Exhibit 3
RESTATED
CERTIFICATE OF INCORPORATION
OF
ECOLAB
INC.
Ecolab
Inc.
, a
corporation organized and existing under the laws of the State of Delaware,
hereby certifies as follows:
1.
The name of the corporation is
Ecolab Inc.
(the “Corporation”). The original
Certificate of Incorporation was filed on February 18, 1924, with the
Delaware Secretary of State under the name of Economics Laboratory, Inc.
2.
This Restated Certificate of Incorporation restates
and integrates and further amends the provisions of the Restated Certificate of
Incorporation of the Corporation by amending the second and fourth paragraphs
of Article IV of the Restated Certificate of Incorporation as follows:
(A)
The following sentence shall be added at the end of
the second paragraph of Article IV:
“Notwithstanding the
foregoing, (1) at the 2011 annual meeting of stockholders, the directors
whose terms expire at that meeting shall be elected to hold office for a
two-year term expiring at the 2013 annual meeting of stockholders; (2) at
the 2012 annual meeting of stockholders, the directors whose terms expire at
that meeting shall be elected to hold office for a one-year term expiring at
the 2013 annual meeting of stockholders; and (3) at the 2013 annual
meeting of stockholders and each annual meeting of stockholders thereafter, all
directors shall be elected for a one-year term expiring at the next annual
meeting of stockholders. Pursuant to such procedures, effective as of the 2013
annual meeting of stockholders, the Board of Directors will no longer be
classified under Section 141(d) of the General Corporation Law of
Delaware.”
(B)
The last sentence of Article IV shall be removed
and replaced with the following sentence:
“Subject to the rights of
the holders of any class or series of the capital stock then outstanding, (x) until
the 2013 annual meeting of stockholders and in accordance with Section 141(k)(1) of
the General Corporation Law of Delaware, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause and (y) from
and after the 2013 annual meeting of stockholders, any director, or the entire
Board of Directors, may be removed from office at any time, with or without
cause.”
3.
This Restated Certificate of Incorporation was duly
proposed by the directors and adopted by shareholders in the manner and by the
vote prescribed by Section 242 and duly adopted pursuant to Section 245
of the General Corporation Law of the State of Delaware.
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4.
The text of the Restated Certificate of Incorporation
of the Corporation, as amended, is hereby amended and restated in its entirety
to read as follows:
ARTICLE I
The name of the
Corporation is
Ecolab Inc.
ARTICLE
II
The purposes of the Corporation
are to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware, and without limiting
the foregoing, to hold shares of the capital stock of other corporations and to
engage in services of all kinds, and produce, manufacture, develop, construct,
transport, buy, hold, sell and generally deal in products, materials and
property, both tangible and intangible.
ARTICLE
III
The total number of
shares of all classes of capital stock which the Corporation shall have
authority to issue is four hundred fifteen million (415,000,000) consisting of
four hundred million (400,000,000) shares of Common Stock of the par value of
One Dollar ($1.00) per share and fifteen million (15,000,000) shares of Preferred
Stock without par value. The number of
authorized shares of any class of capital stock may be increased or decreased
by the affirmative vote of the holders of a majority of capital stock of the
Corporation entitled to vote.
The Board of Directors of
the Corporation is granted full and complete authority to fix by resolution or
resolutions the designation, and the powers, preferences and rights of the
Preferred Stock and any series thereof, and the qualifications, limitations or
restrictions on such powers, preferences and rights.
Series A
Junior Participating Preferred Stock
A series of Preferred
Stock of the Corporation is hereby created and the designation, amount thereof
and the working 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 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
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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 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
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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, 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
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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 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.
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(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 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
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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 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
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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.
No stockholder shall have
any preemptive right to subscribe to an additional issue of capital stock or to
any security convertible into such capital stock.
ARTICLE
IV
The business and affairs
of the Corporation shall be managed by or under the direction of a Board of
Directors. Except to the extent prohibited by law, the Board of Directors shall
have the right (which, to the extent exercised, shall be exclusive) to
establish the rights, powers, duties, rules and procedures (a) that
from time to time shall govern the Board of Directors and each of its members
including without limitation the vote required for any action by the Board of
Directors, and (b) that from time to time shall affect the directors’
power to manage and direct
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the business and affairs
of the Corporation; and Article V notwithstanding, no By-Law shall be
adopted by the stockholders of the Corporation which shall impair or impede the
implementation of the foregoing.
The Board of Directors
shall consist of a number of directors, which number shall be determined from
time to time exclusively by the Board of Directors pursuant to a resolution
adopted by affirmative vote of a majority of the entire Board of Directors. The
directors shall be divided into three classes as nearly equal in number as
possible, designated Class I, Class II and Class III. At the
1983 annual meeting of stockholders, Class I directors shall be elected
for a term expiring at the 1984 annual meeting of stockholders, Class II
directors shall be elected for a term expiring at the 1985 annual meeting of
stockholders, and Class III directors shall be elected for a term expiring
at the 1986 annual meeting of stockholders. At each annual meeting of
stockholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding annual meeting of stockholders
after their election. Notwithstanding the foregoing, (1) at the 2011
annual meeting of stockholders, the directors whose terms expire at that
meeting shall be elected to hold office for a two-year term expiring at the
2013 annual meeting of stockholders; (2) at the 2012 annual meeting of
stockholders, the directors whose terms expire at that meeting shall be elected
to hold office for a one-year term expiring at the 2013 annual meeting of
stockholders; and (3) at the 2013 annual meeting of stockholders and each
annual meeting of stockholders thereafter, all directors shall be elected for a
one-year term expiring at the next annual meeting of stockholders. Pursuant to
such procedures, effective as of the 2013 annual meeting of stockholders, the
Board of Directors will no longer be classified under Section 141(d) of
the General Corporation Law of Delaware.
Notwithstanding the
foregoing, whenever the holders of any one or more classes or series of
Preferred Stock shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of stockholders, the election,
term of office, filling of vacancies and other features of such directorships
shall be governed by the terms of the applicable designation of the powers,
preferences and rights made pursuant to Article III, and such directors so
elected shall not be divided into classes pursuant to this Article V
unless expressly provided by such terms.
Subject to the rights of
the holders of any class or series of the then outstanding capital stock of the
Corporation entitled to vote generally in the election of directors, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
may be filled only by a majority vote of the directors then in office, though
less than a quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires. No decrease in the number of
authorized directors constituting the entire Board of Directors shall shorten
the term of any incumbent director. Subject to the rights of the holders of any
class or series of the capital stock then outstanding, (x) until the 2013
annual meeting of stockholders and in accordance with Section 141(k)(1) of
the General Corporation Law of Delaware, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause and (y) from
and after the 2013 annual meeting of stockholders, any director, or the entire
Board of Directors, may be removed from office at any time, with or without
cause.
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No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty by such director as a
director; provided, however, that this Article IV shall not eliminate or
limit the liability of a director to the extent provided by applicable law (i) for
any breach of the director’s duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under Section 174
of the General Corporation Law of Delaware, or (iv) for any transaction
from which the director derived an improper personal benefit. No amendment to
or repeal of this Article IV shall apply to, or have any effect on, the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
ARTICLE V
The Board of Directors
may from time to time, by vote of a majority of its members, alter, amend or
rescind all or any of the By-Laws of the Corporation, as permitted by law,
subject to the power of the stockholders to change or repeal such By-Laws.
ARTICLE
VI
(A)
(1) In addition to any affirmative vote required
by law or the Certificate of Incorporation or By-Laws of the Corporation, and
except as otherwise expressly provided in paragraph B of this Article VI.
(a)
any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter defined) of an Interested
Stockholder; or
(b)
any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of transactions) to or
with any Interested Stockholder or any Affiliate of any Interested Stockholder
involving any assets or securities of the Corporation, any Subsidiary or any
Interested Stockholder or any Affiliate of any Interested Stockholder, having
an aggregate Fair Market Value (as hereinafter defined) of $10,000,000 or more;
or
(c)
the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliate of any Interested Stockholder; or
(d)
any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of increasing the
proportionate share of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly beneficially
owned by any Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(e)
any agreement, contract or other arrangement providing
for any one or more of the actions specified in clauses (a) to (d) of
this subparagraph (1), shall require the
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affirmative vote of at
least eighty percent (80%) of the voting power of all of the then outstanding
shares of the Voting Stock (as hereinafter defined) voting together as a single
class (it being understood that, for purposes of this Article VI, each
share of the Preference Stock (as hereinafter defined) which is Voting Stock
shall have the number of votes granted to it pursuant to the applicable
Preferred Stock Designation (as hereinafter defined) or Article III of
this Certificate of Incorporation). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2)
The term “Business Combination” as used in this Article VI
shall mean any transaction which is referred to in any one or more of clauses (a) through
(e) of subparagraph (1) of paragraph A.
(B)
The provisions of paragraph A of this Article VI
shall not be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote, if any, as is
required by law and any other provision of the Certificate of Incorporation or
the By-Laws of the Corporation, if all of the conditions specified in either of
the following subparagraphs (1) or (2) are met:
(1)
The Business Combination shall have been approved
(whether such approval is made prior to or subsequent to the acquisition of
beneficial ownership of the Voting Stock which caused the Interested
Stockholder to become an Interested Stockholder) by a majority of the
Continuing Directors (as hereinafter defined).
(2)
All of the following conditions shall have been met:
(a)
The consideration to be received by holders of a
particular class of outstanding Voting Stock shall be in cash or in the same
form as previously paid by or on behalf of the Interested Stockholder in
connection with its direct or indirect acquisition of beneficial ownership of
shares of such class of Voting Stock. If the consideration so paid for shares
of any class of Voting Stock varied as to form, the form of consideration for
such class of Voting Stock shall be either cash or the form used to acquire
beneficial ownership of the largest number of shares of such class of Voting
Stock previously acquired by the Interested Stockholder.
(b)
The aggregate amount of (x) cash and (y) the
Fair Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by
holders of Common Stock in such Business Combination shall be at least equal to
the higher amount determined under subclauses (i) and (ii) below:
(i)
(if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by
or on behalf of the Interested Stockholder for any share of Common Stock in
connection with the acquisition by the Interested Stockholder of beneficial
ownership of such share (x) within the two-year period immediately prior
to the first public announcement of the proposal of the Business Combination
(the “Announcement Date”) or (y) in the transaction in which the
Interested Stockholder became an Interested Stockholder, whichever is higher;
and
11
(ii)
the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
Interested Stockholder (such latter date is referred to in this Article VI
as the “Determination Date”), whichever is higher.
(c)
The aggregate amount of (x) cash and (y) the
Fair Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by
holders of shares of any class of outstanding Preference Stock, shall be at
least equal to the highest amount determined under subclauses (i), (ii) and
(iii) below:
(i)
(if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by
or on behalf of the Interested Stockholder for any share of such class of
Preference Stock in connection with the acquisition by the Interested
Stockholder of beneficial ownership of such share (x) within the two-year
period immediately prior to the Announcement Date or (y) in the
transaction in which the Interested Stockholder became an Interested
Stockholder, whichever is higher;
(ii)
the Fair Market Value per share of such class of
Preference Stock on the Announcement Date or on the Determination Date,
whichever is higher; and
(iii)
the highest preferential amount per share to which the
holders of shares of such class of Preference Stock would be entitled in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation, regardless of whether the Business Combination
to be consummated constitutes such an event.
The provisions of this
subparagraph (2) (c) shall be required to be met with respect to
every class of outstanding Preference Stock, whether or not the Interested
Stockholder has previously acquired beneficial ownership of any shares of a
particular class of Preference Stock.
(d)
After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination: (i) there shall have been no failure to declare and pay at
the regular date therefor any full dividends (whether or not cumulative) on the
outstanding Preference Stock, except as approved by a majority of the
Continuing Directors; (ii) there shall have been (x) no reduction in
the annual rate of dividends paid on the Common Stock (except as necessary to
reflect any subdivision of the Common Stock), except as approved by a majority
of the Continuing Directors, and (y) an increase in such annual rate of
dividends as necessary to reflect any reclassification (including any reverse
stock split), recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of Common Stock
unless the failure so to increase such annual rate is approved by a majority of
the Continuing Directors; and (iii) such Interested Stockholder shall not
have become the beneficial owner of any additional shares of Voting Stock
except as part of the transaction which results in such Interested Stockholder
becoming an Interested Stockholder and except in a transaction which, after
giving effect thereto, would not result in any increase in the Interested
Stockholder’s percentage beneficial ownership of any class of Voting Stock.
(e)
After becoming an Interested Stockholder, such
Interested Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder
12
of the Corporation), of
any loans, advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantages provided by the Corporation, whether in
anticipation of or in connection with such Business Combination or otherwise.
(f)
A proxy or information statement describing the
proposed Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations thereunder (“the
Act”) (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to all stockholders of the Corporation at least 30
days prior to the consummation of such Business Combination (whether or not
such proxy or information statement is required to be mailed pursuant to such
Act or any subsequent provisions).
(g)
Such Interested Stockholder shall not have made any
major change in the Corporation’s business or equity capital structure without
the approval of a majority of the Continuing Directors.
(C)
For the purposes of this Article VI:
(1)
The term “person” shall mean any individual, firm,
corporation or other entity.
(2)
The term “Interested Stockholder” shall mean any
person (other than the Corporation or any Subsidiary) who or which:
(a)
is the beneficial owner, directly or indirectly, of
more than ten percent (10%) of the voting power of the outstanding Voting
Stock; or
(b)
is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of ten percent (10%) or more of the
voting power of the then outstanding Voting Stock; or
(c)
is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by an Interested
Stockholder, if such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3)
A person shall be a “beneficial owner” of any Voting
Stock:
(a)
which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
(b)
which such person or any of its Affiliates or
Associates has, directly or indirectly, (i) the right to acquire (whether
such right is exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the
right to vote pursuant to any agreement, arrangement or understanding; or
13
(c)
which are beneficially owned, directly or indirectly,
by any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Voting Stock.
(4)
For the purposes of determining whether a person is an
Interested Stockholder pursuant to subparagraph (2) of this paragraph C,
the number of shares of Voting Stock deemed to be outstanding shall include
shares deemed owned through application of subparagraph (3) of this
paragraph C but shall not include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(5)
The terms “Affiliate” or “Associate” shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on January 1,
1983.
(6)
The term “Subsidiary” means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in subparagraph (2) of this paragraph C,
the term “Subsidiary” shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the Corporation.
(7)
The term “Continuing Director” means any member of the
Board of Directors of the Corporation (the “Board”), who is unaffiliated with
the Interested Stockholder and was a member of the Board prior to the time that
the Interested Stockholder became an Interested Stockholder, and any successor
of a Continuing Director, while such successor is a member of the Board, who is
unaffiliated with the Interested Stockholder and is recommended or elected to
succeed a Continuing Director by a majority of Continuing Directors.
