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ECOLAB INC.
1993 STOCK INCENTIVE PLAN
(As Amended and Restated as of May 12, 2000)
1. PURPOSE OF PLAN.
The purpose of the Ecolab Inc. 1993 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 persons of
ability to perform services for the Company and its Subsidiaries by providing an
incentive to such individuals through equity participation in the Company and by
rewarding such individuals who contribute to the achievement by the Company of
its 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 "CHANGE IN CONTROL" means an event described in Section 11.1 of the
Plan.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COMMITTEE" means the group of individuals administering the Plan,
as provided in Section 3 of the Plan.
2.6 "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.
2.7 "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 within the meaning of Section
22(e)(3) of the Code.
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2.8 "ELIGIBLE RECIPIENTS" means all employees (including, without
limitation, officers and directors who are also employees) of the Company or any
Subsidiary and any non-employee consultants and advisors of the Company or any
Subsidiary.
2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
2.10 "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 as reported on the New
York Stock Exchange Composite Tape.
2.11 "INCENTIVE AWARD" means an Option, Restricted Stock Award or
Performance Stock Award granted to an Eligible Recipient pursuant to the Plan.
2.12 "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.
2.13 "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.
2.14 "OPTION" means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.15 "PARTICIPANT" means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.
2.16 "PERFORMANCE STOCK AWARD" means an award of Common Stock granted
to an Eligible Recipient pursuant to Section 8 of the Plan.
2.17 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock that are
already owned by the Participant or, with respect to any Incentive Award, that
are to be issued upon the grant, exercise or vesting of such Incentive Award.
2.18 "RESTRICTED STOCK AWARD" means an award of Common Stock granted to
an Eligible Recipient pursuant to Section 7 of the Plan that is subject to the
restrictions on transferability and the risk of forfeiture imposed by the
provisions of such Section 7.
2.19 "RETIREMENT" means (i) termination of employment or service at an
age and length of service such that the Participant would be eligible to an
immediate commencement of benefit payments under the Company's defined benefit
pension plan available generally to its employees, whether or not such
individual actually elects to commence such payments (provided that if the
Participant is not covered by the Company's defined benefit pension plan the
Participant will be deemed to be covered by such plan for purposes of this
Plan), and (ii) termination of employment or service pursuant to and in
accordance with an early
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retirement/pension plan or practice of the Company or Subsidiary then covering
the Participant if approved by the Committee for purposes of this Plan.
2.20 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.21 "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.
2.22 "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. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, the Plan will be
administered by a committee (the "Committee") consisting solely of not less than
two members of the Board who are "disinterested persons" within the meaning of
Rule 16b-3 under the Exchange Act. To the extent consistent with corporate law,
the Committee may delegate to any officers of the Company the 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. 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 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.
(b) The Committee will have the authority under the Plan to
amend or modify the terms of any outstanding Incentive Award in any
manner, including,
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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 the amended or modified terms are permitted by the Plan as
then in effect, that no amendment or modification of an outstanding
Incentive Award (other than as may be required pursuant to Section 4.3
of the Plan) may decrease the per share exercise price of an Option
below the Fair Market Value of the Common Stock on the date of grant,
and that any Participant adversely affected by such amended or modified
terms has consented to such amendment or modification. No amendment or
modification to an Incentive Award, however, whether pursuant to this
Section 3.2 or any other provisions of the Plan, will be deemed to be a
regrant of such Incentive Award for purposes of this Plan.
(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 or disposition of a significant amount of assets or a
significant business, (iii) any change in accounting principles or
practices, or (iv) 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 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 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 the amended or modified
terms are permitted by the Plan as then in effect.
4. SHARES AVAILABLE FOR ISSUANCE.
4.1 MAXIMUM NUMBER OF SHARES AVAILABLE. Subject 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 1,700,000
shares, plus any shares of Common Stock that, as of the close of business on the
date the Plan is approved by the Company's stockholders, are available for
issuance under the Company's 1977 Stock Incentive 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.
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4.2 ACCOUNTING FOR INCENTIVE AWARDS. Shares of Common Stock that are
issued under the Plan or that are subject to outstanding Incentive Awards will
be applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. Any shares of Common Stock that are
subject to an Incentive Award that lapses, expires, is forfeited or for any
reason is terminated unexercised or unvested and any shares of Common Stock that
are subject to an Incentive Award that is settled or paid in cash or any form
other than shares of Common Stock will automatically again become available for
issuance under the Plan. Any shares of Common Stock that constitute the
forfeited portion of a Restricted Stock Award, however, will not become
available for further issuance under the Plan.
