ECOLAB INC.
1997 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF MAY 14, 1999)

1. PURPOSE OF PLAN.

The purpose of the Ecolab Inc. 1997 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 "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 employment, service, confidentiality or noncompete agreement entered into with the Company or any Subsidiary.

2.4 "CHANGE IN CONTROL" means an event described in Section 11.1 of the Plan.

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 "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.

2.9 "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.

2.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

2.11 "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 quoted in the WALL STREET JOURNAL reports of the New York Stock Exchange - Composite Transactions.

2.12 "INCENTIVE AWARD" means an Option, Restricted Stock Award or Performance Stock Award granted to an Eligible Recipient pursuant to the Plan.

2.13 "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.

2.14 "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.

2.15 "OPTION" means an Incentive Stock Option or a Non-Statutory Stock Option.

2.16 "PARTICIPANT" means an Eligible Recipient who receives one or more Incentive Awards under the Plan.

2.17 "PERFORMANCE STOCK AWARD" means an award of Common Stock granted to an Eligible Recipient pursuant to Section 8 of the Plan.

2.18 "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.

2.19 "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.

2.20 "RETIREMENT" means termination of employment 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, attainment of the necessary age and length of service for immediate benefit commencement shall, for purposes of the Plan, be determined as to the Participant as if such Participant had been covered by such plan and had been credited with continuous (vesting) service pursuant to such plan rules (a) for the period of service such Participant was in the employ of the Company and any Subsidiary, and (b) with respect to a Participant who was in the employ of a corporation or other organization whose business was acquired by the Company or any Subsidiary, if (and only to the extent) specifically provided by the Committee, for the period of service such Participant was in the employ of such corporation or other organization prior to such acquisition).

2.21 "SECURITIES ACT" means the Securities Act of 1933, as amended.

2.22 "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.

2.23 "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 and, if the Board so determines in its sole discretion, who are "outside directors" within the meaning of Section 162(m) of the Code. 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 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. 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 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 pay the economic value of any Incentive Award in the form of cash, Common Stock or any combination of both.

(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, 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.

(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 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 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 12,000,000 shares of Common Stock. Notwithstanding any other provisions of the Plan to the contrary, no Participant in the Plan may be granted any Options or any other Incentive Awards with a value based solely on an increase in the value of the Common Stock after the date of grant, relating to more than 2,500,000 shares of Common Stock in the aggregate during any 48- month period (subject to adjustment as provided in Section 4.3 of the 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.

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 or other property (including cash) available for issuance or payment under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, (a) the number and kind of securities or other property (including cash) subject to outstanding Incentive Awards, and (b) the exercise price of outstanding Options.

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.

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 that (i) the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period, (ii) the Participant comply with certain requirements, (iii) the Participant, the Company or any division or subunit thereof, satisfy certain performance goals or criteria or (iv) the Common Stock satisfy certain performance goals or criteria); 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 (through actual delivery or attestation) of Previously Acquired Shares or by a combination of such methods.

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.

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 (i) the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period; (ii) the Participant comply with certain requirements; (iii) the Participant or the Company (or any Subsidiary or division or other subunit thereof) satisfy certain performance goals or criteria; or (iv) the Common Stock 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.

7.2 RIGHTS AS A STOCKHOLDER; TRANSFERABILITY. Except as provided in Sections 7.1, 7.3, 7.4 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 (either in the agreement evidencing the Restricted Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), 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, 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.

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, if any, 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, and may enforce such restrictions by any or all of the methods set forth in Section 7.4 of the Plan.

9. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.

9.1 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the event a Participant's employment 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);

(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 OF EMPLOYMENT DUE TO RETIREMENT. Subject to Section 9.6 of the Plan, in the event a Participant's employment with the Company and all Subsidiaries is terminated by reason of Retirement:

(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable in full for a period of five years after

such termination (but in no event after the expiration date of any such Option). Options not exercisable as of such Retirement will be forfeited and terminate.

(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 OF EMPLOYMENT FOR REASONS OTHER THAN DEATH,
DISABILITY OR RETIREMENT. Subject to Section 9.6 of the Plan, in the event a Participant's employment is terminated with the Company and all Subsidiaries for any reason other than death, Disability or Retirement, or a Participant is in the employ of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the employ of the Company or another Subsidiary):

(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable in full for a period of three months after such termination (but in no event after the expiration date of any such Option). Options not exercisable as of such termination will be forfeited and terminate.

(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.

9.4 TERMINATION OF SERVICE AS A NON-EMPLOYEE CONSULTANT OR ADVISOR. In the event a Participant's service as a non-employee consultant or advisor is terminated with the Company and all Subsidiaries for any reason, or a Participant is in the service of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the 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 (as defined in Section 2.3 of the Plan), 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).

9.5 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 other 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 other 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 9.5 but in no event beyond its expiration date.

9.6 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 or other service 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.

9.7 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.

(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, 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 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, 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, or (b) 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.

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 Previously Acquired Shares, a Broker Exercise Notice or a combination of such methods.

11. CHANGE IN CONTROL.

11.1 CHANGE IN CONTROL. For purposes of this Section 11, 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 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 Sections 3.2 and 4.3 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 non-forfeitable; and
(c) any transfer restrictions with respect to Performance Stock Awards will lapse.

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 affected 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, any of the payments to be made in connection with Section 11.2 or 11.3 of the Plan, together with any other payments or benefits which a Participant has the right to receive from the Company or any corporation which 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, constitute an "excess parachute payment" (as defined in section 280G(b) of the Code), the payments to be made in connection with Section 11.2 or 11.3 of the Plan shall be reduced to the extent necessary to prevent any portion of such payments or benefits from becoming subject to the excise tax imposed under section 4999 of the Code; provided, however, that if a Participant is subject to a separate agreement with the Company or a Subsidiary that expressly addresses the potential application of Sections 280G or 4999 of the Code (including, without limitation, that "payments" under such agreement or otherwise will be reduced, that such payments will not be reduced or that the Participant will have the discretion to determine which "payments" will be reduced), then this
Section 11.4 will not apply, and any "payments" to a Participant pursuant to Section 11.2 or 11.3 of the Plan will be treated as "payments" arising under such separate agreement.

12. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.

12.1 EMPLOYMENT OR OTHER 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 Other 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 Other 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.

12.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by the Plan, 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. A Participant will, however, 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.

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 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 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 3.2, 4.3 and 11 of the Plan.

15. EFFECTIVE DATE AND DURATION OF THE PLAN.

The Plan is effective, as amended and restated, as of May 14, 1999 or such later date as the Plan is approved by the Company's stockholders and shall apply to Incentive Awards granted on or after such effective date. The Plan will terminate at midnight on June 30, 2005, and may be terminated prior to such time to 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, notwithstanding the conflicts of laws principles of any jurisdictions.

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.

AMENDMENT NO. 1

TO THE

ECOLAB EXECUTIVE DEATH BENEFITS PLAN
(AS AMENDED AND RESTATED EFFECTIVE MARCH 1, 1994)

Pursuant to Section 1.3 of the Ecolab Executive Death Benefits Plan (As Amended and Restated Effective March 1, 1994) (the "Plan") and Section 5.1. of the Ecolab Inc. Administrative Document for Non-Qualified Benefit Plans (the "Administrative Document"), which is incorporated into the Plan by reference, Ecolab Inc. (the "Company") hereby amends the Plan as set forth below. Words and phrases used herein with initial capital letters which are defined in the Plan or the Administrative Document are used herein as so defined.

1. Section 2.1 of the Plan is hereby amended in its entirety to read as follows:

"SECTION 2.1. "DEATH BENEFICIARY." An Executive's Death Beneficiary shall be the person or persons (natural or otherwise) designated by the Executive as his primary or contingent Death Beneficiary under this Plan. Such a designation may be made, revoked or changed at any time
(without the consent of any previously designated Death Beneficiary)
only by a written instrument in a form prescribed by the Administrator (or, if applicable, an insurance company providing coverage on the Executive's life), signed by the Executive and delivered to the Administrator (or, if applicable, an insurance company providing coverage on the Executive's life) during the Executive's lifetime."

2. Subsection (2)(b) of Section 3.2 of the Plan is hereby amended in its entirety to read as follows:

"(b) The executive Death Benefit described in paragraph (a) of this Subsection shall be reduced (but not below zero) by any amount payable under any life insurance or other death benefit covering the Executive which is provided by, or payable by or on behalf of a member of the Controlled Group, or which was funded, directly or indirectly, by a member of the Controlled Group (by the payment of premiums or otherwise). If the benefits provided under any such life insurance contract exceed the Executive Death Benefits described in paragraph (a) for a particular Executive, such Executive's Death Beneficiary shall be entitled to receive such additional benefits in addition to the Executive Death Benefits described herein."

3. Subsection (2)(b) of Section 3.3 of the Plan is hereby amended in its entirety to read as follows:

"(b) The executive Death Benefit described in paragraph (a) of this Subsection shall be reduced (but not below zero) by any amount payable under any life insurance or other death benefit covering the Executive which is provided by, or payable by or on behalf of a member of the Controlled Group, or which was funded, directly or indirectly, by a member of the Controlled Group (by the payment of premiums or otherwise). If the benefits provided under any such life insurance contract exceed the Executive Death Benefits described in paragraph (a) for a particular Executive, such Executive's Death Beneficiary shall be entitled to receive such additional benefits in addition to the Executive Death Benefits described herein."

4. This amendment to the Plan shall be effective as of July 1, 1997.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its authorized officers and its corporate seal affixed, this 11th day of July, 1997.

ECOLAB INC.

                                   By:   /s/ Michael E. Shannon
                                      -----------------------------------------
(Seal)                                   Michael E. Shannon
                                         Chairman of the Board, Chief Financial
                                          and Administrative Officer



/s/ Kenneth A. Iverson
----------------------------------
Kenneth A. Iverson
Vice President and Secretary

ECOLAB
EXECUTIVE DEATH BENEFITS PLAN

SECOND DECLARATION OF AMENDMENT

Pursuant to Section 1.3 of the Ecolab Executive Death Benefits Plan (as Amended and Restated Effective March 1, 1994) (the "Plan") and Section 5.1 of the Ecolab Inc. Administrative Document for Non-Qualified Benefit Plans which is incorporated into the Plan by reference ("Administrative Document"), the Company amends the Plan as set forth below.