(8)
The term “Fair Market Value” means (a) in the
case of stock, the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such stock on the New
York Stock Exchange, or, if such stock is not listed on such Exchange, on the
principal United States Securities Exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, on the National
Association of Securities Dealers, Inc. (“NASD”) National Market if such
stock is not listed on a registered Securities Exchange but is quoted on the
NASD National Market, or, if such stock is not so listed or quoted, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the NASD Automated Quotations System
or any system then in use, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as determined by
a majority of the Continuing Directors in good faith; and (b) in the case
of property other than cash or stock, the fair market value of such property on
the date in question as determined in good faith by a majority of the
Continuing Directors.
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(9)
The term “Preference Stock” shall mean the Preferred
Stock and any other class of preference stock which may from time to time be
authorized in or by the Certificate of Incorporation of the Corporation and
which by the terms of its issuance is specifically designated “Preference Stock”
for purposes of this Article VI.
(10)
The term “Preferred Stock Designation” shall mean any
designation of the powers, preferences and rights made pursuant to Article III
and filed with the Secretary of State of the State of Delaware.
(11)
The term “Voting Stock” shall mean all of the shares
of capital stock of the Corporation outstanding from time to time and entitled
to vote generally in the election of directors.
(12)
In the event of any Business Combination in which the
Corporation survives, the phrase “consideration other than cash to be received”
as used in subparagraphs (2)(b) and (c) of paragraph B of Article VI
shall include the shares of Common Stock and/or the shares of any other class
of Voting Stock retained by the holders of such shares.
(D)
Nothing contained in this Article VI shall be
construed to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
(E)
The fact that any Business Combination complies with
the provisions of paragraph B of this Article VI shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the stockholders of the Corporation, nor
shall such compliance limit, prohibit or otherwise restrict in any manner the
Board of Directors, or any member thereof, with respect to evaluations of or
actions and responses taken with respect to such Business Combination.
(F)
Notwithstanding any other provisions of the
Certificate of Incorporation of the Corporation or any provision of law which
might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of Voting
Stock required by law, the Certificate of Incorporation of the Corporation or
any Preferred Stock Designation, the affirmative vote of the holders of at
least eighty percent (80%) of the voting power of all of the then outstanding
shares of Voting Stock, voting together as a single class, shall be required to
amend or repeal this Article VI, or adopt any provisions inconsistent with
this Article VI; provided that, this paragraph F shall not apply to, and
such eighty percent (80%) vote shall not be required for, any amendment, repeal
or adoption unanimously recommended by the Board of Directors of the
Corporation if all of such directors are persons who would be eligible to serve
as Continuing Directors.
ARTICLE
VII
The address of the
Corporation’s registered office in the State of Delaware is 1209 Orange Street,
in the City of Wilmington, County of New Castle. The name of its registered
agent at such address is The Corporation Trust Company.
15
IN WITNESS
WHEREOF
, Ecolab
Inc. has caused this Restated Certificate of Incorporation to be signed by
Lawrence T. Bell, its General Counsel and Secretary, this 6th day of May, 2010.
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ECOLAB INC.
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/s/Lawrence T. Bell
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By:
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Lawrence T. Bell
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Its:
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General Counsel and Secretary
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16
Exhibit 10.A
ECOLAB INC.
2010 STOCK INCENTIVE PLAN
1.
Purpose of Plan
.
The purpose of the Ecolab
Inc. 2010 Stock Incentive Plan (the “Plan”) is to advance the interests of
Ecolab Inc. (the “Company”) and its stockholders by enabling the Company and
its Subsidiaries to attract and retain qualified individuals through
opportunities for equity participation in the Company, and to reward those
individuals who contribute to the achievement of the Company’ economic
objectives.
2.
Definitions.
The following terms will
have the meanings set forth below, unless the context clearly otherwise
requires:
2.1
“
Board
” means the Board of Directors of the
Company.
2.2
“
Broker Exercise Notice
” means a written notice
pursuant to which a Participant, upon exercise of an Option, irrevocably
instructs a broker or dealer to sell a sufficient number of shares or loan a
sufficient amount of money to pay all or a portion of the exercise price of the
Option and/or any related withholding tax obligations and remit such sums to the
Company and directs the Company to deliver stock certificates to be issued upon
such exercise directly to such broker or dealer or their nominee.
2.3
“
Cause
” means (i) dishonesty, fraud,
misrepresentation, embezzlement or deliberate injury or attempted injury, in
each case related to the Company or any Subsidiary, (ii) any unlawful or
criminal activity of a serious nature, (iii) any intentional and
deliberate breach of a duty or duties that, individually or in the aggregate,
are material in relation to the Participant’s overall duties, or (iv) any
material breach of any confidentiality or noncompete agreement entered into
with the Company or any Subsidiary.
2.4
“
Change in Control
” means an event described in
Section 14.1 of the Plan; provided, however, if an Incentive Award
constitutes a deferral of compensation subject to Section 409A of the
Code, and if that Incentive Award provides for a change in the time or form of
payment upon a Change in Control, then no Change in Control shall be deemed to
have occurred upon an event described in Section 14.1 of the Plan unless
the event would also constitute, under Section 409A of the Code and the
regulations and rulings issued thereunder, either a change in the ownership or
effective control of the Company or in the ownership of a substantial portion
of the assets of the Company.
2.5
“
Code
” means the Internal Revenue Code of 1986,
as amended.
2.6
“
Committee
” means the group of individuals
administering the Plan, as provided in Section 3 of the Plan.
2.7
“
Common Stock
” means the common stock of the
Company, par value $1.00 per share, or the number and kind of shares of stock
or other securities into which such Common Stock may be changed in accordance
with Section 4.3 of the Plan.
2.8
“
Covered Employee
” means a person who is, or is
determined by the Committee to likely become, a “covered employee” (as defined
in Section 162(m)(3) of the Code).
2.9
“
Disability
” means the disability of the
Participant such as would entitle the Participant to receive disability income
benefits pursuant to the long-term disability plan of the Company or Subsidiary
then covering the Participant or, if no such plan exists or is applicable to
the Participant, the permanent and total disability of the Participant in the
sense that he or she is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of not less than 12 months; provided, however, if
distribution of an Incentive Award subject to Section 409A of the Code is
or can be triggered by an Eligible Recipient’s Disability, such term will mean
that the Eligible Recipient is disabled as defined by Section 409A of the
Code and the regulations and rulings issued thereunder.
2.10
“
Eligible Recipients
” means all employees
(including, without limitation, officers and directors who are also employees)
of the Company or any Subsidiary, all Non-Employee Directors and any
consultants, advisors and independent contractors of the Company or any
Subsidiary.
2.11
“
Exchange Act
” means the Securities Exchange
Act of 1934, as amended.
2.12
“
Fair Market Value
” means, with respect to the
Common Stock, as of any date (or, if no shares were traded or quoted on such
date, as of the next preceding date on which there was such a trade or quote)
the mean between the reported high and low sale prices of the Common Stock
during the regular daily trading session, as quoted in the WALL STREET JOURNAL
reports of the New York Stock Exchange - Composite Quotations.
2.13
“
Good Reason
” means, without the express
written consent of the affected Participant, any of the following events
involving the Company or Subsidiary that employs or receives services from the
Participant:
(a)
the assignment to the Participant of any duties
inconsistent in any substantial respect with the Participant’s position,
authority or responsibilities as in effect during the 90-day period immediately
preceding the Change in Control which assignment results in a substantial
diminution in such position, authority or responsibilities or any other
substantial adverse change in such position (including titles), authority or
responsibilities, excluding an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company or applicable
Subsidiary as set forth below;
(b)
any failure by the Company or applicable Subsidiary to
furnish the Participant with compensation and benefits at a level substantially
equal to or exceeding
2
those received by the
Participant from the Company or applicable Subsidiary during the 90-day period
preceding the Change in Control, other than (i) an insubstantial and
inadvertent failure remedied by the Company or applicable Subsidiary as set
forth below, (ii) a reduction in compensation which is applied to all
non-union employees of the Company or applicable Subsidiary in the same dollar
amount or percentage, or (iii) a reduction or modification of any employee
benefit program covering substantially all of the employees of the Company or
applicable Subsidiary, which reduction or modification generally applies to all
employees covered under such program; or
(c)
the Company or applicable Subsidiary requiring the
Participant to be based or to perform services at any office or location that
is in excess of 50 miles from the principal location of the Participant’s work
during the 90-day period immediately preceding the Change in Control, except
for travel reasonably required in the performance of the Participant’s
responsibilities.
Before a termination by
the Participant under this Section 2.13 will constitute termination for
Good Reason, the Participant must give the Company a notice of termination
within 30 calendar days of the occurrence of the event that constitutes Good
Reason. The notice must set forth in
reasonable detail the specific reason for the termination and the facts and
circumstances claimed to provide a basis for termination of employment under
the provision indicated. Failure to
provide such notice within such 30-day period shall be conclusive proof that
the Participant does not have Good Reason to terminate employment.
For purposes of this Section 2.13,
Good Reason shall exist only if the Company or applicable Subsidiary fails to
remedy the event or events constituting Good Reason within 30 calendar days
after receipt of the notice of termination from the Participant. If the Participant determines Good Reason for
termination exists and timely files a notice of termination, such determination
shall be presumed to be true and the Company will have the burden of proving
that Good Reason does not exist.
2.14
“
Incentive Award
” means an Option, Stock
Appreciation Right, Restricted Stock Award, Stock Unit Award or Performance
Award granted to an Eligible Recipient pursuant to the Plan.
2.15
“
Incentive Stock Option
” means a right to
purchase Common Stock granted to an Eligible Recipient pursuant to Section 6
of the Plan that qualifies as an “incentive stock option” within the meaning of
Section 422 of the Code.
2.16
“
Non-Employee Director
” means a member of the
Board who is not an employee of the Company or any Subsidiary.
2.17
“
Non-Statutory Stock Option
” means a right to
purchase Common Stock granted to an Eligible Recipient pursuant to Section 6
of the Plan that does not qualify as an Incentive Stock Option.
3
2.18
“
Option
” means an Incentive Stock Option or a
Non-Statutory Stock Option.
2.19
“
Participant
” means an Eligible Recipient who
receives one or more Incentive Awards under the Plan.
2.20
“
Performance-Based Compensation
” means an
Incentive Award to a Covered Employee that is intended to constitute “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the
Code. Options and Stock Appreciation
Rights granted to Covered Employees are intended to be Performance-Based
Compensation.
2.21
“
Performance Award
” means a right granted to an
Eligible Recipient pursuant to Section 10 of the Plan to receive an amount
of cash, shares of Common Stock, or a combination of both, contingent upon
achievement of Performance Criteria or other objectives during a specified
period.
2.22
“
Performance Criteria
” means the performance
criteria that are used by the Committee in granting Incentive Awards contingent
upon achievement of performance goals over a specified performance period. For any Incentive Award intended to constitute
Performance-Based Compensation, the Performance Criteria shall consist of one
or a combination of two or more of the following: net sales; operating income;
net income; net income per share (basic or diluted); earnings before or after
any one or more of taxes, interest, depreciation and amortization;
profitability as measured by return ratios (including return on invested
capital, return on assets, return on equity, return on investment and return on
sales); cash flow; market share; cost reduction goals; margins (including one
or more of gross, operating and net income margins); stock price; total return
to stockholders; economic value added; working capital and strategic plan
development and implementation. The
Committee may select one criterion or multiple criteria for measuring
performance, and the measurement may be based upon Company, Subsidiary or
business unit performance, and may be expressed in absolute amounts, on a per
share basis, as a growth rate or change from preceding periods, or by relative
comparison to the performance of other companies or any other external measure
of the selected criteria. The Committee
shall, in its sole discretion, define in an objective fashion the manner of
calculating the performance goals based on the Performance Criteria it selects
to use in any performance period, which may include adjustments to such
criteria as otherwise defined under U.S. Generally Accepted Accounting
Principles.
2.23
“
Previously Acquired Shares
” means shares of
Common Stock that are already owned by the Participant.
2.24
“
Prior Plan
” means the Ecolab Inc. 2005 Stock
Incentive Plan.
2.25
“
Restricted Stock Award
” means an award of
Common Stock granted to an Eligible Recipient pursuant to Section 8 of the
Plan that is subject to restrictions on transferability and a risk of
forfeiture.
4
2.26
“
Retirement
” means termination of employment or
service at or after age fifty-five (55) with five (5) or more years of
continuous employment or other service with the Company and any Subsidiaries.
2.27
“
Securities Act
” means the Securities Act of
1933, as amended.
2.28
“
Stock Appreciation Right
” means a right
granted to an Eligible Recipient pursuant to Section 7 of the Plan to
receive a payment from the Company, in the form of shares of Common Stock, cash
or a combination of both, equal to the difference between the Fair Market Value
of one or more shares of Common Stock and a specified exercise price of such
shares.
2.29
“
Stock Unit Award
” means a right granted to an Eligible
Recipient pursuant to Section 9 of the Plan to receive the Fair Market
Value of one or more shares of Common Stock, payable in cash, shares of Common
Stock, or a combination of both, the payment, issuance, retention and /or
vesting of which is subject to the satisfaction of specified conditions, which
may include achievement of Performance Criteria or other objectives.
2.30
“
Subsidiary
” means any entity that is directly
or indirectly controlled by the Company or any entity in which the Company has
a significant equity interest, as determined by the Committee.
2.31
“
Substitute Award
” means an Incentive Award
granted upon the assumption of, or in substitution or exchange for, outstanding
awards granted by a company or other entity acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines.
2.32
“
Tax Date
” means the date any withholding tax
obligation arises under the Code for a Participant with respect to an Incentive
Award.
3.
Plan Administration.
3.1
The Committee
. The Plan will
be administered by the Board or by a committee of the Board. So long as the Company has a class of its
equity securities registered under Section 12 of the Exchange Act, any
committee administering the Plan will consist solely of two or more members of
the Board who are “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act, who are “independent” as required by the listing
standards of the New York Stock Exchange and who are “outside directors” within
the meaning of Section 162(m) of the Code, but any action taken by
such a committee shall be valid and effective even if the members of such
committee at the time of such action are later determined not to have satisfied
all the requirements for membership specified above. Such a committee, if established, will act by
majority approval of the members (unanimous approval with respect to action by
written consent), and a majority of the members of such a committee will
constitute a quorum. As used in the
Plan, “Committee” will refer to the Board or to such a committee, if
established. To the extent consistent
with applicable corporate law of the Company’s jurisdiction of incorporation,
the Committee may delegate to one or more of its members or to any officers of
the Company the
5
duties, power and
authority of the Committee under the Plan pursuant to such conditions or
limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to
Eligible Recipients who are subject to Section 16 of the Exchange Act or
whose compensation in the fiscal year may be subject to the limits on
deductible compensation pursuant to Section 162(m) of the Code. The Committee may also delegate to one or
more agents or advisors such non-discretionary administrative duties or powers
as it deems advisable. The Committee may
exercise its duties, power and authority under the Plan in its sole and
absolute discretion without the consent of any Participant or other party,
unless the Plan specifically provides otherwise. Each determination, interpretation or other
action made or taken by the Committee pursuant to the provisions of the Plan
will be conclusive and binding for all purposes and on all persons, and no
member of the Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Incentive Award granted under the
Plan.