4.3 ADJUSTMENTS TO SHARES AND INCENTIVE AWARDS. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities available for issuance under the Plan and, in order to prevent
dilution or enlargement of the rights of Participants, the number, kind and,
where applicable, exercise price of securities subject to outstanding Incentive
Awards.
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.
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.
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 but will not be less than 100% of the Fair
Market Value of one share of Common Stock on the date of grant.
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6.3 EXERCISABILITY AND DURATION. An Option will become exercisable at
such times and in such installments as may be determined by the Committee in its
sole discretion at the time of grant; provided, however, that no Option may be
exercisable prior to six months (other than as provided in Section 9.1 of the
Plan) or after 10 years from its date of grant.
6.4 PAYMENT OF EXERCISE PRICE. 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
tender of a Broker Exercise Notice, by tender, or attestation as to ownership,
of Previously Acquired Shares that have been held for the period of time
necessary to avoid a charge to the Company's earnings for financial reporting
purposes and that are otherwise acceptable to the Committee, or by a combination
of such methods. For purposes of such payment, Previously Acquired Shares
tendered or covered by an attestation 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 delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company at its principal executive office in St. Paul, Minnesota
and by paying in full the total exercise price for the shares of Common Stock to
be purchased in accordance with Section 6.4 of the Plan.
6.6 CASH PAYMENT OF OPTIONS. The Committee will have the authority in
its sole discretion to allow a Participant to receive upon exercise of an Option
the economic value of all or a portion of such Option in the form of cash in the
event that (a) the Participant resides outside of the United States, (b) the
Participant's employment or other service with the Company or any Subsidiary is
terminated by the Company without "cause" (as defined in Section 9.3(b) of the
Plan), or (c) conventional exercise procedures would impose a financial or
administrative hardship on the Participant.
7. RESTRICTED STOCK AWARDS.
7.1 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, that the Participant remain in the
continuous employ or service of the Company or a Subsidiary for a certain period
or that the Participant or the Company (or any Subsidiary or division thereof)
satisfy certain performance goals or criteria; provided, however, that, other
than as provided in Section 9.1 of the Plan, no Restricted Stock Award may vest
prior to six months from its date of grant.
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7.2 RIGHTS AS A STOCKHOLDER; TRANSFERABILITY. Except as provided in
Sections 7.1, 7.3 and 12.3 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 7 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.
7.3 DIVIDENDS AND DISTRIBUTIONS. Unless the Committee determines
otherwise in its sole discretion, any dividends or distributions (other than
regular quarterly cash dividends) 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 dividends or distributions. The Committee, in an agreement
evidencing a Restricted Stock Award, may require that, unless the Participant
elects otherwise, regular quarterly cash dividends paid with respect to shares
of Common Stock subject to a portion of the Restricted Stock Award that has not
vested will be reinvested (and in such case Participants hereby consent to such
reinvestment) in shares of Common Stock pursuant and in accordance with the
Company's regular dividend reinvestment plan.
7.4 ENFORCEMENT OF RESTRICTIONS. To enforce the restrictions referred
to in this Section 7, the Committee may place a legend on the stock certificates
referring to such restrictions and may require the Participant to keep the stock
certificates, together with duly endorsed stock powers, in the custody of the
Company or its transfer agent until the restrictions have lapsed.
8. PERFORMANCE STOCK AWARDS.
An Eligible Recipient may be granted one or more Performance Stock
Awards under the Plan, and such Performance 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 Participant will have
all voting, dividend, liquidation and other rights with respect to the shares of
Common Stock issued to a Participant as a Performance Stock Award under this
Section 8 upon the Participant becoming the holder of record of such shares;
provided, however, that the Committee may impose such restrictions on the
assignment or transfer of a Performance Stock Award as it deems appropriate.
9. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
9.1 TERMINATION 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 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);
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(b) All Restricted Stock Awards then held by the Participant
will become fully vested; and
(c) Any assignment or transfer restrictions with respect to
Performance Stock Awards will lapse.
9.2 TERMINATION DUE TO RETIREMENT. 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 then held by the Participant will
remain exercisable to the extent exercisable as of such termination for
a period of five years after such termination (but in no event after
the expiration date of any such Option);
(b) All Restricted Stock Awards then held by the Participant
that have not vested as of such termination will be terminated and
forfeited; and
(c) Any assignment or transfer restrictions with respect to
Performance Stock Awards that have not lapsed will continue in effect
in accordance with their terms unless otherwise provided in the
agreement evidencing such Performance Stock Awards.
