Ecolab Inc.
ECOLAB INC (Form: S-4/A, Received: 06/23/2004 15:23:16)

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TABLE OF CONTENTS
APPENDIX A INDEX

As filed with the Securities and Exchange Commission on June 23, 2004

Registration No. 333-114869



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


AMENDMENT NO. 2 TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933


ECOLAB INC.
(Exact name of registrant as specified in its charter)


Delaware

 

2840

 

41-0231510
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

370 Wabasha Street North
St. Paul, Minnesota 55102
(651) 293-2233
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Lawrence T. Bell, Esq.
Senior Vice President, General Counsel and Secretary
Ecolab Inc.
370 Wabasha Street North
St. Paul, Minnesota 55102
(651) 293-2981
(Name and address, including zip code, and telephone number, including area code, of agent for service)


Copies to:

Timothy Scallen, Esq.
Oppenheimer Wolff & Donnelly LLP
Plaza VII, Suite 3300
45 South Seventh Street
Minneapolis, Minnesota 55402
(612) 607-7000
  James Lisbakken, Esq.
Eric DeJong, Esq.
Perkins Coie LLP
1201 Third Avenue Suite 4800
Seattle, Washington 98101
(206) 359-8000

        Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and all other conditions to the merger of a wholly-owned subsidiary of Ecolab Inc. into Alcide Corporation have been satisfied or waived.

        If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.   o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o


CALCULATION OF REGISTRATION FEE


Title of
Securities to be Registered

  Amount to
be Registered(1)

  Proposed Maximum
Offering Price
Per Unit

  Proposed Maximum
Aggregate
Offering Price(2)

  Amount of
Registration Fee


Common stock, par value $1.00 per share   N/A   N/A   $63,880,110   $8,093.61(4)

Rights to purchase Series A Junior Participating Preferred Stock(3)   N/A   N/A   N/A   N/A


(1)
Omitted in reliance on Rule 457(o).

(2)
Calculated as the product of (i) $21.00 and (ii) 3,041,910, which is the maximum possible number of shares of Alcide common stock to be cancelled pursuant to the merger and assumes that all outstanding options to purchase Alcide common stock are fully exercised.

(3)
One quarter of one preferred share purchase right will attach to and trade with each common share. Those rights are also covered by this registration statement and the value attributed to them, if any, is reflected in the market price of Ecolab Inc. common stock.

(4)
The registrant previously paid the registration fee in full upon the filing of its Registration Statement on Form S-4 on April 26, 2004.


         The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.




LOGO   LOGO
Alcide Corporation   Ecolab Inc.


Proxy Statement/Prospectus

        Ecolab Inc. and Alcide Corporation have entered into an agreement under which Ecolab will acquire Alcide in a stock-for-stock transaction. The transaction is structured as a merger in which Alcide will become a wholly-owned subsidiary of Ecolab. Both Ecolab and Alcide believe that the merger will enhance shareholder value by providing Alcide stockholders with historically well performing and liquid Ecolab common stock in exchange for their Alcide shares in a transaction that is intended to be tax-free, and an opportunity to participate in the potential growth and future value of Ecolab.

        We cannot complete the merger unless Alcide stockholders adopt and approve the merger agreement and the merger, and a special meeting of Alcide stockholders has been called for that purpose. The stockholders meeting will be held on July 30, 2004, at 9:00 a.m., local time, at Alcide's offices located at 8561 154 th Avenue N.E., Redmond, Washington. This proxy statement/prospectus provides you with detailed information about the proposed merger and the special meeting. Please read this entire document carefully and pay particular attention to the section entitled "Risk Factors," beginning on page 18.

        Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the special meeting, please take the time to vote by completing and mailing the enclosed proxy card to us. If you abstain, do not vote or do not instruct your broker how to vote any shares your broker holds for you in its name, the effect will be a vote against approval and adoption of the merger agreement and the merger. Returning your proxy card will not affect your right to vote in person if you choose to attend the special meeting. The Alcide board of directors has unanimously approved the merger agreement and the merger and recommends that you vote FOR the proposal to adopt and approve the merger agreement and the merger.

        If we complete the merger, you will receive in exchange for each share of Alcide common stock you hold, $21.00 in Ecolab common stock based on the average closing price per share of Ecolab common stock on the New York Stock Exchange for each of the ten consecutive trading days ending on the fifth trading day prior to the closing of the merger. We expect to close the merger on the same day as the Alcide special meeting, in which case we would issue a press release announcing the anticipated exchange ratio on the fourth trading day prior to the meeting. However, the closing could be delayed for a number of reasons, such as the failure of a condition to closing or logistical issues associated with filing the documents that implement the merger. As a result, because the pricing formula is tied to the actual closing of the merger, Alcide stockholders will not know the precise exchange ratio, and hence the number of Ecolab shares they will receive, at the time of the Alcide special meeting.

        Ecolab's common stock is traded on the New York Stock Exchange under the symbol "ECL." As of June 11, 2004, the most recent closing sale price of Ecolab common stock was $31.38. If this price were used to calculate the exchange ratio, Ecolab would issue 0.6692 shares of Ecolab common stock for each share of Alcide common stock, resulting in an aggregate issuance of approximately 1,807,757 shares of Ecolab common stock to holders of Alcide common stock. Following completion of the merger, and assuming Ecolab does not issue any additional shares of its common stock, Alcide stockholders would own approximately 0.7% of the issued and outstanding shares of Ecolab common stock.

Sincerely,

/s/   JOSEPH P. SASENICK      
Joseph P. Sasenick
Chairman and Chief Executive Officer
Alcide Corporation

         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger or the Ecolab common stock to be issued in the merger or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

        This proxy statement/prospectus is dated June 23, 2004, and was first mailed to Alcide stockholders on or about June 30, 2004.


LOGO

Alcide Corporation
8561 154 th Avenue N.E.
Redmond, Washington 98052

Notice of Special Meeting of Stockholders
To Be Held on July 30, 2004

        To our stockholders:

        We will hold a special meeting of the stockholders of Alcide Corporation at 9:00 a.m., local time, on July 30, 2004, at Alcide's offices located at 8561 154 th Avenue N.E., Redmond, Washington. The purposes of the special meeting are as follows:

        Proposals 1 and 2 are more fully described in the attached proxy statement/prospectus, which you should read carefully. The merger agreement is included with the proxy statement/prospectus as Appendix A.

        We have fixed the close of business on June 11, 2004, as the record date for determining which of our stockholders are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement of the special meeting. Only holders of record of Alcide common stock at the close of business on June 11, 2004, are entitled to vote at the special meeting or any adjournment or postponement of the special meeting. We cannot complete the merger unless the holders of a majority of the Alcide common stock outstanding as of the record date vote to approve the merger and the merger agreement.

        After careful consideration, your board of directors unanimously recommends that you vote FOR adoption and approval of the merger agreement and the merger and FOR the proposal regarding adjournment of the special meeting. We are not aware of any other business to come before the special meeting.

         Please complete, sign and promptly return the proxy card in the enclosed preaddressed envelope, whether or not you expect to attend the special meeting. You can revoke your proxy at any time before it has been voted at the special meeting. Returning your proxy card will not affect your right to vote in person if you choose to attend the special meeting. If you fail to vote by proxy card or at the special meeting, or fail to instruct your broker how to vote any shares your broker holds for you in its name, or if you abstain, it will have the same effect as voting against the approval and adoption of the merger agreement and the merger. You can revoke your proxy in the manner described in this proxy statement/prospectus at any time before it has been voted at the special meeting.

        Please do not send Alcide stock certificates with your proxy card. After we complete the merger, the exchange agent will send you written instructions for exchanging Alcide stock for Ecolab stock.


By order of the Board of Directors,

 

 

/s/  
JOHN P. RICHARDS     
John P. Richards
President and Secretary
Redmond, Washington
June 23, 2004

 

 


REFERENCES TO ADDITIONAL INFORMATION

        As permitted under the rules of the Securities and Exchange Commission, this proxy statement/prospectus incorporates important business and financial information about Alcide and Ecolab that is not included in, or delivered with, this proxy statement/prospectus. In accordance with applicable rules of the Securities and Exchange Commission, Alcide's annual report on Form 10-K for the fiscal year ended May 31, 2003, and its quarterly report on Form 10-Q for the quarterly period ended February 29, 2004, both of which contain important business financial information about Alcide and should be read carefully, are delivered with this proxy statement/prospectus.

        You may obtain copies, without charge, of documents incorporated by reference in this proxy statement/prospectus, by requesting them in writing or by telephone from the appropriate company as follows:

Ecolab Inc.
370 Wabasha Street North
St. Paul, Minnesota 55102
Telephone: (651) 293-2233
Attention: Corporate Secretary
  Alcide Corporation
8561 154 th Avenue N.E.
Redmond, Washington 98052
Telephone: (425) 882-2555
Attention: Investor Relations

        For a more detailed discussion of the information about Ecolab and Alcide incorporated by reference into this proxy statement/prospectus, see "Where You Can Find More Information," beginning on page 76.

         In order to receive timely delivery of the documents in advance of the special meeting, you should make your request no later than July 23, 2004, which is five business days prior to the date of the Alcide special meeting.

        Ecolab and the Ecolab logo are registered trademarks of Ecolab Inc. Alcide and the Alcide logo are registered trademarks of Alcide Corporation. Other trademarks appearing in this proxy statement/prospectus are the property of their respective holders.

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TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER

SUMMARY
  The Companies
  Recent Developments
  Alcide's Reasons for the Merger
  Recommendation of the Alcide Board of Directors
  The Alcide Special Meeting
  The Merger Agreement and the Merger
  Interests of Certain Persons in the Merger
  Material United States Federal Income Tax Consequences
  Accounting Treatment
  Dissenters' Rights
  Federal Securities Laws Consequences
  Regulatory Matters
  Comparison of Stockholders' Rights and Corporate Governance Matters

SELECTED HISTORICAL FINANCIAL DATA
  Selected Historical Financial Data of Ecolab
  Selected Historical Financial Data of Alcide
  Comparative Per Share Data
  Comparative Stock Prices and Dividends
  Recent Closing Prices
  Ecolab Dividend Policy
  Shares Held by Certain Stockholders

RISK FACTORS

THE ALCIDE SPECIAL MEETING
  Date, Time and Place of the Special Meeting
  Matters to be Considered at the Special Meeting
  Record Date for the Special Meeting and Voting Rights
  Quorum; Required Votes; Abstentions and Broker Non-Votes
  Voting
  Solicitation of Proxies
  Revocability of Proxies
  Dissenters' Rights

THE MERGER
  Structure of the Merger
  Background of the Merger
  Reasons for the Merger—Ecolab
  Reasons for the Merger—Alcide
  Fairness Opinion of Duff & Phelps
  Accounting Treatment
  Interests of Certain Persons in the Merger
  Stock Ownership Following the Merger
  Regulatory Matters
  Federal Securities Laws Consequences
  Material United States Federal Income Tax Consequences
 

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THE MERGER AGREEMENT
  The Merger
  Closing and Effective Time of the Merger
  Merger Consideration
  Treatment of Outstanding Options
  Procedures for Exchange of Shares
  Representations and Warranties
  Concept of Material Adverse Effect
  Covenants and Agreements
  Conditions to the Merger
  Termination
  Termination Fee and Expense Reimbursement
  Amendments

AGREEMENTS RELATED TO THE MERGER
  Agreements to Facilitate Merger
  Employment Agreements and Consulting Agreement

COMPARISON OF STOCKHOLDERS' RIGHTS AND CORPORATE GOVERNANCE MATTERS

HENKEL STOCKHOLDER'S AGREEMENT

STOCKHOLDER RIGHTS PLAN

LEGAL MATTERS

EXPERTS

STOCKHOLDER PROPOSALS

WHERE YOU CAN FIND MORE INFORMATION

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Appendix A—Agreement and Plan of Merger by and among Ecolab Inc., Bessy Acquisition Inc. and Alcide Corporation, dated as of March 11, 2004
Appendix B—Form of Agreement to Facilitate Merger
Appendix C—Fairness opinion of Duff & Phelps LLP
Appendix D—Presentation of Duff & Phelps LLP to the Alcide Board of Directors

iii



QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER

Q.
Why am I receiving this proxy statement/prospectus?

A:
Ecolab and Alcide have entered into an Agreement and Plan of Merger, dated March 11, 2004. Under the terms of the merger agreement, Bessy Acquisition Inc., a wholly-owned subsidiary of Ecolab, will merge into Alcide with Alcide surviving the merger. As a result, Alcide will become a wholly-owned subsidiary of Ecolab. You are being asked to approve the merger agreement and the merger.

Q:
What stockholder vote is required to approve the merger?

A:
Approval of the merger agreement and the merger will require the affirmative vote of a majority of the shares of Alcide common stock outstanding as of the record date, June 11, 2004, and entitled to vote on the proposal.

Q:
Are there any stockholders already committed to voting in favor of the merger?

A:
Yes. Alcide's officers and directors believe that the merger is in the best interests of Alcide and its stockholders. Accordingly, they and certain of their affiliates have entered into voting agreements requiring them to vote all the shares of Alcide common stock beneficially held by them in favor of adoption of the merger agreement and to vote against other potential acquisition proposals. As of March 11, 2004, the date of the merger agreement, Alcide's officers, directors and affiliates who executed voting agreements held in the aggregate approximately 23.6% of Alcide's outstanding common stock, excluding shares issuable upon exercise or conversion of options and other rights to acquire shares of Alcide common stock which such persons currently hold.

Q:
What will I receive in the merger?

A:
If we complete the merger, you will receive Ecolab common stock in exchange for your shares of Alcide common stock. The number of shares you receive will equal the number of shares of Alcide common stock you hold, multiplied by the quotient of $21.00 divided by the average Ecolab share price. The average Ecolab share price is defined as the average, rounded to the nearest full cent, of the daily closing price per share of Ecolab common stock on the New York Stock Exchange Composite Tape for each of the 10 consecutive trading days ending on the trading day that is five trading days prior to the merger. If the average Ecolab share price is $31.38, which was the closing price of Ecolab common stock on the last trading day prior to June 11, 2004, the most recent practicable date prior to the date of this proxy statement/prospectus, then you would receive 0.6692 shares of Ecolab common stock for each share of Alcide common stock you hold.

Q:
Will Ecolab issue fractional shares?

A:
No. Ecolab will not issue fractional shares. In lieu of fractional shares, each holder of Alcide common stock who would otherwise have been entitled to receive a fraction of a share of Ecolab common stock will be paid an amount in cash (without interest), rounded to the nearest cent, equal to the average Ecolab share price multiplied by the fractional interest to which the holder would otherwise be entitled.

Q:
What happens as the market price of Ecolab common stock changes?

A:
The exchange ratio, and therefore the number of shares of Ecolab common stock that you will receive in the merger, is based on the average Ecolab share price over a ten-day period and not on the actual Ecolab share price on the effective date of the merger or on the date on which your Alcide shares are exchanged for Ecolab shares. Therefore, the value of the Ecolab common stock you will receive in the merger in exchange for each share of Alcide common stock you own may

1


Q:
How will I know what the actual exchange ratio is?

A:
Prior to the special meeting, we will issue a press release and file a Current Report on Form 8-K with the SEC disclosing the exchange ratio under the assumption that the closing of the merger occurs on the same day as the special meeting. The exchange ratio formula is based on the ten trading days ending on the fifth trading day prior to the closing of the merger. Therefore, we intend to issue the press release and file the Form 8-K on the fourth trading day prior to the special meeting. If the closing of the merger is delayed for any reason, then the announced exchange ratio could change. Additionally, you can call Georgeson Shareholder, the proxy solicitor, to receive hypothetical information about the exchange ratio updated as of the Friday immediately preceding the week of your call. You may continue to call Georgeson Shareholder after the meeting to obtain exchange ratio updates in the event the merger is delayed and the exchange ratio changes from what is announced.
Q:
Are there risks involved in undertaking the transaction?

A:
Yes. In evaluating the transaction, you should carefully consider the factors discussed in the section entitled "Risk Factors," beginning on page 18.

Q:
What do I need to do now?

A:
After carefully reviewing and considering this proxy statement/prospectus, you should submit your proxy by mail before the special meeting so that your shares are represented at the special meeting. Even if you submit your proxy, you may also attend the special meeting scheduled to take place on July 30, 2004. Alcide's board of directors unanimously recommends voting FOR the adoption and approval of the merger agreement and the merger.

Q:
Why is my vote important?

A:
The merger agreement must be approved by holders of at least a majority of the outstanding shares of Alcide common stock. If you do not vote it will have the same effect as a vote against the approval of the merger agreement.

Q:
How can I vote my shares without attending the special meeting?

A:
You may vote your shares without attending the special meeting by granting a proxy to us. You can do this by mail, by telephone or by Internet, as follows:

2


Q:
If my Alcide shares are held in "street name" by my broker, will my broker vote my shares for me?

A:
No. Your broker will only vote your shares if you timely provide instructions on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. If you do not provide instructions to your broker on how to vote your shares, they will not be voted. This will have the same effect as voting against the adoption and approval of the merger agreement and the merger.

Q:
What if I do not vote by proxy or at the special meeting, or if I abstain?

A:
If you fail to vote by proxy or at the special meeting or abstain from voting, it will have the same effect as a vote against the adoption and approval of the merger agreement and the merger.

Q:
Can I change my vote after I have mailed a signed proxy card?

A:
Yes. If you are a stockholder of record, you may revoke a previously-granted proxy and change your vote at any time before your proxy is voted at the special meeting in one of the following ways:

by delivering a written notice bearing a date later than the date of your proxy card to Computershare Trust Company, Inc., Alcide's vote tabulator, stating you would like to revoke your proxy;

by delivering to Computershare Trust Company a later-dated proxy card, including a proxy given by telephone or Internet;

submitting a subsequent vote over the Internet or by telephone; or

by attending the special meeting and voting in person by ballot (merely attending the special meeting will not revoke your previously-granted proxy and change your vote—you must cast a ballot at the special meeting).
Q:
What if I receive more than one proxy card?

A:
It may mean that your shares are registered in different ways or are in more than one account. Please provide voting instructions for all proxy cards you receive to ensure that all of your shares are voted at the special meeting.

Q:
Should I send in my Alcide stock certificate now?

A:
No. After we complete the merger, EquiServe Trust Company, N.A., the exchange agent, will send you written instructions for exchanging your Alcide stock certificates for Ecolab common stock. If

3


Q:
When do you expect to complete the merger?

A:
We expect to complete the merger promptly after we receive Alcide stockholder approval at the special meeting and after we receive all necessary regulatory approvals.

Q:
What are the tax consequences to me due to the merger?

A:
Subject to the limitations, qualifications and assumptions described in "The Merger—Material United States Federal Income Tax Consequences," beginning on page 48, you will not recognize gain or loss for U.S. federal income tax purposes on the exchange of Alcide common stock for Ecolab common stock, except to the extent you receive cash in lieu of fractional shares. To review the tax consequences to Alcide stockholders in greater detail, see "The Merger—Material United States Federal Income Tax Consequences," beginning on page 48. You may consult your own tax advisor concerning the tax consequences to you resulting from the merger in light of your particular circumstances.

Q:
What will happen to Alcide if we do not complete the merger?

A:
If we do not complete the merger, Alcide will remain an independent company and may be required to pay Ecolab a termination fee of $2.5 million. In addition, Alcide would have to absorb significant merger-related costs associated with the merger, such as legal, accounting and financial advisor fees. Also, the price of Alcide common stock may decline to the extent that its current market price reflects a market assumption that we will complete the merger.

Q:
Who can I call with questions?

A:
If you would like additional copies of this proxy statement/prospectus or any documents incorporated by reference in or furnished with this proxy statement/prospectus, or, if you have questions about the merger, the special meeting, or how to vote by proxy, you should contact one of the following:

Georgeson Shareholder
17 State Street
New York, NY 10004
Telephone: (800) 316-6480
  Alcide Corporation
8561 154th Avenue N.E.
Redmond, Washington 98052
Telephone: (425) 882-2555
Fax: (425) 861-0173
Attention: Investor Relations
  Ecolab Inc.
370 Wabasha Street North
St. Paul, Minnesota 55102
Telephone: (651) 293-2233
Fax: (651) 293-2573
Attention: Corporate Secretary

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SUMMARY

        For your convenience, we have provided a brief summary of certain information contained in this proxy statement/prospectus. This summary highlights selected information from this document and does not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the terms of the merger, you should read carefully this entire document and the other documents to which we have referred you. See "Where You Can Find More Information," beginning on page 76. We have included page references parenthetically to direct you to more complete descriptions of the topics presented in the summary.


The Companies

         Ecolab Inc.

        Ecolab is engaged in the development and marketing of premium products and services for the hospitality, institutional and industrial markets. Ecolab provides cleaning, sanitizing, pest elimination, maintenance and repair products, systems and services primarily to hotels and restaurants, foodservice, healthcare and educational facilities, quick-service (fast food and other convenience store) units, grocery stores, commercial and institutional laundries, light industry, dairy plants and farms, food and beverage processors, pharmaceutical and cosmetics facilities and the vehicle wash industry. Ecolab is incorporated in Delaware and is headquartered in St. Paul, Minnesota and operates worldwide.

        Bessy Acquisition Inc. is a Delaware corporation and a wholly-owned subsidiary of Ecolab. Bessy was incorporated on February 24, 2004, solely for the purposes of effecting the merger with Alcide. It has not engaged in any activities other than in connection with the merger agreement.

        Alcide is engaged in the research, development and commercialization of unique chemical compounds having intense microbiocidal activity. Alcide holds substantial worldwide rights to its discoveries through various patents, patent applications, trademarks and other intellectual property, technology, and know-how.

        Alcide is a Delaware corporation organized in 1983. Alcide's executive offices and research laboratories are located at 8561 154 th Avenue NE, Redmond, Washington 98052.


Recent Developments

        On June 18, 2004, Alcide entered into a memorandum of understanding to settle a lawsuit filed against Alcide and its directors in King County Superior Court of the State of Washington shortly following the public announcement of the merger agreement. The complaint, which was filed as a class

5



action, alleged that Alcide's directors breached their fiduciary duties in connection with their approval of the merger agreement and sought to enjoin the transaction. Under the terms of the proposed settlement, Alcide agreed to include in this proxy statement/prospectus various disclosures requested by plaintiffs' counsel. In addition, the memorandum requires:

        The terms of the settlement are conditioned upon court approval, which is not assured, and completion of the merger.

        On April 12, 2004, Alcide issued a press release reporting its results of operations for the quarterly period ended February 29, 2004, and filed with the SEC its Form 10-Q for the same period. A copy of Alcide's Form 10-Q for the quarterly period ended February 29, 2004, is being sent to you along with this proxy statement/prospectus.

        On May 31, 2004, Ecolab entered the commercial pest elimination market in South Africa, acquiring Elimco (PTY) Ltd., which is based in Cape Town, South Africa. The transaction was structured as an asset purchase and the consideration paid was approximately $6,500,000. Elimco had 2003 sales of approximately $4,000,000.


Alcide's Reasons for the Merger (page 31)

        In determining to adopt the merger agreement, approve the merger and the transactions contemplated by the merger agreement, and recommend that Alcide's stockholders approve the merger agreement, the Alcide board of directors consulted with Alcide's financial advisor, as well as its legal counsel, and considered, among other things, the following factors:

6


        The above discussion of the factors considered by the Alcide board of directors is described more fully in the section of this proxy statement/prospectus titled "The Merger—Reasons for the Merger—Alcide."


Recommendation of the Alcide Board of Directors (page 21)

        The Alcide board of directors unanimously recommends that you vote FOR the proposal to adopt and approve the merger agreement and the merger and FOR the proposal regarding adjournment of the special meeting.


The Alcide Special Meeting (page 21)

        The special meeting of Alcide stockholders will be held on July 30, 2004, at 9:00 a.m. local time at Alcide's offices located at 8561 154 th Avenue N.E., Redmond, Washington. The purposes of the special meeting are as follows:


        Only Alcide stockholders of record at the close of business on the record date, June 11, 2004, are entitled to vote at the special meeting. The affirmative vote of a majority of the shares of Alcide common stock outstanding as of the record date is required to adopt and approve the merger agreement and the merger. The affirmative vote of a majority of the shares of Alcide common stock outstanding as of the record date and which are present and entitled to vote at the special meeting is required to approve a proposal to adjourn the special meeting. At the close of business on the record date, there were 2,701,371 shares of Alcide's common stock outstanding and entitled to vote at the Alcide special meeting, approximately 23.6% of which were held by directors and executive officers of Alcide and their affiliates.

7


        In connection with the execution of the merger agreement, Alcide's directors and officers and certain of their affiliates have entered into agreements with Ecolab requiring them to vote, or cause to be voted, all of their shares of Alcide common stock in favor of the merger agreement and the merger. These agreements also grant to Ecolab an irrevocable proxy for these purposes. These agreements presently cover an aggregate of 636,560 outstanding shares of Alcide common stock, representing approximately 23.6% of the shares entitled to vote on the merger. If these same stockholders were to exercise all presently exercisable options prior to the record date, an additional 155,414 shares (approximately 27.7% after giving effect to the exercise) would be committed to vote in favor of the merger.


The Merger Agreement and the Merger (pages 50 and 25)

        The merger agreement is attached as Appendix A to this proxy statement/prospectus. We encourage you to read the merger agreement because it is the legal document that governs the merger. If the holders of a majority of the outstanding shares of Alcide common stock adopt and approve the merger agreement and the merger and all other conditions to the merger are satisfied or waived, Bessy Acquisition Inc. will merge into Alcide. As a result, Alcide will survive as a wholly-owned subsidiary of Ecolab.

        If we complete the merger, you will receive $21.00 in Ecolab common stock in exchange for your Alcide common stock. The specific number of Ecolab shares you receive will be calculated using a formula which is based on the market value of Ecolab common stock over a ten-day period ending shortly before the merger. The actual price of Ecolab common stock at the time the merger is completed may be higher or lower than the average Ecolab price on which the exchange ratio is based. As a result, the value of the shares of Ecolab common stock to which you become entitled on the date the merger closes may be more or less than $21.00 per share of Alcide common stock. Cash will be paid in lieu of any fractional shares of Ecolab common stock. Alcide stockholders who would hold only a fractional share of Ecolab common stock will be cashed out entirely and therefore not become a stockholder of Ecolab.

        The following table illustrates the applicable exchange ratio at various price points. The high and low prices in the range are based on the high and low sales prices of Ecolab common stock during the 12 month period prior to the date of this proxy statement, which were $23.78 and $31.48.

Ecolab
Average Stock Price

  Common
Conversion Ratio

$ 23.75   0.8842
$ 24.75   0.8485
$ 25.75   0.8155
$ 26.75   0.7851
$ 27.75   0.7568
$ 28.75   0.7304
$ 29.75   0.7059
$ 30.75   0.6829
$ 31.50   0.6667

        Assuming an average Ecolab share price of $31.38, which was the most recent closing price of Ecolab common stock as of June 11, 2004, Ecolab would issue 0.6692 shares of Ecolab common stock for each share of Alcide common stock, resulting in an aggregate issuance of approximately 1,807,757 shares of Ecolab common stock to holders of Alcide common stock. Following completion of the merger, and assuming Ecolab does not issue any additional shares of its common stock, Alcide stockholders would own approximately 0.7% of the issued and outstanding shares of Ecolab common stock.

8



        Each outstanding stock option granted under Alcide's 2001 Stock Incentive Plan has become fully vested and exercisable, contingent upon completion of the merger. To the extent not exercised prior to the merger, each such option will be cancelled and converted into the right to receive a cash payment equal to $21.00 multiplied by the number of shares subject to the option, less the aggregate exercise price of the option. For example, an option to purchase 100 shares of Alcide common stock at an exercise price of $15.00 per share would be converted into the right to receive a cash payment of $600.00 ($21.00 × 100 shares - $1,500 = $600).

        The automatic conversion mechanism does not apply to any other options granted by Alcide, including those granted under its 1993 Incentive Stock Option Plan and its 1996 Stock Option Plan for Nonemployee Directors. However, the merger agreement requires Alcide to use commercially reasonable efforts to cause the holders of these options to agree to a cash-out on the same terms applicable to options granted under the 2001 Stock Incentive Plan. If the holders of such options agree, their options will accelerate and become fully vested and exercisable to the extent not fully vested as of the date of the completion of the merger. Ecolab will assume any options that are not cashed-out.

        In deciding to adopt the merger agreement and recommend its approval to the Alcide stockholders, Alcide's board of directors considered, among other things, an opinion from its financial advisor, Duff & Phelps, LLC. Duff & Phelps delivered its opinion to the Alcide board of directors on March 11, 2004, that the consideration to be received in the merger by holders of Alcide common stock is fair to the non-management public stockholders, from a financial point of view (without giving effect to any impacts of the proposed transaction on any particular stockholder other than its capacity as a stockholder. The full text of the Duff & Phelps opinion is attached as Appendix C. You should read the Duff & Phelps opinion in its entirety. The Duff & Phelps opinion does not constitute a recommendation as to how you should vote on the merger agreement and the merger.

        Ecolab and Alcide will not complete the merger unless a number of conditions are satisfied or have been waived, including customary conditions relating to Alcide stockholder approval, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the absence of pending litigation relating to the merger, the accuracy of representations and warranties, the performance pre-closing obligations, and the absence of a material adverse effect on the other party. In addition, Ecolab is not required to complete the merger if there are more than 3,041,910 shares of Alcide common stock outstanding, including shares subject to outstanding options. As of June 11, 2004, there are 3,033,385 shares of Alcide common stock outstanding, including shares subject to outstanding options. The condition requiring the expiration or termination of the Hart-Scott-Rodino waiting period was satisfied on April 7, 2004, when the government granted early termination of the waiting period.

        Shortly following the public announcement of the merger, an Alcide stockholder filed a complaint in the King County Superior Court of the State of Washington alleging that the Alcide board of directors breached its fiduciary obligations in approving the merger agreement and the merger. Ecolab is not required to complete the merger so long as the lawsuit is pending. However, as a result of the settlement described in "Recent Developments" beginning on page 5, Ecolab does not intend to delay the merger or terminate the merger agreement as a result of the lawsuit. Ecolab's intention could change if there is a breach of the memorandum of understanding prior to completion of the merger, in which case Ecolab would promptly issue a press release and file a Current Report on Form 8-K announcing the development.

9



        In addition to termination by mutual agreement, Ecolab and Alcide may terminate the merger agreement under a number of other circumstances, including failing to complete the merger by September 11, 2004, the existence of a governmental or legal restraint prohibiting the merger, failing to obtain Alcide stockholder approval, and following certain breaches of representations and warranties or obligations by the other party. The merger agreement may also be terminated:

        Ecolab also has a right to terminate the merger agreement at any time after the receipt of a request for additional information under the Hart-Scott-Rodino Act. However, the government has granted early termination of the Hart-Scott-Rodino waiting period without submitting a request for additional information.

        Alcide has agreed to pay Ecolab a termination fee of $2.5 million in the event the merger agreement is terminated under certain circumstances. Ecolab has agreed to reimburse Alcide for all of its costs and expenses incurred in connection with the merger agreement and the merger, up to a maximum of $500,000, in the event Ecolab terminates the merger agreement because the average Ecolab stock price is less than $21.00.

