NON-STATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into and effective as of this 20th day of
February, 1998 (the "Date of Grant"), by and between Ecolab Inc. (the
"Company") and XXXXX X. XXXXXXX (the "Optionee").
A. The Company has adopted the Ecolab Inc. 1997 Stock Incentive Plan
(the "Plan") authorizing the Board of Directors of the Company, or a
committee as provided for in the Plan (the Board or such a committee to be
referred to as the "Committee"), to grant non-statutory stock options to
employees of the Company and its Subsidiaries (as defined in the Plan).
B. The Company desires to give the Optionee an inducement to acquire a
proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Optionee an option to purchase
shares of common stock of the Company pursuant to the Plan.
Accordingly, the parties agree as follows:
ARTICLE 1. GRANT OF OPTION.
The Company hereby grants to the Optionee the right, privilege, and
option (the "Option") to purchase SEVEN HUNDRED FIFTEEN THOUSAND (715,000)
shares (the "Option Shares") of the Company's common stock, $1.00 par value
(the "Common Stock"), according to the terms and subject to the conditions
hereinafter set forth and as set forth in the Plan. The Option is not
intended to be an "incentive stock option," as that term is used in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE 2. OPTION EXERCISE PRICE.
The per share price to be paid by Optionee in the event of an exercise
of the Option will be $49.00.
ARTICLE 3. DURATION OF OPTION AND TIME OF EXERCISE.
3.1 INITIAL PERIOD OF EXERCISABILITY. The Option will be exercisable
as to 100% of the Option Shares beginning on the third anniversary of the
Date of Grant. This Option will remain exercisable as to all unexercised
Option Shares until 5:00 p.m. (St. Xxxx, Minnesota time) on the date that is
five years and three months following the Date of Grant ("Time of
Termination").
3.2 TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
(a) In the event that the Optionee's employment or other service with
the Company and all Subsidiaries is terminated by reason of the Optionee's
death or Disability (as defined in the Plan), this Option will become
immediately exercisable in full and will remain exercisable for a period of
five years after such termination (but in no event will this Option be
exercisable after the Time of Termination).
(b) In the event that the Optionee's employment or other service with
the Company and all Subsidiaries is terminated by reason of the Optionee's
Retirement (as defined in the Plan), this Option will remain exercisable to
the extent exercisable as of such termination for a period of five years
after such termination (but in no event will this Option be exercisable after
the Time of Termination).
(c) In the event the Optionee's employment or other service with the
Company and all Subsidiaries is terminated for any reason other than death,
Disability or Retirement, all rights of the Optionee under the Plan and this
Agreement will immediately terminate without notice of any kind, and this
Option will no longer be exercisable; provided, however that if such
termination is due to any reason other than termination by the Company or any
Subsidiary for "cause" (as defined in the Plan), this Option will remain
exercisable to the extent exercisable as of such termination for a period of
three months after such termination (but in no event will this Option be
exercisable after the Time of Termination).
(d) A change in the Optionee's status from that of an employee of the
Company or any Subsidiary to that of a non-employee consultant or advisor of
the Company or any Subsidiary will, for purposes of the Plan, be deemed to
result in a termination of the Optionee's employment with the Company and its
Subsidiaries, unless the Committee otherwise determines in its sole
discretion.
3.3 CHANGE IN CONTROL. If any events constituting a Change in Control
(as defined in the Plan) of the Company will occur, then this Option, if it
has been outstanding for at least six months from the Date of Grant, will
become immediately exercisable in full and will remain exercisable in
accordance with the terms of this Agreement.
3.4 BREACH OF CONFIDENTIALITY OR NONCOMPETE AGREEMENTS.
Notwithstanding anything in this Agreement to the contrary, in the event that
the Optionee materially breaches the terms of any confidentiality or
noncompete agreement entered into with the Company or any Subsidiary, whether
such breach occurs before or after termination of the Optionee's employment
with the Company or any Subsidiary, the Committee in its sole discretion may
immediately terminate all rights of the Optionee under the Plan and this
Agreement without notice of any kind.
ARTICLE 4. MANNER OF OPTION EXERCISE.
4.1 NOTICE. This Option may be exercised by the Optionee in whole or
in part from time to time, subject to the conditions contained in the Plan
and in this Agreement, by delivery,
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in person, by facsimile or electronic transmission or through the mail, to
the Company at its principal executive office in St. Xxxx, Minnesota
(Attention: Vice President-Human Resources), of a written notice of
exercise. Such notice will be in a form satisfactory to the Committee, will
identify the Option, will specify the number of Option Shares with respect to
which the Option is being exercised, and will be signed by the person or
persons so exercising the Option. Such notice will be accompanied by payment
in full of the total purchase price of the Option Shares purchased. In the
event that the Option is being exercised, as provided by the Plan and Section
3.2 above, by any person or persons other than the Optionee, the notice will
be accompanied by appropriate proof of right of such person or persons to
exercise the Option. As soon as practicable after the effective exercise of
the Option, the Optionee will be recorded on the stock transfer books of the
Company as the owner of the Option Shares purchased, and the Company will
deliver to the Optionee one or more duly issued stock certificates evidencing
such ownership. In the event that the Option is being exercised, as provided
by resolutions of the Committee and Section 4.2 below, by tender of a Broker
Exercise Notice, the Company will deliver such stock certificates directly to
the Optionee's broker or dealer or their nominee.
