<PAGE>
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           --------------------------

                                    FORM 10-K
              |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2001
                                       OR
            |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                         Commission file Number 1-10585

                           --------------------------

                            CHURCH & DWIGHT CO., INC.
             (Exact name of registrant as specified in its charter)

     Incorporated in Delaware      I.R.S. Employer Identification No. 13-4996950

      469 North Harrison Street, Princeton, New Jersey         08543-5297
          (Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (609) 683-5900

                           --------------------------

           Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each exchange
          Title of each class                      on which registered
          -------------------                      -------------------
      Common Stock, $1 par value                 New York Stock Exchange
    Preferred Stock Purchase Rights              New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

                           --------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.

                                   Yes |X|  No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

As of March 18, 2002, 37,917,394 shares of Common Stock held by non-affiliates
were outstanding with an aggregate market value of approximately $1,138 million.
The aggregate market value is based on the closing price of such stock on the
New York Stock Exchange on March 18, 2002.

As of March 18, 2002, 39,332,332 shares of Common Stock were outstanding.

                      Documents Incorporated by Reference:


                  Part III              Portions of registrant's Proxy Statement
                                        for the Annual Meeting of Stockholders
                                        to be held on May 9, 2002.

================================================================================


<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                                   <C>

                                     PART I

Item                                                                                                  Page

 1.    Business                                                                                       - 1 -
 2.    Properties                                                                                     - 6 -
 3.    Legal Proceedings                                                                              - 7 -
 4.    Submission of Matters to a Vote of Security Holders                                            - 8 -



                                     PART II

 5.    Market for the Registrant's Common Equity and Related Stockholder Matters                      - 8 -
 6.    Selected Financial Data                                                                        - 8 -
 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations          - 8 -
 7a.   Quantitative and Qualitative Disclosures about Market Risk                                     - 8 -
 8.    Financial Statements and Supplementary Data                                                    - 8 -
 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           - 9 -



                                    PART III

 10.   Directors and Executive Officers of the Registrant                                             - 9 -
 11.   Executive Compensation                                                                         - 9 -
 12.   Security Ownership of Certain Beneficial Owners and Management                                 - 9 -
 13.   Certain Relationships and Related Transactions                                                 - 9 -


                                     PART IV

 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K                                - 9 -
</TABLE>



<PAGE>


                                     PART I


ITEM 1. BUSINESS.

      The Company was founded in 1846 and is the world's leading producer of
sodium bicarbonate, popularly known as baking soda, a versatile chemical which
performs a broad range of functions such as cleaning, deodorizing, leavening and
buffering. The Company specializes in sodium bicarbonate and sodium
bicarbonate-based products, along with other products which use the same raw
materials or technology or are sold into the same markets.

      The Company sells its products, primarily under the ARM & HAMMER(R)
trademark, to consumers through supermarkets, drug stores and mass
merchandisers; and to industrial customers and distributors. ARM & HAMMER is the
registered trademark for a line of consumer products which includes ARM & HAMMER
Baking Soda, ARM & HAMMER DENTAL CARE(R) Dentifrices and ARM & HAMMER DENTAL
CARE Gum, ARM & HAMMER Carpet Deodorizer, ARM & HAMMER Deodorizing Air
Freshener, ARM & HAMMER Powder and Liquid Laundry Detergent, ARM & HAMMER SUPER
SCOOP(R) and ARM & HAMMER SUPER STOP(R) Cat Litter and ARM & HAMMER Deodorant
Anti-Perspirant with Baking Soda. The ARM & HAMMER trademark is also used for a
line of chemical products, the most important of which are sodium bicarbonate,
ammonium bicarbonate, sodium sesquicarbonate, ARM & HAMMER MEGALAC(R) Rumen
Bypass Fat and ARMEX(R) Blast Media. The Company also owns BRILLO(R) Soap Pads,
ARRID Anti-Perspirant and other consumer products. In 2001, consumer products
represented approximately 84% and specialty products 16% of the Company's sales.
Approximately 90% of the Company's sales revenues are derived from sales in the
United States.

      In 2001, the Company acquired two laundry brands, XTRA and Nice'N Fluffy,
as part of the USA Detergents, Inc. acquisition. The acquisition increases
Church & Dwight's laundry product sales to approximately $400 million a year,
making it the third largest company in the $7 billion retail U.S. laundry
detergents business.

      On September 28, 2001 the Company completed the acquisition of the
consumer products business of Carter-Wallace in a partnership with the private
equity group, Kelso & Company, for a total purchase price of $739 million. As
part of this transaction, Church & Dwight purchased outright the ARRID
Anti-Perspirant business in the USA and Canada and the Lambert Kay Pet Care
business for $128.5 million. Armkel, LLC, a 50/50 joint venture with Kelso,
purchased the remainder of Carter-Wallace's domestic and international consumer
products business, including TROJAN Condoms, NAIR Depilatories and FIRST
RESPONSE Home Pregnancy Test Kits, for an additional $610.5 million.

Consumer Products

      Principal Products

      The Company's founders first marketed baking soda in 1846 for use in home
baking. The ARM & HAMMER trademark was adopted in 1867. Today, this product is
known for a wide variety of uses in the home, including as a refrigerator and
freezer deodorizer, scratchless cleaner and deodorizer for kitchen surfaces and
cooking appliances, bath additive, dentifrice, cat litter deodorizer, and
swimming pool pH stabilizer. The Company estimates that a majority of U.S.
households have a box of baking soda on hand. Although no longer the Company's
largest single business, ARM & HAMMER Baking Soda remains the leading brand of
baking soda in terms of consumer recognition of the brand name and its
reputation for quality and value.

      The deodorizing properties of baking soda have since led to the
development of several other household products; ARM & HAMMER Carpet Deodorizer
and ARM & HAMMER Deodorizing Air Freshener are both available in a variety of
fragrances. In 1992, the Company launched ARM & HAMMER Cat Litter Deodorizer, a
scented baking soda product targeted to cat-owning households and veterinarians.
During the fourth quarter of 1997, the Company introduced nationally ARM &
HAMMER SUPER SCOOP(R), The Baking Soda Clumping Litter, which competes in the
fast-growing clumping segment of the cat litter market. Following its success,
the Company launched ARM & HAMMER SUPER STOP(R) Clay Litter in late 1999. In
early 2001, the Company introduced ARM & HAMMER Vacuum Free(TM) Foam Carpet
Deodorizer, a companion product to ARM & HAMMER Carpet Deodorizer.


                                       1

<PAGE>

      The Company's largest consumer business today, measured by sales volume,
is in the laundry detergent market. The ARM & HAMMER brand name has been
associated with this market since the last century when ARM & HAMMER Super
Washing Soda was first introduced as a heavy-duty laundry and household cleaning
product. The Company today makes products for use in various stages of the
laundry cycle; powdered and liquid laundry detergents, fabric softener dryer
sheets and a laundry detergent booster.

      ARM & HAMMER Laundry Detergents, in both powder and liquid forms, have
been available nationally since the early 1980's. The Company markets these
brands as value products, priced at a 15 to 30 percent discount from products
identified by the Company as market leaders. ARM & HAMMER Liquid Laundry
Detergent, is also available in regular and perfume and dye-free forms.

      In 1992, the Company completed the national expansion of another laundry
product, ARM & HAMMER Fabric Softener Sheets. This product stops static cling,
and softens and freshens clothes. In 1998, the Company acquired the TOSS `N
SOFT(R) brand of dryer sheets and combined both products under the FRESH &
SOFT(R) brand name.

      ARM & HAMMER Baking Soda has long been used as a dentifrice. Its mild
cleansing action cleans and polishes teeth, removes plaque and leaves the mouth
feeling fresh and clean. These properties have led to the development of a
complete line of sodium bicarbonate-based dentifrice products which are marketed
and sold nationally primarily under the ARM & HAMMER DENTAL CARE brand name. In
1998, the Company introduced ARM & HAMMER DENTAL CARE Gum, a baking soda based
oral care product that is available in four flavors. In 1999, the Company
introduced ARM & HAMMER ADVANCE WHITE, a line of dentifrice for the whitening
segment of the toothpaste market and ARM & HAMMER P.M., the first toothpaste
specifically formulated for nighttime oral care. In 2000, the Company introduced
ARM & HAMMER SENSATION, a toothpaste targeted to 18-34 year olds, ARM & HAMMER
DENTAL CARE Kids Gum and in early 2001, ARM & HAMMER ADVANCE WHITE Gum, a
companion product to the Advance White toothpaste. In 2001, the Company
introduced ARM & HAMMER ADVANCED BREATH CARE, a line of oral deodorization
products, including a mint and mouthwash.

      The Company markets and sells, ARM & HAMMER Deodorant Anti-Perspirant with
Baking Soda, and ARM & HAMMER Deodorant with Baking Soda. These products are
available in various scented and unscented stick, aerosol and roll-on forms.

      In 1997, the Company acquired a group of five household cleaning brands
from The Dial Corporation. The brands acquired were BRILLO(R) Soap Pads and
other steel wool products, PARSONS(R) and BO-PEEP(R) Ammonia, CAMEO(R) Metal
Polish, RAIN DROPS(R) Water Softener and SNO BOL(R) Cleaners. In 1998, the
Company purchased from The Dial Corporation TOSS `N SOFT(R) Dryer Sheets. During
1999, the Company entered the bathroom cleaner category with the acquisition of
two major brands, CLEAN SHOWER(R) and SCRUB FREE(R). As part of the Scrub Free
transaction, the Company also acquired the DELICARE(R) fine fabric wash brand.
The acquisition of these brands broadens the Company's base of household
cleaning products, and fits well within the Company's current sales, marketing
and distribution activities.

      In 2001, the Company acquired two laundry brands, XTRA and Nice'N Fluffy,
as part of the USA Detergents, Inc. acquisition. The acquisition increases
Church & Dwight's laundry product sales to approximately $400 million a year,
making it the third largest company in the $7 billion retail U.S. laundry
detergents business.

      On September 28, 2001 the Company completed the acquisition of the
consumer products business of Carter-Wallace in a partnership with the private
equity group, Kelso & Company, for a total purchase price of $739 million. As
part of this transaction, Church & Dwight purchased outright the ARRID
Anti-Perspirant business in the USA and Canada and the Lambert Kay Pet Care
business for $128.5 million. Armkel, LLC, a 50/50 joint venture with Kelso,
purchased the remainder of Carter-Wallace's domestic and international consumer
products business, including TROJAN Condoms, NAIR Depilatories and FIRST
RESPONSE Home Pregnancy Test Kits, for an additional $610.5 million.

      Competition

      For information regarding competition, see page 8 through 9 of Exhibit 99.


                                       2

<PAGE>

      Distribution

      The Company's consumer products are primarily marketed throughout the
United States and Canada and sold through supermarkets, mass merchandisers and
drugstores. The Company employs a sales force based regionally throughout the
United States. This sales force utilizes the services of independent food
brokers in each market. The Company's products are strategically located in
Church & Dwight plant and public warehouses and either picked up by customers or
delivered by independent trucking companies.

Specialty Products

      Principal Products

      The Company's specialty products business primarily consists of the
manufacture, marketing and sale of sodium bicarbonate in a range of grades and
granulations for use in industrial and agricultural markets. In industrial
markets, sodium bicarbonate is used by other manufacturing companies as a
leavening agent for commercial baked goods, as an antacid in pharmaceuticals, as
a carbon dioxide release agent in fire extinguishers, and as an alkaline agent
in swimming pool chemicals, and as a filtration agent in kidney dialysis. A
special grade of sodium bicarbonate, as well as sodium sesquicarbonate, is sold
to the animal feed market as a feed additive for use by dairymen as a buffer, or
antacid, for dairy cattle.

      The Company markets and sells MEGALAC Rumen Bypass Fat, a nutritional
supplement made from natural oils, which allows cows to maintain energy levels
during the period of high-milk production, resulting in improved milk yields and
minimal weight loss. The product and the trademark MEGALAC are licensed under a
long-term license agreement from a British company, Volac Ltd.

      In January 1999, the Company formed a joint venture with the Safety-Kleen
Corporation called the ArmaKleen Company. This joint venture distributes Church
& Dwight's proprietary product line of aqueous cleaners along with the Company's
Armex Blast Media line which is designed for the removal of a wide variety of
surface coatings. In 1999, the Company sold the equipment portion of the Armex
blast cleaning business to U.S. Filter Surface Preparation Group, Inc., a U.S.
Filter Company.

      The Company markets and sells ammonium bicarbonate and other specialty
chemicals to food and agricultural markets in Europe through its wholly-owned
British subsidiary Brotherton Speciality Products Ltd.

      The Company and Occidental Petroleum Corporation are equal partners in a
joint venture named Armand Products Company, which produces and markets
potassium carbonate and potassium bicarbonate. Potassium chemicals are sold,
among others, to the glass industry for use in TV and computer monitor screens.

      During 1997, the Company acquired a 40 percent equity interest in
QGN/Carbonor, a Brazilian bicarbonate/carbonate-related chemical company. The
Company exercised its option to increase its interest to 75 percent during 1999.
In 2001, the Company increased its ownership to approximately 85 percent.

Early in 2002, the Company acquired Biovance Technologies, Inc., a small
Oskaloosa, Iowa-based producer of BIO-CHLOR and FERMENTEN, a range of specialty
feed ingredients for dairy cows, which improve feed efficiency and help increase
milk production.

      Competition

      For information regarding competition, see pages 8 through 9 of Exhibit
99.

      Distribution

      The Company markets sodium bicarbonate and other chemicals to industrial
and agricultural customers throughout the United States and Canada. Distribution
is accomplished through regional sales offices and manufacturer's
representatives augmented by the sales personnel of independent distributors
throughout the country.


                                       3

<PAGE>


      Raw Materials and Sources of Supply

      The Company manufactures sodium bicarbonate for both of its consumer and
industrial businesses at two of its plants located at Green River, Wyoming and
Old Fort, Ohio.

      The production of sodium bicarbonate requires two basic raw materials,
soda ash and carbon dioxide. The primary source of soda ash used by the Company
is the mineral, trona, which is found in abundance in southwestern Wyoming, near
the Company's Green River plant. The Company had acquired a number of leases
allowing it to extract these trona deposits. In January 1999, the Company sold
most of these leases to Solvay Minerals, Inc. The Company retains adequate trona
reserves to support the requirements of the sodium bicarbonate business and may
acquire other leases in the future as the need arises.

      The Company is party to a partnership agreement with General Chemical
Corporation, which mines and processes certain trona reserves owned by each of
the two companies in Wyoming. Through the partnership and related supply and
services agreements, the Company obtains a substantial amount of its soda ash
requirements, enabling the Company to achieve some of the economies of an
integrated business capable of producing sodium bicarbonate and related products
from the basic raw material. The Company also has an agreement for the supply of
soda ash from another company.

      The partnership agreement and other supply agreements between the Company
and General Chemical terminate upon two years notice by either company. The
Company believes that alternative sources of supply are available.

      The Company obtains its supply of the second basic raw material, carbon
dioxide, in Green River and Old Fort, under long-term supply contracts. The
Company believes that its sources of carbon dioxide, and other raw and packaging
materials, are adequate.

      At the Company's Green River, Wyoming plant, the Company produces laundry
detergent powder employing a process utilizing raw materials readily available
from a number of sources. Therefore, the supply of appropriate raw materials to
manufacture this product is adequate.

      During 1995, a liquid laundry detergent manufacturing line was constructed
in the Company's Syracuse, New York Plant. This line was capable of producing
virtually all of the Company's liquid laundry detergent requirements. The
Company, when necessary, would utilize a contract manufacturer to meet higher
demand. As a result of the ARMUS Joint Venture and the subsequent USAD
acquisition, all of the Company's liquid laundry detergent production was
shifted to former USA Detergents' plants. The Syracuse plant was shut down at
the end of the first quarter 2001. These plants have enough capacity to produce
all of Church & Dwight's requirements. The BRILLO product line and the Company's
Dryer Sheets line are manufactured at the Company's London, Ohio plant. ARM &
HAMMER DENTAL CARE Gum, PARSONS(R) Ammonia, CAMEO(R) Metal Polish, RAIN DROPS(R)
Water Softener and SNO BOL(R) Cleaners, are contract manufactured for the
Company under various agreements. Alternative sources of supply are available in
case of disruption or termination of the agreements.

Armkel's raw materials are chemicals, plastics, latex and packaging materials.
These materials are generally available from several sources and have no
significant supply problems. Armkel generally has two or more suppliers for
production materials. Although there are multiple providers of their raw
materials, in certain instances Armkel chose to sole source certain raw
materials in order to gain favorable pricing.

      The main raw material used in the production of potassium carbonate is
liquid potassium hydroxide. Armand Products obtains its supply of liquid
potassium hydroxide under a long-term supply arrangement.

      The ArmaKleen Company's industrial liquid cleaning products are contract
manufactured.

      Patents and Trademarks

      The Company's trademarks, including ARM & HAMMER, are registered with the
United States Patent and Trademark Office and also with the trademark offices of
many foreign countries. The ARM & HAMMER trademark has been used by the Company
since the late 1800's, and is a valuable asset and important to the successful
operation of the Company's business.


                                       4

<PAGE>

      Customers and Order Backlog

      A group of three Consumer Products customers accounted for approximately
20% of consolidated net sales in 2001, including a single customer which
accounted for approximately 13%. A group of three customers accounted for
approximately 21% of consolidated net sales in 2000 including a single customer
which accounted for approximately 13%. This group accounted for 20% in 1999.

      The time between receipt of orders and shipment is generally short, and as
a result, backlog is not significant.

      Research & Development

      The Company's Research and Development Department is engaged in work on
product development, process technology and basic research. During 2001,
$21,803,000 was spent on research activities as compared to $19,363,000 in 2000
and $17,921,000 in 1999.

      Environment

      The Company's operations are subject to federal, state and local
regulations governing air emissions, waste and steam discharges, and solid and
hazardous waste management activities. The Company endeavors to take actions
necessary to comply with such regulations. These steps include periodic
environmental audits of each Company facility. The audits, conducted by an
independent engineering concern with expertise in the area of environmental
compliance, include site visits at each location, as well as a review of
documentary information, to determine compliance with such federal, state and
local regulations. The Company believes that its compliance with existing
environmental regulations will not have any material adverse effect with regard
to the Company's capital expenditures, earnings or competitive position. No
material capital expenditures relating to environmental control are presently
anticipated.

      Employees

      At December 31, 2001, the Company had 2,099 employees. The Company is
party to a labor contract with the United Industrial Workers of North America at
its London, Ohio plant which contract continues until September 28, 2002. The
Company believes that its relations with both its union and non-union employees
are satisfactory. The Company's Winsted, Connecticut plant has approximately 44
employees, who belong to the Paper, Allied Industrial, Chemical, and Energy
Workers International Union. The contract expires in early 2003.

      Classes of Similar Products

      The Company's operations constitute two operating segments. The table set
forth below shows the percentage of the Company's net sales contributed by each
group of similar products marketed by the Company during the period from January
1, 1997 through December 31, 2001.


<TABLE>
<CAPTION>
                                                    % of Net Sales
                                   --------------------------------------------------

                                   2001        2000       1999       1998        1997
                                   ----        ----       ----       ----        ----
<S>                                 <C>         <C>        <C>        <C>         <C>
       Consumer Products            84          80         79         81          79

       Specialty Products           16          20         21         19          21
</TABLE>



                                       5

<PAGE>


I
TEM 2. PROPERTIES

      The Company's executive offices and research and development facilities
are owned by the Company, subject to a New Jersey Industrial Revenue Bond, and
are located on 22 acres of land in Princeton, New Jersey, with approximately
72,000 square feet of office and laboratory space. In addition, the Company
leases space in two buildings adjacent to this facility which contain
approximately 90,000 square feet of office space. The Company also leases
regional sales offices in various locations throughout the United States. The
Company is currently constructing an additional 55,000 square feet of
administration space to its Princeton facility that will be completed in 2002.

      At Syracuse, New York the Company owns a 16 acre site which included a
group of connected buildings containing approximately 270,000 square feet of
floor space. This plant was used primarily for the manufacture and packaging of
liquid laundry detergent. As previously mentioned, the Company closed the plant
in early 2001 and shifted liquid laundry detergent production to the former USA
Detergents' facilities. The Company is currently demolishing the structures.
This will be completed during 2002.

      The Company's plant in Green River, Wyoming is located on 112 acres of
land owned by the Company. The plant and related facilities contain
approximately 273,000 square feet of floor space. The plant was constructed in
1968 and has since been expanded to a current capacity of 200,000 tons of sodium
bicarbonate per year. This plant also manufactures powder laundry detergent and
cat litter. During 2001, an additional 101,000 square feet of warehouse space
was added.

      The Company's plant in Old Fort, Ohio is located on 75 acres of land owned
by the Company. The plant and related facilities contain approximately 208,000
square feet of floor space. The plant was completed in 1980 and has since been
expanded to a capacity of 280,000 tons of sodium bicarbonate per year. During
2001, an additional 90,000 square feet of warehouse space was added.

      In 1998, the Company purchased a 250,000 square foot manufacturing
facility set on approximately 46 acres in Lakewood, New Jersey. The plant
manufactures and packages the ARM & HAMMER Deodorant Anti-Perspirant product
line, its dentifrice products which was relocated from the Company's Greenville,
South Carolina, facility in 1999, ARM & HAMMER Deodorizing Air Freshener, and
packages ARM & HAMMER Dental Care Gum. In 2000, SCRUB FREE and CLEAN SHOWER
bathroom cleaner production started. Previously it was contract manufactured.

      During 2000, the Company sold a portion of the facility it owns in
Greenville, South Carolina. In 2001, the Company completed the sale of the
remaining portion of the facility.

      During 1997, the Company acquired from The Dial Corporation a
manufacturing facility in London, Ohio. This facility contains approximately
141,000 square feet of floor space and is located on 6 acres of land. The
facility manufactures and packages BRILLO Soap Pads and ARM & HAMMER FRESH &
SOFT Dryer Sheets.

      The Company will complete in 2002, a 50,000 square foot manufacturing
facility in Madera, California that will produce Megalac Rumen Bypass Fats and
related higher-value Megalac products.

      As part of the USA Detergents acquisition, the Company acquired three
manufacturing facilities. The Harrisonville, Missouri facility produces
predominately liquid laundry products. It is approximately 510,000 square feet,
which includes a 150,000 square foot warehouse completed in 2001. The facility
is situated on approximately 43 acres of land. The Company also manufactures
liquid laundry products at a 360,000 square foot leased facility in North
Brunswick, New Jersey. The lease expires in 2004, subject to two five-year
extensions. The Company also acquired a 105,000 square foot manufacturing
facility in Chicago, Illinois that manufactures powder laundry detergent. The
facility is situated on a three-acre land parcel who's lease expires in the year
2080.

      Adjacent to the Company's North Brunswick facility, the Company leased two
warehouses for the distribution of its consumer products. One warehouse is
approximately 525,000 square feet, whose lease expires at the end of 2010. The
other warehouse is approximately 156,000 square feet, whose lease expires at the
end of 2011.

      In conjunction with the anti-perspirant and pet care businesses acquired
from Carter-Wallace, the Company acquired a 45,000 square foot manufacturing
facility in Winsted, Connecticut that manufactures pet care hardware products.
The anti-perspirant products were manufactured in Armkel's Cranbury, New Jersey
facility. The


                                       6

<PAGE>

production is currently being transferred to the Company's Lakewood, New Jersey
facility. This should be complete by the end of the third quarter 2002.

      Armkel, LLC, in which the Company has a 50% interest, owns and operates a
condom manufacturing facility in Colonial Heights, Virginia. The facility
contains approximately 220,000 square feet of space. Armkel also owns a 754,000
square foot facility in Cranbury, New Jersey that manufactures pharmaceuticals,
toiletries and pet care products. Armkel has decided to close the facility and
transfer production to either Church & Dwight's Lakewood, New Jersey facility or
to a series of contract manufacturers. This transfer will be completed in the
second quarter of 2002. Armkel then plans to sell the facility. In addition,
Armkel leases a 200,000 square food warehouse in Dayton, New Jersey and a 43,000
square foot warehouse in Momence, Illinois. Both facilities will be closed
during 2002.

      Armkel also owns or leases facilities outside the United States. They are:


<TABLE>
<CAPTION>
Location                                    Products Manfactured                        Area (Sq. Feet)
-------------------------------------------------------------------------------------------------------
<S>                                         <C>                                                <C>
Owned:
Manufacturing facilities and offices
     Montreal, Canada                       OTC pharmaceuticals and toiletries                 157,000
     Folkestone, England                    Toiletries                                          76,000
     Milan, Italy                           OTC pharmaceuticals and toiletries                  60,000
     Mexico City, Mexico                    Pharmaceuticals                                     94,400
     New Plymouth, New Zealand              Condom processing                                   31,000

Warehouse and Offices
     Toronto, Canada                                                                            52,000

Leased:
Manufacturing facilities and offices
     Barcelona, Spain                       Toiletries                                          58,400
     Milan, Italy                           Diagnostics and toiletries                          49,100
     Folkestone, England                    Toiletries                                          21,500
</TABLE>


      In Ontario, Canada, the Company owns a 26,000 square foot distribution
center which is used for the purpose of warehousing and distribution of products
sold into Canada. The principal office of the Canadian subsidiary is located in
leased offices in Toronto.

      Brotherton Speciality Products Ltd. owns and operates a 71,000 square foot
manufacturing facility in Wakefield, England on about 7 acres of land.

      The Armand Products partnership, in which the Company has a 50% interest,
owns and operates a potassium carbonate manufacturing plant located in Muscle
Shoals, Alabama. This facility contains approximately 53,000 square feet of
space and has a capacity of 103,000 tons of potassium carbonate per year.

      The Company believes that its manufacturing, distribution and office
facilities are adequate for the conduct of its business at the present time.

      Church & Dwight Co., Inc.'s 85% owned subsidiary, QGN, has its
administrative headquarters in Rio de Janeiro, Brazil in leased office space.
QGN owns and operates manufacturing facilities in Camaoari, Feira de Santana,
and Itapura in the state of Bahia and Diadema in the state of Sao Paulo.


ITEM 3. LEGAL PROCEEDINGS.

      Litigation

a. On January 17, 2002, a petition for appraisal, Cede & Co., Inc. and GAMCO
Investors, Inc. v. MedPointe Healthcare, Inc., Civil Action No. 19354, was filed
in the Court of Chancery of the State of Delaware demanding a determination of
the fair value of shares of MedPointe. The action was brought by purported
former shareholders of Carter-Wallace in connection with the merger on September
28, 2001 of MCC Acquisition Sub Corporation with and into Carter-Wallace. The
merged entity subsequently changed its name to MedPointe. The petitioners, who
are purported holders of record of approximately 3.1 million shares of
MedPointe, have petitioned for an appraisal of the fair value of their shares in
accordance with Section 262 of the Delaware General Corporation Law.


                                       7

<PAGE>

      MedPointe and certain former Carter-Wallace shareholders are party to an
indemnification agreement pursuant to which such shareholders will be required
to indemnify MedPointe from a portion of the damages, if any, suffered by
MedPointe in relation to the exercise of appraisal rights by other former
Carter-Wallace shareholders in the merger. Pursuant to the agreement, the
shareholders have agreed to indemnify MedPointe for 40% of any Appraisal Damages
(defined as the recovery greater than the per share merger price times the
number of shares in the appraisal class) suffered by MedPointe in relation to
the merger; provided that if the total amount of Appraisal Damages exceeds
$33,333,333.33, then the indemnifying stockholders will indemnify MedPointe for
100% of any damages suffered in excess of that amount. Armkel, in turn, is party
to an agreement with MedPointe pursuant to which it has agreed to indemnify
MedPointe and certain related parties against 60% of any Appraisal Damages for
which MedPointe remains liable. The maximum liability to Armkel pursuant to the
indemnification agreements and prior to any indemnification from the Company, as
described in the following, is $12 million. The Company is party to an agreement
with Armkel pursuant to which it has agreed to indemnify Armkel for 17.38% of
any Appraisal Damages, up to a maximum of $2.1 million, for which Armkel becomes
liable.

      The Company believes that the consideration offered was fair to the former
Carter-Wallace shareholders, and it cannot predict with certainty the outcome of
this litigation.

b. The Company, in the ordinary course of its business, is the subject of, or
party to, various pending or threatened legal actions. The Company believes that
any ultimate liability arising from these actions will not have a material
adverse effect on its financial position or results of operation.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      No matters were submitted to a vote of the Company's security holders
during the last quarter of the year ended December 31, 2001.


                                     PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS.

      The Company's common stock is traded on the New York Stock Exchange
(symbol: "CHD") This information appears under "Common Stock Price range and
dividends," on page 9 of Exhibit 99 hereto, and on page 9 of Appendix B of the
Proxy Statement, incorporated herein by reference. During 2001, there were no
sales of unregistered securities.


ITEM 6. SELECTED FINANCIAL DATA.

      This information appears under "Eleven-Year Financial Summary," on page 33
of Exhibit 99 hereto, and on page 33 of Appendix B of the Proxy Statement,
incorporated herein by reference.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS. ("MD&A")

      This information appears under "MD&A," on pages 1 through 9 of Exhibit 99
hereto, and on pages 1 through 9 of Appendix B of the Proxy Statement,
incorporated herein by reference.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

      This information appears under "Market Risk" in the "Management's
Discussion and Analysis," on pages 5 through 6 of Exhibit 99 hereto, and on
pages 5 through 6 of Appendix B of the Proxy Statement, incorporated herein by
reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      These statements and data appear on pages 10 through 31 of Exhibit 99
hereto, and on pages 10 through 31 of Appendix B of the Proxy Statement,
incorporated herein by reference.


                                       8

<PAGE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

      None


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

      Information required by this item is incorporated by reference to the
Company's definitive proxy statement pursuant to Regulation 14A which will be
filed with the Commission not later than 120 days after the close of the fiscal
year ended December 31, 2001.


ITEM 11. EXECUTIVE COMPENSATION.

      Information required by this item is incorporated by reference to the
Company's definitive proxy statement pursuant to Regulation 14A which will be
filed with the Commission not later than 120 days after the close of the fiscal
year ended December 31, 2001.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      Information required by this item is incorporated by reference to the
Company's definitive proxy statement pursuant to Regulation 14A which will be
filed with the Commission not later than 120 days after the close of the fiscal
year ended December 31, 2001.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Information required by this item is incorporated by reference to the
Company's definitive proxy statement pursuant to Regulation 14A which will be
filed with the Commission not later than 120 days after the close of the fiscal
year ended December 31, 2001.


                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) 1. Financial Statements

      Consolidated Financial Statements and Independent Auditors' Report
included in Exhibit 99 hereto, and in Appendix B of the Proxy Statement,
incorporated herein by reference:

          Consolidated Statements of Income for each of the three
          years in the period ended December 31, 2001

          Consolidated Balance Sheets as of December 31, 2001 and 2000
          Consolidated Statements of Cash Flow for each of the three years in
          the period ended December 31, 2001

          Consolidated Statements of Stockholders' Equity for each of the
          three years in the period ended December 31, 2001


          Notes to Financial Statements

          Independent Auditors' Report


                                       9

<PAGE>

(a) 2.      Financial Statement Schedule

      Included in Part IV of this report:

            Independent Auditors' Report on Schedule

            For each of the three years in the period ended December 31, 2001:

 
           Schedule II - Valuation and Qualifying Accounts

Other schedules are omitted because of the absence of conditions under which
they are required or because the required information is given in the financial
statements or notes thereto.

(a) 3.      Exhibits

      (3)   (a)   Restated Certificate of Incorporation including amendments has
                  previously been filed with the Securities and Exchange
                  Commission on the Company's Form 10-K for the year ended
                  December 31, 1989, (Commission file no. 1-10585) which is
                  incorporated by reference.

            (b)   By-Laws have previously been filed with the Securities and
                  Exchange Commission on the Company's Form 10-K for the year
                  ended December 31, 1985, (Commission file no. 1-10585) which
                  is incorporated herein by reference.

      (4)   (a) * Credit Agreement, dated as of September 28, 2001, by and
                  between Church & Dwight Co., Inc., the several banks and other
                  financial institutions or entities from time to time parties
                  to the Agreement as Lenders, PNC Bank, National Association,
                  Fleet National Bank, The Bank of Nova Scotia, National City
                  Bank and The Chase Manhattan Bank, as administrative agent.

            (b)   Credit Agreement, dated as of May 23, 2001, by and between
                  Church & Dwight Co., Inc., the several banks and other
                  financial institutions or entities from time to time parties
                  to the Agreement as Lenders, Fleet National Bank, National
                  City Bank, First Union National Bank, PNC Bank, and The Chase
                  Manhattan Bank, as administrative agent previously filed with
                  the Securities and Exchange Commission on the Company's Form
                  8-K filed on June 5, 2001 (Commission file no. 1-10585) and
                  incorporated by reference.

            (c)   The Company is party to a Loan Agreement dated May 31, 1991
                  with the New Jersey Economic Development Authority. The
                  principal amount of the loan thereunder is less than ten
                  percent of the Company's consolidated assets. The Company will
                  furnish a copy of said agreement to the Commission upon
                  request.

      (10)  (a)   Amended and Restated Limited Liability Company Agreement of
                  Armkel LLC, dated as of August 27, 2001, by and between Church
                  & Dwight Co., Inc. and Kelso Protection Venture, LLC, a
                  Delaware limited liability company ("LLC Agreement") and
                  Amendment Number 1 to the LLC Agreement, dated as of September
                  24, 2001 previously filed with the Securities and Exchange
                  Commission on the Company's Form 8-K filed on October 12, 2001
                  (Commission file no. 1-10585) and are incorporated by
                  reference.

            (b) * Amendment Number 2 to the LLC Agreement, dated as of September
                  24, 2001.

            (c)   Amended and Restated Product Line Purchase Agreement, dated as
                  of July 30, 2001 and effective as of May 7, 2001 by and
                  between Church & Dwight Co., Inc. and Armkel LLC ("PLPA") and
                  Amendment Number 1 to the PLPA, dated as of September 28, 2001
                  previously filed with the Securities and Exchange Commission
                  on the Company's Form 8-K filed on October 12, 2001
                  (Commission file no. 1-10585) and are incorporated by
                  reference.

            (d) * Asset Purchase Agreement, dated May 7, 2001, by and between
                  Armkel LLC and Carter-Wallace, Inc. for the purchase of
                  certain consumer brands.

            (e)   Supply Agreement between Church & Dwight Co., Inc. and ALCAD
                  Partnership for supply of soda ash. This document is not
                  attached hereto but has been separately submitted to the
                  Securities and Exchange Commission which has approved the
                  Company's application under rule 24b-2 for privileged and
                  confidential treatment thereof.


                                       10

<PAGE>

            (f)   Limited Liability Company Operation Agreement of Armus, LLC,
                  dated as of June 14, 2000, between Church & Dwight Co., Inc.
                  and USA Detergents, Inc. This document has been previously
                  filed with the Securities and Exchange Commission on the
                  Company's Quarterly Report on Form 10-Q, filed on August 14,
                  2000 and was approved under rule 24b-2 for privileged and
                  confidential treatment thereof.

            (g)   Stock Purchase Agreement dated as of June 14, 2000, among USA
                  Detergents, Inc., Church & Dwight Co., Inc. and Frederick R.
                  Adler. This document has been previously filed with the
                  Securities and Exchange Commission on the Company's Quarterly
                  Report on Form 10-Q, filed on August 14, 2000 and was approved
                  under rule 24b-2 for privileged and confidential treatment
                  thereof.

                  Compensation Plans and Arrangements

            (h) * Employment Agreement, dated February 2, 2001, by and between
                  Church & Dwight Co., Inc. and Jon L. Finley for the position
                  of President and COO.

            (i) * Supplemental Employment Agreement, dated October 5, 2001, by
                  and between Church & Dwight Co., Inc. and Jon L. Finley.

            (j) * Employment Agreement, dated January 3, 2002, by and between
                  Church & Dwight Co., Inc. and Joseph A. Sipia, Jr.

            (k) * Employment Agreement, dated February 26, 2002, by and between
                  Church & Dwight Co., Inc. and Bradley A. Casper.

            (l)   The Company's 1983 Stock Option Plan, which was approved by
                  stockholders at the Annual Meeting of Stockholders on May 5,
                  1983, and was included in the Company's definitive Proxy
                  Statement dated April 4, 1983, (Commission file no. 1-10585)
                  which is incorporated herein by reference.

            (m)   Restricted Stock Plan for Directors which was approved by
                  stockholders at the Annual Meeting of Stockholders on May 7,
                  1987, and was included in the Company's definitive Proxy
                  Statement dated April 6, 1987, (Commission file no. 1-10585)
                  which is incorporated herein by reference.

            (n)   Church & Dwight Co., Inc. Executive Deferred Compensation
                  Plan, effective as of June 1, 1997, (Commission file no.
                  1-10585) which is incorporated herein by reference.

            (o)   Deferred Compensation Plan for Directors has previously been
                  filed with the Securities and Exchange Commission on the
                  Company's Form 10-K for the year ended December 31, 1987,
                  (Commission file no. 1-10585) which is incorporated herein by
                  reference.

            (p)   Employment Service Agreement with Senior Management of Church
                  & Dwight Co., Inc. has previously been filed with the
                  Securities and Exchange Commission on the Company's Form 10-K
                  for the year ended December 31, 1990, (Commission file no.
                  1-10585) which is incorporated herein by reference.

            (q)   The Stock Option Plan for Directors which was approved by
                  stockholders in May 1991, authorized the granting of options
                  to non-employee directors. The full text of the Church &
                  Dwight Co., Inc. Stock Option Plan for Directors was contained
                  in the definitive Proxy Statement filed with the Commission on
                  April 2, 1991, (Commission file no. 1-10585) which is
                  incorporated herein by reference.

            (r)   A description of the Company's Incentive Compensation Plan has
                  previously been filed with the Securities and Exchange
                  Commission on the Company's Form 10-K for the year ended
                  December 31, 1992, (Commission file no. 1-10585) which is
                  incorporated herein by reference.


                                       11

<PAGE>

            (s)   Church & Dwight Co., Inc. Executive Stock Purchase Plan has
                  previously been filed with the Securities and Exchange
                  Commission on the Company's Form 10-K for the year ended
                  December 31, 1993, (Commission file no. 1-10585) which is
                  incorporated herein by reference.

            (t)   The 1994 Incentive Stock Option Plan has previously been filed
                  with the Securities and Exchange Commission on the Company's
                  Form 10-K for the year ended December 31, 1994, (Commission
                  file no. 1-10585) which is incorporated herein by reference.

            (u)   The Compensation Plan for Directors, which was approved by
                  stockholders at the Annual Meeting of Stockholders on May 9,
                  1996, and was included in the Company's definitive Proxy
                  Statement filed with the Commission on April 1, 1996,
                  (Commission file no. 1-10585) which is incorporated herein by
                  reference.

      *(11) Computation of earnings per share.
       
      *(21) List of the Company's subsidiaries.

      *(23) Consent of Independent Auditor.

      *(99) Financial Statements.

(b)   Reports on Form 8-K

            The Company filed an 8-K on October 12, 2001 to announce the
            Company's investment in Armkel, LLC and the acquisition of the
            Antiperspirant and Pet Care businesses acquired from Carter-Wallace.

            The Company filed an 8-K/A on November 9, 2001 to provide pro-forma
            financial statements that were not provided with the 8-K filed on
            October 12, 2001.

            Copies of exhibits will be made available upon request and for a
            reasonable charge.

--------------------------------------------------------------------------------
*filed herewith


                                       12

<PAGE>


INDEPENDENT AUDITORS' REPORT

To The Board of Directors and Stockholders of
Church & Dwight Co., Inc.
Princeton, New Jersey

We have audited the consolidated financial statements of Church & Dwight Co.,
Inc. and subsidiaries as of December 31, 2001 and 2000, and for each of the
three years in the period ended December 31, 2001, and have issued our report
thereon dated March 11, 2002; such consolidated financial statements and report
are included elsewhere in this Form 10-K. Our audits also included the
consolidated financial statement schedule of Church & Dwight Co., Inc. and
subsidiaries, listed in Item 14. This consolidated financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

Deloitte & Touche LLP
Parsippany, New Jersey
March 11, 2002



                                       13

<PAGE>


                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                    2001              2000              1999
                                                                  ------------------------------------------
<S>                                                               <C>               <C>               <C>
Allowance for Doubtful Accounts:

      Balance at beginning of year                                $2,052            $1,552            $1,579
                                                                  ------------------------------------------

      Additions:
            Charged to expenses and costs                          1,950               700               200
            Acquisition of subsidiary/product lines                  788                --               122
                                                                  ------------------------------------------
                                                                   2,738               700               322

      Deductions:
            Amounts written off                                    1,105               190               348
            Foreign currency translation adjustments                  19                10                 1
                                                                  ------------------------------------------

                                                                   1,124               200               349
                                                                  ------------------------------------------

      Balance at end of year                                      $3,666            $2,052            $1,552
                                                                  ------------------------------------------
</TABLE>



                                       14

<PAGE>
                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
                 EXHIBIT 11 - Computation of Earnings Per Share
                     (In thousands except per share amounts)


<TABLE>
<CAPTION>
                                                               2001           2000            1999
                                                            --------------------------------------
<S>                                                         <C>            <C>             <C>    
BASIC:
      Net Income                                            $46,984        $33,559         $45,357

Weighted average shares outstanding                          38,879         38,321          38,792

Basic earnings per share                                      $1.21          $0.88           $1.17

DILUTED:
      Net Income                                            $46,984        $33,559         $45,357

Weighted average shares outstanding                          38,879         38,321          38,792
      Incremental shares under stock option plans             1,940          1,612           2,251
                                                            --------------------------------------
Adjusted weighted average shares outstanding                 40,819         39,933          41,043
                                                            --------------------------------------

Diluted earnings per share                                    $1.15          $0.84           $1.11
</TABLE>



                                       15


<PAGE>

                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
                                   EXHIBIT 21
                       LIST OF THE COMPANY'S SUBSIDIARIES


1)    Church & Dwight Ltd./Ltee
      Incorporated in Canada

2)    C & D Chemical Products, Inc.
      Incorporated in the State of Delaware,
      D/B/A Armand Products Company, a Partnership

3)    Brotherton Speciality Products Ltd.
      Incorporated in the United Kingdom

4)    Quimica Geral do Nordeste S.A. (QGN)
      Incorporated in Brazil (85% Interest)

5)    Biovance Technologies, Inc.
      Incorporated in the state of Delaware

      The Company's remaining subsidiaries, if considered in the aggregate as a
single subsidiary, would not constitute a significant subsidiary as of December
31, 2001.


                                       16


<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements No.
33-60149, 33-60147, 33-24553, 33-6150 and 33-44881 on Form S-8 of our reports
dated March 11, 2002 included in the Annual Report on Form 10-K of Church &
Dwight Co., Inc. for the year ended December 31, 2001.

Deloitte & Touche LLP
Parsippany, New Jersey
March 11, 2002


                                       17

<PAGE>


                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 18, 2002.

                                       CHURCH & DWIGHT CO., INC.