3.2
Authority of the Committee
.
(a)
In accordance with and subject to the provisions of
the Plan, the Committee will have the authority to determine all provisions of
Incentive Awards as the Committee may deem necessary or desirable and as
consistent with the terms of the Plan, including, without limitation, the
following: (i) the Eligible
Recipients to be selected as Participants; (ii) the nature and extent of
the Incentive Awards to be made to each Participant (including the number of
shares of Common Stock to be subject to each Incentive Award, any exercise
price, the manner in which Incentive Awards will vest or become exercisable and
whether Incentive Awards will be granted in tandem with other Incentive Awards)
and the form of written or electronic agreement, if any, evidencing such
Incentive Award; (iii) the time or times when Incentive Awards will be
granted; (iv) the duration of each Incentive Award; and (v) the
restrictions and other conditions to which the payment or vesting of Incentive
Awards may be subject. In addition, the
Committee will have the authority under the Plan in its sole discretion to (A) establish,
amend or rescind rules to administer the Plan; (B) interpret the Plan
and any Incentive Award or related agreement made under the Plan; (C) make
all other determinations necessary or desirable for the administration of the
Plan; and (D) pay the intrinsic value of any Incentive Award in the form
of cash, Common Stock or any combination of both.
(b)
Subject to Section 3.2(d) below, the
Committee will have the authority under the Plan to amend or modify the terms
of any outstanding Incentive Award in any manner, including, without
limitation, the authority to modify the number of shares or other terms and
conditions of an Incentive Award, extend the term of an Incentive Award, accelerate
the exercisability or vesting or otherwise terminate any restrictions relating
to an Incentive Award, accept the surrender of any outstanding Incentive Award
or, to the extent not previously exercised or vested, authorize the grant of
new Incentive Awards in substitution for surrendered Incentive Awards;
provided, however that (i) the amended or modified terms are permitted by
the Plan as then in effect; (ii) any Participant adversely affected by
such amended or modified terms shall have consented to such amendment or
modification unless such amendment is necessary to comply with applicable law
or stock exchange rules; and (iii) the authority to accelerate the
exercisability or vesting or
6
otherwise terminate
restrictions relating to an Incentive Award may be exercised only in connection
with a Participant’s death, Disability or Retirement, in connection with a
Change in Control, or to the extent such actions involve an aggregate number of
shares of Common Stock not in excess of 5% of the number of shares available
for Incentive Awards under the first sentence of Section 4.1.
(c)
In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in corporate structure
or shares; (ii) any purchase, acquisition, sale, disposition or write-down
of a significant amount of assets or a significant business; (iii) any
change in accounting principles or practices, tax laws or other such laws or
provisions affecting reported results; (iv) any uninsured catastrophic
losses or extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 or in management’s discussion and analysis
of financial performance appearing in the Company’s annual report to
stockholders for the applicable year; or (v) any other similar change, in
each case with respect to the Company or any other entity whose performance is
relevant to the grant or vesting of an Incentive Award, the Committee (or, if
the Company is not the surviving corporation in any such transaction, the board
of directors of the surviving corporation) may, without the consent of any
affected Participant, amend or modify the vesting criteria (including
Performance Criteria and related performance goals) of any outstanding
Incentive Award that is based in whole or in part on the financial performance
of the Company (or any Subsidiary or division or other subunit thereof) or such
other entity so as equitably to reflect such event, with the desired result
that the criteria for evaluating such financial performance of the Company or
such other entity will be substantially the same (in the sole discretion of the
Committee or the board of directors of the surviving corporation) following
such event as prior to such event; provided, however, that (A) the amended
or modified terms are permitted by the Plan as then in effect and (B) with
respect to any Incentive Award intended to qualify as Performance-Based
Compensation, any such amendment or modification would not result in such
Incentive Award failing to qualify as “performance-based compensation” for
purposes of Section 162(m) of the Code.
(d)
Notwithstanding any other provision of this Plan other
than Section 4.3, the Committee may not, without prior approval of the
Company’s stockholders, seek to effect any re-pricing of any previously
granted, “underwater” Option by: (i) amending
or modifying the terms of the Option to lower the exercise price; (ii) canceling
the underwater Option and granting either (A) replacement Options or Stock
Appreciation Rights having a lower exercise price; (B) Restricted Stock
Awards; or (C) Stock Unit Awards or Performance Awards in exchange; or (iii) repurchasing
the underwater Options. For purposes of
this Section 3.2(d), an Option will be deemed to be “underwater” at any
time when the Fair Market Value of the Common Stock is less than the exercise
price of the Option.
(e)
In addition to the authority of the Committee under Section 3.2(b) and
notwithstanding any other provision of the Plan, the Committee may, in its sole
7
discretion, amend the
terms of the Plan or Incentive Awards with respect to Participants resident
outside of the United States or employed by a non-U.S. Subsidiary in order to
comply with local legal requirements, to otherwise protect the Company’s or
Subsidiary’s interests, or to meet objectives of the Plan, and may, where
appropriate, establish one or more sub-plans (including the adoption of any
required rules and regulations) for the purposes of qualifying for
preferred tax treatment under foreign tax laws.
The Committee shall have no authority, however, to take action pursuant
to this Section 3.2(e): (i) to reserve shares or grant Incentive
Awards in excess of the limitations provided in Section 4.1; (ii) to
effect any re-pricing in violation of Section 3.2(d); (iii) to grant
Options having an exercise price less than 100% of the Fair Market Value of one
share of Common Stock on the date of grant in violation of Section 6.2; or
(iv) for which stockholder approval would then be required pursuant to Section 422
of the Code or Section 162(m) of the Code or the rules of the
New York Stock Exchange.
(f)
Notwithstanding anything in this Plan to the contrary,
the Committee will determine whether an Incentive Award is subject to the
requirements of Section 409A of the Code and, if determined to be subject
to Section 409A of the Code, the Committee will make such Incentive Award
subject to such written terms and conditions determined necessary or desirable
to cause such Incentive Award to comply in form with the requirements of Section 409A
of the Code. Further, the Plan, as it
relates to Incentive Awards that are subject to Section 409A of the Code,
will be administered in a manner that is intended to comply with the
requirements of Section 409A of the Code and any regulations or rulings
issued thereunder.
4.
Shares Available for Issuance.
4.1
Maximum Number of Shares Available; Certain
Restrictions on Awards
. Subject to Section 4.2
and to adjustment as provided in Section 4.3 of the Plan, the maximum
number of shares of Common Stock that will be available for issuance under the
Plan will be 12,000,000, plus any Shares of Common Stock remaining available
for future grants under the Prior Plan on the effective date of this Plan. The shares available for issuance under the
Plan may, at the election of the Committee, be either treasury shares or shares
authorized but unissued, and, if treasury shares are used, all references in
the Plan to the issuance of shares will, for corporate law purposes, be deemed
to mean the transfer of shares from treasury.
Notwithstanding any other provisions of the Plan to the contrary, (i) no
Participant in the Plan may be granted Incentive Awards denominated in shares
of Common Stock relating to more than 2,000,000 shares of Common Stock in the
aggregate during any calendar year; (ii) no Participant in the Plan may be
granted Incentive Awards denominated in cash in an amount in excess of
$5,000,000 in the aggregate during any calendar year; and (iii) no more
than 12,000,000 shares of Common Stock may be issued pursuant to the exercise
of Incentive Stock Options granted under the Plan, with the foregoing share
limits subject, in each case, to adjustment as provided in Section 4.3 of
the Plan.
4.2
Accounting for Incentive Awards
.
Shares of Common Stock that are issued under the Plan or that are
potentially issuable pursuant to outstanding Incentive Awards will be applied
to reduce the maximum number of shares of Common Stock remaining available for
issuance
8
under the Plan; provided,
however, that (A) the total number of shares remaining available for
issuance under the Plan shall be reduced by 2.5 shares for each share issued
pursuant to an Incentive Award other than an Option or a Stock Appreciation
Right, or potentially issuable pursuant to an outstanding Incentive Award other
than an Option or a Stock Appreciation Right; and (B) Substitute Awards
shall not reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan.
Any shares of Common Stock subject to an Incentive Award, or to an award
granted under the Prior Plan that is outstanding on the effective date of this
Plan (a “Prior Plan Award”), that lapses, expires, is forfeited (including
issued shares forfeited under a Restricted Stock Award) or for any reason is
terminated unexercised or unvested or is settled or paid in cash or any form
other than shares of Common Stock shall, to the extent of such lapse,
expiration, forfeiture or settlement other than in shares of Common Stock,
automatically again become available for issuance under the Plan and
correspondingly increase the total number of shares available for issuance
under Section 4.1 (with such increase in connection with Incentive Awards
other than Options and Stock Appreciation Rights based on the same ratio
specified in clause (A) of the proviso to the first sentence of this Section 4.2). Notwithstanding anything to the contrary in
this Section 4.2, the following shares of Common Stock will not again
become available for issuance under the Plan: (i) any shares which would
have been issued upon any exercise of an Option but for the fact that the
exercise price was paid by a “net exercise” pursuant to Section 6.4(b) or
any Previously Acquired Shares tendered (either actually or by attestation) by
a Participant in payment of the exercise price of an Option; (ii) any
shares withheld by the Company or Previously Acquired Shares tendered (either
actually or by attestation) by a Participant to satisfy any tax withholding
obligation with respect to an Incentive Award or a Prior Plan Award; (iii) shares
covered by a stock appreciation right issued under the Plan or the Prior Plan
that are not issued in connection with the stock settlement of the stock appreciation
right upon its exercise; or (iv) shares that are repurchased by the
Company using Option exercise proceeds.
4.3
Adjustments to Shares and Incentive Awards
.
In the event of any equity restructuring (within the meaning of FASB ASC
Topic 718,
Compensation - Stock Compensation
) that
causes the per share value of shares of Common Stock to change, such as a stock
dividend, stock split, spinoff, rights offering or recapitalization through an
extraordinary dividend, the Committee shall make such adjustments as it deems
equitable and appropriate to (i) the aggregate number and kind of shares
or other securities issued or reserved for issuance under the Plan, (ii) the
number and kind of shares or other securities subject to outstanding Incentive
Awards, (iii) the exercise price of outstanding Options and Stock
Appreciation Rights, and (iv) any maximum limitations prescribed by the
Plan with respect to certain types of Incentive Awards or the grants to
individuals of certain types of Incentive Awards. In the event of any other change in corporate
capitalization, including a merger, consolidation, reorganization, or partial
or complete liquidation of the Company, such equitable adjustments described in
the foregoing sentence may be made as determined to be appropriate and
equitable by the Committee (or, if the Company is not the surviving corporation
in any such transaction, the board of directors of the surviving corporation)
to prevent dilution or enlargement of rights of Participants. In either case, any such adjustment shall be
conclusive and binding for all purposes of the Plan. No adjustment shall be made pursuant to this Section 4.3
in connection with the conversion of any convertible securities of the Company,
or in a manner that would cause
9
Incentive Stock Options
to violate Section 422(b) of the Code or cause an Incentive
Award to be subject to adverse tax consequences under Section 409A
of the Code.
4.4
Effect of Plans Maintained by Acquired Companies
.
If a company acquired by the Company or any Subsidiary or with which the
Company or any Subsidiary combines has shares available under a pre-existing
plan approved by stockholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition or
combination) may be used for Incentive Awards under the Plan and shall not
reduce the shares of Common Stock authorized for issuance under the Plan. Incentive Awards using such available shares
shall not be made after the date awards could have been made under the terms of
the pre-existing plan, absent the acquisition or combination, and shall only be
made to individuals who were not employees of the Company or any Subsidiary or
Non-Employee Directors prior to such acquisition or combination.
5.
Participation
.
Participants in the Plan
will be those Eligible Recipients who, in the judgment of the Committee, have
contributed, are contributing or are expected to contribute to the achievement
of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time
to time one or more Incentive Awards, singly or in combination or in tandem
with other Incentive Awards, as may be determined by the Committee in its sole
discretion. Incentive Awards will be
deemed to be granted as of the date specified in the grant resolution of the
Committee, which date will be the date of any related agreement with the
Participant.
6.
Options
.
6.1
Grant
. An Eligible
Recipient may be granted one or more Options under the Plan, and such Options
will be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its sole
discretion. The Committee may designate
whether an Option is to be considered an Incentive Stock Option or a
Non-Statutory Stock Option. To the
extent that any Incentive Stock Option granted under the Plan ceases for any
reason to qualify as an “incentive stock option” for purposes of Section 422
of the Code, such Incentive Stock Option will continue to be outstanding for
purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock
Option.
6.2
Exercise Price
. The per share
price to be paid by a Participant upon exercise of an Option will be determined
by the Committee in its discretion at the time of the Option grant, provided
that such price will not be less than 100% of the Fair Market Value of one
share of Common Stock on the date of grant, except in the case of Substitute
Awards.
6.3
Exercisability and Duration
.
An Option will become exercisable at such times and in such installments
and upon such terms and conditions as may be determined by the Committee in its
sole discretion at the time of grant (including without limitation (i) the
10
achievement of one or
more of the Performance Criteria; and/or that (ii) the Participant remain
in the continuous employ or service of the Company or a Subsidiary for a
certain period; provided, however, that no Option may be exercisable after 10
years from its date of grant.
6.4
Payment of Exercise Price
.
(a)
The total purchase price of the shares to be purchased
upon exercise of an Option will be paid entirely in cash (including check, bank
draft or money order); provided, however, that the Committee, in its sole
discretion and upon terms and conditions established by the Committee, may
allow such payments to be made, in whole or in part, by (i) tender of a
Broker Exercise Notice; (ii) by tender, or attestation as to ownership, of
Previously Acquired Shares that have been held for the period of time necessary
to avoid a charge to the Company’s earnings for financial reporting purposes
and that are otherwise acceptable to the Committee; (iii) by a “net
exercise of the Option (as further described in paragraph (b), below); or (iv) by
a combination of such methods.
(b)
In the case of a “net exercise” of an Option, the
Company will not require a payment of the exercise price of the Option from the
Participant but will reduce the number of shares of Common Stock issued upon
the exercise by the largest number of whole shares that has a Fair Market Value
that does not exceed the aggregate exercise price for the shares exercised
under this method. Shares of Common Stock will no longer be outstanding under
an Option (and will therefore not thereafter be exercisable) following the
exercise of such Option to the extent of (i) shares used to pay the
exercise price of an Option under the “net exercise,” (ii) shares actually
delivered to the Participant as a result of such exercise and (iii) any
shares withheld for purposes of tax withholding pursuant to Section 13.1.
(c)
Previously Acquired Shares tendered or covered by an
attestation as payment of an Option exercise price will be valued at their Fair
Market Value on the exercise date.