        The merger agreement prohibits Alcide from soliciting, encouraging or otherwise facilitating potential alternative acquisition transactions with third parties. The Alcide board of directors can provide information or negotiate with third parties to the extent required to comply with their fiduciary duties, but Alcide must promptly notify Ecolab if it receives offers or proposals for any such alternative transactions.

        Alcide's directors and certain of their affiliates, who collectively owned an aggregate of approximately 23.6% of the total outstanding common stock of Alcide (excluding shares issuable upon exercise of options to acquire shares of Alcide common stock which such persons currently hold) as of the record date for the special meeting, have entered into a voting agreement with Ecolab. Under the voting agreement, Alcide's directors and their affiliates have agreed to vote, and have granted Ecolab an irrevocable proxy and power of attorney to vote, all of their shares of Alcide common stock in favor of the approval of the merger agreement and against any competing acquisition proposal. Alcide's directors and certain of their affiliates have also agreed not to dispose of, or enter into any other voting arrangement with respect to, their shares of Alcide common stock. The voting agreement

10



terminates upon the earlier of the effective time of the merger or the termination of the merger agreement in accordance with its terms.

        Even if Alcide's board of directors considers a proposal that it determines to be a superior proposal, Alcide may be required to hold the special meeting of its stockholders to consider and vote on the proposal to approve the merger agreement and Alcide's directors and certain of their affiliates will be required to vote in favor of the approval of the merger agreement.


Interests of Certain Persons in the Merger (page 44)

        When you consider the Alcide board's recommendation in favor of the merger, you should be aware that a number of Alcide directors and officers have interests in the merger that may differ from, or be in addition to, your interests. In particular:


Material United States Federal Income Tax Consequences (page 48)

        The obligation of Alcide to effect the merger is subject to its receipt of the opinion of its counsel, Perkins Coie LLP, dated as of the closing date of the merger, that, for United States federal income tax purposes, the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code. In connection with the filing of the registration statement of which this document forms a part, Perkins Coie LLP has delivered to Alcide its opinion that, subject to the limitations and qualifications

11



described in "The Merger—Material United States Federal Income Tax Consequences," beginning on page 40, for United States federal income tax purposes, the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code, with the result that you will not recognize gain or loss for United States federal income tax purposes on your exchange of Alcide common stock for Ecolab common stock, except to the extent you receive cash in lieu of fractional shares. You may consult your own tax advisor concerning the tax consequences to you of the merger, including the applicability and effect of federal, state, local and foreign tax laws, in light of your particular circumstances.


Accounting Treatment (page 44)

        Ecolab will record the merger using the purchase method of accounting in accordance with accounting principles generally accepted in the United States. This means that for financial reporting purposes, Ecolab will treat both companies as one company beginning as of the date we complete the merger. In addition, under this method of accounting Ecolab will record the fair value of Alcide's assets and liabilities on its consolidated financial statements, with the remaining purchase price in excess of the fair value of Alcide's net assets recorded as goodwill.


Dissenters' Rights (page 24)

        You are not entitled to dissenters' rights or appraisal rights under the Delaware General Corporation Law or otherwise in connection with the merger.


Federal Securities Laws Consequences (page 47)

        All shares of Ecolab common stock received by you in connection with the merger will be freely transferable unless you are considered an "affiliate" of either Alcide or Ecolab for purposes of the Securities Act of 1933, as amended. Shares of Ecolab common stock held by these affiliates may only be sold pursuant to a registration statement or an applicable exemption under the Securities Act.


Regulatory Matters (page 47)

        Both Ecolab and Alcide made filings with the Federal Trade Commission and the Antitrust Division of the Department of Justice as required by the Hart-Scott-Rodino Act in connection with the merger. Early termination of the applicable waiting period was granted on April 7, 2004, although either agency may still at any time take action against Ecolab and Alcide in relation to the merger, even after the merger is completed. We are not aware of any other governmental approvals or actions that are required to complete the merger other than compliance with federal securities laws and Delaware corporate law.


Comparison of Stockholders' Rights and Corporate Governance Matters (page 65)

        After we complete the merger, you will become an Ecolab stockholder. Ecolab and Alcide are both Delaware corporations, such that many of your rights as a stockholder will not change. Nevertheless, some of your rights will change as a result of differences between Alcide's certificate of incorporation and by-laws and Ecolab's certificate of incorporation and by-laws. These differences encompass such matters as the authorized number and classification of shares of capital stock; the number, classification and removal of directors; amendments to the company's certificate of incorporation and by-laws; the calling of special meetings of stockholders; advance notice requirements in relation to stockholder nominations and proposals; the personal liability of directors; indemnification of directors, officers and employees; and the stockholder approval requirement for certain business combinations that are not favored by the company's board of directors.

12



SELECTED HISTORICAL FINANCIAL DATA

Selected Historical Financial Data of Ecolab

        The following selected financial data as of and for each of the five years in the period ended December 31, 2003, have been derived from Ecolab's audited consolidated financial statements. The financial data as of March 31, 2004, and March 31, 2003, and for each of the three-month periods then ended, have been derived from Ecolab's unaudited consolidated financial statements that include, in management's opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of operations and financial position of Ecolab for the periods and dates presented. We are providing the following Ecolab selected historical consolidated financial information to aid you in your analysis of the financial aspects of the merger. The following information is only a summary and should be read together with the respective audited consolidated financial statements of Ecolab, including the notes thereto, incorporated herein by reference and with the "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Ecolab contained in or incorporated in the annual reports and other information that Ecolab has filed with the SEC. See "Where You Can Find More Information," beginning on page 75.

 
  For the Three
Months Ended,

   
   
   
   
   
 
  For the Year Ended December 31,
 
  March 31,
2004

  March 31,
2003

 
  2003
  2002
  2001
  2000
  1999
 
  (in thousands, except per share amounts)

Consolidated Statement of Income Data                                          
Net sales   $ 979,371   $ 875,852   $ 3,761,819   $ 3,403,585   $ 2,320,710   $ 2,230,661   $ 2,049,798
Operating income     116,139     116,139     482,658     395,866     318,179     343,139     289,951
Net income     66,006     55,318     277,348     209,770     188,170     206,127     175,786
Net income per share of common stock                                          
  Basic     0.26     0.21     1.07     0.81     0.74     0.81     0.68
  Diluted     0.25     0.21     1.06     0.80     0.72     0.78     0.65
Weighted-average common shares outstanding                                          
  Basic     257,025     260,448     259,454     258,147     254,832     255,505     259,099
  Diluted     260,227     263,637     262,737     261,574     259,855     263,892     268,837
Dividends declared per common share   $ 0.0800   $ 0.0725   $ 0.2975   $ 0.2750   $ 0.2625   $ 0.2450   $ 0.2175

Consolidated Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Current assets   $ 1,185,278   $ 1,099,636   $ 1,150,340   $ 1,015,937   $ 929,583   $ 600,568   $ 577,321
Total assets     3,451,174     3,025,172     3,228,918     2,865,907     2,525,000     1,714,011     1,585,946
Current liabilities     975,093     884,667     851,942     853,828     827,952     532,034     470,674
Long-term debt (excluding current maturities)     620,642     569,296     604,441     539,743     512,280     234,377     169,014
Shareholders' equity     1,345,656     1,197,932     1,295,426     1,099,751     880,352     757,007     762,016
Book value per common share   $ 5.23   $ 4.58   $ 5.03   $ 4.23   $ 3.44   $ 2.98   $ 2.94

13


        Ecolab's former Henkel-Ecolab joint venture is included as a consolidated subsidiary effective with Ecolab's purchase of the remaining 50% interest of this joint venture not already owned on November 30, 2001. Results for 2002 and 2003 reflect the discontinuance of the amortization of goodwill under the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." All per share and shares outstanding data reflect the two-for-one stock split in the form of a 100% stock dividend paid June 6, 2003, to stockholders of record on May 23, 2003.


Selected Historical Financial Data of Alcide

        The following selected historical financial data for each of the five years in the period ended May 31, 2003, have been derived from Alcide's audited consolidated financial statements. The financial data as of February 29, 2004, and February 28, 2003, and for each of the nine-month periods then ended, have been derived from Alcide's unaudited condensed consolidated financial statements that include, in management's opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of operations and financial position of Alcide for the periods and dates presented. We are providing the following Alcide selected historical consolidated financial information to aid you in your analysis of the financial aspects of the merger. The following information is only a summary and should be read together with Alcide's audited and unaudited consolidated financial statements, the related notes and the discussion contained in Alcide's Annual Report on Form 10-K for the fiscal year ended May 31, 2003, and Quarterly Report on Form 10-Q for the quarterly period ended February 29, 2004, both of which have been delivered to you along with this proxy statement/prospectus and with the "Management's Discussion and Analysis of Financial Condition and Results of Operations of Alcide" contained in or incorporated in these reports and other information that Alcide has furnished with this proxy statement/prospectus or filed with the SEC. See "Where You Can Find More Information," beginning on page 75.

 
  For the Nine
Months Ended,

   
   
   
   
   
 
 
  For the Year Ended May 31,
 
 
  February 29,
2004

  February 28,
2003

 
 
  2003
  2002
  2001
  2000
  1999
 
 
  ($ in thousands, except per share amounts or as otherwise indicated)

 
Operations Data:                                            
Total revenue   $ 17,270   $ 16,327   $ 21,924   $ 21,989   $ 17,958   $ 12,440   $ 11,221  
Operating income (loss)     512     1,200     1,735     2,589     2,213     (949 )   (1,852 )
Net income (loss)     362     776     1,130     1,781     1,538     (447 )   (974 )
Earnings (loss) per common share and potential common share                                            
  Basic     0.14     0.29     0.42     0.67     0.60     (0.18 )   (0.38 )
  Diluted     0.14     0.29     0.42     0.65     0.58     (0.18 )   (0.38 )
Weighted-average shares outstanding                                            
  Basic     2,666     2,657     2,658     2,643     2,573     2,519     2,550  
  Diluted     2,680     2,682     2,680     2,720     2,655     2,519     2,550  
Dividends declared per share                              

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Current assets     11,791     11,068     9,812     9,019     8,161     6,373     11,643  
Total assets     22,319     23,035     21,369     21,865     19,003     14,530     15,620  
Current liabilities     1,329     3,196     1,303     3,370     2,802     971     1,210  
Long-term obligations (excluding current maturities)     597     586     573     121         158     316  
Redeemable preferred stock     159     167     167     180     190     190     190  
Shareholders' equity     20,234     19,087     19,325     18,194     16,010     13,211     13,904  
Book value per common share     7.50     7.16     7.28     6.85     6.09     5.24     5.50  

14


        Results for 2002 and 2003 reflect the discontinuance of the amortization of goodwill under the provisions of Statements of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."


Comparative Per Share Data

        The following tables present historical per share data of Alcide as of and for the nine months ended February 29, 2004, and fiscal year ended May 31, 2003, and of Ecolab as of and for the year ended December 31, 2003, and for the three months ended March 31, 2004. You should read this data along with the historical consolidated financial statements and the related notes of Ecolab and Alcide incorporated by reference into this proxy statement/prospectus and, with respect to Alcide, furnished herewith.

        Because the number of shares of Ecolab common stock to be issued in the merger will not be known until the fifth trading day prior to the completion of the merger, Alcide's equivalent per share data cannot be computed at this time. That information will be available via telephone, toll-free, at 1-800-316-6480. Hypothetical Alcide equivalent per share data is presented below using the most recent closing sale price of a share of Ecolab common stock as of June 11, 2004, which was $31.38, and a resulting hypothetical exchange ratio of 0.6692. The hypothetical Alcide equivalent per share data was calculated by multiplying the actual Ecolab per share data by the hypothetical exchange ratio of 0.6692. No pro forma Ecolab information giving effect to the merger is presented because the merger will not materially change the Ecolab historical amounts presented.

        Alcide historically has not paid cash dividends on its common shares.

 
  Alcide
  Ecolab
 
  Nine Months Ended
February 29, 2004

  Fiscal Year Ended

May 31, 2003

  Three Months Ended
March 31, 2004

  Fiscal Year Ended
December 31, 2003

Historical                        
Net income per share, diluted   $ 0.14   $ 0.42   $ 0.25   $ 1.06
Book Value per share (as of end of period)   $ 7.50   $ 7.28   $ 5.23   $ 5.03
Dividends declared per share           $ 0.0800   $ 0.2975

Hypothetical Alcide Equivalent

 

 

 

 

 

 

 

 

 

 

 

 
Net income per share, diluted     N.A.     N.A.   $ 0.17   $ 0.71
Book Value per share (as of end of period)     N.A.     N.A.   $ 3.50   $ 3.37
Dividends declared per share     N.A.     N.A.   $ 0.0535   $ 0.1191


Comparative Stock Prices and Dividends

        Ecolab common stock is listed and traded on the New York Stock Exchange under the symbol "ECL." Alcide common stock is listed and traded on the Nasdaq National Market under the symbol "ALCD." The following table sets forth, for the calendar periods indicated, the high and low sales prices per share of Ecolab common stock as reported by the New York Stock Exchange and per share of Alcide common stock as reported by the Nasdaq National Market. The table also sets forth the quarterly cash dividends per share declared by Ecolab with respect to its common stock. All Ecolab per

15



share information reflects the two-for-one stock split declared in June 2003. Alcide has not paid dividends with respect to its common stock.

 
   
   
   
  ALCIDE
COMMON STOCK

 
  ECOLAB COMMON STOCK
CALENDAR PERIOD

  High
  Low
  Dividends
  High
  Low
2000                              
  First Quarter   $ 20.38   $ 14.00   $ 0.0600   $ 24.56   $ 11.38
  Second Quarter   $ 20.63   $ 17.47   $ 0.0600   $ 19.88   $ 11.25
  Third Quarter   $ 20.00   $ 16.63   $ 0.0600   $ 23.94   $ 14.06
  Fourth Quarter   $ 22.85   $ 17.03   $ 0.0650   $ 37.00   $ 22.63

2001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  First Quarter   $ 22.09   $ 18.94   $ 0.0650   $ 33.13   $ 19.69
  Second Quarter   $ 21.60   $ 18.18   $ 0.0650   $ 34.50   $ 25.05
  Third Quarter   $ 21.00   $ 14.25   $ 0.0650   $ 34.00   $ 24.90
  Fourth Quarter   $ 20.53   $ 17.10   $ 0.0675   $ 27.50   $ 20.40

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  First Quarter   $ 23.94   $ 19.43   $ 0.0675   $ 25.75   $ 21.96
  Second Quarter   $ 24.00   $ 21.25   $ 0.0675   $ 25.25   $ 18.05
  Third Quarter   $ 24.51   $ 18.27   $ 0.0675   $ 20.50   $ 14.86
  Fourth Quarter   $ 25.20   $ 20.71   $ 0.0725   $ 17.48   $ 13.00

2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  First Quarter   $ 26.00   $ 23.08   $ 0.0725   $ 17.04   $ 12.20
  Second Quarter   $ 27.92   $ 24.21   $ 0.0725   $ 14.83   $ 9.82
  Third Quarter   $ 26.80   $ 23.78   $ 0.0725   $ 14.82   $ 10.71
  Fourth Quarter   $ 27.89   $ 25.15   $ 0.0800   $ 17.00   $ 13.00

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  First Quarter   $ 28.61   $ 26.12   $ 0.0800   $ 20.60   $ 14.21

        On June 11, 2004, there were approximately 2,701,371 shares of Alcide common stock and 257,349,374 shares of Ecolab common stock outstanding.


Recent Closing Prices

        The following table sets forth the high, low and closing prices per share of Ecolab common stock as reported on the New York Stock Exchange and Alcide common stock as reported on the Nasdaq National Market on March 11, 2004, the last trading day before the public announcement of the merger agreement, and on June 11, 2004, the most recent practicable date prior to the date of this proxy statement/prospectus for which closing prices were available. The equivalent per share value is determined by multiplying the closing price of Ecolab common stock as of the dates shown below by the assumed exchange ratio of 0.7565 and 0.6692, respectively. The assumed exchange ratio was calculated by dividing $21.00 by the closing price of Ecolab common stock as of the dates shown below. The actual exchange ratio will be calculated by dividing $21.00 by the average Ecolab share price over

16



the 10-trading day period ending five trading days prior to completion of the merger. The actual exchange ratio will not necessarily equal the assumed exchange ratio.

 
  Ecolab
  Alcide
   
 
  Equivalent Per Share of
Alcide Common Stock

 
  High
  Low
  Closing
  High
  Low
  Closing
March 11, 2004   $ 28.20   $ 27.69   $ 27.76   $ 16.75   $ 16.00   $ 16.00   $ 21.00
June 11, 2004   $ 31.47   $ 31.25   $ 31.38   $ 20.61   $ 20.60   $ 20.61   $ 21.00

        The market price of Ecolab common stock is likely to fluctuate prior to the merger. You should obtain current market quotations. We cannot predict the future prices for Ecolab common stock.


Ecolab Dividend Policy

        The holders of Ecolab common stock receive dividends if and when declared by the Ecolab board of directors out of funds legally available for that purpose. Ecolab expects to continue paying quarterly cash dividends on its common stock for the foreseeable future. The declaration and payment of dividends after the merger will depend upon business conditions, operating results and the Ecolab board of directors' consideration of other relevant factors. Ecolab declared dividends of $77,132,000 in 2003, or approximately 28% of Ecolab's 2003 consolidated net income. Per share dividends declared of $0.2975 in 2003 increased 8.2% from 2002.


Shares Held by Certain Stockholders

        Approval and adoption of the merger agreement and the merger by the Alcide stockholders requires the affirmative vote of the holders of a majority of the shares of Alcide common stock outstanding and entitled to vote at the special meeting. As of June 11, 2004, approximately 23.6% of the outstanding shares of Alcide common stock were held by directors and officers of Alcide and their affiliates. Neither Ecolab nor any of its directors or officers owns any shares of Alcide common stock.

17



RISK FACTORS

         In deciding whether to vote for adoption and approval of the merger agreement and the merger, we urge you to carefully read and consider the following risk factors, in addition to the other information contained in this proxy statement/ prospectus. We also urge you to refer to the additional risk factors and disclosures regarding forward looking statements identified in the periodic reports and other documents of Ecolab and Alcide incorporated by reference into this proxy statement/prospectus and listed in the section captioned "Where You Can Find More Information," beginning on page 75.


Risks Relating to the Merger

        The exchange ratio in the merger is based on the average Ecolab share price over the 10-trading day period ending five trading days prior to completion of the merger. The price of Ecolab stock will change during this period and will continue to fluctuate until you receive your shares. As a result, the price of Ecolab common stock at the time you receive your shares may be higher or lower than $21.00 per share.

        When you consider the Alcide board's recommendation in favor of the merger, you should be aware that some Alcide directors and officers have interests in the merger that may differ from, or be in addition to, your interests. As a result, these officers and directors may be more likely to support the merger than if they did not have these interests. These interests, which are discussed in greater detail on page 44 under "Interests of Certain Persons in the Merger," include a cash-out of stock options held by Alcide's directors, officers and employees, employment arrangements entered into between Alcide's officers and Ecolab, and a continuation of Alcide's director and officer indemnification obligations.

        The merger is subject to a number of conditions, and there can be no assurance that the conditions will all be satisfied. You should note, in particular, that an Alcide stockholder has filed a class action lawsuit against Alcide alleging that the Alcide directors have breached their fiduciary obligations by approving the merger agreement and the merger. Ecolab is not required to complete the merger so long as the lawsuit is pending. However, as a result of the settlement described in "Recent Developments" beginning on page 5, Ecolab does not intend to delay the merger or terminate the merger agreement as a result of the lawsuit. Ecolab's intention could change if there is a breach of the memorandum of understanding prior to completion of the merger, in which case Ecolab would promptly issue a press release and file a Current Report on Form 8-K announcing the development.

        If the merger is not completed, Alcide will have incurred significant costs, including the diversion of management resources, for which it will have received little or no benefit. Also, if the merger is not completed under specified circumstances, Alcide will be obligated to pay Ecolab a termination fee of $2.5 million, as well as costs, expenses (including attorneys' fees) and interest in connection with any suit brought by Ecolab to obtain the termination fee if the termination fee is not promptly paid by Alcide when due. Please see the section captioned "The Merger Agreement—Termination Fee and Expense Reimbursement," beginning on page 60. In addition, if the merger is not completed, Alcide may experience a negative reaction from the financial markets and Alcide's collaborative partners,

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customers and employees. Each of these factors may adversely affect the price of Alcide common stock and its financial results and operations.

        Until the merger becomes effective, and with some exceptions, Alcide is prohibited from entering into or soliciting, initiating or encouraging any inquiries or proposals that may lead to an acquisition proposal from any person other than Ecolab. Alcide also has agreed to pay a termination fee to Ecolab of $2.5 million if the merger agreement is terminated in specified circumstances, including circumstances in which Alcide takes any of these prohibited actions or fails to obtain the approval of its stockholders after a proposal from an eventual third-party acquiror is received by Alcide or publicly announced. These provisions could discourage other companies from trying to acquire Alcide even though those other companies might be willing to offer greater value to Alcide stockholders than Ecolab has offered in the merger. The payment of the termination fee could also have a material adverse effect on Alcide's financial condition. For a more detailed discussion of these provisions of the merger agreement, see the sections of this proxy statement/prospectus titled "The Merger Agreement—Covenants and Agreement— No Solicitation of Alternative Acquisition Proposals " on page 55.

        In general, each party can refuse to complete the transaction if there is a material adverse change affecting Ecolab and Alcide between the date of signing of the merger agreement, March 11, 2004, and the closing of the transaction. However, certain types of changes will not prevent the transaction from going forward, even if they would have a material adverse effect on Ecolab or Alcide, including:

        If adverse changes occur but Ecolab and Alcide must still complete the transaction, the business of Ecolab and Alcide may suffer.

        Ecolab anticipates that the merger will facilitate the growth of Alcide's existing businesses, enhance the growth opportunities for Ecolab's dairy and food processing businesses, and present cost savings and other synergistic benefits. If Ecolab is unable to successfully integrate Alcide into its operations, then these benefits may not be realized. The integration of two independent companies is a complex, costly and time-consuming process. The difficulties of combining the operations of the companies include, among others:

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        Ecolab and Alcide may not accomplish this integration smoothly or successfully. The diversion of management's attention from its current operations to the integration effort and any difficulties encountered in combining operations could prevent Ecolab from realizing the full benefits anticipated from the merger and could adversely affect other Ecolab businesses.

        Arthur Andersen was the independent accountant for Alcide's consolidated financial statements for the year ended May 31, 2001. Representatives for Arthur Andersen are not available to provide the consent required for the inclusion of their report on those financial statements incorporated in this prospectus, and we have dispensed with the requirement to file their consent in reliance upon Rule 437a of the Securities Act. Because Arthur Andersen has not consented to the inclusion of their report in this prospectus, you will not be able to recover against Arthur Andersen under Section 11 of the Securities Act, for any false or misleading statements of a material fact contained in the financial statements audited by Arthur Andersen that are incorporated by reference or any omissions to state a material fact required to be stated therein. Any claims against Arthur Andersen related to any such false or misleading statements and omissions may be limited.


Risks Relating to Ecolab

        Upon completion of the merger, the holders of Alcide common stock will become holders of Ecolab common stock. Ecolab's current businesses and markets differ from those of Alcide and, accordingly, the results of Ecolab's operations after the merger may be affected by factors different from those currently affecting the results of Alcide's operations. The market value of the shares of Ecolab common stock you receive in the merger could decrease following the closing date of the merger. For a discussion of the businesses of Ecolab and Alcide and of factors to consider in connection with those businesses, please see the documents incorporated by reference into this proxy statement/prospectus and listed under the section captioned "Where You Can Find More Information," beginning on page 75.

        There are differences between the rights associated with Alcide common stock and the rights associated with Ecolab common stock, even though both companies are incorporated in Delaware. Due to these differences, Alcide stockholders may have less protection in relation to certain matters once they become Ecolab shareholders. For a discussion of the differences between these rights, please see the section captioned "Comparison of Stockholder Rights and Corporate Governance Matters," beginning on page 64.

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THE ALCIDE SPECIAL MEETING

        This proxy statement/prospectus is being mailed on or about June 30, 2004, to holders of record of Alcide common stock as of the close of business on June 11, 2004, and constitutes notice of the Alcide special meeting in conformity with the requirements of the General Corporation Law of the State of Delaware. It is accompanied by a proxy card furnished in connection with the solicitation of proxies by the Alcide board for use at the special meeting and at any adjournments or postponements of the special meeting.


Date, Time and Place of the Special Meeting

        The Alcide special meeting is scheduled to be held as follows:


Matters to be Considered at the Special Meeting

        The purposes of the special meeting of Alcide's stockholders are as follows:

         The Alcide board of directors has unanimously determined that the merger agreement, and the transactions contemplated by the merger agreement, are advisable and in the best interests of Alcide and its stockholders, unanimously approved the merger agreement and the merger, and unanimously recommends that you vote FOR adoption and approval of the merger agreement and the merger. In addition, the Alcide board of directors unanimously recommends that you vote FOR the proposal regarding the possible adjournment of the special meeting.


Record Date for the Special Meeting and Voting Rights

        Only holders of record of Alcide common stock at the close of business on the record date, June 11, 2004, are entitled to notice of, and to vote at, the special meeting. At the close of business on the record date, there were 2,701,371 shares of Alcide common stock outstanding held by approximately 1,352 holders of record. Each holder of record of Alcide common stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the special meeting.

        As of the record date, Alcide's directors and officers and their respective affiliates held approximately 23.6% of the outstanding shares of Alcide common stock. If they were to exercise all presently exercisable options, such persons would hold approximately 27.7% of the outstanding shares of Alcide common stock. The directors and executive officers of Alcide have entered into agreements with Ecolab requiring them to vote, or cause to be voted, the shares beneficially owned by them in favor of the adoption and approval of the merger agreement and the merger, as described under the heading "Agreements Related to the Merger—Agreements to Facilitate Merger," beginning on page 61. Ecolab also holds irrevocable proxies to vote all such shares.

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Quorum; Required Votes; Abstentions and Broker Non-Votes

        The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Alcide common stock entitled to vote at the special meeting is necessary to constitute a quorum. Abstentions and broker non-votes, which are executed proxies returned by a broker holding shares in "street name" that indicate that the broker has not received voting instructions from the beneficial owner of the shares and does not have discretionary authority to vote the shares with respect to the adoption and approval of the merger agreement and the merger, will be counted for purposes of determining whether a quorum exists. Adoption and approval of the merger agreement and the merger requires the affirmative vote of a majority of the shares of Alcide common stock outstanding as of the record date and entitled to vote.

        If a quorum is not present at the special meeting, or if there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement and the merger, it is expected that Alcide's stockholders would be asked to consider and vote upon a proposal to adjourn the special meeting to solicit additional proxies. Adjournment of the special meeting requires the affirmative vote of the holders of a majority of the shares of Alcide common stock present, in person or by proxy, and entitled to vote at the special meeting.

        All properly executed proxies delivered and not properly revoked will be voted at the special meeting as specified in such proxies. If you do not specify a choice, your shares represented by a signed proxy will be voted "for" the adoption and approval of the merger agreement and the merger and, if necessary, "for" the proposal to adjourn the special meeting. If you abstain from voting, it will have the same effect as a vote "against" the adoption and approval of the merger agreement and the merger and as a vote "against" the proposal to adjourn the special meeting. The failure to submit a vote by proxy or in person at the special meeting, as well as broker non-votes, will have the same effect as a vote "against" the adoption and approval of the merger agreement and the merger and will have no effect on the proposal to adjourn the special meeting.

        Alcide does not expect that any other matter will be brought before the special meeting. If, however, other matters are properly presented, the persons named as proxies will vote in accordance with their judgment with respect to those matters.


Voting

        To vote by proxy, you should complete your proxy card and return it in the enclosed pre-addressed return envelope. If your shares are held in an account at a brokerage firm, bank or other fiduciary, you must direct them how to vote your shares. Your broker, firm, bank or other fiduciary will vote your shares only if you provide directions stating how to vote by following the instructions provided to you by your broker or bank.

        You may also grant a proxy to vote your shares over the Internet or by telephone. The law of Delaware, under which Alcide is incorporated, specifically permits electronically transmitted proxies, provided that each such proxy contains or is submitted with information from which the inspector of election can determine that such proxy was authorized by the stockholder.

        The Internet and telephone voting procedures described below are designed to authenticate stockholders' identities, to allow stockholders to grant a proxy to vote their shares and to confirm that stockholders' instructions have been recorded properly. Stockholders granting a proxy to vote over the Internet should understand that there may be costs associated with electronic access, such as usage

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charges from Internet access providers and telephone companies, which must be borne by the stockholder.

        Stockholders of record may go to http://www.computershare.com/us/proxy to grant a proxy to vote their shares over the Internet. They will be required to provide the company number and the control number contained on their proxy cards, and the last four digits of their social security number. The voter will then be asked to complete an electronic proxy card. The votes represented by such proxy will be generated on the computer screen and the voter will be prompted to submit or revise them as desired. Any stockholder using a touch-tone telephone may also grant a proxy to vote shares by calling the telephone number shown on your proxy card.

        Most beneficial owners whose stock is held in street name receive instructions for granting proxies from their banks, brokers or other agents, rather than from our proxy card. A number of brokers and banks are participating in a program provided through ADP Investor Communication Services that offers the means to grant proxies to vote shares over the Internet and by telephone. If your shares are held in an account with a broker or bank participating in the ADP Investor Communications Services program, you may grant a proxy to vote those shares over the Internet at ADP Investor Communication Services' website at http://www.proxyvote.com or by telephone by calling the telephone number shown on the instruction form received from your broker or bank.


Solicitation of Proxies

        The solicitation of proxies may include mail, telephone, facsimile and electronic mail. The cost of the solicitation of proxies from holders of Alcide common stock and all related costs will be borne by Alcide. Alcide has retained a proxy solicitor, Georgeson Shareholder, to assist in the solicitation of proxies for the special meeting at an estimated cost to Alcide of $ 8,000, plus reimbursement of reasonable expenses. In addition, Alcide may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to the beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, telecopy, e-mail or personal solicitation by directors, officers or other regular employees of Alcide. No additional compensation will be paid to directors, officers or other regular employees for these services.

        If you have any questions or need assistance in filling out our submitting your proxy card, please contact Georgeson Shareholder at the following address and telephone number:


Revocability of Proxies

        If you are a stockholder of record, you may revoke and change your vote at any time prior to the special meeting by:

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        If your shares are held in the name of a bank, broker or other fiduciary, you may change your vote by submitting voting instructions to that person.

        You may send notice of revocation or your completed new proxy card, as the case may be, to Computershare Trust Company at the following address:


Dissenters' Rights

        You are not entitled to dissenters' rights or appraisal rights, under Delaware law or otherwise, in connection with the merger because you are receiving publicly traded stock in exchange for your Alcide stock.

         You should not send in any Alcide stock certificates with your proxy card. The exchange agent will mail a transmittal letter to you containing instructions for the surrender of Alcide stock certificates as soon as practicable after completion of the merger.

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THE MERGER

        This section of the proxy statement/prospectus describes material aspects of the proposed merger. While we believe that the description covers the material terms of the merger, this summary may not contain all the information that is important to you. You should therefore carefully read this entire proxy statement/prospectus and the other documents we refer to, including the merger agreement attached as Appendix A and incorporated by reference, for a more complete understanding of the merger agreement and the merger.


