EXHIBIT (10)H(ii)


 


ECOLAB INC.


 


2001 NON-EMPLOYEE DIRECTOR STOCK OPTION AND


 


DEFERRED COMPENSATION PLAN


 


(as amended
effective as of May 1, 2004)


 


1.             Description.


 


1.1.          Name.  The name of the Plan is the “Ecolab Inc.
2001 Non-Employee Director Stock Option and Deferred Compensation Plan.”


 


1.2.          Purposes.  The purpose of the Plan is to attract and
retain the services of experienced and knowledgeable non-employee directors by
providing such directors with greater flexibility in the form and timing of
receipt of compensation for their service on the Board of Directors and an
opportunity to obtain a greater proprietary interest in the Company’s long-term
success and progress through the receipt of Periodic Options and Annual Share
Units and the deferral of cash compensation in the form of credits to their
Share Accounts or Cash Accounts, thereby aligning such directors’ interests
more closely with the interests of the Company’s stockholders.


 


1.3.          Type.  The Plan is maintained primarily for the
purpose of compensating Qualified Directors and providing them with the
opportunity to obtain equity-based compensation and to defer cash
compensation.  The Plan is intended to
be unfunded for tax purposes.  It will
be construed and administered in a manner that is consistent with and gives
effect to the foregoing.


 


1.4.          Components of
Director Compensation.  Qualified
Directors who are eligible pursuant to Section 2.1 will receive Periodic
Options, Share Unit Compensation and Other Director Compensation as part of
their annual compensation for services rendered as directors of the Company, as
determined by the Board from time to time. 
Qualified Directors who are eligible pursuant to Section 2.1 may
defer the receipt of some or all of their Other Director Compensation in the form
of credits to their Cash Accounts and Share Accounts.


 


2.             Participation.


 


2.1.          Eligibility.


 


(a)           Each
individual who is a Participant under any of the Prior Deferred Compensation
Plans will be eligible to have credits made to his or her Cash Account and
Share Account pursuant to Section 4.


 


(b)           Each
individual who is a Qualified Director at any point during a Credit Period with
respect to which a credit is made pursuant to Section 5.1 is eligible to
have such credit made to his or her Share Account pursuant to Section 5.1.


 

















 


(c)           Each
individual who is a Qualified Director on the first day of an Election Period
is eligible to make deferral elections pursuant to Section 5.2 with
respect to such Election Period.  An
individual who becomes a Qualified Director after the first day of the Election
Period is eligible to make a deferral election pursuant to Section 5.2
with respect to the remainder of such Election Period.  Any deferral election under Section 5.2
by a Participant who receives a distribution pursuant to Section 8.2(a) or
8.2(c) will be suspended, and no further amounts will be deferred under such
section, until the first anniversary of such distribution.  Each individual who has made a valid election
pursuant to Section 5.2 and is a Qualified Director at any point during a
Credit Period with respect to which a credit is made pursuant to
Section 5.2 is eligible to have such credit made to his or her Account
pursuant to Section 5.2.


 


(d)           Each
Qualified Director is eligible to receive Periodic Options pursuant to
Section 7.


 


2.2.          Ceasing to be
Eligible.  An individual who ceases
to be a Qualified Director is not eligible to receive Periodic Options pursuant
to Section 7 or to make any elections or receive further credits pursuant
to Section 5, other than such credits relating to the period prior to such
cessation.


 


2.3.          Condition of
Participation.  Each Participant, as
a condition of participation in the Plan, is bound by all the terms and
conditions of the Plan and the Plan Rules, including but not limited to the
reserved right of the Company to amend or terminate the Plan, and must furnish
to the Administrator such pertinent information, and execute such election
forms and other instruments, as the Administrator or Plan Rules may require by
such dates as the Administrator or Plan Rules may establish.


 


2.4.          Termination of
Participation.  An individual will
cease to be a Participant as of the date on which he or she is neither eligible
to receive Periodic Options pursuant to Sections 2.2 and 7, nor to make any
elections or receive further credits pursuant to Sections 2.2, 5 and 6 and his
or her outstanding Periodic Options have been exercised, cancelled or expired
and his or her entire Account balances have been distributed.


 


3.             Participant Cash
and Share Accounts.  For each
Participant, the Administrator will establish and maintain a Cash Account and a
Share Account to evidence amounts credited with respect to the Participant
pursuant to Sections 4, 5 and 6. 
Subject to Section 8.2(c), each Participant will always have a
fully vested nonforfeitable interest in his or her Account.


 


4.             Carryover Credits
from Prior Deferred Compensation Plans. 
As of the 2001 Annual Meeting Date, the Cash Account and Share Account
of each then-current Participant were credited with the amount of cash or Share
Units, if any, in such Participant’s corresponding cash account and share
account under the Prior Deferred Compensation Plans, and such accounts were
reduced to zero.


 


5.             Compensation and
Deferral Credits.


 


5.1.          Share Unit
Compensation:  Credits to Share Account.  Each Qualified Director will receive
additional annual compensation (the “Share Unit Compensation”) in the form of


 


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credits to the Qualified
Director’s Share Account.  The amount of
the Share Unit Compensation will be expressed in U.S. dollars and determined
from time to time by the Board.  A
Qualified Director’s Share Account will be credited pursuant to this
section on the last day of each Credit Period (a “Credit Date”) with the
number of whole and fractional Share Units equal to the quotient of:  (a) the dollar amount of the Share Unit
Compensation allocated to such full Credit Period, divided by (b) the Market
Price on the Credit Date.  If a
Qualified Director has not served for the entire Credit Period for which the
Share Unit Compensation relates, the amount credited to the Qualified
Director’s Share Account will be based on the dollar amount of the Share Unit
Compensation earned by the Qualified Director during the portion of the Credit
Period for which he or she served.


 


5.2.          Other Director
Compensation:  Credits to Cash and Share
Accounts.  Elective deferrals of
Other Director Compensation will be made in accordance with the following
rules:


 


(a)           Election
to Defer Other Director Compensation. 
Each Qualified Director may elect, in accordance with this
section to defer the receipt of all or a portion (in increments of ten
percent) of his or her Other Director Compensation relating to an Election Period
in the form of credits to his or her Cash Account and/or Share Account.  Any such deferral election will
automatically apply to the Participant’s Other Director Compensation, as the
amount of such Other Director Compensation is adjusted from time to time.