6.5
Manner of Exercise
. An Option may
be exercised by a Participant in whole or in part from time to time, subject to
the conditions contained in the Plan and in the agreement evidencing such
Option, by giving written or electronic notice of exercise to the Company at
its principal executive office in St. Paul, Minnesota or through the procedures
established with any Company-appointed third-party administrator specifying the
number of shares of Common Stock as to which the Option is being exercised and
by paying in full the total exercise price for the shares of Common Stock to be
purchased in accordance with Section 6.4 of the Plan.
7.
Stock Appreciation Rights
.
7.1
Grant
. An Eligible
Recipient may be granted one or more Stock Appreciation Rights under the Plan,
and such Stock Appreciation Rights will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The Committee will have the sole discretion
to determine the form in which payment of the intrinsic value of Stock
Appreciation Rights will be made to a
11
Participant (i.e., cash,
Common Stock or any combination thereof) or to consent to or disapprove the
election by a Participant of the form of such payment.
7.2
Exercise Price
. The exercise
price of a Stock Appreciation Right will be determined by the Committee, in its
discretion, at the date of grant but may not be less than 100% of the Fair
Market Value of one share of Common Stock on the date of grant, except as
provided in Section 7.4 below and except in the case of Substitute Awards.
7.3
Exercisability and Duration
.
A Stock Appreciation Right will become exercisable at such time and in
such installments as may be determined by the Committee in its sole discretion
at the time of grant; provided, however, that no Stock Appreciation Right may be
exercisable after 10 years from its date of grant. A Stock Appreciation Right will be exercised
by giving notice in the same manner as for Options, as set forth in Section 6.5
of the Plan.
7.4
Grants in Tandem with Options
.
Stock Appreciation Rights may be granted alone or in addition to other
Incentive Awards, or in tandem with an Option, either at the time of grant of
the Option or at any time thereafter during the term of the Option. A Stock Appreciation Right granted in tandem
with an Option shall cover the same number of shares of Common Stock as covered
by the Option (or such lesser number as the Committee may determine), shall be
exercisable at such time or times and only to the extent that the related
Option is exercisable, have the same term as the Option and shall have an
exercise price equal to the exercise price for the Option. Upon the exercise of a Stock Appreciation
Right granted in tandem with an Option, the Option shall be canceled
automatically to the extent of the number of shares covered by such exercise;
conversely, upon exercise of an Option having a related Stock Appreciation
Right, the Stock Appreciation Right shall be canceled automatically to the
extent of the number of shares covered by the Option exercise.
8.
Restricted Stock Awards.
8.1
Grant
. An Eligible
Recipient may be granted one or more Restricted Stock Awards under the Plan,
and such Restricted Stock Awards will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The
Committee may impose such restrictions or conditions, not inconsistent with the
provisions of the Plan, to the vesting of such Restricted Stock Awards as it
deems appropriate, including, without limitation, (i) the achievement of
one or more of the Performance Criteria; and/or that (ii) the Participant
remain in the continuous employ or service of the Company or a Subsidiary for a
certain period.
8.2
Rights as a Stockholder; Transferability
.
Except as provided in Sections 8.1, 8.3, 8.4 and 15.3 of the Plan, a
Participant will have all voting, dividend, liquidation and other rights with
respect to shares of Common Stock issued to the Participant as a Restricted
Stock Award under this Section 8 upon the Participant becoming the holder
of record of such shares as if such Participant were a holder of record of
shares of unrestricted Common Stock.
8.3
Dividends and Distributions
.
Unless the Committee determines otherwise in its sole discretion (either
in the agreement evidencing the Restricted Stock Award at the time of
12
grant or at any time
after the grant of the Restricted Stock Award), any dividends or distributions
(other than regular quarterly cash dividends in the case of Restricted Stock
Awards that are subject only to service-based vesting conditions) paid with
respect to shares of Common Stock subject to the unvested portion of a
Restricted Stock Award will be subject to the same restrictions as the shares
to which such dividends or distributions relate. The Committee will determine in its sole
discretion whether any interest will be paid on such restricted dividends or
distributions. In its discretion, the
Committee may provide in any award agreement evidencing a Restricted Stock
Award for the waiver by the Participant of any right to receive dividends and
distributions with respect to shares of Common Stock subject to the unvested
portion of the Restricted Stock Award.
8.4
Enforcement of Restrictions
.
To enforce the restrictions referred to in this Section 8, the
Committee may place a legend on the stock certificates referring to such
restrictions and may require the Participant, until the restrictions have
lapsed, to keep the stock certificates, together with duly endorsed stock
powers, in the custody of the Company or its transfer agent, or to maintain
evidence of stock ownership, together with duly endorsed stock powers, in a
certificateless book-entry stock account with the Company’s transfer agent.
9.
Stock Unit Awards
.
An Eligible Recipient may
be granted one or more Stock Unit Awards under the Plan, and such
Stock Unit Awards will be subject to such terms and conditions, consistent
with the other provisions of the Plan, as may be determined by the Committee in
its sole discretion. The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of
the Plan, to the payment, issuance, retention and/or vesting of such Stock Unit
Awards as it deems appropriate, including, without limitation, (i) the
achievement of one or more of the Performance Criteria; and/or that (ii) the
Participant remain in the continuous employ or service of the Company or a
Subsidiary for a certain period. The
agreement evidencing a Stock Unit Award shall either (i) provide that in
all cases payment of the Stock Unit Award will be made within two and one-half
months following the end of the Eligible Recipient’s tax year during which
receipt of the Stock Unit Award is no longer subject to a “substantial risk of
forfeiture” within the meaning of Section 409A of the Code, or (ii) contain
terms and conditions necessary to avoid adverse tax consequences specified in Section 409A
of the Code.
10.
Performance Awards.
An Eligible Recipient may
be granted one or more Performance Awards under the Plan, and such Performance
Awards will be subject to such terms and conditions, if any, consistent with
the other provisions of the Plan, as may be determined by the Committee in its
sole discretion, including, but not limited to, the achievement of one or more
of the Performance Criteria. The
agreement evidencing a Performance Award shall either (i) provide that in
all cases payment of the Performance Award will be made within two and one-half
months following the end of the Eligible Recipient’s tax year during which
receipt of the Performance Award is no longer subject to a “substantial risk of
forfeiture” within the meaning of Section 409A of the Code, or (ii) contain
terms and conditions necessary to avoid adverse tax consequences specified in Section 409A
of the Code.
13
11.
Minimum Vesting Periods
.
Except as otherwise
provided in this Section 11, (i) Restricted Stock Awards and Stock
Unit Awards that vest solely as a result of the passage of time and continued
service by the Participant shall be subject to a vesting period of not less
than three years from the date of grant of the applicable Incentive Award (but
permitting pro rata vesting over such time); and (ii) Restricted Stock
Awards, Stock Unit Awards and Performance Awards whose vesting is subject to
the achievement of specified Performance Criteria over a performance period
shall be subject to a performance period of not less than one year from the
date of grant of the applicable Incentive Award. The minimum vesting periods specified in
clauses (i) and (ii) of the preceding sentence shall not apply: (A) to
Incentive Awards made in payment of earned performance-based Incentive Awards
and other earned cash-based incentive compensation; (B) to a termination
of employment due to death, Disability or Retirement; (C) upon a Change in
Control; (D) to a Substitute Award that does not reduce the vesting period
of the award being replaced; or (E) to Incentive Awards involving an
aggregate number of shares of Common Stock not in excess of 5% of the number of
shares available for Incentive Awards under the first sentence of Section 4.1.
12.
Effect of Termination of Employment or Other Service
.
The following provisions
shall apply upon termination of a Participant’s employment or other service
with the Company and all Subsidiaries, except to the extent that the Committee
provides otherwise in an agreement evidencing an Incentive Award at the time of
grant or determines pursuant to Section 12.4.
12.1
Termination of Employment Due to Death or Disability
.
In the event a Participant’s employment or other service with the
Company and all Subsidiaries is terminated by reason of death or Disability:
(a)
All outstanding Options and Stock Appreciation Rights
then held by the Participant will become immediately exercisable in full and will
remain exercisable for a period of five years after such termination (but in no
event after the expiration date of any such Option or Stock Appreciation
Right).
(b)
All unvested Restricted Stock Awards and Stock Unit
Awards then held by the Participant that are subject only to service-based
vesting conditions will become fully vested.
(c)
The service-based vesting conditions associated with
all unvested Restricted Stock Awards, Stock Unit Awards and Performance Awards
then held by the Participant that are also subject to the achievement of
specified Performance Criteria over a performance period as a condition of
vesting will be deemed satisfied, but vesting of such Incentive Awards shall
occur only when and to the extent the applicable Performance Criteria are
satisfied.
14
12.2
Termination of Employment Due to Retirement
.
Subject to Section 12.5 of the Plan, in the event a Participant’s
employment or other service with the Company and all Subsidiaries is terminated
by reason of Retirement:
(a)
All outstanding Options and Stock Appreciation Rights
then held by the Participant that have been outstanding for at least six months
from the applicable date of grant will become immediately exercisable in full
and will remain exercisable for a period of five years after such termination
(but in no event after the expiration date of any such Option or Stock
Appreciation Right), and any Options and Stock Appreciation Rights then held by
the Participant that have not been outstanding for at least six months will
terminate and be forfeited.
(b)
All unvested Restricted Stock Awards and Stock Unit
Awards then held by the Participant that are subject only to service-based
vesting conditions will terminate and be forfeited.
(c)
The service-based vesting conditions associated with
all unvested Restricted Stock Awards, Stock Unit Awards and Performance Awards
then held by the Participant that are also subject to the achievement of
specified Performance Criteria over a performance period as a condition of
vesting shall be deemed satisfied if such Incentive Awards have been
outstanding for at least six months from the applicable date of grant, but
vesting of such Incentive Awards will occur only when and to the extent the
applicable Performance Criteria are satisfied; any such Incentive Awards then
held by the Participant that have not been outstanding for at least six months
will terminate and be forfeited.
12.3
Termination of Employment for Reasons Other than
Death, Disability or Retirement
. Subject to Section 12.5 of the Plan, in the
event a Participant’s employment or other service is terminated with the
Company and all Subsidiaries for any reason other than death, Disability or
Retirement, or a Participant is in the employ or service of a Subsidiary and
the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant
continues in the employ or service of the Company or another Subsidiary):
(a)
All outstanding Options and Stock Appreciation Rights
then held by the Participant will, to the extent exercisable as of such
termination, remain exercisable for a period of three months after such
termination (but in no event after the expiration date of any such Option or
Stock Appreciation Right), and will, to the extent not exercisable as of such
termination, terminate and be forfeited.
(b)
All unvested Restricted Stock Awards, Stock Unit
Awards and Performance Awards then held by the Participant will terminate and
be forfeited.
12.4
Modification of Rights Upon Termination
.
Notwithstanding the other provisions of this Section 12, upon a
Participant’s termination of employment or other service with the Company and
all Subsidiaries, the Committee may, in its sole discretion (which may be
exercised at any time on or after the date of grant, including following such
termination), except as
15
provided in clauses (ii) and
(iii) below, cause Options or Stock Appreciation Rights (or any part
thereof) then held by such Participant to terminate, become or continue to
become exercisable and/or remain exercisable following such termination of
employment or service, and Restricted Stock Awards, Stock Unit Awards or
Performance Awards then held by such Participant to terminate, vest and/or
continue to vest or become free of restrictions and conditions to payment, as
the case may be, following such termination of employment or service, in each
case in the manner determined by the Committee; provided, however, that (i) no
Incentive Award may remain exercisable or continue to vest for more than two
years beyond the date such Incentive Award would have terminated if not for the
provisions of this Section 12.4 but in no event beyond its expiration
date; (ii) any such action adversely affecting any outstanding Incentive
Award will not be effective without the consent of the affected Participant
(subject to the right of the Committee to take whatever action it deems
appropriate under Sections 3.2(c), 4.3 and 14 of the Plan); and (iii) such
actions (other than termination of an Incentive Award) occurring other than in
connection with the death, Disability or Retirement of a Participant shall not
involve an aggregate number of shares of Common Stock in excess of 5% of the
number of shares available for Incentive Awards under the first sentence of Section 4.1).
12.5
Effects of Actions Constituting Cause
.
Notwithstanding anything in the Plan to the contrary, in the event that
a Participant is determined by the Committee, acting in its sole discretion, to
have committed any action which would constitute Cause as defined in Section 2.3,
irrespective of whether such action or the Committee’s determination occurs
before or after termination of such Participant’s employment with the Company or
any Subsidiary, all rights of the Participant under the Plan and any agreements
evidencing an Incentive Award then held by the Participant shall terminate and
be forfeited without notice of any kind.
The Company may defer the exercise of any Option, the vesting of any
Restricted Stock Award or the payment of any Stock Unit Award or Performance
Award for a period of up to forty-five (45) days in order for the Committee to
make any determination as to the existence of Cause.
12.6
Determination of Termination of Employment or Other
Service
.
(a)
The change in a Participant’s status from that of an
employee of the Company or any Subsidiary to that of a non-employee consultant
or advisor of the Company or any Subsidiary will, for purposes of the Plan, be
deemed to result in a termination of such Participant’s employment with the
Company and its Subsidiaries, unless the Committee otherwise determines in its
sole discretion.
(b)
The change in a Participant’s status from that of a
non-employee consultant or advisor of the Company or any Subsidiary to that of
an employee of the Company or any Subsidiary will not, for purposes of the
Plan, be deemed to result in a termination of such Participant’s service as a
non-employee consultant or advisor with the Company and its Subsidiaries, and
such Participant will thereafter be deemed to be an employee of the Company or
its Subsidiaries until such Participant’s employment is terminated, in which
event such Participant will be governed by the provisions of this Plan relating
to termination of employment (subject to paragraph (a), above).
16
(c)
Unless the Committee otherwise determines in its sole
discretion, a Participant’s employment or other service will, for purposes of the
Plan, be deemed to have terminated on the date recorded on the personnel or
other records of the Company or the Subsidiary for which the Participant
provides employment or other service, as determined by the Committee in its
sole discretion based upon such records; provided, however, if distribution or
payment of an Incentive Award subject to Section 409A of the Code is
triggered by a termination of a Participant’s employment, such termination must
also constitute a “separation from service” within the meaning of Section 409A
of the Code.
13.
Payment of Withholding Taxes.
13.1
General Rules
. The Company
is entitled to (a) withhold and deduct from future wages of the
Participant (or from other amounts that may be due and owing to the Participant
from the Company or a Subsidiary), or make other arrangements for the
collection of, all legally required amounts necessary to satisfy any and all
federal, foreign, state and local withholding and employment-related tax
requirements attributable to an Incentive Award, including, without limitation,
the grant, exercise or vesting of, or payment of dividends with respect to, an
Incentive Award or a disqualifying disposition of stock received upon exercise
of an Incentive Stock Option; (b) withhold cash paid or payable or shares
of Common Stock from the shares issued or otherwise issuable to the Participant
in connection with an Incentive Award; or (c) require the Participant
promptly to remit the amount of such withholding to the Company before taking
any action, including issuing any shares of Common Stock, with respect to an
Incentive Award.
