Organizations by reason of a
military leave or (ii) transfers employment on a permanent
basis outside of the United States and is not, or ceases to
be, a resident alien, will be deemed to have terminated
employment for such purpose if he or she has attained age
59-1/2 or has separated from service within the meaning of
Code section 401(k)(2)(B).
(c) A Participant who transfers employment on a
temporary basis to a foreign subsidiary of a Participating
Employer or other Affiliated Organization will be deemed not
to have terminated employment.
12.38 Testing Wages. (A) Except as provided in Subsection
(E), a person's "Testing Wages" for any period is the sum of all
remuneration paid to such person by Participating Employers and
other Affiliated Organizations that is reportable in box 1 of
Internal Revenue Service Form W-2 or otherwise satisfies the
definition of "compensation" under Treasury Regulation section
414(s).
(B) In no event will a person's Testing Wages for any Plan
Year be taken into account to the extent they exceed
(1) For Plan Years beginning after 1988 and before 1994,
$200,000; or
(2) For Plan Years beginning after 1993, $150,000;
provided, that the dollar limitation for each Plan Year will be
adjusted for increases in the cost of living to such larger
amount as may be in effect for such Plan Year under Code section
401(a)(17).
(C) I n the case of a Participant who is a Highly
Compensated Employee described in clause (1) of Section 12.20(A),
or a Highly Compensated Employee described in clause (2) or (3)
of Section 12.20(A) whose Testing Wages for a Plan Year are not<PAGE>
less than the Testing Wages of at least 10 other Highly
Compensated Employees (determined in each case without regard to
Section 12.20(C) and this subsection), the limitation set forth
in Subsection (B) will be applied to the Participant, the
Participant's spouse and the Participant's lineal descendants who
have not attained age nineteen before the last day of the Plan
Year in question as if they were a single Participant.
(D) The Administrator may, in his discretion, for any Plan
Year, determine the items of remuneration that, in accordance
with Treasury Regulations, will be included in Testing Wages for
such Plan Year; provided, that for each purpose under this Plan,
the Administrator's determination will be uniform throughout any
Plan Year.
(E) For purposes of the definition of Highly Compensated
Employee in Section 12.20 and in applying Subsection (C),
"Testing Wages" means Section 415 Wages as defined in Section
12.36 without the application of Subsection 12.36(C).
12.39 Treasury Regulations. "Treasury Regulations" mean
regulations, rulings, notices and other promulgations issued
under the authority of the Secretary of the Treasury that apply
to, or may be relied upon in the administration of, this Plan.
12.40 Trust. The "Trust" is that created by the Company, as
grantor, for purposes of implementing benefits under the Plan,
and may, as from time to time amended, be referred to as the
"Ecolab Savings Trust." The Trustee's duties with respect to the
Plan will be set forth in the agreement establishing the Trust,
and such agreement will control in the event of any conflict
between the Plan and such agreement with respect to such duties.
12.41 Trustee. The "Trustee" is the corporation and/or
individual or individuals who from time to time is or are the
duly appointed and acting trustee or trustees of the Trust.
12.42 Valuation Date. A "Valuation Date" is each day on
which the Trustee and the New York Stock Exchange are open for
business.<PAGE>
ARTICLE XIII
Administration of Plan
13.1 Administrator, Named Fiduciary. The general administration
of the Plan and the duty to carry out its provisions will be
vested in the Company, which will be the "named fiduciary" of the
Plan for purposes of the Employee Retirement Income Security Act
of 1974. The Vice President-Human Resources of the Company will
perform such duty on behalf of the Company and may delegate all
or any portion of such duty to a named person and may from time
to time revoke such authority and delegate it to another person.
Each such delegation to a person who is not an employee of the
Company will be in writing, and a copy will be furnished to the
person to whom the duty is delegated. Such person will file a
written acceptance with such Vice President. Such person's duty
will terminate upon withdrawal of such authority by such Vice
President or upon withdrawal of such acceptance by the person to
whom the duty was delegated. Any such withdrawal will be in
writing, and will be effective upon delivery of a copy to the
person to whom the duty was delegated or to such Vice President,
as the case may be. Any delegation to an employee of the Company
will terminate when such person ceases to be an employee or upon
its earlier revocation by the Vice President-Human Resources.