                                       By: /s/ Robert A. Davies, III
                                           ------------------------------------
                                           Robert A. Davies, III
                                           Chairman and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


/s/ Robert A. Davies, III      Chairman and                       March 18, 2002
-------------------------      Chief Executive Officer
Robert A. Davies, III


/s/ Zvi Eiref                  Vice President Finance and         March 18, 2002
-------------------------      Chief Financial Officer
Zvi Eiref                      (Principal Financial Officer)



/s/ Gary P. Halker             Vice President, Controller and     March 18, 2002
-------------------------      Chief Information Officer
Gary P. Halker                 (Principal Accounting Officer)


                                       18

<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


/s/ William R. Becklean                 Director                  March 18, 2002
-----------------------
William R. Becklean

/s/ Robert H. Beeby                     Director                  March 18, 2002
-------------------
Robert H. Beeby

/s/ Robert A. Davies, III               Chairman                  March 18, 2002
-------------------------
Robert A. Davies, III

/s/ Rosina B. Dixon, M.D.               Director                  March 18, 2002
-------------------------
Rosina B. Dixon, M.D.

/s/ J. Richard Leaman, Jr.              Director                  March 18, 2002
--------------------------
J. Richard Leaman, Jr.

/s/ Robert D. LeBlanc                   Director                  March 18, 2002
---------------------
Robert D. LeBlanc

/s/ John D. Leggett, III, Ph.D          Director                  March 18, 2002
------------------------------
John D. Leggett, III, Ph.D.

/s/ John F. Maypole                     Director                  March 18, 2002
-------------------
John F. Maypole

/s/ Robert A. McCabe                    Director                  March 18, 2002
--------------------
Robert A. McCabe

/s/ Dwight C. Minton                    Chairman Emeritus         March 18, 2002
--------------------
Dwight C. Minton

/s/ Burton B. Staniar                   Director                  March 18, 2002
---------------------
Burton B. Staniar

/s/ John O. Whitney                     Director                  March 18, 2002
-------------------
John O. Whitney


                                       19





<PAGE>

                                                                    Exhibit 4(a)

                                                                  EXECUTION COPY
================================================================================

                                  $510,000,000

                                CREDIT AGREEMENT

                                      among

                           CHURCH & DWIGHT CO., INC.,
                                  as Borrower,

              The Several Lenders from Time to Time Parties Hereto,

        PNC BANK, NATIONAL ASSOCIATION, FLEET NATIONAL BANK, THE BANK OF
                      NOVA SCOTIA, and NATIONAL CITY BANK

                          each as a Syndication Agent,

                                       and

                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent

                         Dated as of September 28, 2001

================================================================================

                          J.P. MORGAN Securities Inc.,
                  as Sole Advisor, Lead Arranger and Bookrunner


<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                               Page
<S>              <C>                                                                                           <C>
SECTION 1.            DEFINITIONS.................................................................................1

         1.1     Defined Terms....................................................................................1
         1.2     Other Definitional Provisions...................................................................24

SECTION 2.            AMOUNT AND TERMS OF COMMITMENTS............................................................25

         2.1     Term Commitments................................................................................25
         2.2     Procedure for Term Loan Borrowing...............................................................25
         2.3     Repayment of Term Loans.........................................................................26
         2.4     Commitments.....................................................................................27
         2.5     Procedure for Revolving Loan Borrowing..........................................................27
         2.6     Swingline Commitment............................................................................28
         2.7     Procedure for Swingline Borrowing; Refunding of Swingline Loans.................................28
         2.8     Commitment Fees, etc............................................................................30
         2.9     Termination or Reduction of Revolving Commitments...............................................30
         2.10    Optional Prepayments............................................................................30
         2.11    Mandatory Prepayments and Commitment Reductions.................................................31
         2.12    Conversion and Continuation Options.............................................................33
         2.13    Limitations on Eurodollar Tranches..............................................................33
         2.14    Interest Rates and Payment Dates................................................................33
         2.15    Computation of Interest and Fees................................................................34
         2.16    Inability
 to Determine Interest Rate............................................................34
         2.17    Pro Rata Treatment and Payments.................................................................35
         2.18    Requirements of Law.............................................................................36
         2.19    Taxes ..........................................................................................37
         2.20    Indemnity.......................................................................................39
         2.21    Change of Lending Office........................................................................39
         2.22    Replacement of Lenders..........................................................................39
         2.23    Increase of Tranche B Facility..................................................................40

SECTION 3.            LETTERS OF CREDIT..........................................................................42

         3.1     L/C Commitment..................................................................................42
         3.2     Procedure for Issuance of Letter of Credit......................................................42
         3.3     Fees and Other Charges..........................................................................42
         3.4     L/C Participations..............................................................................43
         3.5     Reimbursement Obligation of the Borrower........................................................44
         3.6     Obligations Absolute............................................................................44
         3.7     Letter of Credit Payments.......................................................................44
         3.8     Applications....................................................................................44
         3.9     Transitional Provisions.........................................................................45
         3.10    Certain Reporting Requirements..................................................................45
</TABLE>



                                       i

<PAGE>


<TABLE>
<S>              <C>                                                                                           <C>
SECTION 4.            REPRESENTATIONS AND WARRANTIES.............................................................45

         4.1     Financial Condition.............................................................................45
         4.2     No Change.......................................................................................47
         4.3     Existence; Compliance with Law..................................................................47
         4.4     Power; Authorization; Enforceable Obligations...................................................47
         4.5     No Legal Bar; No Burdensome Restrictions........................................................47
         4.6     Litigation......................................................................................48
         4.7     No Default......................................................................................48
         4.8     Ownership of Property; Liens....................................................................48
         4.9     Intellectual Property...........................................................................48
         4.10    Taxes ..........................................................................................48
         4.11    Federal Regulations.............................................................................48
         4.12    Labor Matters...................................................................................49
         4.13    ERISA ..........................................................................................49
         4.14    Investment Company Act; Other Regulations.......................................................50
         4.15    Subsidiaries....................................................................................50
         4.16    Use of Proceeds.................................................................................51
         4.17    Environmental Matters...........................................................................51
         4.18    Accuracy of Information, etc....................................................................51
         4.19    Security Documents..............................................................................52
         4.20    Solvency........................................................................................52
         4.21    Regulation H....................................................................................52
         4.22    Certain Documents...............................................................................52

SECTION 5.            CONDITIONS PRECEDENT.......................................................................52

         5.1     Conditions to Initial Extension of Credit.......................................................52
         5.2     Conditions to Each Extension of Credit..........................................................54

SECTION 6.            AFFIRMATIVE COVENANTS......................................................................55

         6.1     Financial Statements............................................................................55
         6.2     Certificates; Other Information.................................................................56
         6.3     Payment of Obligations..........................................................................56
         6.4     Maintenance of Existence; Compliance............................................................57
         6.5     Maintenance of Property; Insurance..............................................................57
         6.6     Inspection of Property; Books and Records; Discussions..........................................57
         6.7     Notices.........................................................................................57
         6.8     Environmental Laws..............................................................................58
         6.9     Mortgages, etc..................................................................................58
         6.10    Additional Collateral, etc......................................................................59
         6.11    Interest Rate Protection........................................................................61

SECTION 7.            NEGATIVE COVENANTS.........................................................................61

         7.1     Financial Condition Covenants...................................................................61
</TABLE>



                                       ii

<PAGE>


<TABLE>
<S>              <C>                                                                                           <C>
         7.2     Indebtedness....................................................................................62
         7.3     Liens ..........................................................................................64
         7.4     Fundamental Changes.............................................................................65
         7.5     Disposition of Property.........................................................................66
         7.6     Restricted Payments.............................................................................66
         7.7     Capital Expenditures............................................................................67
         7.8     Investments.....................................................................................67
         7.9     Transactions with Affiliates....................................................................68
         7.10    Sales and Leasebacks............................................................................69
         7.11    Changes in Fiscal Periods.......................................................................69
         7.12    Negative Pledge Clauses.........................................................................69
         7.13    Clauses Restricting Subsidiary Distributions....................................................69
         7.14    Lines of Business...............................................................................69
         7.15    Amendments to Transaction Documents.............................................................69
         7.16    Limitation on Optional Payments and Modifications of Debt Instruments...........................69

SECTION 8.            EVENTS OF DEFAULT..........................................................................70

SECTION 9.            THE AGENTS.................................................................................70

         9.1     Appointment.....................................................................................73
         9.2     Delegation of Duties............................................................................73
         9.3     Exculpatory Provisions..........................................................................73
         9.4     Reliance by Administrative Agent................................................................73
         9.5     Notice of Default...............................................................................74
         9.6     Non-Reliance on Agents and Other Lenders........................................................74
         9.7     Indemnification.................................................................................74
         9.8     Agent in Its Individual Capacity................................................................75
         9.9     Successor Administrative Agent..................................................................76
         9.10    Syndication Agents..............................................................................76

SECTION 10.           MISCELLANEOUS..............................................................................76

         10.1    Amendments and Waivers..........................................................................76
         10.2    Notices.........................................................................................77
         10.3    No Waiver; Cumulative Remedies..................................................................78
         10.4    Survival of Representations and Warranties......................................................78
         10.5    Payment of Expenses and Taxes...................................................................78
         10.6    Successors and Assigns; Participations and Assignments..........................................79
         10.7    Adjustments; Set-off............................................................................82
         10.8    Counterparts....................................................................................82
         10.9    Severability....................................................................................82
         10.10   Integration.....................................................................................83
         10.11   GOVERNING LAW...................................................................................83
         10.12   Submission To Jurisdiction; Waivers.............................................................83
         10.13   Acknowledgements................................................................................83
</TABLE>



                                      iii

<PAGE>


<TABLE>
<S>              <C>                                                                                           <C>
         10.14   Releases of Guarantees and Liens................................................................84
         10.15   Confidentiality.................................................................................84
         10.16   WAIVERS OF JURY TRIAL...........................................................................85
</TABLE>



                                       iv

<PAGE>

SCHEDULES:
----------

1.1A     Commitments
1.1B     Mortgaged Property
3.9      Existing Facility Letters of Credit
4.1      Existing Obligations and Liabilities
4.4      Consents, Authorizations, Filings and Notices
4.15     Subsidiaries
4.19(a)  UCC Filing Jurisdictions and Intellectual Property Filings
4.19(b)  Mortgage Filing Jurisdictions
7.2(d)   Existing Indebtedness
7.2(f)   Existing Hedge Agreements
7.3(f)   Existing Liens

EXHIBITS:
---------

A       Form of Guarantee and Collateral Agreement 
B       Form of Compliance Certificate 
C       Form of Closing Certificate 
D       Form of Mortgage 
E       Form of Assignment and Acceptance 
F-1     Form of Legal Opinion of Gibson, Dunn & Crutcher LLP
F-2     Form of Legal Opinion of general counsel to the Borrower and its 
          Subsidiaries 
G       Form of Exemption Certificate 
H       Issuing Lender Agreement 
I-1     Form of Optional Prepayment Option Notice 
I-2     Form of Mandatory Prepayment Option Notice 
J       Form of New Lender Supplement 
K       Form of Commitment Increase Letter


                                       v

<PAGE>

            CREDIT AGREEMENT (this "Agreement"), dated as of September 28, 2001,
among CHURCH & DWIGHT CO., INC., a Delaware corporation (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties to this Agreement (the "Lenders"), PNC BANK, NATIONAL ASSOCIATION, FLEET
NATIONAL BANK, THE BANK OF NOVA SCOTIA, and NATIONAL CITY BANK, each as a
syndication agent (in such capacity, a "Syndication Agent"; and, collectively,
the "Syndication Agents"), and THE CHASE MANHATTAN BANK, as administrative
agent.

            The parties hereto hereby agree as follows:

                             SECTION 1. DEFINITIONS

            1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.

            "ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by The Chase Manhattan Bank in connection with
extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the CD
Reserve Percentage and (b) the CD Assessment Rate; and "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by The
Chase Manhattan Bank from three New York City negotiable certificate of deposit
dealers of recognized standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.

            "ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.

            "Accounts": as defined in the Uniform Commercial Code as in effect
in the State of New York; and, with respect to the Borrower and its
Subsidiaries, all such Accounts of such Persons, whether now existing or
existing in the future, including, without limitation, (i) all 


<PAGE>
                                                                               2


accounts receivable of such Person (whether or not specifically listed on
schedules furnished to the Administrative Agent) including, without limitation,
all accounts created by or arising from all of such Person's software licensing
arrangements or sales of goods or rendition of services made under any of its
trade names, or through any of its divisions, (ii) all unpaid rights of such
Person (including rescission, replevin, reclamation and stopping in transit)
relating to the foregoing or arising therefrom, (iii) all rights to any goods
represented by any of the foregoing, including returned or repossessed goods,
(iv) all reserves and credit balances held by such Person with respect to any
such accounts receivable or any obligors thereon, (v) all letters of credit,
guarantees or collateral for any of the foregoing and (vi) all insurance
policies or rights relating to any of the foregoing.

            "Additional Term Commitment": as defined in Section 2.23(a).

            "Additional Term Loans": as defined in Section 2.23(a).

            "Adjustment Date": as defined in the definition of "Pricing Grid" in
this Section 1.1.

            "Administrative Agent": The Chase Manhattan Bank, together with its
affiliates, as the arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement and the other Loan Documents, together with
any of its successors.

            "Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.

            "Agents": the collective reference to the Syndication Agents and the
Administrative Agent.

            "Aggregate Exposure": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the
amount of such Lender's Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.

            "Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.

            "Agreement": as defined in the preamble hereto.

            "Applicable Margin": (a) with respect to Tranche B Term Loans which
are Eurodollar Loans, 2.50%, (b) with respect to Tranche B Term Loans which are
ABR Loans, 1.50% and (c) for each other Type of Loan for any day, the rate per
annum set forth under the 


<PAGE>
                                                                               3


relevant column heading in the Pricing Grid; provided, with respect to this
clause (c), until the first Adjustment Date after the Closing Date, Level II (as
set forth in the Pricing Grid) will apply, and, thereafter until the first
Adjustment Date occurring six months after the Closing Date, only Level I or
Level II (as set forth in the Pricing Grid) will apply.

            "Application": an application, in such form as the applicable
Issuing Lender may specify from time to time, requesting such Issuing Lender to
open a Letter of Credit.

            "Armkel Credit Agreement": the credit agreement, dated as of the
date hereof, among the Armkel Joint Venture, as the borrower, Armkel Holding
(Netherlands) B.V. and the Armkel (Canada), Corp., and The Chase Manhattan Bank,
as the administrative agent.

            "Armkel Joint Venture": Armkel L.L.C., a Delaware limited liability
company, which was formed pursuant to the Armkel Joint Venture Agreement.

            "Armkel Joint Venture Acquisition": any acquisition by the Armkel
Joint Venture of the Target on terms and conditions substantially in accordance
with the Transaction Documents or otherwise reasonably satisfactory to the
Administrative Agent.

            "Armkel Joint Venture Agreement": the joint venture agreement, dated
as of September 28, 2001, between the Borrower and Kelso, including all
exhibits, schedules, and annexes thereto.

            "Arranger": J.P. Morgan Securities Inc., in its capacity as sole
advisor, lead arranger and bookrunner.

            "Arrid": the personal underarm deodorant business of the Target.

            "Arrid Acquisition": the direct acquisition by the Borrower of 100%
of the assets of the United States and Canadian Arrid products division and the
Lady's Choice brand of the Target on terms and conditions substantially in
accordance with the Transaction Documents or otherwise reasonably satisfactory
to the Administrative Agent.

            "Asset Sale": any Disposition of property or series of related
Dispositions of property (excluding (i) any such Disposition, or series of
related Dispositions, permitted by clause (a), (b), (c), (d) or (f) of Section
7.5 and (ii) any such Disposition, or series of related Dispositions, permitted
by clause (e) of Section 7.5 that, with respect to this clause (ii), yields
gross proceeds to any Group Member of less than $1,000,000) that yields gross
proceeds to any Group Member (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt securities and
valued at fair market value in the case of other non-cash proceeds) in excess
of, when added to the aggregate amount of gross proceeds received by any Group
Member from all other Dispositions made after the Closing Date and prior to such
Disposition, $5,000,000.


<PAGE>
                                                                               4


            "Assignee": as defined in Section 10.6(c).

            "Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit E

            "Assignor": as defined in Section 10.6(c).

            "Available Revolving Commitment": as to any Revolving Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment then in effect over (b) such Lender's Revolving Extensions of Credit
then outstanding; provided, that in calculating any Lender's Revolving
Extensions of Credit for the purpose of determining such Lender's Available
Revolving Commitment pursuant to Section 2.8(a), the aggregate principal amount
of Swingline Loans then outstanding shall be deemed to be zero.

            "Benefitted Lender": as defined in Section 10.7(a).

            "Biovance": Biovance Technologies, Inc., a Delaware corporation.

            "Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).

            "Borrower": as defined in the preamble hereto.

            "Borrowing Date": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.

            "Business": as defined in Section 4.17(b).

            "Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, provided, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.

            "Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.

            "Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.


<PAGE>
                                                                               5


            "Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.

            "Carter-Wallace": Carter-Wallace, Inc., a Delaware corporation.

            "Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing not more than one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing not
more than six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.

            "CD Assessment Rate": for any day as applied to any ABR Loan, the
annual assessment rate in effect on such day that is payable by a member of the
Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation (the
"FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4 (or any successor provision) to the FDIC (or any successor) for
the FDIC's (or such successor's) insuring time deposits at offices of such
institution in the United States.

            "CD Reserve Percentage": for any day as applied to any ABR Loan,
that percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board as in effect
from time to time) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.


<PAGE>
                                                                               6


            "Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is September 28, 2001.

            "Code": the Internal Revenue Code of 1986, as amended from time to
time.

            "Collateral": all property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.

            "Commitment": as to any Lender, the sum of the Tranche A Term
Commitment, the Tranche B Term Commitment and the Revolving Commitment of such
Lender. The original amount of the total Commitments is $510,000,000.

            "Commitment Fee Rate": 1/2 of 1% per annum for the first six months
after the Closing Date; provided, that on and after the first Adjustment Date
occurring six months after the Closing Date, the Commitment Fee Rate will be
determined pursuant to the Pricing Grid.

            "Commitment Increase Date": as defined in Section 2.23(a).

            "Commitment Increase Letter": as defined in Section 2.23(c).

            "Commitment Letter": the commitment letter, dated as of May 8, 2001,
among The Chase Manhattan Bank, J.P. Morgan Securities Inc., and the Borrower.

            "Commitment Period": the period from and including the Closing Date
to the Revolving Termination Date.

            "Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.

            "Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.

            "Conduit Lender": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided, that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall (a) be entitled to receive any greater
amount pursuant to Section 2.18, 2.19, 2.20 or 10.5 than the designating Lender
would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender or (b) be deemed to have any Commitment.

            "Confidential Information Memorandum": the Confidential Information
Memorandum dated July 2001 and furnished to certain Lenders.


<PAGE>
                                                                               7


            "Consolidated Current Assets": at any date, all amounts (other than
cash and Cash Equivalents) that would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.

            "Consolidated Current Liabilities": at any date, all amounts that
would, in conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
or Swingline Loans to the extent otherwise included therein.

            "Consolidated EBITDA": (a) for any period with respect to the
Borrower and its Subsidiaries (other than Arrid for the periods ended March 31,
2001, June 30, 2001 and September 30, 2001), Consolidated Net Income for such
period plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (i) income
tax expense, (ii) interest expense, amortization or writeoff of debt discount
and debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Loans), (iii) depreciation and
amortization expense, (iv) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (v) any extraordinary, unusual or
non-recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, non-cash losses on sales of assets outside of the ordinary
course of business), (vi) any other non-cash charges, (vii) non-recurring cash
expenses not in excess of an aggregate amount of $10,500,000 related to the
creation of the Armkel Joint Venture and the Armkel Joint Venture Acquisition,
the Arrid Acquisition, the Lambert Kay Acquisition and the USAD Acquisition,
(viii) any amounts not in excess of $500,000 paid to Finova Capital Corporation
in the second quarter of the Borrower's fiscal year 2001, (ix) any amounts
representing the write-up in the value of the Arrid inventory as of the Closing
Date based upon the appraisal thereof conducted by Deloitte & Touche LLP, (x)
minority interests to the extent received in cash and (xi) any prepayment charge
not in excess of $600,000 incurred in connection with the sale or other
disposition of the Solvay Note in the quarter of such sale or other disposition
and minus, to the extent included in the statement of such Consolidated Net
Income for such period, the sum of (i) interest income, (ii) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business), (iii) any other non-cash income, all as determined on a consolidated
basis, (iv) minority interests to the extent paid by the Borrower in cash to
minority holders and (v) cash payments with respect to prior period non-cash
charges otherwise excluded from Consolidated Net Income. For the purposes of
calculating Consolidated EBITDA for any period of four consecutive fiscal
quarters (each, a "Reference Period") pursuant to any determination of the
Consolidated Leverage Ratio, (A) if at any time during such Reference Period the
Borrower or any Subsidiary shall have made any Material Disposition, the
Consolidated EBITDA for such Reference Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) attributable to the property that
is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (B) if during such Reference
Period the Borrower or any Subsidiary shall 


<PAGE>
                                                                               8


have made a Material Acquisition, Consolidated EBITDA for such Reference Period
shall be calculated after giving pro forma effect thereto as if such Material
Acquisition occurred on the first day of such Reference Period. As used in this
definition, "Material Acquisition" means any acquisition of property or series
of related acquisitions of property that (I) constitutes assets comprising all
or substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (II) involves the payment
of consideration by the Borrower and its Subsidiaries in excess of $5,000,000;
and "Material Disposition" means any Disposition of property or series of
related Dispositions of property that yields gross proceeds to the Borrower or
any of its Subsidiaries in excess of $5,000,000; and

            (b) for each of Arrid and Lambert Kay for each of the periods ended
March 31, 2001, June 30, 2001 and September 30, 2001, contributed profit as set
forth on the financial statement of Carter-Wallace for such period plus, without
duplication and to the extent reflected as a charge in the books of
Carter-Wallace for such period, depreciation.

            "Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.

            "Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations) of the
Borrower and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Hedge Agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP).

            "Consolidated Leverage Ratio": as at the last day of any period, the
ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for
such period.

            "Consolidated Net Income": for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries, (b) the income (or loss) of any Person
(other than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.

            "Consolidated Total Debt": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.

            "Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current Liabilities
on such date.


<PAGE>
                                                                               9


            "Continuing Directors": the directors of the Borrower on the Closing
Date and each other director, if, in each case, such other director's nomination
for election to the board of directors of the Borrower is recommended by at
least a majority of the then Continuing Directors.

            "Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

            "Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

            "Disposition": with respect to any property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof
(other than any sale, lease, sale and leaseback, assignment, conveyance,
transfer or other disposition of the Solvay Note). The terms "Dispose" and
"Disposed of" shall have correlative meanings.

            "Dollars" and "$": dollars in lawful currency of the United States.

            "Domestic Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States.

            "Environmental Laws": any and all foreign, federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.

            "Equity Investment": the making of an equity investment in the
Armkel Joint Venture pursuant to the terms of the Armkel Joint Venture
Agreement.

            "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

            "Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.

            "Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Telerate screen (or otherwise on such
screen), the "Eurodollar 


<PAGE>
                                                                              10


Base Rate" shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be selected by the
Administrative Agent or, in the absence of such availability, by reference to
the rate at which the Administrative Agent is offered Dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.

            "Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.

            "Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):

                              Eurodollar Base Rate
            --------------------------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

            "Eurodollar Tranche": the collective reference to Eurodollar Loans
under a particular Facility the then current Interest Periods with respect to
all of which begin on the same date and end on the same later date (whether or
not such Loans shall originally have been made on the same day).

            "Excess Cash Flow": for any fiscal year of the Borrower, the excess,
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) the amount of all non-cash charges (including
depreciation and amortization) deducted in arriving at such Consolidated Net
Income, (iii) decreases in Consolidated Working Capital for such fiscal year,
and (iv) the aggregate net amount of non-cash loss on the Disposition of
property by the Borrower and its Subsidiaries during such fiscal year (other
than sales of inventory in the ordinary course of business), to the extent
deducted in arriving at such Consolidated Net Income over (b) the sum, without
duplication, of (i) the amount of all non-cash credits included in arriving at
such Consolidated Net Income, (ii) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account of
Capital Expenditures (excluding the principal amount of Indebtedness incurred in
connection with such expenditures and any such expenditures financed with the
proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all
prepayments of Revolving Loans and Swingline Loans during such fiscal year to
the extent accompanying permanent optional reductions of the Revolving
Commitments and all optional prepayments of the Term Loans during such fiscal
year, (iv) the aggregate amount of all regularly scheduled principal payments of
Funded Debt (including the Term Loans) of the Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in commitments
thereunder), (v) increases in Consolidated Working Capital for such fiscal year,
and (vi) the aggregate net amount of non-cash gain on the Disposition of
property by the Borrower and its Subsidiaries during such fiscal year (other
than sales of inventory in the ordinary course of business), to the extent
included in arriving at such Consolidated Net Income.

            "Excess Cash Flow Application Date": as defined in Section 2.11(d).


<PAGE>
                                                                              11


            "Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.

            "Existing Facility": the Credit Agreement, dated as of May 23, 2001,
among the Borrower, the several lenders from time to time parties thereto, Fleet
National Bank, National City Bank, First Union National Bank and PNC Bank,
National Association, each as a syndication agent, and The Chase Manhattan Bank,
as administrative agent.

            "Existing Facility Letters of Credit": as defined in Section 3.9.

            "Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.

            "Facility": each of (a) the Tranche A Term Commitments and the
Tranche A Term Loans made thereunder (the "Tranche A Term Facility"), (b) the
Tranche B Term Commitments and the Tranche B Term Loans made thereunder (the
"Tranche B Term Facility"), and (c) the Revolving Commitments and the extensions
of credit made thereunder (the "Revolving Facility").

            "Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by The Chase Manhattan Bank
from three federal funds brokers of recognized standing selected by it.

            "Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.

            "Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.

            "Funded Debt": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or matures not
more than one year from such date but is renewable or extendible, at the option
of such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
all current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect of the
Loans, minus unrestricted cash in an amount not less than $5,000,000 and not to
exceed $20,000,000 of Church & Dwight Company, a Wyoming corporation and a
Wholly Owned Subsidiary of the Borrower.


<PAGE>
                                                                              12


            "Funding Office": the office of the Administrative Agent specified
in Section 10.2 or such other office as may be specified from time to time by
the Administrative Agent as its funding office by written notice to the Borrower
and the Lenders.

            "GAAP": generally accepted accounting principles in the United
States as in effect from time to time, except that for purposes of Section 7.1,
GAAP shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the most recent
audited financial statements referred to in Section 4.1(b). In the event that
any "Accounting Change" (as defined below) shall occur and such change results
in a change in the method of calculation of financial covenants, standards or
terms in this Agreement, then the Borrower and the Administrative Agent agree to
enter into negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Changes had not occurred. "Accounting
Changes" refers to changes in accounting principles required by the promulgation
of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.

            "Governmental Authority": any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

            "Group Members": the collective reference to the Borrower and its
Subsidiaries.

            "Guarantee and Collateral Agreement": the guarantee and collateral
agreement substantially in the form of Exhibit A hereto, dated as of the date
hereof (as the same may be amended, restated, supplemented or otherwise modified
from time to time) by each Subsidiary Guarantor in favor of the Administrative
Agent for the benefit of the Lenders.

            "Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of 


<PAGE>
                                                                              13


the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.

            "Hedge Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.

            "Increasing Lender": as defined in Section 2.23(c).

            "Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) the liquidation value of all
preferred Capital Stock of such Person redeemable at the option of the holder
thereof, (h) all Guarantee Obligations of such Person in respect of obligations
of the kind referred to in clauses (a) through (g) above (other than any
non-recourse Guarantee Obligations incurred in relation to the pledge by the
Borrower of the Capital Stock of the Armkel Joint Venture to the lenders under
the Armkel Credit Agreement), (i) all obligations of the kind referred to in
clauses (a) through (h) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) any
Lien on property (including accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment of such
obligation, (j) for the purposes of Sections 7.2 and 8(e) only, all obligations
of such Person in respect of Hedge Agreements, (k) all obligations not otherwise
included as "indebtedness" on such Person's balance sheet in the nature of
synthetic leases and (l) to the extent not otherwise included, indebtedness or
similar obligations pursuant to any receivables or other securitization. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such Person is not liable
therefor.


<PAGE>
                                                                              14


            "Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.

            "Insolvent": pertaining to a condition of Insolvency.

            "Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, copyrights, copyright licenses, software, databases,
patents, patent licenses, trademarks, trademark licenses, trademark
applications, service marks, service mark licenses, service mark applications,
trade names, brand names, domain names, mask works, mask work licenses,
technology, and related improvements, know-how and processes, trade secrets, all
registrations and applications related to any of the above, and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.

            "Interest Payment Date": (a) as to any ABR Loan, the last day of
each March, June, September and December to occur while such Loan is outstanding
and the final maturity date of such Loan, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest
Period, (c) as to any Eurodollar Loan having an Interest Period longer than
three months, each day that is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest Period,
(d) as to any Loan (other than any Revolving Loan that is an ABR Loan and any
Swingline Loan), the date of any repayment or prepayment made in respect thereof
and (e) as to any Loan, the Revolving Termination Date or such earlier date on
which the Commitments hereunder are terminated and the Loans become due and
payable pursuant to Section 8 hereof.

            "Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the then current Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:

            (i) if any Interest Period would otherwise end on a day that is not
      a Business Day, such Interest Period shall be extended to the next
      succeeding Business Day unless the result of such extension would be to
      carry such Interest Period into another calendar month in which event such
      Interest Period shall end on the immediately preceding Business Day;

            (ii) the Borrower may not select an Interest Period under a
      particular Facility that would extend beyond the Revolving Termination
      Date or beyond the date final payment is due on the Tranche A Term Loans
      or the Tranche B Term Loans, as the case may be;


<PAGE>
                                                                              15


            (iii) any Interest Period that begins on the last Business Day of a
      calendar month (or on a day for which there is no numerically
      corresponding day in the calendar month at the end of such Interest
      Period) shall end on the last Business Day of a calendar month; and

            (iv) the Borrower shall select Interest Periods so as not to require
      a payment or prepayment of any Eurodollar Loan during an Interest Period
      for such Loan.

            "Investments": as defined in Section 7.8.

            "Issuers": as defined in the Guarantee and Collateral Agreement.

            "Issuing Lender": The Chase Manhattan Bank and any other Lender
designated as an Issuing Lender in an Issuing Lender Agreement executed by such
Lender, the Borrower and the Administrative Agent, in its capacity as issuer of
any Letter of Credit.

            "Issuing Lender Agreement": an agreement, substantially in the form
of Exhibit H, executed by a Lender, the Borrower, and the Administrative Agent
pursuant to which such Lender agrees to become an Issuing Lender hereunder.

            "Kelso": Kelso & Company, L.P., a Delaware limited partnership, and
its Affiliates.

            "Lambert Kay": the Lambert Kay products division of the Target.

            "Lambert Kay Acquisition": the direct acquisition by the Borrower of
100% of the stock or assets of Lambert Kay on terms and conditions substantially
in accordance with the Transaction Documents or otherwise reasonably
satisfactory to the Administrative Agent.

            "L/C Commitment": $20,000,000. 

            "L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Commitment Period.

            "L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.

            "L/C Participants": the collective reference to all the Revolving
Lenders other than any Issuing Lenders.

            "Lender Affiliate": (a) any Affiliate of any Lender, (b) any Person
that is administered or managed by any Lender and that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and (c) with respect
to any Lender which is a fund that invests in commercial loans and similar
extensions of credit, any other fund that invests in commercial loans and


<PAGE>
                                                                              16


similar extensions of credit and is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such Lender or investment advisor.

            "Lenders": as defined in the preamble hereto; provided, that unless
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.

            "Letters of Credit": as defined in Section 3.1(a).

            "Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).

            "Loan": any loan made by any Lender pursuant to this Agreement.

            "Loan Documents": this Agreement, the Security Documents and the
Notes.

            "Loan Parties": each Group Member that is a party to a Loan
Document.

            "Mandatory Prepayment Date": as defined in Section 2.11(f).

            "Mandatory Prepayment Option Notice": as defined in Section 2.11(f).

            "Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the Term
Loans or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Facility,
prior to any termination of the Revolving Commitments, the holders of more than
50% of the Total Revolving Commitments).

            "Material Adverse Effect": a material adverse effect on (a) any of
the Transactions (other than the Lambert Kay Acquisition), (b) the business,
property, operations, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.

            "Material Environmental Amount": an amount payable by the Borrower
and/or its Subsidiaries in excess of $20,000,000 in the aggregate for remedial
costs, compliance costs, compensatory damages, punitive damages, fines,
penalties or any combination thereof.

            "Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.

            "Mortgaged Properties": the real properties listed on Schedule 1.1B,
as to which the Administrative Agent for the benefit of the Lenders shall be
granted a Lien pursuant to the Mortgages.


<PAGE>
                                                                              17


            "Mortgages": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded).

            "Multiemployer Plan": a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

            "Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, amounts required to be applied to the repayment of Indebtedness secured by
a Lien expressly permitted hereunder on any asset that is the subject of such
Asset Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash
proceeds received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.

            "New Lender": as defined in Section 2.23(b).

            "New Lender Supplement": as defined in Section 2.23(b).

            "Non-Excluded Taxes": as defined in Section 2.19(a).

            "Non-U.S. Lender": as defined in Section 2.19(d).

            "Notes": the collective reference to any promissory note evidencing
Loans.

            "Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans, the Reimbursement Obligations and all
other obligations and liabilities of the Borrower to the Administrative Agent or
to any Lender (or, in the case of Specified Hedge Agreements, any Person which
at the time of execution of the relevant Specified Hedge Agreement is a Lender
or Lender Affiliate), whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document, the Letters
of Credit, any Specified Hedge Agreement or any other document made, delivered
or given in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including all fees, charges and disbursements of 


<PAGE>
                                                                              18


counsel to the Administrative Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise.

            "Optional Prepayment Date": as defined in Section 2.10(b).

            "Optional Prepayment Option Notice": as defined in Section 2.10(b).

            "Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.

            "Participant": as defined in Section 10.6(b).

            "PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).

            "Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

            "Plan": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

            "Pricing Grid": the table set forth below.


<TABLE>
<CAPTION>
===================================================================================================================
                            Applicable Margin for Eurodollar   Applicable Margin for Tranche A ABR
  Consolidated Leverage         Tranche A Term Loans and       Term Loans and ABR Revolving Credit    Commitment
          Ratio            Eurodollar Revolving Credit Loans                  Loans                    Fee Rate
-------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                 <C>                        <C>   
         Level I                         2.250%                              1.250%                     0.500%
 Greater than or equal to
       3.25 to 1.00
-------------------------------------------------------------------------------------------------------------------
         Level II
  Less than 3.25 to 1.00
and greater than or equal
     to 2.50 to 1.00                     2.000%                              1.000%                     0.500%
-------------------------------------------------------------------------------------------------------------------
        Level III
  Less than 2.50 to 1.00
and greater than or equal
     to 2.00 to 1.00                     1.750%                              0.750%                     0.375%
-------------------------------------------------------------------------------------------------------------------
         Level IV                        1.500%                              0.500%                     0.375%
  Less than 2.00 to 1.00
===================================================================================================================
</TABLE>


For the purposes of the Pricing Grid, changes in the Applicable Margin resulting
from changes in the Consolidated Leverage Ratio shall become effective on the
date (the "Adjustment Date") that 


<PAGE>
                                                                              19


is three Business Days after the date on which financial statements are
delivered to the Lenders pursuant to Section 6.1 and shall remain in effect
until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified in Section 6.1, then, from the date that is three Business Days after
the date when such financial statements are due until the date that is three
Business Days after the date on which such financial statements are delivered,
the highest rate set forth in each column of the Pricing Grid shall apply. In
addition, at all times while an Event of Default shall have occurred and be
continuing, the highest rate set forth in each column of the Pricing Grid shall
apply. Each determination of the Consolidated Leverage Ratio pursuant to the
Pricing Grid shall be made in a manner consistent with the determination thereof
pursuant to Section 7.1.

            "Pro Forma Balance Sheet": as defined in Section 4.1(a).

            "Projections": as defined in Section 4.1(d).

            "Properties": as defined in Section 4.17(a).

            "Receivables": all Accounts and accounts receivable of the Borrower
or any of its Subsidiaries (including any thereof constituting or evidenced by
chattel paper, instruments or general intangibles), and all proceeds thereof and
rights (contractual and other) and collateral related thereto.

            "Receivables Subsidiary": any special purpose, bankruptcy-remote
Subsidiary that acquires, on a revolving basis, Receivables generated by the
Borrower or any of its Subsidiaries and that engages in no operations or
activities other than those related to receivables securitizations.

            "Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Group Member.

            "Refinancing": the refinancing of outstanding Indebtedness of the
Borrower under the Existing Facility with the proceeds of the Loans.

            "Refunded Swingline Loans": as defined in Section 2.7.

            "Refunding Date": as defined in Section 2.7.

            "Register": as defined in Section 10.6(d).

            "Regulation T": Regulation T of the Board as in effect from time to
time.

            "Regulation U": Regulation U of the Board as in effect from time to
time.

            "Regulation X": Regulation X of the Board as in effect from time to
time.

            "Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lenders pursuant to Section 3.5 for amounts drawn under
Letters of Credit.


<PAGE>
                                                                              20


            "Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by any Group Member in
connection therewith that are not applied to prepay the Term Loans or reduce the
Revolving Commitments pursuant to Section 2.11(c) as a result of the delivery of
a Reinvestment Notice.

            "Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.

            "Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and that
the Borrower (directly or indirectly through a Subsidiary) intends and expects
to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire or repair assets useful in its business.

            "Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or repair
assets useful in the Borrower's business.

            "Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring six months after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire or repair assets useful in the
Borrower's business with all or any portion of the relevant Reinvestment
Deferred Amount.

            "Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

            "Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg.ss. 4043.

            "Required Lenders": at any time, the holders of more than 50% of (a)
until the Closing Date, the Commitments then in effect and (b) thereafter, the
sum of (i) the aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the Total Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.

            "Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation (including, without limitation,
Regulation T, U or X) or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

            "Responsible Officer": the chief executive officer, president or
chief financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer of the Borrower.


<PAGE>
                                                                              21


            "Restricted Payments": as defined in Section 7.6.

            "Revolving Commitment": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and participate in Swingline Loans and
Letters of Credit in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading "Revolving Commitment" opposite such Lender's
name on Schedule 1.1A or in the Assignment and Acceptance pursuant to which such
Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof. The original amount of the Total Revolving
Commitments is $100,000,000.

            "Revolving Commitment Period": the period from and including the
Closing Date to the Revolving Termination Date.

            "Revolving Extensions of Credit": as to any Revolving Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding, (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding and (c) such
Lender's Revolving Percentage of the aggregate principal amount of Swingline
Loans then outstanding.

            "Revolving Lender": each Lender that has a Revolving Commitment or
that holds Revolving Loans.

            "Revolving Loans": as defined in Section 2.4(a).

            "Revolving Percentage": as to any Revolving Lender at any time, the
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding, provided,
that, in the event that the Revolving Loans are paid in full prior to the
reduction to zero of the Total Revolving Extensions of Credit, the Revolving
Percentages shall be determined in a manner designed to ensure that the other
outstanding Revolving Extensions of Credit shall be held by the Revolving
Lenders on a comparable basis.

            "Revolving Termination Date": September 28, 2006.

            "SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.

            "Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.

            "Single Employer Plan": any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.


<PAGE>
                                                                              22


            "Solvay Note": $22,500,000 note, due January 5, 2011, issued by
Solvay Minerals, Inc., a Delaware corporation, and guaranteed by the Borrower

            "Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.

            "Specified Hedge Agreement": any Hedge Agreement (a) entered into by
the Borrower and any Person which at the time of execution of the relevant
Specified Hedge Agreement is a Lender or Lender Affiliate and (b) that has been
designated by the relevant Lender and the Borrower, by written notice to the
Administrative Agent, as a Specified Hedge Agreement. The designation of any
Hedge Agreement as a Specified Hedge Agreement shall not create in favor of such
Lender or Lender Affiliate any rights in connection with the management or
release of any Collateral or of the obligations of any Loan Party under the
Guarantee and Collateral Agreement.

            "Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower. Notwithstanding the foregoing,
the Armkel Joint Venture shall not be a Subsidiary for purposes of this
Agreement.

            "Subsidiary Guarantor": each Subsidiary of the Borrower other than
(i) any Excluded Foreign Subsidiary and (ii) any Receivables Subsidiary.

            "Swingline Commitment": the obligation of the Swingline Lender to
make Swingline Loans pursuant to Section 2.6 in an aggregate principal amount at
any one time outstanding not to exceed $10,000,000.


<PAGE>
                                                                              23


            "Swingline Lender": The Chase Manhattan Bank, in its capacity as the
lender of Swingline Loans.

            "Swingline Loans": as defined in Section 2.6.

            "Swingline Participation Amount": as defined in Section 2.7(c).

            "Syndication Agents": as defined in the preamble hereto.

            "Target": the consumer products business of Carter-Wallace.

            "Term Lenders": the collective reference to the Tranche A Term
Lenders and the Tranche B Term Lenders.

            "Term Loans": the collective reference to the Tranche A Term Loans
and the Tranche B Term Loans.

            "Total Revolving Commitments": at any time, the aggregate amount of
the Revolving Commitments then in effect.

            "Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.

            "Trademarks": as defined in the Guarantee and Collateral Agreement.

            "Tranche A Term Commitment": as to any Lender, the obligation of
such Lender, if any, to make a Tranche A Term Loan to the Borrower in a
principal amount not to exceed the amount set forth under the heading "Tranche A
Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche A Term Commitments is $125,000,000.

            "Tranche A Term Lender": each Lender that has a Tranche A Term
Commitment or that holds a Tranche A Term Loan.

            "Tranche A Term Loan": as defined in Section 2.1.

            "Tranche A Term Percentage": as to any Tranche A Term Lender at any
time, the percentage which such Lender's Tranche A Term Commitment then
constitutes of the aggregate Tranche A Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche A Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche A Term Loans then outstanding).

            "Tranche B Mandatory Prepayment Amount": as defined in Section
2.11(f).

            "Tranche B Optional Prepayment Amount": as defined in Section
2.10(b).

            "Tranche B Term Commitment": as to any Lender, the obligation of
such Lender, if any, to make a Tranche B Term Loan to the Borrower in a
principal amount not to exceed the amount set forth under the heading "Tranche B
Term Commitment" opposite such Lender's 


<PAGE>
                                                                              24


name on Schedule 1.1A. The original aggregate amount of the Tranche B Term
Commitments is $285,000,000.

            "Tranche B Term Lender": each Lender that has a Tranche B Term
Commitment or that holds a Tranche B Term Loan.

            "Tranche B Term Loan": as defined in Section 2.1.

            "Tranche B Term Percentage": as to any Tranche B Term Lender at any
time, the percentage which such Lender's Tranche B Term Commitment then
constitutes of the aggregate Tranche B Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche B Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding).

            "Transaction Documents": (i) the Armkel Joint Venture Agreement,
(ii) the Master Services Agreement, dated September 28, 2001, between the
Borrower and the Armkel Joint Venture, (iii) the Asset Purchase Agreement, dated
as of May 7, 2001, between the Armkel Joint Venture and Carter-Wallace, (iv) the
Product Line Purchase Agreement, dated as of May 7, 2001, between the Armkel
Joint Venture and the Borrower and, in all cases, all schedules, exhibits and
annexes thereto.

            "Transactions": the collective reference to (a) the Equity
Investment, (b) the Armkel Joint Venture Acquisition, (c) the Arrid Acquisition,
and (d) the Lambert Kay Acquisition.

            "Transferee": any Assignee or Participant.