1. Section 2.3 of the Plan is hereby amended in its entirety to read as follows:

"SECTION 2.3. "EXECUTIVE" shall mean an Employee who is an elected corporate officer of an Employer and who is selected by the Administrator to participate in the Plan or such other Employee who is selected by the Chief Executive Officer of the Company to participate in the Plan. Notwithstanding the foregoing, any person who was an Executive on March 1, 1998 shall, subject to the other provisions of the Plan, remain as an Executive hereunder."

2. This amendment to the Plan shall be effective as of March 1, 1998.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its authorized officers and its corporate seal affixed, this 3rd day of March, 1998.

ECOLAB INC.

                                    By:  /s/ Michael E. Shannon
                                       ----------------------------------------
                                         Michael E. Shannon
                                         Chairman of the Board, Chief Financial
                                         and Administrative Officer



Attest:  /s/ Kenneth A. Iverson
       --------------------------------
         Kenneth A. Iverson
         Vice President and Secretary

ECOLAB
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

THIRD DECLARATION OF AMENDMENT

Pursuant to Section 1.3 of the Ecolab Supplemental Executive Retirement Plan (the "SERP") and Section 5.1 of the Ecolab Inc. Administrative Document for Non-Qualified Benefit Plans which is incorporated into the SERP by reference ("Administrative Document"), the Company amends the SERP as set forth below.

1. Paragraph 1 of Exhibit A to the SERP is hereby deleted in its entirety and replaced with the following Paragraph:

"7.5% except as provided in item 4 below and provided that, for purposes of determining the actuarial equivalent value of a lump sum distribution, the interest rate will be 120% of the PBGC immediate interest rate for lump sums in effect on the first day of the Plan Year (i.e., January 1) (1) in which the retirement or other termination of employment is effective if the SERP Benefit is to commence immediately following such retirement or termination of employment or (2) in effect on the first day of the Plan Year (i.e., January 1) in which the distribution becomes payable if the payment is to be deferred.

These interest rate assumptions shall be effective as of January 1, 1998. Notwithstanding the foregoing, for the twelve-month period from January 1, 1998 through December 31, 1998, an Executive's SERP Benefit (or SERP Pre-Retirement Benefit) shall be calculated using both the applicable interest rate described above and the interest rate determined pursuant to the SERP terms as in effect on December 31, 1997 and the Executive shall receive the larger of the two amounts as his Benefit hereunder.

2. Section 2.4 of the SERP is hereby amended in its entirety to read as follows:

"SECTION 2.4. "EXECUTIVE" shall mean an Employee who is an elected corporate officer of an Employer and who is selected by the Administrator to participate in the Plan or such other Employee who is selected by the Chief Executive Officer of the Company to participate in the Plan. Notwithstanding the foregoing, any person who was an Executive on March 1, 1998 shall, subject to the other provisions of the Plan, remain as an Executive hereunder."

3. This amendment to the SERP shall be effective as of March 1, 1998.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its authorized officers and its corporate seal affixed, this 3rd day of March, 1998.

ECOLAB INC.

                                   By: /s/ Michael E. Shannon
                                       ----------------------------------------
                                       Michael E. Shannon
                                       Chairman of the Board, Chief Financial
                                       and Administrative Officer



Attest:  /s/ Kenneth A. Iverson
       --------------------------------
         Kenneth A. Iverson
         Vice President and Secretary

ECOLAB
MIRROR SAVINGS PLAN

THIRD DECLARATION OF AMENDMENT

Pursuant to Section 1.3 of the Ecolab Mirror Savings Plan ("Plan") and
Section 5.1 of the Ecolab Inc. Administrative Document for Non-Qualified Benefit Plans which is incorporated into the Plan by reference ("Administrative Document"), the Company amends the Plan as set forth below.

1. Subsection 4.1(1) of the Plan is hereby amended by adding a new paragraph
(c) to the end thereof, to read as follows:

"(c) Notwithstanding any provision of the Plan to the contrary, if the payment of all or any portion of an Executive's Account would, in the sole opinion of the Company on the advice of its counsel, result in a profit recoverable by the Company under Section 16(b) of the Securities Exchange Act of 1934, but for the operation of this paragraph, then such payment (or portion thereof) shall be deferred and made at the earliest time that such payment (or portion thereof) would no longer be subject to Section 16(b)."

2. This amendment to the Plan shall be effective as of November 13, 1997.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its authorized officers and its corporate seal affixed, this 11th day of November, 1997.

ECOLAB INC.

(Seal)                             By:  /s/ Michael E. Shannon
                                      ---------------------------------------
                                       Michael E. Shannon
                                       Chairman of the Board, Chief Financial
                                       and Administrative Officer



Attest:  /s/ Kenneth A. Iverson
        -------------------------------
         Kenneth A. Iverson
         Vice President and Secretary

ECOLAB
MIRROR SAVINGS PLAN

FOURTH DECLARATION OF AMENDMENT

Pursuant to Section 1.3 of the Ecolab Mirror Savings Plan ("Plan") and
Section 5.1 of the Ecolab Inc. Administrative Document for Non-Qualified Benefit Plans which is incorporated into the Plan by reference ("Administrative Document"), the Company amends the Plan as set forth below.

1. Subsection (2) of Section 6.1 of the Plan is hereby amended to read as follows:

"(2) HYPOTHETICAL INVESTMENT FUNDS FOR EXECUTIVE DEFERRALS. The Hypothetical Investment Funds for purposes of the portion of an Executive's Account which is attributable to his Executive Deferrals shall be those same Investment Funds designated by the Company from time to time under the Savings Plan. Each Executive (or his Death Beneficiary) may elect, in a manner prescribed by the Administrator from time to time, one or more Hypothetical Investment Funds in which his Executive Deferrals are deemed to have been invested for purposes of crediting earnings and losses to the portion of the Executive's Account which is attributable to Executive Deferrals. The Company may deem an Executive's Executive Deferrals to have been invested in the Hypothetical Investment Fund elected by the Executive, if any, or may instead, in its sole discretion, deem such Executive Deferrals to have been invested in one or more Hypothetical Investment Funds selected by the Company. Earnings on any amounts deemed to have been invested in any Hypothetical Investment Fund shall be deemed to have been reinvested in such Hypothetical Investment Fund. Notwithstanding the foregoing, any Executive who is subject to Section 16(b) of the Securities Exchange Act of 1934 may not elect and shall not be deemed to have directed any Executive Deferrals to the Ecolab Stock Fund. An Executive shall be deemed, on the day prior to becoming subject to
Section 16(b) or at such other time as he is subject to Section 16(b), to have elected to have Executive Deferrals then deemed to be invested in the Ecolab Stock Fund invested in the Hypothetical Investment Fund known as the Fidelity Retirement Money Market Portfolio unless another permitted election is in place."

2. This amendment to the Plan shall be effective as of September 1, 1998.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its authorized officers and its corporate seal affixed, this 24th day of August, 1998.

ECOLAB INC.
(Seal)

                                   By: /s/ Michael E. Shannon
                                      --------------------------------------
                                      Michael E. Shannon
                                      Chairman of the Board, Chief Financial
                                      and Administrative Officer
Attest: /s/ Kenneth A. Iverson
        --------------------------------
         Kenneth A. Iverson
         Vice President and Secretary

ECOLAB
MIRROR PENSION PLAN

THIRD DECLARATION OF AMENDMENT

Pursuant to Section 1.3 of the Ecolab Mirror Pension Plan (the "Plan") and
Section 5.1 of the Ecolab Inc. Administrative Document for Non-Qualified Benefit Plans which is incorporated into the Plan by reference ("Administrative Document"), the Company amends the Plan as set forth below.

1. Paragraph 1 of Exhibit A to the Plan is hereby deleted in its entirety and replaced with the following Paragraph:

"7.5% except as provided in item 4 below and provided that, for purposes of determining the actuarial equivalent value of a lump sum distribution, the interest rate will be 120% of the PBGC immediate interest rate for lump sums in effect on the first day of the Plan Year (i.e., January 1) (1) in which the retirement or other termination of employment is effective if the Mirror Pension Benefit is to commence immediately following such retirement or termination of employment or (2) in which the distribution becomes payable if the payment is to be deferred.

These interest rate assumptions shall be effective as of January 1, 1998. Notwithstanding the foregoing, for the twelve-month period from January 1, 1998 through December 31, 1998, an Executive's Mirror Pension Benefit (or Mirror Pre-Retirement Pension Benefit) shall be calculated using both the applicable interest rate described above and the interest rate determined pursuant to the terms of the Plan as in effect on December 31, 1997 and the Executive shall receive the larger of the two amounts as his Benefit hereunder.

2. This amendment to the Plan shall be effective as of March 1, 1998.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its authorized officers and its corporate seal affixed, this 3rd day of March, 1998.

ECOLAB INC.

                                     By:  /s/ Michael E. Shannon
                                          -------------------------------------
                                          Michael E. Shannon
                                          Chairman of the Board, Chief Financial
                                          and Administrative Officer


Attest:  /s/ Kenneth A. Iverson
         ----------------------------
         Kenneth A. Iverson

         Vice President and Secretary

                                     By: /s/ Michael E. Shannon
                                         --------------------------------------
(Seal)                                   Michael E. Shannon
                                         Chairman of the Board, Chief Financial
                                         and Administrative Officer


/s/ Kenneth A. Iverson
--------------------------------
Kenneth A. Iverson

Vice President and Secretary

(Seal)                               By: /s/ Michael E. Shannon
                                         -------------------------------------
                                         Michael E. Shannon
                                         Chairman of the Board, Chief Financial
                                         and Administrative Officer


Attest: /s/ Kenneth A. Iverson
        ----------------------------
        Kenneth A. Iverson

        Vice President and Secretary

                                                       - Henkel -

1.       Section 6.02(a) of the Amended and Restated Joint Venture Agreement
         dated 26 June 1991, shall be deleted in its entirety and the following
         paragraph substituted in its place.