13.2 Compensation and Expenses. An employee of a Participating
Employer or another Affiliated Organization performing
administrative duties in connection with the Plan will receive no
compensation from the Fund for such services, but will be
entitled to reimbursement from the Fund for all sums reasonably
and necessarily expended in the performance of such duties. The
Administrator may retain such independent accounting, legal,
clerical and other services as may reasonably be required in the
administration of the Plan and may pay reasonable compensation
from the Fund for such services. Any such reimbursement or
compensation and all other costs of administering the Plan will
be paid by the Trustee from the Fund except to the extent paid by
the Participating Employers.
13.3 Adoption of Rules. The Administrator has the discretionary
power to make and enforce such Plan Rules as he or she deems to
be required or advisable for the effective administration of the
Plan.
13.4 Administrator's Discretion. The Administrator has the power
a n d discretion to make all determinations necessary for
administration of the Plan, except those determinations that the
Plan requires others to make, and to construe, interpret, apply
and enforce the provisions of the Plan, including the power to
remedy ambiguities, inconsistencies, omissions and erroneous
account balances. In the exercise of discretionary powers, the
Administrator will treat all similarly situated Participants and
Beneficiaries uniformly.<PAGE>
13.5 Indemnification. The Participating Employers jointly and
severally agree to indemnify and hold harmless, to the extent
permitted by law, each director, officer, and employee of any
Affiliated Organization against any and all liabilities, losses,
costs and expenses (including legal fees) of every kind and
nature that may be imposed on, incurred by, or asserted against
such person at any time by reason of such person's services in
connection with the Plan, but only if such person did not act
with gross negligence, dishonestly or in bad faith or in willful
violation of the law or regulations under which such liability,
loss, cost or expense arises. The Participating Employers will
have the right, but not the obligation, to select counsel and
control the defense and settlement of any action for which a
person may be entitled to indemnification under this provision.
13.6 Benefit Claim Procedure. A Participant or Beneficiary may
file with the Administrator a written claim objecting to a
determination as to his or her eligibility for benefits or the
amount of his or her benefit. Any such objection must be filed
within 30 days after the Participant or Beneficiary receives
notice of the determination. Not later than 90 days after
receipt of such claim, the Administrator will render a written
decision on the claim to the claimant. If the claim is denied in
whole or in part, such decision will include: the reasons for
the denial; a reference to the Plan provision that is the basis
for the denial; a description of any additional material or
information necessary for the claimant to perfect the claim; an
explanation as to why such information or material is necessary;
and an explanation of the Plan's claim procedure. Not later than
60 days after receiving the Administrator's written decision, the
claimant may file with the Administrator a written request for
review of the Administrator's decision, and the claimant or the
representative may review Plan documents that relate to the claim
and submit written comments to the Administrator. Not later than
60 days after the Administrator's receipt of the request for
review, the Administrator will render a written decision on the
claim, which decision will include the specific reasons for the
decision, including references to specific Plan provisions where
appropriate. The 90- and 60-day periods during which the
Administrator must respond to the claimant may be extended by up
to an additional 90 or 60 days, respectively, if circumstances
beyond the Administrator's control so require and if notice of
such extension is given to the claimant. A Participant or
Beneficiary who fails to utilize or complete the foregoing claim
procedure will be barred from asserting the claim in any judicial
proceeding.
13.7 Correction of Errors. If the Administrator determines that,
by reason of administrative error or other cause attributable to
a Participating Employer, the Account of any Participant has
incurred a loss, the Administrator may enter into an agreement
with such Participating Employer under which the Account is fully
r e s t o r ed and may, upon such restoration, release the
Participating Employer from further responsibility.<PAGE>
13.8 Reliance on Information. (A) The Administrator and any
other person having fiduciary responsibilities under the Plan is
entitled to rely upon all tables, valuations, certificates and
reports furnished by any duly appointed independent qualified
public accountant (under the terms of the Employee Retirement
Income Security Act of 1974), and upon all opinions given by
legal counsel. The Administrator and any such person will be
fully protected in respect of any action taken or suffered in
good faith in reliance upon all such tables, valuations,
certificates, reports, opinions or other advice.
(B) The Administrator is entitled to rely upon any data or
information furnished by a Participating Employer or by a
Participant as to age, service or compensation of any person, and
as to any other information pertinent to any calculation or
determination to be made under the provisions of the Plan and, as
a condition to payment of any benefit under the Plan, may request
any Participant to furnish such information as the Administrator
deems necessary or desirable in administering the Plan.
13.9 Funding Policy. At least annually, the Company will
determine the Plan's funding policy.
13.10 Board of Directors Actions. For purposes of this Plan,
unless the context otherwise requires, the act of the Board of
Directors or its delegate will constitute the act of the Company.
