UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

SCHEDULE 13D/A

 

Under the Securities Exchange Act of 1934

(Amendment No. 5)*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

Laurie A. Smiley, Esq.

Arian Colachis, Esq.

2365 Carillon Point

Kirkland, WA 98033

(425) 889-7900

(Name, Address and Telephone Number of Person Authorized to

Receive Notices and Communications)

 

(Date of Event which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [  ].

 

Note:     Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

 

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

EXPLANATORY STATEMENT

 

This Amendment No. 5 to Schedule 13D (“Amendment”) amends and supplements the Schedule 13D previously filed by Cascade Investment, L.L.C. (“Cascade”), Bill & Melinda Gates Foundation Trust (the “Trust”), William H. Gates III and Melinda French Gates (together with Cascade and the Trust, the “Reporting Persons”) with the Securities and Exchange Commission on July 29, 2011, as amended August 24, 2011, August 28, 2011, December 9, 2011 and February 23, 2012 relating to the Common Stock, $1.00 par value per share (the “Common Stock”) of Ecolab Inc. (the “Issuer”).  Neither the present filing nor anything contained herein shall be construed as an admission that the Reporting Persons constitute a “group” for any purpose and the Reporting Persons expressly disclaim membership in a group.

 

Item 4.                                     Purpose of Transaction

 

On May 4, 2012, Cascade and the Trust entered into a Stockholder Agreement and a Registration Rights Agreement, each of which is dated May 4, 2012 and described in Item 6 hereof.   The Stockholder Agreement and the Registration Rights Agreement are attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference.

 

Item 6.            Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

 

On May 4, 2012, Cascade, the Trust and the Issuer entered into a Stockholder Agreement, pursuant to which the Issuer (i) amended its Rights Agreement, dated as of February 24, 2006 (the “Rights Agreement”) to provide that Cascade, the Trust and certain of their affiliates and associates shall not be deemed to be Acquiring Persons or Adverse Persons, as such terms are defined in the Rights Agreement, (ii) agreed not to amend or modify the Rights Agreement or enter into any new stockholder rights or similar agreement in any manner inconsistent with the Stockholder Agreement, and (iii) agreed to give Cascade and the Trust certain registration rights with respect to shares of Common Stock beneficially owned by them.  In consideration of the Issuer’s agreements, Cascade and the Trust have agreed (subject to certain exceptions) not to acquire beneficial ownership of greater than 25% in the aggregate of the Issuer’s then outstanding Common Stock.

 

Pursuant to the terms of the Stockholder Agreement, following the initial acquisition of Common Stock that would give Cascade and the Trust beneficial ownership of 15% or more in the aggregate of the outstanding Common Stock, Cascade and the Trust each agreed (1) for so long as Michael Larson, or another individual designated by Cascade, is given the opportunity to be nominated by the board of the Issuer as a director, Cascade and the Trust will cause all shares of Common Stock beneficially owned by them and certain of their affiliates and associates to be voted in favor of directors nominated by the board of directors, (2) Cascade and the Trust will not take enumerated actions with respect to the control of the Issuer, and (3) Cascade and the Trust will each limit the manner in which they may sell any shares of Common Stock beneficially owned by them.

 

Under the terms of the Registration Rights Agreement, also dated May 4, 2012, the Issuer granted Cascade and the Trust certain demand and piggyback registration rights which become effective upon the initial acquisition of Common Stock by Cascade and the Trust that would give Cascade and the Trust beneficial ownership of 15% or more in the aggregate of the outstanding shares of Common Stock.

 

This description of the Stockholder Agreement and the Registration Rights Agreement is qualified in its entirety by reference to the Stockholder Agreement and the Registration Rights Agreement, which are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.

 

Item 7.             Material to be Filed as Exhibits

 

Exhibit 99.1	Stockholder Agreement, dated May 4, 2012, by and between Cascade, the Trust and the Issuer
Exhibit 99.2	Registration Rights Agreement, dated May 4, 2012, by and between Cascade, the Trust and the Issuer

 

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SIGNATURE

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

 

Date: May 4, 2012	CASCADE INVESTMENT, L.L.C.(1)
	By:	*
		Name:			Alan Heuberger(2)
		Title:			Attorney-in-fact for Michael Larson,
					Business Manager
	BILL & MELINDA GATES FOUNDATION TRUST(1)
	By:	*
		Name:			Alan Heuberger (3)
		Title:			Attorney-in-fact for each of the Co- Trustees, William H. Gates III and Melinda French Gates
	WILLIAM H. GATES III(1)
	By:	*
		Name:			Alan Heuberger(3)(4)
		Title:			Attorney-in-fact
	MELINDA FRENCH GATES(1)
	By:	*
		Name:			Alan Heuberger(3)
		Title:			Attorney-in-fact
	*By:			/s/Alan Heuberger
				Alan Heuberger

(1)This Amendment is being filed jointly by the Reporting Persons pursuant to the Joint Filing Agreement dated July 29, 2011 and included with the signature page to the Reporting Persons’ Schedule 13D filed with respect to the Issuer on July 29, 2011, SEC File No. 005-30248 and incorporated by reference herein.

 

(2) Duly authorized under Special Limited Power of Attorney appointing Alan Heuberger attorney-in-fact, dated August 12, 2008, by and on behalf of Michael Larson, filed as Exhibit 99.1 to Amendment No. 1 to Cascade’s Schedule 13D with respect to Otter Tail Corporation on April 15, 2009, SEC File No. 005-06638 and incorporated by reference herein.

 

(3) Duly authorized under Special Limited Power of Attorney appointing Alan Heuberger attorney-in-fact, dated August 12, 2008, by and on behalf of William H. Gates III and Melinda French Gates as Co-Trustees, filed as Exhibit 99.5 to Cascade’s Schedule 13D with respect to Grupo Televisa, S.A.B. on May 7, 2009, SEC File No. 005-60431 and incorporated by reference herein.

 

(4) Duly authorized under Special Limited Power of Attorney appointing Alan Heuberger attorney-in-fact, dated August 12, 2008, by and on behalf of William H. Gates III, filed as Exhibit 99.2 to Amendment No. 1 to Cascade’s Schedule 13D with respect to Otter Tail Corporation on April 15, 2009, SEC File No. 005-06638 and incorporated by reference herein.

 

Exhibit 99.1

 

STOCKHOLDER AGREEMENT

 

This Stockholder Agreement, dated as of May 4, 2012 (this “Agreement”), is entered into by and among Cascade Investment, L.L.C., an entity wholly owned by William H. Gates III (“Cascade”), Bill & Melinda Gates Foundation Trust, of which William H. Gates III (“Gates”) and Melinda French Gates are co-trustees (the “Trust” and together with Cascade, the “Cascade Parties” and each, a “Cascade Party”), and Ecolab Inc., a Delaware corporation (the “Company”).  This Agreement is intended to establish a means for a long-term investment in the Company by Gates, through Cascade, and the Trust, for the mutual benefit of the parties hereto.

 

In consideration of and reliance upon the mutual covenants and agreements contained herein, the parties hereto agree as follows:

 

1.             Voting.  During the term of this Agreement, each Cascade Party will cause all Voting Securities that it or any of its Affiliates and Associates over which it has the power to exercise, directly or indirectly, control (excluding, for the avoidance of doubt, any publicly traded company (a) in which the Cascade Parties beneficially own less than twenty-five percent (25%) of the voting securities and (b) of which the Gates Affiliates (as defined below) and their designees comprise in the aggregate less than twenty-five percent (25%) of the board of directors and do not have the right to designate twenty-five percent (25%) or more of the board of directors) (collectively, the “Controlled Affiliates and Associates” and each, a “Controlled Affiliate or Associate”), owns (of record or beneficially) or otherwise has the direct or indirect power to vote or to direct the voting of (whether by proxy or otherwise) (collectively, the “Investor Voting Securities”) to be present for quorum purposes and to be voted in favor of all of the directors nominated by the board of directors of the Company (the “Board”) for election at any annual or special meeting of the shareholders of the Company or at any adjournment or postponement thereof, but only if Michael Larson (or another Person designated by Cascade in lieu of Michael Larson and reasonably acceptable to the Company) is (or is given the opportunity to be) one of the directors nominated by the Board for election at such meeting or would otherwise be (or be given the opportunity to be) on the Board following such meeting.