13.2
Special Rules
. The Committee
may, in its sole discretion and upon terms and conditions established by the
Committee, permit or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in Section 13.1
of the Plan by electing to tender, or by attestation as to ownership of,
Previously Acquired Shares that have been held for the period of time necessary
to avoid a charge to the Company’s earnings for financial reporting purposes
and that are otherwise acceptable to the Committee, by delivery of a Broker
Exercise Notice or a combination of such methods. For purposes of satisfying a Participant’s
withholding or employment-related tax obligation, Previously Acquired Shares
tendered or covered by an attestation will be valued at their Fair Market
Value.
14.
Change in Control.
14.1
A “Change in Control” shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:
(a)
any “person” as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than
the Company, any trustee or other fiduciary holding securities under any
employee benefit plan of the Company or any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes,
including pursuant to a tender or exchange offer for shares of Common Stock
pursuant to which purchases are made, the “beneficial owner” (as defined in Rule l3d-3
under the Exchange Act), directly or
17
indirectly, of securities
of the Company representing 25% or more of the combined voting power of the
Company’s then outstanding securities, provided, however, that the provisions
of this paragraph (a) shall not be applicable to a transaction in which a
corporation becomes the owner of all the Company’s outstanding securities in a
transaction that would not be a Change of Control under paragraph (c) of
this Section 14.1; or
(b)
during any twenty-four (24)
consecutive
calendar months, individuals who constitute the Board on the first day of such
period or any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest
including, but not limited to, a consent solicitation, relating to the election
of directors of the Company) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who were either directors on the first day of such period, or whose
appointment, election or nomination for election was previously so approved or
recommended, shall cease for any reason to constitute at least a majority
thereof; or
(c)
there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) more than 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, and in which no “person” (as defined under
paragraph (a) above) acquires 50% or more of the combined voting power of
the securities of the Company or such surviving entity or parent thereof
outstanding immediately after such merger or consolidation; or
(d)
there is consummated a plan of complete liquidation or
dissolution of the Company or there is consummated the sale or disposition by
the Company of all or substantially all of the Company’s assets, other than a
sale or disposition by the Company of all or substantially all of the Company’s
assets to an entity, more than 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to
such sale.
14.2
Effect of a Change in Control
.
Unless otherwise provided in an agreement evidencing an Incentive Award,
the following provisions shall apply to outstanding Incentive Awards in the
event of a Change in Control.
(a)
Continuation, Assumption or Replacement of
Incentive Awards
. In the event of a Change in Control, the
surviving or successor entity (or its parent corporation) may continue, assume
or replace Incentive Awards outstanding as of the date of the Change in Control
(with such adjustments as may be required or permitted by Section
18
4.3), and such Incentive
Awards or replacements therefore shall remain outstanding and be governed by
their respective terms, subject to Section 14.2(d) below. A surviving or successor entity may elect to
continue, assume or replace only some Incentive Awards or portions of Incentive
Awards. For purposes of this Section 14.2(a),
an Incentive Award shall be considered assumed or replaced if, in connection
with the Change in Control and in a manner consistent with Sections 409A and
424 of the Code, either (i) the contractual obligations represented by the
Incentive Award are expressly assumed by the surviving or successor entity (or
its parent corporation) with appropriate adjustments to the number and type of
securities subject to the Incentive Award and the exercise price thereof that
preserves the intrinsic value of the Incentive Award existing at the time of
the Change in Control, or (ii) the Participant has received a comparable
equity-based award that preserves the intrinsic value of the Incentive Award
existing at the time of the Change in Control and provides for a vesting or
exercisability schedule that is the same as or more favorable to the
Participant.
(b)
Acceleration of Incentive Awards
.
If and to the extent that outstanding Incentive Awards under the Plan
are not continued, assumed or replaced in connection with a Change in Control,
then (i) outstanding Options and Stock Appreciation Rights issued to the
Participant that are not yet fully exercisable shall immediately become
exercisable in full and shall remain exercisable in accordance with their
terms, (ii) all unvested Restricted Stock Awards, Stock Unit Awards and
Performance Awards will become immediately fully vested and non-forfeitable;
and (iii) any Performance Criteria applicable to Restricted Stock Awards,
Stock Unit Awards and Performance Awards will be deemed to have been satisfied
to the maximum degree specified in connection with the applicable Incentive
Award.
(c)
Payment for Incentive Awards
.
If and to the extent that outstanding Incentive Awards under the Plan
are not continued, assumed or replaced in connection with a Change in Control,
then the Committee may terminate some or all of such outstanding Incentive
Awards, in whole or in part, as of the effective time of the Change in Control
in exchange for payments to the holders as provided in this Section 14.2(c). The Committee will not be required to treat
all Incentive Awards similarly for purposes of this Section 14.2(c). The payment for any Incentive Award or
portion thereof terminated shall be in an amount equal to the excess, if any,
of (i) the fair market value (as determined in good faith by the
Committee) of the consideration that would otherwise be received in the Change
in Control for the number of shares of Common Stock subject to the Incentive
Award or portion thereof being terminated, or, if no consideration is to be
received by the Company’s stockholders in the Change in Control, the Fair
Market Value of such number of shares immediately prior to the effective date
of the Change in Control, over (ii) the aggregate exercise price (if any)
for the shares of Common Stock subject to the Incentive Award or portion
thereof being terminated. If there is no
excess, the Incentive Award may be terminated without payment. Any payment shall be made in such form, on such
terms and subject to such conditions as the Committee determines in its discretion,
which may or may not be the same as the form, terms and conditions applicable
to payments to the Company’s stockholders in connection with the Change in
Control, and may include subjecting such payments to vesting conditions
comparable to
19
those of the Incentive
Award surrendered.
(d)
Termination After a Change in Control
.
If and to the extent that Incentive Awards are continued, assumed or
replaced under the circumstances described in Section 14.2(a), and if
within two years after the Change in Control a Participant experiences an
involuntary termination of employment or other service for reasons other than
Cause, or terminates his or her employment or other service for Good Reason,
then (i) outstanding Options and Stock Appreciation Rights issued to the
Participant that are not yet fully exercisable shall immediately become
exercisable in full and shall remain exercisable in accordance with their
terms, (ii) all unvested Restricted Stock Awards, Stock Unit Awards and
Performance Awards will become immediately fully vested and non-forfeitable;
and (iii) any Performance Criteria applicable to Restricted Stock Awards,
Stock Unit Awards and Performance Awards will be deemed to have been satisfied
to the maximum degree specified in connection with the applicable Incentive
Award.
15.
Rights of Eligible Recipients and Participants;
Transferability.
15.1
Employment or Service
. Nothing in
the Plan will interfere with or limit in any way the right of the Company or
any Subsidiary to terminate the employment or service of any Eligible Recipient
or Participant at any time, nor confer upon any Eligible Recipient or
Participant any right to continue in the employ or service of the Company or
any Subsidiary.
15.2
Rights as a Stockholder; Dividends
.
As a holder of Incentive Awards (other than Restricted Stock Awards), a
Participant will have no rights as a stockholder unless and until such
Incentive Awards are exercised for, or paid in the form of, shares of Common
Stock and the Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan or
otherwise provided by the Committee, no adjustment will be made in the amount
of cash payable or in the number of shares of Common Stock issuable under
Incentive Awards denominated in or based on the value of shares of Common Stock
as a result of cash dividends or distributions paid to holders of Common Stock
prior to the payment of, or issuance of shares of Common Stock under, such Incentive
Awards. In its discretion, the Committee
may provide in an agreement evidencing a Stock Unit Award or a Performance
Award that the Participant will be entitled to receive dividend equivalents, in
the form of a cash credit to an account for the benefit of the Participant, for
any such dividends and distributions.
The terms of any rights to dividend equivalents will be determined by
the Committee and set forth in the agreement evidencing the Stock Unit Award or
Performance Award, including the time and form of payment and whether such
equivalents will be credited with interest or deemed to be reinvested in Common
Stock; provided, however, that dividend equivalents in respect of the unvested
portions of Stock Unit Awards and Performance Awards whose vesting is subject
to the achievement of specified Performance Criteria will be subject to the
same restrictions as the underlying shares or units to which such dividend
equivalents relate. No dividend
equivalents may be paid or credited in connection with Options and Stock
Appreciation Rights.
20
15.3
Restrictions on Transfer
.
(a)
Except pursuant to testamentary will or the laws of
descent and distribution or as otherwise expressly permitted by subsections (b) and
(c) below, no right or interest of any Participant in an Incentive Award
prior to the exercise (in the case of Options) or vesting or issuance (in the
case of Restricted Stock Awards and Performance Awards) of such Incentive Award
will be assignable or transferable, or subjected to any lien, during the
lifetime of the Participant, either voluntarily or involuntarily, directly or
indirectly, by operation of law or otherwise.
(b)
A Participant will be entitled to designate a
beneficiary to receive an Incentive Award upon such Participant’s death, and in
the event of such Participant’s death, payment of any amounts due under the
Plan will be made to, and exercise of any Options (to the extent permitted
pursuant to Section 12 of the Plan) may be made by, such beneficiary. If a deceased Participant has failed to
designate a beneficiary, or if a beneficiary designated by the Participant
fails to survive the Participant, payment of any amounts due under the Plan
will be made to, and exercise of any Options (to the extent permitted pursuant
to Section 12 of the Plan) may be made by, the Participant’s legal
representatives, heirs and legatees. If
a deceased Participant has designated a beneficiary and such beneficiary
survives the Participant but dies before complete payment of all amounts due
under the Plan or exercise of all exercisable Options, then such payments will
be made to, and the exercise of such Options may be made by, the legal
representatives, heirs and legatees of the beneficiary.
(c)
Upon a Participant’s request, the Committee may, in
its sole discretion, permit a transfer of all or a portion of a Non-Statutory
Stock Option or Stock Appreciation Right, other than for value, to such
Participant’s child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any person
sharing such Participant’s household (other than a tenant or employee), a trust
in which any of the foregoing have more than fifty percent of the beneficial
interests, a foundation in which any of the foregoing (or the Participant)
control the management of assets, and any other entity in which these persons
(or the Participant) own more than fifty percent of the voting interests. Any permitted transferee will remain subject
to all the terms and conditions applicable to the Participant prior to the
transfer. A permitted transfer may be
conditioned upon such requirements as the Committee may, in its sole
discretion, determine, including, but not limited to execution and/or delivery
of appropriate acknowledgements, opinion of counsel, or other documents by the
transferee.
15.4
Non-Exclusivity of the Plan
.
Nothing contained in the Plan is intended to modify or rescind any
previously approved compensation plans or programs of the Company or create any
limitations on the power or authority of the Board to adopt such additional or
other compensation arrangements as the Board may deem necessary or desirable.
21
16.
Securities Law and Other Restrictions.
Notwithstanding any other
provision of the Plan or any agreements entered into pursuant to the Plan, the
Company will not be required to issue any shares of Common Stock under this
Plan, and a Participant may not sell, assign, transfer or otherwise dispose of
shares of Common Stock issued pursuant to Incentive Awards granted under the
Plan, unless (a) there is in effect with respect to such shares a registration
statement under the Securities Act and any applicable securities laws of a
state or foreign jurisdiction or an exemption from such registration under the
Securities Act and applicable state or foreign securities laws, and (b) there
has been obtained any other consent, approval or permit from any other U.S. or
foreign regulatory body which the Committee, in its sole discretion, deems
necessary or advisable. The Company may
condition such issuance, sale or transfer upon the receipt of any representations
or agreements from the parties involved, and the placement of any legends on
certificates representing shares of Common Stock, as may be deemed necessary or
advisable by the Company in order to comply with such securities law or other
restrictions.
17.
Performance-Based Compensation Provisions.
The Committee, when it is
comprised solely of two or more outside directors meeting the requirements of Section 162(m) of
the Code, in its sole discretion, may designate whether any Restricted Stock
Awards, Stock Unit Awards or Performance Awards to be made to Covered Employees
are intended to be Performance-Based Compensation. The vesting of such Incentive Awards and the
distribution of cash, shares of Common Stock or other property pursuant
thereto, as applicable, will, to the extent required by Section 162(m) of
the Code, be conditioned upon the achievement of performance goals based on one
or more Performance Criteria specified in Section 2.20. Such Performance Criteria will be selected
and performance goals established by the Committee within the time period
prescribed by, and will otherwise comply with the requirements of, Section 162(m) of
the Code. Following completion of an
applicable performance period, the Committee shall certify in writing, in the
manner and to the extent required by Section 162(m) of the Code, that
the applicable performance goals based on the selected Performance Criteria
have been met prior to payment of the compensation, and may adjust downward,
but not upward, any amount determined to be otherwise payable in connection
with such an Incentive Award.
18.
Compliance with Section 409A
.
It is intended that the
Plan and all Incentive Awards hereunder be administered in a manner that will
comply with Section 409A of the Code, including the final regulations and
other guidance issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto. The
Committee is authorized to adopt rules or regulations deemed necessary or
appropriate to qualify for an exception from or to comply with the requirements
of Section 409A of the Code (including any transition or grandfather rules relating
thereto). Notwithstanding anything in
this Section 18 to the contrary, with respect to any Incentive Award
subject to Section 409A of the Code, no amendment to or payment under such
Incentive Award will be made unless permitted under Section 409A of the
Code and the regulations or rulings issued thereunder. Without limiting the generality of the
foregoing, if any amount shall be payable with
22
respect to any Incentive
Award hereunder as a result of a Participant’s “separation from service” at
such time as the Participant is a “specified employee” (as those terms are
defined for purposes of Section 409A of the Code) and such amount is
subject to the provisions of Section 409A of the Code, then no payment
shall be made, except as permitted under Section 409A of the Code, prior
to the first day of the seventh calendar month beginning after the Participant’s
separation from service (or the date of his or her earlier death). The Company may adopt a specified employee
policy that will apply to identify the specified employees for all deferred
compensation plans subject to Section 409A of the Code; otherwise,
specified employees will be identified using the default standards contained in
the regulations under Section 409A of the Code.
19.
Plan Amendment, Modification and Termination.
The Board may suspend or
terminate the Plan or any portion thereof at any time. In addition to the authority of the Committee
to amend the Plan under Section 3.2(e), the Board may amend the Plan from
time to time in such respects as the Board may deem advisable in order that
Incentive Awards under the Plan will conform to any change in applicable laws
or regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no such amendments to the
Plan will be effective without approval of the Company’s stockholders if: (i) stockholder
approval of the amendment is then required pursuant to Section 422 of the
Code or Section 162(m) of the Code or the rules of the New York
Stock Exchange; or (ii) such amendment seeks to modify Section 3.2(d) hereof. No termination, suspension or amendment of
the Plan may adversely affect any outstanding Incentive Award without the
consent of the affected Participant; provided, however, that (i) this
sentence will not impair the right of the Committee to take whatever action it
deems appropriate under Sections 3.2(c), 4.3 and 14 of the Plan, and (ii) no
consent of any affected Participant shall be required if such amendment is
necessary to comply with applicable law or stock exchange rules.
