Document:

EXHIBIT
(4)C

 

ECOLAB INC.

 

and

 

COMPUTERSHARE INVESTOR
SERVICES, LLC

Rights Agent

 

 

Rights Agreement

 

 

Dated as of February 24,
2006

 

 

TABLE OF CONTENTS 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section
  1.

  	
  Certain
  Definitions.

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section
  2.

  	
  Appointment
  of Rights Agent.

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section
  3.

  	
  Issuance
  of Rights Certificates.

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section
  4.

  	
  Form
  of Rights Certificates.

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section
  5.

  	
  Countersignature
  and Registration.

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section
  6.

  	
  Transfer,
  Split Up, Combination and Exchange of Rights Certificates; Mutilated,
  Destroyed, Lost or Stolen Rights Certificates.

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section
  7.

  	
  Exercise
  of Rights; Purchase Price; Expiration Date of Rights.

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section
  8.

  	
  Cancellation
  and Destruction of Rights Certificates.

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section
  9.

  	
  Reservation
  and Availability of Capital Stock.

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section
  10.

  	
  Preferred
  Stock Record Date.

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section
  11.

  	
  Adjustment
  of Purchase Price, Number and Kind of Shares or Number of Rights.

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section
  12.

  	
  Certificate
  of Adjusted Purchase Price or Number of Shares.

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section
  13.

  	
  Consolidation,
  Merger or Sale or Transfer of Assets, Cash Flow or Earning Power.

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section
  14.

  	
  Fractional
  Rights and Fractional Shares.

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section
  15.

  	
  Rights
  of Action.

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section
  16.

  	
  Agreement
  of Rights Holders.

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section
  17.

  	
  Rights
  Certificate Holder Not Deemed a Stockholder.

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section
  18.

  	
  Concerning
  the Rights Agent.

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section
  19.

  	
  Merger
  or Consolidation or Change of Name of Rights Agent.

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section
  20.

  	
  Duties
  of Rights Agent.

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section
  21.

  	
  Change
  of Rights Agent.

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section
  22.

  	
  Issuance
  of New Rights Certificates.

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section
  23.

  	
  Redemption
  and Termination.

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section
  24.

  	
  Exchange.

  	
  33

  

 

i

 

	
  Section
  25.

  	
  Notice
  of Certain Events.

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section
  26.

  	
  Notices.

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section
  27.

  	
  Supplements
  and Amendments.

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section
  28.

  	
  Successors.

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section
  29.

  	
  Determinations
  and Actions by the Board of Directors, etc.

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section
  30.

  	
  Benefits
  of this Agreement.

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section
  31.

  	
  Severability.

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section
  32.

  	
  Governing
  Law.

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section
  33.

  	
  Counterparts.

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section
  34.

  	
  Descriptive
  Headings.

  	
  37

  

 

ii

 

EXHIBITS

 

Exhibit A –
Form of Certificate of Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock

 

Exhibit B –
Form of Rights Certificate

 

iii

 

RIGHTS AGREEMENT 

 

RIGHTS
AGREEMENT, dated as of February 24, 2006 (the “Agreement”), between Ecolab
Inc., a Delaware corporation (the “Company”), and Computershare Investor
Services, LLC, a Delaware limited liability company (the “Rights Agent”).

 

W I  T
N  E  S  S  E  T  H

 

WHEREAS,
in February 1996 the Board of Directors of the Company (the “Board”) approved
and adopted a Rights Agreement (the “1996 Agreement”) pursuant to which
preferred stock purchase rights were distributed to the stockholders of the
Company;

 

WHEREAS, the
rights issued pursuant to the 1996 Agreement will expire at the close of
business on March 11, 2006; and

 

WHEREAS, on
February 24, 2006 (the “Rights Dividend Declaration Date”), the Board
determined to extend the protections provided by the 1996 Agreement by
authorizing and  declaring a dividend
distribution of one new Right for each share of common stock, par value $1.00
per share, of the Company (the “Common Stock”) outstanding at the close of
business on March 11, 2006 (the “Record Date”), to replace the rights
previously issued pursuant to the 1996 Agreement, and the Board has authorized
the issuance of one Right (as such number may hereinafter be adjusted pursuant
to the provisions of Section 11(p) hereof) for each share of Common Stock
issued between the Record Date (whether originally issued or delivered from the
Company’s treasury) and the Distribution Date, each Right initially
representing the right to purchase one one-thousandth of a share of Series A
Junior Participating Preferred Stock of the Company (the “Preferred Stock”)
having the rights, powers and preferences set forth in the form of Certificate
of Designation, Preferences and Rights attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth (the “Rights”).

 

NOW,
THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:

 

Section 1.               Certain Definitions. For
purposes of this Agreement, the following terms have the meanings indicated:

 

(a)           “1996
Agreement” shall have the meaning set forth in the preamble hereof.

 

(b)           “Acquiring
Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of fifteen percent
(15%) or more of the shares of Common Stock then outstanding, but shall not
include: (i) the Company; (ii) any Subsidiary of the Company; (iii) any
employee benefit plan of the Company, or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan; (iv) Henkel Kommanditgesellschaft auf
Aktien (“Henkel”), so long as the Second Amended and Restated Stockholder’s
Agreement, dated as of November 30, 2001,

 

 

between
the Company and Henkel (including any amendment thereto approved by the Company’s
Board) (the “Stockholder’s Agreement”) continues to be binding on Henkel and
Henkel is in compliance (as determined by the Company’s Board in its
discretion) with the terms of the Stockholder’s Agreement; provided, however,
that no amendment of the Stockholder’s Agreement shall cure any prior breach of
such agreement or any amendment thereto; or (v) any such Person who has
reported or is required to report such ownership (but less than 25%) on
Schedule 13G under the Exchange Act (or any comparable or successor report) or
on Schedule 13D under the Exchange Act (or any comparable or successor report)
which Schedule 13D does not state any intention to or reserve the right to
control or influence the management or policies of the Company or engage in any
of the actions specified in Item 4 of such Schedule (other than the disposition
of the Common Stock) and, within ten (10) Business Days of being requested by
the Company to advise it regarding the same, certifies to the Company that such
Person acquired shares of Common Stock in excess of 14.9% inadvertently or
without knowledge of the terms of the Rights and who, together with all
Affiliates and Associates, thereafter does not acquire additional shares of
Common Stock while the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding; provided, however, that if the Person
requested to so certify fails to do so within ten (10) Business Days, then such
Person shall become an Acquiring Person immediately after such ten (10)
Business Day period. Notwithstanding the foregoing, no Person shall become an “Acquiring
Person” solely as the result of an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by a Person to fifteen
percent (15%) or more of the Common Stock then outstanding as determined above;
provided, however, that if a Person becomes the Beneficial Owner
of fifteen percent (15%) or more of the Common Stock of the Company then
outstanding (as determined above) solely by reason of purchases of Common Stock
by the Company and shall, after such purchases by the Company, become the
Beneficial Owner of any additional shares of Common Stock by any means
whatsoever, then such Person shall be deemed to be an “Acquiring Person.”

 

(c)           “Act”
shall mean the Securities Act of 1933, as amended and in effect on the date
hereof.

 

(d)           “Adjustment
Shares” shall have the meaning set forth in Section 11(a)(ii) hereof.

 

(e)           “Adverse
Person” shall mean any Person declared to be an Adverse Person by the Board
upon determination that the criteria set forth in Section 11(a)(ii)(B) apply to
such Person; provided, however, that the Board shall not declare
(i) Henkel or any of its Affiliates to be an Adverse Person, and (ii) the Board
shall not declare any Person who is the Beneficial Owner of ten percent (10%)
or more of the outstanding Common Stock of the Company to be an Adverse Person
if such Person has reported or is required to report such ownership on Schedule
13G under the Exchange Act (or any comparable or successor report) or on
Schedule 13D under the Exchange Act (or any comparable or successor report)
which Schedule 13D does not state any intention to or reserve the right to
control or influence the management or policies of the Company or engage in any
of the actions specified in Item 4 of such Schedule (other than the disposition
of the Common

 

2

 

Stock)
so long as such Person neither reports nor is required to report such ownership
other than as described in this clause (ii).

 

(f)            “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

 

(g)           “Agreement”
shall have the meaning set forth in the introduction hereof.

 

(h)           A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to “beneficially
own,” any securities:

 

(i)            which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the “Beneficial Owner” of, or to “beneficially own:” (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; (B) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event (as hereinafter
defined); or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person or
any of such Person’s Affiliates or Associates prior to the Distribution Date
(as hereinafter defined) or pursuant to Section 3(a) or Section 22 hereof (the “Original
Rights”) or pursuant to Section 11(i) hereof in connection with an adjustment
made with respect to any Original Rights;

 

(ii)           which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership”
of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that
a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially
own,” any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act; and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(iii)          which
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person’s
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (h))

 

3

 

or
disposing of any voting securities of the Company;

 

provided, however, that nothing in
this paragraph (h) shall cause a Person engaged in business as an underwriter
of securities to be the “Beneficial Owner” of, or to “beneficially own,” any
securities acquired through such person’s participation in good faith in a firm
commitment underwriting until the expiration of forty (40) days after the date
of such acquisition.

 

(i)            “Board”
shall have the meaning set forth in the preamble hereof.

 

(j)            “Business
Day” shall mean any day other than a Saturday, Sunday or a day on which the New
York Stock Exchange is closed.

 

(k)           “By-Laws”
shall mean the By-Laws of the Company, as amended through February 18, 1999, and
as further amended from time to time.

 

(l)            “Close
of business” on any given date shall mean 5:00 P.M., New York City time, on
such date; provided, however, that if such date is not a Business
Day, it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.

 

(m)          “Common
Stock” shall mean the common stock, par value $1.00 per share, of the Company,
except that “Common Stock” when used with reference to any Person other than
the Company shall mean the capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.

 

(n)           “Common
Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii)
hereof.

 

(o)           “Company”
shall have the meaning set forth in the introduction hereof.

 

(p)           “Current
Market Price” shall have the meaning set forth in Section 11(d)(i) hereof.

 

(q)           “Current
Value” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(r)            “Distribution
Date” shall have the meaning set forth in Section 3(a) hereof.

 

(s)           “Equivalent
Preferred Stock” shall have the meaning set forth in Section 11(b) hereof.

 

(t)            “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended and in effect
on the date hereof.

 

(u)           “Exchange
Ratio” shall have the meaning set forth in Section 24(a)

 

4

 

hereof.

 

(v)           “Expiration
Date” shall have the meaning set forth in Section 7(a) hereof.

 

(w)          “Final
Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

(x)            “Henkel”
shall have the meaning set forth in Section 1(b)(iv) hereof.

 

(y)           “NASDAQ”
shall have the meaning set forth in Section 11(d)(i) hereof.

 

(z)            “Original
Rights” shall have the meaning set forth in Section 1(h)(i) hereof.

 

(aa)         “Person”
shall mean any individual, firm, corporation, partnership or other entity.

 

(bb)         “Preferred
Stock” shall mean shares of Series A Junior Participating Preferred Stock,
without par value, of the Company, and, to the extent that there are not a
sufficient number of shares of Series A Junior Participating Preferred Stock
authorized to permit the full exercise of the Rights, any other series of
preferred stock of the Company designated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating Preferred Stock.

 

(cc)         “Principal
Party” shall have the meaning set forth in Section 13(b) hereof.

 

(dd)         “Purchase
Price” shall have the meaning set forth in Section 4(a) hereof.

 

(ee)         “Qualifying
Offer” shall have the meaning set forth in Section 11(a)(ii)(A) hereof.

 

(ff)           “Record
Date” shall have the meaning set forth in the preamble hereof.

 

(gg)         “Restated
Certificate of Incorporation” shall mean the Restated Certificate of
Incorporation of the Company, dated as of May 9, 2003, as amended from time to
time.

 

(hh)         “Rights”
shall have the meaning set forth in the preamble hereof.

 

(ii)           “Rights
Agent” shall have the meaning set forth in the introduction hereof.

 

(jj)           “Rights
Certificate” shall have the meaning set forth in Section 3(a)

 

5

 

hereof.

 

(kk)         “Rights
Dividend Declaration Date” shall have the meaning set forth in the preamble
hereof.

 

(ll)           “Section
11(a)(ii) Event” shall mean any event described in Section 11(a)(ii) hereof.

 

(mm)       “Section
13 Event” shall mean any event described in clauses (x), (y) or (z) of Section
13(a) hereof.

 

(nn)         “Spread”
shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(oo)         “Stock
Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed
or amended pursuant to Section 13(d) under the Exchange Act) by the Company or
an Acquiring Person that an Acquiring Person has become such, other than
pursuant to a Qualifying Offer.

 

(pp)         “Stockholder’s
Agreement” shall have the meaning set forth in Section 1(b)(iv) hereof.

 

(qq)         “Subsidiary”
shall mean, with reference to any Person, any corporation of which an amount of
voting securities sufficient to elect at least a majority of the directors of
such corporation is beneficially owned, directly or indirectly, by such Person,
or otherwise controlled by such Person.

 

(rr)           “Substitution
Period” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(ss)         “Trading
Day” shall have the meaning set forth in Section 11(d)(i) hereof.

 

(tt)           “Triggering
Event” shall mean any Section 11(a)(ii) Event or any Section 13 Event.

 

Section 2.               Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3 hereof, shall
prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-rights agents as it may deem necessary or desirable.

 

Section 3.               Issuance of Rights
Certificates.

 

(a)           Until the earliest of: (i) the close
of business on the tenth (10th) Business Day after the Stock
Acquisition Date (or, if the tenth (10th)Business Day after the

 

6

 

Stock Acquisition Date
occurs before the Record Date, the close of business on the Record Date); (ii)
the close of business on the tenth (10th) Business Day (or such
later date as the Board shall determine) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would become an Acquiring Person, in either instance other than pursuant to a
Qualifying Offer; or (iii) the close of business on the tenth (10th)
Business Day after the Board determines, pursuant to the criteria set forth in
Section 11(a)(ii)(B) hereof, that a Person is an Adverse Person (the earliest
of (i), (ii) and (iii) being herein referred to as the “Distribution Date”),
(x) the Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for the Common Stock registered in the
names of the holders of the Common Stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company). As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, one or
more rights certificates, in substantially the form of Exhibit B hereto
(the “Rights Certificates”), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.

 

(b)           With
respect to certificates for the Common Stock outstanding as of the Record Date,
or issued subsequent to the Record Date, unless and until the Distribution Date
shall occur, the Rights will be evidenced by such certificates for the Common
Stock and the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any shares of Common
Stock in respect of which Rights have been issued shall also constitute the transfer
of the Rights associated with such shares of Common Stock.