 


(b)           Time
of Filing Election.  A deferral
election pursuant to this section will not be effective unless it is made
on a properly completed election form received by the Administrator before the
first day of the Election Period to which the deferral election relates or, in
the case of an individual who becomes a Qualified Director on or after the
first day of the Election Period, within 30 days after the date such individual
becomes a Qualified Director.  Any
election delivered or deemed to be delivered under this Section 5.2(b)
applies only to Other Director Compensation relating to services performed
after the effective date of the election.


 


(c)           Allocation
of Deferral.  In conjunction with
each deferral election made pursuant to this section, a Qualified Director must
elect, in accordance with and subject to the Plan Rules, how the deferral is to
be allocated (in increments of ten percent only) among his or her Cash Account
and Share Account.  The sum of such
percentages must not exceed 100 percent. 
Any portion of the deferral for which no election is made will be
allocated to the Qualified Director’s Cash Account.


 


(d)           Credits.  Other Director Compensation deferred
pursuant to this section will be credited to a Qualified Director’s Cash
Account and/or Share Account, as elected, as of the last day of each Credit
Period.  Such credits to the Qualified
Director’s Cash Account will be in United States dollars equal to the amount of
the deferral allocated to each such Account. 
Such credits to a Qualified Director’s Share Account will be the number
of whole and fractional Share Units determined by dividing the United States
dollar amount of the deferral allocated to the Share Account by the Market
Price of a Share on the Credit Date.  
If a Qualified Director has not served or will not serve for the entire
Credit Period for which the Other Director Compensation relates, the amounts


 


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credited to the
Qualified Director’s Cash Account and/or Share Account, as elected, on the last
day of the Credit Period will be based on the amount of the deferral allocated
to each such Account that the Qualified Director has earned during the portion
of the Credit Period for which he or she served.


 


(e)           Succeeding
Election Periods.  A deferral
election pursuant to this section will remain in effect until revoked or
modified for future Election Periods by the Qualified Director by delivering a
new deferral election not later than the day before the first Election Period
to which the new deferral election relates.


 


(f)            Irrevocability.  A deferral election for a given Election
Period is irrevocable after the latest date by which the deferral election is
required to be given to the Administrator for such Election Period.


 


6.             Earnings Credits.


 


6.1.          Earnings Credits to
Cash Accounts.  As of the last day
of each Credit Period, and before any credits have been made pursuant to
Section 5 on such date, a Participant’s Cash Account will be credited with
interest, calculated on the balance in the Cash Account as of the last day of
the immediately preceding calendar month and on the Credit Date at the Prime
Rate in effect on each such date.


 


6.2.          Earnings Credits to
Share Accounts.  A Participant’s
Share Account will be credited as of the date on which dividends are paid on
Shares with that number of whole and fractional Share Units determined by
dividing the dollar amount of the dividends that would have been payable to the
Participant if the number of Share Units credited to the Participant’s Share
Account on the record date for such dividend payment had then been Shares
registered in the name of such Participant by the Market Price of a Share on
the date as of which the credit is made.


 


7.             Periodic Options.


 


A Qualified Director may be granted from time to time one or more
options to purchase that number of whole Shares as determined by the Board in
its sole discretion (“Periodic Options”). 
Periodic Options will be deemed to be granted as of the date specified
in the grant resolution of the Board.  
The terms of the Periodic Options are set forth in Section 9.


 


8.             Distributions.


 


8.1.          Distribution of Cash
and Share Accounts to a Participant Upon Termination of Service.


 


(a)           Form
of Distribution.  A Participant’s
Cash Account and Share Account will be distributed as provided in this
section in a lump sum payment unless (i) the Participant elects, on a
properly completed election form, to receive his or her distribution in the
form of annual installment payments for a period of not more than 10 years and
(ii) except when cessation results from Disability, the date on which he or she
ceases to be a member of the Board follows by more than one year the date on
which a


 


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properly completed
election form is received by the Administrator.  Any election made pursuant to this section may be changed
from time to time upon the Administrator’s receipt of a properly completed
election form, provided that, unless cessation results from Disability, such
change will not be valid and will not have any effect unless it is made more
than one year prior to a Participant’s cessation of service as member of the
Board.  A new election to change has no
effect on any previous election until the new election becomes effective, at
which time any previous election will automatically be void.  (For example, if the Administrator receives
an election to change on July 1 of year 1 and another election on
September 1 of year 1, the July 1 election will become effective on
July 1 of year 2 and will remain in effect through August 30 of year
2.  On September 1 of year 2, the
September 1 election will become effective.)  Any election made pursuant to this section will apply to the
entire balance of the Participant’s Cash and Share Accounts attributable to
credits with respect to the period through the date on which he or she ceases
to be a member of the Board.  If a
Participant has a valid election in effect under any Prior Deferred
Compensation Plan, such Participant’s prior election will automatically be
deemed to be the Participant’s election under this section unless and
until a new election is made and has become effective.  Any distribution from a Participant’s Cash
Account will be made in cash only. 
Subject to Section 13, any distribution from a Participant’s Share
Account will be made in whole Shares only, rounded up to the next whole Share.


 


(b)           Time
of Distribution.  Distribution to a
Participant will be made (if in lump sum) or commence (if in installments) as
soon as administratively practicable after the next Credit Date after the
Participant ceases to be a member of the Board; provided that if a lump sum
distribution from a Participant’s Share Account would otherwise be made after
the record date for a dividend but before the payment date for such dividend,
the distribution will be delayed and made as soon as administratively
practicable after the earnings credits have been made to the Share Account
pursuant to Section 6.2 on the payment date of the dividend  (the “Time of Distribution”).


 


(c)           Amount
of Distribution for Cash Account.


 


(i)            Lump
Sum.  The amount of a lump sum
payment from a Participant’s Cash Account will be equal to the balance of the
Cash Account as of the Time of Distribution.