            "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.

            "United States": the United States of America.

            "USAD Acquisition": the acquisition by the Borrower of 100% of the
stock of USA Detergents Inc., a Delaware corporation ("USAD"), pursuant to the
tender offer by US Acquisition Corp., a Delaware corporation ("USAC"), whereby
the Borrower acquired in excess of 51% of the stock of USAD, and the subsequent
merger of USAC into USAD, with USAD being the surviving corporation.

            "Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.

            "Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of the Borrower.

            1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.


<PAGE>
                                                                              25


            (b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, or become liable in respect of (and the words "incurred" and
"incurrence" shall have correlative meanings), (iv) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
Capital Stock, securities, revenues, accounts, leasehold interests and contract
rights, and (v) references to agreements or other Contractual Obligations shall,
unless otherwise specified, be deemed to refer to such agreements or Contractual
Obligations as amended, supplemented, restated or otherwise modified from time
to time.

            (c) 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,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.

            (d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

            SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

            2.1 Term Commitments(a). Subject to the terms and conditions
hereof, (a) each Tranche A Term Lender severally agrees to make a term loan (a
"Tranche A Term Loan") to the Borrower on the Closing Date in an amount not to
exceed the amount of the Tranche A Term Commitment of such Lender and (b) each
Tranche B Term Lender severally agrees to make a term loan (a "Tranche B Term
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
of the Tranche B Term Commitment of such Lender. The Term Loans may from time to
time be Eurodollar Loans or ABR Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.2 and 2.12.

            2.2 Procedure for Term Loan Borrowing. The Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, one Business Day
prior to the anticipated Closing Date) requesting that the Term Lenders make the
Term Loans on the Closing Date and specifying the amount to be borrowed. The
Term Loans made on the Closing Date shall initially be ABR Loans, unless
otherwise agreed by the Administrative Agent. Upon receipt of such notice the
Administrative Agent shall promptly notify each Term Lender thereof. Not later
than 12:00 Noon, New York City time, on the Closing Date each Term Lender shall
make available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Term Loan or Term Loans to be made by
such Lender. The Administrative Agent shall credit the account of the Borrower
on the books of such office of the Administrative Agent with the aggregate of
the amounts made available to the Administrative Agent by the Term Lenders in
immediately available funds.


<PAGE>
                                                                              26


            2.3 Repayment of Term Loans(a). (a) The Tranche A Term Loan of each
Tranche A Term Lender shall mature in 20 consecutive quarterly installments,
each of which shall be in an amount equal to such Lender's Tranche A Term
Percentage multiplied by the amount set forth below opposite such installment
(unless such amount has been reduced by one or more prepayments pursuant to
Section 2.10 or 2.11, in which case it will be appropriately adjusted):


<TABLE>
<CAPTION>
                   Installment                            Principal Amount
                   -----------                            ----------------
<S>                                                         <C>        
               September 30, 2002                           $ 3,125,000
                December 31, 2002                           $ 3,125,000
                 March 31, 2003                             $ 3,125,000
                  June 30, 2003                             $ 3,125,000

               September 30, 2003                           $ 3,125,000
                December 31, 2003                           $ 3,125,000
                 March 31, 2004                             $ 6,250,000
                  June 30, 2004                             $ 6,250,000

               September 30, 2004                           $ 6,250,000
                December 31, 2004                           $ 6,250,000
                 March 31, 2005                             $ 9,375,000
                  June 30, 2005                             $ 9,375,000

               September 30, 2005                           $ 9,375,000
                December 31, 2005                           $ 9,375,000
                 March 31, 2006                             $12,500,000
                  June 30, 2006                             $12,500,000

               September 30, 2006                           $18,750,000
</TABLE>


            (b) The Tranche B Term Loan of each Tranche B Term Lender shall
mature in 24 consecutive quarterly installments, each of which shall be in an
amount equal to such Lender's Tranche B Term Percentage multiplied by the amount
set forth below opposite such installment (unless such amount has been reduced
by one or more prepayments pursuant to Section 2.10 or 2.11 or increased
pursuant to Section 2.23, in which case it will be appropriately adjusted):


<TABLE>
<CAPTION>
                   Installment                             Principal Amount
                   -----------                             ----------------
<S>                                                        <C>      
               September 30, 2002                          $    712,500
                December 31, 2002                          $    712,500
                 March 31, 2003                            $    712,500
                  June 30, 2003                            $    712,500
                                                               
               September 30, 2003                          $    712,500
                December 31, 2003                          $    712,500
                 March 31, 2004                            $    712,500
</TABLE>



<PAGE>
                                                                              27



<TABLE>
<S>                                                        <C>      
                  June 30, 2004                            $    712,500
                                                               
               September 30, 2004                          $    712,500
                December 31, 2004                          $    712,500
                 March 31, 2005                            $    712,500
                  June 30, 2005                            $    712,500
                                                               
               September 30, 2005                          $    712,500
                December 31, 2005                          $    712,500
                 March 31, 2006                            $    712,500
                  June 30, 2006                            $    712,500

               September 30, 2006                          $    712,500
                December 31, 2006                          $ 28,500,000
                 March 31, 2007                            $ 57,000,000
                  June 30, 2007                            $ 57,000,000

               September 30, 2007                          $130,387,500
</TABLE>


            2.4 Commitments. (a) Subject to the terms and conditions hereof,
each Revolving Lender severally agrees to make revolving credit loans
("Revolving Loans") to the Borrower from time to time during the Revolving
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Percentage of the sum of (i) the
L/C Obligations then outstanding and (ii) the aggregate principal amount of the
Swingline Loans then outstanding, does not exceed the amount of such Lender's
Revolving Commitment. During the Revolving Commitment Period the Borrower may
use the Revolving Commitments by borrowing, prepaying the Revolving Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans
or ABR Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.5 and 2.12. The Borrower may not borrow, and
the Revolving Lenders shall be under no obligations to make available, Revolving
Loans in an amount in excess of $15,000,000 on the Closing Date.

            (b) The Borrower shall repay all outstanding Revolving Loans on the
Revolving Termination Date.

            2.5 Procedure for Revolving Loan Borrowing. The Borrower may borrow
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 12:00 Noon, New York City time, (a) three Business Days prior to the
requested Borrowing Date, in the case of Eurodollar Loans, or (b) one Business
Day prior to the requested Borrowing Date, in the case of ABR Loans), specifying
(i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Loan and the respective lengths of the initial Interest
Period therefor. Any Revolving Loans made on the Closing Date shall initially be
ABR Loans. Each borrowing under the 


<PAGE>
                                                                              28


Revolving Commitments shall be in an amount equal to (x) in the case of ABR
Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate
Available Revolving Commitments are less than $1,000,000, such lesser amount)
and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof; provided, that the Swingline Lender may request,
on behalf of the Borrower, borrowings under the Revolving Commitments that are
ABR Loans in other amounts pursuant to Section 2.7. Upon receipt of any such
notice from the Borrower, the Administrative Agent shall promptly notify each
Revolving Lender thereof. Each Revolving Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the Funding Office prior to 12:00 Noon, New York City
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Lenders and in like funds
as received by the Administrative Agent.

            2.6 Swingline Commitment. (a) Subject to the terms and conditions
hereof, the Swingline Lender agrees to make a portion of the credit otherwise
available to the Borrower under the Revolving Commitments from time to time
available during the Revolving Commitment Period by making swing line loans
("Swingline Loans") to the Borrower; provided that (i) the aggregate principal
amount of Swingline Loans outstanding at any time shall not exceed the Swingline
Commitment then in effect (notwithstanding that the Swingline Loans outstanding
at any time, when aggregated with the Swingline Lender's other outstanding
Revolving Loans, may exceed the Swingline Commitment then in effect) and (ii)
the Borrower shall not request, and the Swingline Lender shall not make, any
Swingline Loan if, after giving effect to the making of such Swingline Loan, the
aggregate amount of the Available Revolving Commitments would be less than zero.
During the Revolving Commitment Period, the Borrower may use the Swingline
Commitment by borrowing, repaying and reborrowing, all in accordance with the
terms and conditions hereof. Swingline Loans shall be ABR Loans only.

            (b) The Borrower shall repay all outstanding Swingline Loans on the
Revolving Termination Date.

            2.7 Procedure for Swingline Borrowing; Refunding of Swingline Loans.
(a) Whenever the Borrower desires that the Swingline Lender make Swingline Loans
it shall give the Swingline Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice must be received by the Swingline
Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing
Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing
Date (which shall be a Business Day during the Revolving Commitment Period).
Each borrowing under the Swingline Commitment shall be in an amount equal to
$500,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00
P.M., New York City time, on the Borrowing Date specified in a notice in respect
of Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the amount of the Swingline Loan to be made by the Swingline
Lender. The Administrative Agent shall make the proceeds of such Swingline Loan
available to the Borrower on such Borrowing Date by depositing such proceeds in
the 


<PAGE>
                                                                              29


account of the Borrower with the Administrative Agent on such Borrowing Date in
immediately available funds.

            (b) The Swingline Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swingline Lender to act on its behalf), on one Business
Day's notice given by the Swingline Lender no later than 12:00 Noon, New York
City time, request each Revolving Lender to make, and each Revolving Lender
hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving
Lender's Revolving Percentage of the aggregate amount of the Swingline Loans
(the "Refunded Swingline Loans") outstanding on the date of such notice, to
repay the Swingline Lender. Each Revolving Lender shall make the amount of such
Revolving Loan available to the Administrative Agent at the Funding Office in
immediately available funds, not later than 10:00 A.M., New York City time, one
Business Day after the date of such notice. The proceeds of such Revolving Loans
shall be immediately made available by the Administrative Agent to the Swingline
Lender for application by the Swingline Lender to the repayment of the Refunded
Swingline Loans. The Borrower irrevocably authorizes the Swingline Lender to
charge the Borrower's accounts with the Administrative Agent (up to the amount
available in each such account) in order to immediately pay the amount of such
Refunded Swingline Loans to the extent amounts received from the Revolving
Lenders are not sufficient to repay in full such Refunded Swingline Loans.

            (c) If prior to the time a Revolving Loan would have otherwise been
made pursuant to Section 2.7(b), one of the events described in Section 8(f)
shall have occurred and be continuing with respect to the Borrower or if for any
other reason, as determined by the Swingline Lender in its sole discretion,
Revolving Loans may not be made as contemplated by Section 2.7(b), each
Revolving Lender shall, on the date such Revolving Loan was to have been made
pursuant to the notice referred to in Section 2.7(b) (the "Refunding Date"),
purchase for cash an undivided participating interest in the then outstanding
Swingline Loans by paying to the Swingline Lender an amount (the "Swingline
Participation Amount") equal to (i) such Revolving Lender's Revolving Percentage
times (ii) the sum of the aggregate principal amount of Swingline Loans then
outstanding that were to have been repaid with such Revolving Loans.

            (d) Whenever, at any time after the Swingline Lender has received
from any Revolving Lender such Lender's Swingline Participation Amount, the
Swingline Lender receives any payment on account of the Swingline Loans, the
Swingline Lender will distribute to such Lender its Swingline Participation
Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was outstanding
and funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
pay the principal of and interest on all Swingline Loans then due); provided,
however, that in the event that such payment received by the Swingline Lender is
required to be returned, such Revolving Lender will return to the Swingline
Lender any portion thereof previously distributed to it by the Swingline Lender.

            (e) Each Revolving Lender's obligation to make the Loans referred to
in Section 2.7(b) and to purchase participating interests pursuant to Section
2.7(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any setoff, 


<PAGE>
                                                                              30


counterclaim, recoupment, defense or other right that such Revolving Lender or
the Borrower may have against the Swingline Lender, the Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.

            2.8 Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the date hereof to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the last day
of each March, June, September and December and on the Revolving Termination
Date, commencing on the first of such dates to occur after the date hereof.

            (b) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates previously agreed to in writing by the Borrower
and the Administrative Agent.

            2.9 Termination or Reduction of Revolving Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans and
Swingline Loans made on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Total Revolving Commitments. Any such
reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the Revolving Commitments then in effect.

            2.10 Optional Prepayments(a). (a) The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto in the case of Eurodollar Loans and at least
one Business Day prior thereto in the case of ABR Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or ABR Loans; provided, that if a Eurodollar Loan is prepaid on
any day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 2.20. Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with (except in
the case of Revolving Loans that are ABR Loans and Swingline Loans) accrued
interest to such date on the amount prepaid. The Borrower may apply prepayments
to the Revolving Loans or the Term Loans, as the Borrower determines. Partial
prepayments of Term Loans and Revolving Loans shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof. Partial prepayments of
Swingline Loans shall be in an aggregate principal amount of $100,000 or a whole
multiple thereof.


<PAGE>
                                                                              31


            (b) Notwithstanding anything to the contrary in Sections 2.10(a) and
2.17, with respect to the amount of any optional prepayment described in Section
2.10(a) that is allocated to Tranche B Term Loans (such amounts, the "Tranche B
Optional Prepayment Amount"), at any time when Tranche A Term Loans remain
outstanding, the Borrower will, in lieu of applying such amount to the
prepayment of Tranche B Term Loans as provided in paragraph (a) above, on the
date specified in Section 2.10(a) for such prepayment, give the Administrative
Agent telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Tranche B Term Lender a notice
(each, an "Optional Prepayment Option Notice") as described below. As promptly
as practicable after receiving such notice from the Borrower, the Administrative
Agent will send to each Tranche B Term Lender an Optional Prepayment Option
Notice, which shall be in the form of Exhibit I-1, and shall include an offer by
the Borrower to prepay on the date (each an "Optional Prepayment Date") that is
10 Business Days after the date of the Optional Prepayment Option Notice, the
relevant Tranche B Term Loans of such Lender by an amount equal to the portion
of the Tranche B Optional Prepayment Amount indicated in such Lender's Optional
Prepayment Option Notice as being applicable to such Lender's Tranche B Term
Loans. On the Optional Prepayment Date, (i) the Borrower shall pay to the
relevant Tranche B Term Lenders the aggregate amount necessary to prepay that
portion of the outstanding relevant Tranche B Term Loans in respect of which
such Lenders have accepted or are deemed to have accepted prepayment pursuant to
the Optional Prepayment Notice and (ii) the Borrower shall pay to the Tranche A
Term Lenders an amount equal to the portion of the Tranche B Optional Prepayment
Amount not accepted by the relevant Lenders, and such amount shall be applied to
the prepayment of the Tranche A Term Loans.

            2.11 Mandatory Prepayments and Commitment Reductions. (a) If any
Capital Stock shall be issued by any Group Member, an amount equal to 50% of the
Net Cash Proceeds thereof shall be applied on the date of such issuance toward
the prepayment of the Term Loans as set forth in Section 2.11(e).

            (b) If any Indebtedness shall be incurred by any Group Member
(including Indebtedness incurred in accordance with Section 7.2(h) and Section
7.2(i)(A) (to the extent contemplated therein), but excluding any other
Indebtedness incurred in accordance with Section 7.2), an amount equal to 100%
of the Net Cash Proceeds thereof shall be applied on the date of such incurrence
toward the prepayment of the Term Loans as set forth in Section 2.11(e).

            (c) If on any date any Group Member shall receive Net Cash Proceeds
from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall
be delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date toward the prepayment of the Term Loans and the reduction of the Revolving
Commitments as set forth in Section 2.11(e); provided, that, notwithstanding the
foregoing, on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Term Loans and the reduction of
the Revolving Commitments as set forth in Section 2.11(e).

            (d) If, for any fiscal year of the Borrower, commencing with the
fiscal year ending December 31, 2002, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply 50% of
such Excess Cash Flow toward the prepayment of the Term Loans as set forth in
Section 2.11(e). Each such prepayment shall be 


<PAGE>
                                                                              32


made on a date (an "Excess Cash Flow Application Date") no later than five days
after the earlier of (i) the date on which the financial statements of the
Borrower referred to in Section 6.1(a), for the fiscal year with respect to
which such prepayment is made, are required to be delivered to the
Administrative Agent and the Lenders and (ii) the date such financial statements
are actually delivered to the Administrative Agent and the Lenders.

            (e) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section 2.11 shall be applied,
first, to the prepayment of the Term Loans and, second, in the case of any Net
Cash Proceeds from any Asset Sale or Recovery Event or incurrence of
Indebtedness, to permanently reduce the Revolving Commitments. Any such
reduction of the Revolving Commitments shall be accompanied by prepayment of the
Revolving Loans and/or Swingline Loans to the extent, if any, that the Total
Revolving Extensions of Credit exceed the amount of the Total Revolving
Commitments as so reduced, provided that if the aggregate principal amount of
Revolving Loans and Swingline Loans then outstanding is less than the amount of
such excess (because L/C Obligations constitute a portion thereof), the Borrower
shall, to the extent of the balance of such excess, replace outstanding Letters
of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Administrative Agent. The application
of any prepayment pursuant to Section 2.11 shall be made, first, to ABR Loans
and, second, to Eurodollar Loans. Each prepayment of the Loans under Section
2.11 (except in the case of Revolving Loans that are ABR Loans and Swingline
Loans) shall be accompanied by accrued interest to the date of such prepayment
on the amount prepaid.

            (f) Notwithstanding anything to the contrary in Sections 2.11(e) and
2.17, with respect to the amount of any mandatory prepayment described in
Section 2.11 that is allocated to Tranche B Term Loans (such amounts, the
"Tranche B Mandatory Prepayment Amount"), at any time when Tranche A Term Loans
remain outstanding, the Borrower will, in lieu of applying such amount to the
prepayment of Tranche B Term Loans as provided in paragraph (e) above, on the
date specified in Section 2.11 for such prepayment, give the Administrative
Agent telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Tranche B Term Lender a notice
(each, a "Mandatory Prepayment Option Notice") as described below. As promptly
as practicable after receiving such notice from the Borrower, the Administrative
Agent will send to each Tranche B Term Lender a Mandatory Prepayment Option
Notice, which shall be in the form of Exhibit I-2, and shall include an offer by
the Borrower to prepay on the date (each a "Mandatory Prepayment Date") that is
10 Business Days after the date of the Mandatory Prepayment Option Notice, the
relevant Tranche B Term Loans of such Lender by an amount equal to the portion
of the Tranche B Mandatory Prepayment Amount indicated in such Lender's
Mandatory Prepayment Option Notice as being applicable to such Lender's Tranche
B Term Loans. On the Mandatory Prepayment Date, (i) the Borrower shall pay to
the relevant Tranche B Term Lenders the aggregate amount necessary to prepay
that portion of the outstanding relevant Tranche B Term Loans in respect of
which such Lenders have accepted prepayment or are deemed to have accepted
prepayment pursuant to the Mandatory Prepayment Notice, and (ii) the Borrower
shall pay to the Tranche A Term Lenders an amount equal to the portion of the
Tranche B Mandatory Prepayment Amount not accepted by the relevant Lenders, and
such amount shall be applied to the prepayment of the Tranche A Term Loans.


<PAGE>
                                                                              33


            2.12 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election (which notice shall specify the length of the initial Interest
Period therefor), provided that no ABR Loan under a particular Facility may be
converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Majority Facility Lenders in
respect of such Facility have determined in its or their sole discretion not to
permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.

            (b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations, and
provided, further, that if the Borrower shall fail to give any required notice
as described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted to
ABR Loans on the last day of such then expiring Interest Period. Upon receipt of
any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.

            2.13 Limitations on Eurodollar Tranches. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans and all selections of Interest Periods shall be in such amounts
and be made pursuant to such elections so that, (a) after giving effect thereto,
the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (b) no more than ten Eurodollar Tranches shall
be outstanding at any one time.

            2.14 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.

            (b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.

            (c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
applicable to ABR Loans under the Revolving Facility plus 2%, and (ii) if all or
a portion of any 


<PAGE>
                                                                              34


interest payable on any Loan or Reimbursement Obligation or any commitment fee
or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to ABR Loans
under the relevant Facility plus 2% (or, in the case of any such other amounts
that do not relate to a particular Facility, the rate then applicable to ABR
Loans under the Revolving Facility plus 2%), in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).

            (d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.

            2.15 Computation of Interest and Fees. (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to ABR Loans the rate of interest
on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.

            (b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.14(a).

            2.16 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:

            (a) the Administrative Agent shall have determined (which
      determination shall be conclusive and binding upon the Borrower) that, by
      reason of circumstances affecting the relevant market, adequate and
      reasonable means do not exist for ascertaining the Eurodollar Rate for
      such Interest Period, or

            (b) the Administrative Agent shall have received notice from the
      Majority Facility Lenders in respect of the relevant Facility that the
      Eurodollar Rate determined or to be determined for such Interest Period
      will not adequately and fairly reflect the cost to such Lenders (as
      conclusively certified by such Lenders) of making or maintaining their
      affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar 


<PAGE>
                                                                              35


Loans under the relevant Facility requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans under the relevant
Facility that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as ABR Loans and (z) any
outstanding Eurodollar Loans under the relevant Facility shall be converted, on
the last day of the then-current Interest Period, to ABR Loans. Until such
notice has been withdrawn by the Administrative Agent, which the Administrative
Agent agrees to do upon the cessation of the events giving rise to such notice,
no further Eurodollar Loans under the relevant Facility shall be made or
continued as such, nor shall the Borrower have the right to convert Loans under
the relevant Facility to Eurodollar Loans.

            2.17 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Tranche A Term Percentages, Tranche B
Term Percentages or Revolving Percentages, as the case may be, of the relevant
Lenders.

            (b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made pro rata
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Lenders (except as otherwise provided in Section 2.11(f)). The
amount of each principal prepayment of the Term Loans shall be applied to reduce
the then remaining installments of the Tranche A Term Loans and Tranche B Term
Loans, as the case may be, pro rata based upon the then remaining principal
amounts thereof. Amounts prepaid on account of the Term Loans may not be
reborrowed.

            (c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made pro
rata according to the respective outstanding principal amounts of the Revolving
Loans then held by the Revolving Lenders.

            (d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.

            (e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may 


<PAGE>
                                                                              36


assume that such Lender is making such amount available to the Administrative
Agent, and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the Borrowing Date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this paragraph
shall be conclusive in the absence of manifest error. If such Lender's share of
such borrowing is not made available to the Administrative Agent by such Lender
within three Business Days after such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans under the relevant Facility, on demand, from
the Borrower.

            (f) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate. Nothing herein shall be
deemed to limit the rights of the Administrative Agent or any Lender against the
Borrower.

            2.18 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:

                  (i) shall subject any Lender to any tax of any kind whatsoever
      with respect to this Agreement, any Letter of Credit, any Application or
      any Eurodollar Loan made by it, or change the basis of taxation of
      payments to such Lender in respect thereof (except for Non-Excluded Taxes
      covered by Section 2.19 and changes in the rate of tax on the overall net
      income of such Lender);

                  (ii) shall impose, modify or hold applicable any reserve,
      special deposit, compulsory loan or similar requirement against assets
      held by, deposits or other liabilities in or for the account of, advances,
      loans or other extensions of credit by, or any other acquisition of funds
      by, any office of such Lender that is not otherwise included in the
      determination of the Eurodollar Rate; or

                  (iii) shall impose on such Lender any other condition;


<PAGE>
                                                                              37


and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender reasonably deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit, or to reduce any amount receivable hereunder
in respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this paragraph, it
shall promptly notify the Borrower (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.

            (b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation
for such reduction; provided that the Borrower shall not be required to
compensate a Lender pursuant to this paragraph for any amounts incurred more
than three months prior to the date that such Lender notifies the Borrower of
such Lender's intention to claim compensation therefor; and provided further
that, if the circumstances giving rise to such claim have a retroactive effect,
then such three-month period shall be extended to include the period of such
retroactive effect.

            (c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

            2.19 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") 


<PAGE>
                                                                              38


or Other Taxes are required to be withheld from any amounts payable to the
Administrative Agent or any Lender hereunder, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender with respect to any Non-Excluded Taxes (i) that are
attributable to such Lender's failure to deliver the documentation required by
paragraph (d) or (e) of this Section or (ii) that are United States withholding
taxes imposed on amounts payable to such Lender at the time such Lender becomes
a party to this Agreement, except to the extent that such Lender's assignor (if
any) was entitled, at the time of assignment, to receive additional amounts from
the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

            (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

            (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.

            (d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit G and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.


<PAGE>
                                                                              39


            (e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.

            (f) The agreements in this Section 2.19 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

            2.20 Indemnity. The Borrower agrees to indemnify each Lender for,
and to hold each Lender harmless from, any loss or expense that such Lender may
sustain or incur as a consequence of (a) a default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) a default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day that is not the last day of
an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error.

            2.21 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.18 or 2.19(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 2.18 or 2.19(a).

            2.22 Replacement of Lenders. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.18 or 2.19(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event 


<PAGE>
                                                                              40


of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 2.21 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 2.18 or 2.19(a), (iv) the replacement
financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (v) the Borrower
shall be liable to such replaced Lender under Section 2.20 if any Eurodollar
Loan owing to such replaced Lender shall be purchased other than on the last day
of the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 10.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein), (viii) until such time as such replacement shall be consummated,
the Borrower shall pay all additional amounts (if any) required pursuant to
Section 2.18 or 2.19(a), as the case may be, and (ix) any such replacement shall
not be deemed to be a waiver of any rights that the Borrower, the Administrative
Agent or any other Lender shall have against the replaced Lender.

            2.23 Increase of Tranche B Facility (a). (a) The Borrower shall
have the right at any time to increase the Tranche B Term Commitments by an
amount not to exceed $75,000,000 (such amount the "Additional Term Commitments",
such Loans made pursuant to the Additional Term Commitment, the "Additional Term
Loans", and the date such increase is to become effective, the "Commitment
Increase Date") (i) by requesting that one or more banks or other financial
institutions not a party to this Agreement become a Lender hereunder or (ii) by
requesting that any Lender already party to this Agreement increase the amount
of such Lender's Tranche B Term Commitment; provided, that the addition of any
bank or financial institution pursuant to clause (i) above shall be subject to
the consent of the Administrative Agent (which consent shall not be unreasonably
withheld); provided further, the Tranche B Term Commitment of any bank or other
financial institution pursuant to clause (i) above, shall be in an aggregate
principal amount at least equal to $1,000,000; provided further, the amount of
the increase of any Lender's Tranche B Term Commitment pursuant to clause (ii)
above when added to the amount of such Lender's Tranche B Term Commitment before
the increase, shall be in an aggregate principal amount at least equal to
$1,000,000.

            (b) Not less than five Business Days prior to the Commitment
Increase Date, any additional bank, financial institution or other entity which
elects to become a party to this Agreement and make a Tranche B Term Commitment
pursuant to clause (a)(i) of this Section 2.23 shall execute a New Lender
Supplement (each, a "New Lender Supplement") with the Borrower and the
Administrative Agent, substantially in the form of Exhibit J, whereupon such
bank, financial institution or other entity (herein called a "New Lender") shall
become a Lender for all purposes and to the same extent as if originally a party
hereto and shall be bound by and entitled to the benefits of this Agreement, and
Schedule 1.1A shall be deemed to be amended to add the name and portion of the
Additional Term Commitment allocable to such New Lender as a Tranche B Term
Commitment.

            (c) Any increase in the Tranche B Term Commitment of any Lender
(each such Lender, an "Increasing Lender") pursuant to clause (a)(ii) of this
Section 2.23 shall be effective only upon the execution and delivery by such
Lender to the Borrower and the Administrative Agent of a commitment increase
letter in substantially the form of Exhibit K hereto (a 


<PAGE>
                                                                              41


"Commitment Increase Letter"), which Commitment Increase Letter shall be
delivered to the Administrative Agent not less than five Business Days prior to
the Commitment Increase Date and shall specify the portion of the Additional
Term Commitment allocable to such Increasing Lender as a Tranche B Term
Commitment.

            (d) Any increase in the aggregate Tranche B Term Commitments
pursuant to this Section 2.23 shall not be effective unless:

                  (i) no Default or Event of Default shall have occurred and be
      continuing on the Commitment Increase Date;

                  (ii) each of the representations and warranties made by the
      Borrower in or pursuant to the Loan Documents shall be true and correct in
      all material respects on the Commitment Increase Date with the same effect
      as though made on and as of such date, except to the extent such
      representations and warranties expressly relate to an earlier date in
      which case such representations and warranties shall have been true and
      correct in all material respects as of such earlier date;

                  (iii) the Administrative Agent shall have received each of (A)
      a certificate of the corporate secretary or assistant secretary of the
      Borrower as to the taking of any corporate action necessary in connection
      with such increase and (B) an opinion or opinions of general counsel to
      the Borrower as to its corporate power and authority to borrow hereunder
      after giving effect to such increase and such other matters relating
      thereto as the Administrative Agent and its counsel may reasonably
      request.

Each notice requesting an increase in the Tranche B Term Commitments pursuant to
this Section 2.23 shall constitute a certification to the effect set forth in
clauses (i) and (ii) of this Section 2.23(d).

            (e) No Lender shall at any time be required to agree to a request of
the Borrower to increase its Tranche B Term Commitment or obligations hereunder.

            (f) The Borrower shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to 10:00
A.M., New York City time, one Business Day prior to the anticipated Commitment
Increase Date) requesting that the New Lenders and the Increasing Lenders make
Additional Term Loans in an amount not to exceed the Additional Term Commitment
on the Commitment Increase Date and specifying the amount to be borrowed. The
Additional Term Loans made on the Commitment Increase Date shall initially be
ABR Loans. Upon receipt of such notice the Administrative Agent shall promptly
notify each New Lender and each Increasing Lender thereof. Not later than 12:00
Noon, New York City time, on the Commitment Increase Date each New Lender and
each Increasing Lender shall make available to the Administrative Agent at the
Funding Office an amount in immediately available funds equal to the Additional
Term Loans to be made by such Lender. The Administrative Agent shall credit the
account of the Borrower on the books of such office of the Administrative Agent
with the aggregate of the amounts made available to the Administrative Agent by
each New Lender and each Increasing Lender in immediately available funds.


<PAGE>
                                                                              42


Additional Term Loans shall be Tranche B Term Loans for all purposes (excepting
Section 2.1) of this Agreement.

                          SECTION 3. LETTERS OF CREDIT

            3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
each Issuing Lender, in reliance on the agreements of the other Revolving
Lenders set forth in Section 3.4(a), agrees to issue letters of credit ("Letters
of Credit") for the account of the Borrower on any Business Day during the
Revolving Commitment Period in such form as may be approved from time to time by
such Issuing Lender; provided that such Issuing Lender shall have no obligation
to issue any Letter of Credit if, after giving effect to such issuance, (i) the
L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of
the Available Revolving Commitments would be less than zero. Each Letter of
Credit shall (i) be denominated in Dollars, (ii) have a face amount of at least
$250,000 (unless otherwise agreed by such Issuing Lender) and (iii) expire no
later than the earlier of (x) the first anniversary of its date of issuance and
(y) the date that is five Business Days prior to the Revolving Termination Date,
provided that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above).

            (b) No Issuing Lender shall at any time be obligated to issue any
Letter of Credit if such issuance would conflict with, or cause such Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.

            3.2 Procedure for Issuance of Letter of Credit. The Borrower may
from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to the applicable Issuing Lender at its address for notices specified
herein an Application therefor, completed to the satisfaction of such Issuing
Lender, and such other certificates, documents and other papers and information
as such Issuing Lender may request. Upon receipt of any Application, an Issuing
Lender will process such Application and the certificates, documents and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and shall promptly issue the Letter of Credit
requested thereby (but in no event shall such Issuing Lender be required to
issue any Letter of Credit earlier than three Business Days after its receipt of
the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed to by such
Issuing Lender and the Borrower. The applicable Issuing Lender shall furnish a
copy of such Letter of Credit to the Borrower promptly following the issuance
thereof. The applicable Issuing Lender shall promptly furnish to the
Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Letter of Credit (including the amount thereof).

            3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans under the Revolving Facility,
shared ratably among the Revolving Lenders and payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date. In addition, the Borrower
shall pay to each Issuing Lender for its own account a fronting fee of 0.25% per
annum on the undrawn and unexpired amount of each Letter of Credit issued by it,
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date.


<PAGE>
                                                                              43


            (b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lenders for such normal and customary costs and expenses
as are incurred or charged by such Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of
Credit.

            3.4 L/C Participations. (a) Each Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce each Issuing
Lender to issue Letters of Credit, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from each Issuing Lender,
on the terms and conditions set forth below, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's Revolving
Percentage in each Issuing Lender's obligations and rights under and in respect
of each Letter of Credit and the amount of each draft paid by such Issuing
Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees
with each Issuing Lender that, if a draft is paid under any Letter of Credit for
which such Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the applicable Issuing Lender upon demand at such Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed.

            (b) If any amount required to be paid by any L/C Participant to any
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the relevant Issuing Lender under any Letter of Credit is
not paid to such Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to such Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the relevant Issuing Lender, times (iii) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any L/C Participant pursuant
to Section 3.4(a) is not made available to the relevant Issuing Lender by such
L/C Participant within three Business Days after the date such payment is due,
such Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans under the Revolving Facility. A
certificate of the relevant Issuing Lender submitted to any L/C Participant with
respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.

            (c) Whenever, at any time after an Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), such Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by such Issuing Lender), or any payment of interest on account thereof, such
Issuing Lender will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
such Issuing Lender shall be required to be returned by such Issuing Lender,
such L/C Participant shall return to such Issuing Lender the portion thereof
previously distributed by such Issuing Lender to it.


<PAGE>
                                                                              44


            3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse each Issuing Lender on the same Business Day (if the Borrower is
notified by 1:00 p.m. (New York time) and no later than the next Business Day if
the Borrower is notified after 1:00 p.m. (New York time)) on which such Issuing
Lender notifies the Borrower of the date and amount of a draft presented under
any Letter of Credit and paid by such Issuing Lender for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment. Each such
payment shall be made to the relevant Issuing Lender at its address for notices
referred to herein in Dollars and in immediately available funds. Interest shall
be payable on any such amounts from the date on which the relevant draft is paid
until payment in full at the rate set forth in (i) until the Business Day next
succeeding the date of the relevant notice, Section 2.14(b) and (ii) thereafter,
Section 2.14(c).

            3.6 Obligations Absolute. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against any Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with each Issuing
Lender that no Issuing Lender shall be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. No Issuing Lender
shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or omissions found by a
final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Issuing Lender.
The Borrower agrees that any action taken or omitted by any Issuing Lender under
or in connection with any Letter of Credit or the related drafts or documents,
if done in the absence of gross negligence or willful misconduct and in
accordance with the standards of care specified in the Uniform Commercial Code
of the State of New York, shall be binding on the Borrower and shall not result
in any liability of any Issuing Lender to the Borrower.

            3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the relevant Issuing Lender shall promptly
notify the Borrower of the date and amount thereof. The responsibility of the
relevant Issuing Lender to the Borrower in connection with any draft presented
for payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.

            3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.


<PAGE>
                                                                              45


            3.9 Transitional Provisions. On the Closing Date, (i) the Borrower
shall provide Schedule 3.9, which schedule shall list those certain letters of
credit issued by a Lender and outstanding as of the Closing Date (the "Existing
Facility Letters of Credit"), (ii) such Existing Facility Letters of Credit
shall be deemed to be Letters of Credit issued pursuant to and in compliance
with this Section 3, (iii) the face amount of such Existing Facility Letters of
Credit shall be included in the calculation of the available L/C Commitment and
the Revolving Extensions of Credit, (iv) the provisions of this Section 3 shall
apply thereto, and the Borrower and the Revolving Lenders hereunder hereby
expressly assume all obligations, and the Revolving Lenders shall have all
rights, with respect to such Letters of Credit which the Borrower and the
Revolving Lenders would have had if the Existing Facility Letters of Credit
originally had been issued hereunder and (v) all liabilities of the Borrower
with respect to such Existing Facility Letters of Credit shall constitute
Obligations.

            3.10 Certain Reporting Requirements. Each Issuing Lender will report
in writing to the Administrative Agent (i) on the first Business Day of each
week, the aggregate stated amount of Letters of Credit issued by it and
outstanding as of the last Business Day of the preceding week and (ii) on or
prior to each Business Day on which an Issuing Lender expects to issue or amend
any Letter of Credit, the date of such issuance or amendment and the aggregate
stated amount of Letters of Credit to be issued by it and outstanding after
giving effect to such issuance or amendment (and such Issuing Lender shall
advise the Administrative Agent on such Business Day whether such issuance or
amendment occurred and whether the amount thereof changed).

                   SECTION 4. REPRESENTATIONS AND WARRANTIES

            To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative Agent
and each Lender that:

            4.1 Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at June 30,
2001 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies of
which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Transactions and the Refinancing, (ii) the Loans to be made on the Closing
Date and the use of proceeds thereof and (iii) the payment of fees and expenses
in connection with the foregoing. The Pro Forma Balance Sheet has been prepared
based on the best information available to the Borrower as of the date of
delivery thereof, and presents fairly on a pro forma basis the estimated
financial position of Borrower and its consolidated Subsidiaries as at June 30,
2001, assuming that the events specified in the preceding sentence had actually
occurred at such date.

            (b) The audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at December 31, 1998, December 31, 1999 and
December 31, 2000, and the related consolidated statements of income and of cash
flows for the fiscal years ended on such dates, in each case reported on by
Deloitte & Touche LLP, and accompanied by an unqualified report from Deloitte &
Touche LLP, present fairly the consolidated financial condition of the Borrower
and its consolidated Subsidiaries as at such date and the consolidated results
of its 


<PAGE>
                                                                              46


operations and its consolidated cash flows for the respective fiscal years then
ended. The unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at March 31, 2001 and the related unaudited
consolidated statements of income and cash flows for the three-month period
ended on such date, present fairly the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such date and the consolidated
results of its operations and its consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments and the omission
of footnotes). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). Except as set forth
on Schedule 4.1, no Group Member has any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from December 31, 2000 to and
including the date hereof there has been no Disposition by any Group Member of
any material part of their respective businesses or properties.

            (c) The audited income statements of the Target, Arrid and Lambert
Kay as at March 31, 1999 and the audited consolidated balance sheets of the
Target, Arrid and Lambert Kay as at March 31, 2000 and March 31, 2001, and the
related consolidated statements of income and of cash flows for the fiscal years
ended 2000 and 2001, in each case reported on by KPMG LLP (and, in the case of
the balance sheets as at March 31, 2000 and March 31, 2001, accompanied by an
unqualified report from KPMG LLP) present fairly the consolidated financial
condition of the Target, Arrid and Lambert Kay as at such date and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). To the Borrower's
knowledge, each of the Target, Arrid and Lambert Kay has no material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any long-term
leases (excepting certain operating leases entered into in the ordinary course
of business) or unusual forward or long-term commitments, including any interest
rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, that are not reflected in the most recent financial
statements referred to in this paragraph or otherwise disclosed in the
Transaction Documents. During the period from March 31, 2001 to and including
the date hereof there has been no Disposition by any of the Target, Arrid or
Lambert Kay, as the case may be, of any material part of its businesses or
properties.

            (d) The detailed consolidated budget for each fiscal year through
2007 (including a projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of each fiscal year through 2007, the related
consolidated statements of projected cash flow, projected changes in financial
position and projected income and a description of the underlying assumptions
applicable thereto), and significant revisions, if any, of such budget and
projections with respect to such fiscal year of the Borrower through the 2007
fiscal year (collectively, the "Projections"), are based on reasonable
estimates, information and assumptions and, to the knowledge of the Borrower,
are not incorrect or misleading in any material respect.


<PAGE>
                                                                              47


            4.2 No Change. Since March 31, 2001, there has been no development
or event that has had or would reasonably be expected to have a Material Adverse
Effect.

            4.3 Existence; Compliance with Law. Each Group Member (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

            4.4 Power; Authorization; Enforceable Obligations. Each Loan Party
has the power and authority, and the legal right, to make, deliver and perform
the Loan Documents and the Transaction Documents to which it is a party and, in
the case of the Borrower, to obtain extensions of credit hereunder and to grant
the security interests on the terms and conditions contained in this Agreement
and the Guarantee and Collateral Agreement. Each Loan Party has taken all
necessary organizational action to authorize the execution, delivery and
performance of the Loan Documents and the Transaction Documents to which it is a
party and, in the case of the Borrower, to authorize the extensions of credit on
the terms and conditions of this Agreement, and to authorize the granting of the
security interests on the terms and conditions contained in this Agreement and
the Guarantee and Collateral Agreement. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the Transactions and the
extensions of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement, any of the Loan Documents or the
Transaction Documents, except (i) consents, authorizations, filings and notices
described in Schedule 4.4, which consents, authorizations, filings and notices
have been obtained or made and are in full force and effect and (ii) the filings
referred to in Section 4.19. Each Loan Document and each Transaction Document
has been duly executed and delivered on behalf of each Loan Party party thereto.
This Agreement constitutes, and each other Loan Document and each Transaction
Document upon execution will constitute, a legal, valid and binding obligation
of each Loan Party party thereto, enforceable against each such Loan Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

            4.5 No Legal Bar; No Burdensome Restrictions. The execution,
delivery and performance of this Agreement, the other Loan Documents and the
Transaction Documents, the issuance of Letters of Credit, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or any material Contractual Obligation of any Group Member and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
material Contractual Obligation (other than the Liens created by the Security
Documents). No Requirement of Law or Contractual Obligation applicable to the
Borrower or any of its Subsidiaries would reasonably be expected to have a
Material Adverse Effect.


<PAGE>
                                                                              48


            4.6 Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Borrower, threatened by or against any Group Member or against any of
their respective properties or revenues (a) with respect to any of the Loan
Documents, any of the Transaction Documents or any of the transactions
contemplated hereby or thereby, or (b) that would reasonably be expected to have
a Material Adverse Effect.

            4.7 No Default. No Group Member is in default under or with respect
to any of its Contractual Obligations in any respect that would reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.

            4.8 Ownership of Property; Liens. Each Group Member has title in fee
simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, or a valid license of, all its other
property (including Intellectual Property), and none of the property held in fee
simple or to which any Borrower has good title is subject to any Lien except as
permitted by Section 7.3.

            4.9 Intellectual Property. Each Group Member owns, or is licensed or
otherwise has sufficient legal rights to use, all Intellectual Property
necessary for the conduct of its business as currently conducted free of all
encumbrances. All of each Group Member's Trademarks and all other material
Intellectual Property are valid and enforceable, not abandoned and unexpired. No
material claim has been threatened in writing or has been asserted and is
pending, and no judgment regarding the same has been rendered by a court of
competent jurisdiction, by any Person challenging or questioning the use of any
material Intellectual Property or the validity or effectiveness of any material
Intellectual Property, nor does the Borrower know of any valid basis for any
such claim. No Group Member which is a party to a material Intellectual Property
license or other material agreement concerning Intellectual Property, is or is
alleged in writing to be, in breach or default thereunder. Each Group Member
represents that the transactions contemplated by this Agreement shall not impair
the Intellectual Property rights of any Group Member. Each Group Member takes
reasonable steps to protect and maintain all Trademarks and all other material
Intellectual Property, including executing all appropriate confidentiality
agreements and filing for all appropriate patents and registrations. The use of
Intellectual Property by each Group Member does not impair or infringe on the
rights of any Person in any material respect.

            4.10 Taxes. Each Group Member has filed or caused to be filed all
federal, state and other material tax returns that are required to be filed and
has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the relevant Group
Member); no tax Lien has been filed, and, to the knowledge of the Borrower, no
claim is being asserted, with respect to any such tax, fee or other charge.