6.02     AUDITING, ACCOUNTING SYSTEM, INSPECTION AND INFORMATION; FINANCIAL
         POLICIES.

         (a)      The auditors for the Venture shall be KPMG for an initial term
                  ending on 30 November 1995. After this initial term for KPMG,
                  either party may cause a change in the auditors for the
                  Venture by providing written notice to the other party at
                  least six months prior to the end of any fiscal year of the
                  Venture. Within 90 days of receipt of a notice of a change in
                  auditors, the parties shall select a new auditor which shall
                  be reasonably acceptable to both parties. Any replacement
                  auditor selected by the parties shall serve beginning on the
                  first day of the fiscal year following notice, except that the
                  auditor being replaced shall complete the year-end audit for
                  the fiscal year just completed. Thereafter, any further
                  changes of the auditor shall be in accordance with the
                  procedures set forth in this Section. In the change and
                  selection of an auditor, the parties shall give due
                  consideration to the disruption and costs associated with
                  frequent changes in the auditor. Henkel and Ecolab shall cause
                  the Venture, for a transition period, to have a fiscal
                  year-end of 30 November for each year, and the Venture shall
                  not be permitted to alter such year-end; PROVIDED, HOWEVER,
                  that Henkel and Ecolab shall cause the Venture to change to a
                  fiscal year-end of 31 December upon Ecolab's reasonable
                  satisfaction that the Venture will be able to supply Ecolab
                  with information, in a timely fashion, in order to allow
                  Ecolab to comply with all Securities Exchange Commission
                  disclosure and other financial reporting requirements with the
                  Venture having a 31 December fiscal year-end.

2.       This Agreement is done in three (3) originals, one for each party and
         one for the Joint Venture Henkel Ecolab.


St. Paul / Dusseldorf               13 June 1994



ECOLAB INC.                         HENKEL KGaA
by

/s/ Michael E. Shannon              /s/ Dr. Grunewald         /s/ Dr. Gruter
----------------------              -----------------         --------------
Michael E. Shannon                  Dr. Grunewald             Dr. Gruter

(thousands, except per share)            1998           1997           1996
-----------------------------------------------------------------------------
Net sales                        $  1,888,226   $  1,640,352   $  1,490,009
Operating income                 $    261,980   $    218,504   $    185,317

Income
     Continuing operations       $    154,506   $    133,955   $    113,185
     Discontinued operations           38,000
                                 --------------------------------------------
     Net income                  $    192,506   $    133,955   $    113,185
-----------------------------------------------------------------------------
Diluted income per common share
     Continuing operations       $       1.15   $       1.00   $       0.85
     Discontinued operations             0.28
     Net income                  $       1.44   $       1.00   $       0.85

(thousands)                              1998           1997           1996
-----------------------------------------------------------------------------
Net sales
  United States
    Cleaning & Sanitizing          $1,296,797     $1,156,625     $1,040,823
    Other Services                    160,063        119,203        107,955
                                   ------------------------------------------
      Total                         1,456,860      1,275,828      1,148,778
  International Cleaning
    & Sanitizing                      440,668        335,337        305,938
                                   ------------------------------------------
      Total                         1,897,528      1,611,165      1,454,716
  Effect of foreign
    currency translation               (9,302)        29,187         35,293
                                   ------------------------------------------
    Consolidated                   $1,888,226     $1,640,352     $1,490,009
-----------------------------------------------------------------------------
Operating income
  United States
    Cleaning & Sanitizing          $  218,500     $  180,975     $  152,979
    Other Services                     19,084         14,655         11,907
                                   ------------------------------------------
      Total                           237,584        195,630        164,886
  International Cleaning
    & Sanitizing                       29,787         22,519         19,151
                                   ------------------------------------------
      Total                           267,371        218,149        184,037
  Corporate                            (4,347)        (4,088)        (3,440)
  Effect of foreign
    currency translation               (1,044)         4,443          4,720
                                   ------------------------------------------
    Consolidated                   $  261,980     $  218,504     $  185,317
-----------------------------------------------------------------------------
Operating income as a percent of
 sales
  United States
    Cleaning & Sanitizing                16.8%          15.6%          14.7%
    Other Services                       11.9           12.3           11.0
      Total                              16.3           15.3           14.4
  International Cleaning
    & Sanitizing                          6.8%           6.7%           6.3%

            First    Second        Third       Fourth
          Quarter   Quarter      Quarter      Quarter      Year
---------------------------------------------------------------------
1998      $0.095    $0.095       $0.095        $0.105      $0.39
1997       0.08      0.08         0.08          0.095       0.335
1996       0.07      0.07         0.07          0.08        0.29

Year ended December 31 (thousands,
except per share)                                       1998           1997           1996
------------------------------------------------------------------------------------------
Net Sales                                       $  1,888,226   $  1,640,352     $1,490,009
Cost of Sales                                        851,173        722,084        674,953
Selling, General and Administrative Expenses         775,073        699,764        629,739
                                                ------------------------------------------
Operating Income                                     261,980        218,504        185,317
Interest Expense, Net                                 21,742         12,637         14,372
                                                ------------------------------------------
Income From Continuing Operations Before
     Income Taxes and Equity in Earnings
     of Henkel-Ecolab                                240,238        205,867        170,945
Provision for Income Taxes                           101,782         85,345         70,771
Equity in Earnings of Henkel-Ecolab Joint
     Venture                                          16,050         13,433         13,011
                                                ------------------------------------------
Income From Continuing Operations                    154,506        133,955        113,185
Gain From Discontinued Operations                     38,000
                                                ------------------------------------------
Net Income                                      $    192,506   $    133,955     $  113,185
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Basic Income Per Common Share
     Income From Continuing Operations          $       1.20   $       1.03     $     0.88
     Gain From Discontinued Operations                  0.29
     Net Income                                 $       1.49   $       1.03     $     0.88
Diluted Income Per Common Share
     Income From Continuing Operations          $       1.15   $       1.00     $     0.85
     Gain From Discontinued Operations                  0.28
     Net Income                                 $       1.44   $       1.00     $     0.85
Weighted-Average Common Shares Outstanding
     Basic                                           129,157        129,446        128,991
     Diluted                                         134,047        133,822        132,817

December 31 (thousands, except per share)               1998           1997           1996
------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents                       $     28,425   $     61,169     $   69,275
Accounts receivable, net                             246,695        246,041        205,026
Inventories                                          165,627        154,831        122,248
Deferred income taxes                                 36,256         34,978         29,344
Other current assets                                  26,511         12,482          9,614
                                                ------------------------------------------
Current Assets                                       503,514        509,501        435,507
Property, Plant and Equipment, Net                   420,205        395,562        332,314
Investment in Henkel-Ecolab Joint Venture            253,646        239,879        285,237
Other Assets                                         293,630        271,357        155,351
                                                ------------------------------------------
Total Assets                                    $  1,470,995   $  1,416,299     $1,208,409
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt                                 $     67,991   $     48,884     $   27,609
Accounts payable                                     124,646        130,682        103,803
Compensation and benefits                             79,431         74,317         71,533
Income taxes                                             244         13,506         26,977
Other current liabilities                            127,479        137,075         97,849
                                                ------------------------------------------
Current Liabilities                                  399,791        404,464        327,771
Long-Term Debt                                       227,041        259,384        148,683
Postretirement Health Care and Pension Benefits       85,793         76,109         73,577
Other Liabilities                                     67,829        124,641        138,415
Shareholders' Equity (common stock, par
     value $1.00 per share;
     shares outstanding:
     1998 - 129,479; 1997 - 129,127;
     1996 - 129,600)                                 690,541        551,701        519,963
                                                ------------------------------------------
Total Liabilities and Shareholders' Equity      $  1,470,995   $  1,416,299     $1,208,409
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------

Year ended December 31 (thousands)                      1998           1997           1996
------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income                                      $    192,506   $    133,955     $  113,185
Less: gain from discontinued operations               38,000
                                                ------------------------------------------
Income from continuing operations                    154,506        133,955        113,185
Adjustments to reconcile income from
     continuing operations to cash
     provided by continuing operations:
          Depreciation                                99,276         84,415         75,185
          Amortization                                22,695         16,464         14,338
          Deferred income taxes                       (2,012)        (2,074)        (6,878)
          Equity in earnings of joint venture        (16,050)       (13,433)       (13,011)
          Joint venture royalties and dividends       10,451         25,367         15,769
          Other, net                                   1,526          4,630          1,023
          Changes in operating assets and
               liabilities:
               Accounts receivable                     1,352        (21,231)         2,809
               Inventories                           (11,667)       (14,395)        (6,852)
               Other assets                           (7,631)       (10,993)        (5,255)
               Accounts payable                       (7,794)        20,876         16,397
               Other liabilities                      29,877         11,517         47,559
                                                ------------------------------------------
Cash provided by continuing operations               274,529        235,098        254,269
Cash used for discontinued operations                (38,887)
                                                ------------------------------------------
Cash provided by operating activities                235,642        235,098        254,269
                                                ------------------------------------------
INVESTING ACTIVITIES
Capital expenditures                                (147,631)      (121,667)      (111,518)
Property disposals                                     7,060          3,424          3,284
Businesses acquired                                  (40,206)      (157,234)       (54,911)
Sale of Gibson businesses and assets                  14,226
Other, net                                             4,766         (1,240)        (1,449)
                                                ------------------------------------------
Cash used for investing activities                  (161,785)      (276,717)      (164,594)
                                                ------------------------------------------
FINANCING ACTIVITIES
Notes payable                                         24,820          9,280        (42,045)
Long-term debt borrowings                            117,740        117,000         75,000
Long-term debt repayments                           (151,143)       (15,210)       (35,690)
Reacquired shares                                    (52,984)       (60,795)       (22,790)
Cash dividends on common stock                       (49,000)       (41,456)       (36,096)
Other, net                                             5,679         26,278         17,088
                                                ------------------------------------------
Cash provided by (used for) financing
      activities                                    (104,888)        35,097        (44,533)
                                                ------------------------------------------
Effect of exchange rate changes on cash               (1,713)        (1,584)          (585)
                                                ------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH
      EQUIVALENTS                                    (32,744)        (8,106)        44,557
Cash and cash equivalents, beginning of year          61,169         69,275         24,718
                                                ------------------------------------------
Cash and cash equivalents, end of year          $     28,425   $     61,169     $   69,275
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------

