Exhibit 10(D)ii

 

MASTER AGREEMENT
RELATING TO PERIODIC OPTIONS GRANTED UNDER THE
ECOLAB INC. 2001 NON-EMPLOYEE DIRECTOR STOCK OPTION
AND DEFERRED COMPENSATION PLAN

(as amended effective as of May 1, 2004)

 

THIS AGREEMENT is entered into and effective as of this         day of 
                          ,         , by and between Ecolab Inc. (the “Company”)
and                               (the “Optionee”).

 

A.                                   The Company has adopted the Ecolab Inc.
2001 Non-Employee Director Stock Option and Deferred Compensation Plan, as
amended effective as of May 1, 2004 (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 from time to
time Periodic Options to Qualified Directors.

 

B.                                     The Company desires to advance the
interests of the Company and its stockholders by enabling the Company to attract
and retain the services of experienced and knowledgeable non-employee directors
and to provide an incentive for such directors to increase their proprietary
interest in the Company’s long-term success and progress.

 

Accordingly, the parties agree as follows:

 

ARTICLE 1.                                GRANT OF PERIODIC OPTIONS.

 

Effective as of each of the dates (each, a “Date of Grant”) set forth in a
written notification of the grant, which written notification will be provided
by the Company to the Optionee from time to time as Periodic Options are granted
under the Plan, the Company hereby grants to the Optionee the right, privilege,
and option to purchase that number of shares (the “Option Shares”) of the
Company’s common stock, $1.00 par value (the “Common Stock”) as set forth
opposite such Date of Grant on the written notification, according to the terms
and subject to the conditions hereinafter set forth and as set forth in the
Plan.  None of the Periodic Options are intended to be “incentive stock
options,” as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”).

 

ARTICLE 2.                                EXERCISE PRICE.

 

The per share price to be paid by the Optionee in the event of an exercise of
any of the Periodic Options will be the respective price set forth opposite such
Periodic Option in the written notification of grant referred to in Article 1
above.

 

ARTICLE 3.                                DURATION OF PERIODIC OPTIONS AND TIME
OF EXERCISE.

 

3.1                                 EXERCISABILITY AND DURATION.  EACH PERIODIC
OPTION WILL BE IMMEDIATELY EXERCISABLE IN FULL AND WILL REMAIN EXERCISABLE UNTIL
5:00 P.M. (ST. PAUL, MINNESOTA TIME) ON THE TENTH ANNIVERSARY OF

 

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SUCH PERIODIC OPTION’S RESPECTIVE DATE OF GRANT (“TIME OF TERMINATION”).  AT THE
TIME OF TERMINATION OF A PERIODIC OPTION, SUCH OPTION WILL BECOME VOID AND
EXPIRE AS TO ALL UNEXERCISED OPTION SHARES.

 

3.2                                 TERMINATION OF SERVICE AS A DIRECTOR OF THE
COMPANY.  IF THE OPTIONEE CEASES TO SERVE AS A DIRECTOR OF THE COMPANY FOR ANY
REASON, THEN EACH PERIODIC OPTION WILL REMAIN EXERCISABLE UNTIL THE EARLIER OF
THE EXPIRATION OF FIVE YEARS AFTER THE DATE THE OPTIONEE CEASED TO SERVE AS A
DIRECTOR OF THE COMPANY OR THE REMAINING TERM OF SUCH PERIODIC OPTION, AT WHICH
TIME SUCH PERIODIC OPTION WILL TERMINATE AND NO LONGER BE EXERCISED.

 

3.3                                 EFFECTS OF ACTIONS CONSTITUTING CAUSE. 
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN THE EVENT THAT
THE OPTIONEE IS DETERMINED BY THE COMMITTEE, ACTING IN ITS SOLE DISCRETION, TO
HAVE COMMITTED ANY ACTION WHICH WOULD CONSTITUTE CAUSE, IRRESPECTIVE OF WHETHER
SUCH ACTION OR THE COMMITTEE’S DETERMINATION OCCURS BEFORE OR AFTER THE OPTIONEE
CEASES TO SERVE AS A DIRECTOR OF THE COMPANY, ALL RIGHTS OF THE OPTIONEE UNDER
THE PLAN AND THIS AGREEMENT ATTRIBUTABLE TO UNEXERCISED PERIODIC OPTIONS THEN
HELD BY THE OPTIONEE WILL TERMINATE AND BE FORFEITED WITHOUT NOTICE OF ANY KIND.