Structure of the Merger

        If the Alcide stockholders adopt and approve the merger agreement and the merger, and all other conditions to the merger agreement are satisfied, Bessy Acquisition Inc., a wholly-owned subsidiary of Ecolab, will merge with and into Alcide. As a result, Bessy will cease its separate corporate existence and become a part of Alcide, the surviving corporation, which will be a wholly-owned subsidiary of Ecolab. We currently anticipate completing the merger promptly after the special meeting of Alcide stockholders, provided we receive the requisite stockholder approval at the special meeting and have received all necessary regulatory approvals.


Background of the Merger

        Growth through acquisitions has long been a key component of Ecolab's business strategy. Ecolab first considered the prospect of acquiring Alcide in 1996 following the resolution of patent litigation between Alcide and ABS Global, Inc., in which Ecolab had become involved. Ecolab was primarily attracted to Alcide's patent portfolio and other intellectual property rights, and acquisitions can often serve as a mutually agreeable resolution to patent disputes. However, the litigation settled before Ecolab had an opportunity to approach Alcide with an acquisition proposal. Therefore, the parties did not discuss the possibility of an acquisition at that time.

        For the past three years, Alcide's growth strategy included possible acquisitions of proprietary technologies in order to attain critical mass in the animal health and food safety industries. Through the acquisition of proprietary technologies that would complement, expand and diversify Alcide's product offering in the red meat, poultry and fish processing and other animal health and food safety markets Alcide served, Alcide believed it would be better able to mitigate the volatility of its financial and operating results that it historically experienced. In pursuit of this strategy, Alcide engaged in exploratory discussions with several companies regarding the potential acquisition of proprietary technologies that served the animal health and food safety industries. In most cases, these discussions did not proceed beyond the preliminary stage. In the case of two of these potential acquisitions, discussions proceeded to more substantive negotiations. However, Alcide did not proceed to definitive agreement in either case due to Alcide's ultimate assessment that both acquisitions did not fully meet Alcide's expectations or goals. In addition, to acquisition discussions, in mid-2003, Alcide had preliminary discussions with another company regarding a potential business combination. These discussions did not proceed beyond the exploratory phase due to differences over valuation expectations, including the other party's unwillingness to entertain a premium for acquiring Alcide.

        On September 22, 2003, Stephen Newlin, President, Industrial of Ecolab, met with Joseph A. Sasenick, the Chairman and CEO of Alcide. Mr. Newlin initiated the meeting at the request of his managers, who had been tracking Alcide over the years and assessing the possibility of an acquisition. At the meeting, Messrs. Newlin and Sasenick discussed in general terms their respective businesses, including the challenges facing the dairy and food safety industries and the benefits that might accrue to their respective organizations and stockholders if Ecolab were to acquire Alcide. Messrs. Newlin and Sasenick believed that a combination of Ecolab and Alcide could potentially provide significant value to customers, who would benefit from the combination of Alcide's technology and Ecolab's broad product

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offerings, global sales and service force, and large corporate identity. Messrs. Sasenick and Newlin also discussed the value that may accrue to Alcide's stockholders from a combination with Ecolab, which offered more financial stability with a significant opportunity for steady growth. Mr. Sasenick also believed that a business combination with Ecolab might achieve Alcide's strategic objective of stabilizing its operational and financial performance given Ecolab's larger size and significantly diversified product offerings in the animal health and food safety industries and would likely yield an immediate increase in stock price and a higher prospect of consistent stock price growth for Alcide stockholders. Messrs. Newlin and Sasenick agreed to continue discussions and, following the meeting, Alcide and Ecolab signed a confidentiality agreement in order to facilitate the exchange of confidential information.

        On September 23, 2003, Ecolab began consulting with Credit Suisse First Boston regarding the potential transaction and subsequently engaged them as Ecolab's financial advisor.

        On October 10, 2003, following a regularly scheduled meeting of Alcide's Audit Committee, the Alcide board of directors held a brief meeting at which Mr. Sasenick provided an update of various acquisition targets that Alcide was evaluating and other strategic business opportunities. Mr. Sasenick also advised the board of Ecolab's expression of interest and the plan for continuing discussions. The Alcide board of directors authorized Mr. Sasenick to proceed.

        On October 13, 2003, a group of Ecolab managers met with Alcide's senior management team in order to further explore a business combination and to become more familiar with Alcide and its product offerings, technologies and regulatory positioning.

        On October 21, 2003, the Alcide board of directors held a regularly scheduled meeting. Among other topics, Mr. Sasenick updated the board regarding the status of discussions with Ecolab and Ecolab's continuing interest in a business combination. The Alcide board of directors authorized Mr. Sasenick to continue the discussions. In doing so, the board believed that proceeding with discussions with Ecolab was consistent with Alcide's long-term strategy of achieving stability in Alcide's financial and operational performance. In addition, the board believed that, in light of information available to it and Alcide's recent experiences exploring potential strategic alternatives, pursuing discussions with Ecolab was a preferred alternative to attempting a sale of Alcide through an auction process or to otherwise soliciting interest from other potential acquirors, as such efforts could jeopardize discussions with Ecolab. Moreover, the Alcide board believed that if it ultimately approved a combination with Ecolab, the public announcement of such a transaction would bring Alcide to the attention of other likely merger partners or buyers, and the board intended to try to negotiate, in the definitive agreement with Ecolab, for flexibility to enter into discussions with serious merger partners or buyers who might emerge after such an announcement.

        On November 4, 2003, Mr. Newlin delivered a letter to Mr. Sasenick expressing Ecolab's interest in acquiring Alcide at a preliminary valuation of between $16.00 and $19.00 per share, subject to a continuing review of Alcide's business and operations. Based on input from Alcide's board of directors, Alcide delivered a letter dated November 6, 2003, with a proposed range of between $21.00 and $27.00 per share. Alcide's response letter also proposed that Alcide would agree not to solicit indications of interest from or discuss acquisition possibilities with other potential suitors in consideration of a $250,000 cash payment, reflecting Mr. Sasenick's concern relating to the costs of pursuing a transaction with Ecolab. In late November 2003, after further internal review by Ecolab and several telephonic discussions between Messrs. Newlin and Sasenick, it was agreed that Ecolab would continue its due diligence analysis with a tentative understanding that Ecolab could move above its preliminary valuation range.

        On December 3, 2003, a group of Ecolab managers, including a research and development team, met with Alcide's senior managers to discuss possible business synergies and technology issues. During the meeting, Ecolab conveyed its expectation that Alcide's employees, particularly its management

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team, would be essential to a successful transaction and that Ecolab would want assurances that the management team will remain in place after completion of the merger. Also in early December, Mr. Sasenick conveyed to Mr. Newlin his continued concern about the cost and expense of negotiating a transaction with Ecolab. Mr. Sasenick repeated Alcide's proposal that Ecolab reimburse Alcide for all out-of-pocket fees and expenses incurred in connection with the negotiation of a potential transaction, up to a maximum of $250,000, in exchange for which Alcide would agree not to solicit indications of interest from or discuss acquisition possibilities with other potential suitors. At that time, Ecolab was unwilling to accept the proposal.

        On December 19, 2003, Messrs. Newlin and Sasenick reached a tentative understanding to proceed with further discussions based on a price of $21.00 per share, subject to, among other things, the approval of each company's board of directors, Ecolab's continuing due diligence, and the negotiation of a definitive agreement. The transaction structure remained an open issue, as Ecolab and Alcide had not settled on whether, if the transaction were to proceed, the consideration should be paid in cash, stock, or a combination of cash and stock. After December 19, 2003, Mr. Sasenick had one-on-one conversations with each of Alcide's directors and received a preliminary consensus from the directors in favor of the transaction, if it were to proceed, at a price of $21.00 per share and a preference to structure the combination as a stock-for-stock merger.

        From December 20, 2003, to January 8, 2004, Messrs. Newlin and Sasenick had several telephone discussions regarding the status of the potential transaction, including timing and structural issues. Mr. Sasenick advised Mr. Newlin that Ecolab's more formal and comprehensive due diligence could not begin until after Alcide filed its quarterly report with the SEC on or about January 14, 2004. Regarding structure, Mr. Newlin told Mr. Sasenick that if the transaction were to proceed, Ecolab would be willing to accept either a cash or stock merger, but that it would not consider a cash election merger or some other combination of cash and stock. Mr. Sasenick expressed Alcide's tentative preference for a stock merger.

        On January 15, 2004, Ecolab delivered to Alcide a list of documents and other information that would be necessary in order for Ecolab to complete its due diligence review.

        On January 15, 2004, Messrs. Newlin and Sasenick met in Seattle to discuss the potential transaction and any remaining concerns that Alcide may have before proceeding to the negotiation of a definitive merger agreement. Mr. Newlin also presented Mr. Sasenick with a letter agreement under which Alcide would agree to a 60-day "no-shop" period, in exchange for which Ecolab would agree to reimburse Alcide for fees and expenses incurred in the course of negotiating the potential transaction with Ecolab, up to a maximum of $150,000, provided the purchase price would be correspondingly reduced. Mr. Sasenick countered with a cap of $250,000, with the other terms subject to the review of Perkins Coie. After review and further negotiation, Ecolab and Alcide executed the letter agreement on January 17, 2004, with the reimbursement obligation capped at $250,000. Alcide subsequently negotiated for the elimination of the purchase price adjustment, and Ecolab made the $250,000 payment on March 15, 2004, after the merger agreement was signed.

        On January 16, 2004, Alcide began discussions with Duff & Phelps regarding the potential engagement of Duff & Phelps to deliver an opinion to the Alcide board of directors as to the fairness to the non-management public stockholders, from a financial point of view, of the consideration to be received by Alcide stockholders in connection with the proposed transaction. Alcide's board previously considered whether to engage a financial advisor with respect to a potential combination with Ecolab but believed that it would need to engage a financial advisor only with respect to a determination that the transaction was fair from a financial point of view to Alcide's stockholders since Alcide was not pursuing an auction process and in light of the collective experience of the members of the board and senior management. On that same date, Duff & Phelps sent its proposal regarding the engagement, which was received by Alcide on January 19, 2004.

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        On January 20, 2004, Ecolab delivered a first draft of the merger agreement to Alcide. The merger agreement reflected a stock merger although Ecolab and Alcide had not yet agreed on the specific acquisition structure. From January 21 to January 31, 2004, representatives of Ecolab met with representatives of Alcide in Seattle and elsewhere in order to conduct further due diligence on such key topics as research and development, product registrations, intellectual property, legal matters, employment matters, employee benefits, tax matters, and information systems. During this same period, Alcide gathered and provided the bulk of the due diligence information requested by Ecolab and responded to follow-up questions. Partially as a result of these discussions and the information provided, Ecolab identified all four officers of Alcide and seven additional employees as important to achieving the anticipated benefits of the merger. However, the parties agreed that compensation and related discussions regarding the officers and other key employees would be postponed until the principal terms of the merger were further negotiated, including price and structure.

        On January 22, 2004, representatives from Duff & Phelps met with Mr. John Richards, Alcide's President and Chief Financial Officer, and Mr. G. Kere Kemp, Alcide's Executive Vice President and Chief Scientific Officer, at Alcide's corporate headquarters in Redmond, Washington, and held telephonic interviews with Mr. Sasenick and Mr. James Winters, Alcide's Vice President and General Manager, Animal Health on January 26, 2004, to discuss the current and future business prospects of Alcide and the potential transaction. On January 27, 2004, Ecolab, Oppenheimer Wolff & Donnelly and Perkins Coie discussed by telephone Alcide's initial reaction to the draft merger agreement, as well as timing and logistical issues. Particular attention was paid to operating covenants and the fiduciary obligations of the Alcide board of directors in light of the deal protection measures that Ecolab was requesting, including the amount of the termination fee, the fiduciary obligations in relation to potential competing offers and the agreements to facilitate merger. Perkins Coie also confirmed Alcide's preference for a stock merger.

        On January 29, 2004, the Alcide board of directors held a special meeting to discuss the proposed merger. At Alcide's request, Mr. Newlin, Lawrence Bell, Senior Vice President and General Counsel of Ecolab, Michael Monahan, Vice President, Investor Relations of Ecolab, and Thomas Grover, Corporate Development-Vice President of Ecolab, attended a portion of the meeting. Mr. Monahan delivered a presentation regarding Ecolab, its business and the proposed merger, and Mr. Monahan and the other Ecolab representatives answered various questions posed by the board of directors. Following the presentation, the Alcide board of directors confirmed to the Ecolab representatives Alcide's interest in a price of $21.00 per share and a transaction structured as a stock merger. After Ecolab's representatives were dismissed from the meeting, the board of directors continued to discuss and evaluate Ecolab's proposal. Alcide had received a draft of the merger agreement and was working with Perkins Coie to evaluate the draft. Messrs. Sasenick and Richards, who also attended the meeting, noted that several business issues relating to, among other things, post-signing restrictions on Alcide's operations, employee benefits, employment agreements and the termination fee, needed to be resolved between the parties. Perkins Coie provided a summary of fiduciary obligations of the board of directors in evaluating a potential business combination with Ecolab. The board also approved the retention of Duff & Phelps as its financial advisor regarding the fairness of the transaction to Alcide's stockholders from a financial point of view. The board's interest in a price per share of $21.00 was subject to a determination by Duff & Phelps that $21.00 per share was fair from a financial point of view to Alcide's stockholders. The board then telephoned a representative of Duff & Phelps, who described the process that Duff & Phelps would undertake in preparing its fairness opinion. On the same day, Ecolab delivered to Perkins Coie a draft of the agreements to facilitate merger that Ecolab would require to be signed by each officer and director of Alcide.

        On February 4, 2004, Ecolab's board of directors held a special meeting at which a number of issues were discussed, including the proposed acquisition of Alcide. The acquisition opportunity was described in written materials prepared by Ecolab management and delivered to the directors in

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advance of the meeting. The materials included an overview of Alcide's business and financial performance, the strategic objectives behind the acquisition, the material terms of the merger agreement, projected financial measures, and anticipated risks. Representatives of Ecolab's management team also delivered supplemental presentations at the meeting explaining the business rationale, valuation parameters, due diligence findings, and material terms of the proposed merger. Ecolab's board of directors then unanimously approved the merger and authorized Ecolab's management team to negotiate and enter into the merger agreement.

        On February 4, 2004, Alcide's board of directors held a special meeting to discuss the status of the transaction and to hear a presentation from Duff & Phelps regarding its process and methodology for preparing its fairness opinion. At the request of the board of directors, representatives from Duff & Phelps presented the analysis and methodology underlying the analysis that Duff & Phelps had conducted to date. The board of directors engaged the representatives from Duff & Phelps in detailed discussion regarding the methodology and the financial projections of Alcide that Duff & Phelps planned to use and evaluate in the analysis. Following the presentation and discussion regarding the preparation for the fairness opinion, the representatives from Duff & Phelps were dismissed from the meeting. The board of directors continued its discussion of business issues relating to the transaction, including the termination fee, voting agreements to be delivered by directors and officers, the request from Ecolab that certain affiliates of directors deliver voting agreements, treatment of payments that had accrued under Alcide's incentive plans and the employment packages to be offered by Ecolab.

        On February 5, 2004, Perkins Coie provided a formal mark-up of the merger agreement that reflected Alcide's prior comments. Thereafter, until March 10, 2004, Ecolab and Alcide held numerous telephone conferences and exchanged mark-ups in the course of negotiating the merger agreement. During this same period, representatives of Ecolab had numerous discussions with Messrs. Sasenick and Richards about the need for and certain details of retention arrangements for key employees in order to ease merger-related concerns. On February 19, 2004, Ecolab provided Alcide with a proposed form of employment agreement that it expected would be signed by each of Alcide's officers and the key individuals identified earlier by Ecolab, together with the proposed retention package for each such person. Ecolab also reiterated its position that an employment agreement from each of these individuals was an essential component of Ecolab's willingness to proceed with the merger. Thereafter, Ecolab negotiated the employment agreements with each individual officer or employee.

        On February 17, 2004, the Alcide board of directors held a special meeting to discuss the status of the proposed merger. Also attending the meeting were representatives of Perkins Coie LLP, who addressed various questions regarding the merger agreement and general duties relating to the fiduciary obligations of the board of directors. Mr. Sasenick led a discussion regarding Alcide's reasons for pursuing this transaction in light of Alcide's recent history in evaluating various strategic alternatives that included, among other things, exploring the potential acquisition of proprietary technologies from other companies and entering into exploratory discussions with a third party in mid-2003 regarding a potential business combination. The board discussed the volatility of the markets in which Alcide competes and the unpredictability of the operating and financial performance of Alcide's business units in light of such volatility and the lack of market liquidity for Alcide's common stock. The board also briefly discussed the potential for the acquisition by Ecolab as a means to reduce operational and financial volatility that has resulted in earnings volatility and concluded that most reasonable acquisition opportunities available presently would likely be in the same markets currently served by Alcide.

        On February 19, 2004, Ecolab delivered draft employment agreements to Messrs. Richards, Kemp and Winter. On February 24, 2004, Ecolab delivered a draft employment agreement to Mr. Sasenick. On March 2, 2004, Ecolab representatives met with each of the individuals from whom employment agreements would be required in order to review the terms of those agreements.

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        On February 27, 2004, Alcide's board of directors held a special meeting to discuss remaining business issues reflected in the most recent draft of the merger agreement, which included the termination fee, reimbursement in the event of an unsolicited tender offer, operating covenants applicable to Alcide prior to closing the transaction, certain representations and warranties and employment packages offered by Ecolab. Alcide's board of directors was aware that draft employment agreements for Alcide's officers and other key employees had been delivered to and were being reviewed by each such employee and his or her legal counsel. Alcide's board of directors did not review the specific terms of any of the employment agreements but received reports from senior management that the terms were generally satisfactory, pending final negotiation by certain employees of some terms of the employment agreements.

        On March 10, 2004, representatives of Ecolab met with representatives of Alcide and Perkins Coie in Seattle to finalize the merger agreement and related documentation.

        On March 11, 2004, the Alcide board of directors held a special telephonic meeting to consider the final terms of the proposed merger with Ecolab, which was attended members of the Alcide board other than Thomas Kempner and by representatives of Duff & Phelps and Perkins Coie. Duff & Phelps' written materials were provided to all members of Alcide's board in advance of the meeting. A copy of these materials is attached to this proxy statement/prospectus as Appendix D. At the meeting, a representative from Duff & Phelps presented an overview of the analysis and methodologies utilized by Duff & Phelps to conduct its analysis of the fairness from a financial point of view of the transaction to the non-management public stockholders of Alcide and discussed the written presentation summarizing its analysis. Following this presentation, the representatives from Duff & Phelps were dismissed from the meeting and Perkins Coie led a brief discussion regarding final wording changes relating solely to certain covenants and representations and warranties reflected in the final draft of the merger agreement. Following the conclusion of the meeting, the Alcide board of directors by unanimous written consent, including Mr. Kempner, authorized the execution of the merger agreement and resolved to recommend that the Alcide stockholders adopt and approve the merger agreement and the merger.


Reasons for the Merger—Ecolab

        At a special meeting held on February 4, 2004, the Ecolab board of directors unanimously authorized its senior management team to negotiate and execute the merger agreement and proceed with the merger. Underlying the board's decision were the following factors, among others:

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        The Ecolab board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weight to these factors or the other factors it considered in reaching its decision. In addition, other than general computation of the elimination of certain general and administrative expenses, Ecolab's board did not attempt to quantify the synergies that the combination of Alcide and Ecolab may realize principally because Alcide's anticipated revenue and profit contribution would not be material to Ecolab's consolidated revenue and profit amounts. Instead, the board concluded that, as a whole, the anticipated benefits of the merger outweighed the risks and uncertainties.


Reasons for the Merger—Alcide

        The Alcide board of directors believes that a merger with Ecolab is advisable and fair to, and in the best interests of, Alcide and its stockholders. At a meeting held on March 11, 2004, the Alcide board of directors unanimously adopted the merger agreement and determined that the merger is advisable and fair to, and in the best interests of, Alcide and its stockholders and resolved to recommend that Alcide's stockholders vote FOR the approval of the merger agreement.

        In making its determination to adopt the merger agreement, the Alcide board of directors considered reasons why the merger should be beneficial to Alcide and its stockholders. These potential benefits include the following:

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        In the course of consideration of the proposed transaction with Ecolab, Alcide's board reviewed historical, present and projected financials of Alcide, historical and short- and long-term strategic objectives of Alcide, the opportunities in the marketplace that Alcide is pursuing and the risks associated with such opportunities. The board also reviewed with its management, the board's financial advisor and Alcide's legal advisors a number of additional factors relevant to the merger, including:

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        The Alcide board also considered a number of potentially negative factors in its deliberations concerning the merger, including:

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        Alcide's board concluded that overall these risks were outweighed by the potential benefits of the merger, and unanimously adopted the merger agreement and determined that the merger was advisable and fair to, and in the best interests of, Alcide and its stockholders.

        The above discussion does not include all of the information and factors considered by Alcide's board. In view of the variety of factors considered in connection with its evaluation of the merger agreement, Alcide's board did not find it practicable to and did not quantify or otherwise assign relative weight to the specific factors considered in reaching its determination. In addition, the Alcide board did not attempt to quantify the synergies that the combination of Alcide and Ecolab may realize because the board did not deem the financial synergies from the proposed transaction to be of significance to its own deliberations or to Alcide's stockholders from the standpoint of their becoming Ecolab stockholders as a result of the transaction. The Alcide board did not reach any specific conclusion on each factor considered, or any aspect of any particular factor, but conducted an overall analysis of these factors. In addition, individual members of Alcide's board may have given different weight to different factors.


Fairness Opinion of Duff & Phelps

        Duff & Phelps LLC, a national investment banking and financial advisory firm, served as financial advisor to the board of directors. Founded in 1932, Duff & Phelps is one of the leading middle market investment banking and independent financial advisory firms in the United States. Duff & Phelps has significant expertise and experience in fairness opinions, business valuations, solvency opinions, structuring ESOP/ERISA transactions, private capital raise, buy-side and sell-side merger and acquisition advisory services, and intangible asset and intellectual property valuations. Headquartered in Chicago, Duff & Phelps has offices in New York, Los Angeles, San Francisco, and Seattle. Each year, Duff & Phelps renders approximately 400 opinions, including fairness opinions, business valuation opinions, solvency opinions, tax-related financial opinions, and other financial opinions.

        In deciding to approve the merger, Alcide's board of directors considered an opinion from its financial advisors, Duff & Phelps, LLC. The full text of the written opinion of the financial advisor is attached to the back of this document as Appendix C and should be read carefully in their entireties for a description of the assumptions made, matters considered and limitations on the review undertaken. The opinion of Duff & Phelps is directed to the Alcide board, and does not address the prices at which Ecolab's common stock will trade after the proposed merger and does not constitute a recommendation as to how to vote with respect to any matter relating to the proposed merger. Furthermore, Duff & Phelps does not address the relative merits of the merger and any other transactions or business strategies discussed by the Alcide board as alternatives to the merger agreement or the underlying business decision of the Alcide board to proceed with or effect the merger.

        Duff & Phelps rendered a written opinion to the board of directors of Alcide that, as of March 11, 2004, the terms of the Proposed Transaction are fair to the non-management public shareholders of Alcide from a financial point of view (without giving effect to any impacts of the Proposed Transaction on any particular shareholder other than in its capacity as a shareholder). Duff & Phelps' opinion is attached as Appendix C and is incorporated herein by reference. Alcide stockholders are encouraged to read this opinion in its entirety.

        The following is a summary of the material financial analyses performed by Duff & Phelps in connection with rendering its opinion. The summary of the financial analyses is not a complete description of all of the analyses performed by Duff & Phelps. In order to better understand the financial analyses performed by Duff & Phelps, the text below should be read together with the

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presentation by Duff & Phelps delivered to the board of directors of Alcide on March 11, 2004, and included with this proxy statement/prospectus as Appendix D. The Duff & Phelps opinion is based on the totality of the various analyses that it performed, and no particular portion of the analysis has any merit standing alone. Duff & Phelps has consented to the use of its opinion and the presentation to Alcide's board of directors in this proxy statement/prospectus.

        While this summary describes the analysis and factors that Duff & Phelps deemed material in its presentation to the Alcide board, it is not a comprehensive description of all analyses and factors considered by Duff & Phelps. The preparation of a fairness opinion is a complex process that involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to a partial analysis or summary description. In arriving at its opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff & Phelps believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and factors, could create a misleading or incomplete view of the evaluation process underlying its opinion. Several analytical methodologies were employed and no one method of analysis should be regarded as critical to the overall conclusion reached by Duff & Phelps. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. The conclusion reached by Duff & Phelps is based on all analyses and factors taken, as a whole, and also on application of Duff & Phelps' own experience and judgment. This conclusion may involve significant elements of subjective judgment and qualitative analysis. Duff & Phelps gives no opinion as to the value or merit standing alone of any one or more parts of the analysis it performed. In performing its analyses, Duff & Phelps made numerous assumptions with respect to the industry outlook, general business and other conditions and matters many of which are beyond the control of Alcide or Duff & Phelps. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by these analyses. Accordingly, analyses relating to the value of businesses do not purport to be appraisals or to reflect the prices at which these businesses actually may be sold in the future, and these estimates are inherently subject to uncertainty.

        The basis and methodology for Duff & Phelps' opinion have been designed specifically for the express purposes of Alcide's board of directors any may not translate to any other purposes. In particular, Duff & Phelps did not conduct a market test of any kind to determine whether or not a better price could have been obtained, nor did it have any role in the solicitation of offers or Alcide's negotiation process with Ecolab.

        Duff & Phelps was retained by the Alcide board of directors under an engagement letter dated January 27, 2004. Alcide's engagement letter with Duff & Phelps provides that, for its services, Duff & Phelps is entitled to receive $150,000 due and payable as follows: $75,000 in cash upon execution of the engagement letter and the remaining $75,000 in cash upon delivery of the opinion, whether or not the opinion is favorable. Alcide has also agreed to reimburse Duff & Phelps for its out-of-pocket expenses and to indemnify and hold harmless Duff & Phelps and its affiliates and any other person, director, employee or agent of Duff & Phelps or any of its affiliates, or any person controlling Duff & Phelps or its affiliates, for certain losses, claims, damages, expenses and liabilities relating to or arising out of services provided by Duff & Phelps as financial advisor to Alcide. The terms of the fee arrangement with Duff & Phelps, which Alcide and Duff & Phelps believe are customary in transactions of this nature, were negotiated at arm's length between Alcide and Duff & Phelps, and the Alcide board was aware of these fee arrangements.

        Duff & Phelps was retained based on Duff & Phelps' experience as a financial advisor in connection with mergers and acquisitions and in securities valuations generally. Duff & Phelps is a

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nationally recognized investment banking firm that is regularly engaged to render financial opinions in connection with mergers and acquisitions, tax matters, corporate planning, and other purposes. Previously, Duff & Phelps had not provided financial advisory services to Alcide or Ecolab.

        In connection with its fairness opinion, Duff & Phelps made such reviews, analyses, and inquiries as it deemed necessary and appropriate under the circumstances. Among other things, Duff & Phelps performed the following due diligence:


Joseph A. Sasenick*   Chairman and Chief Executive Officer
John P. Richards   President and Chief Financial Officer
G. Kere Kemp   Executive Vice President and Chief Scientific Officer
James L. Winters*   Vice President and General Manager, Animal Health

        Duff & Phelps' fairness opinion is based upon an analysis of the foregoing in light of its assessment of the general, economic and financial market conditions, as they can be evaluated by Duff & Phelps, as of March 11, 2004. Events occurring after March 11, 2004, could materially affect the assumptions used in preparing its fairness opinion.

        In connection with its fairness opinion, with Alcide's permission and without any independent verification, Duff & Phelps assumed that all information reviewed by it with respect to Alcide and the Proposed Transaction, whether supplied by Alcide, its advisors, or obtained by Duff & Phelps from publicly available sources, is true, correct and complete in all material respects and does not contain any untrue statements of material fact or omit to state a material fact necessary to make the

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information supplied to Duff & Phelps not misleading. Duff & Phelps did not make an independent valuation or appraisal of the assets or liabilities of Alcide and was not furnished with such valuation or appraisal. Any inaccuracies in or omissions from the information on which Duff & Phelps relied could materially affect its fairness opinion.

        Set forth below is a summary of the analyses performed by Duff & Phelps in reaching its fairness conclusions, as of March 11, 2004. Although developments following the date of the Duff & Phelps opinion may affect the opinion, Duff & Phelps assumes no obligation to update, revise, or reaffirm its opinion. The Duff & Phelps opinion is necessarily based upon market, economic and other conditions that were in effect on, and information made available to Duff & Phelps as of, the date of the opinion. You should understand that subsequent developments may affect the conclusion expressed in the Duff & Phelps opinion, and that Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion. The Duff & Phelps opinion is limited to the fairness of the Proposed Transaction to the non-management public shareholders of Alcide from a financial point of view (without giving effect to any impacts of the Proposed Transaction on any particular shareholder other than in its capacity as a shareholder) as of March 11, 2004.

        In accordance with customary investment banking practice, Duff & Phelps employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial and comparative analyses utilized by Duff & Phelps in arriving at its opinion. It does not purport to be a complete description of the presentation of Duff & Phelps to the Alcide board or the analyses performed by Duff & Phelps. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth below, without considering the analyses as a whole, could create a misleading or an incomplete view of the process underlying Duff & Phelps' fairness opinion.

        In arriving at its fairness opinion, Duff & Phelps considered the results of all such analyses taken as a whole. Furthermore, in arriving at its fairness opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. No company or transaction used in the analyses as a comparison is identical to Alcide or the merger. The analyses were prepared solely for purposes of Duff & Phelps providing its opinion to the board as to the fairness of the merger from a financial point of view, and do not purport to be appraisals or to necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Such analyses are based upon numerous factors or events beyond the control of Alcide, its advisors or any other person, and are inherently uncertain. Actual future results may be materially different from those forecasts.

        Duff & Phelps performed a discounted cash flow analysis of the projected free cash flows of Alcide. Free cash flow is defined as cash that is available either to reinvest in new businesses or to distribute to securityholders in the form of dividends, stock buybacks, or debt service. Alcide management provided Duff & Phelps with financial projections, and Duff & Phelps informed the board that Duff & Phelps considered such projections and consulted with Alcide management as part of its process of developing an independent estimate of the future free cash flows for Alcide. Duff & Phelps also estimated the terminal value of Alcide's business in 2008.

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        The estimated terminal value and future free cash flows were discounted to the present at a rate that reflects the relative risk associated with these flows as well as the rates of return that securityholders could expect to realize on alternative investment opportunities.

        The range of discount rates applied in Duff & Phelps' analysis was based on the estimated weighted average cost of capital of Alcide, which reflects the company's costs of debt and equity, as well as the actual proportions of debt and equity comprising the hypothetical optimal capital structure of Alcide. The cost of equity is the rate of return an equity investor would require to invest in Alcide. To determine the cost of equity, Duff & Phelps considered alternate investment opportunities with varying risk profiles, comparing them to the risk of an investment in Alcide and employed the Capital Asset Pricing Model to develop the cost of equity.