 


(ii)           Installments.  The amount of each installment payment from
a Participant’s Cash Account will be determined by dividing the balance of the
Cash Account as of the distribution date for such installment payment by the
total number of remaining payments (including the current payment).


 


(d)           Amount
of Distribution for Share Account.


 


(i)            Lump
Sum.  A lump sum distribution from a
Participant’s Share Account will consist of the number of Shares equal to the
number of Share Units credited to the Share Account as of the Time of
Distribution, rounded up to the next whole Share.


 


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(ii)           Installments.  Each installment distribution from a
Participant’s Share Account will consist of the number of Shares determined by
dividing the number of whole Share Units credited to the Share Account as of
the distribution date for such installment distribution by the total number of
remaining payments (including the current payment) and rounding the quotient to
the next whole Share.


 


(e)           Reduction
of Account Balance.  The balance of
the Cash or Share Account from which a distribution is made will be reduced, as
of the date of the distribution, by the cash amount or number of Shares
distributed.


 


8.2.          Other Distributions
from Cash and Share Accounts to a Participant.  The provisions of this section will apply notwithstanding
Section 8.1 or any election by a Participant to the contrary.


 


(a)           Withdrawals
Due to Unforeseeable Emergency.  A
distribution will be made to a Participant from his or her Account if the
Participant submits a written distribution request to the Administrator and the
Administrator determines that the Participant has experienced an Unforeseeable
Emergency.  The amount of the
distribution may not exceed the lesser of (a) the amount necessary to satisfy
the emergency, as determined by the Administrator, or (b) the sum of the
balances of the Participant’s Accounts as of the date of the distribution, as
the case may be.  Payments made on
account of an Unforeseeable Emergency will not be made to the extent that such
Unforeseeable Emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise, by liquidation of the Participant’s
assets (to the extent that such liquidation would not itself cause severe
financial hardship) or by cessation of deferrals under Section 5.2.  Any distribution pursuant to this
section will be made as soon as administratively practicable after the
Administrator’s determination that the Participant has experienced an
Unforeseeable Emergency and in the form of a lump sum payment that is (a) in
cash from the Cash Account and (b) in Shares from the Share Account (rounded up
to the next whole Share).  Any
distribution pursuant to this section will be made first from the
Participant’s Cash Account and then from the Participant’s Share Account.


 


(b)           Small
Benefits.


 


(i)            Cash
Account.  Each installment
distribution to a Participant who has ceased to be a member of the Board will
be at least $2,500 or such smaller amount that equals the balance of the
Participant’s Cash Account.


 


(ii)           Share
Account.  If the balance of the
Share Account of a Participant who has ceased to be a member of the Board is
fewer than 100 Share Units as of the day of any installment distribution
pursuant to Section 8.1(d)(ii), such remaining balance will be distributed
to the Participant in the form of a lump sum distribution, that will consist of
the number of Shares equal to the number of Share Units credited to the Share
Account as of that date, rounded up to the next whole Share, as soon as
administratively practicable.  Each
installment


 


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distribution to a
Participant who has ceased to be a member of the Board must be at least 100
Share Units or such smaller number of Share Units that remains in the
Participant’s Share Account.


 


(c)           Accelerated
Distribution.  A Participant may, at
any time, elect an immediate distribution of his or her Cash and Share Accounts
in an amount equal to 90 percent of the sum of the balances of the Cash and Share
Accounts as of the date of the distribution, in which case the remaining
balances of such Accounts will be forfeited. 
The distribution will be made in the form of a lump sum payment as soon
as administratively practicable after the Administrator’s receipt of a written
application in form prescribed by the Administrator.  Any distribution pursuant to this section from a
Participant’s Cash Account will be made in cash.  Any distribution pursuant to this section from a
Participant’s Share Account will be made in whole Shares (rounded up to the
next whole Share).  The balance of the
Cash or Share Accounts from which a distribution is made will be reduced to
zero as of the date of the distribution.


 


(d)           Payment
in Event of Incapacity.  If any
individual entitled to receive any payment under the Plan is, in the judgment
of the Administrator, physically, mentally or legally incapable of receiving or
acknowledging receipt of the payment, and no legal representative has been
appointed for the individual, the Administrator may (but is not required to)
cause the payment to be made to any one or more of the following as may be
chosen by the Administrator: the Beneficiary (in the case of the incapacity of
a Participant); the institution maintaining the individual; a custodian for the
individual under the Uniform Transfers to Minors Act of any state; or the
individual’s spouse, child, parent, or other relative by blood or
marriage.  The Administrator is not
required to see to the proper application of any such payment, and the payment
completely discharges all claims under the Plan against the Company, the Plan
and the Trust to the extent of the payment.


 


(e)           Reduction
of Account Balance.  Except in the
case of accelerated distributions pursuant to Section 8.2(c), the balance
of the Cash or Share Account from which a distribution is made will be reduced,
as of the date of the distribution, by the cash amount or number of Shares
distributed, as the case may be.


 


8.3.          Distribution of Cash
and Share Accounts to a Beneficiary Upon Death of a Participant.


 


(a)           Form.  Following a Participant’s death, the
balances of the Participant’s Cash and Share Accounts will be distributed to
the Participant’s Beneficiary in a lump sum payment whether or not payments had
commenced to the Participant in the form of installments prior to his or her
death.  Any distribution from a
Participant’s Cash Account will be made in cash and any distribution from a
Participant’s Share Account will be made in whole Shares, rounded up to the
next whole Share.


 


(b)           Time.  Distribution to a Beneficiary will be made
as soon as administratively practicable after the next Credit Date after the
date on which the Administrator receives notice of the Participant’s death;
provided that if a distribution


 


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from the
Participant’s Share Account would otherwise be made after the record date for a
dividend but before the payment date for such dividend, the distribution will
be delayed and made as soon as administratively practicable after the earnings
credits have been made to the Share Account pursuant to Section 6.2 on the
payment date of the dividend.


 


(c)           Amount.  The amount of the lump sum payment from a
Participant’s Cash Account will be equal to the sum of the balances of the Cash
Account on the date of distribution.  A
lump sum distribution from a Participant’s Share Account will consist of the
number of Shares equal to the number of Share Units credited to the Share
Account, rounded up to the next whole Share.