4.2 PAYMENT. At the time of exercise of this Option, the Optionee will
pay the total purchase price of the Option Shares to be purchased solely in
cash (including a check, bank draft or money order, payable to the order of
the Company); provided, however, that the Committee, in its sole discretion,
may allow such payment to be made, in whole or in part, by tender of a Broker
Exercise Notice, Previously Acquired Shares or by a combination of such
methods. For purposes of this Agreement, the terms "Broker Exercise Notice"
and "Previously Acquired Shares" will have the meanings set forth in the
Plan. In the event the Optionee is permitted to pay the total purchase price
of this Option in whole or in part with Previously Acquired Shares, the value
of such shares will be equal to their Fair Market Value on the date of
exercise of this Option.
ARTICLE 5. NONTRANSFERABILITY.
Neither this Option nor the Option Shares acquired upon exercise may be
transferred by the Optionee, either voluntarily or involuntarily, or
subjected to any lien, directly or indirectly, by operation of law or
otherwise, except as provided in the Plan. Any attempt to transfer or
encumber this Option or the Option Shares other than in accordance with this
Agreement and the Plan will be null and void and will void this Option.
ARTICLE 6. LIMITATION OF LIABILITY.
Nothing in this Agreement will be construed to (a) limit in any way the
right of the Company to terminate the employment or service of the Optionee
at any time, or (b) be evidence of any agreement or understanding, express or
implied, that the Company will retain the Optionee in any particular
position, at any particular rate of compensation or for any particular period
of time.
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ARTICLE 7. WITHHOLDING TAXES.
7.1 GENERAL RULES. The Company is entitled to (a) withhold and deduct
from future wages of the Optionee (or from other amounts which may be due and
owing to the Optionee from the Company), or make other arrangements for the
collection of, all legally required amounts necessary to satisfy any federal,
state or local withholding and employment-related tax requirements
attributable to the grant or exercise of this Option or otherwise incurred
with respect to this Option, or (b) require the Optionee promptly to remit
the amount of such withholding to the Company before acting on the Optionee's
notice of exercise of this Option. In the event that the Company is unable
to withhold such amounts, for whatever reason, the Optionee hereby agrees to
pay to the Company an amount equal to the amount the Company would otherwise
be required to withhold under federal, state or local law.
7.2 SPECIAL RULES. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require the
Optionee to satisfy, in whole or in part, any withholding or tax obligation
as described in Section 7.1 above by electing to tender Previously Acquired
Shares or a Broker Exercise Notice, or by a combination of such methods.
ARTICLE 8. ADJUSTMENTS.
In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or
shares of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of
the Optionee, will make appropriate adjustment (which determination will be
conclusive) as to the number, kind and exercise price of securities subject
to this Option.
ARTICLE 9. SUBJECT TO PLAN.
The Option and the Option Shares granted and issued pursuant to this
Agreement have been granted and issued under, and are subject to the terms
of, the Plan. The terms of the Plan are incorporated by reference in this
Agreement in their entirety, and the Optionee, by execution of this
Agreement, acknowledges having received a copy of the Plan. The provisions
of this Agreement will be interpreted as to be consistent with the Plan, and
any ambiguities in this Agreement will be interpreted by reference to the
Plan. In the event that any provision of this Agreement is inconsistent with
the terms of the Plan, the terms of the Plan will prevail.
ARTICLE 10. MISCELLANEOUS.
10.1 BINDING EFFECT. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement.
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10.2 GOVERNING LAW. This Agreement and all rights and obligations under
this Agreement will be construed in accordance with the Plan and governed by
the laws of the State of Minnesota without regard to conflicts of laws
provisions. Any legal proceedings related to this Agreement will be brought
in an appropriate Minnesota court, and the parties to this Agreement consent
to the exclusive jurisdiction of the court for this purpose.
10.3 ENTIRE AGREEMENT. This Agreement and the Plan set forth the entire
agreement and understanding of the parties to this Agreement with respect to
the grant and exercise of this Option and the administration of the Plan and
supersede all prior agreements, arrangements, plans and understandings
relating to the grant and exercise of this Option and the administration of
the Plan.
10.4 AMENDMENT AND WAIVER. Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by a written
instrument executed by the parties hereto or, in the case of a waiver, by the
party waiving compliance.
The parties to this Agreement have executed this Agreement effective the
day and year first above written.
ECOLAB INC.
By: /s/ Xxxxx Xxxxxx Xxxxx
Its Vice President, Human Resources
-----------------------------------
[By execution of this OPTIONEE
Agreement, the Optionee
acknowledges having
received a copy of /s/ Xxxxx X. Xxxxxxx
the Plan.] --------------------------------------
(Signature)
Xxxxx X. Xxxxxxx
0000 Xxxxxxx Xx.
Xxxx Xxxxxxx, XX 00000
SSN: ###-##-####
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