        Factoring in the estimated costs of equity and debt for Alcide, with weightings consistent with a hypothetical optimal capital structure, resulted in a range of estimated weighted average cost of capital 13% to 14%. This estimated weighted average cost of capital was applied in the discounted cash flow analysis.

        This analysis resulted in a value per share for Alcide common stock of approximately $18 to $24.

        Duff & Phelps derived valuation multiples for Alcide, utilizing the terms of the proposed transaction for the price per share, and relating this value to Alcide's latest financial data available and projected financial results. Duff & Phelps computed an implied common equity value (as defined as stock price multiplied by total shares outstanding, adjusted for exercisable options outstanding) and enterprise value (as defined as common equity value plus preferred equity, plus debt outstanding, less cash and cash equivalents) for Alcide based on Ecolab's $21.00 per share offer price. Duff & Phelps compared Alcide's implied transaction multiples of revenues, EBITDA, EBIT, Net Income and Book Value, to the range of multiples exhibited under the comparable sale transactions analysis and comparable publicly traded company analysis.

        The comparable sale transactions analysis involved the careful screening and selection of change-of-control transactions that were the most similar to Alcide from an investment perspective. It is unusual that a company involved in a change-of-control transaction is identical, or a close substitute, to the subject company. Typically, however, companies involved in change-of-control transactions can be identified which have a similar product line, customer base, or other business attribute which would cause an investor to group the companies in the same broad industry class for investment purposes.

        Duff & Phelps reviewed 59 change-of-control sale transactions that have occurred in industries with similar investment characteristics as Alcide since 2001. Seventeen of these transactions were domestic companies and 42 transactions were international companies.

        Duff & Phelps searched for all sale transactions announced since January 1, 2001 in which the target company had primary SIC Codes within the major group 28, Chemicals and Allied Products. Duff & Phelps utilized the Security Data Corporation's database and the Mergerstat Control Premium database.

        Duff & Phelps excluded biotechnology and pharmaceutical companies (companies within the SIC industry subgroup 283) that did not have products targeting the animal health and food safety industries. Furthermore, Duff & Phelps excluded transactions that were smaller than $10 million and eliminated all transactions with undisclosed target company financials. No company or transaction utilized in the selected comparable transaction analysis is identical to Alcide.

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        The transaction multiples for the acquisition transactions analyzed can be summarized as follows:


Transaction Date Range: January 1, 2001-March 3, 2004

 
  Transaction Value as a
Multiple of

  Equity Value
   
 
Transaction Value / Company

  LTM
Revenues

  LTM
EBITDA

  LTM
EBIT

  LTM
Net Income

  Book
Value

  LTM
EBITDA
Margin

 
> $500 million (10 transactions)                          
  Mean   1.2x   7.8x   15.8x   17.1x   3.6x   13.1 %
  Median   1.1x   7.6x   16.7x   17.2x   1.1x   11.1 %
$100 million to $500 million (19 transactions)                          
  Mean   0.9x   7.2x   19.3x   24.2x   4.2x   14.4 %
  Median   0.8x   6.5x   11.4x   18.9x   1.3x   11.8 %
< $100 million (30 transactions)                          
  Mean   1.2x   7.1x   9.7x   21.8x   1.3x   13.8 %
  Median   0.8x   5.8x   9.0x   22.3x   0.9x   11.6 %
Alcide Corp. (Transaction)   2.4x   9.2x   27.7x   45.0x   2.9x   25.6 %

LTM = Latest twelve months
Source: Securities Data Corporation and Mergerstat Control Premium Study.

        Duff & Phelps compared the implied transaction multiples for Alcide calculated using the proposed $21 offer per share relative to Alcide's revenues, EBITDA, EBIT, Net Income and Book Value, to the range of transaction multiples.

        Each of Alcide's implied multiples (revenues, EBITDA, EBIT, Net Income and Book Value) under the proposed transaction were higher than the mean and median multiples exhibited in the comparable transaction analysis. Based on this analysis, the implied transaction multiples for Alcide compared favorably relative to the range of comparable transaction multiples. This analysis supports Duff & Phelps' conclusion that the financial terms of the proposed transaction are fair from a financial point of view.

        Duff & Phelps selected publicly traded companies based on comparability to Alcide. Although no single company chosen is identical to Alcide, these companies may share many of the same operating characteristics and may be affected by many of the same economic forces.

        A publicly traded company was selected if it met the following screening criteria:

        In the selection of comparable public companies, Duff & Phelps segregated the comparable public companies among four tiers. The screening criteria specific to each of the four tiers is as follows.

        Tier 1—Food Safety Operating Companies

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        Tier 2—Specialty Chemical Companies

        Tier 3—Biotechnology and Pharmaceutical Companies

        Tier 4—Agribusiness Companies


Tier 1—Food Safety Operating Companies

        The five Tier 1 comparable public companies selected are as follows:


Tier 2—Specialty Chemical Companies

        The ten Tier 2 comparable public companies selected are as follows:

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Tier 3—Biotechnology and Pharmaceutical Companies

        The six Tier 3 comparable public companies selected are as follows:


Tier 4—Agribusiness Companies

        The six Tier 4 comparable public companies selected are as follows:

        Duff & Phelps compared certain financial and operating ratios for Alcide with the corresponding financial and operating ratios for the four groups of publicly traded companies listed above. None of the comparable companies is, of course, identical to Alcide. Duff & Phelps compared the implied transaction multiples for Alcide, using the proposed $21 offer per share relative to Alcide's revenues, EBITDA, EBIT, Net Income and Book Value, to the range of multiples for the comparable publicly traded companies shown below.

        Alcide's implied multiples (revenues, EBITDA, EBIT, Net Income and Book Value) under the proposed transaction were either higher than or similar to the median multiples exhibited by the comparable publicly traded companies in all of the tiers with the exception of the biotechnology and pharmaceutical tier of comparable publicly traded companies, due to this tier's higher growth expectations relative to Alcide. Taking into consideration the risk and growth factors for all the comparable companies, the implied transaction multiples for Alcide compared favorably relative to the range of comparable publicly traded company multiples. This analysis supports Duff & Phelps' conclusion that the financial terms of the proposed transaction are fair from a financial point of view.

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(As of March 9, 2004)

 
  Enterprise Value as a
Multiple of

  Stock Price
   
   
   
 
Company / Tier

  LTM
Revenues

  LTM
EBITDA

  LTM
EBIT

  LTM
EPS

  Projected
EPS

  Book Value
Per Share

  LTM
Revenue
Growth

  LTM
EBITDA
Margin

  LTM
Return on
Equity

 
Tier 1—Food Safety Operating Companies                                      
  Median   1.3x   9.3x   16.5x   19.4x   16.4x   2.7x   7.2 % 12.8 % 14.9 %
  High   2.1x   11.5x   36.3x   28.1x   24.5x   5.9x   20.0 % 18.8 % 23.0 %
  Low   0.4x   5.5x   11.8x   18.2x   16.2x   0.4x   -14.7 % -16.4 % 13.5 %
Tier 2—Specialty Chemical Companies                                      
  Median   0.9x   10.9x   15.1x   20.4x   14.8x   1.8x   2.3 % 10.7 % 7.1 %
  High   2.4x   21.7x   41.9x   67.4x   29.5x   4.7x   32.7 % 33.2 % 22.1 %
  Low   0.3x   1.4x   1.9x   5.8x   11.7x   0.6x   -6.4 % 6.0 % -18.0 %
Tier 3—Biotech / Pharma Companies                                      
  Median   2.6x   12.0x   17.4x   32.0x   23.0x   3.1x   11.7 % 16.9 % 7.7 %
  High   3.4x   19.5x   22.4x   32.4x   29.3x   27.3x   30.3 % 27.2 % 17.3 %
  Low   1.5x   6.8x   11.8x   13.5x   19.5x   1.0x   1.1 % -1.5 % -54.4 %
Tier 4—Agribusiness                                      
  Median   0.6x   9.3x   14.0x   18.5x   15.5x   2.3x   7.4 % 9.3 % 14.9 %
  High   1.4x   13.4x   25.5x   44.8x   19.4x   3.2x   21.2 % 12.1 % 26.4 %
  Low   0.4x   4.6x   6.0x   10.1x   9.4x   1.5x   -29.0 % 4.4 % 4.5 %
Alcide Corp. (Implied Transaction Multiples)   2.4x   9.2x   27.7x   45.0x   31.8x   2.9x   3.9 % 25.6 % 6.7 %

LTM=Latest twelve months

Enterprise Value=Market Capitalization + (Debt + Preferred Stock + Minority interest) - Cash & Cash Equivalents.

Projected EPS for comparable public companies ranged from the fiscal year periods ended August 31, 2004 to May 31, 2005. Alcide's projected EPS was based on the fiscal year period ended May 31, 2004.

Source: Standard & Poor's Compustat Services, Duff & Phelps, LLC, and First Call Corp.

        Between March 9, 2003, and March 9, 2004, Alcide's common shares traded at stock prices ranging from $10.50 to $18.60 per share. Alcide's closing prices over the 30-day period prior to March 10, 2004, ranged from $15.70 to $17.37, with an average closing price of $16.49 per share. Alcide's common stock's price closed at $16.75 per share on March 9, 2004.

        Duff & Phelps reviewed the transaction premiums paid over market price for transactions occurring from January 1, 2001 through March 3, 2004, for transactions with control premiums available using the transactions selected in the comparable sale transaction analysis described above. Duff & Phelps concluded that the median 1-month transaction premium was 20.2% and the mean 1-month transaction premium was 30.7%. This compares to the implied 27.4% transaction premium for Alcide. Based on its analysis, Duff & Phelps concluded that the control premium implied by the $21.00 per share consideration to be received in the proposed transaction for the common stock is adequate relative to the premiums paid in other similar sale transactions.

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        The implied control premiums for the acquisition transactions analyzed can be summarized as follows:


Transaction Date Range: January 1, 2001-March 3, 2004

 
  Control Premium*
 
Transaction Value / Company

  1-Day
Premium

  1-Week
Premium

  4-Week
Premium

 
> $500 million (10 transactions)              
  Mean   11.5 % 13.2 % 20.5 %
  Median   11.5 % 13.5 % 18.3 %
$100 million to $500 million (19 transactions)              
  Mean   12.2 % 17.3 % 26.8 %
  Median   9.5 % 14.2 % 13.8 %
< $100 million (30 transactions)              
  Mean   29.2 % 31.8 % 37.6 %
  Median   12.1 % 19.1 % 21.1 %
All Transactions              
  Mean   19.9 % 23.2 % 30.7 %
  Median   11.5 % 14.2 % 20.2 %
  Alcide Corp. (Transaction)   25.4 % 23.5 % 27.4 %

LTM = Latest twelve months

*
Premiums measured as of one day, one week and four weeks prior to the announcement of the transaction.

Source: Securities Data Corporation and Mergerstat Control Premium Study.

        Duff & Phelps analyzed the form of consideration to be received by the Alcide shareholders in the Proposed Transaction. Due to the size, trading volume and liquidity of Ecolab's publicly traded stock, Duff & Phelps concluded that payments made in common stock would be equivalent to cash consideration.

        Based on its analysis and relying upon the accuracy and completeness of all information provided to Duff & Phelps, it is Duff & Phelps' opinion that, as of March 11, 2004, the Proposed Transaction is fair to the non-management public shareholders of Alcide from a financial point of view (without giving effect to any impacts of the Proposed Transaction on any particular shareholder other than in its capacity as a shareholder.)

        The foregoing summary is qualified by reference to the written opinion dated as of March 11, 2004, of Duff & Phelps, which is attached as Appendix C to this information statement.

        In its review and analysis, and in arriving at its opinion, Duff & Phelps assumed and relied upon the accuracy and completeness of all the financial and other information provided to it (including information furnished to it orally by the management of Alcide) or publicly available and neither attempted independently to verify, nor assumed responsibility for verifying, any of such information. Duff & Phelps relied upon the assurances of the management of Alcide that they were not aware of any facts that would make the information inaccurate or misleading. Furthermore, Duff & Phelps did not make or obtain, or assume responsibility for making or obtaining, any independent evaluation or appraisal of the properties, assets or liabilities (contingent or otherwise) of Alcide, nor was it furnished with any such evaluations or appraisals.

43



        In performing its analyses, Duff & Phelps made numerous assumptions with respect to Alcide's performance, general business and economic conditions and other matters. The analyses performed by Duff & Phelps are not necessarily indicative of future actual values or future results, which may be significantly more or less favorable than suggested by such analyses. The analyses do not purport to be appraisals or to reflect prices at which a company might actually be sold or the prices at which any securities may trade at the present time or at any time in the future. Duff & Phelps developed projections of future performance for Alcide based on discussions with management of Alcide and industry research. The projections were based on numerous variables and assumptions, which are inherently unpredictable and must be considered not certain of occurrence as projected. Accordingly, actual results could vary significantly from those assumed in the projections and any related analyses. Duff & Phelps' opinion does not address the relative merits of the Merger as compared to any alternative business strategies that might exist for Alcide or the effect of any other business combination in which Alcide might engage.

        Duff & Phelps' opinion to the board of directors of Alcide was one of many factors taken into consideration by the board of directors of Alcide in making its determination to approve the Merger.


Accounting Treatment

        Ecolab will record the merger using the purchase method of accounting in accordance with accounting principles generally accepted in the United States. This means that for financial reporting purposes, Ecolab will treat both companies as one company beginning as of the date the merger is completed. In addition, under this method of accounting, Ecolab will record the fair value of Alcide's net assets on its consolidated financial statements, with the remaining purchase price in excess of the fair value of Alcide's net assets recorded as goodwill.


Interests of Certain Persons in the Merger

        In considering the recommendation of the Alcide board of directors that Alcide stockholders adopt and approve the merger agreement and the merger, you should be aware that certain directors and executive officers of Alcide have interests in the merger that may be different from, or in addition to, your interests as a stockholder of Alcide. The Alcide board of directors was aware of these interests and considered them, among other matters, in adopting and approving the merger agreement and the merger.

        As permitted under Alcide's 2001 Stock Incentive Plan, Ecolab has elected not to assume any options granted under that plan. Therefore, all such options, whether or not then vested, have automatically become fully vested and exercisable contingent upon completion of the merger. This includes options held by Alcide's four officers. Upon completion of the merger, all options that remain outstanding will be cancelled and, to the extent the exercise price is less than $21.00 per share, the holders will be entitled to receive a cash payment in accordance with the formula described in "The Merger Agreement—Treatment of Outstanding Options," beginning on page 51. Options with an exercise price at or greater than $21.00 per share will be cancelled and the holders will forfeit the opportunity to realize value from those options.

        The automatic cash-out mechanism does not apply to other options granted by Alcide, although the merger agreement requires Alcide to use commercially reasonable efforts to cause the holders of these other options, including options granted to nonemployee directors under the 1996 Stock Option Plan for Nonemployee Directors and to officers under the 1993 Incentive Stock Option Plan, to agree to a cash-out on the same terms as apply to options granted under the 2001 Stock Incentive Plan. Each officer of Alcide has agreed to the cash-out in his employment agreement with Ecolab and therefore may not elect to have his options assumed by Ecolab.

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        Assuming that all Alcide directors and employees agree to the cash-out, as of June 11, 2004, an aggregate of $1,163,889 will be paid to the holders of outstanding Alcide options, including $665,231 to Alcide's directors and officers. Of the amount payable to Alcide's directors and officers, $500,114 is attributable to options which are currently vested. It is anticipated that options to purchase 27,000 shares of Alcide common stock held by certain officers of Alcide that will otherwise expire prior to the closing of the merger will be exercised prior to closing. If all such options are exercised, the aggregate cash-pay out to the holders of outstanding options will be $829,764, including $331,106 to Alcide's directors and officers. The following table shows the effect of option cancellations and accelerated vesting, assuming that all Alcide employees agree to the cash-out and do not exercise any options prior to completion of the merger. Alcide's nonemployee directors, Messrs. Spears and Baker, are not affected by accelerated vesting because all of their options were fully vested on the date of grant. These directors will receive option cash-out payments totaling $76,028.

Name

  Options
Accelerated

  Payment Due to
Acceleration

  Cancelled Options
Joseph A. Sasenick   14,000   $ 50,968.00   25,000
John P. Richards   11,200   $ 40,774.40   20,000
G. Kere Kemp   11,200   $ 40,774.40   19,000
James L. Winter   18,800   $ 32,600.00   13,000
Other Employees   82,600   $ 340,072.00   50,000

        Ecolab has entered into an employment agreement with Mr. Sasenick with a term commencing on the date the merger is completed and continuing for a period of six months or until February 18, 2005, whichever is later, after which Ecolab and Mr. Sasenick will sign a three-year consulting agreement. Ecolab has also entered into at-will employment agreements with Messrs. Richards, Kemp and Winter. The effectiveness of each of the employment agreements is conditioned upon completion of the merger. These terms of these employment agreements and Mr. Sasenick's consulting agreement are described in greater detail on page 61 under "Agreements Related to the Merger—Employment Agreements."

        None of Alcide's officers or directors will serve as a director of Ecolab following completion of the merger.

        If we complete the merger, Alcide's existing indemnification obligations to its directors and officers in relation to pre-closing matters will continue for a period of six years, and Ecolab has agreed to guarantee and honor those indemnification obligations. In addition, prior to completion of the merger, Alcide is required to purchase the six-year extended reporting period endorsement under its existing directors' and officers' insurance policy, provided that the price of the endorsement may not exceed $200,000 without Ecolab's prior written consent.


Stock Ownership Following the Merger

        As of June 11, 2004, Ecolab had 257,349,374 shares of common stock issued and outstanding, excluding shares held in treasury. Assuming an aggregate of 2,701,371 shares of Alcide common stock issued and outstanding and an average Ecolab share price of $31.38 on such date, Ecolab would issue approximately 1,807,757 shares of Ecolab common stock upon completion of the merger. As a result, following completion of the merger, and assuming Ecolab does not issue any additional shares of its common stock, Alcide stockholders would own approximately 0.7% of the issued and outstanding shares of Ecolab common stock.

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        The following table provides information concerning the beneficial ownership of Alcide common stock as of June 11, 2004, the record date, for each of Alcide's executive officers and directors and all of Alcide's directors and executive officers as a group. This table includes percentage ownership data reflecting ownership both before and after completion of the merger with Ecolab. The pre-merger percentage ownership is based on 2,701,371 shares of Alcide common stock outstanding as of June 11, 2004. The post-merger percentage ownership includes 1,807,757 shares of Ecolab common stock, which is the number of shares that would be issued to Alcide stockholders in the merger assuming an average Ecolab share price of $31.38, which was the most recent closing price of Ecolab common stock as of June 11, 2004. The post-merger number of shares of Ecolab common stock beneficially owned by each director and officer of Alcide assumes that all options to purchase Alcide common stock beneficially owned by each director and officer of Alcide will be cashed-out or cancelled in accordance with the terms of the merger agreement, except as noted. All shares subject to options exercisable within 60 days after June 11, 2004, are deemed to be beneficially owned by the person holding that option and to be outstanding solely for calculating that person's percentage ownership.

        Unless otherwise indicated below, the persons named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.

 
   
   
  POST-MERGER
 
  PRE-MERGER
 
  Number of Shares
of Ecolab Common
Stock Beneficially
Owned

  Percent of Ecolab
Common Stock
Beneficially
Owned

Name

  Number of Shares of
Alcide Common Stock
Beneficially Owned

  Percent of Alcide
Common Stock
Beneficially Owned

Thomas Kempner (1)   491,135   18.2 % 328,667   *
Joseph Sasenick (2)   183,040   6.7 % 52,704   *
William Spears (3)   33,539   1.2 % 14,440   *
Charles Baker (4)   4,654   *   316   *
John Richards (5)   147,224   5.4 % 31,371   *
G. Kere Kemp (6)   53,312   1.7 % 10,466   *
James Winter (7)   9,698   *   234   *
Directors and executive officers as a group (7 persons) (8)   922,602   32.3 % 437,882   *

*
Less than one percent.

(1)
201,946 shares of Alcide common stock are held by Loeb Investors Company V and 26,964 shares are held by Loeb Investors Company 105, for which entities Mr. Kempner serves as Managing Partner. 31,709 shares are held by Mr. Kempner individually. 230,516 shares are held in family trusts and other entities for which Mr. Kempner serves as either a trustee or has shared voting and dispositive power. Mr. Kempner disclaims any beneficial interest as to 274,288 shares of the above listed Alcide common stock.

(2)
Mr. Sasenick's beneficial ownership of Alcide common stock includes 50,000 shares issuable upon exercise of stock options that are exercisable within 60 days following June 11, 2004, and an additional 76,568 shares owned by Alcide's Employee Stock Ownership Plan, of which Mr. Sasenick is Joint Trustee with Mr. Richards. Mr. Sasenick disclaims any beneficial interest as to 64,283 of the plan shares. The disclaimed plan shares have been excluded from the calculation of Mr. Sasenick's post-merger ownership of Ecolab common stock because the plan is being terminated immediately prior to completion of the merger. In addition, Mr. Sasenick's post-merger ownership of Ecolab assumes that he will exercise an option to purchase 10,000 shares of Alcide common stock that expires on July 7, 2004, and continue to hold those shares through the closing.

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(3)
Mr. Spears' beneficial ownership of Alcide common stock includes 11,960 shares issuable upon exercise of stock options that are exercisable within 60 days following June 11, 2004.

(4)
Mr. Baker's beneficial ownership of Alcide common stock consists solely of 4,654 shares issuable upon exercise of stock options that are exercisable within 60 days following June 11, 2004. Mr. Baker currently holds 316 shares of Ecolab common stock.

(5)
Mr. Richards' beneficial ownership of Alcide common stock includes 44,000 shares issuable upon exercise of stock options that are exercisable within 60 days following June 11, 2004, and an additional 76,568 shares owned by Alcide's Employee Stock Ownership Plan, of which Mr. Richards is Joint Trustee with Mr. Sasenick. Mr. Richards disclaims any beneficial interest as to 66,345 of the plan shares. The disclaimed plan shares have been excluded from the calculation of Mr. Richards' post-merger ownership of Ecolab common stock because the plan is being terminated immediately prior to completion of the merger. In addition, Mr. Richards' post-merger ownership of Ecolab common stock assumes that he will exercise an option to purchase 10,000 shares of Alcide common stock that expires on July 7, 2004, and continue to hold those shares through the closing.

(6)
Mr. Kemp's beneficial ownership of Alcide common stock includes 37,000 shares issuable upon exercise of stock options that are exercisable within 60 days following June 11, 2004. Mr. Kemp's post-merger ownership of Ecolab common stock assumes that he will exercise an option to purchase 7,000 shares of Alcide common stock that expires on July 7, 2004, and continue to hold those shares through the closing.

(7)
Mr. Winter's beneficial ownership of Alcide common stock includes 7,800 shares issuable upon exercise of stock options that are exercisable within 60 days following June 11, 2004.

(8)
The total does not equal the sum of the amounts listed above for directors and executive officers in relation to Alcide common stock because Mr. Sasenick and Mr. Richards have joint voting power over the 76,568 shares owned by Alcide's Employee Stock Ownership Plan, which shares have been listed under the individual totals for both Mr. Sasenick and Mr. Richards but are counted only once in the group total.


Regulatory Matters

        The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which prevents specified transactions from being completed until required information and materials are furnished to the Antitrust Division of the Department of Justice and the Federal Trade Commission and specified waiting periods are terminated or expire. Alcide and Ecolab each filed required notification and report forms with these agencies effective March 16, 2004. Early termination of the waiting period was granted on April 7, 2004.

        The Antitrust Division of the Department of Justice or the Federal Trade Commission may challenge the merger on antitrust grounds even though the waiting period has been terminated. Accordingly, at any time before or after the completion of the merger, either the Antitrust Division or the Federal Trade Commission could take action under the antitrust laws as it deems necessary or desirable in the public interest, or other persons could take action under the antitrust laws, including seeking to enjoin the merger. Additionally, at any time before or after the completion of the merger, any state could take action under the antitrust laws as it deems necessary or desirable in the public interest. We cannot assure you that a challenge to the merger will not be made or that, if a challenge is made, Ecolab and Alcide will prevail.

        Except for the Hart-Scott-Rodino clearance and compliance with applicable federal and state securities laws and corporate laws, Ecolab and Alcide are not aware of any other material governmental or regulatory approvals required to be obtained in order to consummate the merger.

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Federal Securities Laws Consequences

        When the merger is completed, shares of Alcide common stock will be delisted from the Nasdaq and will be deregistered under the Securities Exchange Act of 1934, as amended.

        The shares of Ecolab common stock to be issued in connection with the merger will be registered under the Securities Act and will be freely transferable under the Securities Act, except for shares of Ecolab common stock issued to any person who is deemed to be an "affiliate" of Alcide on the date of the special meeting or of Ecolab following completion of the merger. Persons who may be deemed to be affiliates include individuals or entities that control, are controlled by, or are under the common control of Alcide or Ecolab, as applicable, and may include executive officers, directors and significant stockholders of Alcide or Ecolab, as applicable. Affiliates of Alcide may not sell their shares of Ecolab common stock acquired in connection with the merger except pursuant to:

        The merger agreement provides that Alcide will use its reasonable efforts to obtain from each of its affiliates (for purposes of Rule 145 of the Securities Act) a written agreement providing that the affiliate will not sell, pledge, transfer or otherwise dispose of any Ecolab common stock issued to the affiliate pursuant to the merger, except in compliance with Rule 145 or an exemption from the registration requirements of the Securities Act.

        Ecolab's registration statement, of which this proxy statement/prospectus is a part, does not cover the resale of shares of Ecolab common stock to be received by Alcide affiliates in the merger.


Material United States Federal Income Tax Consequences

        The following discussion summarizes the material United States federal income tax consequences of the merger that are generally applicable to holders of Alcide common stock. This discussion is based on the Internal Revenue Code of 1986, as amended, judicial decisions and administrative regulations and interpretations in effect as of the date of this proxy statement/prospectus, all of which are subject to change, possibly with retroactive effect. Accordingly, the tax consequences of the merger to the holders of Alcide common stock could differ from those described below.

        This discussion does not address all aspects of United States federal income taxation that may be relevant to holders of Alcide common stock in light of their particular circumstances, nor does it address the United States federal income tax consequences to holders that are subject to special rules under United States federal income tax law, including:

48


        In addition, this discussion does not describe the federal income tax consequences of transactions other than those pursuant to the merger or the tax consequences of the merger under foreign, state, or local law or federal estate and gift tax laws.

        The obligation of Alcide to effect the merger is conditioned on its receipt of a written opinion from Alcide's counsel, Perkins Coie LLP, dated as of the closing date of the merger, to the effect that, on the basis of the statements, limitations, qualifications and assumptions set forth therein, for United States federal income tax purposes, the merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code (including the tax consequences to holders of Alcide common stock). Alcide will not waive the closing condition regarding receipt of an opinion of counsel regarding tax matters without resoliciting the approval of its stockholders after providing appropriate disclosure. The tax opinion will not be binding on the IRS and will not preclude the IRS from taking a contrary position. Neither Alcide nor Ecolab has requested or will request a ruling from the IRS regarding any of the federal income tax consequences of the merger.

        The discussion set forth below, subject to the limitations and qualifications set forth herein, constitutes the opinion of Perkins Coie LLP as to the material federal income tax consequences to an Alcide stockholder of the exchange of Alcide common stock for Ecolab common stock pursuant to the merger.

        This opinion has been rendered on the basis of certain assumptions, including assumptions regarding the absence of changes in existing facts and that the merger will be completed in accordance with the merger agreement. This opinion also has been rendered on the basis of statements and representations, including those contained in the merger agreement, the registration statement of which this proxy statement/prospectus forms a part, and officers' certificates of Alcide and Ecolab, all of which must be true, correct and complete as of the effective date of the registration statement and must continue to be true, correct and complete at all relevant times thereafter, including as of the effective time of the merger. If any of those statements, representations or assumptions is untrue, incorrect, or incomplete, the conclusions contained in the opinion referred to in this paragraph or set forth below could be adversely affected.

         Holders of Alcide common stock may consult a tax advisor in light of their particular circumstances.

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THE MERGER AGREEMENT

        The following is a summary of the material provisions of the merger agreement, a copy of which is attached as Appendix A to this proxy statement/prospectus and is incorporated herein by reference. The following is not a complete statement of all provisions of the merger agreement. Statements made in this proxy statement/prospectus with respect to the terms of the merger agreement are qualified in their entirety by reference to the more detailed information set forth in the merger agreement.


The Merger

        The merger agreement provides that, at the effective time of the merger, Bessy Acquisition Inc. will merge with and into Alcide. As a result of the merger, Bessy Acquisition Inc. will cease to exist, Alcide will become a wholly-owned subsidiary of Ecolab and you will become a stockholder of Ecolab.

        Immediately following the merger, the certificate of incorporation of Bessy Acquisition Inc. will become the certificate of incorporation of Alcide, the bylaws of Bessy Acquisition Inc. will become the bylaws of Alcide, the senior executive officers of Alcide will remain as the officers of Alcide, and the directors of Bessy Acquisition Inc. will become the directors of Alcide.


Closing and Effective Time of the Merger

        The closing of the merger will take place no later than the second business day after the date on which all conditions to closing have been satisfied or waived. The merger will become effective upon the filing of a certificate of merger with the Delaware Secretary of State or, if agreed to by Ecolab and Alcide, at a later time or date specified in the certificate of merger. The certificate of merger will be filed as soon as practicable after the date on which all conditions to closing have been satisfied or waived. Neither Ecolab nor Alcide can assure you, however, that the conditions to the merger will be satisfied or waived or that the merger agreement will not be terminated. See "—Conditions to the Merger" on page 57 and "—Termination" on page 59.


Merger Consideration

        Upon completion of the merger, you will receive Ecolab common stock in exchange for your shares of Alcide common stock. The number of shares you receive will equal the number of shares of Alcide common stock you hold multiplied by the quotient of $21.00 divided by the average Ecolab share price. The average Ecolab share price is defined as the average, rounded to the nearest full cent, of the daily closing price per share of Ecolab common stock on the New York Stock Exchange Composite Tape for each of the 10 consecutive trading days ending on the trading day that is five trading days prior to the merger.

        Ecolab will not issue fractional shares of Ecolab common stock in the merger. Instead, Ecolab will deposit with the exchange agent any cash payable in lieu of fractional shares of Ecolab common stock. From the deposited funds, the exchange agent will pay each holder of Alcide common stock otherwise entitled to receive a fractional share of Ecolab common stock an amount equal to the fractional share of Ecolab common stock to which the holder would otherwise be entitled multiplied by the average Ecolab share price. No interest will be paid on fractional amounts.

        For example, if the average per share price of Ecolab stock for the valuation period is $31.38 (which was the most recent closing price of Ecolab common stock on the New York Stock Exchange as of June 11, 2004), an Alcide stockholder holding 500 shares of Alcide common stock would receive 334 shares of Ecolab common stock and $18.83 in cash instead of a fractional share.

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Treatment of Outstanding Options

        Options to acquire Alcide common stock have been granted and remain outstanding as of the date of this proxy statement/prospectus, including options that have been granted pursuant to the following plans maintained by Alcide: the 2001 Stock Incentive Plan, the 1996 Stock Option Plan for Nonemployee Directors and the 1993 Incentive Stock Option Plan. Each of these plans was approved by the Alcide stockholders.