            4.11 Federal Regulations. No part of the proceeds of any Loans, and
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" 


<PAGE>
                                                                              49


within the respective meanings of each of the quoted terms under Regulation U as
now and from time to time hereafter in effect in a manner that violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.

            4.12 Labor Matters. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Group Member pending or, to the
knowledge of the Borrower, threatened; (b) hours worked by and payment made to
employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.

            4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or would reasonably be expected to result in a material liability
under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.

            4.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X) that limits its ability to incur Indebtedness.

            4.15 Subsidiaries. Except as disclosed to the Administrative Agent
by the Borrower in writing from time to time after the Closing Date, (a)
Schedule 4.15 sets forth the name and jurisdiction of incorporation of each
Subsidiary and, as to each such Subsidiary, the percentage of each class of
Capital Stock owned by any Loan Party and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of the
Borrower or any Subsidiary, except as created by the Loan Documents.


<PAGE>
                                                                              50


            4.16 Use of Proceeds. The proceeds of the Term Loans shall be used
to finance the Transactions and the Refinancing and to pay related fees and
expenses. The proceeds of the Revolving Loans and the Swingline Loans, and the
Letters of Credit, shall be used for general corporate purposes, including
acquisitions and working capital needs of the Borrower and its Subsidiaries in
the ordinary course of business.

            4.17 Environmental Matters. Except as, in the aggregate, would not
reasonably be expected to result in the payment of a Material Environmental
Amount:

            (a) the facilities and properties owned, leased or operated by any
      Group Member (the "Properties") do not contain, and have not previously
      contained, any Materials of Environmental Concern in amounts or
      concentrations or under circumstances that constitute or constituted a
      violation of, or would be reasonably likely to give rise to liability
      under, any Environmental Law;

            (b) no Group Member has received or is aware of any notice of
      violation, alleged violation, non-compliance, liability or potential
      liability regarding environmental matters or compliance with Environmental
      Laws with regard to any of the Properties or the business operated by any
      Group Member (the "Business"), nor does the Borrower have knowledge or
      reason to believe that any such notice will be received or is being
      threatened;

            (c) Materials of Environmental Concern have not been transported or
      disposed of from the Properties (to the knowledge of any Group Member with
      respect to any third party actions) in violation of, or in a manner or to
      a location that would give rise to liability under, any Environmental Law,
      nor have any Materials of Environmental Concern been generated, treated,
      stored or disposed of at, on or under any of the Properties (to the
      knowledge of any Group Member with respect to any third party actions) in
      violation of, or in a manner that would be reasonably likely to give rise
      to liability under, any applicable Environmental Law;

            (d) no judicial proceeding or governmental or administrative action
      is pending or, to the knowledge of the Borrower, threatened, under any
      Environmental Law to which any Group Member is or will be named as a party
      with respect to the Properties or the Business, nor are there any consent
      decrees or other decrees, consent orders, administrative orders or other
      orders, or other administrative or judicial requirements outstanding under
      any Environmental Law with respect to the Properties or the Business;

            (e) there has been no release or, to the knowledge of any Group
      Member, threat of release of Materials of Environmental Concern at or from
      the Properties, or arising from or related to the operations of any Group
      Member in connection with the Properties or otherwise in connection with
      the Business, in violation of or in amounts or in a manner that would be
      reasonably likely to give rise to liability under Environmental Laws;

            (f) the Properties and all operations (to the knowledge of any Group
      Member with respect to any third party operations) at the Properties are
      in compliance in all material respects, and have in the last five years
      been in compliance in all material 


<PAGE>
                                                                              51


      respects, with all applicable Environmental Laws, and there is no material
      contamination at, under or about the Properties or material violation of
      any Environmental Law with respect to the Properties or the Business; and

            (g) no Group Member has assumed any liability of any other Person
      under Environmental Laws.

            4.18 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, any Transaction Document,
the Confidential Information Memorandum or any other document, certificate or
written statement furnished by or on behalf of any Loan Party to the
Administrative Agent or the Lenders, or any of them, for use in connection with
the transactions contemplated by this Agreement, the other Loan Documents or the
Transaction Documents, contained as of the date such written statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein not misleading. The
projections, including the Projections, and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. As of the
date hereof, the representations and warranties of the Borrower and, to the
Borrower's knowledge, the representations and warranties of the other parties
contained in each Transaction Document are true and correct in all material
respects. There is no fact known to any Loan Party that would reasonably be
expected to have a Material Adverse Effect that has not been expressly disclosed
herein, in the other Loan Documents, in the Transaction Documents, in the
Confidential Information Memorandum or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use in
connection with the transactions contemplated hereby, by the other Loan
Documents and by the Transaction Documents.

            4.19 Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements and other filings specified (including
United States Patent and Trademark Office filings and United States Copyright
Office filings) on Schedule 4.19(a) in appropriate form are filed in the offices
specified on Schedule 4.19(a), the Guarantee and Collateral Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral and the proceeds thereof, as
security for the Obligations (as defined in the Guarantee and Collateral
Agreement), in each case prior and superior in right to Liens held by any other
Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 7.3).


<PAGE>
                                                                              52


            (b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to the Lien of any other Person. Schedule 1.1B lists each parcel of real
property in the United States owned in fee simple by the Borrower or any of its
Subsidiaries as of the Closing Date.

            4.20 Solvency. Each Loan Party is, and after giving effect to the
Transactions and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and such Loan Party is
reasonably expected to continue to be, Solvent.

            4.21 Regulation H. No Mortgage encumbers improved real property that
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.

            4.22 Certain Documents. The Borrower has delivered to the
Administrative Agent a complete and correct copy of each Transaction Document,
including any amendments, supplements or modifications with respect to any of
the foregoing.

                        SECTION 5. CONDITIONS PRECEDENT

            5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:

            (a) Credit Agreement; Guarantee and Collateral Agreement. The
      Administrative Agent shall have received (i) this Agreement executed and
      delivered by the Administrative Agent, the Borrower and each Person listed
      on Schedule 1.1, (ii) the Guarantee and Collateral Agreement, executed and
      delivered by the Borrower and each Subsidiary Guarantor and (iii) an
      Acknowledgement and Consent in the form attached to the Guarantee and
      Collateral Agreement, executed and delivered by each Issuer (as defined
      therein), if any, that is not a Loan Party.

            (b) Transactions, etc. The following transactions or events shall
      have been consummated or occurred, in each case on terms and conditions
      reasonably satisfactory to the Lenders:

                  (i) Each of the Transactions shall have been consummated on
            terms and conditions substantially in accordance with the
            Transaction Documents or otherwise reasonably satisfactory to the
            Administrative Agent and the operative documents with respect
            thereto shall not have been amended, restated, supplemented or
            otherwise modified in any material respect; and


<PAGE>
                                                                              53


                  (ii) The Administrative Agent shall have received a
            certificate of the Chief Financial Officer of the Borrower
            certifying: (A) that the cost of (I) the Equity Investment shall not
            have exceeded $111,750,000, (II) the Arrid Acquisition shall not
            have exceeded $121,000,000, (III) the Lambert Kay Acquisition shall
            not have exceeded $7,500,000, (IV) the Refinancing shall not have
            exceeded $155,000,000, (V) Indebtedness incurred in respect of the
            deferred purchase price in connection with the acquisition of
            Biovance shall not have exceeded $12,000,000, (VI) the refinancing
            of other Indebtedness shall not have exceeded $16,000,000 and (VII)
            the fees and expenses to be incurred by the Borrower in connection
            with the Transactions and the financing thereof shall not exceed
            $12,000,000; and (B) that the Borrower and its Subsidiaries, after
            giving effect to the Transactions and the financings contemplated
            hereby, shall be Solvent.

            (c) Termination of Existing Facility. The Administrative Agent shall
      have received satisfactory evidence that the Existing Facility shall have
      been terminated and all amounts thereunder shall have been paid in full.

            (d) Approvals. All governmental and third party approvals (including
      approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
      and other consents) necessary or, in the discretion of the Administrative
      Agent, advisable in connection with the Transactions, the continuing
      operations of the Group Members and the transactions contemplated hereby
      shall have been obtained and be in full force and effect, and all
      applicable waiting periods shall have expired without any action being
      taken or threatened by any competent authority that would restrain,
      prevent or otherwise impose adverse conditions on the Transactions or the
      financing contemplated hereby.

            (e) Lien Searches. The Administrative Agent shall have received the
      results of a recent lien search in each of the jurisdictions where assets
      of the Borrower, Arrid and Lambert Kay are located, and such search shall
      reveal no liens on any of the assets of the Loan Parties except for liens
      permitted by Section 7.3 or discharged on or prior to the Closing Date
      pursuant to documentation satisfactory to the Administrative Agent.

            (f) Environmental Audit. The Administrative Agent shall have
      received a satisfactory environmental audit with respect to real
      properties of the Armkel Joint Venture located in Winsted, Connecticut and
      Cranberry, New Jersey by a firm reasonably satisfactory to the
      Administrative Agent.

            (g) Fees. The Lenders and the Administrative Agent shall have
      received all fees required to be paid, and all expenses for which invoices
      have been presented (including the reasonable fees and expenses of legal
      counsel), on or before the Closing Date. All such amounts will be paid
      with proceeds of Loans made on the Closing Date and will be reflected in
      the funding instructions given by the Borrower to the Administrative Agent
      on or before the Closing Date.

            (h) Closing Certificate. The Administrative Agent shall have
      received a certificate of each Loan Party, dated the Closing Date,
      substantially in the form of Exhibit C, with appropriate insertions and
      attachments.


<PAGE>
                                                                              54


            (i) Legal Opinions. The Administrative Agent shall have received the
      following executed legal opinions:

                  (i) the legal opinion of Gibson, Dunn & Crutcher LLP, counsel
            to the Borrower and its Subsidiaries, substantially in the form of
            Exhibit E-1;

                  (ii) the legal opinion of general counsel of the Borrower and
            its Subsidiaries, substantially in the form of Exhibit E-2; and

                  (iii) to the extent consented to by the relevant counsel, each
            legal opinion, if any, delivered in connection with the Transactions
            (excepting the Equity Investment), accompanied by a reliance letter
            in favor of the Lenders.

      Each such legal opinion shall cover such other matters incident to the
      transactions contemplated by this Agreement as the Administrative Agent
      may reasonably require.

            (j) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
      Agent shall have received (i) the certificates representing the shares of
      Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
      together with an undated stock power for each such certificate executed in
      blank by a duly authorized officer of the pledgor thereof and (ii) each
      promissory note (if any) pledged to the Administrative Agent pursuant to
      the Guarantee and Collateral Agreement endorsed (without recourse) in
      blank (or accompanied by an executed transfer form in blank) by the
      pledgor thereof.

            (k) Filings, Registrations and Recordings. Each document (including
      any Uniform Commercial Code financing statement, any Patent and Trademark
      Office filing and any Copyright Office filing) required by the Security
      Documents or under law or reasonably requested by the Administrative Agent
      to be filed, registered or recorded in order to create in favor of the
      Administrative Agent, for the benefit of the Lenders, a perfected Lien on
      the Collateral described therein, prior and superior in right to the Lien
      of any other Person (other than with respect to Liens expressly permitted
      by Section 7.3), shall be in proper form for filing, registration or
      recordation.

            (l) Federal Regulations. The Administrative Agent shall be satisfied
      that this Agreement and the use of the proceeds of the Loans hereunder
      comply in all respects with Regulation U. The Administrative Agent shall
      have received for its own account, and for the account of each Lender,
      from the Borrower an executed statement as to matters specified in Section
      4.11 hereof, which statement conforms with the requirements of FR Form U-1
      referred to in Regulation U.

            (m) Insurance. The Administrative Agent shall have received
      insurance certificates satisfying the requirements of Section 5.2(b) of
      the Guarantee and Collateral Agreement.

            5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:


<PAGE>
                                                                              55


            (a) Representations and Warranties. Each of the representations and
      warranties made by any Loan Party in or pursuant to the Loan Documents
      shall be true and correct in all material respects on and as of such date
      as if made on and as of such date, except for representations and
      warranties expressly stated to relate to a specific earlier date, in which
      case such representations and warranties were true and correct in all
      material respects as of such earlier date.

            (b) No Default. No Default or Event of Default shall have occurred
      and be continuing on such date or after giving effect to the extensions of
      credit requested to be made on such date.

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.

                        SECTION 6. AFFIRMATIVE COVENANTS

            The Borrower agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or the Administrative Agent hereunder, the Borrower shall
and shall cause each of its Subsidiaries (with respect to Sections 6.3 through
6.6, 6.8, 6.9 and 6.10) to:

            6.1 Financial Statements. Furnish to the Administrative Agent and
each Lender:

            (a) as soon as available, but in any event within 90 days after the
      end of each fiscal year of the Borrower, a copy of the audited
      consolidated balance sheet of the Borrower and its consolidated
      Subsidiaries as at the end of such year and the related audited
      consolidated statements of income and of cash flows for such year, setting
      forth in each case in comparative form the figures for the previous year,
      reported on without a "going concern" or like qualification or exception,
      or qualification arising out of the scope of the audit, by Deloitte &
      Touche LLP or other independent certified public accountants of nationally
      recognized standing; and

            (b) as soon as available, but in any event not later than 45 days
      after the end of each of the first three quarterly periods of each fiscal
      year of the Borrower, the unaudited consolidated balance sheet of the
      Borrower and its consolidated Subsidiaries as at the end of such quarter
      and the related unaudited consolidated statements of income and of cash
      flows for such quarter and the portion of the fiscal year through the end
      of such quarter, setting forth in each case in comparative form the
      figures for the previous year, certified by a Responsible Officer as being
      fairly stated in all material respects (subject to normal year-end audit
      adjustments and the omission of footnotes).

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by the Borrower's accountants or a Responsible
Officer, as the case may be, and disclosed therein).


<PAGE>
                                                                              56


            6.2 Certificates; Other Information. Furnish to the Administrative
Agent and each Lender (or, in the case of clause (f), to the relevant Lender):

            (a) concurrently with the delivery of the financial statements
      referred to in Section 6.1(a), (i) a certificate of the independent
      certified public accountants reporting on such financial statements
      stating that in making the examination necessary therefor no knowledge was
      obtained of any Default or Event of Default, except as specified in such
      certificate and (ii) a certificate of a Responsible Officer stating on
      behalf of the Borrower that, to such Responsible Officer's knowledge, each
      Loan Party during such period has observed or performed in all material
      respects all of its covenants and other agreements, and satisfied every
      condition contained in this Agreement and the other Loan Documents to
      which it is a party to be observed, performed or satisfied by it, and that
      such Responsible Officer has obtained no knowledge of any Default or Event
      of Default except as specified in such certificate;

            (b) concurrently with the delivery of the financial statements
      referred to in Section 6.1(a) or (b), (i) a Compliance Certificate
      containing all information and calculations necessary for determining
      compliance by each Group Member with the provisions of this Agreement
      referred to therein as of the last day of the fiscal quarter or fiscal
      year of the Borrower, as the case may be, and (ii) to the extent not
      previously disclosed to the Administrative Agent, a listing of any county
      or state within the United States where any Loan Party keeps inventory or
      equipment and of any Intellectual Property acquired by any Loan Party
      since the date of the most recent list delivered pursuant to this clause
      (ii) (or, in the case of the first such list so delivered, since the
      Closing Date);

            (c) within 45 days after the end of each fiscal quarter of the
      Borrower, a narrative discussion and analysis of the financial condition
      and results of operations of the Borrower and its Subsidiaries for such
      fiscal quarter and for the period from the beginning of the then current
      fiscal year to the end of such fiscal quarter, as compared to the current
      annual plan for such periods and to the comparable periods of the previous
      year;

            (d) no later than 5 Business Days prior to the effectiveness
      thereof, copies of substantially final drafts of any proposed amendment,
      supplement, waiver or other modification with respect to the Transaction
      Documents;

            (e) within five days after the same are sent, copies of all
      financial statements and reports that the Borrower sends to the holders of
      any class of its debt securities or public equity securities and, within
      five days after the same are filed, copies of all financial statements and
      reports that the Borrower may make to, or file with, the SEC; and

            (f) promptly, such additional financial and other information as any
      Lender may from time to time reasonably request.

            6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of 


<PAGE>
                                                                              57


whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the relevant
Group Member.

            6.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew and
keep in full force and effect its organizational existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so would not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

            6.5 Maintenance of Property; Insurance. (a) Keep all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted, and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.

            6.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) upon not
less than three Business Days notice and with reasonable coordination among the
Lenders (in each case, so long as no Default or Event of Default has occurred
and is continuing), permit representatives of any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Group Members with officers and employees of the Group Members and with
their independent certified public accountants.

            6.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:

            (a) the occurrence of any Default or Event of Default;

            (b) any (i) default or event of default under any Contractual
      Obligation of any Group Member or (ii) litigation, investigation or
      proceeding that may exist at any time between any Group Member and any
      Governmental Authority, that in either case, if not cured or if adversely
      determined, as the case may be, would reasonably be expected to have a
      Material Adverse Effect;

            (c) any litigation or proceeding affecting any Group Member (i) in
      which the amount involved is $5,000,000 or more and not covered by
      insurance, (ii) in which injunctive or similar relief is sought or (iii)
      which relates to any Loan Document or any Transaction Document;


<PAGE>
                                                                              58


            (d) the following events, as soon as possible and in any event
      within 30 days after the Borrower knows or has reason to know thereof: (i)
      the occurrence of any Reportable Event with respect to any Plan, a failure
      to make any required contribution to a Plan, the creation of any Lien in
      favor of the PBGC or a Plan or any withdrawal from, or the termination,
      Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
      institution of proceedings or the taking of any other action by the PBGC
      or the Borrower or any Commonly Controlled Entity or any Multiemployer
      Plan with respect to the withdrawal from, or the termination,
      Reorganization or Insolvency of, any Plan;

            (e) the following prospective events, as soon as possible and in any
      event at least 15 days' prior to such event, (i) the change of its or any
      Subsidiary Guarantor's jurisdiction of organization or the location of its
      or any Subsidiary Guarantor's chief executive office or sole place of
      business from that referred to in Section 4.3 of the Guarantee and
      Collateral Agreement; or (ii) the change of its or any Subsidiary
      Guarantor's exact name, identity or corporate or other organizational
      structure; and

            (f) any development or event that has had or would reasonably be
      expected to have a Material Adverse Effect.

Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Group Member proposes to take with
respect thereto.

            6.8 Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.

            (b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.

            6.9 Mortgages, etc. Furnish to the Administrative Agent a Mortgage
with respect to each Mortgaged Property, executed and delivered by a duly
authorized officer of each party thereto within 45 days after the Closing Date,
or up to 90 days after the Closing Date if agreed by the Administrative Agent,
and do the following in connection therewith:

            (a) If requested by the Administrative Agent, the Administrative
Agent shall receive, and the title insurance company issuing the policy referred
to in clause (c) below (the "Title Insurance Company") shall receive, maps or
plats of an as-built survey of the sites of the Mortgaged Properties certified
to the Administrative Agent and the Title Insurance Company in a manner
satisfactory to them, dated a date satisfactory to the Administrative Agent and
the Title Insurance Company by an independent professional licensed land
surveyor satisfactory to the Administrative Agent and the Title Insurance
Company, which maps or plats and the surveys on 


<PAGE>
                                                                              59


which they are based shall be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites; (iv) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical inspection of the
sites or otherwise known to the surveyor; (v) any encroachments on any adjoining
property by the building structures and improvements on the sites; (vi) if the
site is described as being on a filed map, a legend relating the survey to said
map; and (vii) the flood zone designations, if any, in which the Mortgaged
Properties are located.

            (b) The Administrative Agent shall receive in respect of each
Mortgaged Property a mortgagee's title insurance policy (or policies) or marked
up unconditional binder for such insurance. Each such policy shall (i) be in an
amount satisfactory to the Administrative Agent; (ii) be issued at ordinary
rates; (iii) insure that the Mortgage insured thereby creates a valid first Lien
on such Mortgaged Property free and clear of all defects and encumbrances,
except as disclosed therein; (iv) name the Administrative Agent for the benefit
of the Lenders as the insured thereunder; (v) be in the form of ALTA Loan Policy
- 1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies); (vi) contain
such endorsements and affirmative coverage as the Administrative Agent may
reasonably request and (vii) be issued by title companies satisfactory to the
Administrative Agent (including any such title companies acting as co-insurers
or reinsurers, at the option of the Administrative Agent). The Administrative
Agent shall receive evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all related
expenses, if any, have been paid.

            (c) If requested by the Administrative Agent, the Administrative
Agent shall receive (i) a policy of flood insurance that (A) covers any parcel
of improved real property that is encumbered by any Mortgage and is in a
designated flood zone (B) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage that is reasonably
allocable to such real property or the maximum limit of coverage made available
with respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (C) has a term ending not later
than the maturity of the Indebtedness secured by such Mortgage and (ii)
confirmation that the Borrower has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board.

            (d) The Administrative Agent shall receive a copy of all recorded
documents referred to, or listed as exceptions to title in, the title policy or
policies referred to in paragraph (c) above and a copy of all other material
documents affecting the Mortgaged Properties.

            6.10 Additional Collateral, etc. (a) With respect to any property
acquired after the Closing Date by any Loan Party (other than (x) any property
described in paragraph (b), (c) or (d) below, (y) any property subject to a Lien
expressly permitted by Section 7.3(g) and (z) property acquired by any Excluded
Foreign Subsidiary) as to which the Administrative Agent, for the benefit of the
Lenders, does not have a perfected Lien, promptly (i) 


<PAGE>
                                                                              60


execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement or such other documents as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a security interest in such property and (ii) take all
actions necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in such
property, including the filing of Uniform Commercial Code financing statements
(or other documents, such as Patent and Trademark Office filings and Copyright
Office filings) in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative
Agent.

            (b) With respect to any fee interest in any real property having a
fair market value (together with improvements thereof) of at least $2,000,000
acquired after the Closing Date by any Loan Party (other than (x) any such real
property subject to a Lien expressly permitted by Section 7.3(g) and (z) real
property acquired by any Excluded Foreign Subsidiary), promptly (i) execute and
deliver a first priority Mortgage, in favor of the Administrative Agent, for the
benefit of the Lenders, covering such real property, (ii) if requested by the
Administrative Agent, provide the Lenders with (x) title and extended coverage
insurance covering such real property in an amount at least equal to the
purchase price of such real property (or such other amount as shall be
reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if reasonably
requested by the Administrative Agent, deliver to the Administrative Agent a
legal opinion relating to such new Mortgage, which opinion shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

            (c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary and any Receivables Subsidiary) created or acquired after the
Closing Date by any Loan Party (which, for the purposes of this paragraph (c),
shall include any existing Subsidiary that ceases to be an Excluded Foreign
Subsidiary), promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary that is owned by any Loan Party, (ii)
deliver to the Administrative Agent the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the relevant Loan Party, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B)
to take such actions necessary or advisable to grant to the Administrative Agent
for the benefit of the Lenders a perfected security interest in the Collateral
described in the Guarantee and Collateral Agreement with respect to such new
Subsidiary (subject to existing Liens permitted by this Agreement), including
the filing of Uniform Commercial Code financing statements in such jurisdictions
as may be required by the Guarantee and Collateral Agreement or by law or as may
be requested by the Administrative Agent and (C) to deliver to the
Administrative Agent a certificate of such Subsidiary, substantially in the form
of Exhibit C, with appropriate insertions and attachments, and (iv) if
reasonably requested by the Administrative Agent, deliver to the Administrative
Agent a legal opinion relating to the matters described above, which opinion
shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.


<PAGE>
                                                                              61


            (d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by any Loan Party (other than by any Loan Party
that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest (other than Liens arising by operation of law) in the Capital
Stock of such new Subsidiary that is owned by any such Loan Party (provided that
in no event shall more than 65% of the total outstanding voting Capital Stock of
any such new Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of the relevant Loan Party, and take such other action as may be
necessary or, in the opinion of the Administrative Agent, desirable to perfect
the Administrative Agent's security interest therein, and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent a legal opinion
relating to the matters described above, which opinion shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

            6.11 Interest Rate Protection. In the case of the Borrower, within
90 days after the Closing Date, enter into, and thereafter maintain, Hedge
Agreements to the extent necessary to provide that at least 33 1/3% of the
aggregate principal amount of the Term Loans is subject to either a fixed
interest rate or interest rate protection for a period of not less than one
year, which Hedge Agreements shall have terms and conditions reasonably
satisfactory to the Administrative Agent.

                         SECTION 7. NEGATIVE COVENANTS

            The Borrower hereby agrees that, so long as the Commitments remain
in effect, any Letter of Credit remains outstanding or any Loan or other amount
is owing to any Lender or the Administrative Agent hereunder, the Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly:

            7.1 Financial Condition Covenants.

            (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to exceed the ratio
set forth below opposite such fiscal quarter:


<TABLE>
<CAPTION>
                                                               Consolidated
                  Fiscal Quarter                              Leverage Ratio
                  --------------                              --------------
<S>                                                            <C>
                     12/31/01                                  4.00 to 1.00
                      3/31/02                                  4.00 to 1.00
                      6/30/02                                  3.75 to 1.00
                      9/30/02                                  3.75 to 1.00
                     12/31/02                                  3.50 to 1.00
</TABLE>



<PAGE>
                                                                              62



<TABLE>
<S>                                                            <C>
                      3/31/03                                  3.50 to 1.00
                      6/30/03                                  3.25 to 1.00
                      9/30/03                                  3.25 to 1.00
                     12/31/03                                  3.00 to 1.00
                      3/31/04                                  2.50 to 1.00
          each fiscal quarter thereafter                       2.50 to 1.00.
</TABLE>


            (b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for the four consecutive fiscal quarters subsequent to
the Closing Date ending with any fiscal quarter set forth below to be less than
the ratio set forth below opposite such fiscal quarter:


<TABLE>
<CAPTION>
                                                           Consolidated Interest
                  Fiscal Quarter                              Coverage Ratio
                  --------------                              --------------
<S>                                                            <C>
                     12/31/01                                  4.00 to 1.00
                      3/31/02                                  4.00 to 1.00
                      6/30/02                                  4.00 to 1.00
                      9/30/02                                  4.00 to 1.00
                     12/31/02                                  4.25 to 1.00
                      3/31/03                                  4.25 to 1.00
                      6/30/03                                  4.25 to 1.00
                      9/30/03                                  4.25 to 1.00
                     12/31/03                                  4.75 to 1.00
                      3/31/04                                  5.00 to 1.00
          each fiscal quarter thereafter                       5.00 to 1.00
</TABLE>


; provided, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 2001, March 31, 2002 and
June 30, 2002, Consolidated Interest Expense for the relevant period shall be
deemed to equal Consolidated Interest Expense for such fiscal quarter (and, in
the case of the latter two such determinations, each previous fiscal quarter
commencing after the Closing Date) multiplied by 4, 2 and 4/3, respectively.

            7.2 Indebtedness. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:

            (a) Indebtedness of any Loan Party pursuant to any Loan Document;

            (b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
      Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;

            (c) Guarantee Obligations incurred in the ordinary course of
      business by the Borrower or any of its Subsidiaries of obligations of any
      Wholly Owned Subsidiary Guarantor;


<PAGE>
                                                                              63


            (d) Indebtedness outstanding on the date hereof and listed on
      Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
      thereof (without increasing, or shortening the weighted average life to
      maturity of, the principal amount thereof);

            (e) Indebtedness (including, without limitation, Capital Lease
      Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
      principal amount not to exceed $10,000,000 at any one time outstanding;

            (f) Hedge Agreements in respect of Indebtedness otherwise permitted
      hereby that bears interest at a floating rate, so long as such agreements
      are not entered into for speculative purposes (including those Hedge
      Agreements in existence on the date hereof and listed on Schedule 7.2(f));

            (g) Indebtedness existing on the Closing Date or incurred thereafter
      in respect of the deferred purchase price in connection with the
      acquisition of Biovance not to exceed $12,000,000;

            (h) Indebtedness of the Borrower and any of its Subsidiaries in
      respect of any receivables securitization to the extent reasonably
      approved by the Administrative Agent in an aggregate principal amount not
      to exceed $75,000,000, so long as the Net Cash Proceeds of any such
      receivables securitization shall be applied as set forth in Section
      2.11(b);

            (i) (A) Indebtedness of the Borrower in respect of unsecured notes,
      so long as (I) such Indebtedness has no scheduled principal payments prior
      to March 31, 2008, (II) no covenant or default contained in the unsecured
      notes is more restrictive than those contained in this Agreement, as
      reasonably determined by the Administrative Agent and (III) if
      subordinated, the unsecured notes contain subordination terms that are no
      less favorable in any material respect to the Lenders than those
      applicable to offerings of "high-yield" subordinated debt by similar
      issuers of similar debt at the same time as reasonably agreed to by the
      Administrative Agent; provided, that the Net Cash Proceeds of such
      unsecured notes shall be applied as set forth in Section 2.11(b) (except
      that if after giving effect to such Indebtedness the Borrower is in pro
      forma compliance with Section 7.1 hereof, the Net Cash Proceeds of such
      unsecured notes may be used to finance acquisitions permitted pursuant to
      this Agreement); and (B) Guarantee Obligations of any Loan Party in
      respect of such Indebtedness, provided that if the unsecured notes are
      subordinated, such Guarantee Obligations are subordinated to the same
      extent as the obligations of the Borrower in respect of the unsecured
      notes;

            (j) any Indebtedness of any Person prior to such Person becoming a
      Subsidiary pursuant to an acquisition permitted by the terms of this
      Agreement; provided, that (i) such Indebtedness is not created in
      contemplation of or in connection with such acquisition and (ii) such
      Indebtedness does not exceed the aggregate amount of $10,000,000;

            (k) additional Indebtedness incurred in relation to the pledge by
      the Borrower of the Capital Stock of the Armkel Joint Venture to the
      lenders under the Armkel Credit 


<PAGE>
                                                                              64


      Agreement; provided, any guarantee associated with such pledge is
      non-recourse to the Borrower;

            (l) additional Indebtedness of any Foreign Subsidiary in an
      aggregate principal amount (for all the Foreign Subsidiaries) not to
      exceed $20,000,000 at any one time outstanding; and

            (m) additional Indebtedness of the Borrower or any of its Domestic
      Subsidiaries in an aggregate principal amount (for the Borrower and all
      Subsidiaries) not to exceed $10,000,000 at any one time outstanding.

            7.3 Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, whether now owned or hereafter acquired, except:

            (a) Liens for taxes not yet due or that are being contested in good
      faith by appropriate proceedings, provided that adequate reserves with
      respect thereto are maintained on the books of the Borrower or its
      Subsidiaries, as the case may be, in conformity with GAAP;

            (b) carriers', warehousemen's, mechanics', materialmen's,
      repairmen's or other like Liens arising in the ordinary course of business
      that are not overdue for a period of more than 30 days or that are being
      contested in good faith by appropriate proceedings;

            (c) pledges or deposits in connection with workers' compensation,
      unemployment insurance and other social security legislation;

            (d) deposits to secure the performance of bids, trade contracts
      (other than for borrowed money), leases, statutory obligations, surety and
      appeal bonds, performance bonds and other obligations of a like nature
      incurred in the ordinary course of business;

            (e) easements, rights-of-way, restrictions and other similar
      encumbrances incurred in the ordinary course of business that, in the
      aggregate, are not substantial in amount and that do not in any case
      materially detract from the value of the property subject thereto or
      materially interfere with the ordinary conduct of the business of the
      Borrower or any of its Subsidiaries;

            (f) Liens in existence on the date hereof listed on Schedule 7.3(f),
      securing Indebtedness permitted by Section 7.2(d), provided that no such
      Lien is spread to cover any additional property after the Closing Date and
      that the principal amount of Indebtedness secured thereby is not
      increased;

            (g) Liens securing Indebtedness of the Borrower or any Subsidiary
      incurred pursuant to Section 7.2(e) to finance the acquisition of fixed or
      capital assets, provided that (i) such Liens shall be created
      substantially simultaneously with the acquisition of such fixed or capital
      assets, (ii) such Liens do not at any time encumber any property other
      than the property financed by such Indebtedness and (iii) the amount of
      Indebtedness secured thereby is not increased;


<PAGE>
                                                                              65


            (h) Liens created pursuant to any Security Document;

            (i) any interest or title of a lessor under any lease entered into
      by the Borrower or any Subsidiary in the ordinary course of its business
      and covering only the assets so leased;

            (j) Liens incurred pursuant to receivables securitizations and
      related assignments and sales of any income or revenues (including
      Receivables), including Liens on the assets of any Receivables Subsidiary
      created pursuant to any receivables securitization and Liens incurred by
      the Borrower and its other Subsidiaries on Receivables to secure
      obligations owing by them in respect of any such receivables
      securitization to the extent reasonably approved by the Administrative
      Agent;

            (k) Liens securing Indebtedness permitted by Section 7.2(j);

            (l) Liens on the Capital Stock of the Armkel Joint Venture in favor
      of the lenders party to the Armkel Credit Agreement to secure the
      obligations thereunder; provided, that such Liens shall be created
      pursuant to agreements reasonably satisfactory to the Administrative Agent
      and also shall permit the pledge of such Capital Stock to secure the
      Obligations; and

            (m) Liens not otherwise permitted by this Section so long as neither
      (i) the aggregate outstanding principal amount of the obligations secured
      thereby nor (ii) the aggregate fair market value (determined as of the
      date such Lien is incurred) of the assets subject thereto exceeds (as to
      the Borrower and all Subsidiaries) $10,000,000 at any one time.

            7.4 Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
property or business, except that:

            (a) any Subsidiary of the Borrower may be merged or consolidated
      with or into the Borrower (provided that the Borrower shall be the
      continuing or surviving corporation) or with or into any Wholly Owned
      Subsidiary Guarantor (provided that the Wholly Owned Subsidiary Guarantor
      shall be the continuing or surviving corporation);

            (b) any Subsidiary of the Borrower may Dispose of any or all of its
      assets (i) to the Borrower or any Wholly Owned Subsidiary Guarantor (upon
      voluntary liquidation or otherwise) or (ii) pursuant to a Disposition
      permitted by Section 7.5; and

            (c) any Investment expressly permitted by Section 7.8 may be
      structured as a merger, consolidation or amalgamation so long as (i) in
      the event the Borrower is a party to such merger, consolidation or
      amalgamation, the Borrower is the surviving or continuing entity and (ii)
      in the event a Wholly Owned Subsidiary Guarantor is a party to such
      merger, consolidation or amalgamation, but the Borrower is not a party,
      such Wholly Owned Subsidiary Guarantor is the surviving or continuing
      entity.


<PAGE>
                                                                              66


            7.5 Disposition of Property. Dispose of any of its property, whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:

            (a) the Disposition of obsolete or worn out property in the ordinary
      course of business;

            (b) the sale of inventory in the ordinary course of business;

            (c) Dispositions permitted by Section 7.4(b) (other than Section
      7.4(b)(ii));

            (d) the sale or issuance of any Subsidiary's Capital Stock to the
      Borrower or any Wholly Owned Subsidiary Guarantor;

            (e) the Disposition, for any fiscal year of the Borrower, of other
      property having a fair market value not to exceed $15,000,000 in the
      aggregate; and

            (f) Dispositions in connection with any receivables or other
      securitization contemplated by Section 7.2(h), so long as the Net Cash
      Proceeds of any such receivables securitization shall be applied as set
      forth in Section 2.11(b).

            7.6 Restricted Payments. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person paying such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of any Group Member
(collectively, "Restricted Payments"), except that:

            (a) any Subsidiary may make Restricted Payments to the Borrower or
      any Subsidiary Guarantor;

            (b) so long as no Default or Event of Default shall have occurred
      and be continuing, the Borrower may pay dividends to or purchase common
      stock or common stock options from present or former officers or employees
      of any Group Member upon the death, disability or termination of
      employment of such officer or employee, provided, that the aggregate
      amount of payments under this clause (b) after the date hereof (net of any
      proceeds received by the Borrower after the date hereof in connection with
      resales of any common stock or common stock options so purchased) shall
      not exceed $5,000,000; and

            (c) so long as no Default or Event of Default shall have occurred
      and be continuing, the Borrower may make Restricted Payments and may
      redeem or repurchase its common stock or common stock options from any
      Person in an amount not to exceed the sum in any fiscal quarter ending
      during the term of this Agreement of (i) $5,000,000 provided, that any
      such amount referred to in this clause (i) may be carried over for
      expenditure in another fiscal quarter in the same fiscal year but, if not
      so expended in the fiscal year for which it is permitted may not be
      carried over for expenditure in succeeding 


<PAGE>
                                                                              67


      fiscal years, plus (ii) 10% of Consolidated Net Income for the period
      beginning on the first day of the fiscal quarter commencing on or
      immediately following the Closing Date, and ending on the last day of the
      most recent fiscal quarter for which financial statements shall have been
      delivered pursuant to Section 6.1 (taken as a single accounting period)
      minus any amount expended under this clause (ii) during any prior fiscal
      quarter ending during the term of this Agreement.

            7.7 Capital Expenditures. Make or commit to make any Capital
Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding $45,000,000 in
fiscal 2001 and $35,000,000 in any fiscal year thereafter during the term of
this Agreement; provided, that (i) any such amount referred to above, if not so
expended in the fiscal year for which it is permitted, may be carried over for
expenditure only in the next succeeding fiscal year and (ii) Capital
Expenditures made pursuant to this clause (a) during any fiscal year shall be
deemed made, first, in respect of amounts permitted for such fiscal year as
provided above and, second, in respect of amounts carried over from the prior
fiscal year pursuant to subclause (i) above and (b) Capital Expenditures made
with the proceeds of any Reinvestment Deferred Amount.

            7.8 Investments. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:

            (a) extensions of trade credit in the ordinary course of business;

            (b) investments in Cash Equivalents;

            (c) Guarantee Obligations permitted by Section 7.2;

            (d) loans and advances to employees of any Group Member in the
      ordinary course of business (including for travel, entertainment and
      relocation expenses) in an aggregate amount for all Group Members not to
      exceed $3,000,000 at any one time outstanding;

            (e) the Transactions;

            (f) the investment in Biovance whereby the Borrower shall acquire at
      least 51% of the outstanding common stock of Biovance for an aggregate
      amount not in excess of $8,000,000 plus the sum of the gross profit of
      Biovance for each of the first two fiscal years of Biovance ending after
      such investment in Biovance by the Borrower;

            (g) Investments in assets (constituting a business unit) useful in
      the business of the Borrower and its Subsidiaries made by the Borrower or
      any of its Subsidiaries with the proceeds of any Reinvestment Deferred
      Amount;

            (h) seller notes, including seller mortgages, in an aggregate amount
      not to exceed $2,000,000 for any fiscal year of the Borrower in connection
      with any sale contemplated by Section 7.5(e);


<PAGE>
                                                                              68


            (i) intercompany Investments by any Group Member in the Borrower or
      any Person that, prior to such investment, is a Wholly Owned Subsidiary
      Guarantor;

            (j) intercompany Investments not otherwise allowed hereunder by any
      Group Member in any Foreign Subsidiary provided that the aggregate total
      amount of such Investments does not exceed $5,000,000;

            (k) other non-hostile acquisitions of the equity securities of, or
      assets constituting a business unit of, any Person in an aggregate amount
      not to exceed the sum of (i) $60,000,000 in any fiscal year (provided,
      that any such amount referred to above, if not so expended in the fiscal
      year for which it is permitted, may not be carried over for expenditure in
      the succeeding fiscal years), (ii) proceeds of Indebtedness permitted by
      Section 7.2(i) to be used to finance acquisitions and (iii) the market
      value of any Capital Stock of the Borrower or any of its Subsidiaries
      issued in connection with any such acquisition, provided that (A)
      immediately prior to and after giving effect to any such acquisition, no
      Default or Event of Default shall have occurred or be continuing, (B) such
      acquisition is consummated in accordance with applicable law, and (C) the
      Borrower shall be in pro forma compliance with the covenants set forth in
      Section 7.1 after giving effect to such acquisition (assuming that such
      acquisition had been completed and any related Indebtedness had been
      incurred on the first day of the most recently completed period of four
      fiscal quarters for which financial statements shall have been furnished
      pursuant to Section 6.1);

            (l) Investments comprised of capital contributions, loans or
      deferred purchase price (whether in the form of cash, a note or other
      assets) to any Receivables Subsidiary;

            (m) in addition to Investments otherwise expressly permitted by this
      Section, Investments by the Borrower in an aggregate amount (valued at
      cost) not to exceed $10,000,000 during the term of this Agreement in
      Quimica Geral do Nordeste, S.A., a corporation organized under the laws of
      the Federated Republic of Brazil; and

            (n) in addition to Investments otherwise expressly permitted by this
      Section, Investments by the Borrower or any of its Subsidiaries in an
      aggregate amount (valued at cost) not to exceed $20,000,000 during the
      term of this Agreement.

            7.9 Transactions with Affiliates. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Borrower or any Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary
course of business of the relevant Group Member, and (c) upon fair and
reasonable terms no less favorable to the relevant Group Member than it would
obtain in a comparable arm's length transaction with a Person that is not an
Affiliate; provided, that the Borrower (i) may receive from the Armkel Joint
Venture management and other fees and (ii) may provide services to the Armkel
Joint Venture, in each case, in accordance with the Transaction Documents.


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            7.10 Sales and Leasebacks. Enter into any arrangement with any
Person providing for the leasing by any Group Member of real or personal
property with a fair market value in excess of $3,000,000 in the aggregate that
has been or is to be sold or transferred by such Group Member to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Group Member.

            7.11 Changes in Fiscal Periods. Permit the fiscal year of the
Borrower to end on a day other than December 31 or change the Borrower's method
of determining fiscal quarters.

            7.12 Negative Pledge Clauses. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of any Group
Member to create, incur, assume or suffer to exist any Lien upon any of its
property or revenues, whether now owned or hereafter acquired, other than (a)
this Agreement and the other Loan Documents, (b) the Letter of Credit
Reimbursement Agreement, dated as of May 1, 1991, between the Borrower and The
Bank of Nova Scotia (provided that any limitation contained therein shall not be
effective to the extent such limitation is made more restrictive after the date
hereof), and (c) any agreements governing any purchase money Liens or Capital
Lease Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby).

            7.13 Clauses Restricting Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents and (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary.

            7.14 Lines of Business. Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement (after giving effect
to the Transactions) or that are reasonably related thereto or to the business
currently conducted by the Target.

            7.15 Amendments to Transaction Documents. (a) Amend, supplement or
otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of
the indemnities and licenses furnished to the Borrower or any of its
Subsidiaries pursuant to the Transaction Documents such that after giving effect
thereto such indemnities or licenses shall be materially less favorable to the
interests of the Loan Parties or the Lenders with respect thereto, (b) otherwise
amend, supplement or otherwise modify the terms and conditions of the
Transaction Documents or any such other documents except for any such amendment,
supplement or modification that would not reasonably be expected to have a
Material Adverse Effect or (c) amend, supplement or otherwise modify any
material term of any Transaction Document without


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                                                                              70


the prior written consent of the Administrative Agent (which will not be
unreasonably withheld or delayed).

            7.16 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) Make any optional payment or prepayment on, or set apart assets
to create a sinking or other analogous fund to effect the redemption, purchase
or defeasance of, any Indebtedness or Guarantee Obligation (other than the
Loans) except for refinancings of Indebtedness permitted by subsection 7.2 or
(b) amend, modify or change, or consent or agree to any amendment, modification
or change to, any of the material terms of any Indebtedness or Guarantee
Obligations (other than any such amendment, modification or change which would
extend the maturity or reduce the amount of any payment of principal thereof or
which would reduce the rate or extend the date for payment of interest thereon).