 

2.             Standstill.

 

(a)           Ownership Limit.

 

(i)            During the term of this Agreement:

 

(1)           neither Cascade Party shall, and each Cascade Party shall cause its Controlled Affiliates and Associates not to, in any way, directly or indirectly without the prior approval of the Board, acquire, offer to acquire, or agree to acquire (except by way of stock dividends, stock splits, reverse stock splits or other distributions or offerings made to holders of any class of Voting Securities generally), whether by purchase, tender or exchange offer, by joining a group (including any group of Persons that would be treated as a single “person” under Section 13(d) of the Exchange Act) or otherwise, record or beneficial ownership of any Voting Securities if, as a result of such acquisition, the Cascade Parties would beneficially own in the aggregate in excess of twenty-five percent (25%) of the then outstanding common stock, par value $1.00 per share, of the Company (the “Common Stock”);

 

(2)           in the event Gates, Melinda French Gates, Michael Larson or any of their

 

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respective Affiliates or Associates over which they have the power to exercise, directly or indirectly, control (including the Cascade Parties and the Controlled Affiliates and Associates but excluding, for the avoidance of doubt, any publicly traded company (A) in which the Gates Affiliates beneficially own less than twenty-five percent (25%) of the voting securities and (B) of which the Gates Affiliates (as defined below) and their designees comprise in the aggregate less than twenty-five percent (25%) of the board of directors and do not have the right to designate twenty-five percent (25%) or more of the board of directors) (collectively with Gates, Melinda French Gates and Michael Larson, the “Gates Affiliates” and each, a “Gates Affiliate”) in any way, directly or indirectly without the prior approval of the Board, acquires, offers to acquire, or agrees to acquire (except by way of stock dividends, stock splits, reverse stock splits or other distributions or offerings made to holders of any class of Voting Securities generally), whether by purchase, tender or exchange offer, by joining a group (including any group of Persons that would be treated as a single “person” under Section 13(d) of the Exchange Act) or otherwise, record or beneficial ownership of any Voting Securities if, as a result of such acquisition, the Gates Affiliates would beneficially own in the aggregate in excess of twenty-five percent (25%) of the then outstanding Common Stock, the Cascade Parties shall, within ten (10) Business Days of such acquisition, divest and/or cause the divestiture of the amount of Common Stock necessary to reduce the aggregate percentage of outstanding shares of Common Stock beneficially owned by the Gates Affiliates to twenty-five percent (25%) or less; and

 

(3)           the Cascade Parties will not be in violation of this Agreement if (A) the Cascade Parties and Controlled Affiliates and Associates or (B) the Gates Affiliates unintentionally acquire beneficial ownership of greater than twenty-five percent (25%) of outstanding shares of Common Stock so long as the Cascade Parties, within ten (10) Business Days of becoming aware that such threshold has been crossed, divest and/or cause the divestiture of the amount of Common Stock necessary to reduce the aggregate percentage of outstanding shares of Common Stock beneficially owned by the Gates Affiliates to twenty-five percent (25%) or less.

 

(ii)           Voting Securities acquired by Michael Larson pursuant to the Company’s customary non-employee director compensation arrangements shall not be counted toward the twenty-five percent (25%) ownership limits in Section 2(a)(i)(1) or Section 2(a)(i)(2).  In addition, it is understood that Michael Larson may serve from time to time as a trustee or director of certain educational, charitable and other not-for-profit institutions that may own publicly-traded securities, including Common Stock, and that Michael Larson shall not be deemed, solely by virtue of his service as a trustee or director of any such institution, to beneficially own any shares of Common Stock held by such institution for purposes of Section 2(a)(i)(2).

 

(iii)          It will not be a violation of Section 2(a)(i)(1) and the Cascade Parties shall have no obligation under Section 2(a)(i)(2) if the beneficial ownership of Common Stock by the Cascade Parties and the Controlled Affiliates and Associates, in the

 

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case of Section 2(a)(i)(1), or the Gates Affiliates, in the case of Section 2(a)(i)(2), exceeds twenty-five percent (25%) solely as a result of the acquisition of Voting Securities by the Company or its subsidiaries (including without limitation as a result of a redemption or repurchase by the Company or its subsidiaries of any Voting Securities) that, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Common Stock beneficially owned by the Cascade Parties and the Controlled Affiliates and Associates, in the case of Section 2(a)(i)(1), or the Gates Affiliates, in the case of Section 2(a)(i)(2), provided that no Cascade Party or Controlled Affiliate or Associate or Gates Affiliate, as applicable, acquires beneficial ownership of additional shares of Common Stock in violation hereof.

 

(iv)          For purposes of determining compliance with this Section 2(a) and determining the Voting Securities outstanding at any given time, the Cascade Parties shall be entitled to rely without independent investigation upon the most recent publicly available Form 10-K, Form 10-Q or Form 8-K (or any successor form) of the Company filed with the SEC reporting the number of Voting Securities then issued and outstanding.

 

(b)           Other Standstill Provisions.

 

(i)            During the term of this Agreement, each Cascade Party and Controlled Affiliate and Associate shall not, and the Cascade Parties and the Controlled Affiliates and Associates shall not assist or cooperate with any other Gates Affiliates in any action by them to, in any way, directly or indirectly, without the prior approval of the Board:

 

(1)           make, or in any way participate in or encourage, any “solicitation” (as such term is used in the proxy rules of the SEC) of proxies or consents with respect to the election or removal of directors or any other matter or proposal; or seek to advise, encourage or influence any Person with respect to the voting of any Voting Securities, except in accordance with matters recommended by the Board;

 

(2)           make any proposal relating to control of the Company or of the Board or its members to be voted upon by holders of Voting Securities, whether made pursuant to the rules under the Exchange Act, the Company’s bylaws or otherwise;

 

(3)           seek election or appointment to, or representation on, or nominate or publicly propose (or propose in a manner that would require public disclosure by the Gates Affiliates or the Company) the nomination of any candidate to, the Board (other than the appointment or re-nomination by the Board of Michael Larson or another Person designated by Cascade in lieu of Michael Larson and reasonably acceptable to the Company as a director) or publicly seek (or seek in a manner that would require public disclosure by the Gates Affiliates or the Company) the removal of any member of the Board, or a change in the composition or size of the Board;

 

(4)           form, join or participate in any group (including any group of Persons that would be treated as a single “person” under Section 13(d) of the Exchange Act but excluding any group that consists solely of one or more of Gates or Melinda French Gates (in each case, solely as the

 

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beneficial owner of shares of Common Stock indirectly through Cascade and the Trust) or the Cascade Parties or the Controlled Affiliates or Associates) with respect to any Voting Securities;

 

(5)           deposit any Voting Securities in any voting trust, or enter into any voting agreement, proxy or other similar arrangement with respect to any Voting Securities (in each case, other than solely with Gates or Melinda French Gates (in each case, solely as the beneficial owner of shares of Common Stock indirectly through Cascade and the Trust) or other Cascade Parties or Controlled Affiliates or Associates, provided such action does not restrict the ability of the Cascade Parties and the Controlled Affiliates and Associates to vote or cause to be voted the Investor Voting Securities in accordance with Section 1 of this Agreement), or take any other action that would limit or otherwise restrict the ability of the Cascade Parties and the Controlled Affiliates and Associates to vote or cause to be voted the Investor Voting Securities in accordance with Section 1 of this Agreement;

 

(6)           act in concert with others to control or seek to control or influence the management, Board, operations or policies of the Company;

 

(7)           seek, propose or make any public statement (or any statement that would require public disclosure by the Gates Affiliates or the Company) with respect to any merger, business combination, tender or exchange offer, sale or purchase of assets, sale or purchase of securities, spin-off, restructuring, recapitalization or other extraordinary transaction of or involving the Company or any of its subsidiaries;

 

(8)           enter into any arrangements, understandings or agreements (whether written or oral) with, or advise, finance, assist or encourage, any other Person in connection with, any of the foregoing; or make any investment in or enter into any arrangement with any other Person that offers or proposes to engage in any of the foregoing; or

 

(9)           take any action challenging the validity or enforceability of this Agreement or request the Company or Board amend or waive any provision of this Agreement, provided that the Cascade Parties may make confidential requests to the Board to amend or waive any provision of this Agreement, which the Board may accept or reject in its sole discretion, so long as any such request is made in a manner that does not require public disclosure by, and is not publicly disclosed by, any Gates Affiliate and is made in a manner that does not require public disclosure thereof by the Company.