    2001 Stock Incentive Plan

        Under the terms of the 2001 Stock Incentive Plan, a successor corporation in a merger can elect whether to assume outstanding options granted under the plan. Ecolab has elected not to assume those options. Instead, to the extent not exercised prior to the merger, each such option will be cancelled and converted into the right to receive a cash payment equal to $21.00 multiplied by the number of shares subject to the option, less the aggregate exercise price of the option. For example, an option to purchase 100 shares of Alcide common stock at an exercise price of $15.00 per share would be converted into the right to receive a cash payment of $600.00. Options with an exercise price at or greater than $21.00 per share will be cancelled and the holders will forfeit the opportunity to realize value from those options.

        In addition, all options granted under the 2001 plan, whether or not vested at the time the merger agreement was signed, have become fully vested and exercisable contingent upon completion of the merger. All such options vested over a period of five years, such that the effect of acceleration as of June 11, 2004, is as follows:

Option Grant Date

  Shares Accelerated
  Exercise Price
  Aggregate Cash Payment
July 10, 2001   20,400   $ 29.50   $ 0.00
August 1, 2001   2,400   $ 33.04   $ 0.00
September 10, 2001   0   $ 28.74   $ 0.00
October 16, 2001   21,600   $ 21.10   $ 0.00
July 17, 2002   17,600   $ 16.90   $ 72,160.00
September 3, 2002   4,000   $ 17.69   $ 13,240.00
July 28, 2003   41,500   $ 12.85   $ 338,225.00
September 8, 2003   1,000   $ 13.40   $ 7,600.00
October 27, 2003   500   $ 15.00   $ 3,000.00

        Giving effect to the acceleration of all outstanding options issued under the 2001 plan as of June 11, 2004, and assuming that none of the options are exercised prior to completion of the merger, the weighted average exercise price per share of such outstanding options is $20.25 and the aggregate cash-out payment would be $453,085.

        The 1996 Stock Option Plan for Nonemployee Directors and the 1993 Incentive Stock Option Plan each require Ecolab to assume all outstanding options granted under those plans. However, the merger agreement requires Alcide to use commercially reasonable efforts to cause the holders of outstanding options under those plans and any other outstanding options (other than those granted pursuant to Alcide's 2001 Stock Incentive Plan) to agree to a cash-out on the same economic terms as apply to options granted under the 2001 plan, including acceleration of vesting for all such outstanding options. Acceleration of vesting will not impact the 1996 plan, as all options granted thereunder vest immediately in full on the grant date. Assuming all holders of currently outstanding options issued under the 1996 plan agree to receive the cash-out payment and do not exercise prior to completion of the merger, the weighted average exercise price per share of such outstanding fully vested options as of

51


June 11, 2004, is $20.48 and the aggregate cash-out payment would be $76,028. As of June 11, 2004, an aggregate of 20,800 options would be accelerated under the 1993 plan if all holders of those options agree to receive the cash-out payment, which would result in an aggregate cash-out payment of $70,934 for such accelerated options. Assuming all holders of outstanding options under the 1993 plan agree to receive a cash-out payment and do not exercise prior to completion of the merger, the weighted average exercise price per share of such fully vested options as of June 11, 2004, is $20.98 and the aggregate cash-out payment would be $634,776. It is anticipated that fully vested options to purchase 27,000 shares of Alcide common stock held by certain officers of Alcide that will otherwise expire prior to the closing of the merger will be exercised prior to closing. If all such options are exercised, the aggregate cash-pay out to the holders of outstanding options will be $300,651. Ecolab will assume any options granted under the 1996 and 1993 plans that are not cashed-out.


Procedures for Exchange of Shares

        As soon as practicable after the merger, the exchange agent will mail to each registered holder of Alcide common stock a letter of transmittal and instructions for surrendering Alcide stock certificates in exchange for shares of Ecolab common stock. Upon surrendering an Alcide stock certificate along with a duly executed letter of transmittal and any other required documents to the exchange agent, you will be entitled to receive a certificate representing the number of shares of Ecolab common stock that you have the right to receive, and any corresponding cash payment for any fractional share.

        If any Alcide stock certificate has been lost, stolen or destroyed, Ecolab will require the owner of the lost, stolen or destroyed Alcide stock certificate to provide an appropriate affidavit and may require the owner to deliver a bond as indemnity against any claim that may be made against the exchange agent, Ecolab or Alcide with respect to such Alcide stock certificate.

        You should not surrender your Alcide stock certificates for exchange until you receive a letter of transmittal and instructions from the exchange agent. If your shares are held in "street name" by your broker, you will receive instructions from your broker as to how to cause your shares to be surrendered to the exchange agent for exchange.


Representations and Warranties

        Alcide, Ecolab and Bessy Acquisition Inc. each have made a number of representations and warranties in the merger agreement regarding their authority to enter into the merger agreement and to complete the merger and the other transactions contemplated by the merger agreement, and regarding various aspects of their business, financial condition, structure, operations and other facts pertinent to the merger. The representations and warranties are complicated and not easily summarized, yet they are important because they relate to the conditions to complete the merger and the parties' rights to terminate the merger agreement. Therefore, you are urged to carefully read the specific language of the representations and warranties in the merger agreement.

        Alcide's representations and warranties cover the following topics, among others, as they relate to Alcide and its subsidiaries:

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        The representations and warranties of Ecolab and Bessy Acquisition Inc. cover the following topics, among others, as they relate to Ecolab and Bessy Acquisition Inc.:

        Certain aspects of the representations and warranties given by Alcide, Ecolab and Bessy Acquisition Inc. are qualified by the concept of a "material adverse effect," which is described below under "—Concept of Material Adverse Effect."


Concept of Material Adverse Effect

        Some of the representations and warranties contained in the merger agreement are qualified by the concept of a "material adverse effect." This concept is also relevant to the conditions to each party's obligation to complete the merger as described under "—Conditions to the Merger" on page 57. For purposes of the merger agreement, the term "material adverse effect" is defined as any effect,

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change, event, circumstance or condition that, individually or in the aggregate with all similar effects, changes, events, circumstances or conditions, is or would reasonably be expected to:

        However, a material adverse effect does not include an effect, change, event, circumstance or condition to the extent the party arguing against the existence of a material adverse effect establishes that it primarily and directly results from or is attributable to:


Covenants and Agreements

        Alcide has agreed that, until the merger is completed or the merger agreement is terminated, Alcide and its subsidiaries will conduct their business in the ordinary and usual course consistent with past practice and use commercially reasonable efforts to, in all material respects, preserve intact their business organization, maintain their present and planned business, keep available the services of their officers and employees, and maintain satisfactory relationships with customers, suppliers and others with whom they have business relationships. Alcide has also agreed to a number of specific, customary restrictions on its operations and the operations of its subsidiaries. These restrictions relate, among other things, to the following topics:

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        Alcide has agreed that, until the merger is completed or the merger agreement is terminated, neither it nor any of its subsidiaries or representatives will, directly or indirectly, solicit, initiate, encourage or otherwise facilitate the making of any "acquisition proposal," enter into any agreement regarding an acquisition proposal, or participate or encourage discussions concerning, or provide any non-public information to, any third party relating to an acquisition proposal or which may reasonably be expected to lead to an acquisition proposal. An "acquisition proposal" is defined as any inquiry, proposal, offer or indication of interest from a third party relating to the following:

        However, Alcide may, prior to obtaining stockholder approval of the merger, furnish non-public information to or enter into discussions or negotiations with a third party that makes an unsolicited, bona fide acquisition proposal that Alcide's board of directors reasonably determines is likely to result in a "superior proposal," but only if and to the extent that:

        A "superior proposal" is defined as an unsolicited, bona fide written acquisition proposal for all of the outstanding shares of Alcide capital stock or voting power which the Alcide board of directors determines in good faith, after consultation with Alcide's legal and financial advisors and taking into consideration all aspects of the acquisition proposal and the merger, to be more favorable to the Alcide stockholders than the merger; for which financing, to the extent required, is then committed; and which is reasonably likely to be consummated within a time period not materially longer than the time period reasonably believed to be necessary to complete the merger.

        Alcide is required to notify Ecolab promptly if Alcide or any of its representatives receives an acquisition proposal or any inquiry reasonably likely to lead to an acquisition proposal, or if discussions

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are sought to be initiated or continued with Alcide or its representatives concerning an acquisition proposal. The notice must contain the name of the proposing or inquiring party and the material terms and conditions of the acquisition proposal.

        Notwithstanding the foregoing non-solicitation restrictions, the Alcide board of directors may, prior to obtaining stockholder approval of the merger, approve or recommend a superior proposal and terminate the merger agreement if the Alcide board of directors determines in good faith, after consultation with outside legal counsel, that such action is required in order for the board to comply with its fiduciary duties, and Ecolab fails to, within three business days after receiving written notice from Alcide of its intention to take such action, propose an amendment to the merger agreement to provide for terms as favorable as or superior to the superior proposal. Termination of the merger agreement under these circumstances would require concurrent payment by Alcide of a $2.5 million termination fee. Furthermore, Alcide is not prohibited from taking and disclosing to its stockholders a position contemplated by Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from making any disclosure to the Alcide stockholders required by applicable law.

        Alcide is obligated to call and hold the special meeting to consider the approval of the merger agreement and the merger as soon as practicable following the date on which the registration statement becomes effective, and must thereafter to solicit proxies to vote in favor of the merger agreement and the merger. The Alcide board of directors is required to recommend approval and adoption of the merger agreement and the merger, and Alcide may not, prior to termination of the merger agreement, adversely withdraw or modify, or propose to adversely withdraw or modify, this recommendation unless Alcide has complied with its non-solicitation obligations and such action is required in order for the board to comply with its fiduciary duties. Unless the merger agreement is earlier terminated, Alcide is further required to submit the merger for a vote at the special meeting even if the Alcide board of directors determines that the merger is no longer advisable or recommends that the Alcide stockholders reject the merger. In such a case, the directors and executive officers of Alcide will, in their individual capacities as stockholders, be obligated to vote in favor of and otherwise facilitate the merger notwithstanding any decision by the Alcide board of directors to no longer recommend the merger.

        The merger agreement provides that, after completion of the merger, Alcide will continue to honor its existing indemnification obligations, indemnify directors and officers of Alcide for acts or omissions occurring prior to the merger and provide indemnification arrangements for Alcide's officers and directors to the fullest extent permitted by applicable law. Ecolab is obligated to guarantee and honor the director and officer indemnification obligations of Alcide. In addition, prior to completion of the merger, Alcide is required to purchase a six year extended reporting period endorsement under its existing directors' and officers' liability insurance policy, provided the cost of the endorsement may not exceed $200,000 without Ecolab's prior written consent.

        All fees and expenses incurred in connection with the merger agreement and the merger will be paid by the party incurring those fees or expenses, whether or not the merger is completed, except that:

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        Ecolab could also become obligated to reimburse Alcide for a broader range of merger-related fees and expenses as described under "—Termination Fee and Expense Reimbursement" on page 60.

        The merger agreement contains a number of other customary covenants and agreements, including agreements relating to the preparation and distribution of this proxy statement/prospectus, confidentiality and access to information, cooperation regarding governmental filings, notification of breaches, public announcements and other communications, and voting and employment agreements. Alcide has further agreed to redeem all of its outstanding preferred stock and to terminate all of its employee benefit plans. Ecolab has further agreed to submit to the New York Stock Exchange a listing application covering all shares of its common stock to be issued in the merger, to use reasonable efforts to obtain approval of the listing application, and to pay certain bonuses to Alcide's officers and employees based on Alcide's existing bonus programs. Ecolab has also agreed to give credit for service prior to the date of acquisition to eligible employees of Alcide for purposes of determining eligibility and vesting only, but not for purposes of determining benefit accrual or employer subsidies, under Ecolab's employee welfare plans and employee pension plans. In addition, the merger agreement contains a general covenant requiring each party to use its commercially reasonable efforts to effectuate the merger and to ensure that the merger is treated as a tax-free reorganization.


Conditions to the Merger

        The obligations of Ecolab, Bessy Acquisition Inc. and Alcide to consummate the merger are subject to a number of customary conditions, including the following:

        An additional condition required the expiration or termination of the waiting period under the Hart-Scott-Rodino Act and any other applicable antitrust laws. Early termination of the Hart-Scott-Rodino waiting period was granted on April 7, 2004, and neither Ecolab nor Alcide are aware of any other applicable antitrust laws.

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        The obligations of Ecolab and Bessy Acquisition Inc. to complete the merger are subject to the following additional conditions:

        Shortly following the public announcement of the merger, an Alcide stockholder filed a complaint in the King County Superior Court of the State of Washington alleging that the Alcide board of directors breached its fiduciary obligations in approving the merger agreement and the merger. Because the lawsuit violates an express condition to closing, Ecolab may elect not to complete the merger so long as the lawsuit is pending. However, as a result of the settlement described in "Recent Developments" beginning on page 5, Ecolab does not intend to delay the merger or terminate the merger agreement as a result of the lawsuit. Ecolab's intention could change if there is a breach of the memorandum of understanding prior to completion of the merger, in which case Ecolab would promptly issue a press release and file a Current Report on Form 8-K announcing the development.

        The obligations of Alcide to complete the merger are subject to the following additional conditions:

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Termination

        Alcide and Ecolab can agree at any time to terminate the merger agreement without completing the merger, and the merger agreement may be terminated by either party as follows:

        Ecolab may also terminate the merger agreement as follows:

        Alcide may also terminate the merger agreement as follows:

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Termination Fee and Expense Reimbursement

        In recognition of Ecolab's time, effort and expenses devoted to the merger opportunity, Alcide has agreed to pay Ecolab a termination fee of $2.5 million in the event the merger agreement is terminated under a variety of circumstances. These circumstances include termination due to:

        A termination fee may also be payable if the Alcide stockholders fail to approve the merger, but only if Alcide enters into an agreement regarding an alternative acquisition proposal within one year after the merger agreement is terminated. The termination fee may have the effect of discouraging competing acquisition proposals.

        If Ecolab terminates the merger agreement because the average Ecolab stock price is below $21.00, Ecolab must cover all of Alcide's reasonably documented out-of-pocket fees and expenses incurred in connection with the merger agreement and the merger and which were not reimbursed before signing as described in "—Covenants and Agreements— Expenses " on page 56. This obligation is capped at $500,000 and includes fees and expenses incurred both before and after signing the merger agreement.


Amendments

        Subject to the applicable provisions of Delaware corporate law, at any time prior to completion of the merger, Ecolab and Alcide, by resolution of their respective boards of directors, may modify or amend the merger agreement by written agreement executed and delivered by duly authorized officers of each company.

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AGREEMENTS RELATED TO THE MERGER

Agreements to Facilitate Merger

        As a condition to entering into the merger agreement, Ecolab required each director and officer of Alcide, together with certain persons and entities controlled by them, to enter into an Agreement to Facilitate Merger with Ecolab. The agreements apply to the signatories only in their capacities as stockholders of Alcide and not as directors or officers. Under the agreements, the stockholders have agreed to vote in favor of the merger agreement and the merger all shares of Alcide common stock that they beneficially own. To supplement this obligation, the stockholders have granted to certain representatives of Ecolab an irrevocable proxy to vote such shares. As of March 11, 2004, the agreements covered an aggregate of 636,560 shares of Alcide common stock, or approximately 23.6% of the aggregate number of shares outstanding as of such date (excluding shares issuable upon exercise or conversion of options and other rights to acquire shares of Alcide common stock which such persons currently hold), plus an additional 155,414 shares not outstanding but which may be issued upon exercise of options. In exercising its right to vote shares of Alcide common stock, Ecolab will be limited to vote the shares in favor of the merger agreement and the merger and any matter that could reasonably be expected to facilitate the Merger. The stockholders retain the right to vote on all other matters.

        Each Agreement to Facilitate Merger also prohibits the stockholder from transferring, encumbering or otherwise disposing of any shares of Alcide common stock or any options, warrants or similar rights to acquire shares of Alcide common stock and from soliciting or otherwise facilitating any alternative acquisition transactions. The agreements will terminate upon completion of the merger or, if earlier, when the merger agreement is terminated in accordance with its terms and provisions.

        The foregoing summary does not purport to describe all of the terms of the Agreements to Facilitate Merger and is qualified in its entirety by reference to the form of Agreement to Facilitate Merger which is attached as Appendix B to this proxy statement/prospectus. You should read the form of agreement carefully.


Employment Agreements and Consulting Agreement

        Concurrently with the signing of the merger agreement, Ecolab entered into employment agreements with Messrs. Sasenick, Richards, Kemp and Winter, each of which will become effective only upon completion of the merger. In addition, Ecolab and Mr. Sasenick will enter into a consulting agreement, which will become effective following the expiration of Mr. Sasenick's employment agreement. The terms of the employment agreements and Mr. Sasenick's consulting agreement are as follows:

        Mr. Sasenick is Alcide's Chairman and Chief Executive Officer. His employment agreement is for a fixed term beginning upon completion of the merger and continuing for a period of six months or until February 18, 2005, whichever is later.

        Under the terms of the employment agreement, Mr. Sasenick's starting base salary will be $287,929 per year, which is the same as his current base salary at Alcide. Mr. Sasenick's base salary is subject to a 4% increase effective September 1, 2004. Consistent with other Ecolab employees at the same grade level, Mr. Sasenick will be eligible for a performance-based bonus targeted at 25% of base salary and which is capped at 50%. This reflects a decrease in his bonus potential with Alcide, which was capped at 100% of base salary and resulted in an actual pay-out of 50% of base salary for fiscal year 2003. Mr. Sasenick's bonus was earned under Alcide's Management Incentive Plan, which provides for the payment of cash bonuses to each of Alcide's executive officers based on Alcide's performance in

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relation to predetermined goals and each executive officer's performance during the fiscal year and was determined by Alcide's Compensation Committee of the Board of Directors. The employment agreement provides for a one-time option grant covering 25,000 shares of Ecolab common stock. The option grant is moderately higher than the typical annual grant given to similarly situated Ecolab employees, but is consistent with grants given at the commencement of employment. The size of the option grant also reflects the fact that Mr. Sasenick is agreeing to transition into a lesser compensated consulting role shortly after the merger is completed. Mr. Sasenick will also be entitled to retain his current company car, which will be given to him upon termination of employment, and one year's severance upon termination, consistent with similarly situated Ecolab employees and his existing employment arrangement with Alcide. As part of the employment agreement, Mr. Sasenick has agreed to release and discharge any and all existing employment arrangements he may have with, and any and all claims he may have against, Alcide, and has also agreed to non-competition, non-solicitation, confidentiality, and assignment of inventions restrictions and obligations.

        Upon expiration of the employment agreement, Ecolab and Mr. Sasenick will enter into a three-year consulting agreement. The fee for his consulting services will be $100,000 per year, which reflects Ecolab's need for Mr. Sasenick's continued advice and counsel in relation to the Alcide business and other business opportunities, plus the reimbursement of certain travel and related expenses pre-approved by Ecolab. Mr. Sasenick will not be required to work more than the equivalent of 30 eight-hour days per year and will remain subject to non-competition, non-solicitation, confidentiality and assignment of inventions restrictions and obligations that are substantially similar to those contained in his employment agreement. If the merger is not completed, then Alcide and Mr. Sasenick would expect to continue his employment with Alcide.

        Mr. Richards is Alcide's President and Chief Financial Officer. During the first two years of his employment, Mr. Richards may only be terminated for cause or upon his death or disability. After two years, his employment will become "at-will," such that both Mr. Richards and Ecolab will be free at any time to terminate his employment with or without cause.

        Under the terms of the employment agreement, Mr. Richards' starting base salary will be $190,000 per year, which represents an increase of $1,161 over his current base salary at Alcide. Consistent with other Ecolab employees at the same grade level, Mr. Richards will be eligible for a performance-based bonus targeted at 25% of base salary and which is capped at 50%. As with the other Alcide officers, this reflects a decrease in Mr. Richards' bonus potential with Alcide, which was capped at 100% of base salary and resulted in an actual pay-out of 50% of base salary for fiscal year 2003, which was made pursuant to Alcide's Management Incentive Plan described above. The employment agreement provides for a one-time option grant covering 12,000 shares of Ecolab common stock. The option grant is consistent with grants given to similarly situated Ecolab employees. Mr. Richards will be entitled to a company car during the term of his employment and one year's severance upon termination, both of which are benefits given to similarly situated Ecolab employees. As part of the employment agreement, Mr. Richards has agreed to release and discharge any and all existing employment arrangements he may have with, and any and all claims he may have against, Alcide, and has also agreed to non-competition, non-solicitation, confidentiality, and assignment of inventions restrictions and obligations.

        Mr. Kemp is Alcide's Executive Vice President and Chief Scientific Officer. Under the terms of his employment agreement, Mr. Kemp will be an "at-will" employee, such that both he and Ecolab are free at any time to terminate his employment with or without cause.

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        Under the terms of the employment agreement, Mr. Kemp's starting base salary will be $156,000 per year, which represents an increase of $13,976 over his current base salary at Alcide. Consistent with other Ecolab employees at the same grade level, Mr. Kemp will be eligible for a performance-based bonus targeted at 25% of base salary and which is capped at 50%. As with the other Alcide officers, this reflects a decrease in Mr. Kemp's bonus potential with Alcide, which was capped at 100% of base salary and resulted in an actual pay-out of 40% of base salary for fiscal year 2003, which was made pursuant to Alcide's Management Incentive Plan described above. The employment agreement provides for a one-time option grant covering 10,000 shares of Ecolab common stock. The option grant is consistent with grants given to similarly situated Ecolab employees. Mr. Kemp will be entitled to one year's severance upon termination, consistent with similarly situated Ecolab employees. As part of the employment agreement, Mr. Kemp has agreed to release and discharge any and all existing employment arrangements he may have with, and any and all claims he may have against, Alcide, and has also agreed to non-competition, non-solicitation, confidentiality, and assignment of inventions restrictions and obligations.

        Mr. Winter is Alcide's Corporate Vice President and General Manager, Animal Health. Under the terms of his employment agreement, Mr. Winter will be an "at-will" employee, such that both he and Ecolab are free at any time to terminate his employment with or without cause.

        Under the terms of the employment agreement, Mr. Winter's starting base salary will be $130,000 per year, which is represents an increase of $3,874 over his current base salary at Alcide. Consistent with other Ecolab employees at the same grade level, Mr. Winter will be eligible for a performance-based bonus targeted at 25% of base salary and which is capped at 50%. As with the other Alcide officers, this reflects a decrease in Mr. Winter's bonus potential with Alcide, which was capped at 100% of base salary and resulted in an actual pay-out of 19% of base salary for fiscal year 2003, which was made pursuant to Alcide's Management Incentive Plan described above. The employment agreement provides for a one-time option grant covering 8,000 shares of Ecolab common stock. The option grant is consistent with grants to similarly situated Ecolab employees. Mr. Winter will be entitled to a company car during the term of his employment and one year's severance upon termination, both of which are benefits given to similarly situated Ecolab employees. As part of the employment agreement, Mr. Winter has agreed to release and discharge any and all existing employment arrangements he may have with, and any and all claims he may have against, Alcide, and has also agreed to non-competition, non-solicitation, confidentiality, and assignment of inventions restrictions and obligations.

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COMPARISON OF STOCKHOLDER RIGHTS AND RELATED MATTERS

        Both Ecolab and Alcide are incorporated under the laws of the State of Delaware. Before completion of the merger, the rights of holders of Alcide stock are governed by Delaware law, the Certificate of Incorporation, as amended, of Alcide and the By-Laws of Alcide. After the completion of the merger, former Alcide stockholders will become stockholders of Ecolab, and their rights will be governed by Delaware law, the Restated Certificate of Incorporation of Ecolab and the By-Laws of Ecolab.

        While there are substantial similarities between the certificates of incorporation and by-laws of Ecolab and Alcide, a number of differences do exist. The following is a summary of the material differences between the rights of Ecolab stockholders and the rights of Alcide stockholders. While we believe that this summary covers the material differences between the two, this summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus and the other documents we refer to in this proxy statement/prospectus for a more complete understanding of the differences between being a stockholder of Ecolab and being a stockholder of Alcide. Ecolab and Alcide have filed with the SEC their respective documents referred to herein and will send copies of these documents to you upon your request. Please see "Where You Can Find More Information."


Authorized Capital Stock

        The authorized capital stock of Ecolab consists of 415,000,000 shares of capital stock, consisting of 400,000,000 shares of common stock, par value $1.00 per share, and 15,000,000 shares of preferred stock, no par value per share.

        The authorized capital stock of Alcide consists of 10,000,000 shares of common stock, par value of $0.01 per share, and 10,100,000 shares of preferred stock, including 1,000 shares of Class A preferred stock, no par value, and 10,000,000 shares of Class B preferred stock, par value $0.01 per share, of which 1,664,581 are designated Series 1 Class B preferred stock and 1,664,581 are designated Series 2 Class B preferred stock.


Number of Directors

        Delaware law provides that a corporation must have at least one director and that the number of directors shall be fixed by or in the manner provided in the by-laws unless the certificate of incorporation fixes the number of directors.

        Ecolab's by-laws defer to its certificate of incorporation, which provides that the number of directors shall be fixed from time to time exclusively by majority vote of the board of directors. The number of directors of Ecolab is currently fixed at 14. Henkel KGaA, a significant stockholder of Ecolab, is currently entitled under the terms of a stockholder's agreement to designate three nominees to the Ecolab board of directors.

        Alcide's certificate of incorporation does not fix the number of directors and its by-laws provide that its board of directors shall consist of eight directors.

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Cumulative Voting

        Under Delaware law, a corporation's certificate of incorporation may permit stockholders to cumulate their votes for directors.

        Ecolab's certificate of incorporation does not provide for cumulative voting for directors.

        Alcide's certificate of incorporation does not provide for cumulative voting for directors.


Classification of Board of Directors

        Delaware law permits, but does not require, a classified board of directors, divided into as many as three classes with staggered terms under which one-half of the directors are elected to a term of two years or one-third of the directors are elected to a term of three years, as applicable.

        Ecolab's certificate of incorporation provides for three classes of directors who serve staggered terms of three years.

        Alcide's certificate of incorporation and by-laws do not provide for the classification of its board of directors.


Removal of Directors

        Under Delaware law, directors of a corporation with an unclassified board may be removed from office by a majority stockholder vote. If a board is classified, such removal may be effected only for cause.

        Ecolab's certificate of incorporation provides that directors may be removed as permitted under Delaware law. Because Ecolab has a classified board of directors, stockholders may effect removal of the directors only for cause.

        Alcide's by-laws provide that Alcide's directors may be removed from office by a majority stockholder vote. Because Alcide does not have a classified board of directors, cause is not required.


Amendment of Certificate of Incorporation

        Under Delaware law and Ecolab's certificate of incorporation, Ecolab's certificate of incorporation may be amended by the affirmative vote of the holders of a majority of the voting rights of all classes of stock entitled to vote. However:

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        Under Delaware law, Alcide's certificate of incorporation may be amended by the affirmative vote of the holders of a majority of the voting rights of all classes of stock entitled to vote.


Amendment of By-Laws

        Delaware law provides that a corporation's stockholders entitled to vote have the power to amend by-laws, although a corporation's certificate of incorporation may give the board of directors the power to amend the by-laws.

        Ecolab's certificate of incorporation provides that its by-laws may be amended by the vote of a majority of the board of directors.

        Alcide's certificate of incorporation provides that its by-laws may be amended by the vote of a majority of the board of directors.


Special Meetings of Stockholders

        Under Delaware law, stockholder meetings may be held in the manner provided in a corporation's by-laws.

        Ecolab's by-laws provide that special meetings of the stockholders may be called by the board of directors or the chairman of the board, or at the written request of the holders of at least 80% of the outstanding voting power of Ecolab capital stock.

        Alcide's by-laws provide that special meetings of the stockholders may be called by the president and shall be called by the president or secretary upon the written request of a majority of the board of directors or the holders of at least a majority of the outstanding voting power of Alcide capital stock.


Advance Notice Requirements of Stockholder Nominations and Proposals

        Ecolab's by-laws impose an advance notice requirement in relation to stockholder proposals, including director nomination proposals, for business to be brought before an annual meeting. To be timely, the notice must be delivered to or mailed and received at Ecolab at its principal executive offices not less than 90 days nor more than 135 days prior to the first anniversary of the preceding year's annual meeting. However, if the actual date of the annual meeting is more than 30 days before or after that anniversary date, then notice must be so received not later than the close of business on the 10 th day following the day on which notice of the annual meeting date was mailed or publicly disclosed, whichever first occurs.

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        Alcide's by-laws do not impose an advance notice requirement in relation to stockholder proposals, including director nomination proposals, for business to be brought before an annual meeting.


Limitation of Personal Liability of Directors

        Under Delaware law, a certificate of incorporation may, subject to certain limitations, contain a provision limiting or eliminating a director's personal liability to the corporation or its stockholders for monetary damages for a director's breach of fiduciary duty.

        Ecolab's certificate of incorporation provides that none of its directors shall be personally liable to Ecolab or its stockholders for monetary damages for breach of fiduciary duty in his or her capacity as such, except to the extent provided by applicable law for:

        As permitted by Section 145 of the Delaware General Corporation Law, Alcide's certificate of incorporation, as amended, eliminates a director's personal liability for monetary damages to Alcide and its stockholders arising from a breach or alleged breach of a director's fiduciary duty except for liability under Section 174 of the Delaware General Corporation Law or liability for any breach of the director's duty of loyalty to Alcide or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or for any transaction from which the director derived an improper personal benefit.


Indemnification of Directors, Officers and Employees

        Ecolab's by-laws require Ecolab to indemnify and hold harmless, to the fullest extent permissible under Delaware law, any person who was or is a party to, or is threatened to be made a party to, any action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that he or she

        This indemnification obligation covers all expenses, including attorneys' fees, and all judgments, fines and amounts paid in settlement actually and reasonably incurred by the director or officer in connection with the matter. Ecolab's by-laws permit, but do not require, that similar indemnification be extended to Ecolab's employees.

        Ecolab also carries directors' and officers' liability insurance which protects each director or officer from certain claims and suits, including stockholder derivative suits, even where the director may be

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determined to not be entitled to indemnification under Delaware law, and claims and suits arising under federal securities laws. The policy may also afford coverage under circumstances where the facts do not justify a finding that the director or officer acted in good faith and in a manner that was in, or not opposed to, the best interests of Ecolab.

        Ecolab has also entered into indemnification agreements with each of its directors. These agreements provide for the prompt indemnification "to the fullest extent permitted by law" and for the prompt advancement of expenses, including attorneys' fees and other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness or participating in (including on appeal) any threatened, pending or completed action, suit or proceeding related to the fact that such director:

        These agreements further provide that Ecolab has the burden of proving that a director is not entitled to indemnification in any particular case.

        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling Ecolab pursuant to the provisions described above, Ecolab has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

        Alcide's certificate of incorporation and by-laws require Alcide to indemnify and hold harmless, to the fullest extent permissible under Delaware law, any person who was or is a party to, or is threatened to be made a party to, any action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that he or she

        Alcide's by-laws further provide that Alcide's indemnification obligation covers all expenses, including attorneys' fees, and all judgments, fines and amounts paid in settlement actually and reasonably incurred by the director or officer in connection with the matter.