20.
Effective Date and Duration of the Plan.
The Plan will be
effective as of May 6, 2010, or such later date on which the Plan is
initially approved by the Company’s stockholders. The Plan will terminate at midnight on the
tenth (10th) anniversary of such effective date, and may be terminated prior to
such time by Board action. No Incentive
Award will be granted after termination of the Plan. Incentive Awards outstanding upon termination
of the Plan may continue to be exercised, earned or become free of
restrictions, according to their terms.
21.
Miscellaneous.
21.1
Governing Law
. Except to the
extent expressly provided herein or in connection with other matters of
corporate governance and authority (all of which shall be governed by the laws
of the Company’s jurisdiction of incorporation), the validity, construction,
interpretation, administration and effect of the Plan and any rules,
regulations and actions relating to the Plan will be governed by and construed
exclusively in accordance with the laws of the State of Minnesota, notwithstanding
the conflicts of laws principles of any jurisdictions.
23
21.2
Successors and Assigns
. The Plan will
be binding upon and inure to the benefit of the successors and permitted
assigns of the Company and the Participants.
24
Exhibit
10.B
NON-STATUTORY
STOCK OPTION AGREEMENT
THIS
AGREEMENT is entered into and effective as of ,
20 (the “Date of Grant”), by and between Ecolab Inc.
(the “Company”) and
(the “Optionee”).
A.
The
Company has adopted the Ecolab Inc. 2010 Stock Incentive Plan (the “Plan”),
authorizing the Board of Directors of the Company, or a committee as provided
for in the Plan (the Board or such a committee to be referred to as the “Committee”),
to grant non-statutory stock options to employees, consultants, advisors and
independent contractors of the Company and its Subsidiaries.
B.
The
Company desires to give the Optionee an inducement to acquire a proprietary
interest in the Company and an added incentive to advance the interests of the
Company by granting to the Optionee an option to purchase shares of common
stock of the Company pursuant to the Plan.
Accordingly, the parties agree as follows:
ARTICLE 1.
GRANT
OF OPTION
.
The Company hereby grants to the Optionee the option (the “Option”)
to purchase
shares (the “Option Shares”) of the Company’s common stock, $1.00 par value
(the “Common Stock”), subject to the terms and conditions set forth in this
Agreement and in the Plan. The Option is
not intended to be an “incentive stock option” as that term is used in Section 422
of the Code.
ARTICLE 2.
OPTION
EXERCISE PRICE
.
The per share price to be paid by Optionee in the event of
an exercise of the Option will be $ .
ARTICLE 3.
DURATION
OF OPTION AND TIME OF EXERCISE
.
3.1
Period
of Exercisability
.
Subject to Section 3.2 below, the Option will become exercisable,
on a cumulative basis, as to one-third of the Option Shares (excluding any
fractional portion less than one share), on each of the first
and second anniversaries of the Date of Grant and as to the
remaining Option Shares on the third anniversary of the Date of Grant, provided
the Optionee remains in the
continuous employ of or service with the
Company or any Subsidiary
. This Option will expire and will no longer be
exercisable as to any unexercised Option Shares at 5:00 p.m. (St. Paul,
Minnesota time) on the earliest of:
(a)
the
tenth anniversary of the Date of Grant (“Expiration Date”);
(b)
upon termination of the Optionee’s employment by or service
to the Company and all Subsidiaries upon a determination by the Committee that
Cause exists;
(c)
upon the expiration of any applicable period specified in
Sections
12.1(a), 12.2(a) and 12.3(a) of the Plan during which the Option may
be exercised after a termination of the Optionee’s employment by or service to
the Company and all Subsidiaries; or
(d)
the date, if
any, fixed for termination of this Option pursuant to Section 14.2(c) of
the Plan
.
3.2
Termination of Employment or Other Service
. The effect of the
termination of
the Optionee’s employment by or service to the
Company and all Subsidiaries prior to the Expiration Date
will
be as provided in Sections 12.1(a), 12.2(a), 12.3(a) and 12.5 of the Plan.
3.3
Change
in Control
.
If a Change in Control occurs prior to the Expiration Date, the effect
on this Option shall be as provided in Section 14.2 of the Plan.
ARTICLE 4.
MANNER
OF OPTION EXERCISE
4.1
Notice
. This Option may be exercised by the Optionee
in whole or in part from time to time, subject to the conditions contained in
the Plan and in this Agreement, by giving written or electronic notice of
exercise (in person, by mail, by facsimile or by electronic transmission) to
the Company at its principal executive office in St. Paul, Minnesota
(Attention: Sr. Vice President-Human Resources), or through the
procedures established with any Company-appointed third-party
administrator. Such notice will be in a
form satisfactory to the Committee, will identify the Option, will specify the
number of Option Shares with respect to which the Option is being exercised,
and will be signed (Including, if applicable, by electronic signature as
provided in Section 11.7 of this Agreement) by the person or persons so
exercising the Option. Such notice will
be accompanied by payment in full of the total purchase price of the Option
Shares purchased. If the Option is being
exercised, as provided by the Plan, by any person or persons other than the
Optionee, the notice will be accompanied by appropriate proof of right of such
person or persons to exercise the Option.
As soon as practicable after the effective exercise of the Option, the
Optionee will be recorded on the stock transfer books of the Company as the owner
of the Option Shares purchased, and the Company will deliver to the Optionee
certificated or uncertificated (“book entry”) shares. If the Option is being exercised by tender of
a Broker Exercise Notice, the Company will deliver such shares directly to the
Optionee’s broker or dealer or their nominee.
4.2
Payment
. At the time of exercise of this Option, the
Optionee will pay the total purchase price of the Option Shares to be purchased
solely in cash (including a check, bank draft or money order, payable to the
order of the Company); provided, however, that the Committee, in its sole
discretion, may allow such payment to be made, in whole or in part, (i) by
tender of a Broker Exercise Notice, (ii) by delivery to the Company
(either actually or by attestation as to ownership) of Previously Acquired
Shares that are acceptable to the Committee, (iii) by a “net exercise” as
described in Section 6.4(b) of the Plan, or (iv) by a
combination of such methods. If the
Optionee is permitted to pay the purchase price of Option Shares to be
purchased in whole or in part by delivery of Previously Acquired Shares or by a
net exercise, the value of such shares delivered to or retained by the Company
will be equal to their Fair Market Value on the date of exercise of this
Option.
ARTICLE 5.
NONTRANSFERABILITY
.
Neither this Option nor the Option Shares acquired upon
exercise may be transferred by the Optionee, either voluntarily or
involuntarily, or subjected to any lien, directly or indirectly, by operation
of law or otherwise, except as provided in the Plan. Any attempt to transfer or encumber this
Option or the Option Shares other than in accordance with this Agreement and
the Plan will be null and void and will void this Option.
ARTICLE 6.
EMPLOYMENT
OR OTHER SERVICE
.
Nothing in this Agreement will be construed to (a) limit
in any way the right of the Company to terminate the employment or service of
the Optionee at any time, or (b) be evidence of any agreement or
understanding, express or implied, that the Company will retain the Optionee in
any particular position, at any particular rate of compensation or for any
particular period of time.
2
ARTICLE 7.
WITHHOLDING
TAXES
.
By
accepting this Award, the Optionee (i) acknowledges his or her obligation
to make arrangements acceptable to the Company for payment of any federal,
state, local or foreign withholding or employment-related taxes that may be due
as a result of the grant or exercise of this Option, (ii) authorizes the
Company (or any Subsidiary) to withhold from payroll or other amounts payable
to the Grantee any sums required to satisfy such tax obligations, and (iii) otherwise
agrees to satisfy such obligations in accordance with the provisions of Section 13
of the Plan. If the Optionee desires to
satisfy some or all of such tax obligations by delivering (actually or through
attestation of ownership) Previously Acquired Shares or by having the Company
retain a portion of the Shares otherwise issuable upon exercise of the Option,
the Optionee must make such a request which shall be subject to approval by the
Company. For purposes of satisfying the
Optionee’s withholding and employment-related tax obligations, Previously
Acquired Shares or Shares retained by the Company will be valued at their Fair
Market Value on the date of exercise of the Option. Delivery of Shares upon exercise of this
Option is subject to the satisfaction of applicable withholding and
employment-related tax obligations.
ARTICLE 8.
ADJUSTMENTS
.
The number and kind of securities subject to this Option and
the exercise price of this Option will be subject to adjustment under the
circumstances and to the extent specified in Section 4.3 of the Plan.
ARTICLE
9.
AUTHORIZATION
TO RELEASE AND TRANSFER NECESSARY PERSONAL INFORMATION
.
The Optionee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of the Optionee’s
personal data by and among, as applicable, the Company for the exclusive purpose
of implementing, administering and managing the Optionee’s participation in the
Plan. The Optionee understands that the
Company may hold certain personal information about the Optionee, including,
but not limited to, the Optionee’s name, home address and telephone number,
date of birth, social security number (or any other social or national
identification number), salary, nationality, job title, number of Options
and/or shares of Common Stock held and the details of all Options or any other
entitlement to shares of Common Stock awarded, cancelled, vested, unvested or
outstanding for the purpose of implementing, administering and managing the
Optionee’s participation in the Plan (the “Data”). The Optionee understands that the Data may be
transferred to the Company or to any third parties assisting in the
implementation, administration and management of the Plan, that these
recipients may be located in the Optionee’s country or elsewhere, and that any
recipient’s country (e.g., the United States) may have different data privacy
laws and protections than the Optionee’s country. The Optionee understands that he or she may
request a list with the names and addresses of any potential recipients of the
Data by contacting his or her local human resources representative or the
Company’s stock plan administrator. The
Optionee authorizes the recipients to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of
implementing, administering and managing the Optionee’s participation in the
Plan, including any requisite transfer of such Data to a broker or other third
party assisting with the administration of Options under the Plan or with whom
shares of Common Stock acquired pursuant to the exercise of the Options or cash
from the sale of such shares may be deposited.
Furthermore, the Optionee acknowledges and understands that the transfer
of the Data to the Company or to any third parties is necessary for the
Optionee’s participation in the Plan.
The Optionee understands that the Optionee may, at any time, view the
Data, request additional information about the storage and processing of the
Data, require any necessary amendments to the Data or refuse or withdraw the
consents herein by contacting the Optionee’s local human resources
representative or the Company’s
3
stock
plan administrator in writing. The
Optionee further acknowledges that withdrawal of consent may affect his or her
ability to vest in or realize benefits from the Option, and the Optionee’s
ability to participate in the Plan. For
more information on the consequences of refusal to consent or withdrawal of
consent, the Optionee understands that he or she may contact his or her local
human resources representative or the Company’s stock plan administrator.
ARTICLE 10.
SUBJECT
TO PLAN
.
10.1
Terms
of Plan Prevail
.
The Option has been and the Option Shares granted and issued pursuant to
this Agreement will be granted and issued under, and are subject to the terms
of, the Plan. The terms of the Plan are
incorporated by reference in this Agreement in their entirety, and the
Optionee, by execution of this Agreement, acknowledges having received a copy
of the Plan. The provisions of this
Agreement will be interpreted as to be consistent with the Plan, and any
ambiguities in this Agreement will be interpreted by reference to the
Plan. In the event that any provision of
this Agreement is inconsistent with the terms of the Plan, the terms of the
Plan will prevail. References in this
Agreement to specific Sections of the Plan refer to those Sections of the Plan
as in effect on the Date of Grant.
10.2
Definitions
. Unless otherwise defined in this Agreement,
the terms capitalized in this Agreement have the same meanings as given to such
terms in the Plan.
ARTICLE 11.
RIGHTS
AS A STOCKHOLDER
.
Neither the Optionee nor any other person entitled to
exercise the Option will have any rights as a stockholder with respect to any
of the Option Shares until the Option has been exercised in accordance with
this Agreement and the Optionee or such other person becomes the holder of
record of the resulting shares of Common Stock as provided in Section 4.1
above.
ARTICLE 12.
MISCELLANEOUS
.
12.1
Binding
Effect
. This Agreement will
be binding upon the heirs, executors, administrators and successors of the
parties to this Agreement.
12.2
Governing
Law
. This Agreement and
all rights and obligations under this Agreement will be construed in accordance
with the Plan and governed by the laws of the State of Minnesota without regard
to conflicts of laws provisions. Any
legal proceedings related to this Agreement will be brought in an appropriate
Minnesota court, and the parties to this Agreement consent to the exclusive
jurisdiction of the court for this purpose.
12.3
Entire
Agreement
. This Agreement and the Plan
set forth the entire agreement and understanding of the parties to this
Agreement with respect to the grant and exercise of this Option and the
administration of the Plan and supersede all prior agreements, arrangements,
plans and understandings relating to the grant and exercise of this Option and
the administration of the Plan.
12.4
Amendment
and Waiver
. Other than as provided in
the Plan, this Agreement may be amended, waived, modified or canceled only by a
written instrument executed by the parties hereto or, in the case of a waiver,
by the party waiving compliance.
12.5
Captions
.
The Article, Section and paragraph captions in this Agreement are for
convenience of reference only, do not constitute part of this Agreement and are
not to be deemed to limit or otherwise affect any of the provisions of this
Agreement.
4
12.6
Counterparts
.
For convenience of the parties hereto, this Agreement may be executed in any
number of counterparts, each such counterpart to be deemed an original
instrument, and all such counterparts together to constitute the same
agreement.
12.7
Electronic
Delivery and Execution
. The Optionee hereby consents and agrees to
electronic delivery of any documents that the Company may elect to deliver
(including, but not limited to, plan documents, prospectus and prospectus
supplements, grant or award notifications and agreements, account statements, annual
and quarterly reports, and all other forms of communications) in connection
with this and any other Incentive Award made or offered under the Plan. The Optionee understands that, unless revoked
by giving written notice to the Company pursuant to the Plan, this consent will
be effective for the duration of the Agreement.
The Optionee also understands that the Optionee will have the right at
any time to request that the Company deliver written copies of any and all
materials referred to above. The Optionee
hereby consents to any and all procedures the Company has established or may
establish for an electronic signature system for delivery and acceptance of any
such documents that the Company may elect to deliver, and agrees that the
Optionee’s electronic signature is the same as, and will have the same force
and effect as, the Optionee’s manual signature.
The Optionee consents and agrees that any such procedures and delivery
may be effected by a third party engaged by the Company to provide administrative
services related to the Plan.
12.8
Address
for Notice
.
All notices to the Company shall be in writing and sent to the Company’s
General Counsel at the Company’s corporate headquarters. Notices to the Grantee shall be addressed to
the Grantee at the address as from time to time reflected in the Company’s or
Subsidiary’s employment records as the Grantee’s address.
12.9
Severability
. In the event that any provision in this
Agreement shall be held invalid or unenforceable, such provision shall be severable
from, and such invalidity or unenforceability shall not be construed to have
any effect on, the remaining provisions of this Agreement.