 

ARTICLE 4.                                MANNER OF PERIODIC OPTION EXERCISE.

 

4.1                                 NOTICE.  EACH PERIODIC 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 DELIVERING, IN
PERSON, BY FACSIMILE OR ELECTRONIC TRANSMISSION OR THROUGH THE MAIL, A WRITTEN
NOTICE OF EXERCISE TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE IN ST. PAUL,
MINNESOTA (ATTENTION:  CORPORATE SECRETARY, OR SUCH OTHER PERSON AS MAY, FROM
TIME TO TIME, BE AUTHORIZED BY THE CORPORATE SECRETARY TO RECEIVE SUCH
NOTICES).  SUCH NOTICE MUST BE IN A FORM SATISFACTORY TO THE COMMITTEE, IDENTIFY
THE PARTICULAR PERIODIC OPTION THAT IS BEING EXERCISED (BY THE DATE OF GRANT AND
TOTAL NUMBER OF OPTION SHARES SUBJECT TO SUCH PERIODIC OPTION), SPECIFY THE
NUMBER OF OPTION SHARES WITH RESPECT TO WHICH SUCH PERIODIC OPTION IS BEING
EXERCISED, AND SIGNED BY THE PERSON OR PERSONS SO EXERCISING SUCH PERIODIC
OPTION.  SUCH NOTICE MUST BE ACCOMPANIED BY PAYMENT IN FULL OF THE TOTAL
PURCHASE PRICE OF THE OPTION SHARES PURCHASED.  IN THE EVENT THAT A PERIODIC
OPTION IS BEING EXERCISED, AS PROVIDED BY THE PLAN AND SECTIONS 5.2 AND 5.3
BELOW, BY ANY PERSON OR PERSONS OTHER THAN THE OPTIONEE, THE NOTICE MUST BE
ACCOMPANIED BY APPROPRIATE PROOF OF RIGHT OF SUCH PERSON OR PERSONS TO EXERCISE
SUCH PERIODIC OPTION.  AS SOON AS PRACTICABLE AFTER THE EFFECTIVE EXERCISE OF
SUCH PERIODIC 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 SUCH PERIODIC 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                                 AT THE TIME OF EXERCISE OF A PERIODIC
OPTION, THE OPTIONEE WILL PAY THE TOTAL PURCHASE PRICE OF THE OPTION SHARES TO
BE PURCHASED ENTIRELY 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 AND UPON TERMS AND CONDITIONS ESTABLISHED BY THE COMMITTEE,
MAY ALLOW SUCH PAYMENT TO

 

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BE MADE, IN WHOLE OR IN PART, BY TENDER OF A BROKER EXERCISE NOTICE, BY TENDER,
OR ATTESTATION AS TO OWNERSHIP, OF PREVIOUSLY ACQUIRED SHARES, OR BY A
COMBINATION OF SUCH METHODS. IN THE EVENT THE OPTIONEE IS PERMITTED TO PAY THE
TOTAL PURCHASE PRICE OF SUCH PERIODIC OPTION IN WHOLE OR IN PART BY TENDER OR
ATTESTATION AS TO OWNERSHIP OF PREVIOUSLY ACQUIRED SHARES, THE VALUE OF SUCH
PREVIOUSLY ACQUIRED SHARES WILL BE EQUAL TO THEIR MARKET PRICE ON THE DATE OF
EXERCISE OF SUCH PERIODIC OPTION.

 

ARTICLE 5.                                RESTRICTIONS ON TRANSFER.

 

5.1                                 GENERAL RESTRICTION ON TRANSFER.  EXCEPT AS
OTHERWISE PROVIDED IN THE PLAN AND THIS SECTION, NONE OF THE PERIODIC OPTIONS
NOR THE OPTION SHARES ACQUIRED UPON EXERCISE OF THE PERIODIC OPTIONS MAY BE
TRANSFERRED BY THE OPTIONEE, EITHER VOLUNTARILY OR INVOLUNTARILY, OR SUBJECTED
TO ANY LIEN, DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW OR OTHERWISE.  ANY
ATTEMPT TO TRANSFER OR ENCUMBER ANY OF THE PERIODIC OPTIONS OR THE OPTION SHARES
OTHER THAN IN ACCORDANCE WITH THIS SECTION AND THE PLAN WILL BE NULL AND VOID
AND WILL VOID SUCH PERIODIC OPTION.