 


(d)           Reduction
of Account Balance.  The balances of
the Participant’s Cash and Share Accounts will be reduced, as of the date of
the distribution, to zero.


 


(e)           Beneficiary
Designation.


 


(i)            Each
Participant may designate, in form prescribed by the Administrator, one or more
primary Beneficiaries or alternative Beneficiaries to receive all or a
specified part of the balance of his or her Cash or Share Accounts after his or
her death, and the Participant may change or revoke any such designation from
time to time.  No such designation,
change or revocation is effective unless signed by the Participant and received
by the Administrator during the Participant’s lifetime.  If a Participant has a valid designation in
effect under any Prior Deferred Compensation Plan, such Participant’s prior
designation will automatically be deemed to be the Participant’s designation
under this section unless and until a new designation is made and has
become effective.


 


(ii)           Any
portion of a Participant’s Cash and Share Accounts for which the Participant
fails to designate a Beneficiary, revokes a Beneficiary designation without
naming another Beneficiary or designates one or more Beneficiaries, none of
whom survives the Participant or exists at the time in question, will be paid
to the Participant’s surviving spouse or, if the Participant is not survived by
a spouse, to the representative of the Participant’s estate.


 


(iii)          The
automatic Beneficiaries specified above and, unless the designation otherwise
specifies, the Beneficiaries designated by the Participant, become fixed as of
the Participant’s death so that, if a Beneficiary survives the Participant but
dies before the receipt of the payment due such Beneficiary, the payment will
be made to the representative of such Beneficiary’s estate.  Any designation of a Beneficiary by name
that is accompanied by a description of the relationship or only by a statement
of relationship to the Participant is effective only to designate the person or
persons standing in such relationship to the Participant at the Participant’s
death.


 


9.             Terms of Options
Granted Under the Plan.  All
Periodic Options granted under the Plan will be governed by the following terms
and conditions:


 


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9.1.          Non-Statutory Options.  All Periodic Options granted under the Plan
will be non-statutory stock options not entitled to special tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended to date and
as may be amended from time to time (the “Code”).


 


9.2.          Option Exercise Price.  The exercise price per Share purchasable
under a Periodic Option granted under the Plan will be equal to 100% of the
Market Price on the date of grant of the Periodic Option.


 


9.3.          Exercisability of
Options.  Each Periodic Option
granted under the Plan will be immediately exercisable.


 


9.4.          Duration of Options.  Each Periodic Option granted under the Plan
will terminate ten years after its Date of Grant. If the Participant ceases to
serve as a director of the Company for any reason, then the Periodic Option
will remain exercisable until the earlier of the expiration of five years after
the date the Participant ceased to serve as a director of the Company or the
remaining term of the Periodic Option.


 


9.5.          Manner of Option Exercise.  A Periodic Option granted under the Plan may
be exercised by a Participant in whole or in part from time to time, subject to
the conditions contained in the Plan, by delivering in person, by facsimile or
electronic transmission or through the mail notice of exercise to the Company
at its principal executive office in St. Paul, Minnesota, and by paying in full
the total exercise price for the Shares to be purchased in accordance with
Section 9.6.  Such notice will
specify the particular Periodic Option that is being exercised (by the date of
grant and total number of Shares subject to the Periodic Option) and the number
of Shares with respect to which the Periodic Option is being exercised.


 


9.6.          Payment of Exercise
Price.  The total purchase price of
the shares to be purchased upon exercise of a Periodic Option granted under the
Plan will be paid entirely in cash (including check, bank draft or money
order); provided, however, that the Administrator, in its sole discretion and
upon terms and conditions established by the Administrator, may allow such
payments 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, or by a combination of such methods. 
For purposes of such payment, Previously Acquired Shares tendered or
covered by an attestation will be valued at the Market Price on the exercise
date.


 


9.7.          Restrictions on
Transfer.


 


(a)           Except
pursuant to testamentary will or the laws of descent and distribution or as
otherwise expressly permitted by Sections 9.7(b) and (c), no right or interest
of any Participant in a Periodic Option granted under the Plan prior to the
exercise of such Periodic Option will be assignable or transferable, or
subjected to any lien, during the lifetime of the Participant, either
voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise.


 


(b)           A
Participant will be entitled to designate a beneficiary to receive a Periodic
Option granted under the Plan upon such Participant’s death, and in the event
of a Participant’s death, payment of any amounts due under the Plan will be
made to, and


 


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exercise of any
Periodic Options (to the extent permitted pursuant to Section 13) may be
made by, the Participant’s legal representatives, heirs and legatees.


 


(c)           A
Participant who is a director of the Company will be entitled to transfer all
or a portion of a Periodic Option granted under the Plan, other than for value,
to such Participant’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 such Participant’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
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting
interests.  Any permitted transferee
will remain subject to all the terms and conditions applicable to the
Participant prior to the transfer.  A
permitted transfer may be conditioned upon such requirements as the
Administrator 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.


 


9.8.          Rights as a
Stockholder.  No Participant will
have any rights as a stockholder with respect to any Shares covered by a
Periodic Option granted under the Plan until the Participant has exercised such
Periodic Option, paid the exercise price and become the holder of record of
such Shares, and, except as otherwise provided in Section 17.3, no
adjustments will be made for dividends or other distributions or other rights
as to which there is a record date preceding the date the Participant becomes
the holder of record of such Shares.


 


9.9.          Cash Payment for
Options.  If a Change in Control of
the Company occurs, then the Board, without the consent of any Participant
affected thereby, may determine that some or all Participants holding
outstanding Periodic Options granted under the Plan will receive, with respect
to some or all of the Shares subject to such Periodic Options, as of the
effective date of any Change in Control of the Company, cash in an amount equal
to the excess of the Market Price of such Shares immediately prior to the
effective date of such Change in Control of the Company over the exercise price
per share of such Periodic Options.