                                                                                              Accumulated
                                                                                                    Other
                                                  Additional                                Comprehensive
                                       Common        Paid-in       Retained       Deferred         Income:    Treasury
(thousands)                             Stock        Capital       Earnings   Compensation     Translation       Stock      Total
---------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1995            $ 70,078       $171,765       $325,674       $ (6,484)       $ 16,272   $(120,647)  $456,658
Net income                                                          113,185                                               113,185
Foreign currency translation                                                                        (9,485)                (9,485)
                                                                                                                         --------
Comprehensive income                                                                                                      103,700
Cash dividends on common stock                                      (37,409)                                              (37,409)
Stock options                             673         14,824                                                               15,497
Stock awards                                             522          2,912         (3,638)                      1,779      1,575
Reacquired shares                                                                                  (22,790)               (22,790)
Amortization                                                                         2,732                                  2,732
                                     --------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1996              70,751        187,111        404,362         (7,390)          6,787    (141,658)   519,963
Net income                                                          133,955                                               133,955
Foreign currency translation                                                                       (35,730)               (35,730)
                                                                                                                         --------
Comprehensive income                                                                                                       98,225
Cash dividends on common stock                                      (43,367)                                              (43,367)
Stock options                             648         15,877                                                               16,525
Stock awards                                           5,093                        (5,200)                      1,427      1,320
Business acquisitions                                 12,454                                                     3,946     16,400
Reacquired shares                                                                                              (60,795)   (60,795)
Amortization                                                                         3,430                                  3,430
Stock dividend                         71,398        (71,398)
                                     --------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1997             142,797        149,137        494,950         (9,160)        (28,943)   (197,080)   551,701
Net income                                                          192,506                                               192,506
Foreign currency translation                                                                          (937)                  (937)
                                                                                                                         --------
Comprehensive income                                                                                                      191,569
Cash dividends on common stock                                      (50,309)                                              (50,309)
Stock options                           1,059         16,047                                                               17,106
Stock awards                                           6,833                        (6,163)                      1,198      1,868
Business acquisitions                     850         26,195                                                       220     27,265
Reacquired shares                                                                                              (52,984)   (52,984)
Amortization                                                                         4,325                                  4,325
                                     --------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1998            $144,706       $198,212       $637,147       $(10,998)      $ (29,880)  $(248,646)  $690,541
                                     --------------------------------------------------------------------------------------------
                                     --------------------------------------------------------------------------------------------

                                                  1998                           1997                     1996
                                      ---------------------------------------------------------------------------------
                                           Common       Treasury         Common       Treasury       Common    Treasury
Year ended December 31 (shares)             Stock          Stock          Stock          Stock        Stock       Stock
-----------------------------------------------------------------------------------------------------------------------
Shares, beginning of year             142,796,652    (13,669,624)    70,750,741     (5,950,518)  70,078,398  (5,376,917)
Stock options                           1,058,686                       648,085                     672,343
Stock awards                                             206,366                       124,440                  150,010
Business acquisitions                     850,445         33,083                       308,343
Reacquired shares                                     (1,796,868)                   (1,317,077)                (723,611)
Stock dividend                                                       71,397,826     (6,834,812)
                                      ---------------------------------------------------------------------------------
Shares, end of year                   144,705,783    (15,227,043)   142,796,652    (13,669,624)  70,750,741  (5,950,518)
                                      ---------------------------------------------------------------------------------
                                      ---------------------------------------------------------------------------------

(thousands, except per share)            1998           1997           1996
-----------------------------------------------------------------------------
Income from continuing
     operations                  $    154,506   $    133,955   $    113,185
-----------------------------------------------------------------------------
Weighted-average common
     shares outstanding
          Basic (actual shares
               outstanding)           129,157        129,446        128,991
          Effect of dilutive
               stock options            4,890          4,376          3,826
                                 --------------------------------------------
          Diluted                     134,047        133,822        132,817
-----------------------------------------------------------------------------
Income from continuing operations
     per common share
          Basic                  $       1.20   $       1.03   $       0.88
          Diluted                $       1.15   $       1.00   $       0.85

December 31 (thousands)                  1998           1997           1996
-----------------------------------------------------------------------------
ACCOUNTS RECEIVABLE, NET
Accounts receivable              $    259,588   $    256,919   $    214,369
Allowance for doubtful accounts       (12,893)       (10,878)        (9,343)
                                 --------------------------------------------
Total                            $    246,695   $    246,041   $    205,026
-----------------------------------------------------------------------------
INVENTORIES
Finished goods                   $     73,983   $     67,823   $     52,232
Raw materials and parts                93,862         89,716         73,060
Excess of fifo cost over lifo cost     (2,218)        (2,708)        (3,044)
                                 --------------------------------------------
Total                            $    165,627   $    154,831   $    122,248
-----------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, NET
Land                             $     12,584   $     18,184   $      7,969
Buildings and leaseholds              157,302        145,021        129,781
Machinery and equipment               258,107        232,940        208,704
Merchandising equipment               435,998        379,531        330,277
Construction in progress               11,038         19,862         11,745
                                 --------------------------------------------
                                      875,029        795,538        688,476
Accumulated depreciation
     and amortization                (454,824)      (399,976)      (356,162)
                                 --------------------------------------------
Total                            $    420,205   $    395,562   $    332,314
-----------------------------------------------------------------------------
OTHER ASSETS
Intangible assets, net           $    236,659   $    217,120   $     96,865
Investments in securities                              5,000          5,000
Deferred income taxes                  27,256         23,444         26,582
Other                                  29,715         25,793         26,904
                                 --------------------------------------------
Total                            $    293,630   $    271,357   $    155,351
-----------------------------------------------------------------------------
SHORT-TERM DEBT
Notes payable                    $     52,441   $     33,440   $     12,333
Long-term debt, current maturities     15,550         15,444         15,276
                                 --------------------------------------------
Total                            $     67,991   $     48,884   $     27,609
-----------------------------------------------------------------------------
LONG-TERM DEBT
7.19% senior notes, due 2006     $     75,000   $     75,000   $     75,000
9.68% senior notes, due
     1995-2001                         42,857         57,143         71,429
6.00% medium-term notes,
     due 2001                          62,761
Multicurrency Credit Agreement,
     due 2002                          44,000        116,450
Other                                  17,973         26,235         17,530
                                 --------------------------------------------
                                      242,591        274,828        163,959
Long-term debt,
     current maturities               (15,550)       (15,444)       (15,276)
                                 --------------------------------------------
Total                            $    227,041   $    259,384   $    148,683
-----------------------------------------------------------------------------

December 31 (thousands)                  1998           1997           1996
----------------------------------------------------------------------------
Carrying amount
     Cash and cash equivalents   $     28,425   $     61,169   $     69,275
     Long-term investments
          in securities                                5,000          5,000
     Short-term debt                   67,991         48,884         27,609
     Long-term debt                   227,041        259,384        148,683
Fair Value
     Long-term debt              $    235,131   $    266,926   $    155,558

(thousands, except per share)                                          1997
-------------------------------------------------------------------------------
Net sales                                                      $  1,741,006
Income from continuing operations                                   131,455
Diluted income from continuing operations
     per common share                                          $       0.98

(thousands)                              1998           1997           1996
----------------------------------------------------------------------------
Joint venture
     Net sales                   $    904,217   $    844,689   $    905,402
     Gross profit                     500,107        470,698        497,909
     Income before income taxes        65,946         63,640         65,091
     Net income                  $     38,540   $     33,701   $     34,808
Ecolab equity in earnings
     Ecolab equity in net income $     19,270   $     16,851   $     17,404
     Ecolab royalty income from
          joint venture, net of
          income taxes                  4,550          4,583          4,730
     Amortization expense for the
          excess of cost over the
          underlying net assets
          of the joint venture         (7,770)        (8,001)        (9,123)
                                 -------------------------------------------
     Equity in earnings of
          Henkel-Ecolab joint
               venture           $     16,050   $     13,433   $     13,011
----------------------------------------------------------------------------

December 31 (thousands)                  1998           1997           1996
----------------------------------------------------------------------------
Current assets                   $    368,604   $    345,692   $    425,225
Noncurrent assets                     179,188        145,601        142,227
Current liabilities                   242,630        224,155        309,599
Noncurrent liabilities           $     82,097   $     77,303   $     75,360

(thousands)                              1998           1997           1996
----------------------------------------------------------------------------
Domestic                         $    213,781   $    173,851   $    144,888
Foreign                                26,457         32,016         26,057
                                 -------------------------------------------
Total                            $    240,238   $    205,867   $    170,945
----------------------------------------------------------------------------

(thousands)                              1998           1997           1996
----------------------------------------------------------------------------
Federal and state                $     92,094   $     76,399   $     66,868
Foreign                                11,700         11,020         10,781
                                 -------------------------------------------
Currently payable                     103,794         87,419         77,649
                                 -------------------------------------------
Federal and state                      (3,596)        (3,675)        (6,748)
Foreign                                 1,584          1,601           (130)
                                 -------------------------------------------
Deferred                               (2,012)        (2,074)        (6,878)
                                 -------------------------------------------
Provision for income taxes       $    101,782   $     85,345   $     70,771
----------------------------------------------------------------------------

December 31 (thousands)                  1998           1997           1996
----------------------------------------------------------------------------
Deferred tax assets
     Postretirement health care
          and pension benefits   $     34,940   $     30,991   $     29,596
     Other accrued liabilities         47,601         41,611         39,151
     Loss carryforwards                 3,999          3,541          4,780
     Other, net                         9,821         12,766          8,814
     Valuation allowance               (1,462)        (1,462)        (1,462)
                                 -------------------------------------------
     Total                             94,899         87,447         80,879
                                 -------------------------------------------
Deferred tax liabilities
     Property, plant and
          equipment basis
          differences                  26,605         27,606         23,496
     Other, net                         4,782          1,419          1,457
                                 -------------------------------------------
     Total                             31,387         29,025         24,953
                                 -------------------------------------------
Net deferred tax assets          $     63,512   $     58,422   $     55,926
----------------------------------------------------------------------------