 

5.2                                 DESIGNATION OF BENEFICIARY.  THE OPTIONEE IS
ENTITLED TO DESIGNATE A BENEFICIARY TO RECEIVE A PERIODIC OPTION UPON THE
OPTIONEE’S DEATH, AND IN THE EVENT OF THE OPTIONEE’S DEATH, PAYMENT OF ANY
AMOUNTS DUE UNDER THE PLAN WILL BE MADE TO, AND EXERCISE OF ANY OF THE PERIODIC
OPTIONS (TO THE EXTENT PERMITTED PURSUANT TO ARTICLE 3) MAY BE MADE BY, THE
OPTIONEE’S LEGAL REPRESENTATIVES, HEIRS AND LEGATEES.

 

5.3                                 GIFTS TO RELATED PARTIES.  SO LONG AS THE
OPTIONEE IS A DIRECTOR OF THE COMPANY, THE OPTIONEE IS ENTITLED TO TRANSFER ALL
OR A PORTION OF A PERIODIC OPTION, OTHER THAN FOR VALUE, TO THE OPTIONEE’S
CHILD, STEPCHILD, GRANDCHILD, PARENT, STEPPARENT, GRANDPARENT, SPOUSE, FORMER
SPOUSE, SIBLING, NIECE, NEPHEW, MOTHER-IN-LAW, FATHER-IN-LAW, SON-IN-LAW,
DAUGHTER-IN-LAW, BROTHER-IN-LAW, OR SISTER-IN-LAW, ANY PERSON SHARING THE
OPTIONEE’S HOUSEHOLD (OTHER THAN A TENANT OR EMPLOYEE), A TRUST IN WHICH ANY OF
THE FOREGOING HAVE MORE THAN FIFTY PERCENT OF THE BENEFICIAL INTERESTS, A
FOUNDATION IN WHICH ANY OF THE FOREGOING (OR THE OPTIONEE) CONTROL THE
MANAGEMENT OF ASSETS, AND ANY OTHER ENTITY IN WHICH THESE PERSONS (OR THE
OPTIONEE) OWN MORE THAN FIFTY PERCENT OF THE VOTING INTERESTS.  ANY PERMITTED
TRANSFEREE WILL REMAIN SUBJECT TO ALL THE TERMS AND CONDITIONS APPLICABLE TO THE
OPTIONEE PRIOR TO THE TRANSFER.  A PERMITTED TRANSFER MAY BE CONDITIONED UPON
SUCH REQUIREMENTS AS THE COMMITTEE MAY, IN ITS SOLE DISCRETION, DETERMINE,
INCLUDING, BUT NOT LIMITED TO EXECUTION AND/OR DELIVERY OF APPROPRIATE
ACKNOWLEDGEMENTS, OPINION OF COUNSEL, OR OTHER DOCUMENTS BY THE TRANSFEREE.

 

ARTICLE 6.                                LIMITATION OF RIGHTS.

 

6.1                                 NO RIGHT TO CONTINUE AS A DIRECTOR.  NEITHER
THE PLAN, NOR THE GRANTING OF ANY OF THE PERIODIC OPTIONS UNDER THE PLAN AND
THIS AGREEMENT, NOR ANY OTHER ACTION TAKEN PURSUANT TO THE PLAN, WILL CONSTITUTE
OR BE EVIDENCE OF ANY AGREEMENT OR UNDERSTANDING, EXPRESS OR IMPLIED, THAT THE
COMPANY WILL RETAIN THE OPTIONEE AS A DIRECTOR OF THE COMPANY FOR ANY PERIOD OF
TIME, OR AT ANY PARTICULAR RATE OF COMPENSATION.

 

6.2                                 RIGHTS AS A STOCKHOLDER.  THE OPTIONEE WILL
HAVE NO RIGHTS AS A STOCKHOLDER WITH RESPECT TO ANY OPTION SHARES COVERED BY A
PERIODIC OPTION UNTIL THE OPTIONEE HAS EXERCISED SUCH PERIODIC OPTION, PAID THE
EXERCISE PRICE AND BECOME THE HOLDER OF RECORD OF SUCH OPTION SHARES, AND,
EXCEPT AS OTHERWISE PROVIDED IN ARTICLE 8 BELOW, NO ADJUSTMENT WILL BE MADE FOR
DIVIDENDS OR OTHER

 

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DISTRIBUTIONS OR OTHER RIGHTS AS TO WHICH THERE IS A RECORD DATE PRECEDING THE
DATE THE OPTIONEE BECOMES THE HOLDER OF RECORD OF SUCH OPTION SHARES.