 


10.           Effects of Actions
Constituting Cause.


 


Notwithstanding
anything in the Plan to the contrary, if a Participant is determined by the
Board, acting in its sole discretion, to have committed any action which would
constitute Cause as defined in Section 15.8, irrespective of whether such
action or the Board’s determination occurs before or after such Participant ceases
to serve as a director of the Company, all rights of the Participant under the
Plan attributable to unexercised Periodic Options granted under Section 8
and any agreements evidencing a Periodic Option then held by the Participant
will terminate and be forfeited without notice of any kind.  Benefits attributable to amounts credited to
a Participant’s Account pursuant to Sections 4 and 5 and any earnings credited
with respect to such amounts pursuant to Sections 6.1 and 6.2 will not be
forfeited. 


 


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11.           Source of Payments:
Nature of Interest.


 


11.1.        Establishment of Trust.  The Company may establish a Trust with an
independent corporate trustee.  The
Trust must be a grantor trust with respect to which the Company is treated as
grantor for purposes of Code Section 677 and must provide that, upon the
insolvency of the Company, Trust assets will be used to satisfy claims of the
Company’s general creditors.  The
Company will pay all taxes of any and all kinds whatsoever payable in respect
of the Trust assets or any transaction with respect to the Trust assets.  The Company may from time to time transfer
to the Trust cash, marketable securities or other property acceptable to the
Trustee in accordance with the terms of the Trust.


 


11.2.        Source of Payments.  The Trustee will make distributions to
Participants and Beneficiaries from the Trust in satisfaction of the Company’s
obligations under the Plan in accordance with the terms of the Trust.  The Company is responsible for paying, from
its general assets, any benefits attributable to a Participant’s Account that
are not paid by the Trust.


 


11.3.        Status of Plan.  Nothing contained in the Plan or Trust is to
be construed as providing for assets to be held for the benefit of any
Participant or any other person or persons to whom benefits are to be paid
pursuant to the terms of the Plan, the Participant’s or other person’s only
interest under the Plan being the right to receive the benefits set forth
herein.  The Trust is established only
for the convenience of the Company and the Participants, and no Participant has
any interest in the assets of the Trust prior to distribution of such assets
pursuant to the Plan.  Until such time
as Shares are distributed to a Participant, Beneficiary of a deceased
Participant or other person, he or she has no rights as a shareholder with
respect to any Share Units credited to a Share Account pursuant to the
Plan.  To the extent that the
Participant or any other person acquires a right to receive benefits under the
Plan or the Trust, such right is no greater than the right of any unsecured
general creditor of the Company.


 


11.4.        Non-Assignability of
Benefits.  The benefits payable
under the Plan and the right to receive future benefits under the Plan may not
be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or
subjected to any charge or legal process.


 


12.           Payment of
Withholding Taxes.


 


12.1.        General Rules.  The Company and the Trustee are entitled to
(a) withhold and deduct from any compensation, deferral and/or benefit payment
pursuant to the Plan and other amounts that may be due and owing to the
Participant or Beneficiary from the Company, or make other arrangements for the
collection of, all legally required amounts necessary to satisfy any and all
federal, state and local withholding and other tax requirements attributable to
the Plan and a Periodic Option, including, without limitation, the grant or
exercise of a Periodic Option, or (b) require the Participant promptly to remit
the amount of such withholding to the Company before taking any action,
including issuing any Shares, with respect to a Periodic Option.


 


12.2.        Special Rules.  The Company or the Trustee, as the case may
be, in its sole discretion and upon terms and conditions established by the
Company or the Trustee, as the case may be, may permit or require a Participant
to satisfy, in whole or in part, any withholding or other tax obligation
described in Section 12.1 by having such amounts withheld from any
compensation, deferral and/or benefit payment pursuant to the Plan, by
remitting such amounts to the Company or the Trustee, by electing to tender, or
attest as to ownership of, Previously


 


11

















 


Acquired Shares, by
delivery of a Broker Exercise Notice or a combination of such methods.  For purposes of satisfying a Participant’s
withholding or other tax obligation, Previously Acquired Shares tendered or
covered by an attestation will be valued at their Market Price.


 


13.           Securities Law and
Other Restrictions.


 


Notwithstanding
any other provision of the Plan or any agreements entered into pursuant to the
Plan to the contrary, neither the Company nor the Trustee is required to issue
or distribute any Shares under the Plan, and a Participant or distributee may
not sell, assign, transfer or otherwise dispose of Shares issued or distributed
pursuant to the Plan, unless (a) there is in effect with respect to such Shares
a registration statement under the Securities Act and any applicable securities
laws of a state or foreign jurisdiction or an exemption from such registration
under the Securities Act and applicable state or foreign securities laws, and
(b) there has been obtained any other consent, approval or permit from any
other regulatory body which the Company, in its sole discretion, deems
necessary or advisable.  The Company or
the Trustee may condition such issuance, distribution, sale or transfer upon
the receipt of any representations or agreements from the parties involved, and
the placement of any legends on certificates representing Shares, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.


 


14.           Amendment and
Termination.


 


14.1.        Amendment.


 


(a)           The
Company reserves the right to amend the Plan at any time to any extent that it
may deem advisable.  To be effective, an
amendment must be stated in a written instrument approved in advance or
ratified by the Board and executed in the name of the Company by its Chief
Executive Officer or President and attested by the Secretary or an Assistant
Secretary.


 


(b)           An
amendment adopted in accordance with Section 14.1(a) is binding on all
interested parties as of the effective date stated in the amendment; provided,
however, that no amendment will have any retroactive effect so as to deprive
any Participant, or the Beneficiary of a deceased Participant, of any benefit
to which he or she is entitled under the terms of the Plan in effect
immediately prior to the effective date of the amendment, determined as if such
Participant had terminated service as a director immediately prior to the
effective date of the amendment.   
Without limiting the foregoing, the amendments to this Plan effective
May 1, 2004: (i) will not affect the rights of Participants to receive a grant
of Elective Options on the Annual Meeting Date in 2004 (or on any earlier
termination of service) with respect to deferrals into their Option Cash
Accounts, and (ii) will not affect the terms of Elective Options so granted or
otherwise outstanding at the time of amendment (including the right to receive
Reload Options upon exercise), subject, 
in each case, to the terms and conditions of the Plan as previously in
effect (including definitions of the foregoing capitalized terms not otherwise
defined in this amended Plan).