                                         1998           1997           1996
----------------------------------------------------------------------------
Statutory U.S. rate                     35.0%          35.0%          35.0%
State income taxes, net of
     federal benefit                      4.3            4.2            4.2
Foreign operations                        1.4            0.6            0.5
Other, net                                1.7            1.7            1.7
                                 -------------------------------------------
Effective income tax rate               42.4%          41.5%          41.4%
----------------------------------------------------------------------------

Shares                                   1998           1997           1996
----------------------------------------------------------------------------
Granted                             3,342,555      1,031,760      1,266,680
Exercised                          (1,058,686)    (1,295,170)    (1,344,686)
Canceled                             (174,800)       (63,416)      (102,666)
                                 -------------------------------------------
December 31:
     Outstanding                   10,989,491      8,880,422      9,207,248
----------------------------------------------------------------------------
     Exercisable                    6,134,840      5,922,150      5,859,968

Average exercise price per share         1998           1997           1996
----------------------------------------------------------------------------
Granted                          $      43.33   $      21.72   $      15.26
Exercised                                8.05           8.50           7.65
Canceled                                37.47          14.07          12.16
December 31:
     Outstanding                        21.44          11.92          10.35
     Exercisable                 $      11.01   $       9.66   $       8.75

                              Options Outstanding
-----------------------------------------------------------------------------
                                                    Weighted-      Weighted-
      Range of                                        Average        Average
      Exercise                     Options          Remaining       Exercise
      Prices                   Outstanding   Contractual Life          Price
-----------------------------------------------------------------------------
$ 5.69-$ 9.31                    1,846,329      2.6 years            $ 7.23
$10.13-$11.59                    2,850,450      5.4 years            $11.10
$13.41-$18.91                    2,119,525      7.1 years            $14.65
$20.63-$33.31                    1,938,187      9.1 years            $26.68
$49.00                           2,235,000      9.2 years            $49.00
-----------------------------------------------------------------------------

                            Options Exercisable
-----------------------------------------------------------------------------
                                                             Weighted-
       Range of                                                Average
       Exercise                     Options                   Exercise
         Prices                 Exercisable                      Price
-----------------------------------------------------------------------------
$ 5.69-$ 9.31                    1,846,329                     $ 7.23
$10.13-$11.59                    2,741,250                     $11.08
$13.41-$18.91                    1,302,005                     $14.42
$20.63-$33.31                      245,256                     $21.88

(thousands, except per share)            1998           1997           1996
-----------------------------------------------------------------------------
Income from continuing operations
     As reported                 $    154,506   $    133,955   $    113,185
     Pro forma                        150,773        131,763        111,761
Diluted income from continuing
     operations per common share
          As reported                    1.15           1.00           0.85
          Pro forma              $       1.12   $       0.98   $       0.84

                                         1998           1997           1996
-----------------------------------------------------------------------------
Weighted-average grant-date fair
     value of options granted
          Granted at market prices     $ 7.65         $ 5.94         $ 4.15
          Granted at prices
               exceeding market        $ 1.78
Assumptions
     Risk-free interest rate             5.5%           6.2%           6.2%
     Expected life                    6 years        6 years       6 years
     Expected volatility                17.8%          19.6%          20.9%
     Expected dividend yield             1.5%           1.8%           1.9%

(thousands)
--------------------------------------------------------------
1999                                            $     13,032
2000                                                   8,727
2001                                                   5,932
2002                                                   3,925
2003                                                   2,827
Thereafter                                            15,420
                                                --------------
Total                                           $     49,863

                                                Pension Benefits                          Postretirement Benefits
                                 -------------------------------------------------------------------------------------------------
(thousands)                              1998           1997           1996           1998           1997                   1996
----------------------------------------------------------------------------------------------------------------------------------
Benefit obligation,
     beginning of year           $    287,027   $    240,116   $    217,008     $   91,121   $     71,549           $     59,447
Service cost                           16,336         13,330         12,615          5,668          4,325                  3,298
Interest cost                          20,563         18,371         16,084          6,382          5,711                  4,398
Plan participants' contributions                                                       741            767                    578
Changes in assumptions                 27,194         22,495          1,189          9,768          6,957                  5,675
Actuarial loss (gain)                     732         (1,402)          (644)        (4,431)         5,057                  1,615
Benefits paid                          (8,027)        (8,534)        (6,136)        (2,572)        (3,245)                (3,462)
Business acquisitions                                  2,651
                                 -------------------------------------------------------------------------------------------------
Benefit obligation, end of year  $    343,825   $    287,027   $    240,116     $  106,677   $     91,121           $     71,549
----------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets,
     beginning of year           $    237,304   $    196,839   $    167,231     $   16,764   $     11,885           $      9,269
Actual return on plan assets           32,256         28,531         20,389          2,261          1,609                    863
Company contributions                  17,388         17,453         15,355          3,239          5,748                  4,637
Plan participants' contributions                                                       741            767                    578
Benefits paid                          (8,027)        (8,534)        (6,136)        (2,572)        (3,245)                (3,462)
Business acquisitions                                  3,015
                                 -------------------------------------------------------------------------------------------------
Fair value of plan assets,
     end of year                 $    278,921   $    237,304   $    196,839     $   20,433   $     16,764           $     11,885
----------------------------------------------------------------------------------------------------------------------------------

                                                  Pension Benefits                          Postretirement Benefits
                                 -------------------------------------------------------------------------------------------------
(thousands)                              1998           1997           1996           1998           1997                   1996
----------------------------------------------------------------------------------------------------------------------------------
Funded status                    $    (64,904)  $    (49,723)  $    (43,277)    $  (86,244)  $    (74,357)          $    (59,664)
Unrecognized actuarial loss            59,647         46,028         37,763         21,468         17,280                  5,984
Unrecognized prior service cost        16,175         18,056         20,325         (8,546)        (9,097)                (9,648)
Unrecognized net transition asset      (9,120)       (10,523)       (11,926)
                                 -------------------------------------------------------------------------------------------------
Prepaid (accrued) benefit costs  $      1,798   $      3,838   $      2,885     $  (73,322)  $    (66,174)          $    (63,328)
----------------------------------------------------------------------------------------------------------------------------------
Weighted-average actuarial
     assumptions
     Discount rate for service
       and interest cost,
       at beginning of year             7.25%          7.75%          7.50%          7.25%          7.75%                  7.50%
     Projected salary increases           5.1            5.1            5.1
     Expected return on assets            9.0            9.0            9.0            9.0            9.0                    9.0
     Discount rate for year-end
          benefit obligation            6.75%          7.25%          7.75%          6.75%          7.25%                  7.75%

                                         Pension Benefits                              Postretirement Benefits
                                 -------------------------------------------------------------------------------------------------
(thousands)                              1998           1997           1996           1998           1997                   1996
----------------------------------------------------------------------------------------------------------------------------------
Service cost -- employee
     benefits earned
     during the year             $     16,336   $     13,330   $     12,615     $    5,668   $      4,325           $      3,298
Interest cost on benefit
     obligation                        20,563         18,371         16,084          6,382          5,711                  4,398
Expected return on plan assets        (20,128)       (17,183)       (14,983)        (1,463)        (1,016)                  (525)
Recognition of net actuarial loss       2,179          1,407          1,634            351            125
Amortization of prior service
     cost (benefit)                     1,881          1,905          1,905           (551)          (551)                  (551)
Amortization of net transition asset   (1,403)        (1,403)        (1,403)
                                 -------------------------------------------------------------------------------------------------
Total U.S. expense                     19,428         16,427         15,852         10,387          8,594                  6,620
International expense                   1,251          1,112          1,261
                                 -------------------------------------------------------------------------------------------------
Total expense                    $     20,679   $     17,539   $     17,113     $   10,387   $      8,594           $      6,620
----------------------------------------------------------------------------------------------------------------------------------

                                                     1 Percentage Point
                                                -----------------------------
(thousands)                                        Increase       Decrease
-----------------------------------------------------------------------------
Effect on total of postretirement
  service and interest cost components          $        440   $       (386)
Effect on postretirement benefit obligation            6,056         (5,350)

                                   United States                                          Other
                    ----------------------------------------                   ----------------------------
                                                              International        Foreign
                    Cleaning &          Other          Total     Cleaning &       Currency
(thousands)         Sanitizing       Services  United States     Sanitizing    Translation      Corporate           Consolidated
----------------------------------------------------------------------------------------------------------------------------------
Net sales
     1998           $1,296,797       $160,063     $1,456,860       $440,668       $ (9,302)                           $1,888,226
     1997            1,156,625        119,203      1,275,828        335,337         29,187                             1,640,352
     1996            1,040,823        107,955      1,148,778        305,938         35,293                             1,490,009

Operating income
     1998              218,500         19,084        237,584         29,787         (1,044)    $   (4,347)               261,980
     1997              180,975         14,655        195,630         22,519          4,443         (4,088)               218,504
     1996              152,979         11,907        164,886         19,151          4,720         (3,440)               185,317

Depreciation & amortization
     1998               87,456          3,145         90,601         25,638            143          5,589                121,971
     1997               76,130          2,716         78,846         17,604            278          4,151                100,879
     1996               67,793          2,167         69,960         15,968            207          3,388                 89,523

Total assets
     1998              701,341         77,491        778,832        334,606          6,749        350,808              1,470,995
     1997              641,441         36,448        677,889        374,136         20,571        343,703              1,416,299
     1996              564,735         31,762        596,497        182,293         20,190        409,429              1,208,409

Capital expenditures
     1998              109,976          4,383        114,359         32,182            393            697                147,631
     1997               90,914          3,539         94,453         24,821          1,528            865                121,667
     1996           $   86,582       $  1,707     $   88,289       $ 22,375       $    290     $      564             $  111,518