                          SECTION 8. EVENTS OF DEFAULT

            If any of the following events shall occur and be continuing:

            (a) the Borrower shall fail to pay any principal of any Loan or
      Reimbursement Obligation when due in accordance with the terms hereof; or
      the Borrower shall fail to pay any interest on any Loan or Reimbursement
      Obligation, any fees payable hereunder or any other amount payable
      hereunder or under any other Loan Document, within five days after any
      such interest or other amount becomes due in accordance with the terms
      hereof or thereof; or

            (b) any representation or warranty made or deemed made by any Loan
      Party herein or in any other Loan Document or that is contained in any
      certificate, document or financial or other statement furnished by it at
      any time under or in connection with this Agreement or any such other Loan
      Document shall prove to have been inaccurate in any material respect on or
      as of the date made or deemed made; or

            (c) (i) any Loan Party shall default in the observance or
      performance of Section 6.4(a) (with respect to the Borrower only), Section
      6.7(a) or Section 7 of this Agreement or Section 5.5 or 5.7(b) of the
      Guarantee and Collateral Agreement or (ii) an "Event of Default" under and
      as defined in any Mortgage shall have occurred and be continuing; or

            (d) any Loan Party shall default in the observance or performance of
      any other agreement contained in this Agreement or any other Loan Document
      (other than as provided in paragraphs (a) through (c) of this Section),
      and such default shall continue unremedied for a period of 30 days after
      notice to the Borrower from the Administrative Agent or the Required
      Lenders; or

            (e) any Group Member shall (i) default in making any payment of any
      principal of any Indebtedness (including any Guarantee Obligation, but
      excluding the Loans) beyond the period of grace, if any, provided in the
      instrument or agreement under which such Indebtedness was created; or (ii)
      default in making any payment of any interest on any such Indebtedness
      beyond the period of grace, if any, provided in the instrument or
      agreement under which such Indebtedness was created; or (iii) default in
      the observance 


<PAGE>
                                                                              71


      or performance of any other agreement or condition relating to any such
      Indebtedness or contained in any instrument or agreement evidencing,
      securing or relating thereto, or any other event shall occur or condition
      exist, the effect of which default or other event or condition is to
      cause, or to permit the holder or beneficiary of such Indebtedness (or a
      trustee or agent on behalf of such holder or beneficiary) to cause, with
      the giving of notice if required, such Indebtedness to become due prior to
      its stated maturity or (in the case of any such Indebtedness constituting
      a Guarantee Obligation) to become payable; provided, that a default, event
      or condition described in clause (i), (ii) or (iii) of this paragraph (e)
      shall not at any time constitute an Event of Default unless, at such time,
      one or more defaults, events or conditions of the type described in
      clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and
      be continuing with respect to Indebtedness the outstanding principal
      amount of which exceeds in the aggregate $10,000,000; or

            (f) (i) any Group Member shall commence any case, proceeding or
      other action (A) under any existing or future law of any jurisdiction,
      domestic or foreign, relating to bankruptcy, insolvency, reorganization or
      relief of debtors, seeking to have an order for relief entered with
      respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
      seeking reorganization, arrangement, adjustment, winding-up, liquidation,
      dissolution, composition or other relief with respect to it or its debts,
      or (B) seeking appointment of a receiver, trustee, custodian, conservator
      or other similar official for it or for all or any substantial part of its
      assets, or any Group Member shall make a general assignment for the
      benefit of its creditors; or (ii) there shall be commenced against any
      Group Member any case, proceeding or other action of a nature referred to
      in clause (i) above that (A) results in the entry of an order for relief
      or any such adjudication or appointment or (B) remains undismissed,
      undischarged or unbonded for a period of 60 days; or (iii) there shall be
      commenced against any Group Member any case, proceeding or other action
      seeking issuance of a warrant of attachment, execution, distraint or
      similar process against all or any substantial part of its assets that
      results in the entry of an order for any such relief that shall not have
      been vacated, discharged, or stayed or bonded pending appeal within 60
      days from the entry thereof; or (iv) any Group Member shall take any
      action in furtherance of, or indicating its consent to, approval of, or
      acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
      above; or (v) any Group Member shall generally not, or shall be unable to,
      or shall admit in writing its inability to, pay its debts as they become
      due; or

            (g) (i) any Person shall engage in any "prohibited transaction" (as
      defined in Section 406 of ERISA or Section 4975 of the Code) involving any
      Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
      of ERISA), whether or not waived, shall exist with respect to any Plan or
      any Lien in favor of the PBGC or a Plan shall arise on the assets of any
      Group Member or any Commonly Controlled Entity, (iii) a Reportable Event
      shall occur with respect to, or proceedings shall commence to have a
      trustee appointed, or a trustee shall be appointed, to administer or to
      terminate, any Single Employer Plan, which Reportable Event or
      commencement of proceedings or appointment of a trustee is, in the
      reasonable opinion of the Required Lenders, likely to result in the
      termination of such Plan for purposes of Title IV of ERISA, (iv) any
      Single Employer Plan shall terminate for purposes of Title IV of ERISA, or
      (v) any Group Member or any Commonly Controlled Entity shall, or in the
      reasonable opinion of the 


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                                                                              72


      Required Lenders is likely to, incur any liability in connection with a
      withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
      Plan; and in each case in clauses (i) through (v) above, such event or
      condition, together with all other such events or conditions, if any,
      would, in the reasonable judgment of the Required Lenders, reasonably be
      expected to have a Material Adverse Effect; or

            (h) one or more judgments or decrees shall be entered against any
      Group Member involving in the aggregate a liability (not paid or fully
      covered by insurance as to which the relevant insurance company has not
      denied coverage) of $5,000,000 or more, and all such judgments or decrees
      shall not have been vacated, discharged, stayed or bonded pending appeal
      within 30 days from the entry thereof; or

            (i) any of the Security Documents covering a material amount of
      property shall cease, for any reason other than as permitted hereunder or
      under the relevant Security Document, to be in full force and effect, or
      any Loan Party or any Affiliate of any Loan Party shall so assert, or any
      material Lien created by any of the Security Documents shall cease to be
      enforceable and of the same effect and priority purported to be created
      thereby; or

            (j) the guarantee contained in Section 2 of the Guarantee and
      Collateral Agreement shall cease, for any reason, to be in full force and
      effect or any Loan Party shall so assert or any Loan Party shall disaffirm
      or deny its obligations thereunder; or

            (k) (i) any "person" or "group" (as such terms are used in Sections
      13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
      "Exchange Act")), excluding stockholders who, as of the Closing Date, own,
      directly or indirectly, more than 10% of the outstanding common stock of
      the Borrower, shall become, or obtain rights (whether by means of
      warrants, options or otherwise) to become, the "beneficial owner" (as
      defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
      indirectly, of more than 20% of the outstanding common stock of the
      Borrower or (ii) the board of directors of the Borrower shall cease to
      consist of a majority of Continuing Directors;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, the
Commitments shall automatically and immediately terminate and the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents (including all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) shall automatically and immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving Commitments shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents 


<PAGE>
                                                                              73


(including all amounts of L/C Obligations, if the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.

                             SECTION 9. THE AGENTS

            9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.

            9.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorney's
in-fact selected by it with reasonable care.

            9.3 Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document 


<PAGE>
                                                                              74


or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agents under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.

            9.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.

            9.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.

            9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and


<PAGE>
                                                                              75


without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

            9.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such termination and repayment), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by such Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

            9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.


<PAGE>
                                                                              76


            9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 30 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.

            9.10 Syndication Agents . No Syndication Agent shall have any duties
or responsibilities hereunder in its capacity as such.

                           SECTION 10. MISCELLANEOUS

            10.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, extend the scheduled date or
reduce the amount due of any amortization payment in respect of any Term Loan,
reduce the stated rate of any interest or fee payable hereunder (except (x) in
connection with the waiver of applicability of any post-default increase in
interest rates (which waiver shall be effective with the consent of the Majority
Facility Lenders of each adversely affected Facility) and (y) that any amendment
or modification of defined terms used in the financial covenants in this
Agreement shall not constitute a reduction in the rate of interest or fees for
purposes of this clause (i)) or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any 


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                                                                              77


Lender's Revolving Commitment, in each case without the written consent of each
Lender directly affected thereby; (ii) eliminate or reduce the voting rights of
any Lender under this Section 10.1 without the written consent of such Lender;
(iii) reduce or increase any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement or the other Loan Documents, or
release all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations under the
Guarantee and Collateral Agreement, in each case without the written consent of
all Lenders; (iv) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Facility set forth in Section 5.2
(including in connection with any waiver of an existing Default or Event of
Default) without the written consent of the Majority Facility Lenders with
respect to the Revolving Facility; (v) amend, modify or waive any provision of
Section 2.17(a), (b) or (c) without the written consent of each Lender adversely
affected thereby or amend, modify or waive any other provision of Section 2.17
without the written consent of the Majority Facility Lenders in respect of each
Facility adversely affected thereby; (vi) reduce the percentage of Net Cash
Proceeds or Excess Cash Flow required to be applied to prepay Loans under this
Agreement, amend the definition of Net Cash Proceeds, Excess Cash Flow or Asset
Sale in a manner which would be reasonably likely to materially lower the
amounts applied to prepay Loans under this Agreement or waive any prepayment
required under Section 2.11 without the written consent of the Majority Facility
Lenders in respect of each Facility; (vii) reduce the percentage specified in
the definition of Majority Facility Lenders with respect to any Facility without
the written consent of all Lenders under such Facility; (viii) amend, modify or
waive any provision of Section 9 without the written consent of the
Administrative Agent; (ix) amend, modify or waive any provision of Section 2.6
or 2.7 without the written consent of the Swingline Lender; (x) amend, modify or
waive any provision of Section 3 without the written consent of each Issuing
Lender or (xi) waive any condition precedent to the initial extension of credit
set forth in Section 5.1 without the written consent of each Lender. Any such
waiver and any such amendment, supplement or modification shall apply equally to
each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the
Administrative Agent and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.

            Notwithstanding the foregoing, this Agreement may be amended (or
amended and restated) with the written consent of the Required Lenders, the
Administrative Agent and the Borrower (a) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
to share ratably in the benefits of this Agreement and the other Loan Documents
with the Term Loans and Revolving Extensions of Credit and the accrued interest
and fees in respect thereof and (b) to include appropriately the Lenders holding
such credit facilities in any determination of the Required Lenders and Majority
Facility Lenders.

            10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or five Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy 


<PAGE>
                                                                              78


notice, when received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:

                                           Church & Dwight Co., Inc.
                                           469 North Harrison Street
      Borrower:                            Princeton, New Jersey 08543-5297
                                           Attention: Chief Financial Officer
                                           Telecopy: 609-497-7177
                                           Telephone: 609-683-5900

                                           The Chase Manhattan Bank
                                           695 Route 64W
      Administrative Agent:                Fairfield, New Jersey 07004
                                           Attention: Larry Normile
                                           Telecopy: 973-439-5011
                                           Telephone: 973-439-5086

            10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

            10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.

            10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Administrative Agent and the Arranger for all their reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to the Administrative Agent and the Arranger, with
statements with respect to the foregoing to be submitted to the Borrower prior
to the Closing Date (in the case of amounts to be paid on the Closing Date) and
from time to time thereafter on a quarterly basis or such other periodic basis
as the Administrative Agent shall deem appropriate, (b) to pay or reimburse each
Lender and the Administrative Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
fees and disbursements of one 


<PAGE>
                                                                              79


counsel to the Lenders as a group and of one counsel to the Administrative Agent
(including, in each case, the allocated fees and expenses of in-house counsel),
(c) to pay, indemnify, and hold each Lender and the Administrative Agent and the
Arranger harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, stamp, excise and other taxes, if any, that may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Administrative Agent and the Arranger and their respective officers,
directors, employees, affiliates, agents and controlling persons when acting in
such capacity (each, an "Indemnitee") harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other documents,
including any of the foregoing relating to the use of proceeds of the Loans or
the violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of any Group Member or any of the Properties and
the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against or otherwise related to any
Loan Party under any Loan Document (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided, that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities result from the gross
negligence or willful misconduct of such Indemnitee. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
10.5 shall be payable not later than 10 days after written demand therefor.
Statements of amounts payable by the Borrower pursuant to this Section 10.5
shall be submitted to Larry Normile (Telephone No. 973-439-5086) (Telecopy No.
973-439-5011), at the address of the Borrower set forth in Section 10.2, or to
such other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 10.5
shall survive repayment of the Loans and all other amounts payable hereunder.

            10.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Administrative Agent, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.

            (b) Any Lender other than any Conduit Lender may, without the
consent of the Borrower, in accordance with applicable law, at any time sell to
one or more banks, financial institutions or other entities (each, a
"Participant") participating interests in any Loan owing to such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the 


<PAGE>
                                                                              80


other parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Loans or
any fees payable hereunder, or postpone the date of the final maturity of the
Loans, in each case to the extent subject to such participation. The Borrower
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 10.7(a) as
fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.18, 2.19 and 2.20
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if it was a Lender; provided that, in the case of Section
2.19, such Participant shall have complied with the requirements of said Section
and provided, further, that no Participant shall be entitled to receive any
greater amount pursuant to any such Section than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.

            (c) Any Lender other than any Conduit Lender (an "Assignor") may, in
accordance with applicable law, at any time and from time to time assign to any
Lender or any Lender Affiliate or, with the consent of the Borrower and the
Administrative Agent (which, in each case, shall not be unreasonably withheld or
delayed), to an additional bank, financial institution or other entity (an
"Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance, executed
by such Assignee, such Assignor and any other Person whose consent is required
pursuant to this paragraph, and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided that, unless otherwise agreed
by the Borrower and the Administrative Agent, no such assignment to an Assignee
(other than any Lender or any Lender Affiliate) shall be in an aggregate
principal amount of less than $5,000,000 (or, in the case of the Tranche B Term
Facility, $1,000,000), in each case except in the case of an assignment of all
of a Lender's interests under this Agreement. For purposes of the proviso
contained in the preceding sentence, the amount described therein shall be
aggregated in respect of each Lender and its Lender Affiliates, if any. Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment and/or
Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering


<PAGE>
                                                                              81


all of an Assignor's rights and obligations under this Agreement, such Assignor
shall cease to be a party hereto). Notwithstanding any provision of this Section
10.6, the consent of the Borrower shall not be required for any assignment that
occurs when an Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing, any Conduit Lender may assign at any time to its
designating Lender hereunder without the consent of the Borrower or the
Administrative Agent any or all of the Loans it may have funded hereunder and
pursuant to its designation agreement and without regard to the limitations set
forth in the first sentence of this Section 10.6(c).

            (d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loans and any Notes evidencing the Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall be
registered on the Register only upon surrender for registration of assignment or
transfer of the Note evidencing such Loan, accompanied by a duly executed
Assignment and Acceptance, and thereupon one or more new Notes shall be issued
to the designated Assignee.

            (e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained therein
in the Register on the effective date determined pursuant thereto.

            (f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including any pledge or assignment by a
Lender to any Federal Reserve Bank in accordance with applicable law.

            (g) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.

            (h) The Borrower, each Lender and the Administrative Agent hereby
confirms that it will not institute against a Conduit Lender or join any other
Person in instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
that each Lender designating any Conduit Lender hereby agrees to indemnify, save
and hold harmless each other party hereto for any loss, cost, damage or expense
arising out of its 


<PAGE>
                                                                              82


inability to institute such a proceeding against such Conduit Lender during such
period of forbearance.

            10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular Lender
or to the Lenders under a particular Facility, if any Lender (a "Benefitted
Lender") shall, at any time after the Loans and other amounts payable hereunder
shall immediately become due and payable pursuant to Section 8, receive any
payment of all or part of the Obligations owing to it, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to
such other Lender, such Benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of the Obligations owing to
each such other Lender, or shall provide such other Lenders with the benefits of
any such collateral, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.

            (b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower, as the case may be. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.

            10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

            10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


<PAGE>
                                                                              83


            10.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.

            10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

            10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:

            (a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive personal jurisdiction of the courts of the State
of New York, the courts of the United States for the Southern District of New
York, and appellate courts from any thereof;

            (b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

            (c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower, as
the case may be at its address set forth in Section 10.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto;

            (d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and

            (e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.

            10.13 Acknowledgements. The Borrower hereby acknowledges that:

            (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;

            (b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and


<PAGE>
                                                                              84


            (c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.

            10.14 Releases of Guarantees and Liens. (a) Notwithstanding anything
to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender) to take any action requested
by the Borrower having the effect of releasing any Collateral or Guarantee
Obligations (i) to the extent necessary to permit consummation of any
transaction not prohibited by any Loan Document or that has been consented to in
accordance with Section 10.1 or (ii) under the circumstances described in
paragraph (b) below.

            (b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than obligations under or in
respect of Hedge Agreements) shall have been paid in full, the Commitments have
been terminated and no Letters of Credit shall be outstanding, the Collateral
shall be released from the Liens created by the Security Documents, and the
Security Documents and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Loan Party under
the Security Documents shall terminate, all without delivery of any instrument
or performance of any act by any Person.

            10.15 Confidentiality. Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated in writing by such
Loan Party as confidential; provided that nothing herein shall prevent the
Administrative Agent or any Lender from disclosing any such information (a) to
the Administrative Agent, any other Lender or any Lender Affiliate, (b) subject
to an agreement to comply with the provisions of this Section, to any actual or
prospective Transferee or any direct or indirect counterparty to any Hedge
Agreement (or any professional advisor to such counterparty), (c) to its
officers, employees, directors, agents, attorneys, accountants and other
professional advisors or those of any of its affiliates, (d) upon the request or
demand of any Governmental Authority, (e) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect to such Lender, or (i) in connection with the exercise of any remedy
hereunder or under any other Loan Document. This Section 10.15 shall not apply
with respect to any information which (i) is or becomes generally known to the
public, (ii) was already known to the Lenders or the Administrative Agent or was
otherwise in their possession prior to its disclosure in connection with this
Agreement, (iii) was disclosed to the Lenders or the Administrative Agent prior
or subsequent to the date hereof from a third party not known to the Lenders or
the Administrative Agent to be bound by a confidentiality agreement with the
Borrower or (iv) was internally developed by any of the Lenders or the
Administrative Agent without reference to any otherwise confidential
information.


<PAGE>
                                                                              85


            10.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.


<PAGE>
                                                                              86


            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

                                     CHURCH & DWIGHT CO., INC., as the Borrower

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:


                                     THE CHASE MANHATTAN BANK, as 
                                       Administrative Agent and as a Lender

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                                                   EXHIBIT 10(b)

                                 AMENDMENT NO. 2
                                     TO THE
                              AMENDED AND RESTATED
                       LIMITED LIABILITY COMPANY AGREEMENT
                                 OF ARMKEL, LLC

      This AMENDMENT NO. 2 (this "Amendment") to the Amended and Restated
Limited Liability Company of Armkel, LLC (the "Company"), dated August 27, 2001
(the "LLC Agreement"), is made effective as of September 24, 2001, by and
between Church & Dwight Co., Inc., a Delaware corporation ("C&D") and Kelso
Protection Venture, LLC, a Delaware limited liability company (the "Kelso
Member"), as the members of the Company (the "Members").

                                    RECITALS

      WHEREAS, the Members are party to the LLC Agreement governing the
operation and management of the Company; and

      WHEREAS, the Members desire to amend the LLC Agreement as set forth
herein.

      NOW THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Members
hereby agree as follows:

      Section 1. Defined Terms. Capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed thereto in the LLC Agreement.

      Section 2. Amendment to LLC Agreement. Upon execution of this Amendment,
the LLC Agreement is hereby amended as follows.

      (a) Section 7.1(a) of the LLC Agreement is hereby deleted in its entirety
and replaced with the following:

            "(a) Net Losses shall be allocated among the Members as follows:

      First, to the Members in a manner that corresponds, in reverse
chronological order, to the allocations of Net Profits previously made, without
duplication,
 pursuant to Section 7.1(b);

                  (ii) Second, to the Members in accordance with Equity
Interests Percentages until the aggregate amount of Net Losses allocated to the
Members pursuant to this Section 7.1(a)(ii) for the current and all previous
Fiscal Years equals $10,000,000;

                  (iii) Third, to C&D until C&D's Adjusted Capital Account
balance has been reduced to zero;


<PAGE>

                  (iv) Fourth, to the Kelso Member until the Kelso Member's
Adjusted Capital Account balance has been reduced to zero; and

                  (v) Fifth, the balance of any Net Losses to all Members in
accordance with their Equity Interests Percentage;"

      Section 3. No Other Changes. Except as expressly amended hereby, the LLC
Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof. From and after the date on which this
Amendment becomes effective, the terms "Agreement," "this Agreement," "herein,"
"hereinafter," "hereto," and words of similar import used in the LLC Agreement
shall, unless the context otherwise requires, mean and refer to the LLC
Agreement as amended hereby.

      Section 4. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THE PARTIES SUBJECT HERETO SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OR ANY OTHER RULE,
PRINCIPLE OR LAW THAT WOULD MAKE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF DELAWARE APPLICABLE HERETO.

      Section 5. Severability. The invalidity or unenforceability of any
provision of this Amendment in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

      Section 6. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Amendment.

                            [SIGNATURE PAGE FOLLOWS]

      IN WITNESS WHEREOF, each Member has duly executed this Agreement as of the
day first above written.

                                               CHURCH & DWIGHT CO., INC.

                                               By: /s/ Zvi Eiref
                                                   -----------------------------
                                                   Name:  Zvi Eiref
                                                   Title: Vice President


                                               KELSO PROTECTION VENTURE, LLC

                                               By:  /s/ Philip E. Berney
                                                    ----------------------------
                                                    Name:  Philip E. Berney
                                                    Title: Vice President


<PAGE>
                                                                   Exhibit 10(d)


                                                                  EXECUTION COPY


                            ASSET PURCHASE AGREEMENT


                                     between

                                   ARMKEL, LLC

                                       and

                              CARTER-WALLACE, INC.







                             Dated as of May 7, 2001









<PAGE>



                                TABLE OF CONTENTS

                                                                            Page

                                    ARTICLE I

                                   Definitions

1.2  Interpretation...........................................................15
1.3  Knowledge................................................................15

                                   ARTICLE II

                                     Assets

2.1  Purchased Assets.........................................................15
2.2  Excluded Assets..........................................................18

                                   ARTICLE III

                                   Liabilities

3.1  Assumed Liabilities......................................................19
3.2  Excluded Liabilities.....................................................21

                                   ARTICLE IV

                           Consideration for Transfer

4.1  Purchase Price...........................................................22
4.2  Allocation of Purchase Price.............................................23
4.3  Domestic Net Working Capital Adjustment..................................23

                                    ARTICLE V

                                     Closing

5.1  Purchase and Sale; Assumption and Acceptance.............................26
5.2  Closing Date.............................................................26
5.3  Delivery and Payment by Buyer............................................26
5.4  Deliveries by the Company................................................27
5.5  Notices of Sale..........................................................28




                                      -i-


<PAGE>



                                   ARTICLE VI

                  Representations and Warranties of the Company

6.1  Organization, Good Standing and Qualification;
       Title to Transferred Subsidiaries......................................29
6.2  Corporate Authority; Stockholder Approval................................30
6.3  Governmental Filings; No Violations......................................30
6.4  Business Contracts.......................................................31
6.5  Company Reports; Audited Financial Statements;
       Interim Financial Statements...........................................32
6.6  Absence of Certain Changes...............................................34
6.7  Employee Benefits........................................................35
6.8  Litigation and Liabilities...............................................37
6.9  Compliance with Laws; Permits............................................37
6.10  Environmental Matters...................................................38
6.11  Labor Matters...........................................................39
6.12  Insurance...............................................................39

6.13  Title to Tangible Personal Property.....................................39
6.14  Title to Owned and Leased Real Properties;
        Absence of Encumbrances...............................................40
6.15  Adequacy and Sufficiency of Purchased Assets............................40
6.16  Intellectual Property...................................................41
6.17  Brokers and Finders.....................................................42
6.18  Taxes...................................................................42

                                   ARTICLE VII

                     Representations and Warranties of Buyer

7.1  Organization, Good Standing and Qualification............................45
7.2  Corporate Authority......................................................45
7.3  Governmental Filings; No Violations......................................45
7.4  Funds....................................................................46
7.5  Ownership of Shares......................................................47

                                  ARTICLE VIII

                                Certain Covenants

8.1  Interim Operations.......................................................47
8.2  Access...................................................................52
8.3  Stockholder Approval.....................................................53
8.4  Proxy Statement..........................................................53
8.5  Filings; Other Actions; Notification.....................................54
8.6  Equitable Assignment.....................................................57
8.7  Complete Financial Statements............................................58



                                      -ii-


<PAGE>



8.8   Intercompany Accounts...................................................60
8.9   Publicity...............................................................61
8.10  No Solicitation and No Hiring...........................................61
8.11  Acquisition Proposals...................................................61
8.12  Timing of Closing.......................................................66
8.13  Insurance...............................................................67
8.14  Sofibel S.A.R.L. Conversion.............................................67
8.15  Carter-Horner Taxes.....................................................67

                                   ARTICLE IX

                             Employees and Benefits

9.1   Employees and Service Crediting.........................................67
9.2   Transitional Employment Matters.........................................77
9.3   Other Employee Matters..................................................77

                                    ARTICLE X

                                   Conditions

10.1  Conditions to Each Party's Obligations..................................78
10.2  Conditions to Obligations of Buyer......................................79
10.3  Conditions to Obligations of the Company................................80

                                   ARTICLE XI

                                   Termination

11.1  Termination by Mutual Consent...........................................81
11.2  Termination by Either Buyer or the Company..............................81
11.3  Termination by the Company..............................................82
11.4  Termination by Buyer....................................................83
11.5  Effect of Termination and Abandonment...................................84
11.6  Return of Information...................................................85

                                   ARTICLE XII

                            Miscellaneous and General

12.1  Survival................................................................86
12.2  Expenses................................................................86
12.3  Modification or Amendment...............................................87
12.4  Waiver of Conditions....................................................87
12.5  Counterparts............................................................87
12.6  GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL...........................87
12.7  Notices.................................................................88



                                      -iii-


<PAGE>



12.8   Entire Agreement; NO OTHER REPRESENTATIONS.............................90
12.9   Severability...........................................................91
12.10  Assignment.............................................................91
12.11  No Third-Party Beneficiary Rights......................................92
12.12  Bulk Transfers.........................................................92
12.13  Further Assurances.....................................................92
12.14  Enforcement............................................................92




                                      -iv-


<PAGE>



                            ASSET PURCHASE AGREEMENT


         ASSET PURCHASE AGREEMENT, dated as of May 7, 2001 (this "Agreement") by
and between Armkel, LLC ("Buyer"), and Carter-Wallace, Inc., (the "Company" and,
collectively with Buyer, the "Parties").

                                    RECITALS

         WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company, CPI Development Corporation, a Delaware corporation
("CPI"), MCC Acquisition Holdings Corporation, a Delaware corporation
("Parent"), MCC Merger Sub Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Company Merger Sub"), and MCC Acquisition Sub
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("CPI Merger Sub"), have executed and delivered an Agreement and Plan of Merger,
dated as of May 7, 2001 (including the exhibits, schedules and annexes thereto,
and as it and they may hereafter be modified or amended in accordance with
Section 8.12(b), the "Merger Agreement"), providing for, among other things, the
merger of CPI Merger Sub with and into CPI (the "CPI Merger") and the merger of
Company Merger Sub with and into the Company (the "Company Merger" and,
collectively with the CPI Merger, the "Mergers"); and

         WHEREAS, the Company and its Subsidiaries (as hereinafter defined) are
engaged in the formulation, development, manufacture, sale and distribution of
certain consumer and personal care products, including anti-perspirants and
deodorants, condoms, at-home pregnancy and ovulation test kits, depilatories,
tooth whitening and similar oral hygiene products, skin care products, non-
prescription medication and various pet products and the business and operations
associated with the Segregated Assets and Liabilities, as hereinafter defined
(all such businesses and operations, collectively with the predecessor
operations and discontinued operations of such businesses and operations, the
"Business"); and

         WHEREAS,(i) the Company and its Subsidiaries desire to sell, transfer
and assign to Buyer, and Buyer desires to purchase from the Company and its
Subsidiaries, in each case immediately prior to the effective time of the CPI
Merger, the Purchased Assets (as hereinafter defined),



<PAGE>



and (ii) the Company and its Subsidiaries desire to assign and transfer to
Buyer, and Buyer desires to accept and assume, in each case immediately prior to
the effective time of the CPI Merger, the Assumed Liabilities (as hereinafter
defined), all on the terms and subject to the conditions set forth in this
Agreement (such sales, transfers, assignments, purchases, acceptances and
assumptions collectively, the "Purchase"); and

         WHEREAS, the Board of Directors of the Company has by resolution
approved a memorandum of understanding (the "Memorandum of Understanding") with
CPI, Parent, Company Merger Sub, CPI Merger Sub and Buyer with respect to and
substantially consistent with the Purchase, the Mergers and the other
transactions contemplated by this Agreement and the Merger Agreement; and

         WHEREAS, contemporaneously with the execution and delivery of this
Agreement, CPI, Parent and Buyer are executing and delivering a Voting Agreement
providing for certain matters relating to the Purchase (the "Voting Agreement")
and certain stockholders of CPI, Parent and Buyer are executing and delivering a
Voting Agreement providing for certain matters relating to the Purchase; and

         WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Church & Dwight Co., Inc. ("Strategic Buyer") and Buyer are executing
and delivering a Product Line Purchase Agreement (the "Product Line Purchase
Agreement") providing for certain matters relating to the Purchase.

         NOW, THEREFORE, in consideration of the premises, and the
representations, warranties, covenants and agreements contained in this
Agreement, the Parties agree as follows:

                                   ARTICLE I

                                  Definitions

         1.1 General Terms. For purposes of this Agreement, the following terms
have the meanings hereinafter indicated:

         "Acquisition Proposal" has the meaning specified in Section 8.11.



                                      -2-

<PAGE>



         "Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person as of the time of determination.

         "Agreement" has the meaning specified in the Preamble.

         "Ancillary Agreements" means the Bill of Sale, the Company Name
Trademark License Agreement, the Cranbury Lease, the Decatur Manufacturing
Agreement, the Indemnification Agreement, the Insurance Claims Agreement, the
Patent License Agreement and the Transition Services Agreement.

         "Arrangements" has the meaning specified in Section 7.4.

         "Assumed Liabilities" has the meaning specified in Section 3.1.

         "Assumed Pension Plan" has the meaning specified in Section 6.7(c).

         "Audit Date" has the meaning specified in Section 6.5(a).

         "Audited Financial Statements" means, collectively, the audited
combined balance sheet as of March 31, 2000, and the audited combined statement
of earnings as of March 31, 1999 and 2000 of the Purchased Assets and the
Assumed Liabilities (excluding the Segregated Assets and Liabilities), in each
case including the notes thereto, all included in Section 1.1(a) of the
Disclosure Letter.

         "Available Employee" means each current Employee as of the date of this
Agreement, plus those added in accordance with Section 9.1(b), but excluding (i)
such Employees who retire (under the terms of the applicable qualified defined
benefit pension plan) or die prior to the Closing Date, (ii) the Employees of
the Transferred Subsidiaries and (iii) the Transition Employees listed on
Section 6.7(b)(2) of the Disclosure Letter.

         "Bankruptcy and Equity Exception" has the meaning specified in Section
6.2.




                                      -3-

<PAGE>



         "Base Net Working Capital" has the meaning specified in Section 4.3(a).

         "Bill of Sale" means the Bill of Sale and Assignment and Assumption
Agreement in the form attached hereto as Exhibit A.

         "Business" has the meaning specified in the Recitals.

         "Business Acquisition Proposal" has the meaning specified in Section
8.11(a).

         "Business Contracts" has the meaning specified in Section 6.4.

         "Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in The City of New York are authorized or obligated by
any Law or executive order to close.

         "Business Patents" means the patents described on Section 1.1(b) of the
Disclosure Letter.

         "Business-Related Intellectual Property" means, collectively, (i) the
Business Patents, (ii) the Business Trademarks and (iii) all other Intellectual
Property (other than any Patents and Trademarks and Excluded Assets) in which
the Company or its Subsidiaries has any right, title or interest in or to, and
that relate primarily to the Business, including in all such cases any goodwill
associated therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under any Law.

         "Business Trademarks" means the trademarks described on Section 1.1(c)
of the Disclosure Letter.

         "Buyer" has the meaning specified in the Preamble.

         "Buyer Savings Plan" has the meaning specified in Section 9.1(h)(i).

         "Carter-Horner Retained Cash Amount" has the meaning specified in
Section 2.1(m).


                                      -4-

<PAGE>



         "Claims" has the meaning specified in Section 6.8.

         "Closing" means the completion of the Purchase and the payment of the
Purchase Price.

         "Closing Agreement" has the meaning specified in Section 8.12(a).

         "Closing Date" has the meaning specified in Section 5.2.

         "COBRA" means Section 4980B of the Code and Title 6 of ERISA.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Company" has the meaning specified in the Preamble.

         "Company Acquisition Proposal" has the meaning specified in Section
8.11(a).

         "Company Merger" has the meaning specified in the Recitals.

         "Company Merger Certificate" has the meaning specified in Section 1.5
of the Merger Agreement.

         "Company Merger Sub" has the meaning specified in the Recitals.

         "Company Name Trademark License Agreement" means the Consumer Products
Transitional Trademark License Agreement in the form attached hereto as Exhibit
B.

         "Company Reports" has the meaning specified in Section 6.5(a).

         "Company Requisite Vote" has the meaning specified in Section 6.2.

         "Company Savings Plan" has the meaning specified in Section 9.1(h)(ii).

         "Company Shares" means, collectively, the outstanding shares of Common
Stock, par value $1.00 per




                                      -5-

<PAGE>



share, of the Company and the outstanding shares of Class B Common Stock, par
value $1.00 per share, of the Company.

         "Compensation and Benefit Plans" means bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, deferred and restricted stock, stock option,
employment, termination, severance, compensation, life insurance, medical,
health or other employee plans, agreements, policies or arrangements that cover
United States-based Employees and current or former directors of the Company.

         "Confidentiality Agreements" means, collectively, the Confidentiality
Agreement, dated July 6, 2000, between Strategic Buyer and J.P. Morgan
Securities Inc., as agent on behalf of the Company and the Confidentiality
Agreement, dated August 7, 2000, between Kelso & Company LP and J.P. Morgan
Securities Inc., as agent on behalf of the Company.

         "Contracts" has the meaning specified in Section 2.1(h).

         "Control", when used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise, and the terms "controlling", "controlled
by" and "under common control with" have correlative meanings.

         "Covered Retiree" has the meaning specified in Section 3.1(g).

         "CPI" has the meaning specified in the Recitals.

         "CPI Merger" has the meaning specified in the Recitals.

         "CPI Merger Sub" has the meaning specified in the Recitals.

         "Cranbury Lease" means the Cranbury Facilities Sharing Agreement and
Lease in the form attached hereto as Exhibit C.

         "CSA" has the meaning specified in Section 6.9(b).



                                      -6-

<PAGE>


         "Decatur Manufacturing Agreement" means the Decatur Manufacturing
Agreement in the form attached hereto as Exhibit D.

         "Delayed Consents" has the meaning specified in Section 8.6.

         "Disclosure Letter" means that certain disclosure letter which was
delivered to Buyer by the Company on or prior to entering into this Agreement
and which states that it is the disclosure letter referred to in this Agreement.

         "Employees" means the Company's and its Subsidiaries' current or former
employees who are or were primarily employed in the Business.

         "Encumbrance" means any lien, charge, mortgage, pledge, security
interest, restriction on transfer or encumbrance of any sort.

         "Environmental Law" means any applicable Law, including common law,
governing (i) the protection of human health (as it relates to Hazardous
Substances) or the environment, (including air, water, soil and natural
resources) or (ii) the treatment, use, storage, handling, release or disposal of
Hazardous Substances, or (iii) the exposure of Persons to Hazardous Substances,
in each case as presently in effect.

         "Equity Arrangements" has the meaning specified in Section 7.4.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "ERISA Affiliate" of any Person means any other Person which, together
with such Person, would be treated as a single employer under Section 4001 of
ERISA or Section 414 of the Code.

         "Estimated Closing Debt" has the meaning specified in Section 4.1(b).

         "Exchange Act" has the meaning specified in Section 6.3(a).



                                      -7-

<PAGE>


         "Excluded Assets" has the meaning specified in Section 2.2.

         "Excluded Liabilities" has the meaning specified in Section 3.2.

         "FDCA" has the meaning specified in Section 6.9(b).

         "Final Determination Date" has the meaning specified in Section 4.3(c).

         "Financing Arrangements" has the meaning specified in Section 7.4.

         "FIRPTA Certificate" has the meaning specified in Section 5.4(f).

         "Fund Agreement" shall mean the fund agreement referred to in the
Shareholder Indemnification Agreement.

         "GAAP" has the meaning specified in Section 6.5(a).

         "Government Antitrust Entity" means any Governmental Entity with
jurisdiction over enforcement of any applicable antitrust laws.

         "Governmental Entity" means any federal, state, local or foreign
governmental or regulatory authority, agency, commission, body or other
governmental entity.

         "Hazardous Substance" means any substance presently listed, defined,
designated or classified as hazardous, toxic or radioactive under any applicable
Environmental Law, or the presence of which poses a hazard to the health or
safety of Persons, including petroleum and any derivatives or by-products
thereof.

         "Healthcare Acquisition Proposal" has the meaning specified in Section
8.11.

         "Healthcare Business" has the meaning specified in Section 8.11.

         "HSR Act" has the meaning specified in Section 6.3(a).


                                      -8-

<PAGE>



         "Indemnification Agreement" means the Indemnification Agreement in the
form attached hereto as Exhibit E.

         "Independent Accounting Firm" has the meaning specified in Section
4.3(c).

         "Infringement" has the meaning specified in Section 3.1(c).

         "Injunctive Action" has the meaning specified in Section 10.2(d).

         "Insurance Claims Agreement" means the Insurance Claims Agreement in
the form attached hereto as Exhibit F.

         "Intellectual Property" means, collectively, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, domain names, know-how, computer software programs or applications,
and tangible or intangible proprietary information or materials.

         "Interim Financial Statements" means, collectively, the unaudited
combined balance sheet as of December 31, 2000 and the unaudited combined
statement of earnings of the Purchased Assets and the Assumed Liabilities
(excluding the Segregated Assets and Liabilities) as of the nine months ended
December 31, 2000, in each case including any notes thereto, all included in
Section 1.1(d) of the Disclosure Letter.

         "International Compensation and Benefit Plans" means bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, compensation, life insurance, medical,
health or other employee plans, agreements, policies or arrangements that are
maintained by or contributed to by the Transferred Subsidiaries and/or their
subsidiaries or that otherwise cover non-U.S. based employees.

         "IRS" has the meaning specified in Section 6.7(c).

         "Laws" has the meaning specified in Section 6.9.



                                      -9-

<PAGE>



         "Leased Real Property" means real property which is leased by a third
party to the Company or its Subsidiaries and set forth on Section 6.14 of the
Disclosure Letter.

         "Leased Tangible Personal Property" means the Tangible Personal
Property which is leased by a third party to the Company or its Subsidiaries.

         "Leave Recipients" has the meaning specified in Section 9.1(c).

         "Liabilities" means all liabilities, obligations, guarantees, damages,
losses, debts, Claims, demands, judgments, fines, penalties or settlements of
any nature or kind, including indebtedness, whether known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, past, present or future, whether incurred prior to, at or after the
Closing, including all costs and expenses (legal, accounting or otherwise)
relating thereto.

         "Material Adverse Effect" means a material adverse effect on the
financial condition, business, assets or results of operations of the Business,
taken as a whole; provided, however, that any such effect resulting from any
change in economic or business conditions generally or in the consumer and
personal care products industry specifically shall not be considered when
determining whether a Material Adverse Effect has occurred.

         "May Deliverables" has the meaning specified in Section 8.7(a).

         "Memorandum of Understanding" has the meaning specified in the
Recitals.

         "Merger Agreement" has the meaning specified in the Recitals.

         "Mergers" has the meaning specified in the Recitals.

         "Net Working Capital" has the meaning specified in Section 4.3(b).



                                      -10-

<PAGE>



         "Non-Subsidiary Agreements" means the documents specified in Section
6.1 of the Disclosure Letter.

         "Notice of Disagreement" has the meaning specified in Section 4.3(c).

         "Obligations" has the meaning specified in Section 6.8.

         "Order" has the meaning specified in Section 10.1(c).

         "Owned Real Property" means real property which is owned by the Company
or its Subsidiaries and set forth on Section 6.14 of the Disclosure Letter.

         "Owned Tangible Personal Property" means Tangible Personal Property
which is owned by the Company or any of its Subsidiaries.

         "Parent" has the meaning set forth in the Recitals.

         "Parties" has the meaning specified in the Preamble.

         "Patent License Agreement" means the Company Patent License Agreement
in the form attached hereto as Exhibit G.

         "Patents" means, collectively, patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof.

         "Permits" means all permits, filings, franchises, certificates,
licenses, notices, orders, variances, consents, registrations, approvals,
authorizations and similar rights.

         "Permitted Encumbrances" means, collectively, those Encumbrances
specified in Section 1.1(e) of the Disclosure Letter; liens for current taxes or
assessments not delinquent; builders', mechanics', warehousemen's, workmen's,
repairmen's, carriers' liens, purchase money security interests and similar
charges and any other similar Encumbrances arising and continuing in the
ordinary course



                                      -11-

<PAGE>



of business, in any case for obligations which are not delinquent; other similar
common law or statutory Encumbrances which do not materially detract from the
value of the property subject thereto or materially interfere with the present
use thereof; Encumbrances reflected, reserved or otherwise specifically
disclosed in the Audited Financial Statements or in the Interim Financial
Statements; Encumbrances arising from claims being contested in good faith that,
alone or in the aggregate, do not materially detract from the value of the
Purchased Assets subject thereto or materially interfere with the present use
thereof.

         "Person" means any individual, firm, partnership, association, group
(as such term is used in Rule 13d-5 under the Exchange Act, as such Rule is in
effect on the date of this Agreement), corporation or other entity.

         "Product Line Purchase Agreement" has the meaning specified in the
Recitals.

         "Proxy Statement" has the meaning specified in Section 8.4.

         "Purchase" has the meaning specified in the Recitals.

         "Purchase Price" has the meaning specified in Section 4.1.

         "Purchase Price Adjustment" has the meaning specified in Section
4.3(d).

         "Purchased Assets" has the meaning specified in Section 2.1.

         "Real Property" has the meaning specified in Section 2.1(b).

         "Recapitalization Amendment" has the meaning specified in the recitals
to the Merger Agreement.

         "Representatives" has the meaning specified in Section 8.2.

         "Section 8.11(c) Notice" has the meaning specified in Section 8.11(c).



                                      -12-

<PAGE>




         "SEC" has the meaning specified in Section 6.5(a).

         "Segregated Assets and Liabilities" means the assets and Liabilities
specified in Section 2.1(a)(ii) of the Disclosure Letter.

         "Shareholder Indemnification Agreement" means that certain
Indemnification Agreement dated as of the date hereof, by and among certain
stockholders of CPI and Parent.

         "Specified Provision" has the meaning specified in Section 12.2(d).