 

(ii)           Section 2(b)(i) of this Agreement shall not limit the ability of Michael Larson or any other Person serving as a director of the Company at the request of the Cascade Parties, in his or her capacity as a director of the Company, to fully participate in board meetings and express his or her views as a director, provided that he or she shall not (1) take any action that would require any Gates Affiliate to amend a filing with the SEC under Section 13(d) of the Exchange Act or (2) in connection with any resignation by him or her as a director of the Company, make any communication with the Company (A) that the Company would be required to file on a Form 8-K and (B) that would otherwise violate Section 2(b)(i) of this Agreement but for the existence of this Section 2(b)(ii).

 

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(iii)          In the event any Gates Affiliate takes any action (or refrains from taking any action) that would violate Section 1 or Section 2(b)(i) of this Agreement if such Gates Affiliate were or is a Cascade Party, the Cascade Parties shall, within ten (10) Business Days, divest and/or cause the divestiture of the amount of Common Stock necessary to reduce the aggregate percentage of outstanding shares of Common Stock beneficially owned by the Gates Affiliates to less than fifteen percent (15%).

 

3.             Disposition of Shares; Registration Rights.

 

(a)           With the exception of (i) open market sales of Voting Securities that are made in compliance with Rule 144(e) promulgated by the SEC under the Securities Act and (ii) a transfer of beneficial ownership of Voting Securities from Gates or Melinda French Gates to an executor of his or her estate or from any such executor to the heirs or other beneficiaries of such estate (provided that the executor and any other transferee that would beneficially own in the aggregate five percent (5%) or more of the Voting Securities then outstanding following any such transfer shall become a party to this Agreement as a “Cascade Party,” and any transferee that would beneficially own in the aggregate less than five percent (5%) of the Voting Securities then outstanding following any such transfer shall be deemed a “Gates Affiliate” for purposes of this Agreement), no Cascade Party or Controlled Affiliate or Associate shall sell, transfer, pledge, encumber or dispose of, directly or indirectly, any Voting Securities (including by transfer of an entity that holds Investor Voting Securities), to a Gates Affiliate or other Person (other than to another Cascade Party or any Controlled Affiliate or Associate) who, to the knowledge of such Cascade Party or Controlled Affiliate or Associate after due inquiry, would beneficially own in the aggregate five percent (5%) or more of the Voting Securities then outstanding following such transaction (a “Prohibited Transferee”).  For the avoidance of doubt, the Cascade Parties may request, in accordance with the terms of Section 2(b)(i)(9) of this Agreement, that the Board approve any such transaction with a Prohibited Transferee in advance of such transaction.

 

(b)           The Company agrees to provide registration rights to the Cascade Parties in accordance with the terms of the Registration Rights Agreement entered into by the parties on the date hereof (the “Registration Rights Agreement”).  The Cascade Parties may sell Voting Securities pursuant to an underwritten public offering under the Securities Act in accordance with the Registration Rights Agreement, provided that (i) the managing underwriter must agree to effect the sale of the Investor Voting Securities in a manner that would effect a broad distribution thereof and (ii) the Cascade Parties shall use reasonable efforts to insure that no sales of Investor Voting Securities are made to any Prohibited Transferee (other than the underwriters or any selected dealers).

 

4.             Cascade 13D Filing.  The Company acknowledges that Gates, Melinda French Gates and the Cascade Parties will comply with their obligations under Section 13(d) of the Exchange Act relating to the Cascade Parties entering into this Agreement.

 

5.             Representations and Warranties.

 

(a)           Each Cascade Party represents and warrants to the Company, as to itself but not as to the other Cascade Party, that:

 

(i)            This Agreement has been duly authorized, executed and delivered by it and is a legal, valid and binding obligation of such entity, enforceable against such entity in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent

 

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conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles.

 

(ii)           As of the date hereof, such Cascade Party beneficially owns that number of Voting Securities set forth opposite of its name on Exhibit A hereto and, to its knowledge, Exhibit A hereto lists all of the Voting Securities beneficially owned by any Gates Affiliate.

 

(iii)          As of the date hereof, neither such Cascade Party nor, to its knowledge, any Gates Affiliate (A) owns, beneficially or of record, or is a party to any Derivative Instrument, or has any other agreement to profit or share in any profit derived from any increase or decrease in the value of shares of Common Stock, or (B) is a party to any proxy, contract, arrangement, understanding or relationship pursuant to which it has a right to vote any securities of the Company.

 

(b)           The Company represents, warrants and covenants to the Cascade Parties that:

 

(i)            This Agreement has been duly authorized, executed and delivered by it and is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles.

 

(ii)           The Board has approved the amendment of, and the Company has amended, the Rights Agreement, dated as of February 24, 2006, between the Company and Computershare Investor Services, LLC, as rights agent (the “Rights Agreement”), to provide that (A) the Cascade Parties, Michael Larson and the Controlled Affiliates and Associates shall not be deemed Acquiring Persons (as defined in the Rights Agreement), and the Board shall not declare them to be Adverse Persons (as defined in the Rights Agreement), in each case so long as this Agreement has not been terminated and the Cascade Parties are in compliance (as determined in good faith by the Board) with the terms hereof and (B) Gates and Melinda French Gates shall not be deemed Acquiring Persons (as defined in the Rights Agreement), and the Board shall not declare them to be Adverse Persons (as defined in the Rights Agreement), in each case so long as (1) they do not beneficially own (as defined in the Rights Agreement) any shares of Common Stock other than indirectly through a Cascade Party or a Controlled Affiliate or Associate and (2) this Agreement has not been terminated and the Cascade Parties are in compliance (as determined in good faith by the Board) with the terms hereof.  Such amendment to the Right Agreement has been delivered to the Cascade Parties, is in full force and effect and has not been modified or further amended. So long as there have been no violations of this Agreement by either Cascade Party, the Company agrees not to amend or modify the Rights Agreement or enter into any new stockholder rights or similar agreement in any manner inconsistent with this Section 5(b)(ii).

 

6.             Suspension of Obligations; Termination.

 

(a)           During the period from the date hereof until the initial acquisition by the Gates Affiliates of beneficial ownership of, in the aggregate, fifteen percent (15%) or more of outstanding shares of Common Stock, the rights and obligations of the parties under Sections 1, 2 and 3 of this Agreement shall be suspended and of no force and effect; provided that (i) in the event any Gates Affiliate takes any action (or refrains from taking any action) during

 

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such period that would violate this Agreement (other than Section 1 hereof) if such Gates Affiliate were or is a Cascade Party and this Agreement were in full force and effect, the Company may terminate this Agreement within sixty (60) days of (1) senior management of the Company gaining actual knowledge of such action or (2) receipt by the Company of written notice from a Cascade Party of such action, by providing written notice to the Cascade Parties and (ii) in the event such period is longer than thirty-six (36) months in duration, this Agreement shall immediately terminate.

 

(b)           Following the initial acquisition by the Gates Affiliates of beneficial ownership of, in the aggregate, fifteen percent (15%) or more of outstanding shares of Common Stock, the rights and obligations of the parties under Sections 1, 2 and 3 of this Agreement shall be suspended and of no force and effect for any period during which the Gates Affiliates beneficially own in the aggregate less than fifteen percent (15%) of outstanding shares of Common Stock; provided that (i) in the event any Gates Affiliate takes any action (or refrains from taking any action) during such period that would violate this Agreement (other than Section 1 hereof) if such Gates Affiliate were or is a Cascade Party and this Agreement were in full force and effect, the Company may terminate this Agreement within sixty (60) days of (1) senior management of the Company gaining actual knowledge of such action or (2) receipt by the Company of written notice from a Cascade Party of such action, by providing written notice to the Cascade Parties and (ii) in the event any such period of suspension is longer than thirty-six (36) months in duration, this Agreement shall immediately terminate.