 

(c)           Rights
shall be issued in respect of all shares of Common Stock which are issued
(whether originally issued or delivered from the Company’s treasury) after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date or in certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights, and shall bear the following
legend if such certificates are issued after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date:

 

7

 

This certificate also
evidences and entitles the holder hereof to certain Rights as set forth in the
Rights Agreement between Ecolab Inc. (the “Company”) and Computershare Investor
Services, LLC (the “Rights Agent”), dated as of February 24, 2006, as amended
from time to time (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company will mail to
the holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring Person or
an Adverse Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.

 

With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date, or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by such certificates shall
be evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.

 

Section 4.               Form of Rights Certificates.

 

(a)           The
Rights Certificates (and the forms of election to purchase and of assignment to
be printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be
set forth therein at the price set forth therein (such exercise price per one
one-thousandth of a share, the “Purchase Price”), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.

 

(b)           Any
Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
Adverse Person or any Associate or Affiliate of an Acquiring Person or Adverse
Person, (ii) a transferee of an Acquiring Person or Adverse Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person or Adverse Person becomes such, or (iii) a transferee of an Acquiring
Person or Adverse Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the

 

8

 

Acquiring
Person or Adverse Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person or Adverse Person to holders of equity interests in such Acquiring
Person or Adverse Person or to any Person with whom such Acquiring Person or
Adverse Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a transfer which the Board has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:

 

The Rights
represented by this Rights Certificate are or were beneficially owned by a
Person who was or became an Acquiring Person or Adverse Person or an Affiliate
or Associate of an Acquiring Person or Adverse Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement.

 

Section 5.               Countersignature and
Registration.

 

(a)           The
Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company’s seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

 

(b)           Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the appropriate place for surrender
of Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.

 

9

 

Section 6.               Transfer, Split Up, Combination
and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.

 

(a)           Subject
to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any
time after the close of business on the Distribution Date, and at or prior to
the close of business on the Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing Rights that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up, combined
or exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one one-thousandths of a share
of Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitle such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e), Section 14 and
Section 24 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.

 

(b)           Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

 

Section 7.               Exercise of Rights; Purchase
Price; Expiration Date of Rights.

 

(a)           Subject
to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-thousandths of a share (or other securities, cash or other assets, as the
case may be) as

 

10

 

to
which such surrendered Rights are then exercisable, at or prior to the earliest
of (i) the close of business on March 10, 2016 (the “Final Expiration Date”),
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof, or (iii) the time at which such Rights are exchanged pursuant to
Section 24 hereof (the earliest of (i), (ii), and (iii) being herein referred
to as the “Expiration Date”).

 

(b)           The
Purchase Price for each one one-thousandth of a share of Preferred Stock
pursuant to the exercise of a Right shall initially be $[   ].00,
and shall be subject to adjustment from time to time as provided in Sections 11
and 13(a) hereof and shall be payable in accordance with paragraph (c) below.

 

(c)           Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per one
one-thousandth of a share of Preferred Stock (or other shares, securities, cash
or other assets, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the shares of Preferred Stock (or make available, if the Rights Agent
is the transfer agent for such shares) certificates for the total number of one
one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request; (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof; (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder; and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made in cash or by certified
bank check or bank draft payable to the order of the Company. In the event that
the Company is obligated to issue other securities (including Common Stock) of
the Company, pay cash and/or distribute other property pursuant to Section
11(a) hereof, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any exercise
of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock would be issued.

 

(d)         In
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder of such
Rights Certificate,

 

11

 

registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14 hereof.

 

(e)         Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
Person or Adverse Person or an Associate or Affiliate of an Acquiring Person or
Adverse Person, (ii) a transferee of an Acquiring Person or Adverse Person (or
of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person or Adverse Person becomes such, or (iii) a transferee of an
Acquiring Person or Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person or
Adverse Person to holders of equity interests in such Acquiring Person or
Adverse Person or to any Person with whom the Acquiring Person or Adverse
Person has any continuing agreement, arrangement or understanding regarding the
transferred Rights, or (B) a transfer which the Board has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person, Adverse Person or any of their respective Affiliates, Associates or
transferees hereunder.

 

(f)          Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.

 

Section 8.               Cancellation and Destruction
of Rights Certificates. All Rights Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.

 

12

 

Section 9.               Reservation and Availability
of Capital Stock.

 

(a)           The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its
authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.

 

(b)           So
long as the shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

 

(c)           The
Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Section 11(a)(ii)
Event on which the consideration to be delivered by the Company upon exercise
of the Rights has been determined in accordance with Section 11(a)(iii) hereof,
a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to ensure compliance
with, the securities or “blue sky” laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily suspend, for
a period of time not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or a registration statement shall not have been
declared effective.

 

(d)           The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all one one-thousandths of a share of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other

 

13

 

securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.

 

(e)           The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificates at the time of
surrender) or until it has been established to the Company’s satisfaction that
no such tax is due.

 

Section 10.             Preferred Stock Record Date.
Each person in whose name any certificate for a number of one one-thousandths
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such fractional shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.

 

Section 11.             Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.

 

(a)           (i)     In the event the Company shall at any time
after the date of this

 

14

 

Agreement
(A) declare a dividend on the Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of Preferred Stock or capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and
kind of shares of Preferred Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open, such holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an event occurs
which would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.

 

(ii)           In
the event that:

 

(A)  any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person, unless the event causing such Person to become an
Acquiring Person is (1) a transaction set forth in Section 13(a) hereof; (2) an
acquisition of shares of Common Stock pursuant to a tender offer or an exchange
offer for all outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board who are not
officers of the Company and who are not representatives, nominees, Affiliates
or Associates of an Acquiring Person, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to stockholders
(taking into account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value), and (b) otherwise in the best interests of the Company and its
stockholders (a “Qualifying Offer”); or (3) an acquisition of shares of Common
Stock by Henkel or its Affiliates, so long as the Stockholder’s Agreement
continues to be binding on Henkel and Henkel is in compliance (as determined by
the Company’s Board in its discretion) with the terms of the Stockholder’s
Agreement; provided, however, that no amendment of the
Stockholder’s Agreement shall cure any prior breach of such agreement or any
amendment thereto; or

 

(B)   the
Board shall declare any Person to be an

 

15

 

Adverse
Person, upon a determination that such Person, alone or together with its
Affiliates and Associates, has, at any time after this Agreement has been filed
with the Securities and Exchange Commission as an exhibit to a filing under the
Exchange Act, become the Beneficial Owner of a number of shares of Common Stock
which the Board of the Company determines to be substantial (which number of
shares shall in no event represent less than 10% of the outstanding shares of
Common Stock) and a determination by the Board, after reasonable inquiry and
investigation, including consultation with such persons as such directors shall
deem appropriate and consideration of such factors as are permitted by
applicable law, that (a) such Beneficial Ownership by such Person is intended
to cause the Company to repurchase the shares of Common Stock beneficially
owned by such Person or to cause pressure on the Company to take action or
enter into a transaction or series of transactions intended to provide such
Person with short-term financial gain under circumstances where the Board
determines that the best long-term interests of the Company would not be served
by taking such action or entering into such transaction or series of
transactions at the time; or (b) such Beneficial Ownership is causing or
reasonably likely to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers or impairment of the
Company’s ability to maintain its competitive position) on the business or
prospects of the Company;

 

then, promptly following the occurrence of any event described in
Section 11(a)(ii)(A) or (B) hereof, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of a
number of one one-thousandths of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following such first occurrence, shall thereafter
be referred to as the Purchase Price for each Right and for all purposes of
this Agreement) by 50% of the Current Market Price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the date of such first
occurrence (such number of shares, the “Adjustment Shares”).

 

(iii)  
In the event that the number of shares of Common Stock which are
authorized by the Company’s Restated Certificate of Incorporation, but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights, is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall (A) determine the value of the Adjustment Shares issuable upon
the exercise of a Right (the “Current Value”), and (B) with respect to each
Right (subject to Section 7(e) hereof), make adequate provision to substitute
for the Adjustment Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock, such as the
Preferred Stock, which the Board has deemed to have essentially the same value
or economic rights as shares of Common Stock

 

16

 

(such
shares of preferred stock being referred to as “Common Stock Equivalents”)),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value (less the
amount of any reduction in the Purchase Price), where such aggregate value has
been determined by the Board based upon the advice of a nationally recognized
investment banking firm selected by the Board; provided, however,
that if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the later of (x)
the first occurrence of a Section 11(a)(ii) Event, and (y) the date on which
the Company’s right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. For purposes of
the preceding sentence, the term “Spread” shall mean the excess of (i) the
Current Value over (ii) the Purchase Price. If the Board determines in good
faith that it is likely that sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of the Rights, the thirty (30)
day period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order
that the Company may seek shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, is
herein called the “Substitution Period”). To the extent that the Company
determines that action is to be taken pursuant to the first and/or third
sentences of this Section 11(a)(iii), the Company (1) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all outstanding
Rights, and (2) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek such shareholder approval for such
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of each Adjustment Share shall be the Current Market Price per share of
the Common Stock on the Section 11(a)(ii) Trigger Date and the per share or per
unit value of any Common Stock Equivalent shall be deemed to equal the Current
Market Price per share of the Common Stock on such date.

 

(b)           In
case the Company shall fix a record date for the issuance of rights (other than
the Rights), options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Preferred Stock (or shares having the
same rights, privileges and preferences as the shares of Preferred Stock (“Equivalent
Preferred Stock”)) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of 

 

17

 

Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery of consideration part
or all of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. Shares of Preferred Stock owned
by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.

 

(c)           In
case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation), of
cash (other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or evidences of indebtedness, or of subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on
such record date, less the fair market value (as determined in good faith by
the Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the Rights)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of
Preferred Stock, and the denominator of which shall be such Current Market
Price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock. Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.

 

(d)           (i)    For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii) hereof,
the “Current Market Price” per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof,
the Current Market Price per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such Common Stock
for the ten (10) consecutive Trading Days immediately following such date; provided,

 

18

 

however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, combination or reclassification of such Common
Stock, and the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification shall not
have occurred prior to the commencement of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, then, and in each such
case, the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”) or such other
system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Stock selected by the Board. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such date
as determined in good faith by the Board shall be used. The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, Current Market
Price per share shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.

 

(ii)           For
the purpose of any computation hereunder, the Current Market Price per share of
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the Current Market Price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the Current Market Price per share of Preferred Stock shall
be conclusively deemed to be an amount equal to 1000 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Current Market Price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, Current Market Price per share of the Preferred Stock
shall mean the fair value per share as

 

19

 

determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
For all purposes of this Agreement, the Current Market Price of a Unit shall be
equal to the Current Market Price of one share of Preferred Stock divided by
1000.

 

(e)           Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share
or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.

 

(f)            If
as a result of an adjustment made pursuant to Section 11(a)(ii) or Section
13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
(b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections
7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on
like terms to any such other shares.

 

(g)           All
Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-thousandths of a share of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

 

(h)           Unless
the Company shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made
in Sections 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one one-thousandths of a share covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

 

(i)            The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of
a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be

 

20

 

exercisable
for the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued, shall be at
least ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.

 

(j)            Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per one one-thousandths of a share and the number
of one one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.

 

(k)           Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then stated value, if any, of the number of one one-thousandths of a
share of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable such number of one one-thousandths of a share of Preferred
Stock at such adjusted Purchase Price.

 

(l)            In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of one
one-thousandths of a share of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the number
of one one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided,

 

21

 

however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder’s
right to receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.

 

(m)          Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that in
their good faith judgment the Board shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the Current
Market Price, (iii) issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for shares
of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such stockholders.

 

(n)           The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.

 

(o)           The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23, Section 24 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.

 

(p)           Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the Rights Dividend Declaration Date and prior
to the Distribution Date (i) declare a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share

 

22

 

of
Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator which shall be the
total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately following the occurrence of
such event.

 

(q)           The
failure of the Board to declare a Person to be an Adverse Person following such
Person becoming the Beneficial Owner of shares of Common Stock representing ten
percent (10%) or more of the outstanding shares of Common Stock shall not imply
that such Person is not an Adverse Person or limit the Board’s right at any
time in the future to declare such Person to be an Adverse Person.

 

Section 12.             Certificate of Adjusted Purchase
Price or Number of Shares.  Whenever
an adjustment is made as provided in Section 11 and Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred
Stock and the Common Stock, a copy of such certificate, and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of
a Rights Certificate (or, if prior to the Distribution Date, to each holder of
a certificate representing shares of Common Stock) in accordance with Section
25 hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.

 

Section 13.             Consolidation, Merger or Sale or
Transfer of Assets, Cash Flow or Earning Power.

 

(a)           In
the event that, following the Stock Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets, cash flow or earning power
aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) hereof), then, and in each such case
(except as may be contemplated by Section 13(d) hereof), proper provision shall
be made so that: (i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized

 

23

 

and
issued, fully paid, non-assessable and freely tradeable shares of Common Stock
of the Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-thousandths of a share of Preferred
Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such one one-thousandths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence of a
Section 11(a)(ii) Event), and (2) dividing that product (which, following the
first occurrence of a Section 13 Event, shall be referred to as the “Purchase
Price” for each Right and for all purposes of this Agreement) by 50% of the
Current Market Price (determined pursuant to Section 11(d)(i) hereof) per share
of the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term “Company”
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply only
to such Principal Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Section 13 Event.

 

(b)           “Principal
Party” shall mean:

 

(i)            in
the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to such merger or consolidation; and

 

(ii)           in
the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets, cash flow or earning power transferred pursuant to such transaction
or transactions;

 

provided,
however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve
(12) month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, “Principal Party” shall refer to such
other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stock of two or more of which
are and have been so registered, “Principal Party” shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest aggregate
market value.

 

24

 

(c)           The
Company shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:

 

(i)            prepare
and file a registration statement under the Act, with respect to the Rights and
the securities purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act) until the
Expiration Date;

 

(ii)           take
all such other action as may be necessary to enable the Principal Party to
issue the securities purchasable upon exercise of the Rights, including but not
limited to the registration or qualification of such securities under all
requisite securities laws of jurisdictions of the various states and the
listing of such securities on such exchanges and trading markets as may be
necessary or appropriate; and

 

(iii)          deliver
to holders of the Rights historical financial statements for the Principal
Party and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.

 

The provisions
of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).

 

(d)           Notwithstanding
anything in this Agreement to the contrary, Section 13 shall not be applicable
to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i)
such transaction is consummated with a Person or Persons who acquired shares of
Common Stock pursuant to a Qualifying Offer (or a wholly owned subsidiary of
any such Person or Persons), (ii) the price per share of Common Stock offered
in such transaction is not less than the price per share of Common Stock paid
to all holders of shares of Common Stock whose shares were purchased pursuant
to such Qualifying Offer, and (iii) the form of consideration being offered to
the remaining holders of shares of Common Stock pursuant to such transaction is
the same as the form of consideration paid pursuant to such Qualifying Offer.
Upon consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.