         "Statement of Net Working Capital" has the meaning specified in Section
4.3(b).

         "Steering Committee" has the meaning specified in Section 8.2(b).

         "Strategic Buyer" has the meaning specified in the Recitals.

         "Subsidiary" means, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
is directly or indirectly owned or controlled by such party or by one or more of
its respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries.

         "Substitute Merger Agreement" has the meaning specified in Section
8.11(c).

         "Substitute Merger Parties" has the meaning specified in Section
8.11(c).

         "Superior Proposal" has the meaning specified in Section 8.11.

         "Tangible Personal Property" has the meaning specified in Section
2.1(c).



                                      -13-

<PAGE>



         "Tax Authority" has the meaning specified in Section 6.18.

         "Tax Return" has the meaning specified in Section 6.18.

         "Tax", "Taxes" and "Taxable" have the meaning specified in Section
6.18.

         "Termination Date" has the meaning specified in Section 11.2.

         "Third Party Intellectual Property Rights" means licenses, sublicenses
and other agreements as to which the Company or any of its Subsidiaries is a
party and pursuant to which it is authorized to use any third-party patents,
trademarks, servicemarks, copyrights, trade secrets or computer software, which
rights relate primarily to the Business.

         "Title IV Plan" has the meaning specified in Section 6.7(e).

         "Trademarks" means, collectively, trademarks, service marks, trade
dress, logos, trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith.

         "Transactions" means the Purchase and the other transactions
contemplated by this Agreement and the Ancillary Agreements.

         "Transferred Employee" has the meaning specified in Section 9.1(a).

         "Transferred Subsidiaries" has the meaning specified in Section 2.1(a).

         "Transition Employee" means a current Employee who is not an Available
Employee and is designated as a Transition Employee on Section 6.7(b)(2) of the
Disclosure Letter.



                                      -14-

<PAGE>



         "Transition Services Agreement" means, the Transition Services
Agreement in the form attached hereto as Exhibit H.

         "Voting Agreement" has the meaning specified in the Recitals.

         "Voting Debt" has the meaning specified in Section 6.1(b).

         "WARN Act" has the meaning specified in Section 9.1(k).

         "Working Papers" has the meaning specified in Section 4.3(c).

         1.2 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.
Terms defined in the singular shall have correlative meanings when used in the
plural, and vice versa. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."

         1.3 Knowledge. References herein to the "Company's knowledge" or the
"knowledge of the Company" refer to the actual knowledge of the officers of the
Company and the employees of the Business specified in Section 1.3 of the
Disclosure Letter.

                                   ARTICLE II

                                     Assets

         2.1 Purchased Assets. Subject to Section 2.2, the "Purchased Assets"
shall consist of all of the Company's and each of its Subsidiaries' entire
right, title and interest in and to the following, wherever located:






                                      -15-

<PAGE>



         (a) all of the outstanding shares of capital stock or other equity
interests of the Subsidiaries of the Company set forth in Section 2.1(a)(i) of
the Disclosure Letter (collectively with the direct or indirect Subsidiaries of
such Subsidiaries, the "Transferred Subsidiaries");

         (b) all Owned Real Property and all rights of the Company in respect of
the Leased Real Property (including subleaseholds) described in Section 6.14 of
the Disclosure Letter and all improvements, fixtures, and fittings thereon, and
easements, rights-of-way, and other appurtenants thereto (such as appurtenant
rights in and to public streets) (collectively, the "Real Property");

         (c) all tangible personal property, including machinery, equipment,
furniture, vehicles, trailers, tools, instruments, spare parts, inventories
(including, without limitation, raw materials, purchased goods, goods and work
in process, supplies (including storeroom supplies) and finished goods),
pallets, office and laboratory equipment, materials, fuel and other similar
personal property not normally included in inventory, that relates primarily to
the Business or is otherwise included in the Purchased Assets (collectively, the
"Tangible Personal Property");

         (d) all warranties and all claims in respect of deposits, prepayments
and refunds and rights of set off against third parties that relate primarily to
the Business;

         (e) any and all rights of an insured party in respect of insurance
claims to the extent related to the Business or to the Purchased Assets, all to
the extent provided in the Insurance Claims Agreement;

         (f) all Permits, Orders and similar rights obtained from Governmental
Entities, that relate primarily to the Business, the Owned Real Property, the
Leased Real Property or are otherwise included in the Purchased Assets, but only
to the extent transferable by their terms;

         (g) copies of all books, records, ledgers, files, documents,
correspondence, customer files, supplier lists, parts lists, vendor lists,
lists, plats, architectural plans, drawings and specifications, creative
materials, advertising and promotional materials, studies, reports, and other
similar printed or written commercial materials, that



                                      -16-

<PAGE>



relate primarily to the Business, the Owned Real Property, the Leased Real
Property or are otherwise included in the Purchased Assets or that are owned by
the Transferred Subsidiaries;

         (h) all agreements, contracts, leases, subleases, indentures, mortgage
documents and commitments, instruments, documents and commitments creating
security interests, guarantees, customer orders, purchase orders, dealer and
distributorship agreements, supply agreements, licenses, sublicenses, joint
venture agreements, partnership agreements and other similar arrangements and
commitments and rights thereunder, that relate primarily to the Business or to
the Purchased Assets (collectively, but excluding this Agreement and the
Ancillary Agreements, "Contracts"), including, without limitation, those
Contracts set forth in Section 6.4 of the Disclosure Letter, the Consultancy
Agreements and Collective Bargaining Agreements listed in Section 6.7(a) of the
Disclosure Letter and any agreement to which an Available Employee is a party;

         (i) all accounts and notes receivable arising in respect of the
operation of the Business;

         (j) the Business-Related Intellectual Property;

         (k) the tangible or physical materials embodying all computer software,
product literature and advertising material, specifications, credit information,
inventory, marketing, personnel, financial, title and other documents, data and
similar information and material, however stored, that relate primarily to the
Business or to the Purchased Assets;

         (l) the cash, cash equivalents and short term investments held by the
Transferred Subsidiaries (other than Carter-Horner Inc.) as of the Closing Date;

         (m) $1,000,000 in aggregate value of cash, cash equivalents and short
term investments held by Carter-Horner Inc. (the "Carter-Horner Retained Cash
Amount");

         (n) the assets in respect of the Assumed Pension Plan and the life
insurance policies underlying the Split Dollar Agreements listed on Section
6.7(a) of the Disclosure Letter and the assets, if any, transferred in
accordance with Section 9.1(h); and



                                      -17-

<PAGE>



         (o) all other assets of the Company or any of its Subsidiaries that
relate primarily to the Business or to the Purchased Assets.

         2.2 Excluded Assets. The Purchased Assets shall not include any assets
other than the assets specifically listed or described in Section 2.1 and,
without limiting the generality of the foregoing, shall expressly exclude the
following assets (collectively, the "Excluded Assets"), which shall not be sold
or transferred to Buyer:

         (a) any shares of capital stock or other equity interests of the
Company or its Subsidiaries other than of the Transferred Subsidiaries;

         (b) the Company's and its Subsidiaries' qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books and other documents relating to the
organization, maintenance and existence of the Company as a corporation, in each
such case other than such as relate exclusively to the Transferred Subsidiaries;

         (c) insurance policies of the Company and its Subsidiaries, other than
those held by the Transferred Subsidiaries, all to the extent provided in the
Insurance Claims Agreement;

         (d) all tax returns and tax books and tax records of the Company and
its Subsidiaries, other than those of the Transferred Subsidiaries;

         (e) any and all rights in and to the Intellectual Property owned or
used by the Company or its Subsidiaries which is either referred to in Section
2.2(e) of the Disclosure Letter or does not constitute Business-Related
Intellectual Property, except as licensed to Buyer or its Affiliates under the
Ancillary Agreements;

         (f) any assets relating to Compensation and Benefit Plans, except as
set forth in Section 9.1(g) and 9.1(h);

         (g) the Company's rights under this Agreement and the Ancillary
Agreements;






                                      -18-

<PAGE>



         (h) any cash, cash equivalents and short term investments (i) held by
the Company or its Subsidiaries other than the Transferred Subsidiaries (other
than Carter-Horner Inc.), and (ii) held by Carter-Horner Inc. in excess of the
Carter-Horner Retained Cash Amount; and

         (i) the assets referred to in Section 2.2(i) of the Disclosure Letter.

                                   ARTICLE III

                                   Liabilities

         3.1 Assumed Liabilities. Except as otherwise specifically set forth in
Section 3.2, Buyer shall assume (i) all Liabilities of the Company or any of its
Subsidiaries that primarily arise or have arisen out of, in respect of or as the
result of the ownership, operation or transfer of the Purchased Assets or the
Business (together with those covered by Sections 3.1(a) through (j) below, the
"Assumed Liabilities") and (ii) without limiting the generality of clause (i) of
this sentence, the following Liabilities:

         (a) the Liabilities set forth in Section 3.1(a) of the Disclosure
Letter;

         (b) except for any Liabilities expressly retained by the Company or its
Subsidiaries under Article IX, the Liabilities of the Company or its
Subsidiaries that primarily arise or have arisen out of, in respect of or as the
result of any Contracts constituting Purchased Assets;

         (c) the Liabilities of the Company or its Subsidiaries for any
infringement, impairment, dilution, misappropriation or other violation or
misuse ("Infringement") or alleged Infringement of the rights of any other
Person relating to Intellectual Property that primarily arise or have arisen out
of, in respect of or as the result of the ownership, operation or transfer of
the Purchased Assets or the Business;

         (d) the Liabilities of the Company or its Subsidiaries in respect of
products manufactured, marketed, distributed or sold by or as part of the
operation of the Business prior to the Closing Date, including product liability
and negligence claims and other Liabilities for



                                      -19-

<PAGE>



refunds, adjustments, allowances, repairs, exchanges, returns and warranty,
merchantability and other claims;

         (e) all Liabilities of the Company or its Subsidiaries under or
relating to Environmental Law or Hazardous Substances, to the extent any such
Liabilities arise or have arisen out of, in respect of or as the result of the
ownership, operation or transfer of the Owned Real Property, which Liabilities
include, but are not limited to, Liabilities in respect of any obligations under
the New Jersey Industrial Site Recovery Act in relation to the Owned Real
Property located in Cranbury, New Jersey and those matters specified in Section
3.1(e) of the Disclosure Letter;

         (f) all transfer taxes, conveyance taxes and sales taxes incurred by
the Company or Buyer in connection with the Transactions (excluding any such
taxes incurred in connection with the transactions effected pursuant to the
Merger Agreement or taxes that are in the nature of a tax on income or gain of
the Company);

         (g) except for any Liabilities expressly retained by the Company or its
Subsidiaries under Article IX of this Agreement, all Liabilities to the extent
that such Liabilities arise or have arisen out of, in respect of or as a result
of the employment (or termination of employment) of any Employees and all
obligations under the Compensation and Benefit Plans and the International
Compensation and Benefit Plans, regardless of whether such plans are actually
assumed or adopted by Buyer to the extent related to any Available Employees,
any employees of the Transferred Subsidiaries and, to the extent provided in
Section 9.2, any Transition Employees and 60% of any retiree medical liabilities
incurred with respect to any Employee who was an Available Employee before
termination of employment and who terminates employment with the Company from
the date hereof through and including the Closing Date under circumstances which
entitle such Employee to retiree medical coverage under any plan, policy or
arrangement of the Company or its Affiliates (a "Covered Retiree"); provided
that it is expressly agreed that Buyer shall have no obligation to assume or
adopt any Compensation and Benefit Plan other than the Assumed Pension Plan and,
to the extent they cover Available Employees and employees of the Transferred
Subsidiaries, the Split Dollar Agreements, Corporate Officer Medical Expense
Reimbursement Plan, Personal Financial Counseling Policy, Executive Employment
Agreements, Change in Control Agreements and



                                      -20-

<PAGE>



Consulting Agreements listed in Section 6.7(a) of the Disclosure Letter and the
International Compensation and Benefit Plans.

         (h) the Liabilities of Buyer under the arrangements contemplated by
Section 8.6;

         (i) the Liabilities of the Company or the Transferred Subsidiaries that
arise or have arisen out of, in respect of or as the result of the Contracts set
forth in Section 6.5(c) of the Disclosure Letter; and

         (j) all Liabilities of the Company or its Subsidiaries relating to any
third party Claims primarily arising out of, or as the result of, the ownership,
operation or transfer of the Purchased Assets or the Business.

         3.2 Excluded Liabilities. Section 3.1 notwithstanding, Buyer shall not
be responsible for or assume any Liabilities of the Company or any of its
Affiliates (i) that are not Assumed Liabilities or (ii) that primarily arise or
have arisen out of, in respect of or as the result of the ownership, operation
or transfer of the Excluded Assets (collectively, the "Excluded Liabilities"),
including the following Liabilities:

         (a) any Liabilities under or relating to Environmental Law or Hazardous
Substances that (i) do not primarily arise and have not arisen out of, in
respect of or as the result of the ownership, operation or transfer of the
Purchased Assets or the Business or (ii) primarily arise or have arisen out of,
in respect of or as the result of the ownership, operation (including cessation
of operations) or transfer of the Excluded Assets;

         (b) any Liabilities for costs and expenses incurred in connection with
this Agreement and the Transactions, other than as expressly set forth in the
Indemnification Agreement;

         (c) any Liabilities of the Company or its Subsidiaries for any
Infringement or alleged Infringement by the Company or its Affiliates of the
rights of any other Person relating to Intellectual Property that primarily
arise or have arisen out of, in respect of or as the result



                                      -21-

<PAGE>



of the ownership, operation or transfer of the Excluded Assets;

         (d) any Liability to any broker, finder or agent for any brokerage
fees, finder's fees or commissions with respect to the Transactions;

         (e) all Liabilities under the Compensation and Benefit Plans or
otherwise relating to employment that are expressly retained by the Company
under Article IX;

         (f) any Liabilities of the Company or its Subsidiaries under this
Agreement or under the Ancillary Agreements;

         (g) any Liabilities referred to in Section 3.2(g) of the Disclosure
Letter;

         (h) any Liabilities (including any Taxes) that primarily relate to or
arise from the ownership, operation or transfer of the Excluded Assets;

         (i) any Taxes relating to or arising in connection with any transaction
contemplated by the Merger Agreement; and

         (j) any liability imposed on Carter-Horner for Taxes required to be
withheld, deducted or otherwise collected with respect to any distribution or
other payment made with respect to shares of Carter-Horner Inc. stock, less any
amount actually withheld, deducted or otherwise collected on or prior to the
Closing Date.

                                   ARTICLE IV

                           Consideration for Transfer

         4.1 Purchase Price. (a) The Purchase Price for the Business (the
"Purchase Price") shall be the sum of $739 million, minus the Estimated Closing
Debt.

         (b) On or prior to the third Business Day prior to the Closing Date,
the Company shall deliver to Buyer a certificate of the Chief Financial Officer
of the Company setting forth the amount of Estimated Closing Debt and including
reasonable documentation with respect thereto. "Estimated Closing Debt" means
the aggregate principal



                                      -22-

<PAGE>



amount of indebtedness for money borrowed of the Transferred Subsidiaries as of
the Closing, plus the accrued but unpaid interest thereon as of the Closing, as
estimated by the Company in good faith.

         4.2 Allocation of Purchase Price. For tax purposes, including without
limitation the filing of IRS Form 8594, the parties agree that they will report
an allocation of the Purchase Price for the Business plus the Assumed
Liabilities, as the Company shall determine in its reasonable discretion giving
due regard to reasonable objections by the Buyer, provided that Buyer shall have
the opportunity to participate in the allocation of a portion of the Purchase
Price to the Arrid, Lady's Choice and Lambert Kay assets that constitute
Purchased Assets (and the related liabilities) and such allocation shall be in a
manner consistent with the summary allocation schedule provided in Section 4.2
of the Disclosure Letter. The allocation to be made pursuant to this Section 4.2
shall be consistent with the summary allocation schedule provided in Section 4.2
of the Disclosure Letter, unless otherwise required by any federal, state, local
or foreign taxing authority.

         4.3 Domestic Net Working Capital Adjustment. Following the Closing, the
Purchase Price shall be adjusted on the terms and conditions and for the amounts
set forth below with respect to the Base Net Working Capital.

         (a) "Base Net Working Capital" shall be the average of the Net Working
Capital (excluding intercompany accounts payable and intercompany accounts
receivable) calculated on the last day of each month for the most recent 12
months ended immediately prior to the Closing Date prepared by the Company and
determined in accordance with U.S. GAAP with methodologies consistently applied
to those used in preparing the Financial Statements in Section 8.7(a)(ii).
Within 30 days after the date hereof, the Company shall deliver to Buyer an
illustrative determination of Base Net Working Capital for the 12-month period
ending April 30, 2001, including the components thereof. The Company shall also
deliver to Buyer such an illustrative determination 30 days following each
month-end between the date hereof and the Closing Date for the 12-month period
ending on the last day of such completed month.

         (b) Within 60 days after the Closing Date, Buyer shall prepare and
deliver to the Company a statement setting






                                      -23-

<PAGE>



forth each of the components of Net Working Capital as of the close of business
on the Closing Date (the "Statement of Net Working Capital") and that such
Statement of Net Working Capital has been prepared in accordance with the
requirements of this Section 4.3. As used herein, the term "Net Working Capital"
consists of the following items relating to the Business and included in the
Purchased Assets: (i) net accounts receivable (excluding intercompany accounts
receivable); plus (ii) net inventory; plus (iii) other current assets; minus
(iv) accounts payable (excluding intercompany accounts payable); minus (v)
accrued expenses; provided that the items described in clauses (i) through (v)
above shall be determined in accordance with U.S. GAAP with methodologies
consistently applied to that used in calculating Base Net Working Capital, and,
for purposes of the Statement of Net Working Capital, in each case shall be
determined as of the close of business on the Closing Date.

         (c) During the 45 days immediately following the receipt of the
Statement of Net Working Capital by the Company, the Company and its accountants
shall, at the Company's expense, be entitled to review the Statement of Net
Working Capital (including the determination of Base Net Working Capital) and
any working papers, trial balances and similar materials (collectively, "Working
Papers") relating to the Statement of Net Working Capital prepared by Buyer. The
Statement of Net Working Capital shall become final and binding upon the parties
on the 46th day following delivery thereof unless the Company gives written
notice to Buyer of its disagreement with the Statement of Net Working Capital (a
"Notice of Disagreement") prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted. If a
timely Notice of Disagreement is delivered by the Company, then the Statement of
Net Working Capital (as revised, if at all, in accordance with this Section 4.3)
shall become final and binding upon the parties on the earlier of (i) the date
the parties hereto resolve in writing all differences they have with respect to
any matter specified in the Notice of Disagreement or (ii) the date all matters
in dispute are finally resolved by the Independent Accounting Firm (as defined
below) (the date on which the Statement of Net Working Capital so becomes final
and binding hereafter referred to as the "Final Determination Date"). During the
30 days immediately following the delivery of any Notice of Disagreement, Buyer
and the Company shall seek in good faith to resolve in writing any differences
which they may have



                                      -24-

<PAGE>



with respect to any matters specified in such Notice of Disagreement. During
such period, Buyer and the Company shall have access to the other's Working
Papers prepared in connection with such party's preparation of the Statement of
Net Working Capital and the Notice of Disagreement, as the case may be. At the
end of such 30 day period, Buyer and the Company shall submit the matter to an
independent, national public accounting firm which has no prior relationship
with Buyer or the Company (the "Independent Accounting Firm") for review and
resolution of any and all matters which remain in dispute and which are included
in the Notice of Disagreement. The Independent Accounting Firm shall reach a
final resolution of all matters and shall furnish such resolution in writing to
Buyer and the Company as soon as practicable after such matters have been
referred to the Independent Accounting Firm. Such resolution shall be made in
accordance with this Agreement and will be conclusive and binding upon Buyer and
the Company. The cost of such resolution shall be allocated and paid 50% by
Buyer and 50% by the Company.

         (d) Upon final determination of the Net Working Capital in accordance
with this Section 4.3, a purchase price adjustment will be paid in accordance
with Section 4.3(e) (the "Purchase Price Adjustment").

         (e) If Net Working Capital based upon the Statement of Net Working
Capital is greater than the Base Net Working Capital, then Buyer shall pay to
the Company the amount by which Net Working Capital based on the Statement of
Net Working Capital exceeds Base Net Working Capital; or if Net Working Capital
based on the Statement of Net Working Capital is less than Base Net Working
Capital, then the Company shall pay to Buyer the amount by which the Base Net
Working Capital exceeds Net Working Capital based on the Statement of Net
Working Capital. If Base Net Working Capital is equal to Net Working Capital
based on the Statement of Net Working Capital, no adjustment shall be made to
the Purchase Price pursuant to this Section 4.3(e). If no Notice of Disagreement
has been given by the Company, Buyer shall remit to the Company or the Company
shall remit to Buyer, as the case may be, in immediately available funds, all
amounts constituting a Purchase Price Adjustment within 30 days after receipt by
the Company of the Statement of Net Working Capital in accordance with this
Section 4.3. If the Company gives Buyer a Notice of Disagreement, payment shall
be made in immediately available funds within five



                                      -25-

<PAGE>



business days after the Final Determination Date. Each payment made pursuant to
this Section 4.3 shall include interest on the amount of such payment at an
annual rate equal to the prime interest rate per annum as stated in the Wall
Street Journal on the date of such payment for the period from the Closing Date
to the date of payment.

                                    ARTICLE V

                                     Closing

         5.1 Purchase and Sale; Assumption and Acceptance. At the Closing, on
the terms and subject to the conditions set forth in this Agreement, (i) the
Company and its Subsidiaries that are not Transferred Subsidiaries shall sell,
transfer and assign to Buyer, and Buyer shall purchase from the Company and such
Subsidiaries, all of the Purchased Assets, (ii) the Company and its Subsidiaries
that are not Transferred Subsidiaries shall assign and transfer to Buyer, and
Buyer shall accept and assume, and shall thereafter perform and discharge when
due, and shall hold the Company and its Affiliates harmless from (pursuant to
the terms and conditions of the Indemnification Agreement), all of the Assumed
Liabilities, (iii) the Company shall thereafter perform and discharge when due,
and shall indemnify and hold Buyer and its Affiliates harmless from (pursuant to
the terms and conditions of the Indemnification Agreement), all of the Excluded
Liabilities, and (iv) Buyer and the Company shall effect the deliveries and
payments set forth in Sections 5.3 and 5.4.

         5.2 Closing Date. Subject to the conditions set forth in this
Agreement, the Closing shall occur at the offices of Sullivan & Cromwell, 125
Broad Street, New York, New York, at 9:00 A.M. on the first Business Day
following the satisfaction or waiver of the last to be satisfied or waived of
the conditions set forth in Article X, or at such later time and date as Buyer
and the Company shall agree (the "Closing Date"). The Closing shall be deemed to
take place as of the close of the Company's business in The City of New York on
the Closing Date.

         5.3 Delivery and Payment by Buyer. At the Closing, Buyer shall execute
and deliver to the Company the following:







                                      -26-

<PAGE>



         (a) the Purchase Price, by wire transfer of immediately available funds
to an account previously designated by the Company;

         (b) the Ancillary Agreements;

         (c) such written assumptions of the Company's collective bargaining
agreements as shall comply with such agreements and shall be reasonably
satisfactory to the Company;

         (d) such assumptions in writing as may be required to effectively
assign and transfer any other Contracts or any other of the Purchased Assets or
Assumed Liabilities that may be assigned without the consent of the counterparty
if so assumed by Buyer; and

         (e) such other customary instruments of assumption, filings or
documents, in form and substance reasonably satisfactory to the Company, as may
be required to give effect to this Agreement and the Ancillary Agreements.

         5.4 Deliveries by the Company. At the Closing, the Company shall
execute and deliver to Buyer the following documents:

         (a) the Ancillary Agreements, the Shareholder Indemnity Agreement and
Fund Agreement, executed by all parties thereto;

         (b) customary deeds for commercial transactions of the same type as the
Transactions and reasonably sufficient to enable Buyer's title insurance company
to issue title insurance in respect of the Owned Real Property;

         (c) assignments of the Leased Real Property in recordable form to the
extent necessary;

         (d) the stock certificates representing all of the outstanding shares
of capital stock or other equity interests of the Transferred Subsidiaries;

         (e) all transferable Permits currently held by the Company pertaining
to the Purchased Assets or the Business;







                                      -27-

<PAGE>



         (f) a certification (a form of which is attached hereto as Exhibit L,
"FIRPTA Certificate") that the Company and any Subsidiary of the Company that is
required to sell any of the Purchased Assets to the Buyer hereunder are not
foreign persons in the form set forth in Treasury Regulations Section
1.1445-2(b)(iii)(B). Notwithstanding anything to the contrary contained herein,
if the Company or any such Subsidiary fails to provide the Buyer with the FIRPTA
Certificates, the Buyer shall be entitled to withhold the requisite amount from
the Purchase Price in accordance with Section 1445 of the Code and the Treasury
Regulations promulgated thereunder;

         (g) evidence reasonably satisfactory to Buyer that Carter-Horner Inc.
holds the Carter-Horner Retained Cash Amount; and

         (h) such other customary instruments of transfer, assumptions, filings
or documents, in form and substance reasonably satisfactory to Buyer, as may be
required to give effect to this Agreement and the Ancillary Agreements.

         5.5 Notices of Sale. The Company will prepare and mail on the Closing
Date such notices to any third party under each of the Contracts assigned by the
Company and assumed by Buyer as are necessary or may be reasonably requested by
Buyer advising such other party or parties that such agreements have been
assigned and directing such party or parties to send to Buyer all future notices
and corre spondence relating to such agreements. The Company will promptly
forward to Buyer all correspondence received by the Company after the Closing
Date that relates to the Purchased Assets, the Assumed Liabilities or the
Business.

                                   ARTICLE VI

                  Representations and Warranties of the Company

         Except (i) as set forth in the Disclosure Letter, or (ii) as
specifically disclosed in the Audited Financial Statements, the Interim
Financial Statements or the Company Reports filed on or prior to the date
hereof, the Company hereby represents and warrants, as of the date hereof and as
of the Closing, to Buyer that:



                                      -28-

<PAGE>



         6.1 Organization, Good Standing and Qualification; Title to Transferred
Subsidiaries. (a) The Company and each of the Transferred Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate or
similar power and authority to own and operate the Purchased Assets and to carry
on the Business as presently conducted and is qualified to do business and is
in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of the Purchased Assets or conduct of the Business
requires such qualification, except where the failure to be so qualified or in
good standing, when taken together with all other such failures, is not
reasonably likely to have a Material Adverse Effect or prevent or materially
delay the consummation of the Transactions.

         (b) Each of the outstanding shares of capital stock and other equity
interests of each of the Transferred Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and, except as set forth in Section
2.1(a)(i) of the Disclosure Letter, is owned by the Company free and clear of
all Encumbrances and free of any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other equity interest, except for
restrictions imposed by applicable securities laws. Except as set forth in
Section 2.1(a)(i) of the Disclosure Letter, the Company owns 100% of the
outstanding shares of capital stock and other equity interests of each of the
Transferred Subsidiaries. None of the Transferred Subsidiaries has outstanding
any bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter ("Voting
Debt") or any stockholders agreement or any options or agreements of any kind to
subscribe for shares or other securities of any such Transferred Subsidiary. The
Company has made available to Buyer a complete and correct copy of the
Transferred Subsidiaries' certificates of incorporation and bylaws, each as
amended to date. The Transferred Subsidiaries' certificates of incorporation and
bylaws as so delivered are in full force and effect. Section 2.1(a)(i) of the
Disclosure Letter lists the name and jurisdiction of incorporation of each of
the Transferred Subsidiaries, the name of each of the Transferred Subsidiaries'
parent corporation, a complete and accurate description of the authorized,
issued and outstanding capi-






                                      -29-

<PAGE>

tal stock of each of the Transferred Subsidiaries and states, with respect to
each Transferred Subsidiary, whether such Transferred Subsidiary is dormant or
inactive. In negotiating the Non-Subsidiary Agreements, the Company complied
with all applicable Laws. Each Non-Subsidiary Agreement is a valid and binding
agreement and is in full force and effect. None of the Transferred Subsidiaries
directly or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable for any equity or similar interest in, any
Person with respect to which interest any of the Transferred Subsidiaries is
required to invest or for which any of the Transferred Subsidiaries has
liability which is not limited.

         6.2 Corporate Authority; Stockholder Approval. The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement, the Memorandum of Understanding and the Ancillary Agreements and to
consummate, subject only to the authorization by a resolution adopted by holders
of a majority of the Company Shares entitled to vote thereon (the "Company
Requisite Vote"), the Transactions. The Company Requisite Vote is the only vote
of the holders of the Company's securities necessary to approve this Agreement
and the Transactions. Each of this Agreement and the Memorandum of Understanding
is, and when executed and delivered by the Company each of the Ancillary
Agreements will be, a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").

         6.3 Governmental Filings; No Violations. (a) Other than the filings
and/or notices (i) pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (ii) pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (iii) pursuant to
Environmental Laws, including the New Jersey Industrial Site Recovery Act and
the Connecticut Property Transfer Act, (iv) pursuant to the European Community
Merger Control Regulation and (v) required to be made with any Governmental
Entity in any jurisdiction outside the United States as set forth in Section 6.3
of the Disclosure Letter, no notices, reports or other filings are



                                      -30-

<PAGE>



required to be made by the Company or any Transferred Subsidiary with, nor are
any consents, registrations, approvals, Permits or authorizations required to be
obtained by the Company or any Transferred Subsidiary from, any Governmental
Entity in connection with the execution and delivery of this Agreement and the
Ancillary Agreements by the Company and the consummation by the Company and the
Transferred Subsidiaries of the Transactions, except those that the failure to
make or obtain is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect or prevent, materially delay or materially impair
the ability of the Company to consummate the Transactions.

         (b) The execution, delivery and performance of this Agreement by the
Company does not, and the consummation by the Company of the Transactions will
not, constitute or result in (i) a breach or violation of, or a default under,
the certificate of incorporation or bylaws of the Company or the comparable
governing instruments of any of its Subsidiaries or (ii) a breach or violation
of, a default under, or an acceleration of any obligations or the creation of an
Encumbrance on the Purchased Assets (with or without notice, lapse of time or
both) pursuant to, any Contract not other wise terminable by the other party
thereto on 90 days' or less notice, or any Law or governmental or
non-governmental Permit or (iii) assuming compliance with the matters referred
to in Section 6.3(a), contravene, conflict with, or result in a breach or
violation of any provisions of applicable Law to which the Company or any of
its Subsidiaries is subject or any judgment, injunction, order or decree to
which the Company or any of its Subsidiaries is subject except, in the case of
clauses (ii) and (iii) above, for any breach, violation, conflict, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect.

         6.4 Business Contracts. Section 6.4 of the Disclosure Letter lists any
Contracts not otherwise terminable by the Company or the other party thereto on
90 days' or less notice, the performance of which involved consideration in
excess of $2,500,000 in the fiscal year ended March 31, 2001 or which the
Company reasonably believes will involve consideration in excess of $2,500,000
in any future fiscal year (collectively, "Business Contracts"). The Company has
made available to Buyer a correct and complete copy of each Contract listed in
Section 6.4 of the Disclosure Letter.



                                      -31-

<PAGE>



With such exceptions as are not reasonably likely to have a Material Adverse
Effect, (i) each Contract listed in Section 6.4 of the Disclosure Letter is a
valid and binding agreement and is in full force and effect, (ii) the Company
has not received any written notice from any third party of such third party's
intention not to renew a Business Contract, (iii) the Company has not allowed
any deadline for notice of intent to renew a Business Contract to pass without
giving such notice of its intention to renew such Business Contract, and (iv)
the Company is not in breach or violation of, or default under, any Business
Contract, and, to the knowledge of the Company, there is no event which would
(with the passage of time, notice or both) constitute a breach or default
thereunder by the Company or any of its Subsidiaries.

         6.5 Company Reports; Audited Financial Statements; Interim Financial
Statements. (a) The Company has delivered to Buyer each registration statement,
report, proxy statement or information statement prepared by it since March 31,
2000 (the "Audit Date") including (i) the Company's Annual Report on Form 10-K
for the year ended March 31, 2000, and (ii) the Company's Quarterly Report on
Form 10-Q for the period ended December 31, 2000, each in the form (including
exhibits, annexes and any amendments made prior to the date of this Agreement
thereto) filed with the Securities and Exchange Commission (the "SEC") (collec-
tively, the "Company Reports"). As of their respective dates (or, if amended, as
of the date of such amendment), the Company Reports, insofar as they relate to
the Business, the Purchased Assets and the Assumed Liabilities, did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. As of the
respective dates on which they were filed and, if amended, on the date of such
amendment, the Company Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder. Each of the combined balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and schedules)
fairly presents, or will fairly present, the combined financial position of the
Company and its Subsidiaries as of its date and each of the combined statements
of earnings, retained earnings and comprehensive earnings and combined
statements of cash flows and of changes in financial position included in or



                                      -32-

<PAGE>



incorporated by reference into the Company Reports (including any related notes
and schedules) fairly presents, or will fairly present, the results of
operations, retained earnings and changes in financial position, as the case may
be, of the Company and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to notes and normal year-end
audit adjustments that will not be material in amount or effect), in each case
in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted
therein.

         (b) The combined balance sheets and the combined statements of earnings
included in the Audited Financial Statements, the Interim Financial Statements
and the financial statements delivered in accordance with Section 8.7 fairly
present the combined net assets and results of operations of the Purchased
Assets and the Assumed Liabilities; the "Arrid" and "Lady's Choice" product
lines and the Lambert Kay business; and the Purchased Assets and the Assumed
Liabilities (excluding the "Arrid" and "Lady's Choice" product lines and the
Lambert Kay business), as the case may be (but excluding, in the case of the
Audited Financial Statements and Interim Financial Statements, the Segregated
Assets and Liabilities), as of their respective dates, in each case in
accordance with GAAP consistently applied during the periods involved and the
accounting principles summarized therein, except as may be noted therein, and
subject (in the case of the Interim Financial Statements and the interim
financial statements delivered in accordance with Section 8.7) to normal
year-end adjustments that will not be material in amount or effect and the
absence of footnotes and similar presentation items therein. Except as set forth
in the Audited Financial Statements, the Interim Financial Statements and the
financial statements delivered in accordance with Section 8.7, and except for
liabilities and obligations under this Agreement, none of the Company nor any of
its Subsidiaries has any liabilities or obligations of any nature required by
GAAP to be set forth on a combined balance sheet of the Purchased Assets and the
Assumed Liabilities or in the notes thereto which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect.

         (c) Section 6.5(c) of the Disclosure Letter sets forth (i) the
outstanding amount of indebtedness for money borrowed of the Transferred
Subsidiaries and any other






                                      -33-

<PAGE>



indebtedness for money borrowed to be assumed by the Buyer as of the date set
forth therein, and (ii) a list of the Contracts containing the terms applicable
to such indebtedness.

         (d) There has not been a material adverse change in the financial
position of the Purchased Assets and Assumed Liabilities taken as a whole
(excluding the Segregated Assets and Liabilities) as of March 31, 2001, as
compared to the financial position of the Purchased Assets and Assumed
Liabilities taken as a whole (excluding the Segregated Assets and Liabilities)
set forth in the audited combined balance sheet included in the Audited
Financial Statements.

         (e) The statement of earnings and the statement of cashflows referred
to in clause (v) of the first sentence of Section 8.7(a), collectively with the
reconciliations referred to therein, will present net sales of the Purchased
Assets and Assumed Liabilities (excluding the Segregated Assets and Liabilities)
of not less than $530,000,000; earnings before interest and taxes of the
Purchased Assets and Assumed Liabilities (excluding the Segregated Assets and
Liabilities) of not less than $80,000,000; earnings before interest, taxes,
depreciation and amortization of the Purchased Assets and Assumed Liabilities
(excluding the Segregated Assets and Liabilities) of not less than $97,000,000;
and capital expenditures of the Purchased Assets and Assumed Liabilities
(excluding the Segregated Assets and Liabilities) of not more than $14,000,000.

         6.6 Absence of Certain Changes. Except as reflected, reserved or
otherwise disclosed in the Audited Financial Statements, the Interim Financial
Statements, the financial statements included in or incorporated by refer ence
in the Company Reports, or as contemplated by this Agreement, (I) since the
Audit Date, the Company and its Subsidiaries have conducted the Business only
in, and have not engaged in any material transaction other than according to,
the ordinary and usual course of business and there has not been (a) as of the
date of this Agreement, any material action taken by the Company or its
Subsidiaries that would have been prohibited under Sections 8.1(a)(ii)(B),
8.1(a)(ii)(C), 8.1(b)(i) through (iv), 8.1(b)(ix), 8.1(b)(xi) through (xiii),
8.1(b)(xv) and 8.1(b)(xvi) through (xviii), (b) any change in the financial
condition, business or results of operations of the Business that,



                                      -34-

<PAGE>



individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect or (c) any change by the Company in any of its material
accounting principles, practices or methods for the Business, other than any
such changes made as a result of any change in GAAP as applicable to the Company
or the Business, and (II) since the Audit Date and prior to the date of this
Agreement, there has not occurred any casualty loss involving an amount in
excess of $2,500,000 with respect to any personal property or Owned Real
Property that comprise Purchased Assets, whether or not covered by insurance.

         6.7 Employee Benefits. (a) A copy of each material Compensation and
Benefit Plan and each material International Compensation and Benefit Plan and
any trust agreement or insurance contract forming a part of such plans has been
made available to Buyer prior to the date hereof, other than International
Compensation and Benefit Plans that are maintained by Governmental Entities. The
material Compensation and Benefit Plans and material International Compensation
and Benefit Plans are listed in Section 6.7(a) of the Disclosure Letter, other
than International Compensation and Benefit Plans that are maintained by
Governmental Entities.

         (b) A list of all Available Employees as of March 31, 2001, other than
Employees of the Transferred Subsidiaries, which indicates those Employees who
are "Leave Recipients" as defined in Section 9.1(c) is set forth on Section
6.7(b)(1) to the Disclosure Letter and a list of all Transition Employees to be
retained by the Company is set forth on Section 6.7(b)(2) of the Disclosure
Letter. Approximately five Business Days prior to the Closing Date, the Company
will provide to Buyer a list of (i) current employees of the Transferred
Subsidiaries, (ii) all Available Employees as of such date and (iii) those
Employees of the Business involuntarily separated from employment with the
Company during the 90 days preceding the date thereof.

         (c) The Retirement Plan for Bargaining Employees of the Company (the
"Assumed Pension Plan") is in substantial compliance with ERISA and all other
applicable Laws, and has received a favorable determination letter from the
Internal Revenue Service (the "IRS") with respect to its qualification under
Section 401(a) of the Code, and the Company is not aware of any circumstances
likely to result



                                      -35-

<PAGE>



in revocation of any such favorable determination letter. There is no pending
or, to the knowledge of the Company, threatened material litigation, dispute or
governmental audit or investigation relating to the Assumed Pension Plan or any
other Compensation and Benefit Plan that Buyer is assuming or with respect to
which Buyer would otherwise have liability. Neither the Company nor any of its
Subsidiaries has engaged in a transaction with respect to the Assumed Pension
Plan that, assuming the taxable period of such transaction expired as of the
date hereof or the Closing Date, as applicable, would subject the Company or any
of its Subsidiaries to a material tax or penalty imposed by either Section 4975
of the Code or Section 502 of ERISA.

         (d) As of the date hereof, no liability under Subtitle C or D of Title
IV of ERISA or Part III of Title I of ERISA has been or is expected to be
incurred by the Company or any Subsidiary with respect to the Assumed Pension
Plan.

         (e) No Compensation and Benefit Plan that is subject to Title IV of
ERISA (a "Title IV Plan") is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Title IV Plan a plan described in section
4063(a) of ERISA.

         (f) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and
applicable Law, including but not limited to ERISA and the Code.

         (g) With respect to the Assumed Pension Plan, as of the last day of the
most recent plan year ended prior to the date hereof, the actuarially determined
present value of all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions
contained in the Pension Plan's most recent actuarial valuation), did not exceed
the then current value of the assets of such Pension Plan.

         (h) All International Compensation and Benefit Plans comply in all
respects with applicable Law except as is not reasonably expected to have a
Material Adverse Effect. The Transferred Subsidiaries have no material unfunded
liabilities calculated on a going-concern basis with respect to any such plan
that is a pension benefit plan, except as permitted or required by applicable
Laws and



                                      -36-

<PAGE>



reflected in the Audited Financial Statements or the Interim Financial
Statements.

         (i) The consummation of the Transactions will not, either alone or in
connection with another event, (x) entitle any Available Employee to severance
pay or any other payments, except as expressly provided in this Agreement or (y)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such Available Employee.

         6.8 Litigation and Liabilities. Except as reflected, reserved or
otherwise disclosed in the Audited Financial Statements and the Interim
Financial Statements, there are no (i) civil, criminal or administrative
actions, suits, claims, hearings, investigations, arbitrations or proceedings
("Claims") pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary relating to the Business or (ii) Liabilities which
would be required to be disclosed in the Audited Financial Statements or Interim
Financial Statements under GAAP if occurring on a date covered by such financial
statements ("Obligations"), in each case that would constitute Assumed
Liabilities, except for such Obligations as are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.

         6.9 Compliance with Laws; Permits. (a) Each of the Company and its
Subsidiaries has in effect all federal, state, local and foreign governmental
Permits necessary for it to own, lease or operate all of the properties and
assets included in the Purchased Assets and to conduct the Business and to
operate the Purchased Assets as now conducted or operated, and there has
occurred no default under any such Permit, and no proceeding is pending that
seeks, and to the knowledge of the Company, no event has occurred that permits,
or upon the giving of notice or lapse of time or otherwise would permit,
revocation, non-renewal, modification, suspension or termination of any Permit,
except for lack of or deficiencies in Permits and except for such defaults under
Permits and events which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect. The Business has not been, and is not
being, conducted in violation of any Order or Permit of any court or
Governmental Entity (collectively, "Laws"), except for violations that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect.



                                      -37-

<PAGE>



         (b) As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration under the Federal Food, Drug and Cosmetic Act (the "FDCA")
or the U.S. Department of Justice under the Controlled Substances Act, 21 U.S.C.
Section 801, et seq (the "CSA"), or any similar agency, rule or regulation of
any other jurisdiction, which is manufactured, tested, distributed, held and/or
marketed by the Business or the Purchased Assets, such product is being
manufactured, held and distributed in compliance with all applicable
requirements under the FDCA, the CSA and such applicable rules and regulations
of any other jurisdictions, including, but not limited to, those relating to
investigational use, premarket approval, good manufacturing practices, labeling,
promotion and advertising, record keeping and filing of reports and security,
except for such failures so to comply that, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect.

         6.10 Environmental Matters. Except for such matters as are not
reasonably likely to have individually or in the aggregate a Material Adverse
Effect:

         (a) the Purchased Assets:

         (i) are and have been in substantial compliance with all applicable
Environmental Laws;

         (ii) are not the subject of any pending or, to the knowledge of the
Company, any threatened, investigation or written notice from any Governmental
Entity alleging the violation of any applicable Environmental Laws;

         (iii) are not currently subject to any Claim or Order arising under any
Environmental Law;

         (iv) have not had any air emissions or wastewater discharges of
Hazardous Substances except as permitted under applicable Environmental Laws;
and

         (b) there are no facts or circumstances whereby the ownership,
operation (including cessation of operations), or transfer of the Purchased
Assets would reasonably be expected to result in any Liabilities under any
Environmental Law.