 


12

















 


(c)           Without
limiting Section 14.1(a), the Company reserves the right to amend the Plan
to change the method of determining the earnings credited to Participants’
Accounts pursuant to Sections 6.1 and 6.2 and to apply such new method not only
with respect to the portion of the Accounts attributable to credits made after
the date on which such amendment is adopted but also with respect to the
portion of the Accounts attributable to credits made prior to the date on which
such amendment is adopted and regardless of whether such new method would
result in materially lower earnings credits than the old method.


 


(d)           The
provisions of the Plan in effect at the termination of a Participant’s service
as a director will, except as otherwise expressly provided by a subsequent
amendment, continue to apply to such Participant.


 


14.2.        Termination.  The Company reserves the right to terminate
the Plan at any time.  The Plan will
terminate as of the date specified by the Company in a written instrument by
its authorized officers to the Administrator, adopted in the manner of an
amendment.  Upon the termination of the
Plan, any benefits to which Participants have become entitled prior to the
effective date of the termination will continue to be paid in accordance with
the provisions of Section 8.  No
termination, suspension or amendment of the Plan may adversely affect any
outstanding Periodic Option without the consent of the affected Participant;
provided, however, that this sentence will not impair the right of the
Administrator to take whatever action it deems appropriate under Sections 9 and
17.3 of the Plan.  Periodic Options
outstanding upon termination of the Plan may continue to be exercised in
accordance with their terms.


 


15.           Definitions.


 


The definitions set forth in this Section 15
apply unless the context otherwise indicates.


 


15.1.        Account.  “Account” means the bookkeeping account or
accounts maintained with respect to a Participant pursuant to Section 3.


 


15.2.        Administrator.  The “Administrator” of the Plan is the
Compensation Committee of the Board or such other committee or person to whom
administrative duties are delegated pursuant to the provisions of
Section 16.1, as the context requires.


 


15.3.        Annual Meeting Date.  “Annual Meeting Date” means the date on
which the annual meeting of the Company’s stockholders is held.


 


15.4.        Beneficiary.  “Beneficiary” with respect to a Participant
is the person designated or otherwise determined under the provisions of
Section 8.3 as the distributee of benefits payable after the Participant’s
death.  A person designated or otherwise
determined to be a Beneficiary under the terms of the Plan has no interest in
or right under the Plan until the Participant in question has died.  A person will cease to be a Beneficiary on
the day on which all benefits to which he, she or it is entitled under the Plan
have been distributed.


 


15.5.        Board.  “Board” means the board of directors of the
Company.


 


13

















 


15.6.        Broker Exercise Notice.  “Broker Exercise Notice” means a written
notice pursuant to which a Participant, upon exercise of an Option, irrevocably
instructs a broker or dealer to sell a sufficient number of shares or loan a
sufficient amount of money to pay all or a portion of the exercise price of the
Option and/or any related withholding tax obligations and remit such sums to
the Company and directs the Company to deliver stock certificates to be issued
upon such exercise directly to such broker or dealer or their nominee.


 


15.7.        Cash Account.  “Cash Account” means an Account to which
deferred amounts are credited pursuant to Sections 4 and 5.2 and earnings
thereon are credited pursuant to Section 6.1 in U.S. dollars.


 


15.8.        Cause.  “Cause” means dishonesty, fraud,
misrepresentation, embezzlement or deliberate injury or attempted injury, in
each case related to the Company or any subsidiary or any material breach of
any confidentiality or non-compete agreement entered into with the Company or
any subsidiary.


 


15.9.        Change in Control.  “Change in Control” will be deemed to have
occurred if the event set forth in any one of the following paragraphs will
have occurred:


 


(a)           any
“person” as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes,
including pursuant to a tender or exchange offer for shares of Common Stock
pursuant to which purchases are made, the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company’s then outstanding securities, other than in a transaction arranged or
approved by the Board prior to its occurrence; provided, however, that if any
such person will become the beneficial owner, directly or indirectly, of
securities of the Company representing 34% or more of the combined voting power
of the Company’s then outstanding securities, a Change in Control will be
deemed to occur whether or not any or all of such beneficial ownership is
obtained in a transaction arranged or approved by the Board prior to its
occurrence, and other than in a transaction in which such person will have
executed a written agreement with the Company (and approved by the Board) on or
prior to the date on which such person becomes the beneficial owner of 25% or
more of the combined voting power of the Company’s then outstanding securities,
which agreement imposes one or more limitations on the amount of such person’s
beneficial ownership of shares of Common Stock, if, and so long as, such
agreement (or any amendment thereto approved by the Board provided that no such
amendment will cure any prior breach of such agreement or any amendment
thereto) continues to be binding on such person and such person is in
compliance (as determined by the Board in its sole discretion) with the terms
of such agreement (including such amendment); provided, however, that if any
such person will become the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company’s then outstanding securities, a Change in Control will be deemed
to occur whether or not such beneficial ownership was held in compliance with
such a binding


 


14

















 


agreement, and
provided further that the provisions of this subparagraph (a) will not be
applicable to a transaction in which a corporation becomes the owner of all the
Company’s outstanding securities in a transaction which complies with the
provisions of subparagraph (c) of this section (e.g., a reverse triangular
merger); or


 


(b)           during
any 36 consecutive calendar months, individuals who constitute the Board on the
first day of such period or any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest including, but not limited to, a consent solicitation,
relating to the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the Company’s stockholders
was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the first day of
such period, or whose appointment, election or nomination for election was
previously so approved or recommended, shall cease for any reason to constitute
at least a majority thereof; or


 


(c)           there is
consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) more than 50% of the combined
voting power of the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation, and
in which no “person” (as defined under subparagraph (a) above) acquires 50% or
more of the combined voting power of the securities of the Company or such
surviving entity or parent thereof outstanding immediately after such merger or
consolidation; or


 


(d)           the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, more than 50% of the combined voting power
of the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.


 


15.10.      Code.  “Code” means the Internal Revenue Code of 1986,
as amended.  Any reference to a specific
provision of the Code includes a reference to that provision as it may be
amended from time to time and to any successor provision.


 


15.11.      Company.  “Company” means Ecolab Inc.


 


15.12.      Credit Date.  “Credit Date” means the date on which
compensation, deferral and earnings credits to a Cash or Share Account are made
pursuant to Sections 5 and 6, which is usually on the last day of a Credit
Period.