 

25

 

Section 14.            Fractional Rights and Fractional
Shares.

 

(a)           The Company shall not be required to
issue fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p) hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, the Company shall pay to
the registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board. If on any
such date no such market maker is making a market in the Rights the fair value
of the Rights on such date as determined in good faith by the Board shall be
used.

 

(b)           The Company shall not be required to
issue fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock). In lieu of fractional shares
of Preferred Stock that are not integral multiples of one one-thousandth of a
share of Preferred Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
one-thousandth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-thousandth of a share of Preferred
Stock shall be one one-thousandth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.

 

(c)           Following the occurrence of a
Triggering Event, the Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one (1) share
of Common Stock. For purposes of this Section 14(c), the current market value
of one share of Common Stock shall be the closing price of one share of Common
Stock (as determined

 

26

 

pursuant to Section 11(d)(i) hereof) on the
Trading Day immediately prior to the date of such exercise.

 

(d)           The holder of a Right by the acceptance
of the Rights expressly waives his or her right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except as permitted
by this Section 14.

 

Section 15.            Rights of Action. All rights
of action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock), and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his or her own behalf and for his or her own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his or her right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this
Agreement.

 

Section 16.            Agreement of Rights Holders. Every
holder of a Right by accepting the same consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:

 

(a)           prior to the Distribution Date, the
Rights will be transferable only in connection with the transfer of Common
Stock;

 

(b)           after the Distribution Date, the
Rights Certificates are transferable only on the registry books of the Rights
Agent if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates fully
executed;

 

(c)           subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be required to be affected by any notice
to the contrary; and

 

(d)           notwithstanding anything in this
Agreement to the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other

 

27

 

Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued by
a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.

 

Section 17.            Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any purpose the holder
of the number of one one-thousandths of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.

 

Section 18.            Concerning the Rights Agent.

 

(a)           The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.

 

(b)           The Rights Agent shall be protected
and shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.

 

Section 19.            Merger or Consolidation or Change
of Name of Rights Agent.

 

(a)           Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation

 

28

 

resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust, stock transfer or other
shareholder services business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.

 

(b)           In case at any time the name of the
Rights Agent shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

 

Section 20.            Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:

 

(a)           The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.

 

(b)           Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person or Adverse Person and the determination of Current
Market Price) be proven or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proven and established by a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President, the Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

 

29

 

(c)           The Rights Agent shall be liable
hereunder only for its own gross negligence, bad faith or willful misconduct.

 

(d)           The Rights Agent shall not be liable
for or by reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify the same
(except as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by the
Company only.

 

(e)           The Rights Agent shall not be under
any responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11, Section 13 or Section 24 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.

 

(f)            The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.

 

(g)           The Rights Agent is hereby authorized
and directed to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the Chief Executive Officer,
the President, the Secretary, any Assistant Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.

 

(h)           The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.

 

(i)            The Rights Agent may execute and
exercise any of the rights or

 

30

 

powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection and continued
employment thereof.

 

(j)            No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.

 

(k)           If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company.

 

Section 21.            Change of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days’ notice in writing mailed
to the Company, and to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation, trust company, or limited liability company organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock

 

31

 

and the Preferred Stock,
and mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

 

Section 22.            Issuance of New Rights
Certificates. Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, granted or awarded as of the Distribution Date, or upon
the exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that
(i) no such Rights Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

 

Section 23.            Redemption and Termination.

 

(a)           The Board may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth (10th)
Business Day following the Stock Acquisition Date (or, if the Stock Acquisition
Date shall have occurred prior to the Record Date, the close of business on the
tenth (10th) Business Day following the Record Date), or (ii) the
Final Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”). The Board may not redeem any
Rights following a determination pursuant to Section 11(a)(ii)(B) that any
Person is an Adverse Person. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the Company’s right
of redemption hereunder has expired. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current Market
Price of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board.

 

(b)           Immediately upon the action of the
Board ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption

 

32

 

Price for each Right so held. Promptly after
the action of the Board ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder’s last address as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.

 

Section 24.            Exchange.

 

(a)           The Board may, at its option, at any
time after any Person becomes an Acquiring Person or is determined to be an
Adverse Person pursuant to Section 11(a)(ii)(B), exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”). Notwithstanding the
foregoing, the Board shall not be empowered to effect such exchange at any time
after any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Stock for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of fifty percent (50%) or more of the Common Stock then outstanding.

 

(b)           Immediately upon the action of the
Board ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Stock for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.

 

(c)           In any exchange pursuant to this
Section 24, the Company, at its option, may substitute shares of Preferred
Stock (or Equivalent Preferred Stock) for shares of Common Stock exchangeable
for Rights, at the initial rate of one one-thousandth of a share of Preferred
Stock (or Equivalent Preferred Stock) for each share of Common Stock,

 

33

 

as appropriately adjusted to reflect
adjustments in the voting rights of the Preferred Stock pursuant to Section
3(A) of the rights, powers and preferences attached hereto as Exhibit A,
so that the fraction of a share of Preferred Stock delivered in lieu of each
share of Common Stock shall have the same voting rights as one share of Common
Stock.

 

(d)           In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the
Rights.

 

(e)           The Company shall not be required to
issue fractions of shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of Common
Stock, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional share of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this subsection
(e), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.

 

Section 25.            Notice of Certain Events.

 

(a)           In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any dividend payable in stock
of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly
cash dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or
(iv) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more than fifty percent
(50%) of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and
in accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered

 

34

 

by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Preferred Stock, whichever shall be the earlier.

 

(b)           In case any of the events set forth
in Section 11(a)(ii) hereof shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph to Preferred Stock shall be
deemed thereafter to refer to Common Stock and/or, if appropriate, other
securities.

 

Section 26.            Notices. Notices or demands
authorized by this Agreement to be given or made by the Rights Agent or by the
holder of any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing by the Rights Agent with the Company) as
follows:

 

Ecolab Inc.

370 Wabasha
Street North

St. Paul,
Minnesota 55102

Attention:
Corporate Secretary

 

Subject to the
provisions of Section 21, any notice or demand authorized by this Agreement to
be given or made by the Company or by the holder of any Rights Certificate to
or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing by the Rights Agent with the Company) as follows:

 

Computershare
Investor Services, LLC

2 North
LaSalle Street

Chicago,
Illinois 60602

Attention:  Relationship Manager

With a Copy
to:  Director of Relationship Management

 

Notices or
demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates representing shares of Common
Stock) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.

 

Section 27.            Supplements and Amendments. Prior
to the Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement without
the approval of any holders of certificates representing shares of Common
Stock. From and after the Distribution Date, the Company

 

35

 

and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or Adverse Person); provided this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights
(other than an Acquiring Person or Adverse Person and its Affiliates and
Associates). Upon the delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock. Notwithstanding anything herein to the contrary, this
Agreement may not be amended (other than pursuant to clauses (i) or (ii) of the
second sentence of this Section 27) at a time when the Rights are not
redeemable.

 

Section 28.            Successors. All the covenants
and provisions of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their respective successors
and assigns hereunder.

 

Section 29.            Determinations and Actions by the
Board of Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock or any other class of
capital stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or
not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board or any of the directors on the Board to
any liability to the holders of the Rights.

 

Section 30.            Benefits of this Agreement. Nothing
in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the

 

36

 

registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock).

 

Section 31.            Severability. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
close of business on the tenth (10th) Business Day following the
date of such determination by the Board. Without limiting the foregoing, if any
provision requiring a majority of the members of the Board who are not officers
of the Company and who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person to act is held by any court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall be made by the Board in accordance with applicable law and
the Company’s Restated Certificate of Incorporation and By-Laws.

 

Section 32.            Governing Law. This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for
all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts made and to be performed entirely within
such State.

 

Section 33.            Counterparts. This Agreement
may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.

 

Section 34.            Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.

 

37

 

IN WITNESS
WHEREOF, the parties hereto have caused this Rights Agreement to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written. 

 

 

	
  Attest:

  	
  ECOLAB INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/Lawrence T. Bell

  	
   

  	
  By

  	
  /s/Douglas M. Baker, Jr.

  	
   

  
	
   

  	
  Name:

  	
  Lawrence T. Bell

  	
   

  	
  Name:

  	
  Douglas M. Baker, Jr.

  
	
   

  	
  Title:

  	
  Senior Vice President,

  General Counsel and

  Secretary

  	
   

  	
  Title:

  	
  President and Chief Executive

  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
  COMPUTERSHARE INVESTOR

  SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/Fred Papenmeier

  	
   

  	
  By

  	
  /s/Michael Lang

  	
   

  
	
   

  	
  Name:

  	
  Fred Papenmeier

  	
   

  	
  Name:

  	
  Michael Lang

  
	
   

  	
  Title:

  	
  Relationship Manager

  	
   

  	
  Title:

  	
  Director, Relationship

  Management

  
									

 

Exhibit A

 

FORM OF

CERTIFICATE OF
DESIGNATION, PREFERENCES

AND RIGHTS OF
SERIES A JUNIOR

PARTICIPATING
PREFERRED STOCK

OF

ECOLAB INC.

 

 

Pursuant to
Section 151 of the 

General Corporation Law of the State of Delaware

 

 

To become effective as of 

5:01 p.m., Eastern Standard Time, 

on March 13, 2006

 

The undersigned officers of Ecolab Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:

 

That pursuant to the authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation of the said Corporation, dated
as of May 9, 2003, as amended from time to time (the “Restated Certificate of Incorporation”), the said Board of
Directors on February 24, 2006, adopted the following resolution creating a
series of 400,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:

 

RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Restated
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof, are as follows:

 

Section 1.              Designation
and Amount. The shares of such series shall be designated as “Series A
Junior Participating Preferred Stock” and the number of shares constituting
such series shall be 400,000.

 

Section 2.              Dividends
and Distributions.

 

(A)          Subject to the prior and superior
rights of the holders of any shares of any series of Preferred Stock, if any,
issued from time to time ranking prior and superior to the shares of Series A
Junior Participating Preferred Stock with respect to dividends, the holders of

 

A-1

 

shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the fifteenth day of February, May, August and
November in each year (each such date being referred to herein as a “Quarterly
Dividend Payment Date”), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series A
Junior Participating Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $10.00 or (b) subject to the
provision for adjustment hereinafter set forth, 1000 times the aggregate per
share amount of all cash dividends, and 1000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock, par value $1.00 per share, of the Corporation (the “Common
Stock”) since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the Corporation shall at any time after February
24, 2006 (the “Rights Declaration Date”) (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of Series
A Junior Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(B)          The Corporation shall declare a
dividend or distribution on the Series A Junior Participating Preferred Stock
as provided in paragraph (A) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date,
a dividend of $10.00 per share as such amount may be adjusted pursuant to the
last sentence of the preceding paragraph on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

 

(C)          Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior Participating Preferred
Stock from the Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on

 

A-2

 

such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.

 

Section 3.              Voting
Rights. The holders of shares of Series A Junior Participating Preferred
Stock shall have the following voting rights:

 

(A)          Subject to the provision for
adjustment hereinafter set forth, each share of Series A Junior Participating
Preferred Stock shall entitle the holder thereof to 1000 votes on all matters
submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes per share
to which holders of shares of Series A Junior Participating Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

 

(B)          Except as otherwise provided herein or
by law, the holders of shares of Series A Junior Participating Preferred Stock
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.

 

(C)                               (i)            If
at any time dividends on any Series A Junior Participating Preferred Stock
shall be in arrears in an amount equal to six (6) quarterly dividends thereon,
the occurrence of such contingency shall mark the beginning of a period (herein
called a “default period”) which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect two (2) Directors.

 

(ii)           During
any default period, such voting right of the holders of Series A Junior
Participating Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of ten
percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any,

 

A-3

 

in
the Board of Directors as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two (2) Directors. If the
number which may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the right to
make such increase in the number of Directors as shall be necessary to permit
the election by them of the required number. After the holders of the Preferred
Stock shall have exercised their right to elect Directors in any default period
and during the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior Participating Preferred Stock.

 

(iii)          Unless
the holders of Preferred Stock shall, during an existing default period, have
previously exercised their right to elect Directors, the Board of Directors may
order, or any stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting of the
holders of Preferred Stock, which meeting shall thereupon be called by the
President, a Vice President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this paragraph (C) (iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and not later than
60 days after such order or request or in default of the calling of such
meeting within 60 days after such order or request, such meeting may be called
on similar notice by any stockholder or stockholders owning in the aggregate
not less than ten percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii),
no such special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.

 

(iv)          In
any default period, the holders of Common Stock, and other classes of stock of
the Corporation if applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock shall have exercised
their right to elect two (2) Directors voting as a class, after the exercise of
which right (x) the Directors so elected by the holders of Preferred Stock
shall continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected the
Director whose office shall have become vacant. References in this paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.

 

(v)           Immediately
upon the expiration of a default period, (x) the right of the holders of
Preferred Stock as a class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Preferred Stock as a class shall terminate,
and (z) the number of Directors shall be such number as may be provided for in
the Restated Certificate of Incorporation or By-Laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in

 

A-4

 

any
manner provided by law or in the Restated Certificate of Incorporation or
By-Laws). Any vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.

 

(D)          Except as set forth herein, holders of
Series A Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.

 

Section 4.              Certain
Restrictions. 

 

(A)          Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:

 

(i)            declare
or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A
Junior Participating Preferred Stock;

 

(ii)           declare
or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior Participating Preferred Stock and
all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;

 

(iii)          redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Junior Participating Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or

 

(iv)         purchase
or otherwise acquire for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock ranking on a parity with
the Series A Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.

 

(B)          The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless

 

A-5

 

the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.

 

Section 5.              Reacquired
Shares. Any shares of Series A Junior Participating Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein.

 

Section 6.              Liquidation,
Dissolution or Winding Up.

 

(A)          Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no distribution shall
be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Series A Junior Participating Preferred Stock shall have received
$1000 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the “Series A Liquidation Preference”). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the “Common Adjustment”) equal to the quotient
obtained by dividing (i) the Series A Liquidation Preference by (ii) 1000 (as
appropriately adjusted as set forth in subparagraph (C) below to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii), the “Adjustment Number”).
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.

 

(B)          In the event, however, that there are
not sufficient assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.

 

(C)          In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number by
a

 

A-6

 

fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

Section 7.              Consolidation,
Merger, etc. In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock
are exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

 

Section 8.              No
Redemption. The shares of Series A Junior Participating Preferred Stock
shall not be redeemable.