9.3 TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT.
(a) 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), all rights of
the Participant under the Plan and any agreements evidencing an
Incentive Award will immediately terminate without notice of any kind,
and (i) no Options then held by the Participant will thereafter be
exercisable, (ii) all Restricted Stock Awards then held by the
Participant that have not vested will be terminated and forfeited, and
(iii) any assignment or transfer restrictions with respect to
Performance Stock Awards that have not lapsed will continue in effect
in accordance with their terms unless otherwise provided in the
agreement evidencing such Performance Stock Awards; provided, however,
that if such termination is due to any reason other than termination by
the Company or any Subsidiary for "cause," all outstanding Options then
held by such Participant will remain exercisable to the extent
exercisable as of such termination for a period of three months after
such termination (but in no event after the expiration date of any such
Option).
(b) For purposes of this Section 9.3, "cause" (as determined
by the Committee) will be as defined in any employment or other
agreement or policy applicable to the Participant or, if no such
agreement or policy exists, will mean (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
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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 a confidentiality or noncompete
agreement entered into with the Company or any Subsidiary.
9.4 MODIFICATION OF RIGHTS UPON TERMINATION. Notwithstanding the other
provisions of this Section 9, 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), cause Options (or any part
thereof) then held by such Participant to become or continue to become
exercisable and/or remain exercisable following such termination of employment
or service and Restricted Stock Awards and Performance Stock Awards then held by
such Participant to vest and/or continue to vest or become free of transfer
restrictions, 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 (a) no Incentive Award will become exercisable or vest prior to
six months from its date of grant (unless such exercisability or vesting is by
reason of death or Disability), and (b) 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
9.4 BUT in no event beyond its expiration date.
9.5 BREACH OF CONFIDENTIALITY OR NONCOMPETE AGREEMENTS. Notwithstanding
anything in this Plan to the contrary, in the event that a Participant
materially breaches the terms of any confidentiality or noncompete agreement
entered into with the Company or any Subsidiary, whether such breach occurs
before or after termination of such Participant's employment or other service
with the Company or any Subsidiary, the Committee in its sole discretion may
immediately terminate all rights of the Participant under the Plan and any
agreements evidencing an Incentive Award then held by the Participant without
notice of any kind.
9.6 DATE OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE. Unless the
Committee will otherwise determine 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.
10. PAYMENT OF WITHHOLDING TAXES.
10.1 GENERAL RULES. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts which 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, 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
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received upon exercise of an Incentive Stock Option, or (b) require the
Participant promptly to remit the amount of such withholding to the Company
before taking any action with respect to an Incentive Award.
10.2 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 10.1 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 by a
combination of such methods. For purposes of such payment, Previously Acquired
Shares tendered or covered by an attestation will be valued at their Fair Market
Value.
11. CHANGE IN CONTROL.
11.1 CHANGE IN CONTROL. For purposes of this Section 11.1, a "Change in
Control" of the Company will mean the following:
(a) Any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes, including
pursuant to a tender or exchange offer for shares of Common Stock
pursuant to which purchases are made, the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities, other than
in a transaction arranged or approved by the Board prior to its
occurrence; provided, however, that if any such person will become the
beneficial owner, directly or indirectly, of securities of the Company
representing 34% or more of the combined voting power of the Company's
then outstanding securities, a Change in Control will be deemed to
occur whether or not any or all of such beneficial ownership is
obtained in a transaction arranged or approved by the Board prior to
its occurrence, and other than in a transaction in which such person
will have executed a written agreement with the Company (and approved
by the Board) on or prior to the date on which such person becomes the
beneficial owner of 25% or more of the combined voting power of the
Company's then outstanding securities, which agreement imposes one or
more limitations on the amount of such person's beneficial ownership of
shares of Common Stock, if, and so long as, such agreement (or any
amendment thereto approved by the Board provided that no such amendment
will cure any prior breach of such agreement or any amendment thereto)
continues to be binding on such person and such person is in compliance
(as determined by the Board in its sole discretion) with the terms of
such agreement (including such amendment); provided, however, that if
any such person will become the beneficial owner, directly or
indirectly, of securities of the Company
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representing 50% or more of the combined voting power of the Company's
then outstanding securities, a Change in Control will be deemed to
occur whether or not such beneficial ownership was held in compliance
with such a binding agreement.