Any action which is required to be taken by the Board of
Directors of the Company or which such Board of Directors is
authorized to take, may be taken by any committee of such Board
of Directors appointed in accordance with the corporation law of
the state in which such corporation is incorporated. The Board
of Directors may, by resolution, delegate to the Company's
Benefits Finance Committee, a successor to such committee or the
Company's Chief Financial Officer as the Board deems advisable
any one or more of the powers reserved to the Board under the
Plan, subject to the revocation of such delegation by the Board
at any time. To the extent that the Board of Directors delegates
its authority to direct the Trustee under Article V, to select an
investment manager for the Fund to select investment Funds, to
direct investments within the Fund or to remove or appoint a
Trustee, the person or persons to whom such authority is
delegated will be a "named fiduciary" within the meaning of
section 403(a)(1) of ERISA.
13.11 Officers. Any reference to a specific officer of the
Company will include a reference to the officer of the Company
who succeeds to the relevant functions of such officer if the
title or duties of the specific office change.<PAGE>
ARTICLE XIV
Miscellaneous
14.1 Merger, Consolidation, Transfer of Assets. If this Plan is
merged or consolidated with, or its assets or liabilities are
transferred to, any other plan, each Participant will be entitled
to receive a benefit immediately after such merger, consolidation
or transfer (if such other plan were then terminated) that is
equal to or greater than the benefit he or she would have been
entitled to receive immediately before such merger, consolidation
or transfer (if this Plan had then terminated). If any other
plan is merged into this Plan, any provisions unique to the
Accounts resulting from such merger will be set forth in an
exhibit, which will be appended to this instrument.
14.2 Limited Reversion of Fund. (A) Except as provided in
Subsection (B), no corpus or income of the Trust will at any time
revert to Participating Employer or be used other than for the
e x clusive benefit of Eligible Employees, Participants and
Beneficiaries by paying benefits and, if applicable,
administrative expenses of the Plan.
(B) Notwithstanding any contrary provision in the Plan,
(1) All contributions made by a Participating Employer
to the Trustee prior to the initial determination of the
Internal Revenue Service as to qualification of the Plan
under section 401(a) of the Code and the tax exempt status
of the Trust under Code section 501(a) will be repaid by the
Trustee to such Participating Employer, upon the
Participating Employer's written request, if the Internal
Revenue Service rules that the Plan, as adopted by that
Participating Employer, is not qualified or the Trust is not
tax exempt; provided, that the Participating Employer
requests such determination within a reasonable time after
adoption of the Plan, and the repayment by the Trustee to
such Participating Employer is made within one year after
the date of denial of qualification of the Plan; and
(2) To the extent a contribution is made by a
Participating Employer by a mistake of fact or a deduction
is disallowed a Participating Employer under Code section
404, the Trustee will repay the contribution to such
Participating Employer upon the Participating Employer's
written request; provided, that such repayment is made
within one year after the mistaken payment is made or the
deduction is disallowed, as the case may be. The amount
returned to the Participating Employer will not include any
investment gains or earnings but will be reduced by any
investment losses. Each contribution to the Plan by a
Participating Employer is expressly conditioned on such
contribution's being fully deductible by the Participating
Employer under Code section 404.<PAGE>
14.3 Top-Heavy Provisions. (A) If the Plan becomes a "top-heavy
plan," the following provisions will apply to, and control the
operation and administration of, the Plan for those Plan Years
during which the Plan is a top-heavy plan.
(1) Notwithstanding the provisions of Article III, the
a m ount of contributions (excluding Before-Tax Savings
Contributions and After-Tax Savings Contributions) made and
allocated for such Plan Year on behalf of each Active
Participant who is not a key employee and who is employed
w i t h a Participating Employer or another Affiliated
Organization on the last day of the Plan Year (whether or
not such Participant completed at least 1000 Hours of
Service during the Plan Year), expressed as a percentage of
the Participant's Testing Wages for the Plan Year, will be
at least equal to the lesser of
(a) three percent, or
(b) the largest percentage of such Testing Wages
at which contributions (including Before-Tax Savings
Contributions but not After-Tax Savings Contributions)
are made and allocated on behalf of any key employee
for such Plan Year.