 

Section 9.              Ranking.
The Series A Junior Participating Preferred Stock shall rank junior to all
other series of the Corporation’s Preferred Stock which may be issued from time
to time as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.

 

Section 10.            Amendment.
At any time when any shares of Series A Junior Participating Preferred Stock
are outstanding, neither the Restated Certificate of Incorporation of the
Corporation nor this Certificate of Designation shall be amended in any manner
which would materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a majority or
more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.

 

Section 11.            Fractional Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock.

 

A-7

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of  Designation to be executed by its duly authorized officer on this               day of                        , 2006.
 

 

	
   

  	
  ECOLAB
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   Name: Lawrence T. Bell

  
	
   

  	
   

  	
  Title:   Senior Vice President, General

  Counsel and Secretary

  

 

A-8

Exhibit B 

 

[Form of Rights Certificate]

 

	
  Certificate No. R

  	
   

  	
                          Rights

  

 

NOT
EXERCISABLE AFTER MARCH 10, 2016 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ADVERSE
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON OR ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.](1)

 

Rights Certificate

 

ECOLAB INC.

 

This certifies
that                                                  ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of February 24,
2006 (the “Rights Agreement”), between Ecolab Inc., a Delaware corporation (the
“Company”), and Computershare Investor Services, LLC, a Delaware limited
liability company (the “Rights Agent”), to purchase from the Company at any time
prior to 5:00 P.M. (New York City time) on March 10, 2016 at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-thousandth of a fully paid, non-assessable share of
Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the
Company, at a purchase price of $            
per one one-thousandth of a share (the “Purchase Price”), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of                         ,
based on the Preferred Stock as constituted at such date. The Company reserves
the right to require prior to the occurrence of a Triggering Event (as such
term is defined in the Rights Agreement) that a number of Rights be exercised
so that only whole shares of Preferred

 

(1)   The portion of the legend in brackets shall
be inserted only if applicable and shall replace the preceding sentence.

 

B-1

 

Stock will be
issued.

 

Upon the
occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or Adverse Person or an Affiliate or Associate
of any such Acquiring Person or Adverse Person (as such terms are defined in
the Rights Agreement), (ii) a transferee of any such Acquiring Person or
Adverse Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a person who, after such
transfer, became an Acquiring Person or Adverse Person, or an Affiliate or
Associate of an Acquiring Person or Adverse Person, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.

 

As provided in
the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events, including Triggering Events.

 

This Rights
Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and are
also available upon written request to the Rights Agent.

 

This Rights
Certificate, with or without other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-thousandths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.

 

Subject to the
provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $0.01 per
Right at any time prior to the earlier of the close of business on (i) the
tenth business day following the Stock Acquisition Date (as such time period
may be extended pursuant to the Rights Agreement), and (ii) the Final
Expiration Date. In addition, the Rights may be exchanged, in whole or in part,
for shares of the Common Stock, or shares of preferred stock of the Company
having essentially the same value or economic rights as such shares. Immediately
upon the action of the Board of Directors of the Company

 

B-2

 

authorizing
any such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate and
the Rights will only enable holders to receive the shares issuable upon such
exchange.

 

No fractional
shares of Preferred Stock will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

 

No holder of
this Rights Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Preferred Stock or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or, to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.

 

This Rights
Certificate shall not be valid or obligatory for any purpose until it shall
have been countersigned by the Rights Agent.

 

B-3

 

WITNESS the
facsimile signature of the proper officers of the Company and its corporate
seal.

 

 

Dated as
of                      ,           

 

 

	
  ATTEST:

  	
  ECOLAB INC.

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Secretary

  	
   

  	
         Title:

  
	
   

  
	
   

  
	
  Countersigned:

  
	
   

  
	
  COMPUTERSHARE INVESTOR

  
	
  SERVICES, LLC

  
	
   

  
	
  By: 

  	
   

  	
   

  
	
  Authorized
  Signature 

  
							

 

B-4

 

 [Form of Reverse Side of Rights
Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such holder
 desires to transfer the Rights
Certificate.)

 

FOR VALUE RECEIVED                                                                                                                                                                   

hereby sells,
assigns and transfers unto

 

 

(Please print name and address of transferee)

 

this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint                                      
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.

 

Dated:                       ,              

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  
	
  Signature Guaranteed:

  

 

 

Certificate 

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(1)               this Rights Certificate [    ]
is [    ] is not being sold, assigned and transferred by or
on behalf of a Person who is or was an Acquiring Person or Adverse Person or an
Affiliate or Associate of any such Acquiring Person or Adverse Person (as such
terms are defined pursuant to the Rights Agreement);

 

(2)               after due inquiry and to the best
knowledge of the undersigned, it [    ] did [    ]
did not acquire the Rights evidenced by this Rights Certificate from any Person
who is, was or subsequently became an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or Adverse Person.

 

Dated:                       ,           

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  

 

NOTICE 

 

The signature
to the foregoing Assignment and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever. 

 

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to exercise
 Rights represented by the Rights
Certificate.)

 

To:   ECOLAB INC.

 

The
undersigned hereby irrevocably elects to exercise                 
Rights represented by this Rights Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:

 

Please insert social security

or other identifying number

 

 

(Please print name and address)

 

 

If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new Rights Certificate for the
balance of such Rights shall be registered in the name of and delivered to:

 

Please insert social security

or other identifying number

 

 

(Please print name and address)

 

 

 

Dated:                       ,        

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed: 

  

 

 

Certificate

 

The undersigned
hereby certifies by checking the appropriate boxes that:

 

(1)               the Rights evidenced by this
Rights Certificate [    ] are [    ] are not being exercised by or on behalf
of a Person who is or was an Acquiring Person or Adverse Person or an Affiliate
or Associate of any such Acquiring Person or Adverse Person (as such terms are
defined pursuant to the Rights Agreement);

 

(2)               after due inquiry and to the best
knowledge of the undersigned, it [    ]
did [    ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was or became an
Acquiring Person or Adverse Person or an Affiliate or Associate of an Acquiring
Person or Adverse Person.

 

 

Dated:                      ,          

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  

 

NOTICE 

 

The signature
to the foregoing Election to Purchase and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.Exhibit
(10)B(i)(a)

 

	
  

  	
  LIMITED
  LIABILITY  PARTNERSHIP

  

 

Execution Version

 

2
December 2005

 

 

ECOLAB INC.

(incorporated
under the laws of the State of Delaware)

 

ECOLAB B.V.

(incorporated
with limited liability under the laws of The Netherlands)

 

ECOLAB HOLDING GMBH

(incorporated
with limited liability under the laws of Germany)

 

as
Issuers

 

ECOLAB INC.

(incorporated
under the laws of the State of Delaware)

(as
Guarantor in respect of the Notes

issued
by Ecolab B.V. and

Ecolab
Holding GmbH)

 

CREDIT
SUISSE FIRST BOSTON (EUROPE) LIMITED

as
Arranger

 

- and -

 

CITIBANK
INTERNATIONAL plc

CREDIT
SUISSE FIRST BOSTON (EUROPE) LIMITED

as
Dealers

 

 

AMENDED
AND RESTATED DEALER AGREEMENT

relating
to a U.S.$200,000,000

EURO-COMMERCIAL PAPER PROGRAMME

 

 

CONTENTS

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Interpretation

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Issue

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Representations And Warranties

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Covenants And Agreements

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Conditions Precedent

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Termination And Appointment

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Notices

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Third Party Rights

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Law And Jurisdiction

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Counterparts

  	
   

  	
  15

  

 

	
  SCHEDULE
  1

  	
   

  	
  CONDITION
  PRECEDENT DOCUMENTS

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  2

  	
   

  	
  SELLING
  RESTRICTIONS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  3

  	
   

  	
  PROGRAMME
  SUMMARY

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  4

  	
   

  	
  INCREASE
  OF MAXIMUM AMOUNT

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  5

  	
   

  	
  APPOINTMENT
  OF NEW DEALER

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  6

  	
   

  	
  FORM
  OF CALCULATION AGENCY AGREEMENT

  	
   

  	
  30

  

 

 

THIS
AGREEMENT is made on 2 December 2005

 

BETWEEN

 

(1)         ECOLAB INC., ECOLAB B.V. and ECOLAB HOLDING GMBH (each an “Issuer” and together, the “Issuers”);

 

(2)         ECOLAB INC. (the “Guarantor”, in respect of Notes issued by
Ecolab B.V. and Ecolab Holding GmbH);

 

(3)         CREDIT SUISSE
FIRST BOSTON (EUROPE) LIMITED (the “Arranger”); and

 

(4)         CITIBANK
INTERNATIONAL plc and CREDIT
SUISSE FIRST BOSTON (EUROPE) LIMITED as dealers for the Notes to be
issued under the Programme (each a “Dealer” and
together, the “Dealers”).

 

WHEREAS

 

(A)        Ecolab Inc. and certain dealers named in a dealer agreement dated 10
June 2003 (the “Original Agreement”) entered into
such agreement under which Ecolab Inc. agreed from time to time to sell and the
dealers named therein agreed from time to time to subscribe for notes issued
under Ecolab Inc.’s euro-commercial paper programme.

 

(B)        The parties hereto wish to amend and restate the terms of the
Original Agreement as set out hereunder.

 

IT
IS AGREED as follows:

 

1.           INTERPRETATION

 

1.1        Definitions

In this
Agreement:

 

“Agency Agreement” means the amended and restated note agency
agreement, dated the date hereof, between the Issuers, the Guarantor and the
Issue and Paying Agent, providing for the issue of and payment on the Notes, as
such agreement may be amended or supplemented from time to time;

 

“Agreements” means this Agreement (as amended or supplemented
from time to time), any agreement reached pursuant to Clause 2.1, the Deed
of Covenant and the Agency Agreement;

 

“Dealer(s)” means the institution or institutions specified
as a Dealer in the Programme Summary together with any additional institution
or institutions appointed pursuant to Clause 6.2 but excluding any
institution or institutions whose appointment has been terminated pursuant to
Clause 6.1;

 

“Deed of Covenant” means the deed of covenant, dated the date
hereof, executed by the Issuers in respect of Global Notes issued pursuant to
the Agency Agreement, as such deed may be amended or supplemented from time to
time;

 

“Definitive Note” means a security printed Note in definitive
bearer form;

 

1

 

“Disclosure Documents” means, at any particular date,
(a) the Information Memorandum, (b) the most recently published
audited consolidated financial statements of the Guarantor, any subsequent
quarterly unaudited financial statements of the Guarantor and any other financial
statements of the Guarantor on Form 8-K, that in each case are filed with the
United States Securities and Exchange Commission (the “SEC”)
and (c) any other document delivered by the Issuers or the Guarantor to
the Dealer(s) which the Issuers or the Guarantor have expressly authorised to
be distributed to actual or potential purchasers of Notes;

 

“Dollars” and “U.S.$” denote
the lawful currency of the United States of America; and “Dollar Note”
means a Note denominated in Dollars;

 

“Dollar Equivalent” means, on any day:

 

(a)            in relation to any Dollar
Note, the nominal amount of such Note; and

 

(b)            in relation to any Note
denominated or to be denominated in any other currency, the amount in Dollars
which would be required to purchase the nominal amount of such Note as
expressed in such other currency at the spot rate of exchange for the purchase
of such other currency with Dollars quoted by the Issue and Paying Agent at or
about 11.00 a.m. (London time) on such day;

 

“Euro”, “euro”, “EUR” and “€” denote the
lawful currency of member states of the European Union that adopt the single
currency introduced in accordance with the Treaty; and “Euro Note”
means a Note denominated in Euro;

 

“FSMA” means the Financial Services and Markets Act 2000;

 

“Global Note” means a Note in global bearer form,
representing an issue of promissory notes of a like maturity which may be
issued by an Issuer from time to time pursuant to the Agency Agreement;

 

“Guarantee” means the deed of guarantee, dated the date
hereof, executed by the Guarantor in respect of the obligations of the Ecolab
B.V. and Ecolab Holding GmbH under the Notes and the Deed of Covenant and,
where the context so requires, the guarantee and indemnity contained in that
deed;

 

“Index Linked Note” means a Note, the redemption or coupon
amount of which is not fixed at the time of issue, but which is to be
calculated in accordance with such formula or other arrangement as is agreed
between the relevant Issuer and the relevant Dealer at the time of reaching
agreement under Clause 2.1;

 

“Information Memorandum” means the most recent information
memorandum, as the same may be amended or supplemented from time to time,
containing information about the Issuers, the Guarantor and the Programme, the
text of which has been prepared by or on behalf of the Issuers and the
Guarantor for use by the Dealer(s) in connection with the transactions
contemplated by this Agreement;

 

“Issue and Paying Agent” means Citibank, N.A. and any
successor issue and paying agent appointed in accordance with the Agency
Agreement;

 

2

 

“Japanese Yen” and “¥” denote the
lawful currency of Japan, and “Yen Note” means
a Note denominated in Japanese Yen;

 

“Loss” means any liability, damages, cost, loss or expense
(including, without limitation, legal fees, costs and expenses and any value
added tax thereon);

 

“Note” means a commercial paper note of an Issuer purchased
or to be purchased by a Dealer under this Agreement, in bearer global or
definitive form, substantially in the relevant form scheduled to the Agency
Agreement or such other form(s) as may be agreed from time to time between the
relevant Issuer, the Guarantor, the relevant Dealer(s) and the Issue and Paying
Agent and, unless the context otherwise requires, includes the commercial paper
notes represented by the Global Notes;

 

“Programme” means the Euro-commercial paper programme
established by this Agreement;

 

“Programme Summary” means the summary of the particulars of
the Programme as set out in Schedule 3, as such summary may be amended or
superseded from time to time;

 

“Related Party” means, in respect of any person, any
affiliate of that person or any officer, director, employee or agent of that
person or any such affiliate or any person by whom any of them is controlled
for the purposes of the Securities Act;

 

“relevant jurisdiction” means any one or more of The
Netherlands, Germany, the United Kingdom, the United States and any
jurisdiction from or through which any payment under or in respect of any Note or
any Agreement or the Guarantee may be made;

 

“Securities Act” means the United States Securities Act of
1933, as amended;

 

“Sterling” and “£” denote the
lawful currency of the United Kingdom; and “Sterling
Note” means a Note denominated in Sterling;

 

“Subsidiary” means, in respect of any person (the “first person”) at any particular time, any other person (the
“second person”):

 

(a)            Control: whose affairs and policies the first person controls or has the
power to control, whether by ownership of share capital, contract, the power to
appoint or remove a majority of the members of the governing body of the second
person or otherwise; or

 

(b)            Consolidation:  whose financial statements
are, in accordance with applicable law and generally accepted accounting principles,
consolidated with those of the first person;

 

“Swiss Franc”
and “CHF” denote the lawful currency of
Switzerland; and “Swiss Franc Note”
means a Note denominated in Swiss Francs; and

 

“Treaty” means the Treaty establishing the European
Community, as amended.