(b) During any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction which would
constitute a Change in Control pursuant to this Section 11.1) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute at least
a majority thereof.
(c) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i)
a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
person acquires a percentage of the combined voting power of the
Company's then outstanding securities which would constitute a Change
in Control pursuant to Section 11.1 above. In case of any consolidation
or merger of another corporation into the Company in which the Company
is the surviving corporation and in which there is a reclassification
or change (including a change to the right to receive cash or other
property) of the shares of Common Stock (other than a change in par
value, or from par value to no par value, or as a result of a
subdivision or combination, but including any change in such shares
into two or more classes or series of shares), Section 4.3 of the Plan
will apply.
(d) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
11.2 ACCELERATION OF VESTING. Without limiting the authority of the
Committee under Section 3.2 of the Plan, if a Change in Control of the Company
occurs, then, if approved by the Committee in its sole discretion either in an
agreement evidencing an Incentive Award at the time of grant or at any time
after the grant of an Incentive Award, (a) all Options that have been
outstanding for at least six months will become immediately exercisable in full
and will remain exercisable in accordance with their terms; (b) all outstanding
Restricted Stock Awards that have been outstanding for at least six months will
become immediately fully vested; and (c) any transfer restrictions with respect
to Performance Stock Awards will lapse.
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11.3 CASH PAYMENT FOR OPTIONS. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee in its sole discretion
either in an agreement evidencing an Incentive Award at the time of grant or at
any time after the grant of an Incentive Award, and without the consent of any
Participant effected thereby, may determine that some or all Participants
holding outstanding Options will receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options.
11.4 LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding anything
in Section 11.2 or 11.3 of the Plan to the contrary, if, with respect to a
Participant, the acceleration of the vesting of an Incentive Award as provided
in Section 11.2 or the payment of cash in exchange for all or part of an
Incentive Award as provided in Section 11.3 (which acceleration or payment could
be deemed a "payment" within the meaning of Section 280G(b)(2) of the Code),
together with any other payments which such Participant has the right to receive
from the Company or any corporation that is a member of an "affiliated group"
(as defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a "parachute
payment" (as defined in Section 280G(b)(2) of the Code), then the payments to
such Participant pursuant to Section 11.2 or 11.3 will be reduced to the largest
amount as will result in no portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code; provided, however, that if such
Participant is subject to a separate agreement with the Company or a Subsidiary
which specifically provides that payments attributable to one or more forms of
employee stock incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such agreement, even if it
would constitute an excess parachute payment, then the limitations of this
Section 11.4 will, to that extent, not apply.
12. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.
12.1 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.
12.2 RIGHTS AS A STOCKHOLDER. As a holder of Incentive Awards (other
than Restricted Stock Awards and Performance 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, no adjustment will be made for dividends or distributions
with respect to such Incentive Awards as to which there is a record date
preceding the date the Participant becomes the holder of record of such shares,
except as the Committee may determine in its discretion.
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12.3 RESTRICTIONS ON TRANSFER.
(a) Except pursuant to testamentary will or the laws of descent
and distribution or as otherwise expressly permitted in subsections (b) and (c)
below, no right or interest of any Participant in an Incentive Award prior to
the exercise or vesting 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 a
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 9 of
the Plan) may be made by, the Participant's legal representatives, heirs and
legatees.
(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 Option,
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. To the
extent permitted, such 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 acknowledgments, opinion of counsel, or
other documents by the transferee.
12.4 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.
13. 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
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securities laws, and (b) there has been obtained any other consent, approval or
permit from any other 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.
14. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may suspend or terminate the Plan or any portion thereof at
any time, and 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
amendments to the Plan will be effective without approval of the stockholders of
the Company if stockholder approval of the amendment is then required pursuant
to Rule 16b-3 under the Exchange Act, Section 422 of the Code or the rules of
the New York Stock Exchange. 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 this sentence will not impair the
right of the Committee to take whatever action it deems appropriate under
Sections 4.3 and 11 of the Plan.
15. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan is effective as of December 18, 1992, the date it was adopted
by the Board. The Plan will terminate at midnight on May 31, 2003, and may be
terminated prior thereto by Board action, and no Incentive Award will be granted
after such termination. Incentive Awards outstanding upon termination of the
Plan may continue to be exercised, or become free of restrictions, in accordance
with their terms.
16. MISCELLANEOUS
16.1 GOVERNING LAW. 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.
16.2 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.
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