 


15

















 


15.13.      Credit Period.  “Credit Period” means a period of one
calendar quarter, beginning on each January 1, April 1, July 1,
and October 1 and ending on each March 31, June 30,
September 30 and December 31; provided, however, that the first
Credit Period following the May 1, 2004 amendments to this Plan shall commence
as of such date and end on June 30, 2004.


 


15.14.      Disability.  “Disability” means the total disability of a
Qualified Director.  Such total
disability will be deemed to have occurred if the Administrator finds on the
basis of medical evidence satisfactory to it that the Qualified Director is
prevented from engaging in any suitable gainful employment or occupation and
that such disability will be permanent and continuous during the remainder of
his or her life.


 


15.15.      Election Period.  “Election Period” means a period of one
calendar year, commencing on each January 1 and ending on each
December 31; provided, however, that the first Election Period following
the May 1, 2004 amendments to this Plan shall commence as of such date and end
on December 31, 2004.


 


15.16.      Market Price.  “Market Price” means the average of the high
and low sale prices of a Share during the regular trading session on a
specified date or, if Shares were not then traded, during the regular trading
session on the most recent prior date when Shares were traded, all as quoted in
The Wall Street Journal reports of New York Stock Exchange - Composite
Transactions.


 


15.17.      Other Director
Compensation.  “Other Director
Compensation” means all cash amounts payable by the Company to a Qualified
Director for his or her services to the Company as a Qualified Director, (a)
including, without limitation, the Retainer and fees specifically paid for
attending regular or special meetings of the Board and Board committees or for
acting as the chair of a committee, but (b) excluding expense allowances or
reimbursements and insurance premiums.


 


15.18.      Participant.  “Participant” is a current or former
Qualified Director who has been granted a Periodic Option under the Plan or
whose Account amounts have been credited pursuant to Section 4, 5 or 6 and
who has not ceased to be a Participant pursuant to Section 2.4.


 


15.19.      Periodic Option.  “Periodic Option” means an option to
purchase Shares granted to Qualified Directors from time to time pursuant to
Section 7.


 


15.20.      Plan.  “Plan” means the Ecolab Inc. 2001
Non-Employee Director Stock Option and Deferred Compensation Plan, as from time
to time amended or restated.


 


15.21.      Plan Rules.  “Plan Rules” are rules, policies, practices
or procedures adopted by the Administrator pursuant to Section 16.2.


 


15.22.      Previously Acquired
Shares.  “Previously Acquired
Shares” means Shares that are already owned by the Participant 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 Administrator.


 


16

















 


15.23.      Prime Rate.  “Prime Rate” means the Bloomberg Prime Rate
Composite (“Prime Rate by Country US—BB Comp”).


 


15.24.      Prior Deferred
Compensation Plans.  “Prior Deferred
Compensation Plans” means the Company’s 1997 Non-Employee Director Deferred
Compensation Plan, as amended, and the Company’s Deferred Compensation Plan for
Non-Employee Directors, as amended.


 


15.25.      Qualified Director.  “Qualified Director” means an individual who
is a member of the Board and who is not an employee of the Company or any of
its subsidiaries.


 


15.26.      Retainer.  “Retainer” means the amount payable by the
Company to a Qualified Director for holding office as a Qualified Director,
exclusive of fees specifically paid for attending regular or special meetings
of the Board and Board committees, fees for acting as chair of the Board or a Board
committee, expense allowances or reimbursements, insurance premiums, charitable
gift matching contributions and any other payments that are determined by
reference to factors other than holding office as a Qualified Director.


 


15.27.      Securities Act.  “Securities Act” means the Securities Act of
1933, as amended.  Any reference to a
specific provision of the Securities Act includes a reference to that provision
as it may be amended from time to time and to any successor provision.


 


15.28.      Share Account.  “Share Account” means an Account to which
credits are made pursuant to Section 5.1, deferred amounts are credited
pursuant to Sections 4 and 5.2 and earnings are credited pursuant to
Section 6.2 in Share Units.


 


15.29.      Share Unit Compensation.  “Share Unit Compensation” means the
compensation paid to Qualified Directors in the form of credits to their Share
Accounts pursuant to Section 5.1.


 


15.30.      Share Units.  “Share Units” means a unit credited to a
Participant’s Share Account pursuant to Sections 4, 5.1, 5.2 and 6.2, each of
which represents the economic equivalent of one Share.  A Participant will not have any rights as a
stockholder with respect to Share Units until the Participant is distributed
Shares pursuant to Section 8 of the Plan.


 


15.31.      Shares.  “Shares” means shares of common stock of the
Company, $1.00 par value, or such other class or kind of shares or other
securities as may be applicable pursuant to Section 17.3.


 


15.32.      Trust.  “Trust” means any trust or trusts
established by the Company pursuant to Section 11.1 of the Plan.


 


15.33.      Trustee.  “Trustee” means the independent corporate
trustee or trustees that at the relevant time has or have been appointed to act
as Trustee of the Trust.


 


15.34.      Unforeseeable Emergency.  “Unforeseeable Emergency” means an
unanticipated emergency that is caused by an event beyond the Participant’s
control resulting in a severe financial hardship that cannot be satisfied
through other means.  The existence of
an unforeseeable emergency will be determined by the Administrator.


 


17

















 


16.           Administration.


 


16.1.        Administrator.  The general administration of the Plan and
the duty to carry out its provisions will be vested in the Compensation
Committee of the Board or such other Board committee as may be subsequently
designated as Administrator by the Board. 
Such committee may delegate such duty or any portion thereof to a named
person and may from time to time revoke such authority and delegate it to
another person.


 


16.2.        Plan Rules and
Regulations.  The Administrator has
the discretionary power and authority to make such Plan Rules as the
Administrator determines to be consistent with the terms, and advisable in
connection with the administration, of the Plan and to modify or rescind any
such Plan Rules.  In addition, the
Administrator has the discretionary power and authority to limit or modify
application of Plan provisions and Plan Rules as the Administrator determines
to be advisable to facilitate tax deferral treatment (or accommodate the
unavailability thereof) for Options granted to, or amounts credited with
respect to, non-U.S. resident Participants.