December 31 (thousands)                  1998           1997           1996
----------------------------------------------------------------------------
United States                       $ 332,072      $ 294,372      $ 269,065
International                          81,046         99,069         53,783
Corporate                               3,931          3,812          3,214
Effect of foreign currency
     translation                        3,156         (1,691)         6,252
                                    ----------------------------------------
Consolidated                        $ 420,205      $ 395,562      $ 332,314
----------------------------------------------------------------------------

                                        First         Second          Third         Fourth
(thousands, except per share)         Quarter        Quarter        Quarter        Quarter           Year
-----------------------------------------------------------------------------------------------------------
1998
Net sales
     United States
          Cleaning & Sanitizing  $    303,435   $    324,347   $    343,771     $  325,244   $  1,296,797
          Other Services               29,179         34,907         48,536         47,441        160,063
     International Cleaning &
          Sanitizing                  102,963        109,696        113,560        114,449        440,668
     Effect of foreign currency
          translation                     785           (490)        (5,830)        (3,767)        (9,302)
                                 --------------------------------------------------------------------------
     Total                            436,362        468,460        500,037        483,367      1,888,226
Cost of sales                         195,909        210,116        224,365        220,783        851,173
Selling, general and
     administrative expenses          186,733        194,604        196,501        197,235        775,073
                                 --------------------------------------------------------------------------
Operating income
     United States
          Cleaning & Sanitizing        44,606         52,644         65,128         56,122        218,500
          Other Services                2,930          4,725          6,905          4,524         19,084
     International Cleaning &
          Sanitizing                    6,995          7,881          8,935          5,976         29,787
     Corporate                           (910)        (1,479)        (1,149)          (809)        (4,347)
     Effect of foreign currency
          translation                      99            (31)          (648)          (464)        (1,044)
                                 --------------------------------------------------------------------------
     Total                             53,720         63,740         79,171         65,349        261,980
Interest expense, net                   5,406          5,400          5,069          5,867         21,742
                                 --------------------------------------------------------------------------
Income from continuing operations
     before income taxes and equity
     in earnings of Henkel-Ecolab      48,314         58,340         74,102         59,482        240,238
Provision for income taxes             20,289         24,475         31,794         25,224        101,782
Equity in earnings of Henkel-Ecolab
     joint venture                      2,563          3,824          4,704          4,959         16,050
                                 --------------------------------------------------------------------------
Income from continuing
     operations                        30,588         37,689         47,012         39,217        154,506
Gain from discontinued
     operations                                                      38,000                        38,000
                                 --------------------------------------------------------------------------
Net income                       $     30,588   $     37,689   $     85,012     $   39,217   $    192,506
-----------------------------------------------------------------------------------------------------------
Diluted income per common share
     Income from continuing
          operations             $       0.23   $       0.28   $       0.35     $     0.29   $       1.15
     Gain from discontinued
          operations                                                   0.28                          0.28
     Net income                  $       0.23   $       0.28   $       0.63     $     0.29   $       1.44
Weighted-average common shares
          outstanding
     Basic                            128,958        128,667        129,573        129,431        129,157
     Diluted                          133,934        133,803        134,319        134,154        134,047

1997
Net sales
     United States
          Cleaning & Sanitizing  $    264,623   $    289,974   $    306,129     $  295,899   $  1,156,625
          Other Services               26,080         29,659         32,635         30,829        119,203
     International Cleaning &
          Sanitizing                   74,465         84,406         86,484         89,982        335,337
     Effect of foreign currency
          translation                   8,592          7,771          7,625          5,199         29,187
                                 --------------------------------------------------------------------------
     Total                            373,760        411,810        432,873        421,909      1,640,352
Cost of sales                         165,726        183,322        188,178        184,858        722,084
Selling, general and administrative
     expenses                         164,604        175,685        177,899        181,576        699,764
                                 --------------------------------------------------------------------------
Operating income
     United States
          Cleaning & Sanitizing        36,262         44,137         55,665         44,911        180,975
          Other Services                2,179          3,047          5,073          4,356         14,655
     International Cleaning &
          Sanitizing                    4,444          5,493          5,938          6,644         22,519
     Corporate                           (881)        (1,050)        (1,044)        (1,113)        (4,088)
     Effect of foreign currency
          translation                   1,426          1,176          1,164            677          4,443
                                 --------------------------------------------------------------------------
     Total                             43,430         52,803         66,796         55,475        218,504
Interest expense, net                   2,998          3,054          3,351          3,234         12,637
                                 --------------------------------------------------------------------------
Income before income taxes
     and equity in earnings of
     Henkel-Ecolab                     40,432         49,749         63,445         52,241        205,867
Provision for income taxes             16,577         20,397         26,613         21,758         85,345
Equity in earnings of
     Henkel-Ecolab joint venture        2,349          3,542          3,657          3,885         13,433
                                 --------------------------------------------------------------------------
Net income                       $     26,204   $     32,894   $     40,489     $   34,368   $    133,955
-----------------------------------------------------------------------------------------------------------
Diluted net income per common
     share                       $       0.20   $       0.25   $       0.30     $     0.26   $       1.00
Weighted-average common shares
     outstanding
     Basic                            129,548        129,779        129,462        128,993        129,446
     Diluted                          133,520        133,963        133,930        133,740        133,822
-----------------------------------------------------------------------------------------------------------

/s/Allan L. Schuman
-------------------
Allan L. Schuman
PRESIDENT AND CHIEF EXECUTIVE OFFICER

/s/Michael E. Shannon
---------------------
Michael E. Shannon
CHAIRMAN OF THE BOARD,
CHIEF FINANCIAL AND ADMINISTRATIVE OFFICER

/s/PricewaterhouseCoopers LLP
-----------------------------
PricewaterhouseCoopers LLP

FEBRUARY 22, 1999
SAINT PAUL, MINNESOTA

December 31 (thousands, except per share)                       1998            1997           1996           1995
-----------------------------------------------------------------------------------------------------------------------
                                                              >                                                

OPERATIONS
Net sales
         United States                                      $ 1,456,860     $ 1,275,828     $ 1,148,778     $ 1,030,126
         International (at average rates of currency
           exchange during the year)                            431,366         364,524         341,231         310,755
         Europe (at average rates of currency
          exchange during the year)
-----------------------------------------------------------------------------------------------------------------------
         Total                                                1,888,226       1,640,352       1,490,009       1,340,881
Cost of sales                                                   851,173         722,084         674,953         603,167
Selling, general and administrative expenses                    775,073         699,764         629,739         575,028
Merger costs and nonrecurring expenses
-----------------------------------------------------------------------------------------------------------------------
Operating income                                                261,980         218,504         185,317         162,686
Interest expense, net                                            21,742          12,637          14,372          11,505
-----------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income
         taxes and equity in earnings of Henkel-Ecolab          240,238         205,867         170,945         151,181
Provision for income taxes                                      101,782          85,345          70,771          59,694
Equity in earnings of Henkel-Ecolab joint venture                16,050          13,433          13,011           7,702
-----------------------------------------------------------------------------------------------------------------------
Income from continuing operations                               154,506         133,955         113,185          99,189
Income (loss) from discontinued operations                       38,000
Extraordinary loss and changes in accounting principles
-----------------------------------------------------------------------------------------------------------------------
Net income (loss)                                               192,506         133,955         113,185          99,189
Preferred stock dividends
-----------------------------------------------------------------------------------------------------------------------
Net income (loss) to common shareholders, as reported           192,506         133,955         113,185          99,189
Pro forma adjustments
-----------------------------------------------------------------------------------------------------------------------
Pro forma net income (loss) to common shareholders          $   192,506     $   133,955     $   113,185     $    99,189
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Income (loss) per common share, as reported
         Basic -- continuing operations                     $      1.20     $      1.03     $      0.88     $      0.75
         Basic -- net income (loss)                                1.49            1.03            0.88            0.75
         Diluted -- continuing operations                          1.15            1.00            0.85            0.73
         Diluted -- net income (loss)                              1.44            1.00            0.85            0.73
Pro forma income (loss) per common share
         Basic -- continuing operations                            1.20            1.03            0.88            0.75
         Basic -- net income (loss)                                1.49            1.03            0.88            0.75
         Diluted -- continuing operations                          1.15            1.00            0.85            0.73
         Diluted -- net income (loss)                       $      1.44     $      1.00     $      0.85     $      0.73
Weighted-average common shares outstanding -- basic             129,157         129,446         128,991         132,193
Weighted-average common shares outstanding -- diluted           134,047         133,822         132,817         134,956
SELECTED INCOME STATEMENT RATIOS
Gross profit                                                       54.9%           56.0%           54.7%           55.0%
Selling, general and administrative expenses                       41.0            42.7            42.3            42.9
Operating income                                                   13.9            13.3            12.4            12.1
Income from continuing operations before income taxes              12.7            12.6            11.5            11.3
Income from continuing operations                                   8.2             8.2             7.6             7.4
Effective income tax rate                                          42.4%           41.5%           41.4%           39.5%
FINANCIAL POSITION
Current assets                                              $   503,514     $   509,501     $   435,507     $   358,072
Property, plant and equipment, net                              420,205         395,562         332,314         292,937
Investment in Henkel-Ecolab joint venture                       253,646         239,879         285,237         302,298
Other assets                                                    293,630         271,357         155,351         107,573
-----------------------------------------------------------------------------------------------------------------------
Total assets                                                $ 1,470,995     $ 1,416,299     $ 1,208,409     $ 1,060,880
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Current liabilities                                         $   399,791     $   404,464     $   327,771     $   310,538
Long-term debt                                                  227,041         259,384         148,683          89,402
Postretirement health care and pension benefits                  85,793          76,109          73,577          70,666
Other liabilities                                                67,829         124,641         138,415         133,616
Shareholders' equity                                            690,541         551,701         519,963         456,658
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                  $ 1,470,995     $ 1,416,299     $ 1,208,409     $ 1,060,880
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
SELECTED CASH FLOW INFORMATION
Cash provided by operating activities                       $   235,642     $   235,098     $   254,269     $   166,463
Depreciation and amortization                                   121,971         100,879          89,523          76,279
Capital expenditures                                            147,631         121,667         111,518         109,894
EBITDA from continuing operations                               383,951         319,383         274,840         238,965
Cash dividends declared per common share                    $      0.39     $     0.335     $      0.29     $    0.2575
SELECTED FINANCIAL MEASURES/OTHER
Total debt and preferred stock                              $   295,032     $   308,268     $   176,292     $   161,049
Total debt and preferred stock to capitalization                  29.9%           35.8%           25.3%           26.1%
Book value per common share                                 $      5.33     $      4.27     $      4.01     $      3.53
Return on beginning equity                                        28.0%           25.8%           24.8%           21.5%
Dividends/diluted net income per common share                     33.9%           33.5%           34.1%           35.3%
Annual common stock price range                             $38.00-26.13    $28.00-18.13    $19.75-14.56    $15.88-10.00
Number of employees                                              12,007          10,210           9,573           9,026
-----------------------------------------------------------------------------------------------------------------------