(2) If, in addition to this Plan, the Participating
E m ployer or another Affiliated Organization maintains
another qualified defined contribution plan or one or more
qualified defined benefit pension plans during a Plan Year,
the provisions of clause (1) will be applied for such Plan
Year -
(a) by taking into account the Participating
Employer contributions (other than elective
contributions for a non-key employee) on behalf of the
Participant under all such defined contribution plans;
(b) without regard to any Participant who is not
a key employee and whose accrued benefit, expressed as
a single life annuity, under a defined benefit pension
plan maintained by the Participating Employer or
another Affiliated Organization for such Plan Year is
not less than the product of -
(i) the Participant's average Testing Wages
for the period of consecutive years not exceeding
the period of consecutive years (not exceeding
f i ve) when the Participant had the highest
aggregate Testing Wages, disregarding years in
which the Participant completed less than 1,000
Hours of Service, multiplied by
(ii) the lesser of (A) two percent per year
o f s ervice, disregarding years of service<PAGE>
beginning after the close of the last Plan Year in
which such defined benefit plan was a top heavy
plan, or (B) 20 percent.
(3) Each Participant's vested interest in the Matching
Contribution Account and Profit Sharing Contribution Account
will be the vested interest determined under the preceding
provisions of the Plan or determined in accordance with the
following schedule, whichever provides the greater vested
interest for the Participant:
Y e ars of Vesting
Service Extent of Vested Interest
Less than Two Years 0%
Two Years 20%
Three Years 40%
Four Years 60%
Five Years 80%
Six or more Years 100%
If the Plan ceases to be a top-heavy plan, the portion of a
Participant's Matching Contribution Account and Profit
Sharing Contribution Account that has vested pursuant to the
f o regoing schedule will remain nonforfeitable,
notwithstanding the subsequent application of the vesting
schedule set forth in Section 7.1(D) to amounts subsequently
allocated to the Matching Contribution Account and Profit
Sharing Contribution Account.
(B) For purposes of Subsection (A),
(1) (a) The Plan will be a "top-heavy plan" for a
particular Plan Year if, as of the last day of the
initial Plan Year or, with respect to any other Plan
Year, as of the last day of the preceding Plan Year,
the aggregate of the Account balances of key employees
is greater than 60% of the aggregate of the Account
balances of all Participants.
(b) For purposes of calculating the aggregate
Account balances for both key employees and employees
who are not key employees:
(i) Any distributions made within the five-
year period preceding the Plan Year for which the
d e t ermination is being made, other than a
distribution transferred or rolled over to a plan
maintained by a Participating Employer or another
Affiliated Organization, will be included;
(ii) Amounts transferred or rolled over from
a plan not maintained by a Participating Employer
o r a nother Affiliated Organization at the<PAGE>
initiation of the Participant will be excluded;
and,
(iii) The Account balances of any key
employee and any employee who is not a key
employee who has not performed an Actual Hour of
Service at any time during the five-year period
ending on the date as of which the determination
is being made will be excluded; and
(iv) The terms "key employee" and "employee"
will include the Beneficiaries of such persons who
have died.
(2) (a) Notwithstanding the provisions of clause (1),
this Plan will not be a top-heavy plan if it is part of
either a "required aggregation group" or a "permissive
aggregation group" and such aggregation group is not
top-heavy. An aggregation group will be top-heavy if
the sum of the present value of accrued benefits and
account balances of key employees is more than 60% of
the sum of the present value of accrued benefits and
account balances for all Participants, such accrued
benefits and account balances being calculated in each
case in the same manner as set forth in clause (1).
(b) Each plan in a required aggregation group
will be top-heavy if the group is top-heavy. No plan
in a required aggregation group will be top-heavy if
the group is not top-heavy.
(c) If a permissive aggregation group is top-
heavy, only those plans that are part of an underlying
top-heavy, required aggregation group will be top-
heavy. No plan in a permissive aggregation group will
be top-heavy if the group is not top-heavy.
(3) The "required aggregation group" consists of (i)
each plan of an Affiliated Organization in which a key
employee participates, and (ii) each other plan of an
Affiliated Organization that enables a plan in which a key
e m p l oyee participates to meet the nondiscrimination
requirements of Code sections 401(a)(4) and 410.
(4) A "permissive aggregation group" consists of those
plans that are required to be aggregated and one or more
plans (providing comparable benefits or contributions) that
are not required to be aggregated, which, when taken
t o g ether, satisfy the requirements of Code sections
401(a)(4) and 410.
(5) For purposes of applying clauses (2), (3) and (4)
of this Subsection (B), any qualified defined contribution
plan maintained by a Participating Employer or another<PAGE>
Affiliated Organization at any time within the five-year
period preceding the Plan Year for which the determination
being made which, as of the date of such determination, has
been formally terminated, has ceased crediting service for
benefit accruals and vesting and has been or is distributing
all plan assets to participants or their beneficiaries, will
be taken into account to the extent required or permitted
under such clauses and under Code section 416.