        Alcide also carries directors' and officers' liability insurance which protects each director or officer from certain claims and suits, including stockholder derivative suits, even where the director may be determined to not be entitled to indemnification under Delaware law, and claims and suits arising under federal securities laws. The policy may also afford coverage under circumstances where the facts do not justify a finding that the director or officer acted in good faith and in a manner that was in, or not opposed to, the best interests of Alcide.

        Alcide has also entered into indemnification agreements with each of its officers and directors. These agreements provide for the prompt indemnification "to the fullest extent permitted by law" and for the prompt advancement of expenses, including attorneys' fees and other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness or participating in (including on appeal) any threatened, pending or completed action, suit or proceeding related to the fact that such officer or director:

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Business Combinations

        Article IV of Ecolab's Restated Certificate of Incorporation requires the approval of the holders of at least 80% of the outstanding shares of Ecolab common stock entitled to vote in order to complete a "business combination" with, or proposed by or on behalf of, any "interested stockholder," any affiliate or associate of an interested stockholder or any person who thereafter would be an affiliate or associate of an interested stockholder.

        An "interested stockholder" is any person who

        A "business combination" includes certain transactions with or proposed by or on behalf of an interested stockholder or related parties, including, among others,

        The 80% voting requirement will not apply if certain fair price criteria and procedural requirements are satisfied, or if the transaction is approved by a majority of Ecolab's directors who are unaffiliated with the interested stockholder or were directors before the interested stockholder became an interested stockholder and any successor of any such director, while such successor is a member of the board, who is unaffiliated with the interested stockholder and is recommended or elected to succeed by a majority of such directors.

        The business combination provisions of Ecolab's Restated Certificate of Incorporation are intended to prevent certain of the potential inequities of business combinations that are part of "two-step" transactions. In the absence of such provisions, a purchaser who acquired control of Ecolab could subsequently, by virtue of such control, force the remaining stockholders to sell or exchange their shares at a price that would not reflect any premium such purchaser may have paid in order to acquire its controlling interest. Such provisions may also discourage the accumulation of large blocks of

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Ecolab's stock which could be disruptive to the stability of Ecolab's important relationships with its employees, customers and the communities that it serves. Such an accumulation could precipitate a change of control of Ecolab on terms unfavorable to Ecolab's other stockholders.

        The business combination provisions of Ecolab's Restated Certificate of Incorporation may render more difficult or discourage a merger with or takeover of Ecolab, the acquisition of control of Ecolab by a large stockholder and the removal of incumbent management. Such provisions would also discourage some takeover attempts by persons who intend to acquire Ecolab in two steps and eliminate remaining stockholder interests by means of a business combination involving less consideration per share than the acquiring person would propose to pay for its initial interest in Ecolab equal to or greater than 10% (but less than 100%) of the outstanding voting stock of Ecolab. To the extent that this provision discourages certain business combinations, Ecolab's stockholders may be deprived of higher market prices for their stock that often prevail as a result of such events.

        In addition, Ecolab's Restated Certificate of Incorporation does not include a provision opting out of Section 203 of the Delaware General Corporation Law, Delaware's anti-takeover statute. Consequently, Section 203 applies to Ecolab and prohibits Ecolab from engaging in a transaction involving a sale of assets to or a merger or consolidation with an "interested stockholder," as defined under Section 203, for a period of three years following the date of the transaction in which the stockholder became an "interested stockholder" unless that transaction was approved in a prescribed manner.

        Alcide's certificate of incorporation does not include any business combination provisions. However, Alcide's certificate of incorporation does not include a provision opting out of Section 203 of the Delaware General Corporation Law. Consequently, as with Ecolab, Section 203 applies to Alcide and prohibits Alcide from engaging in a transaction involving a sale of assets to or merger or consolidation with an "interested stockholder," as defined under Section 203, for a period of three years following the date of the transaction in which the stockholder became an "interested stockholder" unless that transaction was approved in a prescribed manner.

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HENKEL STOCKHOLDER'S AGREEMENT

        In a filing with the SEC, Henkel KGaA reported that affiliates of Henkel owned 72,692,552 shares of Ecolab common stock. Henkel's equity ownership in Ecolab is subject to a stockholder's agreement containing certain restrictions pertaining to, among other things, Henkel's acquisition and transfer of and voting rights in relation to Ecolab common stock. Generally, the Henkel stockholder's agreement terminates when Henkel owns less than two percent of Ecolab's voting shares. Pursuant to the Henkel stockholder's agreement, Henkel is precluded from acquiring more than 35% of Ecolab's outstanding common stock or from acting, alone or in concert with others, to control or influence Ecolab.

        Henkel may sell its shares of Ecolab common stock under certain conditions specified in the Henkel stockholder's agreement, subject to Ecolab's right of first refusal. In December 2003, Henkel reported that it may sell a portion or all of its holdings of Ecolab common stock and/or its holdings of common stock of The Clorox Company, or a combination of both, in connection with financing its pending acquisition of The Dial Corporation. Any disposition by Henkel of any shares of Ecolab common stock would be effected in an orderly manner in accordance with the Henkel stockholder's agreement, including Ecolab's right of first refusal.

        Henkel has agreed to vote its shares in the case of election of Ecolab directors, certain stockholder proposals, compensation and certain matters pertaining to the independent publicly traded nature of Ecolab, in accordance with the recommendations or directions of the Ecolab board of directors. In all other cases, except with respect to certain "strategic transactions," Henkel may vote, at its option, either in accordance with the recommendation of the Ecolab board of directors or pro rata in the same manner and proportion that votes of Ecolab stockholders (other than Henkel and Ecolab's officers or directors) have been cast. Any vote with respect to "strategic transactions" (for example, a disposition, recapitalization, liquidation or consolidation of Ecolab or other transactions which could reasonably be expected to have a material effect upon Henkel's investment in Ecolab common stock) may be cast at Henkel's sole discretion. Henkel also is entitled to designate nominees for election to the Ecolab board of directors proportionate to the percentage of its holdings of Ecolab voting securities, rounded down to the nearest whole number. Currently, Henkel has designated for election three of Ecolab's directors. Those directors are Stefan Hamelmann, Jochen Krautter and Ulrich Lehner.

        In addition, the Henkel stockholder's agreement provides that beginning in 2011, Henkel will be permitted to make proposals to the Ecolab board of directors to acquire all, but not less than all, of Ecolab's outstanding voting shares at certain times, and under terms and conditions set forth in the Henkel stockholder's agreement.


STOCKHOLDER RIGHTS PLAN

        On February 24, 1996, Ecolab adopted a stockholder rights plan pursuant to a rights agreement, which it subsequently amended on November 5, 2001, to facilitate the appointment of EquiServe Trust Company, N.A., as the rights agent. The following description of the rights agreement is subject in its entirety to the terms and conditions of the rights agreement. You should read the rights agreement carefully. See "Where You Can Find More Information" below. Alcide does not have a stockholder rights plan.

        Under the rights agreement as initially adopted, a single right attached to each share of Ecolab common stock outstanding. Each right, when exercisable, entitled the registered holder to purchase from Ecolab 1/100th of a share of Series A Junior Participating Preferred Stock, at a purchase price of $115. The number of rights associated with each share of Ecolab common stock is subject to equitable adjustment as provided in the rights agreement in connection with any stock dividend payable in shares of Ecolab common stock and any subdivision or combination of Ecolab common stock. The purchase

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price associated with each right is subject to equitable adjustment as provided in the rights agreement in connection with any similar events associated with the preferred stock and certain other dilutive events. As a result of two two-for-one stock splits, each effected in the form of a 100% stock dividend, one in 1997 and the other in 2003, each share of Ecolab common stock presently outstanding has, and each share of Ecolab common stock issued in the merger or otherwise will have, attached to it one-quarter of a right.

        Until the rights expire, are redeemed or become exercisable, they are inseparable from and transferable only with the shares of Ecolab common stock to which they are attached, except in connection with a redemption.

        The rights will separate from Ecolab common stock and become exercisable upon the earliest to occur of the following events:

        However, Ecolab's board of directors may not declare any person to be an adverse person if the person has reported or is required to report its ownership of Ecolab common stock on Schedule 13G under the Securities Exchange Act or on Schedule 13D under the Securities Exchange Act, provided the Schedule 13D does not state any intention to or reserve the right to control or influence Ecolab or engage in certain other actions. Also, Henkel KGaA will not trigger the first event described above if, and so long as, it is a party to a written agreement with Ecolab imposing one or more limitations on the amount of Henkel's beneficial ownership of Ecolab common stock, and if, and so long as, such agreement continues be binding on Henkel and Henkel is in compliance with the terms of such agreement. Ecolab may not declare Henkel to be an adverse person.

        Unless earlier redeemed as described below, the rights will expire at the close of business on March 11, 2006.

        If a person or group acquires or obtains the right to acquire beneficial ownership of 15% or more of Ecolab's outstanding common stock or becomes an adverse person, then the rights will "flip-in" and entitle each holder of a right to purchase, upon exercise, such number of shares of Ecolab common stock as then has a market value of two times the applicable purchase price. This flip-in feature would

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not be triggered by an offer for all outstanding shares of Ecolab common stock which the independent directors of Ecolab determine to be fair to and otherwise in the best interests of Ecolab and its stockholders after receiving advice from one or more investment banking firms. It also would not be triggered if the acquiring person or group reports ownership on a Schedule 13G or 13D under the Securities Exchange Act, provided the report does not state any intention to, or reserve the right to, control or influence Ecolab, and the person or group certifies that they inadvertently caused a triggering event and agree that they will not acquire any additional shares of Ecolab common stock.

        If, after the flip-in feature described above is triggered, Ecolab is acquired in a merger or other business combination or Ecolab sells or otherwise transfers 50% or more of the assets or earning power of Ecolab and its subsidiaries taken as a whole, whether in a single transaction or a series of related transactions, the rights will "flip-over" and entitle each holder of a right to purchase, upon the exercise, that number of shares of common stock of the acquiring company (or, in certain circumstances, one of its affiliates) which at the time of the transaction would have a market value of two times the then-applicable purchase price. The exceptions applicable to the flip-in feature also apply to the flip-over feature.

        Ecolab may redeem the rights in whole, but not in part, at any time until the rights expire or, if earlier, 10 days following a public announcement that a person or group has acquired or obtained the right to acquire beneficial ownership of 15% or more of Ecolab's outstanding common stock. The redemption price is $.01 per right. Ecolab may elect to pay the redemption price in cash, shares of Ecolab common stock or any other form of consideration deemed appropriate by Ecolab's board of directors. Immediately upon the action of Ecolab's Board of Directors ordering redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the applicable redemption price. In addition, after a Triggering Event, at the election of the Board of Directors of Ecolab, the outstanding Rights (other than those beneficially owned by an Acquiring Person, Adverse Person or an affiliate or associate of an Acquiring Person or Adverse Person) may be exchanged, in whole or in part, for shares of Common Stock, or shares of preferred stock of Ecolab having essentially the same value or economic rights as such shares. Immediately upon the action of the Board of Directors of Ecolab authorizing any such exchange, and without any further action or any notice, the Rights (other than Rights which are not subject to such exchange) will terminate and such Rights will only entitle holders to receive the shares issuable upon such exchange.

        Until exercised, the holder of a right, as such, will have no rights as a stockholder of Ecolab, including, without limitation, the right to vote or to receive dividends.

        At any time before the rights become exercisable, Ecolab may, without the approval of any rights holder, supplement or amend any provision of the rights agreement. Thereafter, the rights agreement may be amended only to cure ambiguities, to correct inconsistent provisions, to shorten or lengthen any time period thereunder or in ways that do not adversely affect the rights holders other than the person or group that triggered the exercisability of the rights. From and after such time as the rights become exercisable, the rights agreement may not be amended to lengthen:

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        The rights have certain anti-takeover effects. The rights will cause substantial dilution to a person or group that attempts to acquire Ecolab on terms not approved by Ecolab's Board of Directors. The rights should not interfere with any merger or other business combination approved by Ecolab's board of directors since the board of directors may, at its option, redeem the rights as described above at the applicable redemption price.


LEGAL MATTERS

        Certain legal matters relating to the validity of the shares of Ecolab common stock issuable in connection with the merger will be passed upon for Ecolab by Lawrence T. Bell, the Senior Vice President, General Counsel and Secretary of Ecolab. Mr. Bell beneficially owns or has rights to acquire an aggregate of less than 0.14% of Ecolab common stock. Certain legal matters relating to federal income tax matters will be passed upon for Alcide by Perkins Coie LLP, Seattle, Washington.


EXPERTS

        The financial statements incorporated in this prospectus by reference to the Ecolab Inc. Annual Report of Form 10-K for the year ended December 31, 2003 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered accounting firm, given on the authority of said firm as experts in auditing and accounting.

        With respect to the unaudited condensed consolidated financial information of Ecolab Inc. for the three-month periods ended March 31, 2004 and 2003, incorporated by reference in this prospectus, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated April 22, 2004 incorporated by reference herein, states that they did not audit and they do not express an opinion on that unaudited consolidated financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited financial information because that report is not a "report" or a "part" of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

        The consolidated financial statements of Alcide as of May 31, 2003 and 2002, and for the years then ended, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG LLP, an independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

        The audit report of KPMG LLP covering the May 31, 2003 consolidated financial statements of Alcide refers to the audit of the disclosures added to revise the 2001 consolidated financial statements to include the transitional disclosures required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, which was adopted by Alcide as of June 1, 2001, as more fully described in Note 2 to the consolidated financial statements. However, KPMG LLP was not engaged to audit, review, or apply any procedures to the 2001 consolidated financial statements other than with respect to such disclosures.

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        The consolidated financial statements of Alcide for the year ended May 31, 2001, incorporated by reference herein and in the registration statement, were audited by Arthur Andersen LLP, independent public accountants.

        Arthur Andersen LLP has not consented to the inclusion in this proxy statement/prospectus of its reports on the financial statements Alcide described above, and the requirement to file its consent to such inclusion with the Securities and Exchange Commission has been dispensed with in reliance upon Rule 437a under the Securities Act. Because Arthur Andersen LLP has not consented to the inclusion of its reports in this document, you will not be able to recover against Arthur Andersen LLP under Section 11 of the Securities Act for any untrue statements of a material fact contained in the financial statements described above that were audited by Arthur Andersen LLP or any omissions to state a material fact required to be stated therein.


STOCKHOLDER PROPOSALS

        The 2004 Annual Meeting of Alcide Stockholders is presently scheduled to be held on Friday, October 22, 2004. If the merger is completed, Alcide will not hold the annual meeting. If the merger is not completed and the annual meeting is held, then, under Rule 14a-8(e) of the Securities Exchange Act, stockholder proposals intended to be included in Alcide's 2004 proxy statement and form of proxy must be received in writing by the Secretary of Alcide at 8561 154th Avenue, N.E., Redmond, Washington, 98052, no later than Saturday, May 8, 2004.

        Any stockholder proposal submitted for consideration at the 2004 Annual Meeting but not submitted for inclusion in the proxy statement which is received by Alcide later than Thursday, July 22, 2004, will not be considered received on a timely basis by Alcide under the advance notice provisions of Rule 14a-4(c)(1) of the Exchange Act. For such proposals that are not timely received, Alcide retains discretion to vote proxies it receives. For such proposals that are timely received, Alcide retains discretion to vote proxies it receives provided that (1) the Company includes in its proxy statement advice on the nature of the proposal and how it intends to exercise its voting discretion and (2) the proponent does not issue a proxy statement.


WHERE YOU CAN FIND MORE INFORMATION

        Alcide and Ecolab each file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information we file at the SEC's public reference room, including the registration statement of which this proxy statement/prospectus is a part, at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of these materials may also be obtained from the SEC at prescribed rates by writing to the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information about the operation of the SEC public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. Alcide and Ecolab filings are also available to the public from commercial document retrieval services and at the web site maintained by the SEC at http: //www.sec.gov . You may also access the SEC filings and obtain other information about Ecolab and Alcide through the websites maintained by Ecolab and Alcide, which are http://www.ecolab.com and http://www.alcide.com , respectively. The information contained in such websites is not incorporated by reference in this proxy statement/prospectus.

        Ecolab has filed with the SEC a registration statement on Form S-4 with respect to the shares of Ecolab common stock to be issued to holders of Alcide common stock pursuant to the merger agreement. This proxy statement/prospectus constitutes the prospectus of Ecolab and the proxy statement of Alcide for the special meeting and is filed as part of the registration statement. Other parts of the registration statement and the exhibits to the registration statement are omitted from this proxy statement/prospectus in accordance with the rules and regulations of the SEC. Statements made

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in this proxy statement/prospectus as to the content of any contract, agreement or other document referenced to are not necessarily complete. With respect to each of these contracts, agreements or other documents to be filed or incorporated by reference to an exhibit to the registration statement, you should refer to the corresponding exhibit, when it is filed, for a more complete description of the matter involved and read all statements in this proxy statement/prospectus in light of that exhibit.

        The SEC allows Alcide and Ecolab to "incorporate by reference" information into this proxy statement/ prospectus, which means that we can disclose important information to you by referring you to other documents that Ecolab or Alcide have filed separately with the SEC, and in some cases, delivered to you with the copy of this proxy statement/prospectus. The information incorporated by reference is deemed to be part of this proxy statement/prospectus. Information that Ecolab or Alcide files later with the SEC will automatically update and supersede the information contained in documents filed earlier with the SEC or contained in this proxy statement/prospectus.

        The following documents previously filed with the SEC by Ecolab are incorporated by reference into this proxy statement/prospectus:

        A copy of the following documents previously filed with the SEC by Alcide are incorporated by reference into, and delivered with, this proxy statement/prospectus:

        In addition, the following documents previously filed with the SEC by Alcide are incorporated by reference into this proxy statement/prospectus:

        All documents filed by Ecolab under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement/prospectus and before the later of the date of the special meeting or the date on which the offering of shares of Ecolab common stock under the registration statement of which this proxy statement/prospectus is a part is completed or terminated are incorporated by

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reference into, and deemed a part of, this proxy statement/prospectus from the date of filing of those documents, provided, however, that we are not incorporating any information "furnished" under either Item 9 or Item 12 of any Current Report on Form 8-K.

        You may obtain copies, without charge, of documents incorporated by reference in this proxy statement/prospectus, by requesting them in writing or by telephone from the appropriate company as follows:

Ecolab Inc.
370 Wabasha Street North
St. Paul, Minnesota 55102
Attn: Corporate Secretary
Telephone: (651) 293-2233
www.ecolab.com/investor

Alcide Corporation
8561 154 th Avenue N.E.
Redmond, Washington 98052
Telephone: (425) 882-2555
www.alcide.com

        You may also request additional copies of this proxy statement/prospectus, documents incorporated by reference or furnished with this proxy statement/prospectus by contacting the proxy solicitor for Alcide's stockholder meeting at the following address and telephone number:

Georgeson Shareholder
17 State Street
New York, NY 10004
(800) 316-6480


SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

        The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In this proxy statement/prospectus and the documents incorporated by reference herein, Ecolab discusses expectations regarding its future performance which include anticipated business progress and expansion, business acquisitions, debt repayments, susceptibility to changes in technology, global economic conditions and liquidity requirements. Without limiting the foregoing, words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "we believe," "estimate," "project" (including the negative or variations thereof) or similar terminology, generally identify forward-looking statements. Additionally, Ecolab may refer to this section of the proxy statement/prospectus to identify risk factors related to other forward looking statements made in oral presentations, including telephone conferences and/or webcasts open to the public.

        Forward-looking statements represent challenging goals for Ecolab. As such, they are based on current expectations and are subject to certain risks and uncertainties. Ecolab cautions that undue reliance should not be placed on such forward-looking statements which speak only as of the date made. In order to comply with the terms of the safe harbor, Ecolab identifies for investors important factors which could affect Ecolab's financial performance and could cause actual results for future periods to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.

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        Risks and uncertainties that may affect Ecolab's operating results and business performance include the following:

        In addition, Ecolab notes that its stock price can be affected by fluctuations in quarterly earnings. There can be no assurances that Ecolab's earnings levels will meet investors' expectations. Ecolab undertakes no duty to update its Forward-Looking Statements.

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Appendix A

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ECOLAB INC.

BESSY ACQUISITION INC.

AND

ALCIDE CORPORATION

dated as of March 11, 2004


ARTICLE 1. THE MERGER
  1.1.   The Merger
  1.2.   Closing of the Merger
  1.3.   Effective Time
  1.4.   Effects of the Merger
  1.5.   Certificate of Incorporation and Bylaws of the Surviving Corporation
  1.6.   Directors and Officers of the Surviving Corporation

ARTICLE 2. CONVERSION OF SECURITIES
  2.1.   Conversion of Capital Stock
  2.2.   No Appraisal Rights
  2.3.   Exchange of Certificates
  2.4.   Stock Options

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
  3.1.   Organization and Qualification
  3.2.   Charter and Bylaws
  3.3.   Capitalization
  3.4.   Company SEC Reports; Financial Statements
  3.5.   Controls
  3.6.   Information Supplied
  3.7.   Authorization and Enforceability
  3.8.   Absence of Certain Changes or Events
  3.9.   Consents and Approvals
  3.10.   Permits
  3.11.   Compliance with Laws
  3.12.   Litigation
  3.13.   Employee Benefit Matters
  3.14.   Employees
  3.15.   Property and Leases
  3.16.   Intellectual Property Rights
  3.17.   Taxes
  3.18.   Material Contracts
  3.19.   Relations with Suppliers and Customers
  3.20.   Environmental Matters
  3.21.   Company Products; Regulation
  3.22.   Interested Party Transactions
  3.23.   Change in Control
  3.24.   Fairness Opinion
  3.25.   No Finders
  3.26.   Disclosure
  3.27.   Tax Treatment

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB
  4.1.   Organization and Qualification
  4.2.   Capitalization
  4.3.   Parent SEC Reports; Financial Statements
  4.4.   Registration Statement
  4.5.   Authorization and Enforceability
  4.6.   Absence of Certain Changes or Events
  4.7.   Consents and Approvals
  4.8.   Ownership and Interim Operations of Merger Sub
  4.9.   Litigation
     

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  4.10.   No Finders
  4.11.   Tax Treatment

ARTICLE 5. COVENANTS AND AGREEMENTS
  5.1.   Conduct of Business of the Company
  5.2.   No Solicitation
  5.3.   Proxy Statement; Registration Statement; Stockholders Meeting
  5.4.   Redemption of Preferred Stock
  5.5.   State Takeover Statutes
  5.6.   Affiliates
  5.7.   NYSE Listing Application
  5.8.   Confidentiality
  5.9.   Access to Information
  5.10.   Approvals and Consents; Cooperation
  5.11.   Commercially Reasonable Efforts; Further Actions
  5.12.   Officers' and Directors' Indemnification
  5.13.   Notification of Certain Matters
  5.14.   Public Announcements
  5.15.   Voting of Shares
  5.16.   Executive Officer Agreements
  5.17.   Expenses
  5.18.   Section 368 Qualification
  5.19.   Provision of Tax Returns
  5.20.   Employee Benefit Plans
  5.21.   Bonuses
  5.22.   Communications

ARTICLE 6. CONDITIONS PRECEDENT
  6.1.   Conditions to Obligations of the Parent, Merger Sub, and the Company
  6.2.   Conditions to Obligations of the Parent and Merger Sub
  6.3.   Conditions to Obligations of the Company

ARTICLE 7. TERMINATION AND ABANDONMENT
  7.1.   Termination
  7.2.   Effect of Termination

ARTICLE 8. DEFINED TERMS
  8.1.   Definitions of Certain Terms
  8.2.   Location of Other Defined Terms

ARTICLE 9. GENERAL PROVISIONS
  9.1.   Amendment and Modification
  9.2.   Waiver of Compliance; Consents
  9.3.   Investigation; Survival of Representations and Warranties
  9.4.   Notices
  9.5.   Specific Performance
  9.6.   Assignment
  9.7.   Governing Law
  9.8.   Interpretation
  9.9.   Entire Agreement
  9.10.   Parties in Interest
  9.11.   Severability
  9.12.   Counterparts

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EXHIBIT LIST

5.15   Form of Agreement to Facilitate Merger
5.16   Schedule of Executive Officers Signing Employment Agreements
6.2(f)   Form of Opinion of the Company's Counsel
6.3(e)   Form of Opinion of the Parent's Counsel
6.3(f)-1   Form of Tax Certificate of the Parent and the Merger Sub
6.3(f)-2   Form of Tax Certificate of the Company

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AGREEMENT AND PLAN OF MERGER

        THIS AGREEMENT AND PLAN OF MERGER (this " Agreement ") is dated as of March 11, 2004, by and among Ecolab Inc., a Delaware corporation (the " the Parent "), Bessy Acquisition Inc., a Delaware corporation and wholly owned subsidiary of the Parent (" Merger Sub "), and Alcide Corporation, a Delaware corporation (the " Company ").

        WHEREAS, the respective Boards of Directors of the Parent, Merger Sub and the Company have each determined that an acquisition of the Company by the Parent is advisable and in the best interests of their respective stockholders;

        WHEREAS, in furtherance of the acquisition of the Company by the Parent, the Boards of Directors of the Parent, Merger Sub and the Company have approved the merger of Merger Sub with and into the Company (the " Merger ") upon the terms and subject to the conditions set forth herein, whereby each share of common stock, par value $0.01 per share, of the Company (the " Company Common Stock ") issued and outstanding immediately prior to the effective time of the Merger (other than Cancelled Shares, as defined below), shall be converted into the right to receive a certain fraction of a share of common stock, par value $1.00 per share, of the Parent (together with the associated Parent Rights, the " Parent Common Stock "), as described in Article 2 below;

        WHEREAS, for federal income tax purposes, it is intended that the Merger shall qualify as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the " Code ");

        WHEREAS, officers and directors of the Company have, to induce the Parent to execute this Agreement, executed and delivered to the Parent the Agreements to Facilitate Merger described in Section 5.15;

        WHEREAS, the parties hereto desire to make certain representations, warranties, and agreements in connection with the Merger and also to prescribe various conditions to the Merger; and

        WHEREAS, capitalized terms shall have the meaning set forth in this Agreement, including the meanings set forth in Article 8.

        NOW, THEREFORE, in consideration of the foregoing premises and the mutual representations, warranties, covenants and agreements contained herein and intending to be legally bound hereby, the Parent, Merger Sub and the Company hereby agree as follows:


ARTICLE 1.
THE MERGER

        1.1.     The Merger.     Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.3 hereof), Merger Sub shall be merged with and into the Company in accordance with the provisions of Delaware Law, whereupon the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation (the " Surviving Corporation ").


        1.2.
    Closing of the Merger.     The closing of the Merger (the " Closing ") shall take place at 10:00 a.m., local time, on a date to be specified by the parties (the " Closing Date "), which shall be no later than the second business day after the satisfaction or waiver of the conditions set forth in Article 6 (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), at the offices of Perkins Coie LLP, 1201 Third Avenue, Seattle, Washington, or at such other place as the parties hereto may agree.


        1.3.
    Effective Time.     As soon as practicable after each of the conditions set forth in Article 6 has been satisfied or waived, the Company and Merger Sub shall file, or cause to be filed, with the

A-1


Secretary of State of the State of Delaware a Certificate of Merger for the Merger, which Certificate shall be in the form required by and executed in accordance with the applicable provisions of Delaware Law and in form and substance acceptable to the Parent (the " Certificate of Merger "). The Merger shall become effective at the time such filing is made or, if agreed to by the Parent and the Company, at such later time or date set forth in the Certificate of Merger (the " Effective Time ").


        1.4.
    Effects of the Merger.     The Merger shall have the effects set forth under Delaware Law. From and after the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers, and franchises, and be subject to all the restrictions, disabilities, and duties, of the Company and Merger Sub, all as more fully described under Delaware Law.


        1.5.
    Certificate of Incorporation and Bylaws of the Surviving Corporation.     The Certificate of Incorporation of Merger Sub shall, by virtue of the Merger, become and thereafter be the Certificate of Incorporation of the Surviving Corporation until amended in accordance with such Certificate of Incorporation and Delaware Law. The Bylaws of Merger Sub in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation, until amended in accordance with such Bylaws, the Amended and Restated Certificate of Incorporation and Delaware Law.


        1.6.
    Directors and Officers of the Surviving Corporation.     The directors of Merger Sub and the officers of the Company immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation until their respective successors shall be duly elected and qualified or appointed.


ARTICLE 2.
CONVERSION OF SECURITIES

        2.1.     Conversion of Capital Stock.     At the Effective Time, by virtue of the Merger and without any action on the part of any holder of any share of capital stock of the Company or Merger Sub:

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        2.2.
    No Appraisal Rights.     In accordance with Section 262 of Delaware Law, no appraisal rights shall be available to holders of shares of Company Common Stock or Company Preferred Stock in connection with the Merger.


        2.3.
    Exchange of Certificates.     

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        2.4.
    Stock Options.     

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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        As a material inducement to the Parent and Merger Sub to enter into this Agreement, with the understanding that the Parent and Merger Sub shall be relying thereon in consummating the transactions contemplated hereunder, the Company hereby represents and warrants to the Parent and Merger Sub, except as set forth in the Company Disclosure Schedule delivered by the Company to the Parent and Merger Sub on the date hereof pursuant to, and as an integral part of, this Agreement (the " Company Disclosure Schedule "), which Company Disclosure Schedule identifies the Section and subsection numbers of this Article 3 to which the disclosures pertain and which disclosures relate only to the representations and warranties set forth in the Section or subsection of this Agreement to which such section of the Company Disclosure Schedule expressly relates and not to any other representation and warranty contained in this Agreement (except to the extent that one section of the Company Disclosure Schedule specifically refers to another section thereof), as follows:


        3.1.
    Organization and Qualification.     


        3.2.
    Charter and Bylaws.     The Company has furnished or made available to the Parent a complete and correct copy of the Certificate of Incorporation and the Bylaws of the Company and the Certificate of Incorporation, Bylaws or equivalent organizational documents of each Company Subsidiary, each as in full force and effect as of the date hereof. Neither the Company nor any Company Subsidiary is in violation of any of the provisions of its Certificate of Incorporation, Bylaws or equivalent organizational documents.


        3.3.
    Capitalization.     

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        3.4.
    Company SEC Reports; Financial Statements.     

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        3.5.
    Controls.     


        3.6.
    Information Supplied.     The proxy statement/prospectus included as part of the Registration Statement (such proxy statement/prospectus, together with notice of meeting, form of proxy, and any letter or other materials to the Company's stockholders included therein are referred to in this Agreement as the " Proxy Statement/Prospectus ") shall not, at the time the Proxy Statement/Prospectus is first mailed and at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, or to correct any statement made in any earlier communication with respect to the solicitation of any proxy or approval for the Merger in connection with which the Proxy Statement/Prospectus shall be mailed, except that no representation or warranty is made by the Company with respect to any information regarding the Parent, Merger Sub or any Affiliate of the Parent or Merger Sub which is contained or incorporated by reference in the Proxy Statement/Prospectus. The Proxy Statement/Prospectus shall comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations of the SEC promulgated thereunder.