December 31 (thousands, except per share)                      1994            1993          1992             1991
-----------------------------------------------------------------------------------------------------------------------

OPERATIONS
Net sales
         United States                                       $   942,070     $   867,415     $   816,405     $   757,564
         International (at average rates of currency
           exchange during the year)                             265,544         234,981         241,229         201,738
         Europe (at average rates of currency
          exchange during the year)
-----------------------------------------------------------------------------------------------------------------------
         Total                                                 1,207,614       1,102,396       1,057,634         959,302
Cost of sales                                                    533,143         491,306         485,206         447,356
Selling, general and administrative expenses                     529,507         481,639         446,814         393,700
Merger costs and nonrecurring expenses                             8,000
-----------------------------------------------------------------------------------------------------------------------
Operating income                                                 136,964         129,451         125,614         118,246
Interest expense, net                                             12,909          21,384          35,334          30,489
-----------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income
         taxes and equity in earnings of Henkel-Ecolab           124,055         108,067          90,280          87,757
Provision for income taxes                                        50,444          33,422          27,392          29,091
Equity in earnings of Henkel-Ecolab joint venture                 10,951           8,127           8,600           4,573
-----------------------------------------------------------------------------------------------------------------------
Income from continuing operations                                 84,562          82,772          71,488          63,239
Income (loss) from discontinued operations                                                                      (274,693)
Extraordinary loss and changes in accounting principles                              715                         (24,560)
-----------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                 84,562          83,487          71,488        (236,014)
Preferred stock dividends                                                                                         (4,064)
-----------------------------------------------------------------------------------------------------------------------
Net income (loss) to common shareholders, as reported             84,562          83,487          71,488        (240,078)
Pro forma adjustments                                              5,902          (2,667)         (2,797)         (2,933)
-----------------------------------------------------------------------------------------------------------------------
Pro forma net income (loss) to common shareholders           $    90,464     $    80,820     $    68,691    $  (243,011)
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Income (loss) per common share, as reported
         Basic -- continuing operations                      $      0.63     $      0.61     $      0.53    $      0.51
         Basic -- net income (loss)                                 0.63            0.62            0.53          (2.05)
         Diluted -- continuing operations                           0.62            0.60            0.52           0.50
         Diluted -- net income (loss)                               0.62            0.61            0.52          (2.05)
Pro forma income (loss) per common share
         Basic -- continuing operations                             0.67            0.59            0.51           0.48
         Basic -- net income (loss)                                 0.67            0.60            0.51          (2.08)
         Diluted -- continuing operations                           0.66            0.58            0.50           0.48
         Diluted -- net income (loss)                        $      0.66     $      0.59     $      0.50    $     (2.08)
Weighted-average common shares outstanding -- basic              135,100         135,056         134,408         117,050
Weighted-average common shares outstanding -- diluted            137,306         137,421         136,227         118,178
SELECTED INCOME STATEMENT RATIOS
Gross profit                                                        55.9%           55.4%           54.1%          53.4%
Selling, general and administrative expenses                        44.6            43.7            42.2           41.1
Operating income                                                    11.3            11.7            11.9           12.3
Income from continuing operations before income taxes               10.3             9.8             8.5            9.1
Income from continuing operations                                    7.0             7.5             6.8            6.6
Effective income tax rate                                           40.7%           30.9%           30.3%          33.1%
FINANCIAL POSITION
Current assets                                               $   401,179     $   311,051     $   264,512     $   293,053
Property, plant and equipment, net                               246,191         219,268         207,183         198,086
Investment in Henkel-Ecolab joint venture                        284,570         255,804         289,034         296,292
Other assets                                                      88,416         105,607          98,135         152,857
-----------------------------------------------------------------------------------------------------------------------
Total assets                                                 $ 1,020,356     $   891,730     $   858,864     $   940,288
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Current liabilities                                          $   253,665     $   201,498     $   192,023     $   240,219
Long-term debt                                                   105,393         131,861         215,963         325,492
Postretirement health care and pension benefits                   70,882          72,647          63,393          56,427
Other liabilities                                                128,608          93,917          29,179          11,002
Shareholders' equity                                             461,808         391,807         358,306         307,148
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                   $ 1,020,356     $   891,730     $   858,864     $   940,288
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
SELECTED CASH FLOW INFORMATION
Cash provided by operating activities                        $   169,346     $   175,674     $   120,217     $   128,999
Depreciation and amortization                                     66,869          60,609          60,443          55,653
Capital expenditures                                              88,457          68,321          59,904          53,752
EBITDA from continuing operations                                203,833         190,060         186,057         173,899
Cash dividends declared per common share                     $    0.2275     $    0.1975     $   0.17875    $     0.175
SELECTED FINANCIAL MEASURES/OTHER
Total debt and preferred stock                               $   147,213     $   151,281     $   236,695     $   407,221
Total debt and preferred stock to capitalization                   24.2%           27.9%           39.8%          57.0%
Book value per common share                                  $      3.41     $      2.90     $      2.66    $      2.30
Return on beginning equity                                         21.6%           23.3%           23.3%          13.6%
Dividends/diluted net income per common share                      36.7%           32.4%           34.4%          42.7%
Annual common stock price range                              $11.75-9.63     $11.91-9.07      $9.57-6.66     $8.38-4.88
Number of employees                                                8,206           7,822           7,601           7,428
-----------------------------------------------------------------------------------------------------------------------

December 31 (thousands, except per share)                      1990            1989          1988
-------------------------------------------------------------------------------------------------------
OPERATIONS
Net sales
         United States                                       $   712,579    $   646,895     $   589,715
         International (at average rates of currency
           exchange during the year)                             184,220        179,705         159,374
         Europe (at average rates of currency
          exchange during the year)                              150,809        122,871         122,250
-----------------------------------------------------------------------------------------------------------------------
         Total                                                 1,047,608        949,471         871,339
Cost of sales                                                    495,086        461,256         433,734
Selling, general and administrative expenses                     425,983        383,512         337,707
Merger costs and nonrecurring expenses                                           12,978
-----------------------------------------------------------------------------------------------------------------------
Operating income                                                 126,539         91,725          99,898
Interest expense, net                                             28,321         31,628          31,097
-----------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income
         taxes and equity in earnings of Henkel-Ecolab            98,218         60,097          68,801
Provision for income taxes                                        32,494         19,411          21,285
Equity in earnings of Henkel-Ecolab joint venture
-----------------------------------------------------------------------------------------------------------------------
Income from continuing operations                                 65,724         40,686          47,516
Income (loss) from discontinued operations                        (4,408)        (29,379)         4,238
Extraordinary loss and changes in accounting principles
-----------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                 61,316         11,307          51,754
Preferred stock dividends                                         (7,700)           (429)
-----------------------------------------------------------------------------------------------------------------------
Net income (loss) to common shareholders, as reported             53,616         10,878          51,754
Pro forma adjustments                                             (2,956)         (3,196)        (2,622)
-----------------------------------------------------------------------------------------------------------------------
Pro forma net income (loss) to common shareholders          $    50,660    $     7,682   $    49,132
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Income (loss) per common share, as reported
         Basic -- continuing operations                     $      0.56    $      0.34   $      0.41
         Basic -- net income (loss)                                0.52           0.09          0.44
         Diluted -- continuing operations                          0.56           0.34          0.40
         Diluted -- net income (loss)                              0.51           0.09          0.43
Pro forma income (loss) per common share
         Basic -- continuing operations                            0.53           0.31          0.38
         Basic -- net income (loss)                                0.49           0.06          0.42
         Diluted -- continuing operations                          0.53           0.31          0.38
         Diluted -- net income (loss)                       $      0.49    $      0.06   $      0.41
Weighted-average common shares outstanding -- basic              103,298        118,516         117,188
Weighted-average common shares outstanding -- diluted            104,258        120,196         119,586
SELECTED INCOME STATEMENT RATIOS
Gross profit                                                       52.7%          51.4%         50.2%
Selling, general and administrative expenses                       40.6           41.7          38.7
Operating income                                                   12.1            9.7          11.5
Income from continuing operations before income taxes               9.4            6.3           7.9
Income from continuing operations                                   6.3            4.3           5.5
Effective income tax rate                                          33.1%          32.3%         30.9%
FINANCIAL POSITION
Current assets                                               $   216,612    $   370,875     $   265,291
Property, plant and equipment, net                               187,735        203,056         194,509
Investment in Henkel-Ecolab joint venture
Other assets                                                     480,911        420,115         444,827
-----------------------------------------------------------------------------------------------------------------------
Total assets                                                 $   885,258    $   994,046     $   904,627
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Current liabilities                                          $   177,643    $   201,585     $   181,758
Long-term debt                                                   208,147        228,632         257,500
Postretirement health care and pension benefits                    8,742         12,859          12,768
Other liabilities                                                138,792        135,343          11,590
Shareholders' equity                                             351,934        415,627         441,011
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                   $   885,258    $   994,046     $   904,627
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
SELECTED CASH FLOW INFORMATION
Cash provided by operating activities                        $   154,208    $   123,215     $   113,514
Depreciation and amortization                                     61,024         53,113          48,282
Capital expenditures                                              58,069         54,430          62,125
EBITDA from continuing operations                                187,563        144,838         148,180
Cash dividends declared per common share                    $    0.1675    $     0.165   $      0.16
SELECTED FINANCIAL MEASURES/OTHER
Total debt and preferred stock                               $   353,886    $   382,764     $   300,448
Total debt and preferred stock to capitalization                  50.1%          47.9%            40.5%
Book value per common share                                 $      3.41    $      3.55   $         3.73
Return on beginning equity                                        12.9%           2.5%            12.9%
Dividends/diluted net income per common share                     32.8%         183.3%            37.2%
Annual common stock price range                              $7.78-4.16     $8.94-6.22       $6.94-5.32
Number of employees                                                8,106          7,845           7,684
-----------------------------------------------------------------------------------------------------------------------