(C) A "key employee" is any person who is or was employed
with a Participating Employer and who, at any time during the
Plan Year in question or any of the preceding four Plan Years is
or was:
(1) An officer of the Participating Employer (an
administrative executive in regular and continued service
with the Participating Employer) whose Testing Wages for
such Plan Year exceeds 50% of the amount in effect under
Code section 415(b)(1)(A) for such Plan Year, but in no case
will there be taken into account more than the lesser of (a)
50 persons, or (b) the greater of (i) three persons or (ii)
10% of the number of the Participating Employer's employees,
excluding for purposes of determining the number of such
officers, any employees that are excluded pursuant to
Section 12.34(A)(2)(b);
(2) The owner of an interest in the Participating
Employer, including business entities that are required to
be aggregated under Code section 414(b), (c) or (m), that is
not less than the interest owned by at least 10 other
persons employed with the Participating Employer; provided,
that, such owner will not be a key employee solely by reason
of such ownership for a Plan Year if he or she does not own
more than one-half of one percent of the value of the
outstanding interests of the Participating Employer or if
the amount of his Testing Wages for such Plan Year are less
than the amount in effect under Code section 415(c)(1)(A)
for such Plan Year;
(3) The owner of more than five percent of the
Participating Employer's outstanding stock or more than five
p e r cent of the total combined voting power of the
Participating Employer's stock; or
(4) The owner of more than one percent of the
Participating Employer's outstanding stock or more than one
p e r cent of the total combined voting power of the
Participating Employer's stock, whose Testing Wages for such
Plan Year exceed 150,000.00 Dollars.
F o r purposes of this Subsection (C), ownership of the
Participating Employer's stock will be determined in accordance
with Code section 318; provided, first, that subparagraph
318(a)(2)(C) will be applied by substituting the phrase "5<PAGE>
percent" for the phrase "50 percent" wherever it appears in such
Code section; and, second, that, for purposes of clauses (3) and
(4), the rules of Code section 414(b), (c), (m), (n) and (o) will
not apply.
(D) If the Participating Employer maintains a qualified
defined contribution plan and a qualified defined pension plan,
the limitation on combined contributions and accrued benefits
will be adjusted by substituting "100 percent" for "125 percent"
in the definitions of the defined benefit fraction and the
defined contribution fraction in Section 9.7; provided, first,
that this Subsection (D) will be applied prospectively only to
prohibit additional contributions allocated, and forfeitures
reallocated, to and defined benefit accruals for, a Participant
and will not reduce any allocations or reallocations made to, or
benefits accrued for, such Participant prior to the Plan Year for
which it first becomes effective; and, second, that if the Plan
would not be a top heavy plan if "90 percent" were substituted
for "60 percent" in clause (1)(a) of Subsection (B), this
Subsection (D) will not apply if -
(1) the aggregate Participating Employer contribution
(other than elective contributions) under all such qualified
defined contribution plans on behalf of each Participant who
i s not a key employee and who is employed with a
Participating Employer or another Affiliated Organization on
the last day of the Plan Year is not less than seven and
one-half percent of his or her Testing Wages for the Plan
Year, or
(2) the accrued benefit for each Participant under the
qualified defined benefit pension plan is not less than the
benefit described in Subsection (A)(2)(b), applied by
substituting "3 percent" for "2 percent" in item (A) of
clause (ii) and "30 percent" for "20 percent" in item (B) of
clause (ii).
14.4 No Employment Rights Created. The establishment and
maintenance of the Plan neither give any employee a right to
continuing employment nor limit the right of a Participating
Employer to discharge any employee or otherwise deal with the
employee without regard to the effect such action might have on
his or her initial or continued participation in the Plan.
14.5 Puerto Rican Participants. (A) Notwithstanding any
contrary provision of this Plan, the provisions of this section
will apply to Participants who are employed in, and subject to
income taxation by, the Commonwealth of Puerto Rico.
(B) No such Participant may direct that any Before-Tax,
After-Tax or Rollover Contributions made to his or her Accounts
will be invested in the Ecolab Stock Fund or that any portion of
the balance of his or her Accounts will be transferred to the
Ecolab Stock Fund.<PAGE>
(C) The annual dollar limitation for Before-Tax Savings
Contributions under Section 9.1 for such Participants will be
$7,000 and will not be subject to cost-of-living adjustments.
(D) The Actual Deferral Percentage limitations of Section
9.2 will be adjusted so that such Participants' Before-Tax
S a v i n gs Contributions do not exceed the percentage of
compensation permitted under the income tax laws of Puerto Rico.<PAGE>