Exhibit 10(B)i

 

NON-STATUTORY STOCK OPTION AGREEMENT

 

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

 

A.            The Company has adopted the Ecolab Inc. 1997 Stock Incentive Plan,
as Amended and Restated as of May 14, 1999 (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.

 

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                         (              ) 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 $          .

 

ARTICLE 3.  DURATION OF OPTION AND TIME OF EXERCISE.

 

3.1           Initial Period of Exercisability.  The Option will be exercisable,
on a cumulative basis, as to 25% of the Option Shares (excluding any fractional
portion less than one share), on each of the first, second and third
anniversaries of the Date of Grant and as to the remaining Option Shares on the
fourth anniversary of the Date of Grant.  This Option will remain exercisable as
to all unexercised Option Shares until 5:00 p.m. (St. Paul, Minnesota time) on
the tenth anniversary of the Date of Grant (“Time of Termination”).

 

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3.2           Termination of Employment.

 

(a)           In the event that the Optionee’s employment with the Company and
all Subsidiaries is terminated by reason of the Optionee’s death or Disability,
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)(i)       In the event that the Optionee’s employment with the Company and
all Subsidiaries is terminated by reason of the Optionee’s Retirement, then,
subject to clause (ii) hereof, this Option, if it has been outstanding at least
six months from the Date of Grant, will become exercisable in full immediately
prior to such termination and 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);

 

(ii)           The acceleration of exercisability of the Option provided for in
clause (i) hereof will not occur in the event that the Optionee has committed an
act which constitutes Cause, which shall be determined by the Committee acting
in its sole discretion, irrespective of whether such action or the Committee’s
determination occurs before or after termination of the Optionee’s employment
with the Company or any Subsidiary.

 

(c)           In the event the Optionee’s employment 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, 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
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           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 termination of the Optionee’s
employment with the Company or any Subsidiary, all rights of the Optionee under
the Plan and this Agreement shall terminate and be forfeited without notice of
any kind.

 

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ARTICLE 4.  MANNER OF OPTION EXERCISE; RELOAD GRANTS.

 

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, in person, by facsimile or electronic
transmission or through the mail, to the Company at its principal executive
office in St. Paul, 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.  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.

 

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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.

 

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.

 

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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.

 

9.1           Terms of Plan Prevail.  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.

 

9.2           Definitions.  Unless otherwise defined in this Agreement, the
terms capitalized in this Agreement shall 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 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 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.

 

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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

 

 

 

 

 

 

 Its

 

 

 

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

OPTIONEE

 

 

(Signature)

 

 

 

 

 

 

 

 

(Name and Address)

 

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