12.10
Appendix
. Notwithstanding any provision of this
Agreement to the contrary, this Option and the shares of Common Stock acquired
under the Plan upon its exercise shall be subject to any and all special terms
and provisions, if any, as set forth in the Appendix for the Grantee’s country
of residence.
5
The parties to this Agreement have executed this Agreement
effective the day and year first above written.
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ECOLAB
INC.
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By:
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Its:
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[By
execution of this Agreement,
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OPTIONEE
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the
Optionee acknowledges having
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received a
copy of the Plan.]
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«Firstnamefirst»
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6
Exhibit 10.C
RESTRICTED STOCK AWARD AGREEMENT
THIS AGREE
MENT is entered into and
effective as of this
day of ,
20 , (the “Date of Grant”), by and between Ecolab Inc.
(the “Company”) and
(the “Grantee”).
A.
The Company has
adopted the Ecolab Inc. 2010 Stock Incentive Plan, (the “Plan”), authorizing
the Board of Directors of the Company, or a committee as provided for in the
Plan (the Board or such a committee to be referred to as the “Committee”), to
grant Restricted Stock Awards to certain employees of the Company and its
Subsidiaries.
B.
The Company
desires to give the Grantee a proprietary interest in the Company and an added
incentive to advance the interests of the Company by granting to the Grantee
pursuant to the Plan an award of shares of common stock of the Company that are
restricted as to transferability and subject to a risk of forfeiture.
Accordingly, the parties agree as follows:
ARTICLE
1.
GRANT OF AWARD
.
The Company hereby grants to the Grantee a Restricted Stock Award (the “Award”)
consisting of
( )
shares (the “Award Shares”) of the Company’s common stock, par value $1.00 per
share (the “Common Stock”).
The Award and the Award Shares are
subject to the terms, conditions and restrictions set forth in this Agreement
and in the Plan, including that the Award Shares shall be subject to possible
forfeiture by the Grantee until the satisfaction of the vesting conditions set
forth in Section 2.1 below.
Reference to the Award Shares in this
Agreement will be deemed to include the Distribution Proceeds (as defined in Section 3.2
of this Agreement) with respect to such Award Shares that are retained and held
by the Company as provided in Section 3.2 of this Agreement.
ARTICLE 2.
GRANT
CONDITIONS AND RESTRICTIONS
.
2.1
Vesting of
Award Shares
. Subject to
Sections 2.3 and 2.4 of this Agreement, restrictions on the Award Shares will
lapse and the Award Shares will vest in the percentages and on the dates
specified in the following vesting schedule, provided the Grantee remains in
the continuous employ or service of the Company or any Subsidiary from the Date
of Grant to the applicable vesting date:
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Vesting Date
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Portion of Award Shares Vested
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*[ ]
anniversary of the Date of Grant
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*[ ]%
of Award Shares (excluding any fractional portion less than one share)
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*[ ]
anniversary of the Date of Grant
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Remaining
Award Shares
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The
period from the Date of Grant to the final Vesting Date specified in the
preceding schedule is referred to in this Agreement as the “Restriction Period.”
2.2
Restrictions on
Transferability
. During the
Restriction Period, the Grantee shall not be entitled to transfer, assign or
encumber, voluntarily or involuntarily, any unvested Award Shares, and unvested
Award Shares may not be subjected to any lien, directly or indirectly, by
operation of law or otherwise.
Any attempt to transfer, assign or
encumber unvested Award Shares during the Restriction Period will be null and
void
and will result in the immediate termination of the Award, and all
unvested Award Shares will be forfeited and immediately returned to the
Company.
2.3
Termination of
Employment or Other Service
. This Award is considered a Restricted Stock
Award subject only to service-based vesting conditions for purposes of Section 12
of the Plan. The effect of the
termination of the Grantee’s employment or other service with the Company and
all Subsidiaries during the Restriction Period will be as provided in Sections
12.1(b), 12.2(b), 12.3(b) and 12.5 of the Plan.
2.4
Change in
Control
.
If a Change in Control occurs during the Restriction
Period, the effect on this Award shall be as provided in Section 14.2 of
the Plan.
ARTICLE 3.
ISSUANCE OF
AWARD SHARES
.
3.1
Rights of a
Stockholder
. As soon as
practicable after this Agreement is executed and delivered, the Award Shares
will be transferred on the books of the Company into the name of, or into an
account for the benefit of, the Grantee.
Except as provided in Sections 2.2 and 3.2 of this Agreement, the
Grantee will have all voting, dividend, liquidation and other stockholder
rights with respect to the Award Shares in accordance with their terms upon
becoming the holder of record of such shares.
Prior to the vesting of any Award Shares, any book entries for such
Award Shares will bear an appropriate legend, as determined by the Committee,
to the effect that such Award Shares are subject to the restrictions, terms and
conditions set forth in this Agreement and the Plan.
3.2
Dividends and
Other Distributions
. The Grantee
will have no right to receive regular quarterly cash dividends with respect to
unvested Award Shares during the Restriction Period, and hereby waives his or
her rights to receive such dividends with respect to unvested Award
Shares. Any securities or other property
payable or distributable with respect to unvested Award Shares during the
Restriction Period as the result of any equity restructuring or other change in
corporate capitalization described in Section 4.3 of the Plan (all of
which will collectively be referred to as “Distribution Proceeds”) may, in the
Committee’s sole discretion, be distributed to the Grantee or may be retained
and held by the Company subject to the same restrictions, vesting conditions
and other terms of this Agreement to which the underlying Award Shares are
subject. In addition, the Committee may,
in its sole discretion, cause such Distribution Proceeds to be paid to the
Company pursuant to Article 6 of this Agreement in order to satisfy any
federal, state, local or foreign withholding or other employment-related tax
requirements attributable to such distributions or to the Grantee’s receipt of
the Award or the vesting of the Award Shares.
ARTICLE 4.
ADJUSTMENTS
.
The number and kind of
securities subject to this Award will be subject to adjustment under the
circumstances and to the extent specified in Section 4.3 of the Plan.
ARTICLE 5.
EMPLOYMENT OR
SERVICE
.
Nothing in this Agreement will be construed to (a) limit in any
way the right of the Company to terminate the employment or service of the
Grantee at any time, or (b) be evidence of any agreement or understanding,
express or implied, that the Company will retain the Grantee in any particular
position at any particular rate of compensation or for any particular period of
time.
ARTICLE 6.
TAXES
.
By accepting this Award, the Grantee (i) acknowledges his or her
obligation to pay any federal, foreign, state and local withholding or employment-related
taxes attributable to this Award as provided in Section 13 of the Plan,
and (ii) consents and directs the Company or its third party administrator
to withhold the number of shares of Common Stock issuable upon the vesting of
some or all of the Award Units as the Company, in its sole discretion, deems
necessary to satisfy such withholding obligations. For
2
purposes
of
satisfying the Grantee’s withholding and employment-related tax obligations,
shares withheld by the Company will be valued at their Fair Market Value on the
date of settlement.
ARTICLE
7
.
AUTHORIZATION TO RELEASE AND TRANSFER NECESSARY PERSONAL
INFORMATION
.
The Grantee hereby explicitly and unambiguously consents to the collection,
use and transfer, in electronic or other form, of the Grantee’s personal data
by and among, as applicable, the Company for the exclusive purpose of
implementing, administering and managing the Grantee’s participation in the
Plan. The Grantee understands that the Company may hold certain personal
information about the Grantee, including, but not limited to, the Grantee’s
name, home address and telephone number, date of birth, social security number
(or any other social or national identification number), salary, nationality,
job title, number of Award Shares and/or shares of Common Stock held and the
details of all Award Shares or any other entitlement to shares of Common Stock
awarded, cancelled, vested, unvested or outstanding for the purpose of implementing,
administering and managing the Grantee’s participation in the Plan (the “Data”). The Grantee understands that the Data may be
transferred to the Company or to any third parties assisting in the
implementation, administration and management of the Plan, that these
recipients may be located in the Grantee’s country or elsewhere, and that any
recipient’s country (e.g., the United States) may have different data privacy
laws and protections than the Grantee’s country. The Grantee understands that he or she may
request a list with the names and addresses of any potential recipients of the
Data by contacting his or her local human resources representative or the
Company’s stock plan administrator. The
Grantee authorizes the recipients to receive, possess, use, retain and transfer
the Data, in electronic or other form, for the sole purpose of implementing,
administering and managing the Grantee’s participation in the Plan, including
any requisite transfer of such Data to a broker or other third party assisting
with the administration of Award Shares under the Plan or with whom shares of
Common Stock acquired pursuant to the vesting of the Award Shares or cash from
the sale of such shares may be deposited.
Furthermore, the Grantee acknowledges and understands that the transfer
of the Data to the Company or to any third parties is necessary for the Grantee’s
participation in the Plan. The Grantee
understands that the Grantee may, at any time, view the Data, request
additional information about the storage and processing of the Data, require
any necessary amendments to the Data or refuse or withdraw the consents herein
by contacting the Grantee’s local human resources representative or the Company’s
stock plan administrator in writing. The
Grantee further acknowledges that withdrawal of consent may affect his or her
ability to vest in or realize benefits from the Award Shares, and the Grantee’s
ability to participate in the Plan. For
more information on the consequences of refusal to consent or withdrawal of
consent, the Grantee understands that he or she may contact his or her local
human resources representative or the Company’s stock plan administrator.
ARTICLE 8.
SUBJECT TO PLAN
.
8.1
Terms of Plan
Prevail
. The Award and the Award Shares
granted pursuant to this Agreement have been granted under, and are subject to
the terms of, the Plan. The terms of the
Plan are incorporated by reference in this Agreement in their entirety, and the
Grantee, by execution of this Agreement, acknowledges having received a copy of
the Plan. The provisions of this
Agreement will be interpreted as to be consistent with the Plan, and any
ambiguities in this Agreement will be interpreted by reference to the Plan. In the event that any provision in this
Agreement is inconsistent with the terms of the Plan, the terms of the Plan
will prevail.
8.2
Definitions
. Unless otherwise defined in this Agreement,
the terms capitalized in this Agreement have the same meanings as given to such
terms in the Plan.
3
ARTICLE 9.
MISCELLANEOUS
.
9.1
Binding Effect
. This Agreement will be binding upon the
heirs, executors, administrators and successors of the parties hereto.
9.2
Governing Law
. This Agreement and all rights and obligations
under this Agreement will be construed in accordance with the Plan and governed
by the laws of the State of Minnesota without regard to conflicts of law
provisions. Any legal proceeding related
to this Agreement will be brought in an appropriate Minnesota court, and the
parties to this Agreement consent to the exclusive jurisdiction of the court
for this purpose.
9.3
Entire
Agreement
. This
Agreement and the Plan set forth the entire agreement and understanding of the
parties hereto with respect to the grant and exercise of this Award and the
administration of the Plan and supersede all prior agreements, arrangements,
plans and understandings relating to the grant and vesting of this Award and
the administration of the Plan.
9.4
Amendment and
Waiver
. Other than as provided in the
Plan, this Agreement may be amended, waived, modified or canceled only by a
written instrument executed by the parties hereto or, in the case of a waiver,
by the party waiving compliance.
9.5
Captions
. The Article, Section and paragraph
captions in this Agreement are for convenience of reference only, do not
constitute part of this Agreement and are not to be deemed to limit or
otherwise affect any of the provisions of this Agreement.
9.6
Electronic
Delivery and Execution
. The Grantee hereby consents and agrees to
electronic delivery of any documents that the Company may elect to deliver
(including, but not limited to, plan documents, prospectus and prospectus
supplements, grant or award notifications and agreements, account statements,
annual and quarterly reports, and all other forms of communications) in
connection with this and any other Incentive Award made or offered under the
Plan. The Grantee understands that, unless revoked by giving written notice to
the Company pursuant to the Plan, this consent will be effective for the
duration of the Agreement. The Grantee also understands that the Grantee will
have the right at any time to request that the Company deliver written copies
of any and all materials referred to above. The Grantee hereby consents to any
and all procedures the Company has established or may establish for an
electronic signature system for delivery and acceptance of any such documents
that the Company may elect to deliver, and agree that the Grantee’s electronic
signature is the same as, and will have the same force and effect as, the
Grantee’s manual signature. The Grantee consents and agrees that any such
procedures and delivery may be affected by a third party engaged by the Company
to provide administrative services related to the Plan.
9.7
Address for Notice
.
All notices to the Company shall be in writing and sent to the Company’s
General Counsel at the Company’s corporate headquarters. Notices to the Grantee shall be addressed to
the Grantee at the address as from time to time reflected in the Company’s or
Subsidiary’s employment records as the Grantee’s address.
9.8
Severability
.
In the event that any provision in this Agreement shall be held invalid
or unenforceable, such provision shall be severable from, and such invalidity
or unenforceability shall not be construed to have any effect on, the remaining
provisions of this Agreement.
9.9
Appendix
.
Notwithstanding any provision of this Agreement to the contrary, this
grant of Award Units and the shares of Common Stock acquired under the Plan
shall be subject to any and all special terms and provisions, if any, as set
forth in the Appendix for the Grantee’s country of residence.
4
9.10
Counterparts
.
For the convenience of the parties hereto, this Agreement may be
executed in any number of counterparts, each such counterpart to be deemed an
original instrument, and all such counterparts together to constitute the same
agreement.
The parties to this Agreement
have executed this Agreement effective the day and year first above written.
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ECOLAB INC.
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By:
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Its:
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[By execution of this Agreement,
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GRANTEE
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the Grantee acknowledges having
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received a copy of the Plan.]
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«Firstnamefirst»
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«Address_Line_2»
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«City», «State» «Zip_Code»
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SSN: «Ssn»
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5
Exhibit 10.D
PERFORMANCE-BASED
RESTRICTED STOCK UNIT AWARD AGREEMENT
THIS AGREEMENT is entered into and effective as of ,
20 (the “Date of Grant”), by and between Ecolab Inc.
(the “Company”) and
(the “Grantee”).
A.
The Company
has adopted the Ecolab Inc. 2010 Stock Incentive Plan (the “Plan”), authorizing
the Board of Directors of the Company, or a committee as provided for in the
Plan (the Board or such a committee to be referred to as the “Committee”), to
grant restricted Stock Unit Awards to certain employees of the Company and its
Subsidiaries.
B.
The Company
desires to give the Grantee an incentive to advance the interests of the
Company by granting to the Grantee an award of restricted stock units pursuant
to the Plan.
Accordingly,
the parties agree as follows:
ARTICLE 1.
GRANT
OF AWARD
.
The Company hereby grants to the Grantee a performance-based
restricted Stock Unit Award (the “Award”) consisting of units
(the “Award Units”), each of which is a bookkeeping entry representing the
right to receive one share of the Company’s common stock, par value $1.00 per
share (the “Common Stock”). The Award
and Award Units are subject to the terms, conditions, restrictions and risk of
forfeiture set forth in this Agreement and in the Plan.
ARTICLE 2.
VESTING
OF AWARD UNITS
.