 

(c)           This Agreement shall immediately terminate in the event a third party other than any Cascade Party or Controlled Affiliate or Associate enters into a definitive agreement with the Company contemplating the acquisition (by way of merger, tender offer, consolidation, business combination or otherwise) of at least fifty percent (50%) of the outstanding shares of Common Stock or all or substantially all of the consolidated assets of the Company.

 

7.             Governing Law; Jurisdiction; Waiver. This Agreement, and any dispute arising out of, relating to or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles.  Each of the parties hereto (a) consents to the exclusive personal jurisdiction and venue in any action to enforce this Agreement in the federal or state courts located in Wilmington, Delaware;  (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court;  and (c) agrees that it shall not bring any action relating to this Agreement in any court other than the federal or state courts located in Wilmington, Delaware.  Each of the parties hereto waives any right to trial by jury with respect to any action, suit or proceeding arising out of or related to this Agreement.

 

9.             Entire Agreement.  This Agreement, the Rights Agreement (as amended) and the Registration Rights Agreement contain the entire understanding of the parties with respect to the subject matter hereof.

 

10.           Notices.  All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given when delivered by overnight courier, receipt confirmed, to:

 

if to the Company:

 

Ecolab Inc.
370 Wabasha Street North
Saint Paul, Minnesota 55102
Attn:    James J. Seifert

Executive Vice President, General Counsel and Secretary
Phone:    (651) 293-2981
Fax:         (651) 293-2471

 

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with copies (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
155 N. Wacker Drive
Chicago, IL 60606
Attn:       Charles W. Mulaney, Jr.
Phone:    (312) 407-0700
Fax:         (312) 407-0411

 

if to the Cascade Parties:

 

Cascade Investment, L.L.C.
2365 Carillon Point
Kirkland, WA 98033
Attn:       Michael Larson
Phone:    (425) 889-7900
Fax:         (425) 889-0288

 

or such other address as such party may hereafter specify for the purpose of giving such notice to such party.

 

11.           Definitions.  As used in this Agreement, (a) the terms “Affiliate” and “Affiliates” shall have the meaning set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act and shall include Persons who become Affiliates of any Person subsequent to the date of this Agreement; (b) the terms “Associate” and “Associates” shall have the meaning set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act and shall include Persons who become Associates of any Person subsequent to the date of this Agreement; (c) the terms “beneficially own” and “beneficial owner” shall have the meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act, provided that, for purposes of this Agreement, (i) the reference to “sixty days” in Rule 13d-3 shall be deleted, (ii) a Person shall also be deemed to be the beneficial owner of shares of Common Stock that are the subject of a Derivative Instrument directly or indirectly beneficially owned by such Person or to which such Person is a party and (iii) a Person shall not be deemed the beneficial owner of shares of Common Stock that are the subject of or borrowed in connection with a short position entered into by such Person so long as such Person does not have voting rights in such shares; (d) the term “Business Day” shall mean any day other than a Saturday, Sunday or a day on which banks in New York city are authorized or obligated by applicable law or executive order to close or ore otherwise generally closed; (e) the term “Derivative Instrument” shall mean any option, warrant, convertible security, swap, stock appreciation right or other agreement related to the Common Stock or with an exercise or conversion privilege or a settlement payment or mechanism at a price related to the Common Stock or with a value derived in whole or in part from the value of the Common Stock, whether or not such instrument or right shall be subject to settlement in shares of Common Stock or otherwise, but shall not include interests in broad-based index options, broad-based index futures or broad-based publicly traded market baskets or indices of stocks; (f) the terms “Person” or “Persons” shall be interpreted broadly to include, among others, any individual, corporation (including not-for-profit), general or limited partnership, limited liability or unlimited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature; (g) the term “Voting Securities” shall mean the shares of Common Stock and any other securities of the Company entitled to vote in the election of directors, including any securities convertible into, or exercisable or exchangeable for, Common Stock or such other securities; (h)

 

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the term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended; (i) the term “Securities Act” shall mean the Securities Act of 1933, as amended; and (j) the term “SEC” shall mean the United States Securities and Exchange Commission.

 

12.           Severability.  If any provision of this Agreement shall be held by any court of competent jurisdiction to be illegal, void or unenforceable, the illegality or unenforceability of such provision shall have no effect upon the legality or enforceability of any other provision of this Agreement.  Any provision of this Agreement that is held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable.  The parties hereto further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid or unenforceable provision.

 

13.           Counterparts.  This Agreement may be executed in two or more counterparts (including by fax or .pdf), which together shall constitute a single agreement.

 

14.           Binding Agreement; Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  No party hereto may assign or otherwise transfer either this Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other parties hereto.  Any purported transfer without such consent shall be void.  No amendment, modification, supplement or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party or parties hereto affected thereby, and then only in the specific instance and for the specific purpose stated therein.  Any waiver by any party hereto of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement.  The failure of a party hereto to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

 

15.           No Third Party Beneficiaries.  This Agreement is solely for the benefit of the parties hereto and is not enforceable by any other Persons.

 

16.           Fees and Expenses.  Neither the Company, on the one hand, nor the Cascade Parties, on the other hand, will be responsible for any fees or expenses of the other in connection with the negotiation and execution of this Agreement.

 

17.           Interpretation and Construction.  Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said counsel.  Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement, and any drafts relating thereto exchanged among the parties may not be construed against any party by reason of its drafting or preparation.  Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this Agreement shall be decided without regard to events of drafting or preparation.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Stockholder Agreement, or caused the same to be executed by its duly authorized representative as of the date first above written.

 

	ECOLAB INC.
	By:	/s/ Douglas M. Baker, Jr.
		Name: Douglas M. Baker, Jr.
		Title: Chairman and CEO
	CASCADE INVESTMENT, L.L.C.
	By:	/s/ Michael Larson
		Name: Michael Larson
		Title: Business Manager
	BILL & MELINDA GATES FOUNDATION TRUST
	By:	/s/ Michael Larson
		Name: Michael Larson
		Title: Investment Manager

 

 

Exhibit A

 

Name		Voting Securities Beneficially Owned
Cascade Investment, L.L.C.		27,001,348 shares of Common Stock
Bill & Melinda Gates Foundation Trust		4,366,425 shares of Common Stock
William H. Gates III		31,367,773 shares of Common Stock
Melinda French Gates		4,366,425 shares of Common Stock
Michael Larson		84.81 shares of Common Stock

 

As sole owner of Cascade, William H. Gates III may be deemed to beneficially own the shares held by Cascade; as co-trustees of Bill & Melinda Gates Foundation Trust, Mr. and Mrs. Gates may be deemed to beneficially own the shares held by the Trust.

 

As chief investment officer for Mr. Gates, Michael Larson has voting and investment power with respect to the shares held by Cascade and the Trust, but disclaims beneficial ownership of those shares.

 

Exhibit 99.2

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as of May 4, 2012 (this “Agreement”), is entered into by and among Ecolab Inc., a Delaware corporation (the “Company”), and Cascade Investment, L.L.C. and Bill & Melinda Gates Foundation Trust (each, a “Holder” and together, the “Holders”).

 

WHEREAS, the Company and the Holders have entered into that certain agreement, dated as of the date hereof (the “Stockholder Agreement”); and

 

WHEREAS, in consideration for the Stockholder Agreement, the Company has agreed to provide the Holders with certain registration rights with respect to the Registrable Securities (as defined herein) as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in the Stockholder Agreement and herein, intending to be legally bound, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01           Definitions.  The following terms shall have the meanings ascribed to them below:

 

“Agreement” means this Agreement, as amended, modified or supplemented from time to time, in accordance with the terms hereof, together with any exhibits, schedules or other attachments thereto.