 


16.3.        Administrator’s
Discretion.  The Administrator has
the sole discretionary power and authority to make all determinations necessary
for administration of the Plan, except those determinations that the Plan
requires others to make, and to construe, interpret, apply and enforce the
provisions of the Plan and Plan Rules whenever necessary to carry out its intent
and purpose and to facilitate its administration, including, without
limitation, the discretionary power and authority to remedy ambiguities,
inconsistencies, omissions and erroneous benefit calculations.  In the exercise of its discretionary power
and authority, the Administrator will treat all similarly situated persons
uniformly.


 


16.4.        Specialist’s Assistance.  The Administrator may retain such actuarial,
accounting, legal, clerical and other services as may reasonably be required in
the administration of the Plan, and may pay reasonable compensation for such
services.  All costs of administering
the Plan will be paid by the Company.


 


16.5.        Indemnification.  The Company agrees to indemnify and hold
harmless, to the extent permitted by law, each director, officer and employee
of the Company and any subsidiary or affiliate of the Company against any and
all liabilities, losses, costs and expenses (including legal fees) of every
kind and nature that may be imposed on, incurred by, or asserted against such person
at any time by reason of such person’s services in connection with the Plan,
but only if such person did not act dishonestly or in bad faith or in willful
violation of the law or regulations under which such liability, loss, cost or
expense arises.  The Company has the
right, but not the obligation, to select counsel and control the defense and
settlement of any action for which a person may be entitled to indemnification
under this provision.


 


17.           Shares Available for
Issuance.


 


17.1.        Maximum Number of
Shares Available.  Subject to
adjustment as provided in Section 17.2, the maximum number of Shares that
will be available for issuance or distribution under the Plan will be 500,000
Shares, plus any Shares which, as of the 2001 Annual Meeting Date, were reserved
for issuance under the 1997 Non-Employee Director Deferred Compensation Plan,
as amended, and the Company’s 1995 Non-Employee Director Stock


 


18

















 


Option Plan and which
were not thereafter issued or are not hereafter issued, or which have been
issued but are subsequently forfeited and which would otherwise have been
available for further issuance under such plans.  The Shares available for issuance or distribution under the Plan
may, at the election of the Administrator, be either treasury shares or shares
authorized but unissued, and, if treasury shares are used, all references in
the Plan to the issuance or distribution of Shares will, for corporate law
purposes, be deemed to mean the transfer of shares from treasury.


 


17.2.        Accounting.  Shares that are issued or distributed under
the Plan or that are subject to outstanding Periodic Options granted under the
Plan or Share Units will be applied to reduce the maximum number of Shares
remaining available for issuance or distribution under the Plan.  Any Shares that are subject to a Periodic
Option granted under the Plan that lapses, expires, is forfeited or for any
reason is terminated unexercised and any Shares that are subject to Share Units
in a Share Account that are forfeited pursuant to Section 8.2(c) will
automatically again become available for issuance or distribution under the
Plan.  To the extent that the exercise
price of any Periodic Option granted under the Plan and/or associated tax
withholding obligations are paid by tender or attestation as to ownership of
Previously Acquired Shares, or to the extent that such tax withholding
obligations are satisfied by withholding of shares otherwise issuable upon
exercise of the Periodic Option, only the number of Shares issued net of the
number of Shares tendered, attested to or withheld will be applied to reduce
the maximum number of Shares remaining available for issuance under the Plan.


 


17.3.        Adjustment to Shares,
Share Units and Options.  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 Company’s corporate structure or the Shares, the
Administrator (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) will make
appropriate adjustment (which determination will be conclusive) as to the
number and kind of securities or other property (including cash) available for
issuance or distribution under the Plan and as to the number and kind of Share
Units credited to Share Accounts and the number and kind of securities as to
which Periodic Options are to be granted and, in order to prevent dilution or
enlargement of the rights of Participants holding Periodic Options, the number,
kind and exercise price of securities subject to outstanding Periodic Options.


 


18.           Miscellaneous.


 


18.1.        Other Benefits.  Neither amounts deferred nor amounts paid
pursuant to the Plan constitute salary or compensation for the purpose of
computing benefits under any other benefit plan, practice, policy or procedure
of the Company unless otherwise expressly provided thereunder.


 


18.2.        No Warranties Regarding
Treatment.  The Company makes no
warranties regarding the tax treatment to any person of any deferrals or
payments made pursuant to the Plan, and each Participant will hold the
Administrator and the Company and their officers, directors, employees, agents
and advisors harmless from any liability resulting from any tax position taken
in good faith in connection with the Plan.


 


19

















 


18.3.        No Rights to Continued
Service Created.  Neither the
establishment of or participation in the Plan gives any individual the right to
continued service on the Board or limits the right of the Company or its
stockholders to terminate or modify the terms and conditions of service of such
individual on the Board or otherwise deal with any individual without regard to
the effect that such action might have on him or her with respect to the Plan.


 


18.4.        Successors.  Except as otherwise expressly provided in
the Plan, all obligations of the Company under the Plan are binding on any
successor to the Company whether the successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise of all of the business
and/or assets of the Company.


 


18.5.        Cross Reference.  References in the Plan to a particular
section refer to that section within the Plan, references within a
section of the Plan to a particular subsection refer to that
subsection within the same section, and references within a
section or subsection to a particular clause refer to that clause
within the same section or subsection, as the case may be.


 


18.6.        Number and Gender.  Wherever appropriate, the singular may be
read as the plural, the plural may be read as the singular, and one gender may
be read as the other gender.


 


18.7.        Governing Law.  Except in connection with matters of
corporate governance and authority (which shall be governed by the laws of the
Company’s jurisdiction of incorporation), questions pertaining to the
construction, validity, effect and enforcement of the Plan will be determined
in accordance with the internal, substantive laws of the State of Minnesota
without regard to the conflict of laws rules of the State of Minnesota or any
other jurisdiction.


 


18.8.        Headings.  The headings of sections are included solely
for convenience of reference; if there exists any conflict between such
headings and the text of the Plan, the text will control.


 


20