 

3

 

1.2        Programme
Summary

Terms
not expressly defined herein shall have the meanings set out in the Programme
Summary.

 

1.3        Legislation

Any
reference in this Agreement to any legislation (whether primary legislation or
regulations or other subsidiary legislation made pursuant to primary
legislation) shall be construed as a reference to such legislation as the same
may have been, or may from time to time be, amended or re-enacted.

 

1.4        Clauses and
Schedules

Any
reference in this Agreement to a Clause, sub-clause or a Schedule is,
unless otherwise stated, to a clause or sub-clause hereof or a schedule
hereto.

 

1.5        Headings

Headings
and sub-headings are for ease of reference only and shall not affect the
construction of this Agreement.

 

2.           ISSUE

 

2.1        Basis of
agreements to issue; uncommitted facility

Subject
to the terms hereof, each Issuer may issue Notes to the Dealer(s) from time to
time at such prices and upon such terms as the relevant Issuer and the relevant
Dealer may agree, provided that each Issuer has, and shall have, no obligation
to issue Notes to the Dealer(s), except as agreed, and each Dealer has, and
shall have, no obligation to subscribe Notes from the Issuers, except as agreed.
Each Issuer acknowledges that the Dealer(s) may resell Notes subscribed by such
Dealer(s). The tenor of each Note shall not be less than the Minimum Term nor
greater than the Maximum Term specified in the Programme Summary, calculated
from the date of issue of such Note to the maturity date thereof. Definitive
Notes (if any) shall be issued in the Denomination(s) specified in the
Programme Summary. Each issue of Notes having the same issue date, maturity
date, currency of denomination, yield and redemption basis will be represented
by a Global Note or by Definitive Notes having the aggregate nominal amount of
such issue as may be agreed between the relevant Issuer and the relevant
Dealer.

 

2.2        Procedures

If an
Issuer and any Dealer shall agree on the terms of the subscription of any Note
by such Dealer (including agreement with respect to the issue date, maturity
date, currency, denomination, yield, redemption basis, aggregate nominal amount
and purchase price), then:

 

2.2.1        Instruction to Issue and Paying Agent:  the relevant Issuer shall
instruct the Issue and Paying Agent to issue such Note and deliver it in
accordance with the terms of the Agency Agreement;

 

2.2.2         Payment of purchase price:  the relevant Dealer shall
subscribe such Note on the date of issue:

 

(a)       Dollar Note:  in the case of a Dollar Note, by transfer of
funds settled through the New York Clearing House Interbank Payments
System (or

 

4

 

such other same-day value funds as at the time shall
be customary for the settlement in New York City of international banking
transactions denominated in Dollars) to such account of the Issue and Paying
Agent in New York City denominated in Dollars as the Issue and Paying
Agent shall have specified for this purpose; or

 

(b)       Euro Note:  in the case of a Euro Note, by transfer of
funds settled through the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System to such account of the Issue and Paying Agent
outside the United Kingdom denominated in Euro as the Issue and Paying Agent
shall have specified for this purpose; or

 

(c)       Other Notes:  in all other cases, by transfer of freely
transferable same-day funds in the relevant currency to such account of the
Issue and Paying Agent at such bank in the principal domestic financial centre
for such currency as the Issue and Paying Agent shall have specified for this
purpose,

 

or, in
each case, by such other form of transfer as may be agreed between the relevant
Dealer and the relevant Issuer; and

 

2.2.3        Delivery Instructions:  the relevant Dealer shall notify the Issue
and Paying Agent and the relevant Issuer of the payment and delivery
instructions applicable to such Note or Notes by telephone, fax or telex, such
notification to be received in sufficient time and in any event no later than
(i) 12 noon (London time) on the proposed issue date (in the case of
Sterling Definitive Notes); (ii) 12 noon (Paris time) on the proposed issue
date in the case of Notes to be cleared through Euroclear France S.A.; or (iii)
in any other case, 10.00 a.m. (London time) one Business Day prior to the
proposed issue date (or such later time or date as may be agreed between the
Issue and Paying Agent and the relevant Dealer) to enable the Issue and Paying
Agent to deliver such Note or Notes as contemplated in the Agency Agreement
(or, in the case of Sterling Definitive Notes, make the same available for
collection) on its issue
date.

 

2.3        Failure
of agreed issuance

If for
any reason (including, without limitation, the failure of the relevant trade) a
Note agreed to be subscribed pursuant to Clause 2.1 is not to be issued,
the relevant Issuer and the relevant Dealer shall immediately notify the Issue
and Paying Agent thereof.

 

2.4        Issuance
currencies

The
parties acknowledge that Notes issued under the Programme may be denominated in
Dollars, Euro, Japanese Yen, Sterling, Swiss Francs, or, subject as provided
below, in any other currency. Any agreement reached pursuant to Clause 2.1
to sell and subscribe a Note denominated in a currency other than Dollars,
Euro, Japanese Yen, Sterling and Swiss Francs shall be conditional upon:

 

2.4.1        Compliance:  it being lawful and in compliance with all
requirements of any relevant central bank and any other relevant fiscal,
monetary, regulatory or

 

5

 

other authority, for deposits to be made in such
currency and for such Note to be issued, offered for sale, sold and delivered;

 

2.4.2        Convertibility:  such other currency being freely transferable
and freely convertible into Dollars; and

 

2.4.3        Amendments:  any appropriate amendments which the relevant
Dealer, the relevant Issuer, the Guarantor or the Issue and Paying Agent shall
require having been made to this Agreement and/or the Agency Agreement.

 

2.5        Increase
of Maximum Amount

The
Issuers and the Guarantor may increase the Maximum Amount by giving at least
ten days’ notice by letter, substantially in the form set out in Schedule 4, to
each of the Dealer(s) and the Issue and Paying Agent. Such increase will not
take effect until the Dealer(s) have received from the Issuers the documents
listed in such letter or in Schedule 1 (if required by the Dealer(s)), in each
case in form and substance acceptable to each Dealer.

 

2.6        Calculation
Agent

If Index
Linked Notes are to be issued, the relevant Issuer will appoint either the
relevant Dealer or the Issue and Paying Agent (subject to the consent of the
relevant Dealer or the Issue and Paying Agent, as the case may be, thereto) or
some other person (subject to the consent of the relevant Dealer and the Issue
and Paying Agent to such person’s appointment) to be the calculation agent in
respect of such Index Linked Notes and the following provisions shall apply:

 

2.6.1        Dealer:  if a Dealer is to be the calculation agent,
its appointment as such shall be on the terms of the form of agreement set out
in Schedule 6, and each Dealer will be deemed to have entered into an agreement
in such form for a particular calculation if it is named as calculation agent in
the redemption calculation attached to or endorsed on the relevant Note;

 

2.6.2        Issue and Paying Agent:  if the Issue and Paying Agent is to be the
calculation agent, its appointment as such shall be on the terms set out in the
Agency Agreement; and

 

2.6.3        Other Calculation Agent:  if the person nominated by a Dealer or by the
Issue and Paying Agent as calculation agent is not a Dealer, that person shall
execute (if it has not already done so) an agreement substantially in the form
of the agreement set out in Schedule 6 and the appointment of that person shall
be on the terms of that agreement.

 

3.           REPRESENTATIONS AND
WARRANTIES

 

3.1        Representations
and warranties

Each
Issuer, in respect of itself and the Guarantor, in respect of itself, Ecolab
B.V. and Ecolab Holding GmbH, represents and warrants to each Dealer at the
date of this Agreement, each date upon which the Maximum Amount is increased,
each date upon which an agreement for the issue and subscription of Notes is
made and each date upon which Notes are, or are to be, issued that:

 

6

 

3.1.1        Authorisation; valid, binding and enforceable:  each of:

 

(a)       the establishment of the
Programme and the execution, delivery and performance by the Issuers of the
Agreements and the Notes;

 

(b)       the execution, delivery and
performance by the Guarantor of this Agreement, the Agency Agreement and the
Guarantee;

 

(c)       the entering into and
performance by the relevant Issuer of any agreement for the sale of Notes
reached pursuant to Clause 2.1; and

 

(d)       the issue and sale of the Notes
by the relevant Issuer under the Agreements,

 

has
been duly authorised by all necessary action and the same constitute or, in the
case of Notes, will, when issued in accordance with the Agency Agreement,
constitute, valid and binding obligations of the relevant Issuer and/or the
Guarantor (as the case may be) enforceable against each of them in accordance
with their respective terms (subject, as to enforceability, to bankruptcy,
insolvency, reorganisation and similar laws of general applicability relating
to or affecting creditors’ rights and to general principles of equity);

 

3.1.2        Status:  the obligations of each Issuer under each of
the Agreements and the Notes and the obligations of the Guarantor under this
Agreement, the Agency Agreement and the Guarantee will rank (other than in the
case of obligations preferred by mandatory provisions of law) at least pari passu with all other present and future unsecured and
unsubordinated indebtedness of each Issuer and the Guarantor (as the case may
be);

 

3.1.3         Incorporation, capacity: each Issuer and the Guarantor is duly incorporated and validly
existing under the laws of its jurisdiction of incorporation and:

 

(a)       the establishment of the Programme, the execution, delivery and
performance by each Issuer of the Agreements and the Notes;

 

(b)       the execution, delivery and performance by the Guarantor of this
Agreement, the Agency Agreement and the Guarantee;

 

(c)       the entering into and performance by the relevant Issuer of any
agreement for the issue and subscription of Notes reached pursuant to
Clause 2.1; and

 

(d)       the issue and sale of the Notes by the relevant Issuer under the
Agreements,

 

will
not infringe any of the provisions of the relevant Issuer’s or the Guarantor’s  constituting documents and will not
contravene any law, regulation, order or judgment to which the relevant Issuer
or the Guarantor or any of its assets is subject nor result in the breach of
any term of, or cause a default under, any instrument to which the relevant
Issuer or the Guarantor is a party or by which it or any of its assets may be
bound except for such breaches or defaults as could

 

7

 

not
reasonably be expected to be material in the context of this Agreement and the
transactions contemplated hereby;

 

3.1.4        Approvals: all
consents, authorisations, licences or approvals of and registrations and
filings with any governmental or regulatory authority required in connection
with the issue by each Issuer of Notes under the Agreements and the performance
of each Issuer’s obligations under the Agreements and the Notes, the issue by
the Guarantor of the Guarantee and the performance by the Guarantor of its
obligations under this Agreement, the Agency Agreement and the Guarantee have
been obtained and are in full force and effect, and copies thereof have been
supplied to the Dealer(s) except for such consents, authorisations, licences,
approvals, registrations and filings as could not reasonably be expected to be
material in the context of this Agreement and the transactions contemplated
hereby;

 

3.1.5        Disclosure:  in the context of this Agreement and the transactions contemplated
hereby, the information contained or incorporated by reference in the
Disclosure Documents is true and accurate in all material respects and is not
misleading in any material respect and there are no other facts in relation to
the Issuers or the Guarantor or any Notes the omission of which makes, in the
context of the issue of Notes, the Disclosure Documents as a whole or any such
information contained or incorporated by reference therein misleading in any
material respect;

 

3.1.6        Financial Statements:
the audited consolidated financial statements and any interim financial
statements (audited or unaudited) published subsequently thereto and any other
financial statements of Ecolab Inc. (in its capacity as Issuer and Guarantor)
on Form 8-K published subsequently thereto, and in each case filed with the SEC
incorporated by reference in the Information Memorandum, present fairly and
accurately the consolidated financial position of each Issuer, the Guarantor
and their respective Subsidiaries as of the respective dates of such statements
and the consolidated results of operations of the Issuers, the Guarantor and
their respective Subsidiaries for the periods they cover or to which they
relate and such financial statements have been prepared in accordance with the
relevant laws of the United States, and with generally accepted accounting
principles in the United States applied on a consistent basis throughout the
periods involved (unless and to the extent otherwise stated therein);

 

3.1.7        No material adverse change, No litigation: since the date of the most recent audited consolidated financial
statements of the Guarantor supplied to the Dealer(s) and, in relation to any
date on which this warranty falls to be made after the date hereof, save as
otherwise disclosed by any Disclosure Document subsequently delivered by the
Guarantor to the Dealer(s):

 

(a)       there has been no adverse change in the business, financial or other
condition of the Issuers or the Guarantor or their respective Subsidiaries,
holding companies or affiliates; and

 

8

 

(b)       there is no litigation, arbitration or governmental proceeding
pending or, to the knowledge of the Issuers or the Guarantor, threatened
against or affecting the Issuers or the Guarantor or their respective
Subsidiaries, holding companies or affiliates,

 

which
in any case could reasonably be expected to be material in the context of this
Agreement and the transactions contemplated hereby;

 

3.1.8        No default:  none of the Issuers nor the Guarantor is in
default in respect of payment of any indebtedness for borrowed money where such
indebtedness is in an aggregate amount greater than U.S.$20,000,000;

 

3.1.9        No ratings downgrade: there
has been no downgrading, nor any notice to the Issuers or the Guarantor of any
intended downgrading, in the rating accorded to the Issuers’ or the Guarantor’s
short-term or long-term debt by Standard & Poor’s Ratings Services, a
division of the McGraw-Hill Companies Inc., or Moody’s Investors Service, Inc.;

 

3.1.10      Taxation: subject to
compliance with the terms of the Agreements, neither the Issuers nor the
Guarantor are required by any law or regulation nor any relevant taxing
authority in the United States, The Netherlands or Germany to make any
deduction or withholding from any payment due under the Notes, the Agency Agreement,
the Deed of Covenant or the Guarantee for or on account of any income,
registration, transfer or turnover taxes, customs or other duties or taxes of
any kind;

 

3.1.11      Maximum Amount not exceeded: the outstanding principal amount of all Notes on the date of issue
of any Note does not and will not exceed the Maximum Amount set out in the
Programme Summary (as increased from time to time pursuant to Clause 2.5)
and for this purpose the nominal amount of any Note denominated in any currency
other than Dollars shall be taken as the Dollar Equivalent of such nominal
amount as at the date of the agreement for the issue of such Note; and

 

3.1.12      Investment Company:
each Issuer and the Guarantor is not an investment company as defined in the
United States Investment Company Act of 1940.

 

3.2        Notice of
inaccuracy

If,
prior to the time a Note is issued and delivered to or for the account of the
relevant Dealer, an event occurs which would render any of the representations
and warranties set out in Clause 3.1 immediately, or with the lapse of
time, untrue or incorrect in any material respect, the relevant Issuer and the
Guarantor (where applicable) will inform the relevant Dealer in writing as soon
as practicable of the occurrence of such event. In either case, the relevant
Dealer shall inform the relevant Issuer in writing without any undue delay
whether it wishes to continue or discontinue the issuance and delivery of the
respective Notes.