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        3.7.
    Authorization and Enforceability.     The Company has the corporate power and authority to execute and deliver this Agreement and, subject to obtaining the Company Stockholder Approval, the corporate power and authority to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the Company's Board of Directors and no other corporate proceedings on the part of the Company (other than Company Stockholder Approval) or any Company Subsidiary are necessary to authorize this Agreement, and, subject to obtaining the Company Stockholder Approval, no other corporate action on the part of the Company or any Company Subsidiary is necessary to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to rules of Law governing bankruptcy, specific performance, injunctive relief, or other equitable remedies. The approval by the Company's Board of Directors of this Agreement and the transactions contemplated hereby is sufficient so that neither the restrictions on "business combinations" set forth in Section 203(a) of Delaware Law nor the provisions of any other "fair price," "moratorium," "control share acquisition," or other similar anti-takeover statute or regulation nor the provisions of any applicable anti-takeover provisions in the Certificate of Incorporation or Bylaws of the Company shall apply to this Agreement or any of the transactions contemplated by this Agreement. Under applicable Law, the Company's current Certificate of Incorporation and Nasdaq rules, the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock is the only vote required for the stockholders of the Company to approve the Merger and no holders of any other Company Securities (including the holders of the Company Preferred Stock) are entitled to any vote regarding the Merger, this Agreement or any of the transactions contemplated hereby.


        3.8.
    Absence of Certain Changes or Events.     Except as contemplated hereby or as disclosed in Section 3.8 of the Company Disclosure Schedule or in the Company SEC Reports, since November 30, 2003, the Company and the Company Subsidiaries have conducted their business in the ordinary course of business and consistent with past practice and there has not been:

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        3.9.
    Consents and Approvals.     The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated hereby does not: (a) violate any provision of the Certificate of Incorporation, Bylaws, or other governing document of the Company or any Company Subsidiary; (b) violate any Law or Order by which the Company or any Company Subsidiary or any of their respective properties or assets may be bound; or (c) result in any violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under, result in the loss of any material benefit under, or give rise to any right of termination, cancellation, increased payments, or acceleration under, or result in the creation of any Encumbrance on any of the properties or assets of the Company or any Company Subsidiary under, any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, license, franchise, permit, authorization, agreement, or other instrument or obligation to which the Company or any Company Subsidiary is a party, or by which it or any of its properties or assets may be bound, except, (x) in the cases of clauses (b) or (c), where such violations, breaches, defaults, or other occurrences could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. No filing with or permit, consent, or approval of any Governmental Entity or any other Person is required by the Company or any Company Subsidiary in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for (i) any applicable requirements of

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the Securities Act, the Exchange Act, state takeover or securities laws, the rules of Nasdaq, and the HSR Act; (ii) the Company Stockholder Approval; and (iii) the filing and recordation of the Certificate of Merger as required by Delaware Law.


        3.10.
    Permits.     Each of the Company and the Company Subsidiaries is in possession of all Permits, except where the failure to have, or the suspension or cancellation of, any of the Permits could not reasonably be expected to have a Company Material Adverse Effect. As of the date hereof, no suspension or cancellation of any of the Permits is pending or, to the Knowledge of the Company, threatened, except where the failure to have, or the suspension or cancellation of, any of such Permits could not reasonably be expected to have a Company Material Adverse Effect. Section 3.10 of the Company Disclosure Schedule lists all material Permits of the Company and the Company Subsidiaries, and the Company has made available to the Parent all other Permits of the Company and the Company Subsidiaries.


        3.11.
    Compliance with Laws.     All activities of the Company and each Company Subsidiary have been, and are currently being, conducted in all material respects in compliance with all applicable Laws and Orders. To the Knowledge of the Company, the Company and each Company Subsidiary has timely filed, maintained or otherwise provided all registrations, reports, data, and other information and applications with respect to its Regulated Products required to be filed with or otherwise provided to the USDA, the FDA, the EPA or any other Governmental Entity with jurisdiction over the manufacture, use, or sale of the Regulated Products, has complied in all material respects with all applicable requirements of the USDA, the FDA, the EPA or any other Governmental Entity with respect to the Regulated Products, and all regulatory licenses or approvals in respect thereof are in full force and effect. All documentation, correspondence, reports, data, analyses and certifications relating to or regarding any Regulated Products of the Company or any Company Subsidiary, filed with or delivered by or on behalf of the Company or any Company Subsidiary to any Governmental Entity were in material compliance with all applicable Laws and in all material respects true and accurate when so filed or delivered, and nothing has come to the attention of the Company that causes the Company to conclude that such documentation, correspondence, reports, data, analyses and certifications do not remain true and correct and in material compliance with all applicable Laws.


        3.12.
    Litigation.     Except as set forth in Section 3.12 of the Company Disclosure Schedule, there are no suits, actions or proceedings pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of the Company Subsidiaries. Neither the Company nor any of the Company Subsidiaries is subject to any outstanding Order that contains ongoing material obligations, restricts the activities of the Company or any Company Subsidiary going forward or could reasonably be expected to prevent, hinder or delay the timely completion of the transactions contemplated by this Agreement.


        3.13.
    Employee Benefit Matters.     Except as set forth in Section 3.13 of the Company Disclosure Schedule:

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        3.14.
    Employees.     

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        3.15.
    Property and Leases.     


        3.16.
    Intellectual Property Rights.     

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        3.17.
    Taxes.     As used in this Agreement, " Tax " or " Taxes " shall include all Federal, state, local and foreign income, gross receipts, business and occupation, franchise, real estate, property, sales, use, transfer, withholding, employment, payroll, excise, ad valorem, value added and other taxes, tariffs or governmental charges or assessments of any nature whatsoever as well as any interest, penalties and additions thereto. Except as set forth in Section 3.17 of the Company Disclosure Schedule:

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        3.18.
    Material Contracts.     


        3.19.
    Relations with Suppliers and Customers.     No material current supplier of the Company or any Company Subsidiary has canceled or, to the Knowledge of the Company, threatened to cancel any Contract for the provision of, or indicated an intention to reduce its supply of or not to provide, raw materials, products, supplies, or services to the businesses of the Company or any Company Subsidiary either prior to or following the Merger. Neither the Company nor any Company Subsidiary has received any information from any customer that accounted for more than 5% of the revenues of the Company and its Subsidiaries during the last full fiscal year to the effect that such customer intends to materially decrease the amount of business it does with the businesses of the Company or any Company Subsidiary either prior to or following the Merger. No material current supplier of the Company has initiated any recall or issued any warning or received any FDA warning letters or FDA Form 483 notifications (other than warnings included as part of the product literature at the time of sale) in relation to any Company Products. Schedule 3.19 lists the top twenty (20) customers of Company Products as measured by consolidated sales revenue earned by the Company for the twelve month period ended December 31, 2003. To the Knowledge of the Company, all Company Products manufactured by third parties have been manufactured in material compliance with all applicable Laws, including all Laws regarding "good manufacturing processes" promulgated by the FDA or any other Governmental Entity.

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        3.20.
    Environmental Matters.     The Company: (a) is in compliance in all material respects with all applicable Environmental Laws (which compliance includes, but is not limited to, the possession by the Company and the Company Subsidiaries of all Permits required under applicable Environmental Laws, and compliance with the terms and conditions thereof); (b) has not received any communication (written or, to the Knowledge of the Company, oral) from a Governmental Entity or third party alleging that the Company is not in compliance with, or has any liability under, any Environmental Law; (c) has not owned or operated any property that is contaminated with any Hazardous Material which may be expected to require remediation under any Environmental Law; (d) is not subject to liability for any Environmental Release, disposal or contamination (whether on-site or, to the Knowledge of the Company, off-site) of any Hazardous Material; (e) has not received any claims (written or, to the Knowledge of the Company, oral), and has no Knowledge of any potential claims, that the Company or any Company Subsidiary may be liable under any Environmental Law; and (f) is not subject to any other circumstances in connection with any Environmental Law that could reasonably be expected to have a Company Material Adverse Effect.


        3.21.
    Company Products; Regulation.     Except as set forth in Section 3.21 of the Company Disclosure Schedule: (a) since June 1, 2000 through the date hereof there have been no notices, citations or decisions by any Governmental Entity that any Company Products are defective or fail to meet any applicable standards promulgated by any such Governmental Entity; (b) the Company and the Company Subsidiaries have complied in all material respects with all Laws and specifications with respect to the design, manufacture, labeling, testing and inspection of Company Products promulgated by any Governmental Entity; and (c) since June 1, 2000 through the date hereof, there have been no recalls, field notifications, seizures FDA warning letters or FDA Form 483 notifications ordered or, to the Knowledge of the Company, threatened by any such Governmental Entity with respect to any of the Company Products. The Company has delivered or made available to the Parent copies of all medical device reports, customer complaints and adverse incidents with respect to the Company Products received by the Company since June 1, 2000.


        3.22.
    Interested Party Transactions.     Since June 1, 2000, except as described in the Company SEC Reports or Section 3.22 of the Company Disclosure Schedule: (a) no event has occurred that would be required to be reported by the Company pursuant to Item 404 of Regulation S-K promulgated by the SEC; and (b) there are no existing contracts, agreements, business dealings, arrangements or other understandings between the Company or any Company Subsidiary and any Related Party. There are no assets of any Related Party that are used in or necessary to the conduct of the business of the Company or any Company Subsidiary.


        3.23.
    Change in Control.     Except as described in Section 3.23 of the Company Disclosure Schedule, the execution and delivery of this Agreement and the Agreements to Facilitate Merger and the consummation of the transactions contemplated hereby and thereby shall not (a) result in any payment (including severance, unemployment compensation, Tax gross-up, bonus or otherwise) becoming due to any current or former director, employee or independent contractor of the Company or any of its subsidiaries, from the Company or any of its subsidiaries under any Company Stock Plan, any Benefit Plan, agreement or otherwise, (b) materially increase any benefits otherwise payable under any Company Stock Plan, any Benefit Plan, agreement or otherwise or (c) result in the acceleration of the time of payment, exercise or vesting of any such benefits.


        3.24.
    Fairness Opinion.     The Company has received a written opinion from Duff & Phelps LLC, financial advisor to the Company, dated as of the date hereof, to the effect that, subject to the qualifications and limitations stated therein, the merger consideration to be received by the holders of shares of Company Common Stock pursuant to this Agreement is fair to such holders from a financial point of view. A copy of such opinion has been delivered to the Parent. As of the date hereof, such opinion has not been withdrawn, revoked or modified.

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        3.25.
    No Finders.     Except as provided in Section 3.25 of the Company Disclosure Schedule, the Company has not incurred any brokers', finders' or any similar fee in connection with the transactions contemplated by this Agreement.


        3.26.
    Disclosure.     No representation or warranty by the Company in this Agreement and no statement contained in the Company Disclosure Schedule or any certificate delivered by the Company to the Parent pursuant to this Agreement, contains any untrue statement of a material fact or omits any material fact necessary to make the statements herein or therein not misleading when taken together in light of the circumstances in which they were made.


        3.27.
    Tax Treatment.     Neither the Company nor any of its Affiliates has taken or agreed to take any action, or is aware of any fact or circumstances, that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368 of the Code.


ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND MERGER SUB

        As a material inducement to the Company to enter into this Agreement, with the understanding that the Company shall be relying thereon in consummating the transactions contemplated hereunder, the Parent and Merger Sub hereby represent and warrant to the Company that:


        4.1.
    Organization and Qualification.     Each of the Parent and Merger Sub is a corporation duly organized, validly existing, and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as now being conducted. Each of the Parent and Merger Sub is duly qualified and in good standing to do business in each jurisdiction in which the property owned, leased, or operated by it or the nature of the business conducted by it (a) makes such qualification necessary and (b) where the failure to qualify could reasonably be expected to have a Parent Material Adverse Effect.


        4.2.
    Capitalization.     As of February 29, 2004, the authorized capital stock of the Parent consists of (a) 400,000,000 shares of Parent Common Stock, of which there were 257,215,105 shares issued and outstanding and 53,606,761 shares held in the Parent's treasury, and (b) 15,000,000 shares of preferred stock with no par value, of which there were no shares issued and outstanding. The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stock, 100 of which are issued and outstanding and owned by the Parent. All issued and outstanding shares of Parent Common Stock and Merger Sub Common Stock are, and the shares of Parent Common Stock to be issued and delivered in the Merger pursuant to Article 2 shall be, at the time of issuance and delivery, duly authorized, validly issued, fully paid, nonassessable, and free of preemptive rights. The shares of Parent Common Stock to be issued and delivered in the Merger pursuant to Article 2 shall be registered under the Securities Act and duly listed for trading on the NYSE, subject to official notice of issuance.


        4.3.
    Parent SEC Reports; Financial Statements.     

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        4.4.
    Registration Statement.     The Registration Statement and any amendments or supplements thereto will comply in all material respects with the Securities Act, and none of the information relating to the Parent or its Affiliates included or incorporated therein or in any amendments or supplements thereto, or any schedules required to be filed with the SEC in connection therewith, will, at the time the Registration Statement becomes effective, at the time of the Company Stockholders Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made by the Parent with respect to information supplied by the Company or any Affiliate of the Company specifically for inclusion in the Registration Statement.


        4.5.
    Authorization and Enforceability.     Each of the Parent and Merger Sub has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Parent and Merger Sub and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the Boards of Directors of the Parent and Merger Sub and by the Parent as the sole stockholder of Merger Sub, and no other corporate proceedings on the part of the Parent and Merger Sub are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of the Parent and Merger Sub and constitutes the valid and binding obligation of the Parent and Merger Sub, enforceable against each of them in accordance with its terms, subject to rules of Law governing bankruptcy, specific performance, injunctive relief, or other equitable remedies.


        4.6.
    Absence of Certain Changes or Events.     Except as contemplated hereby or as disclosed in the Parent SEC Reports, since September 30, 2003, the Parent and its subsidiaries have conducted their

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business in the ordinary course of business and consistent with past practice and there has not been any change, effect, event, occurrence, state of facts or development that, individually or in the aggregate, has had or could reasonably be expected to have a Parent Material Adverse Effect.


        4.7.
    Consents and Approvals.     The execution and delivery of this Agreement by the Parent and Merger Sub and the consummation of the transactions contemplated hereby will not: (a) violate any provision of the Certificate of Incorporation, Bylaws or other governing document of the Parent and Merger Sub; (b) violate any Law or Order by which the Parent or Merger Sub or any of their respective properties or assets may be bound; or (c) result in any violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under, result in the loss of any material benefit under, or give rise to any right of termination, cancellation, increased payments, or acceleration under, or result in the creation of any Encumbrance on any of the properties or assets of the Parent or Merger Sub under, any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, license, franchise, permit, authorization, agreement, or other instrument or obligation to which the Parent or Merger Sub is a party, or by which it or any of its properties or assets may be bound, except where such violation could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. No filing with or permit, consent, or approval of any Governmental Entity is required by the Parent or Merger Sub in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for (i) any applicable requirements of the Securities Act or the Exchange Act, state takeover or securities laws and the Antitrust Laws, and (ii) the filing and recordation of the Certificate of Merger as required by Delaware Law.


        4.8.
    Ownership and Interim Operations of Merger Sub.     Merger Sub is a direct, wholly owned subsidiary of the Parent. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement and has not engaged in any business activities or conducted any operations other than in connection with the performance of its obligations hereunder.


        4.9.
    Litigation.     There are no suits, actions or proceedings pending or, to the Knowledge of the Parent or Merger Sub, threatened against or affecting the Parent or any of its subsidiaries that could reasonably be expected to prevent, hinder or delay the timely completion of the transaction contemplated by this Agreement. Neither the Parent nor any of its subsidiaries is subject to any outstanding Order that could reasonably be expected to prevent, hinder or delay the timely completion of the transaction contemplated by this Agreement.


        4.10.
    No Finders.     Except for certain obligations to Credit Suisse First Boston LLC, the Parent has not incurred any brokers', finders' or any similar fee in connection with the transactions contemplated by this Agreement.


        4.11.
    Tax Treatment.     Neither the Parent nor any of its Affiliates has taken or agreed to take any action, or is aware of any fact or circumstances, that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368 of the Code.


ARTICLE 5.
COVENANTS AND AGREEMENTS

        5.1.     Conduct of Business of the Company.     Except as contemplated by this Agreement or to the extent that the Parent otherwise consents in writing, which consent shall not be unreasonably withheld, during the period from the date of this Agreement to the Effective Time, the Company and each Company Subsidiary shall conduct their respective operations according to their ordinary and usual course of business and consistent with past practice, and the Company and each Company Subsidiary shall use commercially reasonable efforts to preserve intact in all material respects their respective business organizations, to maintain in all material respects their present and planned business, to keep available in all material respects the services of their respective officers and employees and to maintain

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in all material respects satisfactory relationships with licensors, licensees, suppliers, contractors, distributors, consultants, customers, and others having business relationships with them. Without limiting the generality of the foregoing, and except as otherwise expressly provided in or contemplated by this Agreement, prior to the Effective Time, neither the Company nor any Company Subsidiary shall, without the prior written consent of the Parent (which, in the case of subsection (k) below, may not be unreasonably withheld):

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        5.2.
    No Solicitation.     

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        5.3.
    Proxy Statement; Registration Statement; Stockholders Meeting.     

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        5.4.
    Redemption of Preferred Stock.     As soon as practicable following the execution and delivery of this Agreement, and in any event no later than five (5) business days prior to the Closing Date, the Company and its Board of Directors shall take all actions necessary pursuant to the Company's Certificate of Incorporation and all applicable documents and agreements designating or otherwise providing the terms of the Company Preferred Stock to redeem all of the issued and outstanding shares of Company Preferred Stock, at the price per share provided in Section 3.3(c).


        5.5.
    State Takeover Statutes.     The Company and its Board of Directors shall (a) take all reasonable actions necessary to ensure that no "fair price", "control share acquisition", "moratorium" or other anti-takeover statute, or similar statute or regulation, is or becomes applicable to this Agreement, the Merger or any of the other transactions contemplated hereby or thereby and (b) if any "fair price", "control share acquisition", "moratorium" or other anti-takeover statute, or similar statute or regulation, becomes applicable to this Agreement or the Stockholder Agreements, the Merger or any other transaction contemplated hereby or thereby, take all action necessary to ensure that the Merger and the other transactions contemplated hereby and thereby, may be consummated as promptly as practicable on the terms contemplated hereby and otherwise to minimize the effect of such statute or regulation on the Merger and the other transactions contemplated hereby and thereby.


        5.6.
    Affiliates.     Within ten (10) days after the date of this Agreement, the Company shall deliver to the Parent a letter identifying all persons who are to the Company's Knowledge "affiliates" of the Company for purposes of Rule 145 under the Securities Act. The Company shall use reasonable efforts to cause each such person to deliver to the Parent at least five (5) business days prior to the Effective Time, a written agreement covering Rule 145 matters in customary form and reasonably acceptable to the Parent and the Company from each such person.


        5.7.
    NYSE Listing Application.     The Parent shall prepare and submit to the NYSE a listing application for Parent Common Stock to be issued in the Merger pursuant to Article 2 of this Agreement and shall use its reasonable efforts to obtain, prior to the Effective Time, approval for the listing of such Parent Common Stock, subject to official Notice to the NYSE of issuance. The Company shall cooperate with the Parent in such listing application.


        5.8.
    Confidentiality.     The Parent and the Company shall comply with, and shall cause their respective representatives to comply with, in all respects, all of their respective obligations under the Confidentiality Agreement, and in no event shall the negotiation, entering into or termination of this Agreement be deemed to waive or otherwise adversely affect the rights and obligations of the parties under the Confidentiality Agreement, which rights and obligations shall continue in full force and effect in accordance with their terms.

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        5.9.
    Access to Information.     The Company shall afford to the Parent and Merger Sub, and to their respective accountants, officers, directors, employees, counsel, and other representatives reasonable access, during normal business hours, upon reasonable prior notice, from the date hereof through the Effective Time, to all of its properties, books, data, contracts, commitments, and records. During such period, the Company shall additionally furnish promptly to the Parent and Merger Sub all information concerning the Company's and all Company Subsidiaries' businesses, prospects, properties, liabilities, results of operations, financial condition, product evaluations and testing, pilot studies, clinical data and studies and evaluations, patient results, regulatory compliance, officers, employees, third party clinical investigators, consultants, distributors, customers, suppliers, and others having dealings with the Company and all Company Subsidiaries as the Parent and Merger Sub may reasonably request and reasonable opportunity to contact and obtain information from such officers, employees, investigators, consultants, distributors, customers, suppliers, and others having dealings with the Company and all Company Subsidiaries as the Parent and Merger Sub may reasonably request. No investigation pursuant to this Section 5.9 shall affect any representation or warranty of the Company contained herein or any condition to the obligations of the Parent and Merger Sub hereto. The parties hereto agree that the Company's disclosure obligations hereunder shall not require the disclosure of competitively sensitive information in a manner that would create a risk of liability under the Antitrust Laws.


        5.10.
    Approvals and Consents; Cooperation.     

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        5.11.
    Commercially Reasonable Efforts; Further Actions.     Subject to the terms and conditions herein provided and without being required to waive any conditions herein (whether absolute, discretionary, or otherwise), each of the parties hereto agrees to use commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper, or advisable to consummate and make effective the transactions contemplated by this Agreement, in the most expeditious manner possible. In case at any time after the Effective Time any further action is

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necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall take all such necessary action.


        5.12.
    Officers' and Directors' Indemnification.     


        5.13.
    Notification of Certain Matters.     The Company shall give prompt written notice to the Parent, and the Parent shall give prompt written notice to the Company, of (a) the occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of which would be likely to cause any representation or warranty contained herein to be untrue or inaccurate in any material respect at or prior to the Effective Date and (b) any material failure of the Company or the Parent, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.13 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice.


        5.14.
    Public Announcements.     The Parent and Merger Sub, on the one hand, and the Company, on the other hand, shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, including the Merger, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by applicable Nasdaq or NYSE rules. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement shall be in the form previously agreed to by the parties.


        5.15.
    Voting of Shares.     To induce the Parent to execute this Agreement, all of the officers and directors of the Company, and each Person who holds shares of Company Common Stock that are also deemed beneficially owned by Thomas Kempner (a director of the Company), have executed and delivered as of the date hereof Agreements to Facilitate Merger in the form attached hereto as Exhibit 5.15 (the " Agreements to Facilitate Merger ") pursuant to which, as and to the extent set forth

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therein, each such person has agreed to vote his, her or its shares of Company Common Stock in favor of the Merger at the Company Stockholders Meeting.


        5.16.
    Executive Officer Agreements.     Upon execution of this Agreement, each officer or employee of the Company listed in Exhibit 5.16 shall enter into an employment agreement, in form and substance satisfactory to the Parent and such officer or employee, for the benefit of the Company, the Parent and the Surviving Corporation and their Affiliates, which employment agreement shall become effective upon, and contingent upon the occurrence of, the Effective Date.


        5.17.
    Expenses.     Except as set forth in Section 7.2 and as otherwise provided in this Section 5.17, all fees and expenses incurred in connection with the Merger, this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not the Merger is consummated; provided , however , that the Company and the Parent shall share equally the cost of printing and filing with the SEC the Proxy Statement/Prospectus and the Registration Statement. The parties agree that within five (5) business days of the execution of this Agreement, the Parent will pay to the Company an amount of $250,000 to reimburse, in part, the out-of-pocket fees and expenses for legal, accounting and financial advisor services and the other fees and expenses incurred by the Company through the date of this Agreement in connection with this Agreement and the transactions contemplated hereby. The Parent shall assume and pay, or reimburse the Company for, all reasonably documented out-of-pocket fees payable and expenses incurred exclusively in connection with the Company's pursuit of clearance under the HSR Act; provided , however , that this obligation shall apply only to the extent such fees and expenses arise from actions taken after the date of this Agreement and are expressly approved in advance by the Parent (the " Company HSR Expenses "), it being agreed that such approval may not be unreasonably withheld, delayed or limited in scope (giving due consideration to the parties' respective obligations under Section 5.10, including the general obligation to use commercially reasonable efforts to advance the Merger in the most expeditious manner practicable); and provided further , that the Company shall not be liable under this Agreement for any failure to take actions which are subject to the foregoing advance approval requirement, for which approval is sought, and which are not so approved. The Company shall send the Parent invoices for the Company HSR Expenses not directly assumed or paid by the Parent on a monthly basis, and the Parent shall reimburse the Company for the amount reflected in such invoices as soon as practicable following receipt of each such invoice.


        5.18.
    Section 368 Qualification.     The Parent, Merger Sub and the Company will each use commercially reasonable efforts to cause the Merger to qualify as a reorganization within the meaning of Section 368 of the Code, will report the Merger in such manner and will not take any action reasonably likely to cause the Merger to not so qualify.


        5.19.
    Provision of Tax Returns.     The Company and each Company Subsidiary shall deliver to the Parent copies of each Tax Return with respect to Taxes based upon net income or net profits filed or to be filed by the Company or any Company Subsidiary on or after the date of this Agreement and through the Effective Time, such that they are received by the Parent no later than three (3) business days prior to the Effective Time.


        5.20.
    Employee Benefit Plans.     Prior to the Closing:

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        5.21.
    Bonuses.     


        5.22.
    Communications.     Each of the Parent, Merger Sub and the Company will issue public announcements and communicate with employees and other Persons in compliance with the written communication plan agreed upon concurrently with the execution of this Agreement.


ARTICLE 6.
CONDITIONS PRECEDENT

        6.1.     Conditions to Obligations of the Parent, Merger Sub, and the Company.     The respective obligations of each party to consummate the Merger shall be subject to the fulfillment at or prior to the Closing of the following conditions:

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        6.2.
    Conditions to Obligations of the Parent and Merger Sub.     The respective obligations of the Parent and Merger Sub to consummate the Merger shall be subject to the fulfillment at or prior to the Closing of the following additional conditions:

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        6.3.
    Conditions to Obligations of the Company.     The obligation of the Company to consummate the Merger shall be subject to the fulfillment at or prior to the Closing of the following additional conditions:

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ARTICLE 7.
TERMINATION AND ABANDONMENT

        7.1.     Termination.     This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval by the stockholders of the Company, only:

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        7.2.
    Effect of Termination.     

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ARTICLE 8.
DEFINED TERMS

        8.1.     Definitions of Certain Terms.     When used in this Agreement, and in addition to the other terms defined herein, the following terms shall have the meanings specified in this Article 8.

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        8.2.
    Location of Other Defined Terms.     The following additional terms are defined elsewhere in this agreement, as indicated below:

Defined Term

  Section
2001 Plan   2.4(a)
401(k) Plan   5.20(e)
Agreement   First Paragraph
Agreements to Facilitate Merger   5.15
Antitrust Laws   5.10(b)
Assumed Options   2.4(a)
Bonus Adjustment Ratio   5.21(b)
Cancelled Shares   2.1(b)
Certificate of Merger   1.3
Certificates   2.3(b)
Class A Preferred Stock   3.3(a)
Class B Preferred Stock   3.3(a)
Closing   1.2
Closing Date   1.2
Code   Third Recital
Common Conversion Ratio   2.1(c)
Company   First Paragraph
Company Affiliated Organization   3.13(a)
Company Common Stock   Second Recital
Company Compensation Plans   3.13(e)
Company Disclosure Schedule   Article 3
Company HSR Expenses   5.17
Company Material Agreements   3.18(b)
Company Pension Plan   3.13(a)
Company Plan   3.13(g)
Company Preferred Stock   3.3(a)
Company SEC Reports   3.4(a)
Company Securities   3.3(a)
Company Stockholder Approval   5.3(a)
Company Stockholders Meeting   5.3(a)
Company Welfare Plan   3.13(d)
Effective Time   1.3
ESOP   5.20(b)
Exchange Agent   2.3(a)
Termination Fee   7.2(a)(i)
Foreign Antitrust Authority   7.1(b)
Merger   Second Recital
Merger Sub   First Paragraph
Merger Sub Common Stock   2.1(a)
NYSE   2.1(c)
Option Cash-Out Amount   2.4(c)
Option Notice   2.4(b)
Other Plan Options   2.4(a)
Other Plans   2.4(a)
Parent   First Paragraph
Parent Average Stock Price   2.1(c)
Parent Common Stock   Second Recital
     

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Parent SEC Reports   4.3(a)
Proxy Statement / Prospectus   3.6
Registration Statement   5.3(b)
Representatives   5.2(a)
Subsidiary Securities   3.3(b)
Surviving Corporation   1.1
Tax   3.17


ARTICLE 9.
GENERAL PROVISIONS

        9.1.     Amendment and Modification.     Subject to applicable Law, this Agreement may be amended, modified, or supplemented only by written agreement of the Parent, Merger Sub and the Company at any time prior to the Effective Time with respect to any of the terms contained herein. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.


        9.2.
    Waiver of Compliance; Consents.     Any failure of the Parent or Merger Subsidiary on the one hand, or the Company on the other hand, to comply with any obligation, covenant, agreement, or condition herein may be waived by the Company or the Parent, respectively, only by a written instrument signed by an officer of the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement, or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing. Merger Subsidiary agrees that any consent or waiver of compliance given by the Parent hereunder shall be conclusively binding upon Merger Subsidiary, whether or not given expressly on its behalf.


        9.3.
    Investigation; Survival of Representations and Warranties.     The respective representations and warranties of the Parent and the Company contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party hereto. Each and every representation and warranty contained herein shall be deemed to be conditions to the Merger and shall not survive the Merger. This Section 9.3 shall have no effect upon any other obligation of the parties hereto, whether to be performed before or after the Closing.


        9.4.
    Notices.     All notices and other communications hereunder shall be in writing and shall be deemed given (a) on the date of delivery if delivered personally, or by telecopy or facsimile, upon electronic confirmation of receipt, (b) on the first business day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder must be delivered as set forth below, or pursuant to instructions as may be designated in writing by the party to receive such notice:

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        9.5.
    Specific Performance.     The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties further agree that each party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.


        9.6.
    Assignment.     Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of Law or otherwise by any of the parties without the prior written consent of the other parties; any instrument purporting to make such assignment shall be void. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.


        9.7.
    Governing Law.     This Agreement shall be construed in accordance with and governed by the Law of the State of Delaware (without giving effect to choice of Law principles thereof).


        9.8.
    Interpretation.     The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The table of contents, article and section headings contained in this Agreement are inserted for reference purposes only and shall not affect the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any

A-47


presumption or other rule requiring the resolution of any ambiguity regarding the interpretation or construction hereof against the party causing this Agreement to be drafted.


        9.9.
    Entire Agreement.     This Agreement, including the annexes, exhibits and schedules hereto, the Company Disclosure Schedule, and the Confidentiality Agreement referred to herein, embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersede all prior agreements and the understandings between the parties with respect to such subject matter, including that certain letter agreement between the Parent and the Company, dated January 15, 2004, but excluding that certain Joint Defense Agreement between the Parent and the Company dated March 11, 2004, which shall continue in full force and effect. No discussions regarding or exchange of drafts or comments in connection with the transactions contemplated herein shall constitute an agreement among the parties hereto. Any agreement among the parties shall exist only when the parties have fully executed and delivered this Agreement.


        9.10.
    Parties in Interest.     This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns, and, except for the provisions of Section 5.12, nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.