 

“Business Day” means any day other than a Saturday, Sunday or a day on which banks in New York, New York are authorized or obligated by applicable law or executive order to close or are otherwise generally closed.

 

“Commission” means the United States Securities and Exchange Commission or any other federal agency at the time administering either the Securities Act or the Exchange Act.

 

“Common Stock” means the common stock, par value $1.00 per share, of the Company (and any other securities into which or for which the Common Stock may be converted or exchanged pursuant to a dividend, stock split, plan of recapitalization, reorganization, merger, sale of assets or otherwise).

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Covered Person” has the meaning set forth in Section 3.01.

 

“Damages” has the meaning set forth in Section 3.01.

 

“Demand Registration” has the meaning set forth in Section 2.01(a).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

 

“Holder” and “Holders” has the meaning set forth in the preamble to this Agreement, and shall include any Permitted Transferee that becomes a Holder pursuant to Section 4.05.

 

“Holders’ Counsel” has the meaning set forth in Section 2.03.

 

“Indemnified Party” has the meaning set forth in Section 3.03.

 

“Indemnifying Party” has the meaning set forth in Section 3.03.

 

 

“Initiating Holder” has the meaning set forth in Section 2.01(a).

 

“FINRA” means the Financial Industry Regulatory Authority, Inc.

 

“Participating Holders” shall mean Holders participating in the registration relating to the Registrable Securities.

 

“Permitted Transferee” has the meaning set forth in Section 4.05.

 

“Person” shall mean any individual, corporation, partnership, firm, limited liability company, joint venture, trust, association, unincorporated organization, university, group, joint-stock company or other entity.

 

“Piggyback Registration” has the meaning set forth in Section 2.02(a).

 

“register”, “registered” and “registration” shall mean any registration effected by preparing and (a) filing a Registration Statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such Registration Statement, or (b) filing a prospectus and/or prospectus supplement in respect of an appropriate effective Registration Statement.

 

“Registrable Securities” means, subject to the last sentence of this definition, shares of Common Stock beneficially owned by any of the Holders and not acquired in violation of the Stockholder Agreement.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) they are sold or otherwise transferred pursuant to an effective registration statement under the Securities Act or (ii) in the case of a Holder who is not an affiliate of the Company, such shares of Common Stock shall have been or all remaining Registrable Securities held by such Holder may immediately be sold under Rule 144 (or any similar provision then in force) under the Securities Act and without any volume or manner of sale restrictions.

 

“Registration Expenses” has the meaning set forth in Section 2.03.

 

“Registration Request” has the meaning set forth in Section 2.01(a).

 

“Registration Statement” means any registration statement of the Company on an appropriate registration form under the Securities Act that covers any of the Registrable Securities, including the prospectus, amendments and supplements thereto, and all exhibits and material incorporated by reference therein.

 

“Request Date” has the meaning set forth in Section 2.01(a).

 

“Request Notice” has the meaning set forth in Section 2.01(a).

 

“Scheduled Black-out Period” means any black-out period declared by the Company in connection with a quarterly earnings release in accordance with Company policy (as may be amended from time to time).

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

 

“Shelf Registration Statement” means a Registration Statement on Form S-3 (or any successor or similar provision) or any similar short-form or other appropriate Registration Statement that may be available at such time, in each case for an offering to be made on a continuous or delayed basis pursuant to Rule 415 (or any successor or similar provision) under the Securities Act covering Registrable Securities. To the extent that the Company is a “well-known seasoned issuer” (as such term is defined in Rule 405 (or any successor or similar rule) of the Securities Act), a “Shelf Registration Statement” shall be deemed to refer to an “automatic shelf registration statement,” as such term is defined in Rule 405 (or any successor or similar rule) of the Securities Act.

 

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“Stockholder Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Suspension Notice” has the meaning set forth in Section 2.06(a).

 

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.

 

“Underwriters’ Maximum Number” means, for any Demand Registration or Piggyback Registration, that number of securities to which such registration should, in the opinion of the managing underwriter of such registration, in the light of marketing factors (including an adverse effect on the per share offering price), be limited.

 

ARTICLE II

 

REGISTRATION RIGHTS

 

Section 2.01           Demand For Registration; Underwritten Offering.

 

(a)        Requests for Registration.  Subject to the blackout provisions contained in Section 2.06 and the limitations set forth in this Section 2.01, a Holder or group of Holders (such Holder or group of Holders, the “Initiating Holder(s)”) shall have the right to require the Company to effect a registration with respect to Registrable Securities beneficially owned by such Initiating Holder(s) for an underwritten registration (which, for the avoidance of doubt, may be pursuant to a Shelf Registration Statement as determined by the Initiating Holder(s)) under the Securities Act (a “Registration Request”) by delivering a written request therefor (a “Request Notice”) to the Company specifying the number of Registrable Securities to be included in such underwritten registration by the Initiating Holder(s).  In no event shall the Initiating Holder(s) make a Registration Request under this Section 2.01(a) to offer in the aggregate less than Registrable Securities that constitute three percent (3%) of the Company’s outstanding Common Stock as of the date of the Request Notice (the “Request Date”).  As soon as practicable after the receipt of a Registration Request, the Company shall (i) give written notice of such request to all other Holders and (ii) use commercially reasonable efforts to effect the registration (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) of the Registrable Securities that have been requested to be registered in the Registration Request or by any other Holder by written notice to the Company given within fifteen (15) Business Days after the date the Company delivered such Holders notice of the Registration Request.  Any registration requested by a Holder or Holders pursuant to this Section 2.01(a) is referred to in this Agreement as a “Demand Registration”.  The Company shall not be obliged under this Section 2.01(a) to effect more than (A) one (1) Demand Registration during any nine-month period or (B) a total of three (3) Demand Registrations on behalf of the Holders.  For the avoidance of doubt, the Company, at its sole option, may elect to utilize an existing Registration Statement for the purpose of registering any Registrable Securities covered by a Demand Registration.

 

(b)        Underwriting.  Unless effected pursuant to a Shelf Registration Statement, the offering of the Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten public offering only. The managing underwriter to administer the offering in connection with any such Demand Registration will be chosen by the Company, subject to the prior written consent, not to be unreasonably withheld, conditioned, or delayed, of the Initiating Holder(s).  The Initiating Holder(s) may designate a co-managing underwriter in connection with any such Demand Registration, subject to the prior written consent, not to be unreasonably withheld, conditioned, or delayed, of the Company.   The right of any Participating Holder other than the Initiating Holder(s) to registration pursuant to this Section 2.01 will be conditioned upon such holder agreeing to the method of distribution being proposed by the Initiating Holder(s) and, in the case of an underwritten offering, agreeing to such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting.  If applicable,

 

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the Company and the Participating Holder(s) shall enter into an underwriting agreement in customary form with the managing Underwriter, which underwriting agreement shall have substantially the same indemnification provisions as set forth in this Agreement.

 

(c)        Priority on Demand Registration.  If, in connection with a Demand Registration, the managing Underwriter gives written advice to the Company of an Underwriters’ Maximum Number, then the Company shall so advise all Initiating Holder(s) and the Company will be required to include in such registration only the Underwriters’ Maximum Number, which securities will be so included in the following order of priority: (i) first, Registrable Securities of the Initiating Holder(s), pro rata on the basis of the aggregate number of Registrable Securities owned by all Initiating Holder(s) who have delivered written requests for registration pursuant to this Section 2.01, (ii) second, Registrable Securities of any other Participating Holders, pro rata on the basis of the aggregate number of Registrable Securities owned by all such Participating Holders who have delivered written requests for registration pursuant to this Section 2.01, (iii), third, any shares of Common Stock to be sold by the Company and (iv) fourth, any shares of Common Stock requested to be included pursuant to the exercise of other contractual registration rights granted by the Company, pro rata among such holders (if applicable) on the basis of the aggregate number of securities requested to be included by such holders.