 

ARTICLE 7.                                WITHHOLDING TAXES.

 

7.1                                 GENERAL RULES.  THE COMPANY IS ENTITLED TO
(A) WITHHOLD AND DEDUCT FROM THE OPTIONEE’S COMPENSATION AND ALL 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 OTHER TAX REQUIREMENTS
ATTRIBUTABLE TO THE GRANT OR EXERCISE OF ANY PERIODIC OPTION OR OTHERWISE
INCURRED WITH RESPECT TO SUCH PERIODIC OPTION, OR (B) REQUIRE THE OPTIONEE
PROMPTLY TO REMIT THE AMOUNT OF SUCH WITHHOLDING TO THE COMPANY BEFORE TAKING
ANY ACTION ON THE OPTIONEE’S NOTICE OF EXERCISE OF ANY PERIODIC OPTION,
INCLUDING ISSUING ANY OPTION SHARES, WITH RESPECT TO SUCH PERIODIC 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 OTHER TAX OBLIGATION AS DESCRIBED IN SECTION 7.1 ABOVE BY REMITTING SUCH
AMOUNTS TO THE COMPANY, BY ELECTING TO TENDER, OR ATTEST AS TO OWNERSHIP OF,
PREVIOUSLY ACQUIRED SHARES, BY DELIVERY OF A BROKER EXERCISE NOTICE OR A
COMBINATION OF SUCH METHOD.  FOR PURPOSES OF SATISFYING THE OPTIONEE’S
WITHHOLDING OR OTHER TAX OBLIGATION, PREVIOUSLY ACQUIRED SHARES TENDERED OR
COVERED BY AN ATTESTATION WILL BE VALUED AT THEIR MARKET PRICE.

 

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 similar 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 each Periodic Option.

 

ARTICLE 9.                                SUBJECT TO PLAN.

 

9.1                                 TERMS OF PLAN PREVAIL.  EACH PERIODIC 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

 

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PROVISION OF THIS AGREEMENT IS INCONSISTENT WITH THE TERMS OF THE PLAN, THE
TERMS OF THE PLAN WILL PREVAIL.

 

9.2                                 DEFINITIONS.  UNLESS OTHERWISE DEFINED IN
THIS AGREEMENT, THE TERMS CAPITALIZED IN THIS AGREEMENT WILL HAVE THE SAME
MEANING AS GIVEN TO SUCH TERMS IN THE PLAN.

 

ARTICLE 10.                          MISCELLANEOUS.

 

10.1                           BINDING EFFECT.  THIS AGREEMENT WILL BE BINDING
UPON THE HEIRS, EXECUTORS, ADMINISTRATORS, DESIGNATED BENEFICIARIES AND
SUCCESSORS OF THE PARTIES TO THIS AGREEMENT.

 

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 (INCLUDING ANY
WRITTEN NOTIFICATION OF THE GRANT OF A PERIODIC OPTION) AND THE PLAN SET FORTH
THE ENTIRE AGREEMENT AND UNDERSTANDING OF THE PARTIES TO THIS AGREEMENT WITH
RESPECT TO THE GRANT AND EXERCISE OF EACH PERIODIC OPTION AND THE ADMINISTRATION
OF THE PLAN AND SUPERSEDE ALL PRIOR AGREEMENTS, ARRANGEMENTS, PLANS AND
UNDERSTANDINGS RELATING TO THE GRANT AND EXERCISE OF SUCH PERIODIC OPTION AND
THE ADMINISTRATION OF THE PLAN.

 

10.4                           AMENDMENT AND WAIVER.  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.

 

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The parties to this Agreement have executed this Agreement effective the day and
year first above written.

 

 

 

ECOLAB INC.

 

 

 

 

 

By

 

 

 

 

Timothy P. Dordell

 

 

Associate General Counsel - Corporate and
Assistant Secretary

 

 

[By execution of this Agreement,
the Optionee acknowledges having
received a copy of the Plan.]

OPTIONEE

 

 

 

 

(Name)

 

 

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