        9.11.
    Severability.     If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economics or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. Upon determination that any term or other provision hereof is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.


        9.12.
    Counterparts.     This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank]

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        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

    ECOLAB INC.

 

 

By:

 

/s/  
STEPHEN D. NEWLIN       
    Name:  Stephen D. Newlin
Title:    President, Industrial

 

 

BESSY ACQUISITION INC.

 

 

By:

 

/s/  
STEPHEN D. NEWLIN       
    Name:  Stephen D. Newlin
Title:    Authorized Person

 

 

ALCIDE CORPORATION

 

 

By:

 

/s/  
JOSEPH A. SASENICK       
    Name:  Joseph A. Sasenick
Title:    Chairman and Chief Executive Officer

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Appendix B


AGREEMENT TO FACILITATE MERGER

        This Agreement to Facilitate Merger (this " Agreement ") is made and entered into as of March     , 2004, between Ecolab Inc., a Delaware corporation (" Acquiror "), and the undersigned stockholder (" Stockholder ") of Alcide Corporation, a Delaware corporation (" Alcide ").

RECITALS

        A.    Concurrently with the execution of this Agreement, Acquiror, Alcide and Bessy Acquisition Inc., a Delaware corporation and wholly owned subsidiary of Acquiror (" Merger Sub "), have entered into an Agreement and Plan of Merger (the " Merger Agreement ") which provides for the merger (the " Merger ") of Merger Sub with and into Alcide. Pursuant to the Merger, each share of common stock, par value $0.01 per share, of Alcide (" Alcide Common Stock ") issued and outstanding immediately prior to the effective time of the Merger (other than Cancelled Shares, as defined in the Merger Agreement) will be converted into the right to receive a certain fraction of a share of common stock, par value $1.00 per share, of Acquiror on the basis described in the Merger Agreement.

        B.    Stockholder is the record holder and beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of such number of Shares as is indicated on the final page of this Agreement.

        C.    As a condition to its willingness to enter into the Merger Agreement, Acquiror has required that Stockholder enter into this Agreement, and Stockholder is willing to enter into this Agreement in order to induce Acquiror to enter into the Merger Agreement.

        NOW, THEREFORE, intending to be legally bound, the parties agree as follows:


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

B-1



        2.
    Agreement to Retain Shares and Voting Rights.     


        3.
    Agreement to Vote Shares.     At every meeting of stockholders of Alcide (or any adjournment thereof) called with respect to any of the following, and on every action or approval by written consent of the stockholders of Alcide with respect to any of the following, Stockholder shall vote the Shares in favor of approval of the Merger and the Merger Agreement and any matter that could reasonably be expected to facilitate the Merger. Stockholder agrees not to take any actions contrary to Stockholder's obligations under this Agreement. Without limiting the generality of the foregoing, Stockholder shall vote against any proposal (other than the Merger Agreement) that could reasonably be expected to (a) result in any change in the directors of Alcide, any change in the present capitalization of Alcide or any amendment to Alcide's Certificate of Incorporation or By-laws; (b) result in a breach of any covenant, representation or warranty or any other obligation or agreement of Alcide under the Merger Agreement; (c) impair in any material respect Alcide's ability to perform its obligations under the Merger Agreement; or (d) otherwise prevent or materially delay the consummation of the transactions contemplated by the Merger Agreement.


        4.
    No Solicitation.     Prior to the Expiration Time, Stockholder shall not as a stockholder (either individually or through any representatives or agents): (a) solicit, initiate, facilitate or encourage (including by way of furnishing information), directly or indirectly, any inquiries regarding, or the submission of, any Acquisition Proposal; (b) participate in any discussions or negotiations regarding, or furnish to any Person any information or data with respect to, or take any other action to knowingly facilitate the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal; or (c) enter into any agreement with respect to any proposal for a Takeover Proposal or approve or resolve to approve any proposal for any Acquisition Proposal. Upon execution of this Agreement, Stockholder shall (y) immediately cease any existing activities, discussion or negotiations with any parties conducted prior to such time with respect to any of the foregoing; and (z) promptly (but in all events within twenty-four hours) notify Acquiror of the existence of any proposal, discussion, negotiation, or inquiry received by Stockholder with respect to a potential Acquisition Proposal and communicate the material terms of any such proposal, discussion, negotiation, or inquiry to Acquiror (including provision to Acquiror of any material documents (except for matters

B-2


covered by an attorney-client privilege) received by Stockholder in connection with such proposal, discussion, negotiation, or inquiry).


        5.
    Irrevocable Proxy.     Concurrently with the execution of this Agreement, Stockholder shall deliver to Acquiror a proxy in the form attached hereto as Exhibit A (the " Proxy "), which shall be irrevocable to the extent provided therein, with the total number of shares of outstanding capital stock of Alcide beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act) by Stockholder and subject to the Proxy set forth therein.


        6.
    Representations, Warranties and Covenants of Stockholder.     Stockholder hereby represents and warrants to Acquiror that Stockholder (a) is the sole record and beneficial owner of the Shares, which at the date hereof and at all times up until the Expiration Date will be free and clear of any liens, claims, options, charges or other encumbrances; (b) does not beneficially own any shares of capital stock of Alcide other than the Shares; and (c) has full power and authority to make, enter into and carry out the terms of this Agreement and the Proxy.


        7.
    Additional Documents.     Stockholder hereby covenants and agrees to execute and deliver any additional documents necessary or desirable, in the reasonable opinion of Acquiror, to carry out the intent of this Agreement.


        8.
    Consent and Waiver.     Stockholder hereby gives any consents or waivers that are reasonably required for the consummation of the Merger under the terms of any agreements to which Stockholder is a party as a stockholder or pursuant to any rights Stockholder may have as a stockholder.


        9.
    No Ownership Interest.     Nothing contained in this Agreement shall be deemed to vest in Acquiror any direct or indirect ownership or incidents of ownership of or with respect to any of the Shares, except as otherwise expressly provided herein. All rights, ownership and economic benefits of and relating to the Shares shall remain with, and belong to, Stockholder, and this Agreement shall not be deemed to authorize Acquiror to manage, direct, superintend, restrict, regulate, govern or administer any of the policies or operations of Alcide or to direct Stockholder in the voting of any of the Shares, except as otherwise expressly provided herein.


        10.
    Termination.     This Agreement and the Proxy delivered in connection herewith shall terminate and shall have no further force or effect as of the Expiration Time.


        11.
    Miscellaneous.     

B-3


If to Acquiror:   Ecolab Inc.
370 Wabasha Street North
St. Paul, Minnesota 55102
Fax: (651) 225-3380
Attention: Vice President F&B, N.A.

with a copy (which shall not constitute notice) to:

 

 

Ecolab Inc.
370 Wabasha Street North
St. Paul, Minnesota 55102
Fax: (651) 293-2573
Attention: General Counsel

 

 

and

 

 

Oppenheimer Wolff & Donnelly LLP
Plaza VII, Suite 3300
Minneapolis, Minnesota 55402-1609
Fax: (612) 607-7100
Attention: Timothy J. Scallen

If to Stockholder:

 

To the address for notice set forth on the last page hereof.

with a copy (which shall not constitute notice) to:

 

 

Fax: (      )      -      
Attention:

B-4


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Signature Page
to
Agreement to Facilitate Merger

        IN WITNESS WHEREOF, the parties have caused this Agreement to Facilitate Merger to be duly executed on the date and year first above written.

    ECOLAB INC.

 

 

By:

 

    

    Name:
Title:    

 

 

STOCKHOLDER

 

 

By:

 

    

    Name:  

 

 

Shares beneficially owned as of the date hereof:
                            shares of Alcide Common Stock
    Form of beneficial ownership:

B-6


EXHIBIT A

IRREVOCABLE PROXY

        The undersigned stockholder of Alcide Corporation, a Delaware corporation (" Alcide "), hereby irrevocably appoints Stephen Newlin, Lawrence Bell and Douglas Milroy of Ecolab Inc., a Delaware corporation (" Acquiror "), and each of them, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to the full extent of the undersigned's rights with respect to the shares of outstanding capital stock of Alcide beneficially owned by the undersigned as of the date hereof, which shares are listed below (the " Shares "), and any and all other shares or securities issued or issuable in respect thereof on or after the date hereof, until such time as that certain Agreement and Plan of Merger, dated as of the date hereof (the " Merger Agreement "), by and among Acquiror, Alcide and Bessy Acquisition Inc., a Delaware corporation and wholly owned subsidiary of Acquiror, shall be terminated in accordance with its terms or the Merger (as defined in the Merger Agreement) is effective, whichever first occurs. Upon the execution hereof, all prior proxies given by the undersigned with respect to the Shares and any and all other shares or securities issued or issuable in respect thereof on or after the date hereof are hereby revoked and no subsequent proxies will be given.

        This proxy is coupled with an interest and is irrevocable, is granted in order to secure the obligations under the Agreement to Facilitate Merger, dated as of the date hereof, between Acquiror and the undersigned stockholder (the " Agreement to Facilitate Merger "), and is granted in consideration of Acquiror entering into the Merger Agreement. The attorneys and proxies named above will be empowered at any time prior to termination of the Merger Agreement to exercise all voting and other rights (including, without limitation, the power to execute and deliver written consents with respect to the Shares) of the undersigned at every annual, special or adjourned meeting of Alcide stockholders, and in every written consent in lieu of such a meeting, or otherwise, in favor of the Merger and the Merger Agreement and any matter that could reasonably be expected to facilitate the Merger.

        The attorneys and proxies named above may only exercise this proxy to vote the Shares subject hereto at any time prior to termination of the Merger Agreement at every annual, special or adjourned meeting of the stockholders of Alcide and in every written consent in lieu of such meeting, in favor of approval of the Merger and the Merger Agreement and any matter that could reasonably be expected to facilitate the Merger, and may not exercise this proxy on any other matter. The undersigned stockholder may vote the Shares on all other matters.

        Any obligation of the undersigned hereunder shall be binding upon the successors and assigns of the undersigned.

Dated: March     , 2004

Signature of Stockholder:       
   
Print Name of Stockholder:       
   

Shares beneficially owned as of the date hereof:

                        shares of outstanding common stock, par value $0.01 per share, of Alcide

B-7



Appendix C

    •    2029 CENTURY PARK EAST, SUITE 820    •    LOS ANGELES, CA 90067    •    310-284-8008    •    FAX 310-284-8130

DUFF & PHELPS, LLC

March 11, 2004

The Board of Directors
Alcide Corporation
8561 154th Ave. NE
Redmond, WA 98052

Dear Board of Directors:

        The Board of Directors of Alcide Corporation ("Alcide" or the "Company") has engaged Duff & Phelps, LLC ("Duff & Phelps") as its independent financial advisor to provide an opinion (the "Opinion") as to the fairness to the non-management public holders of the Company's common stock, from a financial point of view, of a contemplated transaction described below (the "Proposed Transaction")(without giving effect to any impact of the Proposed Transaction on any particular stockholder other than in its capacity as a stockholder). Previously, Duff & Phelps has not provided financial advisory services to the Company.

Description of the Proposed Transaction

        The Proposed Transaction involves the merger of Alcide with Bessy Acquisition Inc., a wholly owned subsidiary of Ecolab, Inc. ("Ecolab"). All of the Company's outstanding common shares, issued and outstanding prior to the effective time of the merger, would be converted into the right to receive a certain fraction of a share of common stock (the "Common Conversion Ratio") of Ecolab based on a stock price per share for the Company of $21.00. The Common Conversion Ratio would equal the fraction of a share of Ecolab equal to $21.00 divided by the average (rounded to nearest cent) of the daily closing stock price of Ecolab's common stock for the ten consecutive trading days on the New York Stock Exchange ("NYSE") ended on and including the fifth NYSE trading day immediately preceding the close of the Proposed Transaction.

        The Proposed Transaction contemplates the redemption of all of Alcide's preferred stock outstanding and the acceleration and cash-out of the outstanding stock options that have exercise prices below $21.00 (other than options under plans or arrangements that do not permit termination and cash-out, which options will be assumed by Ecolab and replaced with Ecolab options on substantially similar terms.) As a result of the Proposed Transaction, the Company's common shares would no longer be publicly traded. Details of the Proposed Transaction are provided in the Agreement and Plan of Merger of Alcide, Bessy Acquisition Inc., and Ecolab, Inc. (the "Merger Agreement").

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Scope of Analysis

        In connection with this Opinion, we have made such reviews, analyses and inquiries, as we have deemed necessary and appropriate under the circumstances. Our due diligence with regards to the Proposed Transaction included, but was not limited to, the items summarized below.


Joseph A. Sasenick*   Chairman and Chief Executive Officer
John P. Richards   President and Chief Financial Officer
G. Kere Kemp   Executive Vice President and Chief Scientific Officer
James L. Winters*   Vice President and General Manager, Animal Health

*
Telephonic interview

2.
Held discussions with Ms. Jacque Cabe, Partner of KPMG LLP, the Company's auditor;

3.
Reviewed the draft Merger Agreement dated March 8, 2004 and understand and assumed that there will be no changes material to our analysis in the final executed Merger Agreement;

4.
Reviewed Alcide's financial statements and SEC filings, including the annual reports on Form 10-K for the fiscal years ended May 31, 2001, 2002 and 2003 and quarterly reports on Form 10-Q for the periods ended August 31, 2003 and November 30, 2003;

5.
Reviewed the Proxy Statement dated August 29, 2003;

6.
Reviewed management prepared income statement forecasts through May 31, 2008;

7.
Reviewed the exclusivity agreement between Ecolab and Alcide, dated January 15, 2004;

8.
Reviewed the non-qualified and incentive option schedule dated as of November 30, 2003 provided by Alcide management;

9.
Reviewed minutes of the Board of Directors from July 22, 1999 through February 27, 2004;

10.
Analyzed the terms of the Company's Class A Preferred Stock and Redeemable Class B Preferred Stock;

11.
Analyzed the historical trading price and trading volume of Alcide's common stock;

12.
Reviewed other operating and financial information provided by Alcide management; and

13.
Reviewed certain other relevant, publicly available information, including economic, industry, and investment information.

        Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps did not make any independent evaluation, appraisal or physical inspection of the Company's solvency or of any specific assets or liabilities (contingent or otherwise). In addition, Duff & Phelps is not expressing any opinion as to the market price or value of the Ecolab shares after completion of the Proposed Transaction. Duff & Phelps also has made no independent investigation of any legal matters involving the Company and has relied upon all legal advice given to the Board of Directors by its counsel. In rendering this Opinion, Duff & Phelps relied upon the fact that the Board of Directors and the Company have been advised by counsel as to all legal matters with respect to the Proposed Transaction, including whether all procedures required by law to be taken in connection with the Proposed Transaction have been duly, validly and timely taken;

C-2


and Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.

        In preparing its forecasts, performing its analysis and rendering its Opinion with respect to the Proposed Transaction, Duff & Phelps (i) relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including Company management, and did not attempt to independently verify such information, and (ii) assumed that any estimates, evaluations and projections furnished to Duff & Phelps were reasonably prepared and based upon the last currently available information and good faith judgment of the person furnishing the same, and (iii) assumed that the final versions of all documents reviewed by us in draft form conform in all material respects to the drafts reviewed. Duff & Phelps' Opinion further assumes that information supplied and representations made by Company management are substantially accurate regarding the Company and the Proposed Transaction. Neither Company management nor its Board of Directors placed any limitation upon Duff & Phelps with respect to the procedures followed or factors considered by Duff & Phelps in rendering its Opinion.

        In our analysis and in connection with the preparation of this Opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Proposed Transaction. Duff & Phelps has also assumed that all of the conditions precedent required to implement the Proposed Transaction will be satisfied and that the Proposed Transaction will be completed in accordance with the Merger Agreement.

        The basis and methodology for this Opinion have been designed specifically for the express purposes of the Board of Directors and may not translate to any other purposes. In particular, we did not conduct a market test of any kind to determine whether or not a better price could have been obtained, nor did we have any role in the solicitation of offers or the negotiation process with Ecolab.

        To the extent that any of the foregoing assumptions or any of the facts on which this Opinion is based proves to be untrue in any material respect, this Opinion cannot and should not be relied upon.

        Duff & Phelps has prepared this Opinion effective as of March 11, 2004. The Opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of such date, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of Duff & Phelps after the date hereof. Notwithstanding and without limiting the foregoing, in the event that there is any change in any material fact or matter affecting the Opinion after the date hereof and prior to the completion of the Proposed Transaction, Duff & Phelps reserves the right to change, modify or withdraw the Opinion.

        This letter should not be construed as creating any fiduciary duty on Duff & Phelps' part to any party.

        It is understood that this Opinion is for the information of the Board of Directors in connection with its consideration of the Proposed Transaction and may not be used for any other purpose without our prior written consent, except that this Opinion may be included in its entirety in any filing made by the Company with the Securities and Exchange Commission in respect of the Proposed Transaction and you may summarize or otherwise reference the existence of this Opinion in such documents provided that any such summary or reference language shall be subject to prior approval by Duff & Phelps. This Opinion is not a recommendation as to how any stockholder should vote or act with respect to any matters relating to the Proposed Transaction, or whether to proceed with the Proposed Transaction or any related transaction, nor does it indicate that the consideration paid is the best possible attainable under any circumstances. Instead, it merely states whether the price in the Proposed Transaction is within a range suggested by certain financial analysis. The decision as to whether to proceed with the

C-3



Proposed Transaction or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which this Opinion is based.

        Notwithstanding anything to the contrary contained herein or in any other agreement between the parties hereto, both Duff & Phelps and the Company (and each of their employees, representatives or other agents) may disclose to any and all persons, entities and governmental bodies, without limitation of any kind, the "tax treatment" and "tax structure" (in each case within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated herein.

Conclusion

        Based upon and subject to the foregoing, Duff & Phelps is of the opinion that the Proposed Transaction is fair to the non-management public holders of the Company's common stock, from a financial point of view, (without giving effect to any impacts of the Proposed Transaction on any particular stockholder other than in its capacity as a stockholder).

Respectfully submitted,

/s/Duff & Phelps, LLC
DUFF & PHELPS, LLC

C-4



APPENDIX D

DUFF & PHELPS, LLC
INVESTMENT BANKING & FINANCIAL ADVISORY SERVICES

FAIRNESS ANALYSIS

PRESENTATION TO THE BOARD OF DIRECTORS OF

         LOGO

MARCH 11, 2004

CORPORATE ADVISORS SINCE 1932

CHICAGO /*/ LOS ANGELES /*/ NEW YORK /*/ SEATTLE /*/ SAN FRANCISCO

The information contained herein is of a confidential nature and is intended for the exclusive use of the persons or firm to whom it is furnished by us. Reproduction, publicatio n, or dissemination of portions hereof may not be made without prior approval of Duff & Phelps, LLC.



Table of Contents

 
   
   
  Page
I.   Summary of Engagement   D-3

II.

 

Summary of Due Diligence

 

D-7

III.

 

Overview of Proposed Transaction

 

D-10

IV.

 

Analysis of the Proposed Transaction

 

D-12

 

 

A.

 

Discounted Cash Flow Analysis

 

D-15

 

 

B.

 

Comparable Sale Transaction Analysis

 

D-19

 

 

C.

 

Comparable Public Company Analysis

 

D-21

 

 

D.

 

Current and Historical Stock Price Analysis

 

D-26

 

 

E.

 

Premiums Paid Analysis

 

D-28

V.

 

Fairness Conclusions

 

D-30

D-1



Appendix

A.
Comparable Company Sale Transactions

B.
Tier 1—Comparable Public Company Data and Descriptions

C.
Tier 2—Comparable Public Company Data and Descriptions

D.
Tier 3—Comparable Public Company Data and Descriptions

E.
Tier 4—Comparable Public Company Data and Descriptions

F.
Analysis of Payment in Cash versus Ecolab Stock

D-2


Summary of Engagement

Duff & Phelps, LLC ("Duff & Phelps") has been engaged by Alcide Corporation ("Alcide" or the "Company"), as financial advisor to the Board of Directors of the Company, in connection with a contemplated transaction (the "Proposed Transaction"), as described below. Specifically, Duff & Phelps has been engaged to provide an opinion (the "Opinion") as to whether the Proposed Transaction is fair to the non-management public shareholders of the Company from a financial point of view (without giving effect to any impacts of the Proposed Transaction on any particular shareholder other than in its capacity as a shareholder.)

        The Proposed Transaction involves the merger of Alcide with Bessy Acquisition Inc., a wholly owned subsidiary of Ecolab, Inc. ("Ecolab"). All of the Company's outstanding common shares, issued and outstanding prior to the effective time of the merger, would be converted into the right to receive a certain fraction of a share of common stock (the "Common Conversion Ratio") of Ecolab based on a stock price per share for the Company of $21.00. The Common Conversion Ratio would equal the fraction of a share of Ecolab equal to $21.00 divided by the average (rounded to nearest cent) of the daily closing stock price of Ecolab's common stock for the ten consecutive trading days on the New York Stock Exchange ("NYSE") ended on and including the fifth NYSE trading day immediately preceding the close of the Proposed Transaction.

        The Proposed Transaction contemplates the redemption of all of Alcide's preferred stock outstanding and the acceleration and cash-out of the outstanding stock options that have exercise prices below $21.00 (other than options under plans or arrangements that do not permit termination and cash-out, which options will be assumed by Ecolab and replaced with Ecolab options on substantially similar terms.) As a result of the Proposed Transaction, the Company's common shares would no longer be publicly traded. Details of the Proposed Transaction are provided in the Agreement and Plan of Merger of Alcide, Bessy Acquisition Inc., and Ecolab, Inc. (the "Merger Agreement").

D-3


        Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps did not make any independent evaluation, appraisal or physical inspection of the Company's solvency or of any specific assets or liabilities (contingent or otherwise). In addition, Duff & Phelps is not expressing any opinion as to the market price or value of the Ecolab shares after completion of the Proposed Transaction. Duff & Phelps also has made no independent investigation of any legal matters involving the Company and has relied upon all legal advice given to the Board of Directors by its counsel. In rendering this Opinion, Duff & Phelps relied upon the fact that the Board of Directors and the Company have been advised by counsel as to all legal matters with respect to the Proposed Transaction, including whether all procedures required by law to be taken in connection with the Proposed Transaction have been duly, validly and timely taken; and Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.

        In preparing its forecasts, performing its analysis and rendering its Opinion with respect to the Proposed Transaction, Duff & Phelps (i) relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including Company management, and did not attempt to independently verify such information, and (ii) assumed that any estimates, evaluations and projections furnished to Duff & Phelps were reasonably prepared and based upon the last currently available information and good faith judgment of the person furnishing the same, and (iii) assumed that the final versions of all documents reviewed by us in draft form conform in all material respects to the drafts reviewed. Duff & Phelps' Opinion further assumes that information supplied and representations made by Company management are substantially accurate regarding the Company and the Proposed Transaction. Neither Company management nor its Board of Directors placed any limitation upon Duff & Phelps with respect to the procedures followed or factors considered by Duff & Phelps in rendering its Opinion.

D-4


        In our analysis and in connection with the preparation of this Opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Proposed Transaction. Duff & Phelps has also assumed that all of the conditions precedent required to implement the Proposed Transaction will be satisfied and that the Proposed Transaction will be completed in accordance with the Merger Agreement.

        The basis and methodology for this Opinion have been designed specifically for the express purposes of the Board of Directors and may not translate to any other purposes. In particular, we did not conduct a market test of any kind to determine whether or not a better price could have been obtained, nor did we have any role in the solicitation of offers or the negotiation process with Ecolab.

        To the extent that any of the foregoing assumptions or any of the facts on which this Opinion is based proves to be untrue in any material respect, this Opinion cannot and should not be relied upon.

        Duff & Phelps has prepared this Opinion effective as of March 11, 2004. The Opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of such date, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of Duff & Phelps after the date hereof. Notwithstanding and without limiting the foregoing, in the event that there is any change in any material fact or matter affecting the Opinion after the date hereof and prior to the completion of the Proposed Transaction, Duff & Phelps reserves the right to change, modify or withdraw the Opinion.

D-5


        It is understood that this Opinion is for the information of the Board of Directors in connection with its consideration of the Proposed Transaction and may not be used for any other purpose without our prior written consent, except that this Opinion may be included in its entirety in any filing made by the Company with the Securities and Exchange Commission in respect of the Proposed Transaction and you may summarize or otherwise reference the existence of this Opinion in such documents provided that any such summary or reference language shall be subject to prior approval by Duff & Phelps. This Opinion is not a recommendation as to how any stockholder should vote or act with respect to any matters relating to the Proposed Transaction, or whether to proceed with the Proposed Transaction or any related transaction, nor does it indicate that the consideration paid is the best possible attainable under any circumstances. Instead, it merely states whether the price in the Proposed Transaction is within a range suggested by certain financial analysis. The decision as to whether to proceed with the Proposed Transaction or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which this Opinion is based.

D-6


In connection with this Opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. No limits were placed on us by the Company or the Board of Directors in terms of the information to which we had access or the matters we could consider. Our due diligence with regards to the Proposed Transaction is summarized below.

Conducted meetings with members of the senior management team of Alcide at their corporate headquarters in Redmond, Washington, as follows:

Joseph A. Sasenick*   Chairman and Chief Executive Officer
John P. Richards   President and Chief Financial Officer
G. Kere Kemp   Executive Vice President and Chief Scientific Officer
James L. Winters*   Vice President and General Manager, Animal Health

*
Telephonic interview

Held discussions with Ms. Jacque Cabe, Partner of KPMG LLP, the Company's auditor;

Reviewed the draft Merger Agreement dated March 4, 2004 and understand and assumed that there will be no changes material to our analysis in the final executed Merger Agreement;

D-7


Reviewed Alcide's financial statements and SEC filings, including the annual reports on Form 10-K for the years ended May 31, 2001, 2002 and 2003 and quarterly reports on Form 10-Q for the periods ended August 31, 2003 and November 30, 2003;

Reviewed Proxy Statement dated August 29, 2003;

Reviewed management prepared income statement forecasts through May 31, 2008;

Reviewed exclusivity agreement between Ecolab and Alcide, dated January 15, 2004;

Reviewed non-qualified and incentive option schedule as of November 30, 2003 provided by Alcide management;

Reviewed minutes of the Board of Directors from July 22, 1999 through February 27, 2004;

Analyzed the historical trading price and trading volume of Alcide's common stock;

D-8


Analyzed the terms of the Company's Class A Preferred Stock and Redeemable Class B Preferred Stock;

Reviewed other operating and financial information provided by Alcide management; and

Reviewed certain other relevant, publicly available information, including economic, industry, and investment information.

D-9


Overview of the Proposed Transaction

Background of Proposed Transaction

On September 22, 2003, Mr. Stephen Newlin, Ecolab's President, Industrial, met with Mr. Joseph Sasenick, Alcide's Chairman and CEO, to express Ecolab's interest in exploring a potential business combination with Alcide, whether in the form of a merger, tender offer or otherwise. Following this preliminary meeting, the parties signed a confidentiality agreement in order to facilitate the exchange of confidential information.

On October 10, 2003, Mr. Sasenick advised Alcide's Board of Directors of Ecolab's expression of interest and the plan for continuing discussions.

On October 13, 2003, a group of Ecolab managers met with Alcide's senior management team in order to further explore a business combination and to become more familiar with Alcide and its product offerings, technologies and regulatory requirements.

On November 4, 2003, Mr. Newlin delivered a letter to Mr. Sasenick expressing Ecolab's continuing interest at a preliminary valuation of between $16.00 and $19.00 per share, subject to a continuing review of Alcide's business and operations. Alcide responded with a proposed range of $21.00 to $27.00 per share.

On December 16, 2003, Ecolab and Alcide reached a tentative understanding to proceed with further discussions based on a price of $21.00 per share, subject to Ecolab's continuing due diligence, agreement on a transaction structure, and the negotiation of a definitive agreement.

D-10


On January 15, 2004, Ecolab and Alcide signed a letter agreement in which Ecolab agreed to reimburse Alcide for certain fees and expenses up to $250,000, in exchange for which Alcide agreed to negotiate exclusively with Ecolab for a period of 60 days.

Terms of the Proposed Transaction

Alcide's outstanding common shares would be converted into the right to receive a certain fraction of a share of Ecolab common stock ("Common Conversion Ratio") based on a stock price per share for the Company of $21.00.

Common Conversion Ratio would equal the fraction of a share of Ecolab equal to $21.00 divided by the average daily closing price of Ecolab's common stock for ten consecutive trading days ending on and including the fifth trading day immediately prior to the consummation of the merger.

All of Alcide's preferred stock outstanding would be redeemed and the outstanding stock options that have exercise prices below $21.00 would be cashed out (other than options or arrangements that do not permit termination and cash-out, which options will be assumed by Ecolab and replaced with Ecolab options on substantially similar terms.)

D-11


Analysis of the Proposed Transaction

Fairness Considerations

In determining whether the $21.00 per share stock consideration to be received by the common shareholders of Alcide in the Proposed Transaction is fair, from a financial point of view, to the Company's non-management public stockholders, Duff & Phelps took into consideration the following:

1)
The $21.00 per share consideration to be received by the non-management public common stockholders in the form of Ecolab common stock is not less than the fair value of Alcide's common stock on a controlling interest basis; and

2)
The control premium implied by the $21.00 per share consideration to be received in the Proposed Transaction for the common stock is adequate relative to the premiums paid in other similar sale transactions.

D-12


        We performed various analyses to determine whether the $21.00 per share stock consideration (in the form of Ecolab common stock) to be received by Alcide's non-management public stockholders is fair, from a financial point of view. The $21.00 per share consideration was compared relative to the valuation parameters implied by the following analyses:

    Discounted Cash Flow Analysis

    Comparable Sale Transaction Analysis

    Comparable Public Company Analysis

    Current and Historical Stock Price Analysis

    Premiums Paid Analysis

D-13


(in 000s, except per share data)

  Stock Price
  Shares
Out.(1)

  Less:
Aggregate
Exercise
Proceeds(2)

  Implied
Common Equity
Value

  Plus:
Preferred
Equity(3)

  Plus:
Total
Debt

  Less:
Cash &
Equivalents(4)

  Implied
Enterprise
Value

 
 
   
  (in 000s)

   
   
   
   
   
   
 
Alcide Stock Data                                                  
Proposed Transaction Price     $21.00     2,881   $ 3,150   $ 57,341     $178   $ 0   $ 4,300   $ 53,219  

 

 

Revenues


 

EBITDA


 

EBIT


 

Net Income


 

EPS


 

Book Value


 

 


 

 


 
Alcide Financial Data                                                  
LTM 11/30/03(5)   $ 22,527   $ 5,777   $ 1,922     $1,275   $ 0,48   $ 19,484              

 

 

EV /
Revenues


 

EV /
EBITDA


 

EV /
EBIT


 

Common Equity
Value /
Net Income


 

Common Equity
Value /
Book Value


 

 


 

 


 

 


 
Implied Transaction Multiples                                                  
LTM 11/30/03 Financial Data                                                  
Transaction Price     2.4 x   9.2 x   27.7 x   45.0 x   2.9 x                  

FYE = Fiscal year ended        LTM = Latest twelve months        EV = Enterprise Value

(1)
Includes common shares outstanding of 2,676,731 and exercisable options outstanding of 203,771.

(2)
Exercisa