PAGE
NUMBER   DESCRIPTION
------   -----------

  24   Bar graph illustrating total return to shareholders (share
       appreciation plus dividends) for the last five fiscal years
       as follows:

          1998                                         31.9%
          1997                                         49.0%
          1996                                         27.3%
          1995                                         46.1%
          1994                                        (5.3)%

  24   Bar graph illustrating return on beginning equity for the
       last five fiscal years as follows:

          1998                                         28.0%
          1997                                         25.8%
          1996                                         24.8%
          1995                                         21.5%
          1994                                         21.6%

  27   Pie chart illustrating the United States Cleaning and
       Sanitizing business mix for 1998 as well as consolidated
       net sales (in millions) for the last three fiscal years
       as follows:

          1998 Institutional mix                       60%
          1998 Food & Beverage mix                     18%
          1998 Professional Products mix                8%
          1998 Kay mix                                  7%
          1998 Textile Care mix                         5%
          1998 Water Care mix                           2%
          1998 sales                                  $1,297
          1997 sales                                  $1,157
          1996 sales                                  $1,041

  28   Pie chart illustrating United States Other Services
       consolidated business mix for 1998 as well as consolidated
       net sales (in millions) for the last three fiscal years as
       follows:

          1998 Pest Elimination mix                    77%
          1998 GCS Service mix                         15%
          1998 Jackson mix                              8%
          1998 sales                                  $160
          1997 sales                                  $119
          1996 sales                                  $108

PAGE
NUMBER   DESCRIPTION
------   -----------

  29   Pie chart illustrating the International Cleaning and
       Sanitizing business mix for 1998 as well as consolidated
       net sales (in millions) for the last three fiscal years
       as follows:

          1998 Asia Pacific mix                        48%
          1998 Latin America mix                       20%
          1998 Canada mix                              19%
          1998 Africa, Export and Other mix            13%
          1998 sales                                  $441
          1997 sales                                  $335
          1996 sales                                  $306

  30   Pie chart illustrating the Henkel-Ecolab Joint Venture
       business mix for 1998 as well as Ecolab's equity in
       earnings of Henkel-Ecolab (in millions) for the last
       three fiscal years as follows:

          1998 Institutional mix                       36%
          1998 Professional Hygiene mix                26%
          1998 Food & Beverage P3 mix                  25%
          1998 Textile Hygiene (Textile Care) mix      13%
          1998 Henkel-Ecolab equity                    $16
          1997 Henkel-Ecolab equity                    $13
          1996 Henkel-Ecolab equity                    $13

  32   Pie chart illustrating mix of shareholders' equity
       and total debt for 1998 as well as total debt to
       capitalization ratio for the last three fiscal years
       as follows:

          1998 Shareholders' Equity mix                70%
          1998 Total Debt mix                          30%
          1998 debt/equity ratio                       30%
          1997 debt/equity ratio                       36%
          1996 debt/equity ratio                       25%

  33   Bar graph illustrating cash from continuing operating
       activities (in millions) for the last five fiscal years
       as follows:

          1998                                          $275
          1997                                          $235
          1996                                          $254
          1995                                          $163
          1994                                          $154

                                                        STATE OR OTHER                 PERCENTAGE
                                                       JURISDICTION OF                     OF
NAME OF AFFILIATE                                       INCORPORATION                  OWNERSHIP
-----------------                                      ---------------                 -----------
Ecolab S.A.                                                Argentina                       100

Ecolab Australia Pty Limited                               Australia                       100

Ecolab Finance Pty Limited                                 Australia                       100

Ecolab Pty Limited                                         Australia                       100

Gibson Chemical Industries Limited                         Australia                       100

Gibson Chemicals Limited                                   Australia                       100

Gibson Chemicals (NSW) Pty Limited                         Australia                       100

Gibson Chemicals Fiji Pty Limited                          Australia                       100

Gibson Chemicals Great Britain Pty Limited                 Australia                       100

Intergrain Timber Finishes Pty Limited                     Australia                       100

Leonard Chemical Products Pty Limited                      Australia                       100

Maxwell Chemicals Pty Limited                              Australia                       100

Nippon Thermochemical Pty Limited                          Australia                        60

Puritan/Churchill Chemical Holdings Pty Ltd.               Australia                       100

Vessey Chemicals (Holdings) Pty Limited                    Australia                       100

Vessey Chemicals Pty Limited                               Australia                       100

Vessey Chemicals (Vic.) Pty Limited                        Australia                       100

Ecolab Limited                                              Bahamas                        100

Ecolab (Barbados) Limited                                   Barbados                       100

Kay N.V.                                                    Belgium                        100

Ecolab Quimica Ltda.                                         Brazil                        100

Ecolab Ltd.                                                  Canada                        100

Ecolab S.A.                                                  Chile                         100

Ecolab Colombia S.A.                                        Columbia                       100

                                                        STATE OR OTHER                 PERCENTAGE
                                                       JURISDICTION OF                     OF
NAME OF AFFILIATE                                       INCORPORATION                  OWNERSHIP
-----------------                                      ---------------                 -----------
Ecolab Sociedad Anonima                                    Costa Rica                      100

Ecolab, S.A. de C.V.                                      El Salvador                      100

Ecolab S.A.                                                  France                        100

Ecolab GmbH                                                 Germany                        100

Ecolab Export GmbH                                          Germany                        100

Ecolab, Sociedad Anonima                                   Guatemala                       100

Quimicas Ecolab, S.A.                                       Honduras                       100

Ecolab Limited                                             Hong Kong                       100

P.T. Ecolab Indonesia                                      Indonesia                        80

Ecolab Export Limited                                       Ireland                        100

Ecolab Co.                                                  Ireland                        100

Ecolab Limited                                              Jamaica                        100

Ecolab K.K.                                                  Japan                         100

Ecolab East Africa (Kenya) Limited                           Kenya                         100

Ecolab  Korea Ltd.                                           Korea                         100

Ecolab Lebanon S.a.r.l.                                     Lebanon                        100

Ecolab Sdn. Bhd.                                            Malaysia                       100

Ecolab S.A. de C.V.                                          Mexico                        100

Ecolab Holdings Mexico, S.A. de C.V.                         Mexico                        100

Ecolab Morocco                                              Morocco                        100

Ecolab Finance N.V.                              Netherlands Antilles (Curacao)            100

Ecolab International B.V.                                 Netherlands                      100

Ecolab Limited                                            New Zealand                      100

Ecolab Nicaragua, S.A.                                     Nicaragua                       100

Ecolab S.A.                                                  Panama                        100

                                                        STATE OR OTHER                 PERCENTAGE
                                                       JURISDICTION OF                     OF
NAME OF AFFILIATE                                       INCORPORATION                  OWNERSHIP
-----------------                                      ---------------                 -----------
Gibson Chemicals (PNG) Pty. Limited                     Papua New Guinea                   100

Ecolab Chemicals Ltd.                              People's Republic of China               85

Ecolab Philippines, Inc.                                  Philippines                      100

Ecolab Pte. Ltd.                                           Singapore                       100

Klenzade South Africa (Proprietary) Ltd.                  South Africa                     100

Ecolab Ltd.                                                  Taiwan                        100

Ecolab East Africa (Tanzania) Limited                       Tanzania                       100

Ecolab Limited                                              Thailand                       100

Ecolab East Africa (Uganda) Limited                          Uganda                        100

Ecolab Foreign Sales Corp.                            U.S. Virgin Islands                  100

Ecolab S.A.                                                Venezuela                        51

UNITED STATES
-------------

BCS Sales Inc.                                              Delaware                       100

Kay Chemical Company                                     North Carolina                    100

Kay Chemical International, Inc.                         North Carolina                    100

Ecolab Finance (Australia) Inc.                             Delaware                       100

Ecolab Manufacturing Inc.                                   Delaware                       100

Ecolab Holdings Inc.                                        Delaware                       100

Ecolab Investment Inc.                                      Delaware                       100

Ecolab Foundation                                          Minnesota                       100

Ecolab Leasing Corporation                                  Delaware                       100

FastSource Leasing, Inc.                                    Delaware                       100

GCS Service, Inc.                                           Delaware                       100

Jackson MSC Inc.                                            Delaware                       100

Puritan Services Inc.                                       Georgia                        100

/s/ Gunter Betz                          /s/ Henri Leveque
           Betz                                    Leveque


    Wirtschaftsprufer                        Certified Public Accountant

/s/Stefan Haas                      /s/Bernhard Momken
--------------------                ----------------------
Stefan Haas                         Bernhard Momken


Wirtschaftsprufer                   Wirtschaftsprufer

/s/Les S. Biller
------------------------
Les S. Biller

/s/Ruth S. Block
------------------------
Ruth S. Block

/s/James J. Howard
------------------------
James J. Howard

/s/Joel W. Johnson
------------------------
Joel W. Johnson

/s/Jerry W. Levin
------------------------
Jerry W. Levin

/s/Reuben F. Richards
------------------------
Reuben F. Richards

/s/Richard L. Schall
------------------------
Richard L. Schall

/s/Roland Schulz
------------------------
Roland Schulz

/s/Hugo Uyterhoeven
------------------------
Hugo Uyterhoeven

/s/Albrecht Woeste
------------------------


Albrecht Woeste