 

9

 

4.           COVENANTS AND
AGREEMENTS

 

4.1        Issuer
and Guarantor

Each of
the Issuers and the Guarantor jointly and severally covenants and agrees that:

 

4.1.1        Delivery of published information:  whenever the Guarantor
shall publish or make available to its shareholders or to the public (by filing
with any regulatory authority, securities exchange or otherwise) any
information which could reasonably be expected to be material in the context of
this Agreement and the transactions contemplated hereby, the Guarantor shall
notify the Dealer(s) as to the nature of such information, shall make a
reasonable number of copies of such information available to the Dealer(s) upon
request to permit distribution to investors and prospective investors and shall
take such action as may be necessary to ensure that the representation and
warranty contained in sub-clause 3.1.5 is true and accurate in all
material respects on the dates contemplated by such sub-clause. Notwithstanding
the foregoing, the Guarantor will satisfy its obligations to notify the
Dealer(s) under this Clause 4.1.1 by maintaining an e-mail alert system
affording the Dealer(s) the opportunity to register via the Guarantor’s web
site to receive notification of the Guarantor’s news releases and filings with
the SEC, and the Dealers agree to so register. The Guarantor will notify the
Dealer(s) if the e-mail alert system is discontinued and, in such event,
notices pursuant to this Clause 4.1.1 will be delivered in accordance with
Clause 7.1 of this Agreement. Certain SEC Filings are available via electronic
means including the Internet (http://www.sec.gov/cgi-bin/srch-edgar) and
Bloomberg Business News.

 

4.1.2         Indemnity:  each of the Issuers and the Guarantor jointly
and severally undertake to the Dealers that if the Dealer or any of the Dealer’s
Related Parties incurs any Loss arising out of:

 

(a)       the relevant Issuer’s failure (other than, in the reasonable opinion
of the Issuer, for technical reasons) to make due payment under the Notes; or

 

(b)       the Guarantor’s failure to make due payment under the Guarantee; or

 

(c)       Notes not being issued for any reason (other than as a result of the
failure of any Dealer to pay) after an agreement for the sale of such Notes has
been made; or

 

(d)       any breach or alleged breach of the representations, warranties,
covenants or agreements made by the relevant Issuer or the Guarantor in this
Agreement,

 

the
Issuers or, as the case may be, the Guarantor shall pay to the Dealer on demand
an amount equal to such Loss. The Dealer shall not have any duty or other
obligation, whether as fiduciary or trustee for any of its Related Parties or
otherwise, to recover any such payment or to account to any other person for
any amounts paid to it under this Clause.

 

10

 

4.1.3         Expenses, stamp duties, amendments: each of the Issuers and the Guarantor will:

 

(a)       Arranger’s expenses:  pay, or reimburse the Arranger for, all
reasonable out-of-pocket costs and expenses (including United Kingdom value
added tax and any other taxes or duties thereon and fees and disbursements of
counsel to the Arranger) incurred by the Arranger in connection with the
preparation, negotiation, printing, execution and delivery of this Agreement
and all documents contemplated by this Agreement;

 

(b)       Dealers’ expenses:  pay, or reimburse each Dealer for, all
reasonable out-of-pocket costs and expenses (including United Kingdom value
added tax and any other taxes or duties thereon and fees and disbursements of
counsel to such Dealer) incurred by such Dealer in connection with the
enforcement or protection of its rights under this Agreement;

 

(c)       Stamp duties:  pay all stamp, registration and other taxes
and duties (including any interest and penalties thereon or in connection
therewith) which may be payable upon or in connection with the creation and
issue of the Notes and the execution, delivery and performance of the
Agreements and the Guarantee and the Issuers shall jointly and severally
indemnify each Dealer against any claim, demand, action, liability, damages,
cost, loss or expense (including, without limitation, legal fees and any
applicable value added tax) which it may incur as a result or arising out of or
in relation to any failure to pay or delay in paying any of the same;

 

(d)       Amendments:  notify each Dealer of any change in the
identity of or the offices of the Issue and Paying Agent and any material
change or amendment to or termination of the Agency Agreement or the Deed of
Covenant or the Guarantee not later than five days prior to the making of any
such change or amendment or such termination; and it will not permit to become
effective any such change, amendment or termination which could reasonably be
expected to affect adversely the interests of any Dealer or the holder of any
Notes then outstanding; and

 

4.1.4        No deposit-taking:  the relevant Issuer will issue the Notes only
if the following conditions apply (or the Notes can otherwise be issued without
contravention of section 19 of the FSMA):

 

(a)       Selling restrictions:
each relevant Dealer represents, warrants and agrees in the terms set out in
sub-clause 3.2 of Schedule 2; and

 

(b)       Minimum denomination:
the redemption value of each such Note is not less than $500,000 (or an amount
of equivalent value denominated wholly or partly in a currency other than dollars),
and no part of any Note may be transferred unless the redemption value of that
part is not less than $500,000 (or such an equivalent amount).

 

11

 

4.2        Compliance

 

The
Issuers and the Guarantor shall take such steps (in conjunction with the
Dealer(s), where appropriate) to ensure that any laws and regulations or
requirements of any governmental agency, authority or institution which may
from time to time be applicable to any Note shall be fully observed and
complied with and in particular (but without limitation):

 

4.2.1        Regulation S: 
that neither the Issuers, the Guarantor, nor
any of their affiliates nor any person acting on their or their affiliates
behalf have engaged or will engage in any directed selling efforts with respect
to the Notes, and they and their affiliates have complied and will comply with
the offering restrictions requirement of Regulation S. Terms used in this
sub-clause have the meanings given to them by Regulation S under the Securities
Act.

 

4.3        Selling
restrictions

Each
Dealer represents, covenants and agrees that it has complied with and will
comply with the selling restrictions set out in Schedule 2, and that the
representations contained therein are true and correct. Subject to compliance
with those restrictions, each Dealer is hereby authorised by each of the
Issuers and the Guarantor to circulate the Disclosure Documents to purchasers
or potential purchasers of the Notes.

 

4.4        Dealers’
obligations several

The
obligations of each Dealer contained in this Agreement are several.

 

4.5        Status of
Arranger

Each of
the Dealers agrees that the Arranger has only acted in an administrative
capacity to facilitate the establishment and/or maintenance of the Programme
and has no responsibility to it for (a) the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, undertaking, agreement,
statement or information in the Information Memorandum, this Agreement or any
information provided in connection with the Programme or (b) the nature and
suitability to it of all legal, tax and accounting matters and all
documentation in connection with the Programme or any issue of Notes
thereunder.

 

4.6        Issuers’
compliance

The
Guarantor shall procure that the Issuers shall comply with and discharge their
respective obligations under each of the Agreements and the Notes.

 

5.           CONDITIONS
PRECEDENT

 

5.1        Conditions
precedent to first issue

The
relevant Issuer and the Guarantor agrees to deliver to each Dealer, prior to
the first issue of Notes to that Dealer, each of the documents set out in
Schedule 1 in form, substance and number reasonably requested by the relevant
Dealer.

 

5.2        Conditions
precedent to each issue

In
relation to each issue of Notes, it shall be a condition precedent to the
purchase thereof by any Dealer that (a) the representations and warranties
in Clause 3.1 shall be true and correct in all material respects on each
date upon which an agreement for the sale of Notes is made hereunder and on the
date on which such Notes are issued and that

 

12

 

(b) there
is no other material breach of any of the obligations of the relevant Issuer or
the Guarantor or either of them under any of the Agreements, the Notes or the
Guarantee.

 

5.3        Sterling
Definitive Notes

 

In
relation to an issue of Sterling Definitive Notes (and if so agreed between the
relevant Issuer and the relevant Dealer), it shall be a condition precedent to
the purchase thereof by any Dealer that the relevant Issuer supplies to each
Dealer, not less than five days prior to the first issue of such Notes to that
Dealer, confirmation from the Issue and Paying Agent that the relevant agreed
forms of Definitive Note have been security printed and the same delivered to
the Issue and Paying Agent.

 

6.           TERMINATION AND
APPOINTMENT

 

6.1        Termination

The
Issuers may terminate the appointment of any Dealer, and any Dealer may resign,
on not less than ten days’ written notice to the relevant Dealer or the
Issuers, as the case may be. The Issuers shall promptly inform the other
Dealer(s), the Guarantor and the Issue and Paying Agent of any such termination
or resignation. The rights and obligations of each party hereto shall not
terminate in respect of any rights or obligations accrued or incurred before
the date on which such termination takes effect and the provisions of
sub-clause 4.1.2 and 4.1.3 shall survive termination of this Agreement and
delivery against payment for any of the Notes.

 

6.2        Additional
Dealers

Nothing
in this Agreement shall prevent the Issuers from appointing one or more
additional Dealers upon the terms of this Agreement provided that any
additional Dealer shall have first confirmed acceptance of its appointment upon
such terms in writing to the Issuers in substantially the form of the letter
set out in Schedule 5, whereupon it shall become a party to this Agreement
vested with all the authority, rights, powers, duties and obligations as if
originally named as a Dealer hereunder. The Issuers shall promptly inform the
other Dealer(s), the Guarantor and the Issue and Paying Agent of any such
appointment. The Issuers and the Guarantor hereby agrees to supply to such
additional Dealer, upon such appointment, such legal opinions as are specified
in paragraph 6 of Schedule 1, if requested, or reliance letters in respect
thereof.

 

7.           NOTICES

 

7.1        Addressee
for notices

All
notices and other communications hereunder shall, save as otherwise provided in
this Agreement, be made in writing and in English (by letter or fax) and shall
be sent to the intended recipient at the address or fax number and marked for
the attention of the person (if any) from time to time designated by that party
to the other parties hereto for such purpose. The initial address and fax
number so designated by each party are set out in the Programme Summary.

 

7.2        Effectiveness

Any
communication from any party to any other under this Agreement shall be
effective upon receipt by the addressee, provided that any such notice or other
communication which would otherwise take effect after 4.00 p.m. on any
particular day shall not take

 

13

 

effect
until 10.00 a.m. on the immediately succeeding business day in the place of the
addressee.

 

7.3        Assignment

If, at
any time, any Dealer shall transfer all or substantially all of its
euro-commercial paper business to any affiliate then, on the date such transfer
becomes effective, such affiliate shall become the successor to the relevant
Dealer under this Agreement without the execution or filing of any paper or any
further act on the part of the parties hereto so that the Issuers and the
Guarantor and such affiliate shall acquire and become subject to the same
rights and obligations between themselves as if they had entered into an
agreement in the form (the relevant changes having been made) of this Agreement.
After the said effective date all references in this Agreement to the relevant
Dealer shall be deemed to be references to such affiliate. The relevant Dealer
shall, as soon as reasonably practicable, give notice of any such transfer to
the Issuers. In this Clause 7.3, “affiliate”
means, in relation to any person, any entity controlled, directly or
indirectly, by such person, any entity that controls, directly or indirectly,
such person, or any entity under common control with such person. For this
purpose “control” of any entity or person means ownership of a majority of the
voting power of the entity or person.

 

8.           THIRD PARTY RIGHTS

A
person who is not a party to this Agreement has no right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this Agreement, but
this does not affect any right or remedy of a third party which exists or is
available apart from that Act.

 

9.           LAW AND
JURISDICTION

 

9.1        Governing
law

This
Agreement and all matters arising from or connected with it are governed by,
and shall be construed in accordance with, English law.

 

9.2        English
courts

The
courts of England have exclusive jurisdiction to settle any dispute (a “Dispute”), arising from or connected with this Agreement
(including a dispute regarding the existence, validity or termination of this
Agreement) or the consequences of its nullity.

 

9.3        Appropriate
forum

The
parties agree that the courts of England are the most appropriate and
convenient courts to settle any Dispute and, accordingly, that they will not
argue to the contrary.

 

9.4        Rights of
the Dealers to take proceedings outside England

Clause 9.2
(English courts) is for the benefit of
the Dealers only. As a result, nothing in this Clause 9 (Law and jurisdiction) prevents the Dealers from taking
proceedings relating to a Dispute (“Proceedings”)
in any other courts with jurisdiction. To the extent allowed by law, the
Dealers may take concurrent Proceedings in any number of jurisdictions.

 

9.5        Process
agent

Each
Issuer and the Guarantor agrees that the documents which start any Proceedings
and any other documents required to be served in relation to those Proceedings
may be

 

14

 

served
on it by being delivered to Law Debenture Corporate Services Limited at Fifth
Floor, 100 Wood Street, London EC2V 7EX or, if different, its registered office
for the time being or at any address of the relevant Issuer or the Guarantor in
Great Britain at which process may be served on it in accordance with Part
XXIII of the Companies Act 1985. If such person is not or ceases to be
effectively appointed to accept service of process on behalf of the Issuers and
the Guarantor, the Issuers and the Guarantor shall, on the written demand of
any Dealer addressed and delivered to the Issuers and the Guarantor appoint a
further person in England to accept service of process on its behalf and,
failing such appointment within 15 days, any Dealer shall be entitled to
appoint such a person by written notice addressed to the Issuers and the
Guarantor and delivered to the Issuers and the Guarantor. Nothing in this
paragraph shall affect the right of any Dealer to serve process in any other
manner permitted by law. This clause applies to Proceedings in England and to
Proceedings elsewhere.

 

9.6        Ecolab
B.V.

If
Ecolab B.V. is represented by an attorney or attorneys in connection with the
signing and/or execution and/or delivery of this Agreement or any agreement or
document referred to herein or made pursuant hereto and the relevant power or
powers of attorney is or are expressed to be governed by the laws of The
Netherlands, it is hereby expressly acknowledged and accepted by the other
parties hereto that such laws shall govern the existence and extent of such
attorney’s or attorneys’ authority and the effects of the exercise thereof.

 

10.        COUNTERPARTS

 

This
Agreement may be signed in any number of counterparts, all of which when taken
together shall constitute a single agreement.

 

AS
WITNESS the hands of the duly authorised
representatives of the parties hereto the day and year first before written.

 

15

 

SCHEDULE 1     

CONDITION PRECEDENT DOCUMENTS

 

1.           Certified copies of the
Issuers’ and the Guarantor’s constituting documents, together with English
translations, where required.

 

2.           Certified copies of all
documents evidencing the internal authorisations and approvals required to be
granted by the Issuers and the Guarantor in connection with the Programme,
together with English translations, where required.

 

3.           Certified copies of any
governmental or other consents and any filings required in connection with the
Programme, together with English translations, where required.