                                      -38-

<PAGE>



         6.11 Labor Matters. As of the date hereof, neither the Company nor any
of its Subsidiaries is the subject of, nor, to the Knowledge of the Company, has
there been threatened, any material Claim asserting that the Company or any of
its Subsidiaries has committed an unfair labor practice with respect to
employees of the Business or seeking to compel it to bargain with any labor
union or labor organization with respect to employees of the Business nor is
there pending or, to the knowledge of the Company, threatened, nor has there
been for the five years prior to the date of this Agreement, any organized
effort or demand for recognition by any labor organization or any labor dispute
or slow-down that is material to the operations of any of the plants comprising
the Purchased Assets. There has not been, for the five years prior to the date
of this Agreement, and there is not pending, nor, to the Knowledge of the
Company, has there been threatened, any labor strike, walk-out, work stoppage or
lockout with respect to employees of the Business.

         6.12 Insurance. True and complete copies of all material fire and
casualty, general liability, business interruption, product liability, workers'
compensation, disability and sprinkler and water damage insurance policies
maintained by the Company or any of its Subsidiaries have been made available to
Buyer and such policies are in full force and effect. The Company or relevant
Subsidiary has paid all premiums under such policies and is not in default with
respect to its obligations thereunder. All material claims made by the Company
under such policies during the past year are described in Section 6.12 of the
Disclosure Letter.

         6.13 Title to Tangible Personal Property. The Company or a wholly owned
Subsidiary has good title to, or a valid leasehold interest in, all Owned
Tangible Personal Property and all Leased Tangible Personal Property, free and
clear of any Encumbrances, other than Permitted Encumbrances. All of the
fixtures, machinery, equipment and other tangible personal property and assets
owned or used by the Company and its Subsidiaries in the Business are in good
condition and repair, except for ordinary wear and tear not caused by neglect,
and are usable in the ordinary course of business, except that, with respect to
any matter covered by this sentence which would not, individually or in the
aggregate, reasonably be likely to have a Material Adverse Effect.



                                      -39-

<PAGE>



         6.14 Title to Owned and Leased Real Properties; Absence of
Encumbrances. (a) Section 6.14 of the Disclosure Letter sets forth a list of all
Owned Real Property and all Leased Real Property used to carry out the Business
as presently conducted. None of the Owned Real Property or Leased Real Property
is leased or licensed by the Company to, or otherwise used by, any other Person.

         (b) The Company has not received written notice of any uncured default,
and to the knowledge of the Company there are no pending uncured defaults, under
the lease documents pertaining to any material Leased Real Property, except for
such matters as are reasonably susceptible of cure without material expense or
delay, and are not reasonably likely to disturb Buyer's use of the Leased Real
Property affected thereby to carry on the Business as presently conducted.

         (c) Except as disclosed in Section 6.14 of the Disclosure Letter, the
Company or a Subsidiary has good title to, or, with respect to leasehold
interests, a valid leasehold interest in, the Owned Real Property and the Leased
Real Property, as the case may be, free and clear of all Encumbrances, except
for Permitted Encumbrances and such imperfections of title, liens and easements
as will not, individually or in the aggregate, materially impair present
business operations at such properties.

         (d) Except as disclosed in Section 6.14 of the Disclosure Letter, no
consent to assignment of Leased Real Property will be required in connection
with the Purchase.

         6.15 Adequacy and Sufficiency of Purchased Assets. (a) This Agreement,
the Ancillary Agreements and the instruments and documents to be delivered by
the Company and the Subsidiaries to Buyer at or following the Closing shall be
adequate and sufficient to transfer to Buyer the Company's and its Subsidiaries'
entire right, title and interest in and to the Purchased Assets. The Purchased
Assets when taken together with the rights and services under the Ancillary
Agreements are sufficient in all material respects to carry out the Business as
presently conducted by the Company and its Subsidiaries.

         (b) To the Company's knowledge, Section 6.15 of the Disclosure Letter
contains a true and complete list of (i) all buildings and parcels owned or
leased by the Company





                                      -40-

<PAGE>



or any of its Subsidiaries during the ten years prior to the date of this
Agreement that were used primarily in connection with the operation of the
Business and all buildings and parcels owned or leased by the Transferred
Subsidiaries during the ten years prior to the date of this Agreement other than
in connection with the Business but which, in each case, do not comprise
Purchased Assets, (ii) all products marketed and sold by the Company or its
Subsidiaries in connection with the Business and all products marketed and sold
by the Transferred Subsidiaries other than in connection with the Business, in
each case, during the ten years prior to the date of this Agreement which are
not currently marketed and sold by the Company or its Subsidiaries, and (iii)
operations of the Company or its Subsidiaries relating to the Business and
operations of the Transferred Subsidiaries other than in connection with the
Business, in each case, which have become discontinued operations of the Company
or its Subsidiaries during the ten years prior to the date of this Agreement.

         6.16 Intellectual Property. (a) The Company and/or its Subsidiaries
owns, or is licensed or otherwise possesses the right to use, in each case free
and clear of all Encumbrances, all Business-Related Intellectual Property,
except for any such failures to own, be licensed or possess as are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect, and all material patents, trademarks, trade names, service marks and
copyrights which comprise the Business-Related Intellectual Property and are
used in the Business as currently conducted, are valid and subsisting, except
for such failures to be valid and subsisting as are not individually or in the
aggregate, reasonably likely to have a Material Adverse Effect. Section 6.16 of
the Disclosure Letter contains a true and complete list as of the date of this
Agreement of all material license agreements to which the Company or any of its
Subsidiaries is a party pursuant to which third parties are licensed to use
Business-Related Intellectual Property.

         (b) Except for such matters as are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect:

         (i) neither the Company nor any of its Subsidiaries is, nor will it be
as a result of the execution and delivery of this Agreement or the Ancillary
Agreements






                                      -41-

<PAGE>



or the contemplated transfer of the Purchased Assets hereunder, in violation of
any Third Party Intellectual Property Rights;

         (ii) no Claims involving the Company or its Subsidiaries with respect
to the Business-Related Intellectual Property are currently pending or, to the
knowledge of the Company, threatened by any Person; and

         (iii) to the knowledge of the Company, there is no unauthorized use,
infringement or misappropriation of any of the Business-Related Intellectual
Property by any third party.

         6.17 Brokers and Finders. Neither the Company nor any of its
Subsidiaries has incurred any Liabilities for any brokerage fees, commissions or
finders' fees in connection with the Transactions for which Buyer will be
liable.

         6.18 Taxes. (a) Definitions. As used in this Agreement, the term (i)
"Tax" (including, with correlative meaning, the terms "Taxes" and "Taxable")
includes all federal, state, local and foreign income, profits, franchise, gross
receipts, environmental, customs duty, capital stock, severance, stamp, payroll,
sales, employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever (including any withholding taxes for which any Transferred
Subsidiary is responsible as a result of distributions or any other payments to
the Company and its Subsidiaries or any other Persons), together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, (ii) "Tax Authority" means
any Governmental Entity responsible for the imposition of Tax, and (iii) "Tax
Return" includes all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be
supplied to a Tax Authority relating to Taxes.

         (b) Company and Subsidiaries Other Than Transferred Subsidiaries. The
Company and each of its Subsidiaries other than the Transferred Subsidiaries (i)
have prepared in good faith and duly and timely filed (taking into account any
extensions of time within which to file) all Tax Returns required to be filed by
any of them



                                      -42-

<PAGE>



and all such tax returns are true, correct and complete in all material
respects; (ii) have paid all Taxes that are shown as due on such filed Tax
Returns; and (iii) have not waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. As of the date hereof, there are not pending or, to the knowledge of
the Company, threatened in writing, any audits, examinations, investigations or
other proceedings in respect of Taxes or Tax matters of the Company or any of
its subsidiaries (other than the Transferred Subsidiaries).

         The Company and any Subsidiary that is required to sell any of the
Purchased Assets to the Buyer hereunder are not foreign persons as defined in
Treasury Regulations Section 1.1445-2(b)(2). There are (and as of immediately
following the Closing there will be) no Liens (as defined below) on any of the
Purchased Assets.

         (c) Transferred Subsidiaries. The Company represents and warrants as to
each of the Transferred Subsidiaries as follows:

         (i) Each Transferred Subsidiary has duly and timely filed (taking into
account any extension of time within which to file) all Tax Returns required to
be filed by it. All Tax Returns filed by such Transferred Subsidiary are true,
correct and complete in all material respects.

         (ii) Each Transferred Subsidiary has paid all Taxes that are shown as
due on such filed Tax Returns, and has withheld and remitted to the appropriate
Tax Authority, with respect to amounts paid or owing to employees, creditors,
and third parties, all Taxes it is required to have withheld.

         (iii) No Transferred Subsidiary has waived any statute of limitations
with respect to Taxes or agreed to any extension of time with respect to a tax
assessment or deficiency, nor is there any tax deficiency outstanding, proposed
in writing or assessed against any Transferred Subsidiary.

         (iv) There are not pending or, to the knowledge of the Company,
threatened in writing, any audits, examinations, investigations or other
proceedings in respect of the Taxes or Tax matters of the Transferred
Subsidiaries.



                                      -43-

<PAGE>



         (v) Each Transferred Subsidiary, other than Carter-Wallace (N.Z.) Ltd.,
is treated as a corporation for U.S. federal income tax purposes. Carter-Wallace
(N.Z.) Ltd. has validly elected on Form 8832 to be treated as a disregarded
entity for U.S. tax purposes.

         (vi) There are (and as of immediately following the Closing there will
be) no Encumbrances on the assets of any Transferred Subsidiary relating to or
attributable to Taxes, other than Encumbrances for personal property taxes not
yet due and payable.

         (vii) No Transferred Subsidiary is a party to a Tax sharing, Tax
indemnity, Tax allocation or similar contract (whether or not written), nor does
or will any Transferred Subsidiary owe any amount under such agreement.

         (viii) No adjustment relating to any Tax Return filed by any
Transferred Subsidiary has been proposed in writing by any Tax Authority to any
Transferred Subsidiary which has not been resolved to the satisfaction of the
relevant Tax Authority.

         (ix) No Transferred Subsidiary is or has been included in any
"consolidated," "unitary," "combined" or similar Tax Return provided for under
the laws of the United States or any foreign jurisdiction for any taxable period
for which the statute of limitations has not yet expired.

         (x) No power of attorney has been granted by or imposed upon any
Transferred Subsidiary with respect to any matter relating to Taxes.

         (xi) No Transferred Subsidiary has received written notice of any claim
made by a Tax authority in a jurisdiction where such Transferred Subsidiary does
not file Tax Returns, that such Transferred Subsidiary is or may be subject to
taxation by that jurisdiction.

         (xii) No Transferred Subsidiary is, or has been for any prior Taxable
Period, a passive foreign investment corporation as defined in Section 1297(a)
of the Code.

         (xiii) The unpaid Taxes of the Transferred Subsidiaries do not, as of
December 31, 2000, exceed the reserve for Taxes (other than any reserve for
deferred Taxes



                                      -44-

<PAGE>



of the Transferred Subsidiaries established to reflect timing differences
between book and Tax income) set forth on the face of the balance sheet for the
Transferred Subsidiaries included in the Interim Financial Statements, and the
unpaid Taxes of the Transferred Subsidiaries will not, as of the Closing Date,
exceed that reserve as adjusted for the passage of time through the Closing
Date.

                                   ARTICLE VII

                     Representations and Warranties of Buyer

         Buyer hereby represents and warrants, as of the date hereof and as of
the Closing, to the Company as follows:

         7.1 Organization, Good Standing and Qualification. Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.

         7.2 Corporate Authority. (a) No vote of the holders of the capital
stock of Buyer is necessary to approve this Agreement, the Memorandum of
Understanding or the Transactions. Buyer has the requisite power and authority
and has taken all action necessary in order to execute and deliver this
Agreement and the Memorandum of Understanding and to consummate the
Transactions. Each of this Agreement and the Memorandum of Understanding is a
valid and binding agreement of Buyer enforceable against Buyer in accordance
with its terms, subject to the Bankruptcy and Equity Exception.

         (b) Each of Strategic Buyer and Buyer has the requisite power and
authority and has taken all action necessary in order to execute and deliver the
Product Line Purchase Agreement. The Product Line Purchase Agreement is a valid
and binding agreement of Strategic Buyer and Buyer, enforceable against each of
them in accordance with its terms, subject to the Bankruptcy and Equity
Exception.

         7.3 Governmental Filings; No Violations. (a) Other than the filings
and/or notices (i) pursuant to the Exchange Act, (ii) pursuant to the HSR Act,
(iii) pursuant to Environmental Laws, including the New Jersey Industrial Site
Recovery Act and the Connecticut Property Transfer Act, (iv) pursuant to the
European



                                      -45-

<PAGE>



Community Merger Control Regulation and (v) required to be made with any
Governmental Entity in any jurisdiction outside the United States, no notices,
reports or other filings are required to be made by Buyer with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by Buyer from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by Buyer and the consummation by Buyer
of the Transactions, except those that the failure to make or obtain are not,
individually or in the aggregate, likely to prevent, materially delay or impair
the ability of Buyer to consummate the Transactions.

         (b) The execution, delivery and performance of this Agreement and the
Memorandum of Understanding by Buyer does not, and the consummation by Buyer of
the Transactions will not constitute or result in (i) a breach or violation of,
or a default under, the organizational documents and governing instruments of
Buyer or (ii) a breach or violation of, a default under, or an acceleration of
any obligations or the creation of an Encumbrance on the assets of Buyer (with
or without notice, lapse of time or both) pursuant to, any agreement, lease,
contract, note, mortgage, indenture or other obligation binding upon Buyer or
any Law or governmental or non-governmental Permit to which Buyer is subject,
except, in the case of clause (ii) above, for breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to prevent, materially delay or impair the ability of Buyer to
consummate the Transactions. Buyer does not have any Subsidiaries.

         7.4 Funds. Buyer has received and delivered to the Company executed
commitment letters with respect to debt financing of up to $420 million (the
"Financing Arrangements") and equity financing of up to $356 million (the
"Equity Arrangements" and, collectively with the Financing Arrangements, the
"Arrangements"). When funded in accordance with their terms, the Arrangements
will provide Buyer with funds in an aggregate amount sufficient to enable Buyer
to consummate the Transactions and pay all fees, expenses and costs in
connection with the negotiation, execution and performance of this Agreement and
the Ancillary Agreements. The Financing Arrangements and the Equity Arrangements
remain in full force and effect.



                                      -46-

<PAGE>



         7.5 Ownership of Shares. Neither Buyer nor any of its Subsidiaries
beneficially owns any (i) shares of any class of stock of CPI or (ii) Company
Shares.

                                  ARTICLE VIII

                                Certain Covenants

         8.1 Interim Operations.

         (a) From the date hereof until the Closing Date, the Company shall, and
shall cause its Subsidiaries to:

         (i) operate the Business in the ordinary course of business, consistent
with past practice, and, to the extent consistent with such operation, use
commercially reasonable efforts to: (A) preserve the present business
organization intact; and (B) preserve any beneficial business relationships with
all customers, suppliers, and others having business dealings with the Business;
and

         (ii) maintain (A) the Purchased Assets in such condition and repair as
is consistent with past practice, (B) insurance upon all of the Purchased Assets
and with respect to the conduct of the Business in full force and effect,
comparable in amount, scope, and coverage to that in effect on the date of this
Agreement, and apply all insurance proceeds from coverage of the Purchased
Assets to restore such Purchased Assets or otherwise hold such proceeds for the
Buyer's account, and (C) all Permits in full force and effect; and

         (iii) conduct their respective advertising activities in a manner which
is not materially inconsistent with the Company's advertising budget in effect
as of the date of this Agreement.

         (b) Except in connection with the Mergers and the other transactions
contemplated by the Merger Agreement, from the date of this Agreement until the
Closing Date, neither the Company nor any of its Subsidiaries shall take any of
the following actions, to the extent that any such action relates to the
Purchased Assets, the Assumed Liabilities or the Business:



                                      -47-

<PAGE>



         (i) subject any of the Purchased Assets to any further material
Encumbrance, other than Permitted Encumbrances and other than in the ordinary
course of business, consistent with past practice;

         (ii) transfer, sell or otherwise convey any part of the Purchased
Assets or make any material acquisition of assets which would become part of the
Purchased Assets, except in the ordinary course of business, consistent with
past practice;

         (iii) make any material Tax election or settle or compromise any
material Tax liability without the Buyer's prior written approval, except in the
ordinary course of business consistent with past practice (including, without
limitation, with respect to the Transferred Subsidiaries);

         (iv) grant, convey or sell any option or right to purchase or lease any
of the Purchased Assets, except in the ordinary course of business, consistent
with past practice;

         (v) pay or promise to pay, any bonus, profit-sharing or special
compensation to the Available Employees or make or promise to make any increase
in the compensation, severance or other benefits payable or to become payable to
any of such employees, except (A) as required by applicable Laws, (B) to satisfy
obligations under the terms of any agreement or Compensation and Benefit Plan or
International Compensation and Benefit Plan in effect as of the date hereof, (C)
for increases in compensation that are made in the ordinary course of business
consistent with past practice (which shall include normal periodic performance
reviews and related compensation and benefit increases) and as set forth on
Section 8.1(b)(v) of the Disclosure Letter, (D) in respect of Available
Employees covered by collective bargaining agreements, as would be permitted
under Section 8.1(b)(vii), and (E) for employment arrangements for or grants of
awards to, newly hired employees in the ordinary course of business consistent
with past practice, and who are hired in accordance with clause (viii) below and
(F) as set forth on Section 8.1(b)(v) of the Disclosure Letter;

         (vi) except in the ordinary course of business consistent with past
practice or as required by applicable Laws, enter into or terminate any material
Contract, or amend, modify or make any change in, or waive any material benefit
of, any of its material Contracts;



                                      -48-

<PAGE>



         (vii) enter into any collective bargaining agreements covering
employees of the Business, except for the contemplated actions described in
Section 8.1(b)(vii) of the Disclosure Letter or as required by applicable Laws;

         (viii) involuntarily separate from employment with the Company any
employee of the Business without due cause or hire, without the prior written
consent of Buyer which shall not be unreasonably withheld, any employee who
would become an Available Employee and who would be entitled to an annual base
salary greater than $100,000;

         (ix) split, combine or reclassify any of the capital stock of the
Transferred Subsidiaries or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
capital stock of the Transferred Subsidiaries;

         (x) with respect to the Business or Purchased Assets, incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
Person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities, or guarantee any debt securities of another Person, except
for the endorsement of checks in the ordinary course of business and the
extension of credit in the ordinary course of business, or make any loans,
advances or capital contributions to, or investments in, any other Person, other
than (A) to any Transferred Subsidiary or (B) advances to employees in the
ordinary course of business consistent with past practice;

         (xi) repurchase, redeem or otherwise acquire any shares of capital
stock or other securities of, or other ownership interests in, any of the
Transferred Subsidiaries;

         (xii) issue, deliver or sell any shares of capital stock of any of the
Transferred Subsidiaries, or any securities convertible into or exercisable or
exchangeable for shares of capital stock of any of the Transferred Subsidiaries,
or any rights, warrants or options to acquire any shares of common stock of any
of the Transferred Subsidiaries, other than (A) issuances pursuant to stock-
based awards or options that are outstanding on the date hereof or are granted
in accordance with the following clause (B), and (B) additional options or
stock-based awards to acquire shares of capital stock of any of the Transferred



                                      -49-

<PAGE>



Subsidiaries required to be granted under the terms of stock plans as in effect
on the date hereof;

         (xiii) amend the certificate of incorporation or bylaws or other
comparable organizational documents or amend any material terms of the
outstanding securities of any of the Transferred Subsidiaries;

         (xiv) except for the items currently contracted for by the Company and
the items contemplated by the Company's most recent capital expenditure budget
previously provided to Buyer, make or agree to make any new capital expenditure
or expenditures other than expenditures which, individually, are in excess of
$500,000 or, in the aggregate, are in excess of $2,500,000, with respect to any
of the Transferred Subsidiaries;

         (xv) permit any material insurance policy as a beneficiary with respect
to the Business or Purchased Assets or loss payable payee to be canceled or
terminated;

         (xvi) incur or issue any indebtedness or guaran tee that would
constitute an Assumed Liability or issue or sell any debt securities or warrants
or other rights to acquire any debt securities that would constitute Assumed
Liabilities, except, in any such case, in the ordinary course of business, or
make any loans, advances or capital contributions to, or investments in, any
other Person that would constitute Purchased Assets, other than (A) to any
Transferred Subsidiary, or (B) advances to employees in the ordinary course of
business consistent with past practice;

         (xvii) adopt any change, other than in the ordinary course of business
consistent with past practice or as required by the SEC, GAAP or by Law, in its
accounting policies, procedures or practices;

         (xviii) settle, pay, discharge or satisfy any material Claim pending
against the Company or any of its Subsidiaries relating to the Purchased Assets
or the Business, except in the ordinary course of business;

         (xix) with respect to each of the Transferred Subsidiaries, (A) declare
or pay any dividends or other distributions of any sort in respect of its
capital stock or similar payments to the direct or indirect holders of its
capital stock, or (B) settle, pay, discharge or satisfy any



                                      -50-

<PAGE>



indebtedness (including intercompany accounts) except as expressly contemplated
by Section 8.8 hereof and except for payments on third-party indebtedness not to
exceed $1,658,347 in the aggregate, in each case except with respect to
Carter-Horner Inc. in order to cause the aggregate value of cash, cash
equivalents and short-term investments held by Carter-Horner Inc. as of the
Closing Date to equal the Carter-Horner Retained Cash Amount;

         (xx) engage in any practice or promotion materially inconsistent with
the Company's past practices that is designed to materially increase trade
inventories.

         (xxi) authorize or enter into an agreement to do any of the foregoing.

         (c) Except as otherwise described in Section 8.1 and Section 8.7(c),
nothing in this Agreement shall be construed or interpreted to prevent the
Company or any Subsidiary from (i) paying or making regular, special or
extraordinary dividends or other distributions consisting of cash, cash
equivalents or short term investments held by any Persons other than the
Transferred Subsidiaries (not including Carter-Horner Inc. pursuant to Section
8.1(b)(xix)) and with respect to Carter-Horner Inc. only in respect of cash,
cash equivalents and short term investments in excess of the Carter-Horner
Retained Cash Amount or; (ii) making, accepting or settling intercompany
advances to, from or with one another; (iii) subject to clause (i) above,
causing any Subsidiary to pay or distribute to the Company all cash, money
market instruments, bank deposits, certificates of deposit, other cash
equivalents, marketable securities and other investment securities then owned or
held by such Subsidiary; (iv) causing any Subsidiary which owns or holds any
Excluded Assets to transfer or otherwise convey such assets to the Company or
its nominee prior to the Closing by means of a dividend, distribution in kind or
other transfer without consideration; (v) engaging in any other transaction
incident to the normal cash management procedures of the Company and its
Subsidiaries, including, without limitation, short-term investments in bank
deposits, money market instruments, time deposits, certificates of deposit and
bankers' acceptances and borrowings for working capital purposes and purposes of
providing additional funds to Subsidiaries made, in each case, in the ordinary
course of business, consistent with past practice; or (vi) entering



                                      -51-

<PAGE>



into the Merger Agreement or complying with the terms thereof.

         8.2 Access. (a) Upon reasonable notice, and except as may otherwise be
required by applicable Laws, the Company shall (and the Company shall cause its
Subsidiaries to) afford Buyer's officers, employees, counsel, accountants and
other authorized representatives (including representatives of entities
providing or arranging financing for the Buyer) ("Representatives") reasonable
access, during normal business hours throughout the period prior to Closing, to
their respective properties, books, Contracts and records that relate primarily
to the Business, the Purchased Assets or the Assumed Liabilities and, during
such period, the Company shall (and shall cause its Subsidiaries to) furnish
promptly to Buyer all such information and reasonable access to the Company's
employees, in each case to the extent related to the Business, the Purchased
Assets or the Assumed Liabilities, as Buyer or its Representatives may
reasonably request; provided that no investigation pursuant to this Section
shall affect or be deemed to modify any representation or warranty made by the
Company; provided, further, that the foregoing shall not require the Company to
furnish Buyer with documents or information concerning its toothpaste/tooth
polish or antiperspirant/deodorant businesses which the Company reasonably
determines to have competitive significance; and provided, further, that the
foregoing shall not require the Company to permit any inspection, or to disclose
any information, which in the reasonable judgment of the Company, would result
in the disclosure of any trade secrets of third parties or violate any
obligation of the Company with respect to confidentiality, provided that the
Company shall have used commercially reasonable efforts to obtain the consent of
such third party to such inspection or disclosure. All requests for information
made pursuant to this Section shall be directed to an executive officer of the
Company or such Person as may be designated by any such officer. All such
information shall be governed by the terms of the Confiden tiality Agreements.

         (b) Within 14 days following the date of this Agreement, the Company
and Buyer shall establish a Steering Committee comprised of at least one senior
executive of Buyer and one senior executive of the Company (the "Steering
Committee"). During the period prior to the Closing, the Parties shall cause
members of the Steering Committee to



                                      -52-

<PAGE>



discuss in good faith the development of reasonable plans, protocols and
arrangements designed to facilitate (i) the rapid integration of the Company's
information technology systems immediately following the Closing and (ii) the
separation of the Company's accounting records, inventories, receivables and
bank accounts as between the Business and the Company's other businesses. The
plans, protocols and arrangements with respect to information technology matters
shall address, among other things, the installation by Buyer of hardware in the
Company's facilities, the training of Company employees and means of
facilitating Buyer's design of compatible information technology systems, the
provision to Buyer by the Company of sample data files prior to the Closing and
the transfer of data files to Buyer's system following the Closing. The Company
will cooperate with Buyer and assist Buyer in effecting the actions and
initiatives set forth in the plans, protocols and arrangements developed by the
Steering Committee; provided, however, that this Section 8.2(b) and the plans,
protocols and arrangements developed by the Steering Committee shall not require
the Company to incur out-of-pocket expenses, require Company personnel to devote
significant amounts of time to integration activities, require the Company to
provide sales, production, operations or business data to Buyer, or require the
Company to suffer a meaningful disruption of its operations.

         8.3 Stockholder Approval. (i) Subject to fiduciary obligations under
applicable Laws, the Board of Directors of the Company shall recommend the
approval of the Purchase and the Transactions to holders of Company Shares and
(ii) the Company will take, in accordance with applicable Laws and its
certificate of incorporation and bylaws, all action necessary to convene a
meeting of the stockholders to vote on the Mergers and the Purchase.

         8.4 Proxy Statement. The Company shall prepare and file with the SEC a
proxy or information statement with respect to the solicitation of consents or
proxies relating to the Mergers and the Purchase (the "Proxy Statement") as
promptly as practicable and promptly thereafter mail the Proxy Statement to the
holders of Company Shares. Buyer and the Company each agree, as to itself and
its Subsidiaries, that none of the information supplied or to be supplied by it
or its Subsidiaries for inclusion or incorporation by reference in the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to



                                      -53-

<PAGE>



stockholders and at the time of the action constituting the Company Requisite
Vote, 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. Notwithstanding the foregoing, no representation is made by
Buyer or its Subsidiaries with respect to statements made or incorporated by
reference by the Company in the Proxy Statement based on written information
supplied by the Company or its Subsidiaries.

         8.5 Filings; Other Actions; Notification. (a) The Company and Buyer
shall cooperate with each other and shall use (and shall cause their respective
Subsidiaries to use) their respective reasonable best efforts to take or cause
to be taken all actions, and do or cause to be done all things, necessary,
proper or advisable on its part under this Agreement and applicable Laws to as
promptly as practicable consummate and make effective the Transactions,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and to obtain as
promptly as practicable all Permits necessary or advisable to be obtained from
any third party and/or any Governmental Entity in order to consummate the
Transactions. Whenever this Agreement requires the Company to take any action,
such requirement shall be deemed to include an undertaking on the part of the
Company to cause each of its relevant Subsidiaries to take such action and a
guarantee of the performance thereof. Subject to applicable Laws and the terms
of any relevant agreements with third parties relating to the exchange of
information, Buyer and the Company shall have the right to review in advance,
and to the extent practicable each will consult the other on, all the
information relating to Buyer or the Company, as the case may be, and any of
their respective Subsidiaries, that appears in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with obtaining the Permits required to consummate the Transactions
and the Mergers. In exercising the foregoing right, each of the Company and
Buyer shall act reasonably and as promptly as practicable.

         (b) The Company and Buyer each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and



                                      -54-

<PAGE>



stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement or any other statement, filing, notice
or application made by or on behalf of Buyer, the Company or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with obtaining the Permits required to consummate the Transactions
and the Mergers.

         (c) Subject to applicable Laws and the terms of any relevant agreements
with third parties, the Company and Buyer each shall keep the other apprised of
the status of matters relating to completion of the Transactions and the
Mergers, including promptly furnishing the other with copies of notices or other
communications received by Buyer or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Transactions and the Mergers (including obtaining the Permits
required to consummate the Transactions); provided that in respect of any
communication to or from (or meeting with) any Governmental Entities relating to
the Transactions and the Mergers or obtaining such Permits, each Party shall use
its reasonable best efforts to afford the other with advance notice of, and a
meaningful opportunity to participate in, any such communications, including,
without limitation, a right to attend, with advisors present, any meetings
(telephonic or in person) with such Governmental Entities.

         (d) Without limiting the generality of the undertakings pursuant to
this Section 8.5, the Company (in the case of clauses (i) and (iii)) and Buyer
(in all cases set forth below) agree to take or cause to be taken the following
actions: (i) provide promptly to any and all federal, state, local or foreign
courts or Government Antitrust Entities information and documents requested by
any Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the Transactions; (ii) the proffer by Buyer of its willingness
to sell or otherwise dispose of, or hold separate and agree to sell or otherwise
dispose of, and the sale of, such assets, categories of assets or businesses of
the Company or Buyer or either's respective Subsidiaries (and to enter into
agreements with the relevant Government Antitrust Entity giving effect thereto)
no later than 90 days from the date of this Agreement if such action should be
reasonably necessary or advisable to avoid the commencement of a proceeding to
delay, restrain, enjoin or otherwise prohibit consummation of the transactions
contem-




                                      -55-

<PAGE>

plated by this Agreement by any Government Antitrust Entity; and (iii) take
promptly, in the event that any Order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make consummation of the
Transactions unlawful or that would prevent or delay consummation of the
Transactions, any and all steps consistent with their "reasonable best efforts"
obligations (including the appeal thereof, the posting of a bond or the taking
of the steps contemplated by clause (ii) of this paragraph) necessary to vacate,
modify or suspend such Order so as to permit such consummation on a schedule as
close as possible to that contemplated by this Agreement.

         (e) Without limiting the generality of the undertakings pursuant to
this Section 8.5, the Company agrees to provide, and shall cause its
Subsidiaries and shall use its reasonable best efforts to cause its and their
respective officers, employees and advisors, including KPMG LLP, to provide,
reasonable assistance to Buyer in connection with the completion of the
financings contemplated in the Financing Arrangements to be consummated
contemporaneously with or at or after the Closing in respect of the
Transactions.

         (f) Without limiting the generality of the undertakings pursuant to
this Section 8.5, Buyer agrees to use its reasonable best efforts to (i) enter
into definitive documentation with respect to the financings contemplated by the
Financing Arrangements on substantially the same terms reflected in the
Financing Arrangements, (ii) negotiate a substantially complete form (subject to
customary review and comment by the banks in the syndicate group) of definitive
agreements with respect to the senior credit facilities contemplated thereby
prior to the mailing of the Proxy Statement (although signing may be delayed
until a later date), and (iii) to satisfy all conditions applicable to Buyer in
such definitive documentation. Buyer will keep the Company informed on a regular
ongoing basis of the status of the efforts to obtain such financings and will
use its reasonable best efforts to (i) provide the Company and its advisors, on
a current basis, drafts and final versions of the definitive documentation
related to the Financing Arrangements, with an opportunity to provide comments
to Buyer thereon and (ii) assure that any conditions to funding the Financing
Arrangements relating to loan syndication are satisfied at or prior to the time
that all other conditions to the Closing are expected to be satisfied. In the
event



                                      -56-

<PAGE>



any portion of the financings contemplated by the Arrangements becomes
unavailable in the manner or from the sources originally contemplated, Buyer
will use its reasonable best efforts to obtain any such portion from alternative
sources on substantially comparable terms, if available, or if not substantially
comparable, on terms and conditions satisfactory to Buyer in its sole
discretion.

         8.6 Equitable Assignment. Notwithstanding anything to the contrary
contained in this Agreement, to the extent that the sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer, conveyance or
delivery to Buyer, as contemplated hereunder, of any Purchased Assets is
prohibited by any applicable Laws or would require any governmental or third
party Permits, including the Permits listed in Section 6.3 of the Disclosure
Letter, and such Permits shall not have been obtained prior to the Closing (such
Permits, collectively, "Delayed Consents"), this Agreement shall not constitute
a sale, assignment, transfer, conveyance or delivery, or any attempted sale,
assignment, transfer, conveyance or delivery, thereof. Following the Closing the
Parties shall use commercially reasonable efforts and shall cooperate with each
other, to obtain promptly the Delayed Consents; provided that all reasonable
out-of-pocket expenses of such cooperation and related actions shall be paid by
Buyer. Pending receipt of the Delayed Consents or if such Delayed Consents are
not obtained, the Parties shall cooperate with each other in any reasonable and
lawful arrangements, effectively transferring to Buyer from and after the
Closing, the rights and benefits of, and entitlements to exercise the Company's
rights under, and effectively causing the Buyer to assume all Assumed
Liabilities with respect to, such Purchased Assets and operations of the
Business as if such assets and operations had been transferred by the Company to
Buyer at Closing and any Liabilities associated with the arrangements
specifically established by Buyer and the Company pursuant to this Section 8.6.
Once any Delayed Consent is obtained, the Company shall assign, transfer, convey
and deliver, or cause to be assigned, transferred, conveyed and delivered, such
Purchased Assets and operations of the Business to Buyer at Buyer's expense with
Buyer responsible for all reasonable out-of-pocket costs associated with the
transfer of the relevant Purchased Assets and operations and any other
Liabilities associated with such transfer and the ownership or operation of such
Purchased Assets that would have comprised Assumed



                                      -57-

<PAGE>



Liabilities under this Agreement had such assets and operations been transferred
by the Company to Buyer at Closing; provided that no additional consideration
shall be paid by Buyer to the Company for such relevant Purchased Assets.

         8.7 Complete Financial Statements. (a) The Company shall use its
reasonable best efforts to deliver to Buyer (i) audited combined statements of
earnings and statements of cash flows for the Purchased Assets and the Assumed
Liabilities for the years ended March 31, 2000 and March 31, 1999, (ii) an
audited combined balance sheet for the Purchased Assets and the Assumed
Liabilities as of March 31, 2000, (iii) unaudited combined statements of
earnings and statements of cash flows for the Purchased Assets and the Assumed
Liabilities for the nine months ended December 31, 2000, (iv) an unaudited
combined balance sheet for the Purchased Assets and the Assumed Liabilities as
of December 31, 2000, (v) an audited combined statement of earnings and an
audited combined statement of cashflows for the Purchased Assets and the Assumed
Liabilities for the year ended March 31, 2001, in each case together with
reconciliations against the Purchased Assets and Assumed Liabilities excluding
the Segregated Assets and Liabilities, and an audited combined balance sheet for
the Purchased Assets and the Assumed Liabilities as of March 31, 2001, (vi) in
the event that the Closing has not occurred by August 15, 2001, interim
unaudited combined statements of earnings and cashflows for the Purchased Assets
and Assumed Liabilities for the three-month periods ended June 30, 2000 and June
30, 2001 and interim unaudited combined balance sheets for the Purchased Assets
and Assumed Liabilities for the three months ended June 30, 2000 and June 30,
2001, and (vii) in the event that the Closing has not occurred by November 15,
2001, interim unaudited combined statements of earnings and cashflows for the
Purchased Assets and the Assumed Liabilities for the six-month periods ended
September 30, 2000 and September 30, 2001 and unaudited combined balance sheets
for the Purchased Assets and Assumed Liabilities for the six months ended
September 30, 2000 and September 30, 2001, in each case prepared in accordance
with GAAP (including GAAP requirements with respect to notes) and in compliance
with requirements of Regulation S-X. The Company shall use its reasonable best
efforts to deliver to Buyer the financial statements referred to in clauses (i)
through (v) of the previous sentence (the "May Deliverables") by May 25, 2001.
The Company shall cause its



                                      -58-

<PAGE>



auditors to meet with Buyer and permit Buyer to review the auditors' workpapers
concerning the May Deliverables, but Buyer shall not be permitted to copy such
workpapers. The Company shall use its reasonable best efforts to deliver to
Buyer (i) audited statements of earnings and statements of cash flows for the
Purchased Assets and the Assumed Liabilities which do not include the "Arrid" or
"Lady's Choice" product lines or the Lambert Kay business for the years ended
March 31, 2001, March 31, 2000 and March 31, 1999, (ii) audited balance sheets
for the Business which do not include the "Arrid" or "Lady's Choice" product
lines or the Lambert Kay business as of March 31, 2001 and March 31, 2000, (iii)
in the event that the Closing has not occurred by August 15, 2001, interim
unaudited statements of earnings and cashflows for the Purchased Assets and the
Assumed Liabilities which do not include the "Arrid" or "Lady's Choice" product
lines or the Lambert Kay business for the three-month periods ended June 30,
2000 and June 30, 2001 and interim unaudited balance sheets for the Purchased
Assets and Assumed Liabilities which do not include the "Arrid" or "Lady's
Choice" product lines or the Lambert Kay business as of June 30, 2000 and June
30, 2001, and (iv) in the event that the Closing has not occurred by November
15, 2001, interim unaudited statements of earnings and cashflows for the
Purchased Assets and the Assumed Liabilities which do not include the "Arrid" or
"Lady's Choice" product lines or the Lambert Kay business for the six-month
periods ended September 30, 2000 and September 30, 2001 and interim unaudited
balance sheets for the Purchased Assets and Assumed Liabilities which do not
include the "Arrid" or "Lady's Choice" product lines or the Lambert Kay business
as of September 30, 2000 and September 30, 2001, in each case prepared in
accordance with GAAP (including GAAP requirements with respect to notes) and in
compliance with requirements of Regulation S-X. The Company shall use its
reasonable best efforts to deliver to Buyer the financial statements referred to
in clauses (i) and (ii) of the previous sentence by June 30, 2001. The Company
shall use its reasonable best efforts to deliver to Buyer (i) audited statements
of earnings and statements of cash flows for the "Arrid" and "Lady's Choice"
product lines and the Lambert Kay business for the years ended March 31, 2001,
March 31, 2000 and March 31, 1999, (ii) audited balance sheets for the "Arrid"
and "Lady's Choice" product lines and the Lambert Kay business as of March 31,
2001 and March 31, 2000, (iii) in the event that the Closing has not occurred by
August 15, 2001, interim unaudited statements of earnings and cashflows



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for the "Arrid" and "Lady's Choice" product lines and the Lambert Kay business
for the three-month periods ended June 30, 2000 and June 30, 2001 and interim
unaudited balance sheets for the "Arrid" and "Lady's Choice" product lines and
the Lambert Kay business as of June 30, 2000 and June 30, 2001, and (iv) in the
event that the Closing has not occurred by November 15, 2001, interim unaudited
statements of earnings and cashflows for the "Arrid" and "Lady's Choice" product
lines and the Lambert Kay business for the six-month periods ended September 30,
2000 and September 30, 2001 and interim unaudited balance sheets for the "Arrid"
and "Lady's Choice" product lines and the Lambert Kay business as of September
30, 2000 and September 30, 2001, in each case prepared in accordance with GAAP
(including GAAP requirements with respect to notes) and in compliance with
requirements of Regulation S-X. The Company shall use its reasonable best
efforts to deliver to Buyer the financial statements referred to in clauses (i)
and (ii) of the previous sentence by June 30, 2001.

         (b) From the date hereof until the Closing Date, the Company shall use
its reasonable best efforts to deliver to Buyer, promptly following the internal
circulation thereof, (i) such monthly management reporting packages for the
Company's Carter Products, Lambert Kay and International divisions as the
Company prepares in the ordinary course of business, and (ii) such Friday sales
reports for the Company's Carter Products and Lambert Kay divisions as the
Company prepares in the ordinary course of business.

         (c) The Company shall cause the cash held by the Transferred
Subsidiaries as of the Closing (other than the Carter-Horner Retained Cash
Amount) to be held by the Transferred Subsidiaries (other than Carter-Horner
Inc.) in ratable portions not materially inconsistent with their respective
ratable portions of the cash held by the Transferred Subsidiaries (other than
Carter-Horner Inc.) as reflected in the Audited Financial Statements.

         8.8 Intercompany Accounts. Intercompany accounts between the Company or
any of its Subsidiaries, on the one hand and any Transferred Subsidiary, on the
other hand ("Intercompany Accounts") in respect of goods sold in the ordinary
course of business shall be paid in full 30 days after Closing and all other
Intercompany Accounts will be canceled without payment prior to the Closing.



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         8.9 Publicity. The initial press release concerning the Transactions
shall be a joint press release approved in advance by the Company and Buyer and
thereafter the Company and Buyer each shall consult with each other prior to
issuing any press releases or otherwise making public announcements with respect
to the Transactions and prior to making any filings with any third party and/or
any Governmental Entity (including any national securities exchange or
interdealer quotation service) with respect thereto, except as may be required
by applicable Laws or by obligations pursuant to any listing agreement with or
rules of any national securities exchange or interdealer quotation service on
which the securities of the Company or Buyer or its Affiliates are listed or
quoted.

         8.10 No Solicitation and No Hiring. For a period of 24 months following
the Closing Date, the Company and its Affiliates (excluding MedPointe Capital
Partners, L.L.C., Cypress Associates II, LLC and TC Group, LLC and their
respective Affiliates that are not otherwise Affiliates of the Company) shall
not directly or indirectly solicit for employment or hire as an employee or
consultant, any of the Transferred Employees or other employees of Buyer or its
Affiliates engaged in the Business unless such employee's employment is earlier
terminated by Buyer. For a period of 24 months following the Closing Date, Buyer
and its Affiliates (excluding Financial Bidder and its Affiliates that are not
otherwise Affiliates of the Company) shall not directly or indirectly solicit
for employment or hire as an employee or consultant, any employee (other than an
Transferred Employee) who works for the Company or its Affiliates unless such
employee's employment is earlier terminated by the Company. Notwithstanding the
foregoing, this Section 8.10 shall not prevent either Buyer or Company (or any
of their respective Affiliates or any Person acting on their behalf) from
conducting general searches for employees by use of advertisements or the media
that are not directly targeted at the employees of the other Party.

