Exhibit 10(A)i

 

NON-STATUTORY STOCK OPTION AGREEMENT

 

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

 

A.            The Company has adopted the Ecolab Inc. 2002 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.

 

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 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 one-third of the Option Shares (excluding any
fractional portion less than one share), on each of the first and second
anniversaries of the Date of Grant and as to the remaining Option Shares 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. 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).

 

3.3           Change in Control.  In the event of a Change in Control, 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 provisions 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.  The Company may defer the exercise of this Option for up to
forty-five (45) days in order for the Committee to make any determination as to
the existence of Cause.

 

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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, in person, by facsimile or electronic
transmission or through the mail, to the Company at its principal executive
office in St. Paul, Minnesota (Attention:  Sr. 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, by tender, or attestation as to ownership, of Previously
Acquired Shares that have been held for the period of time necessary to avoid a
charge to the Company’s earnings for financial reporting purposes and that are
otherwise acceptable to the Committee, 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 by tender or attestation as to ownership of
Previously Acquired Shares, the value of such shares will be equal to their Fair
Market Value on the date of exercise of this Option.

 

4.3           Reload Grants.  To the extent that (a) this Option is exercised in
whole or in part during the term of the Optionee’s employment with the Company
or any Subsidiary; and (b) the exercise price is satisfied by the Optionee by
tender or attestation of ownership of Previously Acquired Shares, then the
Optionee will automatically be granted, effective as of such date of exercise, a
Reload Option to purchase the number of shares tendered or attested to in
exercising this Option and the number of shares tendered, attested to or
withheld to satisfy tax obligations associated with that portion of this Option
exercised by such tender or attestation, at an exercise price equal to the Fair
Market Value on the date of grant.  The Reload Option will be a Non-Qualified
Option as defined in the Plan, will be fully vested on the date of grant, and
will expire at the

 

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original Time of Termination set forth in Section 3.1, or earlier upon the
Optionee’s termination of employment as provided in Section 3.2.  The right to
receive a Reload Option under this Section will accrue, on the terms and
conditions set forth above, solely to the Optionee, and not to any permitted
transferee under the terms of the Plan.  A further Reload Option will not accrue
or be granted on a Reload 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.  EMPLOYMENT.

 

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 must promptly pay 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, or by attestation as to
ownership of, Previously Acquired Shares that have been held for the period of
time necessary to avoid a charge to the Company’s earnings for financial
reporting purposes and that are otherwise acceptable to the

 

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Committee, or by a Broker Exercise Notice, or by a combination of such methods. 
For purposes of satisfying a Participant’s withholding or employment-related tax
obligation, Previously Acquired Shares tendered or covered by an attestation
will be valued at their Fair Market Value.

 

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 has been and the Option Shares
granted and issued pursuant to this Agreement will be 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 have the same meanings 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.

 

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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.

 

10.5         Captions.  The Article, Section and paragraph captions in this
Agreement are for convenience of reference only, do not constitute part of this
Agreement and are not to be deemed to limit or otherwise affect any of the
provisions of this Agreement.

 

10.6         Counterparts.  For convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
to be deemed an original instrument, and all such counterparts together to
constitute the same agreement.

 

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

 

 

ECOLAB INC.

 

 

 

 By

 

 

 

 

 

 

 Its

Sr. Vice President, Human Resources

 

 

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

 

OPTIONEE

 

 

 

 

 By

 

 

 

 

(Signature)

 

 

 

 

 

 

 

 

 SSN:

 

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