 

4.           Certified or conformed
copies of:

 

(a)            the Dealer Agreement, as
executed;

 

(b)            the Agency Agreement, as
executed;

 

(c)             the Deed of Covenant, as
executed; and

 

(d)            the Guarantee, as
executed.

 

5.           Copies of:

 

(a)            the confirmation of
acceptance of appointment from the agent for service of process; and

 

(b)            confirmation that the Deed
of Covenant and the Deed of Guarantee have been delivered to the Issue and
Paying Agent.

 

6.           Legal opinions from:

 

(a)            the associate general
counsel of Ecolab Inc. as to its due incorporation and the due authorisation
and execution of the Agreements in its capacities as both Issuer and Guarantor;

 

(b)            Clifford Chance as to the
laws of The Netherlands and Germany in respect of Ecolab B.V. and Ecolab
Holding GmbH respectively.

 

(c)             Clifford Chance as to the
laws of England.

 

7.           The Information Memorandum.

 

8.           A list of the names, titles
and specimen signatures of the persons authorised:

 

(a)            to sign on behalf of the
Issuers and the Guarantor this Agreement, the Deed of Covenant, the Agency
Agreement, the Notes and the Guarantee (as applicable);

 

(b)            to sign on behalf of the
Issuers and the Guarantor all notices and other documents to be delivered in
connection therewith; and

 

16

 

(c)             to take any other action
on behalf of the Issuers and the Guarantor in relation to the Programme.

 

9.           Confirmation from the
Issuers or the Issue and Paying Agent that the relevant forms of Global Note
have been prepared and the same delivered to the Issue and Paying Agent.

 

10.        Confirmation that Standard
& Poor’s Ratings Services, a division of the McGraw-Hill Companies Inc.,
and Moody’s Investors Service, Inc. respectively have granted ratings for the
Programme.

 

17

 

SCHEDULE 2     

SELLING RESTRICTIONS

 

1.           General

 

By its
purchase and acceptance of Notes issued under this Agreement, each Dealer
represents, warrants and agrees that it will observe all applicable laws and
regulations in any jurisdiction in which it may offer, sell or deliver Notes;
and that it will not directly or indirectly offer, sell, resell, re-offer or
deliver Notes or distribute any Disclosure Document, circular, advertisement or
other offering material in any country or jurisdiction except under
circumstances that will result in compliance with all applicable laws and
regulations.

 

2.           The United
States of America

 

2.1        Regulation S
Restrictions

The
Notes have not been and will not be registered under the Securities Act and may
not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons. Each Dealer represents and agrees that it has offered
and sold, and will offer and sell, Notes only outside the United States to non-U.S.
persons in accordance with Rule 903 of Regulation S under the Securities
Act. Accordingly, each Dealer represents and agrees that neither it, its
affiliates nor any persons acting on its or their behalf have engaged or will
engage in any directed selling efforts with respect to the Notes, and that it
and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Dealer also agrees that, at or prior to
confirmation of sale of Notes, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that purchases
Notes from it a confirmation or notice to substantially the following effect:

 

“The
Securities covered hereby have not been registered under the U.S. Securities
Act of 1933 (the “Securities Act”)
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons. Terms used above have the meanings given
to them by Regulation S under the Securities Act.”

 

Terms
used in this paragraph have the meanings given to them by Regulation S
under the Securities Act.

 

2.2        Tax
Restrictions

2.2.1        Except to the extent permitted
under U.S. Treas. Reg. §1.163-5(c)(2)(i)(D) (the “D Rules”), each Dealer (A) represents that it has not offered
or sold, and agrees that during the restricted period it will not offer or
sell, Notes (or interests therein) to a person who is within the United States
or its possessions or to a United States person, and (B) represents that it has
not delivered and agrees that it will not deliver within the United States or
its possessions definitive Notes that are sold during the restricted period;

 

2.2.2        each Dealer represents that it
has in effect, and agrees that throughout the restricted period it will have in
effect, procedures reasonably designed to ensure

 

18

 

that its employees and agents who are
directly engaged in selling Notes (or interests therein) are aware that such
Notes (or interests therein) may not be offered or sold during the restricted
period to a person who is within the United States or its possessions or to a
United States person, except as permitted by the D Rules;

 

2.2.3        if it is a United States
person, each Dealer represents that it is acquiring the Notes (or interests
therein) for purposes of resale in connection with their original issue and if
it retains Notes (or interests therein) for its own account, it will only do so
in accordance with the requirements of U.S. Treas. Reg.
§1.163-5(c)(2)(i)(D)(6)(i); and

 

2.2.4        with respect to each affiliate
that acquires Notes (or interests therein) for the purpose of offering or
selling such Notes (or interests therein) during the restricted period, each
Dealer either (A) repeats and confirms the representations and agreements
contained in subparagraphs 2.2.1 to 2.2.3 on its behalf or (B) agrees that it
will obtain from such affiliate for the benefit of the relevant Issuer the
representations and agreements contained in subparagraphs 2.2.1 to 2.2.3.

 

Terms
used in this paragraph 2.2 and not defined herein have the meanings given to
them by the U.S. Internal Revenue Code and regulations thereunder, including
the D Rules.

 

3.           The United
Kingdom

 

In
relation to each issue of Notes, the Dealer purchasing such Notes represents,
warrants and undertakes to the relevant Issuer and the Guarantor (where
appropriate) that:

 

3.1

 

3.1.1        it is a person whose ordinary
activities involve it in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of its business; and

 

3.1.2        it has not offered or sold and
will not offer or sell any Notes other than to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or who
it is reasonable to expect will acquire, hold, manage or dispose of investments
(as principal or agent) for the purposes of their businesses where the issue of
the Notes would otherwise constitute a contravention of section 19 of the
Financial Services and Markets Act 2000 (the “FSMA”)
by the relevant Issuer or the Guarantor;

 

3.2        it has only communicated or
caused to be communicated and will only communicate or cause to be communicated
an invitation or inducement to engage in investment activity (within the
meaning of section 21 of the FSMA) received by it in connection with the issue
or sale of any Notes in circumstances in which section 21(1) of the FSMA does
not apply to the relevant Issuer or the Guarantor; and

 

19

 

3.3        it has complied and will
comply with all applicable provisions of the FSMA with respect to anything done
by it in relation to any Notes in, from or otherwise involving the United
Kingdom.

 

4.           Japan

 

The
Notes have not been and will not be registered under the Securities and
Exchange Law of Japan and, accordingly, each Dealer undertakes that it will not
offer or sell any Notes, directly or indirectly, in Japan or to, or for the
benefit of any Japanese Person or to others for re-offering or resale, directly
or indirectly, in Japan or to any Japanese Person expect under circumstances
which will result in compliance with all applicable laws, regulations and
guidelines promulgated by the relevant Japanese governmental and regulatory authorities
and in effect at the relevant time. For the purposes of this paragraph, “Japanese
Person” shall mean any person resident in Japan, including any corporation or
other entity organised under the laws of Japan.

 

5.           Switzerland

 

Each
Dealer agrees that any issue of Notes denominated in Swiss Francs will be in
compliance with the guidelines of the Swiss National Bank regarding issues of
Swiss Franc denominated debt securities.

 

6.           The Netherlands

 

6.1        Notes issued by Ecolab Holding
GmbH shall only be offered and sold to individuals or entities resident,
domiciled or established in The Netherlands (“Dutch Residents”) in accordance with the following
conditions (“High Denomination Notes”):

 

6.1.1        such Notes shall upon the
relevant Issue Date have a minimum denomination of at least EUR100,000  (or its foreign currency equivalent);

 

6.1.2        either Ecolab Holding GmbH is
not reasonably able to identify any Dutch Resident holders of such Notes on the
relevant Issue Date (other than the Dealers), or to the extent such Notes are
issued directly to such holders or issued in circumstances where Ecolab Holding
GmbH is reasonably aware of their identity on or prior to the Issue Date (as
will be the case for the Dealers), such holders must qualify as a professional
market party (“PMP”) within the
meaning of the Exemption Regulation under the Dutch Act on the Supervision of
Credit Institutions 1992 (Wet toezicht
kredietwezen 1992; the “Exemption Regulation”)
and be verified as such by Ecolab Holding GmbH on or prior to such Issue Date
in accordance with the Dutch Central Bank’s 2005 policy rules pursuant to the
Exemption Regulation (Beleidsregels 2005
kernbegrippen markttoetreding en handhaving Wtk 1992);

 

6.1.3        such Notes are held at the time of
issuance through a clearing system that is established in a European Economic
Area member state, the United Sates, Japan, Australia, Canada or Switzerland in
which securities can only be held through a licensed bank or securities firm or
directly by a member of such clearing system qualifying as a PMP.

 

20

 

6.2        Notwithstanding the provisions
of paragraph (a) above, Zero Coupon Notes (as defined below) in definitive form
of the relevant Issuer may only be transferred and accepted, directly or
indirectly, within, from or into The Netherlands through the mediation of
either the relevant Issuer or a member firm of Euronext Amsterdam N.V. in full
compliance with the Dutch Savings Certificates Act (Wet inzake
spaarbewijzen) of 21 May 1985 (as amended) and its implementing
regulations. No such mediation is required: (a) in respect of the transfer and
acceptance of rights representing an interest in a Zero Coupon Note in global
form, or (b) in respect of the initial issue of Zero Coupon Notes in definitive
form to the first holders thereof, or (c) in respect of the transfer and
acceptance of Zero Coupon Notes in definitive form between individuals not
acting in the conduct of a business or profession, or (d) in respect of the
transfer and acceptance of such Zero Coupon Notes within, from or into The
Netherlands if all Zero Coupon Notes (either in definitive form or as rights
representing an interest in a Zero Coupon Note in global form) are issued
outside The Netherlands and are not distributed into The Netherlands in the
course of initial distribution or immediately thereafter. As used herein “Zero Coupon Notes” are Notes that are in bearer form and
that constitute a claim for a fixed sum against the relevant Issuer and on
which interest does not become due during their tenor or on which no interest
is due whatsoever.

 

21

 

SCHEDULE 3     

PROGRAMME SUMMARY

 

	
  Issuer/Guarantor

  	
   

  	
   

  	
   

  	
  Issuer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ecolab Inc.

  	
   

  	
   

  	
   

  	
  Ecolab B.V.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  370 North Wabasha Street,

  St. Paul,

  MN 55102-1390,

  U.S.A.

  	
   

  	
  Address:

  	
   

  	
  Edisonbaan 9-11
3439 MN Nieuwegein
The Netherlands

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  + 1 651 293 4506

  	
   

  	
  Telephone:

  	
   

  	
  +32 2 46 75144

  
	
  Fax:

  	
   

  	
  + 1 651 293 2379

  	
   

  	
  Fax:

  	
   

  	
  +32 2 46 75133

  
	
  Contact:

  	
   

  	
  Assistant Treasurer

  	
   

  	
  Contact:

  	
   

  	
  BENELUX
  Controller

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (cc. Ecolab
  Inc. as specified above)

  
	
  Issuer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ecolab Holding

  GmbH

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Reisholzer Werftstraße
38-42,
D-40589 Düsseldorf,
Germany

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  +49 211 9893
  270

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  +49 211 9893
  297

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Tax and
  Treasury, Europe

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (cc. Ecolab
  Inc. as specified

  above)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dealer and Arranger

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse First Boston
  (Europe) Limited

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  One Cabot Square

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  London E14 4QJ

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  + 44 20 7888 9968

  	
   

  	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  + 44 20 7905 6132

  	
   

  	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Commercial Paper Desk

  	
   

  	
   

  	
   

  	
   

  

 

22

 

	
  Dealer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citibank International plc

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Citigroup Centre

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Canada Square

  Canary Wharf

  London E14 5LB

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  + 44 20 7986 9070

  	
   

  	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  + 44 20 7986 6837

  	
   

  	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Short-Term Fixed Income Desk

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Issue and Paying Agent

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citibank, N.A.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  5 Carmelite Street

  London EC4Y 0PA

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  + 44 20 7508 3826

  	
   

  	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  + 44 20 7508 3884

  	
   

  	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Global Agency and Trust

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Maximum

  Amount:

  	
   

  	
   

  	
   

  	
  Denominations:

  	
   

  
	
  U.S.$200,000,000

  	
   

  	
   

  	
   

  	
  U.S.$500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (or other conventionally accepted
  Denominations in other currencies, provided that the Dollar Equivalent of any
  Note must be at least U.S.$500,000 on the issue date).

  	
   

  

 

23

 

	
  Governing Law:

  	
   

  	
   

  	
   

  	
  Form of Notes:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Agreements:

  

  Notes:

  	
   

  	
  English

  

  English

  	
   

  	
  The Notes will be in bearer form. The
  Notes will initially be in global form (“Global
  Notes”) or in the case of Sterling-denominated Notes, in
  definitive form (“Sterling Definitive Notes”).
  A Global Note will be exchangeable into definitive notes (“Definitive Notes”) only in the
  circumstances set out in that Global Note (and as summarised below).

  

  Exchangeable Global Notes. A Global Note will be exchangeable, in whole but
  not in part, for Definitive Notes after surrender of the Global Note to the
  Issue and Paying Agent only (i) if default is made in payment of any sum due
  under the Notes represented by such Global Note, or (ii) if Euroclear or
  Clearstream, Luxembourg or any relevant clearing system is closed for a
  continuous period of 14 days or more (other than by reason of weekends or
  public holidays, statutory or otherwise).

  

  Sterling Definitive Notes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Notes may be issued at a discount to face
  value or may bear fixed or floating rate interest or may be Index Linked Notes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Term:

  	
   

  	
   

  	
   

  	
  Maximum Term:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  One day

  	
   

  	
   

  	
   

  	
  183 days

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clearing Systems:

  	
   

  	
   

  	
   

  	
  Selling Restrictions:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Euroclear Bank S.A./N.V., as operator of
  the Euroclear system

  	
   

  	
   

  	
   

  	
  U.S.A.

  United Kingdom

  	
   

  
	
  Euroclear France

  	
   

  	
   

  	
   

  	
  Japan

  	
   

  
	
  Clearstream Banking, société anonyme,
  Luxembourg

  	
   

  	
   

  	
   

  	
  Switzerland

  The Netherlands

  	
   

  
	
  (or such other recognised clearing system
  as may be agreed between the relevant Issuer and the Issue and Paying Agent
  and in which Notes may from time to time be held)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Agent for Service of Process:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Law Debenture Corporate
  Services Limited

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Fifth Floor

  	
   

  	
   

  	
   

  

 

24

 

	
   

  	
   

  	
  100 Wood Street

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  London EC2V 7EX

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  +44 20 7606 5451

  	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  +44 20 7606 0643

  	
   

  	
   

  	
   

  
	
  Telex:

  	
   

  	
  888347/8956803

  	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Service of Process

  	
   

  	
   

  	
   

  

 

25

 

SCHEDULE 4     

INCREASE OF MAXIMUM AMOUNT

 

[Letterhead
of Ecolab]

 

[Date]

 

To:          Credit Suisse First Boston
(Europe) Limited

Citibank International plc

Citibank, N.A. (as Issue and Paying Agent])

 

Dear
Sirs

 

U.S.$200,000,000
Euro-commercial paper programme

 

We
refer to an amended and restated dealer agreement dated 2 December 2005 (the “Dealer Agreement”) between ourselves as Issuers, the
Guarantor, the Arranger and the Dealers party thereto relating to a
U.S.$200,000,000 Euro-commercial paper programme (the “Programme”). Terms used in the Dealer Agreement shall have
the same meaning in this letter.