 

(d)        Effected Demand Registration.  An offering pursuant to Section 2.01(a) shall not be counted as a Demand Registration for purposes of the second to last sentence of Section 2.01(a) unless such offering is completed, except that in the event (i) the Company has made substantial efforts to effect an offering pursuant to a Registration Request and such offering is not completed due to action or non-action of the Holders or (ii) the offering contemplated by a Registration Request does not close within 180 days of the date on which the applicable Registration Statement has been declared effective by the SEC despite the commercially reasonable efforts of the Company, such offering will be so counted as a Demand Registration and the Company shall have no further obligations to effect such offering.

 

Section 2.02           Piggyback Registration.

 

(a)        Notice of Piggyback Registration.  If the Company proposes to register any of its equity securities under the Securities Act either for the Company’s own account or for the account of any of its stockholders (other than (A) securities to be issued solely in connection with any acquisition of or business combination with any entity or business, (B) securities issuable solely upon the exercise of stock options, (C) securities issuable solely pursuant to employee benefit plans, (D) securities issuable in connection with an exchange offer, (E) a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a Registration Statement, or (F) for Initiating Holder(s) pursuant to Section 2.01 hereof entitled to participate in a registration) (each such registration not withdrawn or abandoned prior to the effective date thereof being herein called a “Piggyback Registration”), the Company will give written notice to all Holders of such proposal not later than the earlier to occur of (i) the seventh (7th) Business Day following the receipt by the Company of notice of exercise of any registration rights by any Persons, and (ii) the fifteenth (15th) Business Day prior to the anticipated filing date of such Piggyback Registration.

 

(b)        Piggyback Rights.  Subject to the provisions contained in Section 2.02(c), the Company will be required to use commercially reasonable efforts to include in each Piggyback Registration such Registrable Securities as requested in a written notice from any Holder delivered to the Company no later than ten (10) Business Days following delivery of the notice from the Company specified in Section 2.02(a).

 

(c)        Priority on Piggyback Registrations.  If a Piggyback Registration is an underwritten registration, and the managing underwriter shall give written advice to the Company of an Underwriters’ Maximum Number, then securities will be included in the following order of priority: (i) equity securities proposed to be included in such Piggyback Registration by the Company for its own

 

4

 

account, or on the account of such holder or holders for whom or for which the registration was originally being effected pursuant to demand or other registration rights, as applicable, and (ii) if the Underwriters’ Maximum Number exceeds the number of securities proposed to be included pursuant to clause (i), then such excess, up to the Underwriters’ Maximum Number, shall be allocated pro rata among any Participating Holders and any holders of other piggyback registration rights on the basis of the number of securities requested to be included therein by each such Holder or other Person.

 

(d)        Selection of Underwriter(s).  If the Piggyback Registration is proposed to be underwritten, the Company will so advise the Holders in the notice referred to in Section 2.02(a).  In such event, the right of any Holder to registration pursuant to this Section 2.02 will be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting.  The Company, or the holder or holders for whom or for which such registration was originally being effected pursuant to demand or other registration rights, as applicable, shall have the sole right to select the investment banker(s) and managing underwriter(s) in any such underwritten Piggyback Registration.

 

Section 2.03           Registration Expenses.  In connection with registrations pursuant to Section 2.01 or 2.02 hereof, the Company shall pay the following registration costs and expenses incurred in connection with the registration thereunder (the “Registration Expenses”): (i) registration and filing fees and expenses, including, without limitation, those related to filings with the Commission, (ii) fees and expenses of compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) reasonable processing, duplicating and printing expenses, including, without limitation, expenses of printing any prospectuses or issuer free writing prospectuses reasonably requested by any Participating Holder, (iv)  the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties, the expense of any liability insurance and the expense of any annual audit or quarterly review), (v) fees and expenses incurred in connection with listing the Registrable Securities for trading on a national securities exchange, including, without limitation, fees and expenses of The New York Stock Exchange, (vi) fees and expenses in connection with the preparation of the registration statement and related documents covering the Registrable Securities, (vii) fees and expenses, if any, incurred with respect to any filing with FINRA, (viii) any documented out-of-pocket expenses of the Underwriter(s) incurred with the approval of the Company, (ix) the cost of providing any CUSIP or other identification numbers for the Registrable Securities, (x) fees and expenses and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including, without limitation, the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters requested), and (xi) fees and expenses of any special experts retained by the Company in connection with such registration. Each Participating Holder shall be responsible for any underwriting fees, discounts or commissions as well as disbursements to counsel for any Participating Holder (“Holders’ Counsel”) attributable to the sale of Registrable Securities pursuant to a Registration Statement.

 

Section 2.04           Registration Procedures.  In the case of each registration effected by the Company pursuant to this Agreement, the Company shall keep each Participating Holder advised in writing as to the initiation of each registration and as to the completion thereof.  In connection with any such registration (in each case, to the extent applicable):

 

(a)        The Company shall prepare and file with the Commission a Registration Statement with respect to such Registrable Securities (which, for the avoidance of doubt, may be a Shelf Registration Statement) and use its reasonable best efforts to cause such Registration Statement to become effective as soon as reasonably practicable, or prepare and file with the Commission a prospectus supplement with respect to such Registrable Securities pursuant to an effective Registration Statement and, upon the request of the holders of a majority of the Registrable Securities registered thereunder, keep

 

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such Registration Statement effective or such prospectus supplement current, until (i) in the case of a Shelf Registration, the earlier of (A) 180 days after the effective date, (B) the date on which all Registrable Securities covered thereby have been sold pursuant to such registration and (C) the first date on which no Registrable Securities remain outstanding and (ii) in the case of any Registration Statement not related to a Shelf Registration, the earlier of (A) the date on which all Registrable Securities covered thereby have been sold pursuant to such registration and (B) the expiration of ninety (90) days after such registration statement becomes effective.

 

(b)        The Company will prepare and file with the Commission such amendments and supplements to the Registration Statement, prospectus, prospectus supplement or any issuer free writing prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act applicable to it with respect to the disposition of Registrable Securities covered thereby for the period set forth in Section 2.04(a).

 

(c)        Prior to filing a Registration Statement, a prospectus or any issuer free writing prospectus or any amendment or supplement to such Registration Statement, prospectus or issuer free writing prospectus, the Company will make available to (i) each Participating Holder, (ii) Holders’ Counsel and (iii) each Underwriter of the Registrable Securities covered by such Registration Statement, copies of such Registration Statement, prospectus or issuer free writing prospectus and each amendment or supplement as proposed to be filed, together with any exhibits thereto, and thereafter, furnish to such Participating Holders, Holders’ Counsel and Underwriters, if any, such reasonable number of copies of such Registration Statement, prospectus or issuer free writing prospectus and each amendment and supplement thereto, without charge, the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents or information as such Participating Holder, Holders’ Counsel or Underwriters may reasonably request in order to permit the Participating Holders and Holders’ Counsel sufficient time to review and comment on the same and facilitate the disposition of the Registrable Securities in accordance with the plan of distribution set forth in the prospectus included in the Registration Statement.

 

(d)        The Company will promptly notify each Participating Holder of any stop order issued or threatened by the Commission and, if entered, use commercially reasonable efforts to prevent the entry of such stop order or to remove it as soon as reasonably possible.

 

(e)        On or prior to the date on which the Registration Statement is declared effective, the Company shall use commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any Participating Holder reasonably requests and do any and all other lawful acts and things which may be necessary or advisable to enable the Participating Holders to consummate the disposition in such jurisdictions of such Registrable Securities, and use commercially reasonable efforts to keep each such registration or qualification (or exemption therefrom) effective while the Registration Statement effective; provided, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (e), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction.