2.1
Subject to Article 5 below, some or all of the
Award Units will vest and become non-forfeitable (“Vested”) on December 31,
20 (the “Vesting Date”), provided that (a) the
Committee has certified that the Company has achieved a level of average annual
Return on Invested Capital (as defined below) of at least
percent for the three (3) year period from January 1, 20
to December 31, 20 (the “Performance Period”), and
(b) the Grantee remains in the continuous employ of or service with the
Company or any Subsidiary until the Vesting Date. The number of Award Units that will Vest on
the Vesting Date will be determined in accordance with Section 2.2 below.
2.2
The
following chart sets forth the percentage of the Award Units (or of a portion
of the Award Units as provided in Section 5.1 of this Agreement) that will
vest on the Vesting Date based upon the Company’s level of achievement of
average annual Return on Invested Capital for the Performance Period:
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Average Annual Return on
Invested Capital Level
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Vested Award Unit
Percentage
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Threshold
Level — [ %]
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[ ]
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Maximum
Level — [ %]
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[ ]
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The actual
percentage of Award Units that will Vest based upon the Company’s achievement
of average annual Return on Invested Capital between the Threshold Level and
Maximum Level will be interpolated on a straight line basis, with the
corresponding number of Vested Award Units resulting from such determination
rounded up to the next whole Award Unit.
If the average annual Return on Invested Capital for the Performance
Period is below the Threshold Level, no Award Units will Vest. Any Award Units that do not Vest on the
Vesting Date will be forfeited.
2.3
The
Committee shall certify the level of average annual Return on Invested Capital
for the Performance Period and the percentage of Award Units that Vest as
provided in Section 2.2 above no later than March 1, 20 .
2.4
For the
purposes of this Agreement, average annual Return on Invested Capital is
calculated by dividing (i) the average of the Company’s Net Operating
Profit After Taxes (as defined below) for each of the three fiscal years during
the Performance Period, by (ii) the average of the Company’s Invested
Capital (as defined below) as of the last day of the fiscal quarter immediately
preceding the Performance Period and of each fiscal quarter during the
Performance Period. “Net Operating
Profit After Taxes” is defined as the Company’s operating income multiplied by
1 minus the Company’s effective tax rate, each as reported in the Company’s
consolidated financial statements for each fiscal year during the Performance
Period, adjusted to eliminate the after-tax effects
of
any acquisition during the Performance Period that was approved by the
Board as well as
(a)
the cumulative
effects of accounting or tax changes, (b) gains and losses from
discontinued operations, (c) extraordinary gains or losses, and (d) charges
for restructurings, each as defined by generally accepted accounting principles
and as identified in the Company’s financial statements (including accompanying
notes), management’s discussion and analysis or other filings with the
Securities and Exchange Commission by the Company
. “
Invested
Capital” is defined as the Company’s (a) total assets less cash and cash
equivalents, minus (b) total liabilities less short-term and long-term
debt, each as reported by the Company as of the end of the fiscal quarters
described above and adjusted to eliminate the impact of the same factors
identified in the previous sentence.
2.5
The
Committee may adjust the calculation of Return on Invested Capital applicable
to the Award Units under the circumstances, for the purpose and to the extent
contemplated by Section 3.2(c) of the Plan. Further, the actual number of Award Units
that become Vested based upon achieving the specified level of average annual
Return on Invested Capital during the Performance Period may be adjusted (but only
downward if the Grantee is a Covered Employee and this Award is intended to be
Performance-Based Compensation subject to Section 17 of the Plan) by the
Committee in its sole and absolute discretion based on such factors as the
Committee determines to be appropriate and/or advisable.
ARTICLE 3.
SETTLEMENT
OF VESTED AWARD UNITS
.
Except as may otherwise be provided in Section 5.2
below, Vested Award Units will be paid to the Grantee by no later than March 15,
20 . Each Vested
Award Unit will be paid to the Grantee in one share of Common Stock, provided
that the Company will have no obligation to issue shares of Common Stock
pursuant to this Agreement unless and until the Grantee has satisfied any
applicable tax obligations pursuant to Article 9 below and such issuance
otherwise complies with all applicable law.
Prior to the time the Vested Award Units are settled, the Grantee will
have no rights other than those of a general creditor of the Company. The Award Units represent an unfunded and
unsecured obligation of the Company.
ARTICLE 4.
GRANT
RESTRICTIONS
.
4.1
Transferability
. Any attempt to transfer, assign or encumber
the Award Units other than in accordance with this Agreement and the Plan will
be null and void, and will result in the immediate termination and forfeiture
of the Award and all Award Units that have not yet Vested.
4.2
Dividends
and Other Distributions
. Subject to Article 6 of this Agreement,
the Grantee will have no right to receive dividends, dividend equivalents or
other distributions with respect to Award Units.
2
ARTICLE 5.
TERMINATION
OF EMPLOYMENT OR OTHER SERVICE; CHANGE IN CONTROL
.
5.1
Termination
of Employment or Other Service
. This Award is considered a Stock Unit Award
subject to a service-based vesting condition and to the achievement of a
specified Performance Criterion as a condition to vesting for purposes of Section 12
of the Plan. Except as otherwise
provided in this Section 5.1, the effect of the termination of
the Grantee’s
employment or other service with the Company and all Subsidiaries prior to the
Vesting Date of this Award will be as provided in Sections 12.1(c), 12.2(c),
12.3(b) and 12.5 of the Plan. If
the Grantee’s employment by or other service with the Company and all
Subsidiaries is terminated by the Company or any Subsidiary without Cause prior
to the Vesting Date, then (i) for purposes of Section 2.1(b) of
this Agreement, the Grantee will be deemed to have been in the continuous
employ of or service with the Company or any Subsidiary until the Vesting Date
with respect to one-third of the Award Units if such termination occurs during
the second year of the Performance Period and with respect to two-thirds of the
Award Units if the such termination occurs during the third year of the
Performance Period, and (ii) for purposes of determining the number of
Vested Award Units on the Vesting Date under Section 2.2 of this
Agreement, the Vested Award Unit Percentage determined in accordance with Section 2.2
will be applied to the number of Award Units as to which the service-based
vesting condition is deemed satisfied in accordance with clause (i) of
this sentence, rather than to the total number of Award Units.
5.2
Change in
Control
. If a Change in Control
occurs prior to the Vesting Date, the effect on this Award shall be as provided
in Section 14.2 of the Plan. If
vesting of Award Units should be accelerated in accordance with Section 14.2
of the Plan, Vested Unit Awards will be settled and paid to the Grantee no
later than two and one-half months after the end of the Grantee’s taxable year
in which the Award Units became Vested.
ARTICLE 6.
ADJUSTMENTS
.
The number and kind of securities subject to this Award will
be subject to adjustment under the circumstances and to the extent specified in
Section 4.3 of the Plan.
ARTICLE 7.
RIGHTS
AS A STOCKHOLDER
.
The Grantee will have no rights as a stockholder with
respect to any of the Award Units until the Award Units are settled following
vesting and the Grantee becomes the holder of record of shares of Common Stock.
ARTICLE 8.
EMPLOYMENT
OR SERVICE
.
Nothing in this Agreement will be construed to (a) limit
in any way the right of the Company to terminate the employment or service of
the Grantee at any time, or (b) be evidence of any agreement or
understanding, express or implied, that the Company will retain the Grantee in
any particular position at any particular rate of compensation or for any
particular period of time.
ARTICLE 9.
WITHHOLDING
TAXES
.
By accepting this Award, the Grantee (i) acknowledges his or her
obligation to pay any federal, foreign, state and local withholding or
employment-related taxes attributable to this Award as provided in Section 13
of the Plan, and (ii) consents and directs the Company or its third party
administrator to withhold the number of shares of Common Stock issuable upon
the vesting of some or all of the Award
3
Units
as the Company, in its sole discretion, deems necessary to satisfy such
withholding obligations. For purposes of
satisfying the
Grantee’s withholding and employment-related tax obligations, shares withheld
by the Company will be valued at their Fair Market Value on the date of
settlement.
ARTICLE 10.
PERFORMANCE-BASED
COMPENSATION
.
Any payment of Common Stock received for the Vested Award
Units is intended to qualify as “performance-based compensation” for purposes
of Section 162(m) of the Internal Revenue Code, and no action will be
taken which would cause such payment to fail to satisfy the requirements of
such exemption.
ARTICLE 11.
AUTHORIZATION
TO RELEASE AND TRANSFER NECESSARY PERSONAL INFORMATION
.
The Grantee hereby explicitly and unambiguously consents to
the collection, use and transfer, in electronic or other form, of the Grantee’s
personal data by and among, as applicable, the Company and its Subsidiaries for
the exclusive purpose of implementing, administering and managing the Grantee’s
participation in the Plan. The Grantee
understands that the Company may hold certain personal information about the
Grantee, including, but not limited to, the Grantee’s name, home address and
telephone number, date of birth, social security number (or any other social or
national identification number), salary, nationality, job title, number of
Award Units and/or shares of Common Stock held and the details of all Award
Units or any other entitlement to shares of Common Stock awarded, cancelled,
vested, unvested or outstanding for the purpose of implementing, administering
and managing the Grantee’s participation in the Plan (the “Data”). The Grantee understands that the Data may be
transferred to the Company or to any third parties assisting in the
implementation, administration and management of the Plan, that these
recipients may be located in the Grantee’s country or elsewhere, and that any
recipient’s country (e.g., the United States) may have different data privacy
laws and protections than the Grantee’s country. The Grantee understands that he or she may
request a list with the names and addresses of any potential recipients of the
Data by contacting his or her local human resources representative or the
Company’s stock plan administrator. The
Grantee authorizes the recipients to receive, possess, use, retain and transfer
the Data, in electronic or other form, for the sole purpose of implementing,
administering and managing the Grantee’s participation in the Plan, including
any requisite transfer of such Data to a broker or other third party assisting
with the administration of Award Units under the Plan or with whom shares of
Common Stock acquired pursuant to the vesting of the Award Units or cash from
the sale of such shares may be deposited.
Furthermore, the Grantee acknowledges and understands that the transfer
of the Data to the Company or to any third parties is necessary for the Grantee’s
participation in the Plan. The Grantee
understands that the Grantee may, at any time, view the Data, request
additional information about the storage and processing of the Data, require
any necessary amendments to the Data or refuse or withdraw the consents herein
by contacting the Grantee’s local human resources representative or the Company’s
stock plan administrator in writing. The
Grantee further acknowledges that withdrawal of consent may affect his or her
ability to vest in or realize benefits from the Award Units, and the Grantee’s
ability to participate in the Plan. For
more information on the consequences of refusal to consent or withdrawal of
consent, the Grantee understands that he or she may contact his or her local
human resources representative or the Company’s stock plan administrator.
ARTICLE 12.
SUBJECT
TO PLAN
.
12.1
Terms
of Plan Prevail
.
The Award and the Award Units granted pursuant to this Agreement have
been granted under, and are subject to the terms of, the Plan. The terms of the Plan are incorporated by
reference in this Agreement in their entirety, and the Grantee acknowledges
having received a copy of the Plan. The
provisions of this Agreement will be interpreted as to be consistent with
4
the Plan, and any ambiguities in this Agreement will be
interpreted by reference to the Plan. In
the event that any provision in this Agreement is inconsistent with the terms
of the Plan, the terms of the Plan will prevail. References in this Agreement to specific
Sections of the Plan refer to those Sections of the Plan as in effect on the
Date of Grant.
12.2
Definitions
. Unless otherwise defined in this Agreement,
the terms capitalized in this Agreement have the same meanings as given to such
terms in the Plan.
ARTICLE 13.
MISCELLANEOUS
.
13.1
Binding
Effect
. This Agreement will
be binding upon the heirs, executors, administrators and successors of the
parties hereto.
13.2
Governing Law
.
This Agreement and all rights and obligations under this Agreement will
be construed in accordance with the Plan and governed by the laws of the State
of Minnesota without regard to conflicts of law provisions. Any legal proceeding related to this Agreement
will be brought in an appropriate Minnesota court, and the parties to this
Agreement consent to the exclusive jurisdiction of the court for this purpose.
13.3
Entire
Agreement
.
This Agreement and the Plan set forth the entire agreement and
understanding of the parties hereto with respect to the grant, vesting and
payment of this Award and the administration of the Plan and supersede all
prior agreements, arrangements, plans and understandings relating to the grant,
vesting and payment of this Award and the administration of the Plan.
13.4
Amendment
and Waiver
.
Other than as provided in the Plan, this Agreement may be amended,
waived, modified or canceled only by a written instrument executed by the
parties hereto or, in the case of a waiver, by the party waiving compliance.
13.5
Captions
. The Article, Section and paragraph
captions in this Agreement are for convenience of reference only, do not
constitute part of this Agreement and are not to be deemed to limit or
otherwise affect any of the provisions of this Agreement.
13.6
Electronic
Delivery and Execution
. The Grantee hereby consents and agrees to
electronic delivery of any documents that the Company may elect to deliver
(including, but not limited to, plan documents, prospectus and prospectus
supplements, grant or award notifications and agreements, account statements,
annual and quarterly reports, and all other forms of communications) in
connection with this and any other Incentive Award made or offered under the
Plan. The Grantee understands that,
unless revoked by giving written notice to the Company pursuant to the Plan,
this consent will be effective for the duration of the Agreement. The Grantee also understands that the Grantee
will have the right at any time to request that the Company deliver written
copies of any and all materials referred to above. The Grantee hereby consents to any and all
procedures the Company has established or may establish for an electronic
signature system for delivery and acceptance of any such documents that the
Company may elect to deliver, and agrees that the Grantee’s electronic
signature is the same as, and will have the same force and effect as, the
Grantee’s manual signature. The Grantee
consents and agrees that any such procedures and delivery may be effected by a
third party engaged by the Company to provide administrative services related
to the Plan.
13.7
Address
for Notice
.
All notices to the Company shall be in writing and sent to the Company’s
General Counsel at the Company’s corporate headquarters. Notices to the Grantee shall be addressed to
the Grantee at the address as from time to time reflected in the Company’s or
Subsidiary’s employment records as the Grantee’s address.
5
13.8
Severability
. In the event that any provision in this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
13.9
Appendix
. Notwithstanding any provision of this
Agreement to the contrary, this grant of Award Units and the shares of Common
Stock acquired under the Plan shall be subject to any and all special terms and
provisions, if any, as set forth in the Appendix for the Grantee’s country of
residence.
13.10
Counterparts
. For the convenience of the parties hereto,
this Agreement may be executed in any number of counterparts, each such
counterpart to be deemed an original instrument, and all such counterparts
together to constitute the same agreement.
The parties to this Agreement have executed this Agreement
effective the day and year first above written.
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ECOLAB INC.
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By:
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Its:
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[By
execution of this Agreement,
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GRANTEE
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the
Grantee acknowledges having
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received a
copy of the Plan.]
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«Firstnamefirst»
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«Address_Line_1»
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o
«Address_Line_2»
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o
«Address_Line_3»
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«City»,
«State» «Zip_Code»
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SSN: «Ssn»
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