 

In
accordance with Clause 2.5 of the Dealer Agreement, we hereby notify each
of the addressees listed above that the Maximum Amount of the Programme is to
be increased from U.S.$[ ],000,000 to U.S.$[ ],000,000 with effect from [date], subject to delivery of the following documents:

 

(a)         an updated or supplemental
Information Memorandum reflecting the increase in the Maximum Amount of the
Programme;

 

(b)         certified copies of all
documents evidencing the internal authorisations and approvals required to be
granted by the Issuers and the Guarantor for such increase in the Maximum
Amount;

 

(c)         certified copies of [specify any governmental or other consents required by the Issuers and
the Guarantor] for such
increase;

 

(d)         legal opinions from (i) the
associate general counsel of Ecolab Inc. and (ii) Clifford Chance as to the
laws of The Netherlands, Germany and the United Kingdom relating to such
increase;

 

(e)         a list of names, titles and
specimen signatures of the persons authorised to sign on behalf of the Issuers
and the Guarantor all notices and other documents to be delivered in connection
with such an increase in the Maximum Amount; and

 

(f)          written confirmation that
Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies
Inc., and Moody’s Investors Service, Inc. respectively are maintaining their
current ratings for the Programme.

 

26

 

From
the date on which such increase in the Maximum Amount becomes effective, all
references in the Dealer Agreement to the Maximum Amount or the amount of the
Programme shall be construed as references to the increased Maximum Amount as
specified herein.

 

Yours
faithfully

 

 

	
   

  	
   

  	
   

  	
   

  
	
  for
  and on behalf of

  	
  for
  and on behalf of

  
	
  ECOLAB INC. (in its capacity as Issuer)

  	
  ECOLAB B.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  for and
  on behalf of

  	
   

  
	
  ECOLAB HOLDING GMBH 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  for
  and on behalf of

  
	
  ECOLAB INC. (in its capacity as

  Guarantor)

  

 

27

 

SCHEDULE 5

APPOINTMENT OF NEW DEALER

 

[Letterhead
of Ecolab]

 

[Date]

 

To:          [Name of new Dealer]

 

 

Dear
Sirs

U.S.$[•]00,000,000 Euro-commercial paper programme

 

We
refer to an amended and restated dealer agreement dated 2 December 2005 (the “Dealer Agreement”) between ourselves as Issuers, the
Arranger and the Dealers party thereto relating to a U.S.$[•]00,000,000 Euro-commercial paper programme (the “Programme”). Terms used in the Dealer Agreement shall have
the same meaning in this letter.

 

In
accordance with Clause 6.2 of the Dealer Agreement, we hereby appoint you
as an additional dealer for the Programme upon the terms of the Dealer
Agreement with [immediate effect/effect from [date]].
Please confirm acceptance of your appointment upon such terms by signing and
returning to us the enclosed copy of this letter, whereupon you will, in accordance
with Clause 6.2 of the Dealer Agreement, become a party to the Dealer
Agreement vested with all the authority, rights, powers, duties and obligations
as if originally named as a Dealer thereunder.

 

Yours
faithfully

 

 

	
   

  	
   

  
	
  for
  and on behalf of

  
	
  ECOLAB INC. (in its capacity as Issuer)

  
	
   

  
	
   

  
	
   

  	
   

  
	
  for
  and on behalf of

  
	
  ECOLAB B.V.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  for
  and on behalf of

  
	
  ECOLAB HOLDING GMBH

  

 

28

 

	
   

  	
   

  
	
  for
  and on behalf of

  
	
  ECOLAB INC. (in its capacity as Guarantor)

  

 

[On
copy]

 

We
hereby confirm acceptance of our appointment as a Dealer upon the terms of the
Dealer Agreement referred to above. For the purposes of Clause 7 (Notices), our contact details are as follows:

 

 

[Name
of Dealer]

 

Address:                [                    ]

 

Telephone:            [                    ]

 

Fax:                        [                    ]

 

Telex:                     [                    ]

 

Contact:                                [                    ]

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signed:

  	
   

  	
   

  

for [Name of new Dealer]

 

29

 

SCHEDULE 6     

FORM OF CALCULATION AGENCY AGREEMENT

 

THIS
AGREEMENT is made on [date]

 

BETWEEN

 

(1)         [ECOLAB
INC./ECOLAB B.V./ECOLAB HOLDING GMBH] (delete as appropriate)(the “Issuer”); [and]

 

(2)         [ECOLAB INC (the “Guarantor”);
and] (delete where Ecolab Inc. is the Issuer)

 

(3)         [CALCULATION
AGENT], as the calculation agent appointed pursuant
to Clause 2 hereof (the “Calculation Agent”,
which expression shall include any successor thereto).

 

WHEREAS:

 

(A)        Under an amended and restated
dealer agreement (as amended, supplemented and/or restated from time to time,
the “Dealer Agreement”) dated 2 December
2005 and made between the Issuers, the Guarantor, the Arranger and the
Dealer(s) referred to therein, and an amended and restated note agency
agreement (as amended, supplemented and/or restated from time to time, the “Agency Agreement”) dated 2 December 2005 and made between
the Issuers, the Guarantor and the agents referred to therein, the Issuers
established a Euro-commercial paper programme (the “Programme”).

 

(B)        The Dealer Agreement contemplates,
among other things, the issue under the Programme of index linked notes and
provides for the appointment of calculation agents in relation thereto. Each
such calculation agent’s appointment shall be on substantially the terms and
subject to the conditions of this Agreement.

 

IT
IS AGREED as follows:

 

1.           INTERPRETATION

 

1.1        Definitions

Terms
not expressly defined herein shall have the meanings given to them in the
Dealer Agreement or the Agency Agreement.

 

1.2        Legislation

Any
reference in this Agreement to any legislation (whether primary legislation or
regulations or other subsidiary legislation made pursuant to primary
legislation) shall be construed as a reference to such legislation as the same
may have been, or may from time to time be, amended or re-enacted.

 

1.3        Index Linked
Notes

“Relevant Index Linked Notes” means such Index Linked Notes
in respect of which the Calculation Agent is appointed.

 

30

 

2.           APPOINTMENT OF
CALCULATION AGENT

 

The
Issuer appoints the Calculation Agent as its agent for the purpose of
calculating the redemption amount and/or, if applicable, the amount of interest
in respect of the Relevant Index Linked Notes upon the terms and subject to the
conditions of this Agreement. The Calculation Agent accepts such appointment.

 

3.           DETERMINATION
AND NOTIFICATION

 

3.1        Determination

The
Calculation Agent shall determine the redemption amount of, and/or, if
applicable, the amount of interest payable on, each Relevant Index Linked Note
in accordance with the redemption calculation applicable thereto.

 

3.2        Notification

 

The
Calculation Agent shall as soon as it has made its determination as provided
for in Clause 3.1 above (and, in any event, no later than the close of
business on the date on which the determination is made) notify the Issuer and
the Issue and Paying Agent (if other than the Calculation Agent) of the
redemption amount and/or, if applicable, the amount of interest so payable.

 

4.           STAMP DUTIES

The
Issuer will pay all stamp, registration and other taxes and duties (including
any interest and penalties thereon or in connection therewith) payable in
connection with the execution, delivery and performance of this Agreement.

 

5.           INDEMNITY AND
LIABILITY

 

5.1        Indemnity

The
Issuer shall indemnify and hold harmless on demand the Calculation Agent
against any claim, demand, action, liability, damages, cost, loss or expense
(including, without limitation, legal fees and any applicable value added tax)
which it may incur arising out of the exercise of its powers and duties as
Calculation Agent under this Agreement, except such as may result from its own
negligence or bad faith or that of its officers, employees or agents.

 

5.2        Liability

The
Calculation Agent may consult as to legal matters with lawyers selected by it,
who may be employees of, or lawyers to, the Issuer. If such consultation is
made, the Calculation Agent shall be protected and shall incur no liability for
action taken or not taken by it as Calculation Agent or suffered to be taken
with respect to such matters in good faith, without negligence and in
accordance with the opinion of such lawyers.

 

6.           CONDITIONS OF
APPOINTMENT

 

The
Calculation Agent and the Issuer agree that its appointment will be subject to
the following conditions:

 

(a)            No obligations:
in acting under this Agreement, the Calculation
Agent shall act as an independent expert and shall not assume any obligations
towards or

 

31

 

relationship of agency or trust with the
Issuer or the owner or holder of any of the Relevant Index Linked Notes or any
interest therein;

 

(b)            Notices: unless otherwise specifically provided in this Agreement, any order,
certificate, notice, request, direction or other communication from the Issuer
made or given under any provision of this Agreement shall be sufficient if
signed or purported to be signed by a duly authorised employee of the Issuer;

 

(c)             Duties: the Calculation Agent shall be obliged to perform only those duties
which are set out in this Agreement and in the redemption calculation relating
to the Relevant Index Linked Notes;

 

(d)            Ownership,
interest: the Calculation Agent and its officers
and employees, in its individual or any other capacity, may become the owner
of, or acquire any interest in, any Relevant Index Linked Notes with the same
rights that the Calculation Agent would have if it were not the Calculation
Agent hereunder; and

 

(e)             Calculations
and determinations: all calculations and
determinations made pursuant to this Agreement by the Calculation Agent shall
(save in the case of manifest error) be binding on the Issuer, the Calculation
Agent and (if other than the Calculation Agent) the holder(s) of the Relevant
Index Linked Notes and no liability to such holder(s) shall attach to the
Calculation Agent in connection with the exercise by the Calculation Agent of
its powers, duties or discretion under or in respect of the Relevant Index
Linked Notes in accordance with the provisions of this Agreement, except such
as may result from its own gross negligence or bad faith or that of its
officers, employees or agents.

 

7.           ALTERNATIVE
APPOINTMENT

 

If, for
any reason, the Calculation Agent ceases to act as such or fails to comply with
its obligations under Clause 3, the Issuer shall appoint [the Issue and
Paying Agent] as calculation agent in respect of the Relevant Index Linked
Notes.

 

8.           THIRD PARTY
RIGHTS

 

A
person who is not a party to this Agreement has no right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this Agreement, but
this does not affect any right or remedy of a third party which exists or is
available apart from that Act.

 

9.           LAW AND
JURISDICTION

 

9.1        Governing law

This
Agreement is governed by, and shall be construed in accordance with, English
law.

 

9.2        Jurisdiction

The
Issuer agrees for the benefit of the Calculation Agent that the courts of
England shall have jurisdiction to hear and determine any suit, action or
proceedings, and to settle any disputes, which may arise out of or in connection
with this Agreement (respectively,

 

32

 

“Proceedings” and “Disputes”) and,
for such purposes, irrevocably submits to the jurisdiction of such courts.

 

9.3        Appropriate
forum

The
Issuer irrevocably waives any objection which it might now or hereafter have to
the courts of England being nominated as the forum to hear and determine any
Proceedings and to settle any Disputes, and agrees not to claim that any such
court is not a convenient or appropriate forum.

 

9.4        Process agent

The
Issuer agrees that the process by which any Proceedings in England are begun
may be served on it by being delivered to Law Debenture Corporate Services
Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX or, if different, its
registered office for the time being. If such person is not or ceases to be
effectively appointed to accept service of process on behalf of the Issuer, the
Issuer shall, on the written demand of the Calculation Agent addressed to the
Issuer and delivered to the Issuer appoint a further person in England to
accept service of process on its behalf and, failing such appointment within 15
days, the Calculation Agent shall be entitled to appoint such a person by
written notice addressed to the Issuer and delivered to the Issuer. Nothing in
this paragraph shall affect the right of the Calculation Agent to serve process
in any other manner permitted by law.

 

9.5        Non exclusivity

The
submission to the jurisdiction of the courts of England shall not (and shall
not be construed so as to) limit the right of the Calculation Agent to take
Proceedings in any other court of competent jurisdiction, nor shall the taking
of Proceedings in any one or more jurisdictions preclude the taking of
Proceedings in any other jurisdiction (whether concurrently or not) if and to
the extent permitted by law.

 

10.        COUNTERPARTS

 

This
Agreement may be signed in any number of counterparts, all of which when taken
together shall constitute a single agreement.

 

AS
WITNESS the hands of the duly authorised
representatives of the parties hereto the day and year first before written.

 

 

	
  [ECOLAB INC. (in its capacity as Issuer)

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ECOLAB B.V.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  

 

33

 

	
  ECOLAB HOLDING GMBH

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ECOLAB INC. (in its capacity as Guarantor)

  
	
   

  	
   

  
	
  By:

  	
   

  	
  ]*

  

 

(*Delete as appropriate)

 

34

 

Signature
Page

 

	
  The Issuers

  
	
   

  	
   

  
	
  ECOLAB INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/Mark
  D. Vangsgard

  	
   

  
	
   

  	
   

  
	
   

  
	
  ECOLAB B.V.

  
	
   

  	
   

  
	
  By:

  	
  /s/Mark
  D. Vangsgard

  	
   

  
	
   

  	
   

  
	
   

  
	
  ECOLAB HOLDING GMBH

  
	
   

  	
   

  
	
  By:

  	
  /s/Timothy
  P. Dordell

  	
   

  
	
   

  	
   

  
	
   

  
	
  The Guarantor

  
	
   

  	
   

  
	
  ECOLAB INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/Mark
  D. Vangsgard

  	
   

  
	
   

  	
   

  
	
   

  
	
  The Arranger

  
	
   

  	
   

  
	
   

  
	
  CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED

  
	
   

  	
   

  
	
  By:

  	
  /s/[signatory
  unrecognized]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The Dealers

  
	
   

  	
   

  
	
  CITIBANK INTERNATIONAL plc

  
	
   

  	
   

  
	
  By: 

  	
  /s/[signatory
  unrecognized]

  	
   

  
	
   

  	
   

  
	
   

  
	
  CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED

  
	
   

  
	
  By:

  	
  /s/[signatory
  unrecognized]

  	
   

  

 

35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}]]