 

(f)         The Company will notify each Participating Holder, Holders’ Counsel and the Underwriter promptly and confirm such notice in writing, (i) when any prospectus, prospectus supplement, post-effective amendment or issuer free writing prospectus has been filed and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement, prospectus or issuer free writing prospectus for additional information to be included in any Registration Statement, prospectus or issuer free writing prospectus, (iii) of the issuance by any state securities commission or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Securities under

 

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state securities or blue sky laws or the initiation of any proceedings for that purpose, and (iv) of the occurrence of any event that makes any statement made in a Registration Statement or any related prospectus or issuer free writing prospectus or any document incorporated or deemed to be incorporated by reference therein untrue in a material way or that requires the making of any changes in such Registration Statement, prospectus, issuer free writing prospectus or documents so that such documents do not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements in the Registration Statement, prospectus or issuer free writing prospectus not misleading in light of the circumstances in which they were made; and, in the case of clauses (ii) and (iv), as promptly as practicable thereafter, prepare and file with the Commission a supplement or amendment to such Registration Statement, prospectus or issuer free writing prospectus so that such Registration Statement, prospectus or issuer free writing prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and, in the case of clause (iii), use its reasonable best efforts to obtain the withdrawal of such suspension of qualification as promptly as practicable.  Each Participating Holder hereby agrees to keep any disclosures under subsection (iv) above confidential until such time as a supplement or amendment is filed.

 

(g)        The Company will furnish customary closing certificates and other deliverables to the Underwriter(s) and the Participating Holders and enter into customary agreements satisfactory to the Company (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities.

 

(h)        The Company shall use commercially reasonable efforts to ensure the obtaining of all necessary approvals from FINRA.

 

(i)         The Company shall use its reasonable best efforts to furnish to the lead underwriter, addressed to the underwriters, (1) an opinion of counsel for the Company (which may be the Company’s General Counsel), dated the effective date of the registration statement and the closing of the sale of any securities thereunder, as well as a consent to be named in the registration statement or any prospectus thereto, and (2) comfort letters as well as an audit opinion and consent to be named in the registration statement or any prospectus relating thereto signed by the Company’s independent public accountants who have examined and reported on the Company’s financial statements included in the registration statement covering substantially the same matters with respect to the registration statement (and the prospectus or any issuer free writing prospectus included therein) and (in the case of the accountants’ comfort letters) with respect to events subsequent to the date of the financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ comfort letters delivered to the underwriters in underwritten public offerings of securities, to the extent that the Company is required to deliver or cause the delivery of such opinion or comfort letters to the underwriters in an underwritten public offering of securities.

 

(j)         The Company shall make available for inspection by any Participating Holder, any underwriter participating in the disposition pursuant to the Registration Statement and any attorney, accountant or other agent retained by any such Participating Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by such Participating Holder, underwriter, attorney, accountant or agent in connection with the Registration Statement, subject to confidentiality agreements with third persons, matters covered by attorney/client privilege and attorney work product doctrine and protecting proprietary information.

 

Section 2.05           Participating Holders’ Obligations.  The Company may require each Participating Holder to promptly furnish in writing to the Company such information regarding the distribution of the Registrable Securities as the Company may from time to time reasonably request and such other

 

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information as may be legally required in connection with such registration, including, without limitation, all such information as may be requested by the Commission.  Each Participating Holder agrees that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in Section 2.04(f)(ii) through (iv) hereof, such Participating Holder will forthwith discontinue the offering or selling of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Participating Holder’s receipt of the copies of the supplemented or amended prospectus or issuer free writing prospectus contemplated by Section 2.04(f) hereof, and, if so directed by the Company, such Participating Holder will deliver to the Company all copies, other than permanent file copies then in such Participating Holder’s possession and retained solely in accordance with record retention policies then-applicable to such Participating Holder, of the most recent prospectus or issuer free writing prospectus covering such Registrable Securities at the time of receipt of such notice.

 

Section 2.06           Blackout Provisions.

 

(a)        Notwithstanding anything in this Agreement to the contrary, by delivery of written notice to the Participating Holders (a “Suspension Notice”) stating which one or more of the following limitations shall apply to the addressee of such Suspension Notice, the Company may, if permitted by the provisions of the following sentence, (1) postpone effecting a registration under this Agreement, or (2) require such addressee to refrain from the offering or selling of Registrable Securities under the registration, in either case for a period of no more than 180 consecutive days from the delivery of such Suspension Notice (which period may not be extended or renewed).  The Company may postpone effecting a registration or apply the limitations on dispositions specified in clause 2 of this Section 2.06(a) if (w) the Company in good faith determines that such registration or disposition would materially impede, delay or interfere with any material transaction then pending or proposed to be undertaken by the Company or any of its subsidiaries, (x) the Company in good faith determines that the Company is in possession of material non-public information the disclosure of which during the period specified in such notice the Company reasonably believes would not be in the best interests of the Company, (y) the Company in good faith otherwise determines that it would be materially detrimental to the Company or its security holders for such registration to be effected at such time, or (z) during any Scheduled Black-Out Period (except, in the case of this clause (z), only for the duration of such Scheduled Black-Out Period).

 

(b)        If the Company shall take any action pursuant to clause 2 of Section 2.06(a) with respect to any Participating Holder in a period during which the Company shall be required to cause a Registration Statement to remain effective under the Securities Act and the prospectus to remain current, such period shall be extended for such Person by one (1) day beyond the end of such period for each day that, pursuant to Section 2.06(a), the Company shall require such Person to refrain from the offering or selling of Registrable Securities owned by such Person.

 

Section 2.07           Clear Market Periods.

 

(a)        In the event of a registration by the Company involving the offering and sale by the Company of equity securities (including without limitation Common Stock) or securities convertible into or exchangeable for its equity securities (including without limitation Common Stock), the Holders agree, if and to the extent requested in writing by the Company (or, in the case of an underwritten public offering, by the managing underwriter or underwriters), not to effect any public sale or distribution (excluding any sale pursuant to Rule 144 under the Securities Act) of any securities (except, in each case, as part of the applicable registration, if permitted) which securities are the same as or similar to those being registered in connection with such registration, or which are convertible into or exchangeable or exercisable for such securities, during the period beginning seven days before, and ending 60 days (or such lesser period as may be permitted by the Company or such managing underwriter or underwriters) after the effective date of the Registration Statement filed in connection with registration; provided that, if such registration is to be effected pursuant to a Shelf Registration Statement, such 60-day period shall

 

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begin upon the earlier of (i) the filing with the SEC of a preliminary prospectus supplement relating to such registration or (ii) the filing of a final prospectus supplement relating to any such registration.

 

(b)        In the case of a registration of a class of Registrable Securities pursuant to Section 2.01, the Company agrees, if and to the extent requested in writing by the holders of a majority of such class of Registrable Securities to be sold pursuant to the such registration (or, in the case of an underwritten public offering, by the managing underwriter or underwriters in such underwritten public offering), not to effect (or register for sale) any public sale or distribution of any securities which are the same as or similar to those being registered, or which are convertible into or exchangeable or exercisable for such securities, during the period beginning seven days before, and ending 60 days (or such lesser period as may be permitted by such holders or such underwriter or underwriters) after the effective date of the Registration Statement filed in connection with registration; provided that, if such registration is to be effected pursuant to a Shelf Registration Statement, such 60-day period shall begin upon the earlier of (i) the filing with the SEC of a preliminary prospectus supplement relating to such registration or (ii) the filing of a final prospectus supplement relating to any such registration.  Notwithstanding the foregoing, the Company may effect a public sale or distribution of securities of the type described above and during the periods described above if the same (A) is made pursuant to registration on Form S-4 or S-8 or any successor form to such forms or (B) as part of any registration of securities for offering and sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit plan arrangement.

 

ARTICLE III

 

INDEMNIFICATION

 

Section 3.01           Indemnification by the Company.  With respect to each Registration which has been effected pursuant to Section 2.01 or Section 2.02, the Company agrees, notwithstanding the termination of this Agreement, to indemnify and hold harmless, to the fullest extent permitted by law, each Participating Holder and each of its managers, members, partners, officers, directors, employees and agents, and each Person, if any, who controls such Participating Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the managers, members, partners, officers, directors, employees and agents of such controlling Person (each such Person being referred to herein as a “Covered Person”), from and against any and all losses, claims, damages, liabilities, reasonable attorneys’ fees, costs and expenses of investigating and defending any such claim (collectively, “Damages”) and any action in respect thereof to which such Participating Holder, and any such Covered Person may become subject under the Securities Act or otherwise, insofar as such Damages (or proceedings in respect thereof) arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (including any prospectus or issuer free writing prospectus) (or any amendment or supplement thereto), or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or issuer free writing prospectus, in light of the circumstances in which they were made) not misleading, and shall reimburse such Participating Holder and each such Covered Person for any legal and other expenses reasonably incurred by such Participating Holder or Covered Person in investigating or defending or preparing to defend against any such Damages or proceedings; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made or incorporated by reference in such Registration Statement, any such prospectus, issuer free writing prospectus or preliminary prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, in reliance upon, and in conformity with, written information prepared and furnished to the Company by any Participating Holder or Covered Person for use therein.

 

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Section 3.02           Indemnification by the Participating Holders.  Each of the Participating Holders agree, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors, employees, agents, each underwriter and each Person, if any, who controls the Company or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the managers, members, partners, officers, directors, employees and agents of such Person, to the same extent as the foregoing indemnity from the Company to the Participating Holders, for information related to the Participating Holders or a Covered Person, or their plan of distribution, furnished in writing by the Participating Holders or any Covered Person to the Company for use in any Registration Statement, prospectus or issuer free writing prospectus, or any amendment or supplement thereto, or any preliminary prospectus.  No Holder shall be required to indemnify any Person pursuant to this Section 3.02 for any amount in excess of the net proceeds of the Registrable Securities sold for the account of such Holder.

 

Section 3.03           Conduct of Indemnification Proceedings.  Promptly after receipt by any Person (an “Indemnified Party”) of notice of any claim or the commencement of any action in respect of which indemnity may be sought pursuant to Section 3.01 or 3.02, the Indemnified Party shall, if a claim in respect thereof is to be made against the Person against whom such indemnity may be sought (an “Indemnifying Party”), notify the Indemnifying Party in writing of the claim or the commencement of such action.  The failure to notify the Indemnifying Party in accordance with the preceding sentence shall not relieve the Indemnifying Party from any liability that it may have to an Indemnified Party under Section 3.01 or 3.02, except to the extent that the Indemnifying Party is prejudiced thereby.  If any such claim or action shall be brought against an Indemnified Party, and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party.  After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable out-of-pocket costs of investigation; provided, that the Indemnified Party shall have the right to employ separate counsel to represent the Indemnified Party who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, but the fees and expenses of such counsel shall be for the account of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the reasonable opinion of counsel to such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest between them, it being understood, however, that the Indemnifying Party shall not, in connection with any one such claim or action or separate but substantially similar or related claims or actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnified Parties.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.  Whether or not the defense of any claim or action is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its written consent.

 

ARTICLE IV

 

MISCELLANEOUS

 

Section 4.01           Holdback.  If requested by the underwriters managing any underwritten offering in which any Registrable Securities are eligible to be sold (without giving effect to any Underwriters’

 

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Maximum Number), without the prior written consent of the underwriter for such offering during the period specified by such underwriter, which period shall not exceed fourteen (14) days prior to or sixty (60) days following the effective date of the applicable registration, each Holder will agree with such underwriter and the other holders of Registrable Securities not to transfer any Common Stock or any other equity securities of the Company.

 

Section 4.02           Limitations on Transfer.  The provisions of Section 4 of the Stockholder Agreement will apply to any transfers of Registrable Securities pursuant to this Agreement or any registered offering.

 

Section 4.03           Suspension of Registration Rights and Termination.

 

(a)        The rights and obligations of the parties under this Agreement shall be suspended and of no force and effect during the period from the date hereof until the initial acquisition by the Cascade Parties (as defined in the Stockholder Agreement) of “beneficial ownership” (as defined in the Stockholder Agreement) of, in the aggregate, fifteen percent (15%) or more of outstanding shares of Common Stock.

 

(b)        The rights granted under this Agreement shall terminate upon the earlier of (i) the termination of the Stockholder Agreement or (ii) the date that the Registrable Securities represent less than two percent (2%) of the then-outstanding Common Stock.

 

(c)        Notwithstanding anything contained in this Agreement, the rights of the Holders and the obligations of the Company under Article II of this Agreement shall be suspended and of no force and effect in the event and for so long as a Cascade Party (as defined in the Stockholder Agreement) is in breach of the terms and conditions of the Stockholder Agreement.

 

Section 4.04           Amendment and Modification.  This Agreement may be amended, modified and supplemented, and any of the provisions contained herein may be waived, only by a written instrument signed by the Company and each Holder, provided that the addition of a permitted assign as a Holder hereunder shall not constitute an amendment or modification for purposes of this Section 4.04.

 

Section 4.05           Assignment; Binding Effect; Entire Agreement.  The rights and obligations hereunder may be assigned in whole or in part by any Holder to a controlled affiliate of such Holder, effective only for so long as such transferee remains a controlled affiliate of a Holder as of the date hereof (a “Permitted Transferee”) without the consent of the Company or the other Holders.  Such assignment shall be effective upon receipt by the Company of (x) written notice from the Holder certifying that the transferee is a Permitted Transferee, stating the name and address of the Permitted Transferee and identifying the amount of Registrable Securities with respect to which the rights under this Agreement are being transferred, and (y) a written agreement from the Permitted Transferee to be bound by all of the terms of this Agreement.  Upon receipt of the documents referenced in (x) and (y) above, the Permitted Transferee shall thereafter be deemed to be a “Holder” for all purposes of this Agreement.  Except as set forth above, this Agreement and the rights and obligations hereunder may not be assigned by any party hereto without the prior written consent of each of the other parties hereto.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.  This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them with respect to the subject matter hereof.

 

Section 4.06           Severability.  In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless that provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement.

 

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Section 4.07           Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including fax or similar writing) and shall be given to:

 

if to the Company:

 

Ecolab Inc.
370 Wabasha Street North
Saint Paul, Minnesota 55102
Attn:       James J. Seifert
                 Executive Vice President, General Counsel and Secretary
Phone:    (651) 293-2981
Fax:         (651) 293-2471

 

with copies (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
155 N. Wacker Drive
Chicago, IL 60606
Attn:       Charles W. Mulaney, Jr.
Phone:    (312) 407-0700
Fax:         (312) 407-0411

 

if to the Holders:

 

Cascade Investment, L.L.C.
2365 Carillon Point
Kirkland, WA 98033
Attn:       General Counsel
Phone:    (425) 889-7900
Fax:         (425) 803-0758

 

or such other address or fax number as such party may hereafter specify for the purpose of giving such notice to such party.  Each such notice, request or other communication shall be deemed to have been received (a) if given by fax, when such fax is transmitted to the fax number specified pursuant to this Section 4.07 and appropriate confirmation is received, or (b) if given by any other means, when delivered in person or by overnight courier.

 

Section 4.08           Headings.  The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement, nor shall they affect their meaning, construction or effect.

 

Section 4.09           Counterparts.  This Agreement may be executed via facsimile or electronic transmission and in any number of counterparts, each of which shall be deemed to be an original instrument and all of which together shall constitute one and the same instrument.

 

Section 4.10           Governing Law; Jurisdiction; Waiver of Jury Trial.  This Agreement, and any dispute arising out of, relating to or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles.  Each of the parties hereto (a) consents to the exclusive personal jurisdiction and venue in any action to enforce this Agreement in the federal or state courts located in Wilmington, Delaware;  (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court;  and (c) agrees that it shall not bring any action relating to this Agreement in any court other than the federal or state courts located in Wilmington, Delaware.  Each of the parties hereto waives any right to trial by jury with respect to any action, suit or proceeding arising out of or related to this Agreement.

 

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[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

 

	ECOLAB INC.
	By:	/s/ Douglas M. Baker, Jr.
		Name: Douglas M. Baker, Jr.
		Title: Chairman and CEO
	CASCADE INVESTMENT, L.L.C.
	By:	/s/ Michael Larson
		Name: Michael Larson
		Title: Business Manager
	BILL & MELINDA GATES FOUNDATION TRUST
	By:	/s/ Michael Larson
		Name: Michael Larson
		Title: Investment Manager