         8.11 Acquisition Proposals. (a) The Company agrees that neither it nor
any Subsidiary of the Company nor any of their respective officers or directors
shall, and that it shall direct and cause its and such Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by them or any of the Company's Subsidiaries) not to,
directly or indirectly, (i) initiate, solicit, encourage or otherwise



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facilitate any inquiry or the making of any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation, purchase or similar
transaction involving (A) more than 15% of the consolidated assets of the
Company primarily related to the Business (a "Business Acquisition Proposal");
(B) more than 15% of the consolidated assets of the Company primarily related to
the operations of the Company other than the Business (such operations, the
"Healthcare Business" and such a proposal, a "Healthcare Acquisition Proposal");
or (C) more than 15% of the outstanding equity securities of the Company or more
than 15% of the consolidated assets primarily related to the Business and the
consolidated assets primarily related to the Healthcare Business (a "Company
Acquisition Proposal", any Business Acquisition Proposal, Healthcare Acquisition
Proposal or Company Acquisition Proposal being referred to as an "Acquisition
Proposal"); (ii) engage in any negotiations concerning, or provide any
confidential information or data to, or have any substantive discussions with,
any Person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal (including by
entering into any letter of intent or similar document or any contract,
agreement or commitment with any Person making such an Acquisition Proposal) or
(iii) approve, endorse or recommend any Acquisition Proposal; provided, however,
that prior to the effectiveness of the Company Requisite Vote, nothing contained
in this Agreement shall prevent the Company, its directors, officers, agents or
other representatives from (A) complying with its disclosure obligations under
applicable Law; (B) providing information in response to a request therefor by a
Person who has made an unsolicited bona fide written Acquisition Proposal if the
Board of Directors receives from the Person so requesting such information an
executed confidentiality agreement on terms substantially similar to those
contained in the Confidentiality Agreements, it being understood that such
confidentiality agreement will not prohibit the making of an Acquisition
Proposal; (C) engaging in any negotiations or discussions with any Person who
has made an unsolicited bona fide written Acquisition Proposal or entering into
an agreement with such Person solely with respect to the payment by such Person
of amounts payable to Buyer pursuant to Section 11.5(b) or to Parent pursuant to
Section 8.5(b) of the Merger Agreement; (D) approving, recommending or endorsing
such an Acquisition Proposal to the stockholders of the Company (which, in the
case of a Business Acquisition



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Proposal or Company Acquisition Proposal, shall be deemed to be a withdrawal or
modification of the recommendation of this Agreement by the Board of Directors
of the Company), or (E) following the termination of the Merger Agreement
pursuant to Section 8.3(a) thereof, entering into an agreement with a Person who
has made an unsolicited bona fide written Healthcare Acquisition Proposal with
respect to such Healthcare Acquisition Proposal, if and only to the extent that,
(i) in each such case referred to in clause (B), (C), (D) or (E) above, the
Board of Directors of the Company determines in good faith (after consultation
with outside legal counsel) that failure to take such action would, in light of
such Acquisition Proposal and the terms of this Agreement, be inconsistent with
the fiduciary duties of the directors under applicable Law and (ii) (x) in the
cases referred to in clause (B) or (C) above, the Board of Directors of the
Company determines in good faith (after consultation with a financial advisor)
that taking the actions permitted pursuant to such clauses with respect to an
Acquisition Proposal could reasonably be expected to result in a Superior
Proposal, assuming such Acquisition Proposal were consummated and (y) in the
case referred to in clauses (D) or (E) above, the Board of Directors of the
Company determines in good faith (after consultation with its financial advisor)
that such Acquisition Proposal is a Superior Proposal. A Business Acquisition
Proposal is a "Superior Proposal" if (i) the transaction (or series of
transactions) pursuant to such Acquisition Proposal involves the direct or
indirect (by stock acquisition or otherwise) acquisition by a third party of all
or substantially all of the consolidated assets of the Company primarily related
to the Business and (ii) the consummation of such transaction (or series of
transactions) pursuant to such Acquisition Proposal, together with the
consummation of the Mergers pursuant to the Merger Agreement, will be more
favorable to the Company's stockholders from a financial point of view than the
Purchase, taken together with the Mergers and, for purposes of the determination
to be made in clause (D) or (E) above, in the good faith judgment of the Board
of Directors of the Company, such transaction is reasonably likely to be
financed by such third party. A Healthcare Acquisition Proposal is a "Superior
Proposal" if (i) the transaction (or series of transactions) pursuant to such
Acquisition Proposal involves the direct or indirect (by merger, stock
acquisition or otherwise) acquisition by a third party of the Healthcare
Business and (ii) the consummation of such transaction (or series of
transactions)



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pursuant to such Acquisition Proposal, together with the consummation of the
Purchase, will be more favorable to the Company's stockholders from a financial
point of view than the Mergers, taken together with the Purchase and such other
transactions and, for purposes of the determination to be made in clause (D) or
(E) above, in the good faith judgment of the Board of Directors of the Company,
such transaction is reasonably likely to be financed by such third party. A
Company Acquisition Proposal is a "Superior Proposal" if (i) the transaction (or
series of transactions) pursuant to such Acquisition Proposal involves a third
party unaffiliated with CPI acquiring, directly or indirectly, not less than a
majority of the outstanding Company Shares (by merger, stock acquisition or
otherwise) or acquiring directly or indirectly, all or substantially all of the
consolidated assets of the Company, (ii) such transaction (or series of
transactions) is reasonably likely to be consummated and (iii) the consummation
of such transaction (or series of transactions) pursuant to such Acquisition
Proposal will be more favorable to the Company's stockholders from a financial
point of view than the combined effect of the Purchase and the Mergers. The
Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Person conducted
heretofore with respect to any Acquisition Proposals. The Company agrees that it
will notify Buyer immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives.

         (b) Buyer and its Affiliates shall not directly or indirectly (through
Affiliates or otherwise), individually or as a group, enter into any agreement
or other arrangement with any party to the Merger Agreement that would obligate
any party to the Merger Agreement to refuse or otherwise fail to cooperate with
the Company and its representatives or obligate any party to the Merger
Agreement to oppose or otherwise act to thwart the Company's efforts to (i)
negotiate with respect to a Business Acquisition Proposal or (ii) enter into a
Business Acquisition Proposal that is a Superior Proposal.

         (c) In the event the Company terminates the Merger Agreement pursuant
to Section 8.3(a) thereof in order to enter into an agreement with respect to a
Healthcare Acquisition Proposal that constitutes a Superior Proposal,



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Buyer shall be required to accept (i) the acquirors of the Healthcare Business
pursuant to such agreements as replacements for Parent, CPI Merger Sub and
Company Merger Sub (the "Substitute Merger Parties") for purposes hereof and
(ii) such agreement as a replacement for the Merger Agreement (such agreement
and any related agreements, collectively, the "Substitute Merger Agreement") for
purposes hereof if such Substitute Merger Parties and Substitute Merger
Agreement would not, in the good faith judgment of Buyer (as compared with the
Merger Agreement and the agreements entered into in connection therewith),
materially and adversely affect the Buyer's rights or obligations hereunder and
under the agreements executed and delivered in connection herewith (including
the Ancillary Agreements, the Voting Agreement, the Shareholder Indemnification
Agreement and the Fund Agreement), taking into account all relevant factors,
including the terms and conditions of the Substitute Merger Agreement and the
financial position of the Substitute Merger Parties. If the Company notifies
Buyer that it intends, subject to not receiving a Section 8.11(c) Notice (as
hereinafter defined), to terminate the Merger Agreement pursuant to Section
8.3(a) thereof in order to enter into a Substitute Merger Agreement pursuant to
such Section 8.3(a) and, prior to or at the time of delivery of such notice,
provides Buyer with a draft of such Substitute Merger Agreement and such
documents and information relating to the Substitute Merger Parties and the
transactions contemplated by the proposed Substitute Merger Agreement that are
in the Company's possession or as may be reasonably obtained by the Company as
Buyer may reasonably request, Buyer will notify the Company (the "Section
8.11(c) Notice") within three Business Days of such notice (not counting the day
of receipt) following the date of receipt of such notice as to whether, in the
exercise of its good faith judgment, such Substitute Merger Agreement with the
Substitute Merger Parties would have any of the material adverse effects
described above. If Buyer does not provide a Section 8.11(c) Notice within such
three-day period, Buyer shall be deemed to accept the Substitute Merger Parties
and the Substitute Merger Agreement. For purposes of this Agreement, upon
execution and delivery by the Company and CPI of the substitute Merger
Agreement, all references herein to the "Mergers" and the "Merger Agreement"
shall become references to such Substitute Merger Agreement. It is further
agreed that the giving by the Company to Parent of the notice that it intends to
terminate this Agreement pursuant to Section 11.3(a) in order to enter



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<PAGE>



into a Substitute Asset Purchase Agreement and the drafts, documents and
information contemplated by Section 6.2(b) of the Merger Agreement, shall not,
in and of itself, provide Buyer a right to terminate this Agreement pursuant to
Section 11.4.

         8.12 Timing of Closing. (a) Buyer will cooperate with the Company in
causing the Closing contemplated by the Merger Agreement and the Closing
contemplated by this Agreement to occur and be effected on the same date and the
Closing contemplated by this Agreement to immediately precede the Closing
contemplated by the Merger Agreement; it being understood and agreed that the
closing contemplated by the Merger Agreement and the Closing will not be
consummated until all conditions to closing in the Merger Agreement and this
Agreement and the conditions to the extension of financing by all respective
financing sources (debt and equity) have been satisfied or waived and the
parties to this Agreement and the Merger Agreement and their respective
financing sources (debt and equity) have entered into an appropriate agreement
reasonably satisfactory to the Company (the "Closing Agreement") to such effect.

         (b) Without the prior written consent of Buyer, which shall not be
unreasonably withheld, delayed or conditioned, the Company shall not amend or
modify the Merger Agreement in a manner that materially and adversely affects
Buyer's rights and obligations hereunder. Subject to the foregoing, the Company
shall deliver promptly to Buyer copies of all amendments or modifications to the
Merger Agreement.

         (c) Without the prior written consent of the Company, which shall not
be unreasonably withheld, delayed or conditioned, Strategic Buyer and Buyer
shall not amend or modify the Product Line Purchase Agreement in a manner that
would materially and adversely affect the Company. Without the prior written
consent of Buyer, which shall not be unreasonably withheld, delayed or
conditioned, the Company will not terminate the Merger Agreement pursuant to
Section 8.1 thereof. Subject to the foregoing, Buyer shall deliver promptly to
the Company copies of all amendments or modifications to the Product Line
Purchase Agreement. The Company and Buyer shall cooperate in causing the Closing
contemplated by the Product Line Purchase Agreement to be effected in accordance
therewith.



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         8.13 Insurance. The Company will use its reasonable best efforts to
ensure that, at or prior to Closing, the Buyer is named as an additional insured
under each of the Company's insurance policies in effect on the date of this
Agreement.

         8.14 Sofibel S.A.R.L. Conversion. Subject to and in accordance with the
applicable requirements of French Law, the Company shall use its reasonable best
efforts to convert (by merger or otherwise) its Subsidiary Sofibel S.A.R.L.
prior to Closing from an S.A.R.L. entity into an S.A.S. or S.A. entity, at
Buyer's request, exercisable once. If such conversion has been effected, Buyer
shall not convert Sofibel S.A.S. or S.A., as the case may be, again into an
S.A.R.L. entity for a period of five years following the Closing. All references
in this Agreement, the Disclosure Letter and any Ancillary Agreements to Sofibel
S.A.R.L. shall be deemed to be references to Sofibel S.A.S or S.A., as the case
may be, following the effectiveness of such conversion.

         8.15 Carter-Horner Taxes. Buyer agrees to cause Carter-Horner to pay to
the Company any amounts actually withheld, deducted or otherwise collected by
Carter-Horner with respect to any distribution or other payment made with
respect to shares of Carter-Horner stock in excess of any Taxes required to be
so withheld, deducted or otherwise collected.

                                   ARTICLE IX

                             Employees and Benefits

         9.1 Employees and Service Crediting.

         (a) Offer of Employment with Buyer. (i) The parties hereto intend that
there shall be continuity of employment with respect to all Available Employees
who become Transferred Employees. Except where applicable Laws provide for an
automatic transfer of employees upon the transfer of a business as a going
concern, Buyer shall make an offer of employment effective as of the Closing to
each Available Employee (including those on vacation, and Leave Recipients (as
defined in Section 9.1(c)) on the Closing Date which offer, except as provided
below, shall include a base salary or wages not less than as in effect with
respect



                                      -67-

<PAGE>



to each such Employee at Closing and shall not require that such Employee
relocate to a work location more than 45 miles from such Employee's current work
location. In addition to the foregoing base salary, wage and location terms,
except as provided below such offer shall provide for substantially comparable
total benefits and compensation in the aggregate for the group of Employees
taken as a whole (including short-term bonus opportunities, but excluding equity
compensation and post-retirement health and welfare except for Employees with
Executive Employment Agreements and Change in Control Agreements listed on
Section 6.7(a) of the Disclosure Letter and also excluding the Executive
Automobile Policy described in Section 8.1(b)(v) of the Disclosure Letter)) to
such total benefits and compensation provided by the Company in the aggregate
for all Available Employees taken as a whole as of the Closing. Each offer shall
also contain the covenant of Buyer set forth in subsections 9.1(e), 9.1(f),
9.1(h)(i)), 9.1(i)(ii) and (iii), and 9.1(j) below. The requirement of
comparability of benefits shall not apply to Employees covered by a collective
bargaining agreement. Prior to the Closing Date, the Company shall cooperate
with and use commercially reasonable efforts to assist Buyer in its efforts to
secure reasonably satisfactory employment arrangements with the Available
Employees. Each Available Employee who accepts an offer of employment with Buyer
shall become and shall be referred to herein as a "Transferred Employee."

         (ii) Notwithstanding anything to the contrary herein, Buyer shall also
have the ability to make employment offers which are not "comparable" to their
current terms and conditions to up to thirty Available Employees, which offer
shall describe the provisions of this Section 9(a)(ii), in which case if the
Available Employee rejects such offer (but only if he or she rejects such
offer), Buyer shall be responsible for such Employee's severance pay as
specified in the Change in Control Severance Plan set forth in Section 9.1(d) of
the Disclosure Letter (the "CIC Severance Plan") (or other applicable severance
arrangement for Employees not covered by the CIC Severance Plan), and Buyer
shall indemnify the Company for all such severance obligations with respect to
such Available Employees. In the event an Available Employee accepts an offer
with Buyer with a Base Salary (as defined in the CIC Severance Plan) less than
such employee's Base Salary at the Closing Date or location more than 45 miles
from such Employee's principal place of employment at the time of such offer, if
consented



                                      -68-

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to by such Employee in writing upon accepting such offer such Employee shall not
be entitled to severance pay by reason of such noncomparable employment, however
such new Base Salary or location will become the benchmark Base Salary or
location to determine eligibility for severance for Good Reason (as defined in
the CIC Severance Plan) thereafter, but shall not affect the calculation of the
amount of severance payments under any circumstances, as provided in the CIC
Severance Plan. In all other respects, such group of Available Employees shall
be treated as other Available Employees under this Section 9.1. Nothing herein
shall be construed as a guarantee of any length of employment or shall restrict
Buyer's ability to terminate any Transferred Employee, subject to any applicable
Laws, employment agreements or collective bargaining agreements.

         (b) Adjustment of Available Employees for Subsequently Hired Employees.
An employee hired by the Company after the date hereof who would have been an
Available Employee but for not being employed on the date hereof shall become an
Available Employee as of the date of hire. An Employee who is on the Available
Employee list who retires (under the terms of the applicable qualified defined
benefit pension plan) or dies prior to the Closing Date shall be removed from
the Available Employee list. Approximately five Business Days prior to Closing,
the Company shall furnish to Buyer an updated list of Available Employees as of
such date.

         (c) Special Provisions for Leave Recipients. (i) Any offer of
employment extended pursuant to Section 9.1(a) to an Available Employee who is
not actively at work on the date of such offer as a result of short-term
disability leave, or other approved personal leave (including, without
limitation, military leave with re-employment rights under federal law, leave
with right of re-employment under any collective bargaining agreement and leave
under the Family Medical Leave Act of 1993), (individually, a "Leave Recipient"
and collectively the "Leave Recipients") will remain effective until such
Available Employee's termination of such short-term disability or approved leave
of absence, respectively, provided that he or she returns to active service
before the later of (A) 180 days following the Closing Date or (B) the date such
employee's re-employment rights expire under the applicable agreement or
applicable Laws. Prior to returning to active status, such Leave Recipient shall
continue to



                                      -69-

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receive benefits, if any, to which he or she is entitled pursuant to the
applicable agreement or under the Compensation and Benefit Plans maintained by
the Company; provided that to the extent compensation or benefits paid or
provided to such a Leave Recipient under the Company's Compensation and Benefit
Plans is not fully covered by the Company's insurance, Buyer shall reimburse the
Company for the dollar value of any such compensation and benefits that are not
covered.

         (ii) When the Leave Recipient returns to active status pursuant to the
terms of clause (i) above and accepts Buyer's offer of employment, such Leave
Recipient shall be considered a Transferred Employee (as defined above) and the
following provisions shall apply: (A) the Leave Recipient shall cease to be
eligible for coverage and benefits under any employee benefit plans or programs
maintained by the Company (including, without limitation the Compensation and
Benefit Plans) except to the extent, if any, that such coverage and benefits are
required by the terms of the Company's plans, applicable Law or by this
subsection (c); (B) the Leave Recipient, upon becoming a Transferred Employee,
shall become eligible for coverage and benefits under all employee benefit plans
or programs maintained by Buyer under the same terms and conditions that apply
to other Transferred Employees; and (C) the Leave Recipient's period of leave
shall be treated as a period of service under the employee benefit plans and
programs of Buyer to the same extent as if the Leave Recipient had received
benefits under a similar plan or was subject to a similar policy of Buyer except
to the extent such service credit will result in duplication of benefits to the
Leave Recipient.

         (iii) Any Leave Recipient who (A) was receiving short-term disability
benefits under a Compensation and Benefit Plan, (B) becomes a Transferred
Employee under Section (ii) above, and (C) terminates employment with Buyer
within the time period in the applicable company policy under circumstances
relating to the same infirmity (as defined in the applicable company policy)
which gave rise to the short-term disability that existed on the Closing Date
that would entitle such person to benefits under a Compensation and Benefit Plan
that is a long term disability plan, shall receive such benefits as are provided
under such Company plan. Any benefits under a Buyer plan shall be



                                      -70-

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provided in accordance with, and subject to, the terms of such plan.

         (d) Buyer Benefit Obligation. Buyer shall establish and maintain until
June 30, 2002 employee benefit plans, programs, policies and arrangements for
Transferred Employees which provide benefits to the Transferred Employees that,
as a group, are substantially comparable in the aggregate to those provided to
the Transferred Employees, as a group, under the applicable Compensation and
Benefit Plans in effect on the Closing Date (other than equity compensation and
post-retirement health and welfare, except for those Transferred Employees with
Executive Employment Agreements or Change in Control Agreements listed on
Section 6.7(a) of the Disclosure Letter, and also other than the Executive
Automobile Policy, described on Section 8.1(b)(v) of the Disclosure Letter);
provided, however, that the requirements of this sentence shall not apply to
Transferred Employees who are covered by a collective bargaining agreement. Such
requirement shall be applied based upon the benefits offered to Transferred
Employees generally, and shall not be applied on an employee-by-employee basis,
nor shall any lack of equity-based compensation, post-retirement health and
welfare coverage of active employees (other than those executives entitled to
benefits under the Corporate Officer Medical Expense Reimbursement Plan), or
lack of Executive Automobile Policy, be taken into account in making such
determination. Notwithstanding the above aggregation, Buyer shall accept
assignment, and assume, from the Company or its Subsidiaries all employment and
change in control agreements to which any Available Employee is a party and
Buyer shall assume the obligation to provide severance pay and benefits to
Available Employees no less favorable than the benefits provided pursuant to the
severance plan set forth in Section 9.1(d) of the Disclosure Letter (to the
extent such Employee is covered by such plan). Except as expressly provided in
Section 9.1(c) or as required by law, all Available Employees shall cease
accruing benefits under and shall cease to participate in the Compensation and
Benefit Plans as of the Closing Date.

         (e) Payment of Bonuses. At the earlier of such Employee's termination
of employment (except termination for cause as defined in the CIC Severance
Plan, which termination has no bonus entitlement) or April 1, 2002, Buyer shall
pay to each Available Employee who is employed



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immediately prior to Closing, other than employees covered by a collective
bargaining agreement or employees whose employment agreement or other individual
agreement otherwise provides for such payment, a payment equal to a pro rata
portion of such employee's target bonus, if any, under the Company's annual
incentive bonus plan(s) in which such employee is a participant, for the portion
of the bonus year that has elapsed from April 1, 2001 until the Closing Date.

         (f) Recognition of Service. On and after the Closing Date and for
purposes of eligibility, vesting, vacation entitlement and severance benefits
under all employee compensation and benefit plans of Buyer, each Transferred
Employee shall receive full credit from Buyer for all prior service properly
credited under the Compensation and Benefit Plans. Section 6.7(b)(1) of the
Disclosure Letter may be conclusively relied upon by Buyer in crediting service
in accordance with this Section.

         (g) Compensation and Benefit Plan Assets to be Transferred to Buyer. As
soon as practicable after the Closing Date, the Company agrees to cause the
trustee of the Assumed Pension Plan to transfer to the trustee of the Buyer's
pension plan all assets with respect to the Assumed Pension Plan. As of the
Closing Date, Buyer shall assume all Liabilities with respect to the Assumed
Pension Plan. Seller shall transfer or shall cause the trustee to transfer,
effective as of the Closing Date, assets with respect to the life insurance
policies underlying the Split Dollar Agreements listed on Section 6.7(a) of the
Disclosure Letter with respect to Transferred Employees. As of the Closing Date,
Buyer shall assume all Liabilities with respect to such Split Dollar Agreements.
Except as described in subsection (h)(iii) below, no assets will be transferred
in connection with this Agreement in respect of any Compensation and Benefit
Plan other than the Assumed Pension Plan and the life insurance policies
underlying the Split Dollar Agreements listed on Section 6.7(a) of the
Disclosure Letter.

         (h) Buyer Savings Plan. (i) As of the Closing Date, Buyer shall
establish and maintain a tax-qualified defined contribution plan (the "Buyer
Savings Plan"). All Transferred Employees will be eligible to participate in the
Buyer Savings Plan.






                                      -72-

<PAGE>


         (ii) Distributable Event. If a distribution is permissible under
Section 401(k) of the Code, as determined by the Company in its sole discretion,
the Company will permit each Transferred Employee to elect a distribution of
benefits from the applicable tax-qualified defined contribution plan maintained
by the Company (the "Company Savings Plan"). If the Company permits Transferred
Employees to elect distributions, Buyer will cause the Buyer Savings Plan to
accept a direct rollover of the portion of a Transferred Employee's distribution
which constitutes an eligible rollover distribution, including any outstanding
loans and related promissory notes.

         (iii) Plan-to-Plan Transfer. If the Company determines in accordance
with the foregoing that a distribution is not permissible under Section 401(k)
of the Code, then Buyer and the Company agree to use their reasonable best
efforts to effect a plan to plan transfer of the account balances and related
Liabilities of the Transferred Employees, except to the extent the Company
elects to allow Transferred Employees to choose to retain their account balances
in the Company Savings Plans (and to the extent Transferred Employees elect to
so retain their account balances). Such a transfer (if any) shall occur on or as
soon as practicable after the Closing Date. To implement such a transfer (if
any), the Company shall direct the trustee(s) of the Company Savings Plans to
transfer to the trustee or funding agent of the Buyer Savings Plan an amount in
cash or kind (as determined by the Company with the consent of Buyer, which
shall not be unreasonably withheld) equal in value to the account balances of
the Transferred Employees covered by the Company Savings Plans as of the date of
the transfer (other than any such employees who are permitted by the Company to
elect, and who so elect, to retain such account balances in the Company Savings
Plans); provided that to the extent the account balances to be transferred
consist in whole or in part of outstanding loans, the Company shall direct the
trustee(s) of the Company Savings Plans to transfer to the trustee or funding
agent of the Buyer Savings Plan, in lieu of cash, the promissory notes and
related documents evidencing such loans. Buyer and the Company shall take such
actions as may be required to effect the assignment of such loans by the
trustee(s) of the Company Savings Plans to the trustee or funding agent of the
Buyer Savings Plan. In addition, the transfer procedure (if any) shall ensure
that all account balances of Transferred Employees remain invested, or



                                      -73-

<PAGE>



receive a reasonable rate of return, throughout the transfer process. As of the
date and to the extent that assets from the Company Savings Plan are transferred
to a Buyer Savings Plan, all Liabilities related to or arising from such assets
shall be assumed by Buyer Savings Plan.

         (iv) Matching Contributions. All required matching contributions with
respect to the Transferred Employees' contributions to the Company Savings Plans
that are eligible for matching and made before the Closing Date (or with respect
to compensation earned by such Transferred Employees prior to the Closing Date
but paid by the Company and its Affiliates after the Closing Date) shall be made
by the Company, without regard to any year of service or last day of Plan year
active employment requirements (and the Company Savings Plan shall be amended,
if necessary, to accomplish this result). Such matching contributions shall be
made not later than the date on which all other matching contributions are made
to the Company Savings Plans with respect to contributions made at the same time
as the Transferred Employees' contributions.

         (i) Welfare Plans and Other Unfunded Plans. (i) The Company shall
retain responsibility for all medical, dental, cafeteria plan, Accidental Death
and Dismemberment, life and short- and long-term disability insurance claims,
workers compensation, and all other welfare and fringe benefit claims (x)
incurred by Employees who are not Available Employees or employees of the
Transferred Subsidiaries as of the Closing Date and (y) incurred by Available
Employees prior to the Closing Date; provided that Buyer shall assume, and shall
reimburse the Company for, 60% of any retiree medical liability incurred with
respect to any Covered Retiree. The Company shall not offer any severance,
through the Company's regular severance program or otherwise, to Available
Employees who do not become Transferred Employees, except as described in
Section 9.1(a)(ii) or as disclosed pursuant to an individual agreement in
Section 6.7(a) of the Disclosure Letter. Except as otherwise expressly provided
in this Agreement with respect to Covered Retirees, the Company shall retain
responsibility for all compensation and benefits (including, without limitation,
retiree medical), for any Available Employee who retires or dies on or before
the Closing Date. For purposes of this paragraph, a claim shall be deemed to
have been incurred when the medical or other service giving rise to the claim is
performed, except that disability



                                      -74-

<PAGE>



(including workers compensation) claims shall be deemed to have been incurred on
the date the Employee becomes disabled as determined under the terms of the
applicable Compensation and Benefit Plan. Notwithstanding the foregoing but
subject to Sections 8.1(b)(viii) and 9.1(i)(i), Buyer shall be liable for
severance and termination obligations for Available Employees who quit, resign
or are otherwise terminated prior to the Closing Date, other than Available
Employees who retire (under the terms of the applicable defined benefit pension
plan) or die prior to the Closing Date, for whom such obligations shall be
retained by the Company (subject to the Buyer's assumption of liabilities with
respect to Covered Retirees as expressly provided herein). For the avoidance of
doubt, Buyer shall be liable for any severance and termination obligations
incurred as a result of the consummation of the Transactions for Available
Employees and the Company shall retain liability for severance paid to Employees
who are not Available Employees and not employees of the Transferred
Subsidiaries.

         (ii) Buyer agrees to cause each of its medical, dental and health plans
that provides coverage to a Transferred Employee to (A) waive any preexisting
conditions, waiting periods and actively at work requirements under such plans,
other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Closing
Date under any welfare plan maintained for the Transferred Employees immediately
prior to the Closing Date and (B) cause such plans to honor any expenses
incurred by the Transferred Employees and their beneficiaries under similar
plans of the Company during the portion of the calendar year prior to the
Closing Date for purposes of satisfying applicable deductible, co-insurance and
maximum out-of-pocket expenses.

         (iii) Beneficiary Coverage. References herein to a benefit with respect
to a Transferred Employee or Available Employee shall include, where applicable,
benefits with respect to any eligible dependents and beneficiaries of such
Transferred Employee or Available Employee under the terms of the relevant
employee benefit policy, plan, arrangement, program, practice, or agreement.

         (iv) The Company shall retain all Liabilities under the Compensation
and Benefit Plans listed on Section 9.1(i)(iv) of the Disclosure Letter.



                                      -75-

<PAGE>



         (v) At the Closing, Buyer shall execute and deliver the letter attached
hereto as Exhibit I, to the recipients described therein.

         (j) Vacation. The Company shall not pay out to Employees vacation pay
benefits earned but not yet used as of the Closing Date, other than for
Available Employees who choose not to become Transferred Employees, which
vacation pay cost shall be reimbursed by Buyer. Buyer shall provide Transferred
Employees with credit under Buyer's vacation pay plan for the earned but not yet
used vacation pay benefits and attributable to each Transferred Employee as set
forth on a written schedule provided prior to the Closing by the Company to
Buyer. Liability for such amounts shall be borne by Buyer; the Company shall
have no liability for such vacation pay benefits.

         (k) WARN Act and Health Care Continuance Requirements.

         (i) Buyer shall be responsible for providing or discharging any and all
notifications, benefits, and liabilities to Transferred Employees and
Governmental Entities required by the Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act") or by any other applicable law
relating to plant closings or employee separations or severance pay that are
first required to be provided or discharged on or after the Closing Date,
including pre-closing notice or liabilities if actions by Buyer on or after the
Closing Date result in a notice requirement or liability under such laws. The
Company shall reasonably cooperate with Buyer in preparing and distributing any
notices that Buyer may desire to provide prior to Closing. All employees
involuntarily separated from employment by the Company within 90 days of the
Closing Date shall be identified on a schedule to be prepared by the Company and
submitted to Buyer as soon as practicable after the date hereof and in no event
later than the Closing Date. Buyer and the Company shall cooperate with each
other to provide timely notice, if required, to any Governmental Entity of the
consummation of this Agreement and the related transfer of employees.

         (ii) The Company shall retain the obligations with respect to COBRA
continuation coverage for all Available Employees who do not become Transferred
Employees; provided however, that Buyer shall reimburse the Company for the



                                      -76-

<PAGE>



amount by which aggregate medical claims incurred by such Employees exceeds the
aggregate premiums collected by the Company with respect to COBRA coverage for
such Employees.

         (l) The Company shall cause each Transferred Subsidiary that is a
participating subsidiary in any Compensation and Benefit Plan retained by the
Company to cease to be a participating subsidiary as of the Closing.

         9.2 Transitional Employment Matters. (a) Buyer shall assume and shall
reimburse the Company for all Liabilities that arise or have arisen out of, in
respect of or as a result of the employment (or termination of employment) of
any Transition Employee, except that the Company expressly retains liability for
(i) salary, wages, cash compensation and related payroll taxes and providing
employee benefits during the period from the Closing Date to the date such
Transition Employee's employment is terminated, (ii) incremental liability, if
any, for any post-employment benefit entitlement and severance incurred by
reason of a Transition Employee remaining employed by the Company after the
first anniversary of the Closing Date, (iii) incremental severance liability, if
any, by reason of the Company (x) increasing the salary of any such Transition
Employee by more than 4% since the Closing Date or (y) putting in place
severance enhancements after the Closing Date, and (iv) any employment-related
liabilities to the extent related to acts or omissions that occur during the
period from the Closing Date to the date such Transition Employee's employment
is terminated (including, without limitation, for employment discrimination or
other torts or violations of law). Buyer and the Company shall share Liability
for any retiree medical obligations for Transition Employees who either (i)
retire in the first year after the Closing, or (ii) were eligible to retire and
receive retiree medical benefits under the Company's retiree medical plan as of
the Closing Date, to the same extent as for Covered Retirees. Any other retiree
medical Liabilities for Transition Employees shall be the Company's
responsibility.

         9.3 Other Employee Matters. (a) The Company, Buyer, the administrator
of the Compensation and Benefit Plans and the administrator of the employee
benefits plans established by Buyer shall assist and cooperate with each other
in providing each other with any records, documents or other information and
access to personnel within its control or to which it has access that is
reasonably requested by



                                      -77-

<PAGE>



any other such party as necessary to the disposition, settlement or defense of
any claim or to the implementation of the provisions of this Article IX.

         (b) Successors and Assigns. From and after Closing, in the event either
Party or any of its successors and assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving corporation or
entity in such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets relating to the Business to any Person, then,
and in each case, proper provision shall be made so that such successors and
assigns of such Party expressly agree to assume and honor the obligations of
such Party set forth in this Article.

         (c) Each of Buyer and the Company acknowledge that the Transactions
contemplated by this Agreement and by the Merger Agreement shall be a
"change-in-control" of the Company with respect to all participants under any
"Change of Control" provisions of the Compensation and Benefit Plans.

                                    ARTICLE X

                                   Conditions

         10.1 Conditions to Each Party's Obligations. The respective obligations
of each party to effect the Closing are subject to the satisfaction or waiver at
or prior to the Closing of each of the following conditions:

         (a) Stockholder Approval. The Transactions shall have been authorized
by a resolution adopted by the Company Requisite Vote.

         (b) Regulatory Consents. The waiting periods applicable to the
consummation of the Transactions under the HSR Act shall have expired or been
terminated and the notices, reports and other filings listed in Section 10.1(b)
of the Disclosure Letter shall have been made or obtained.

         (c) No Orders. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, law, ordinance, rule, regulation, judgment, decree, injunction or






                                      -78-

<PAGE>



other order (whether temporary, preliminary or permanent) (collectively, an
"Order") that is in effect and restrains, enjoins or otherwise prohibits
consummation of the Transactions.

         (d) Closing Agreement. The Company, Buyer, CPI, Parent, CPI Merger Sub
and Company Merger Sub shall have executed and delivered, each to the other, the
Closing Agreement as contemplated by Section 8.12(a).

         (e) Financing. Buyer shall have obtained financing proceeds sufficient
to consummate the Purchase on the terms and conditions set forth in the
Arrangements or upon terms and conditions which are substantially comparable
thereto, and to the extent that any of the terms and conditions are not so set
forth or are not so substantially comparable, on terms and conditions
satisfactory to Buyer in its sole discretion.

         10.2 Conditions to Obligations of Buyer. The obligations of Buyer to
effect the Closing are also subject to the satisfaction or waiver by Buyer at or
prior to the Closing of the following conditions:

         (a) Representations and Warranties of the Company. (i) The
representations and warranties of the Company set forth in this Agreement that
are qualified by reference to "Material Adverse Effect" shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except to the extent that any such
representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty shall be true and correct as of such
earlier date); (ii) the representations and warranties of the Company set forth
in this Agreement that are not qualified by reference to "Material Adverse
Effect" shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the extent
that any such representation and warranty expressly speaks as of an earlier
date, in which case such representation and warranty shall be true and correct
as of such earlier date), provided, however, that notwithstanding anything
herein to the contrary, the condition set forth in this Section 10.2(a)(ii)
shall be deemed to have been satisfied even if such representations and
warranties of the Company are not true and correct unless the failure of such
representations



                                      -79-

<PAGE>



and warranties of the Company to be so true and correct, individually or in the
aggregate, has had (since the date of this Agreement) or is reasonably likely to
have a Material Adverse Effect; and (iii) Buyer shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer of
the Company to the effect that such Chief Executive Officer has read this
Section 10.2(a) and the conditions set forth in this Section 10.2(a) have been
satisfied.

         (b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date; provided that the
Company shall have performed its obligations pursuant to Section 8.1(b)(vii) in
all respects.

         (c) Permits. All Permits listed in Section 10.2(c) of the Disclosure
Letter shall have been obtained, or arrangements reasonably satisfactory to
Buyer to provide Buyer the benefits of such items as to which Permits shall have
not been obtained, shall have been entered into.

         (d) No Litigation. No Governmental Entity shall have instituted any
suit, action or proceeding that remains pending at the time of Closing seeking
to restrain, enjoin or otherwise prohibit the consummation of the Purchase or
the Mergers (an "Injunctive Action"), and no Person shall have instituted any
suits, actions or proceeding that remains pending at the time of Closing before
any U.S. court of competent jurisdiction, except for any (i) Injunctive Action
and (ii) any other such suits, actions or proceedings that, after giving effect
to any liabilities of Buyer pursuant to the Indemnification Agreement, are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect.

         (e) Fund Agreement. The Company and the shareholders party thereto
shall have executed and delivered to Buyer the Fund Agreement.

         10.3 Conditions to Obligations of the Company. The obligations of the
Company to effect the Closing are also subject to the satisfaction or waiver by
the Company at or prior to the Closing of the following conditions:



                                      -80-

<PAGE>



         (a) Representations and Warranties of Buyer. (i) The representations
and warranties of Buyer set forth in this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except to the extent that any such representation and
warranty expressly speaks as of an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier date)
provided, however, that notwithstanding anything herein to the contrary, this
Section 10.3(a) shall be deemed to have been satisfied even if the
representations and warranties of Buyer are not so true and correct unless the
failure of such representations and warranties to be so true and correct,
individually or in the aggregate, is reasonably likely to materially delay or
impair the validity of the transactions contemplated by this Agreement; and (ii)
the Company shall have received a certificate signed on behalf of Buyer by the
Chief Executive Officer of Buyer to the effect that such Chief Executive Officer
has read this Section 10.3(a) and the condition set forth in this Section
10.3(a) has been satisfied.

         (b) Performance of Obligations of Buyer. Buyer shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.

                                   ARTICLE XI

                                   Termination

         11.1 Termination by Mutual Consent. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Closing by mutual
written consent of the Company and Buyer by action of their respective boards of
directors.

         11.2 Termination by Either Buyer or the Company. This Agreement may be
terminated and the Transactions may be abandoned at any time prior to the
Closing by action of the board of directors of either Buyer or the Company if
(i) the Transactions shall not have been consummated by October 31, 2001 (the
"Termination Date"), whether such date is before or after the adoption of this
Agreement by holders of Company Shares, (ii) the Company shall not have obtained
the Company Requisite Vote upon a vote taken at a meeting of the



                                      -81-

<PAGE>



Company stockholders duly convened therefor or at any adjournment or
postponement thereof or as a result of a solicitation of consents pursuant to
the DGCL and, to the extent applicable, the federal proxy rules, or (iii) any
Order permanently restraining, enjoining or otherwise prohibiting consummation
of the Transactions shall become final and non-appealable; provided that the
right to terminate this Agreement pursuant to clause (i) above shall not be
available to any party that has breached in any material respect its obligations
under this Agreement in any manner that shall have contributed to the occurrence
of the failure of the Transactions to be consummated.

         11.3 Termination by the Company. This Agreement may be terminated and
the Transactions may be abandoned at any time prior to the Closing, whether
before or after the authorization of the Transactions by holders of a majority
of Company Shares entitled to vote thereon referred to in Section 10.1(a), by
action of the Board of Directors of the Company:

         (a) prior to the effectiveness of the Company Requisite Vote, if (i)
the Board of Directors of the Company authorizes the Company, subject to
complying with the terms of this Agreement, to enter into a binding written
agreement concerning a Business Acquisition Proposal or Company Acquisition
Proposal that constitutes a Superior Proposal and the Company notifies the Buyer
that it intends to enter into such an agreement, (ii) Buyer does not make,
within three business days of receipt (not counting the day of receipt) of the
Company's written notification of its intention to enter into a binding
agreement for such Superior Proposal, an offer that the Board of Directors of
the Company determines, in good faith after consultation with its financial
advisors, is at least as favorable, from a financial point of view, to the
stockholders of the Company as such Superior Proposal and (iii) as a condition
to termination pursuant to this Section 11.3 the Company upon such termination
pays to the Buyer in immediately available funds any fees required to be paid
pursuant to Section 11.5(b);



                                      -82-

<PAGE>



         (b) if there has been a material breach by Buyer of any representation,
warranty, covenant or agreement contained in this Agreement that is not curable
or, if curable, is not cured within 30 days after written notice of such breach
is given by the Company to the Buyer and as a result of any such breach or
breaches either of the conditions set forth in Section 10.3(a) or (b) would not
be satisfied at the Closing; or

         (c) (i) if the Merger Agreement has been terminated in accordance with
the terms thereof (other than pursuant to Section 8.3(a) of the Merger Agreement
to enter into a binding written agreement concerning a Healthcare Acquisition
Proposal) or (ii) within 10 Business Days after the termination of the Merger
Agreement pursuant to such Section 8.3(a), the Company has not entered into a
new agreement with respect to a Healthcare Acquisition Proposal that Buyer is
required to accept as a Substitute Merger Agreement pursuant to Section 8.11(c).

         11.4 Termination by Buyer. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Closing by action of the
Board of Directors of Buyer:

         (a) if the Board of Directors of the Company shall have withdrawn or
adversely modified its approval or recommendation of this Agreement or after an
Acquisition Proposal has been made failed to reconfirm its recommendation of
this Agreement within five Business Days after a written request by Buyer to do
so; or

         (b) if there has been a material breach by the Company of any
representation, warranty, covenant or agreement contained in this Agreement
(other than any representation and warranty set forth in Section 6.5(d) or (e))
that is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by Buyer to the Company, and as a result of any
such breach or breaches either of the conditions set forth in Section 10.2(a) or
(b) would not be satisfied at the Closing; or

         (c) if (i) the Merger Agreement is terminated in accordance with the
terms thereof (other than pursuant to Section 8.3(a) of the Merger Agreement to
enter into a binding agreement concerning a Healthcare Acquisition Proposal that
constitutes a Superior Proposal) or (ii)



                                      -83-

<PAGE>



within 10 Business Days after the termination of the Merger Agreement pursuant
to such Section 8.3(a), the Company has not entered into a new agreement with
respect to a Healthcare Acquisition Proposal that Buyer is required to accept as
a Substitute Merger Agreement pursuant to Section 8.11(c);

         (d) at any time during the ten days following the delivery by the
Company to the Buyer of the financial statements described in clause (v) of the
first sentence of Section 8.7(a), if either of the representations and
warranties set forth in Section 6.5(d) or (e) is not true and accurate in all
respects as of the date of such termination; or

         (e) at any time between June 23, 2001 and July 3, 2001 (or such later
date as may be agreed by the Parties in writing), if any of the financial
statements required to be delivered by the Company pursuant to clauses (i)
through (v) of Section 8.7(a) are not delivered to Buyer on or prior to June 22,
2001.

         11.5 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Transactions pursuant
to this Article XI, this Agreement (other than as set forth in Sections 12.1,
12.2 and this Section 11.5) shall become void and of no effect with no liability
on the part of any party hereto (or of any of its directors, officers,
employees, agents, legal and financial advisors or other representatives);
provided that the agreements contained in the last sentence of Section 8.2(a)
and in Sections 11.5 and 11.6 and in Article XII of this Agreement shall survive
termination.

         (b) In the event that this Agreement is terminated (i) by the Company
pursuant to Section 11.3(a) or (ii) by Buyer pursuant to Section 11.4(a) or (b)
or (iii) by either Party pursuant to Section 11.2(ii), in the case of this
clause (iii), if the Voting Agreement has not been terminated pursuant to
Section 8(b)(i)(z) thereof at the time of such vote, then the Company shall
promptly, but in no event later than two Business Days after the date of such
termination, pay Buyer a termination fee of $22,000,000 and shall promptly, but
in no event later than two days after being notified of such by Buyer, pay all
of the charges and expenses incurred by Buyer in connection with this Agreement
and the Transactions up to a maximum amount of $4,000,000,



                                      -84-

<PAGE>



in each case payable by wire transfer of same day funds. Notwithstanding the
foregoing, in the event that this Agreement is terminated by either party
pursuant to Section 11.2(ii) and the Voting Agreement has been terminated
pursuant to Section 8(b)(i)(z) thereof at the time of such vote, the Company
shall promptly, but in no event later than two days after being notified of such
by Buyer, pay all of the reasonable and customary charges and expenses incurred
by Buyer in connection with this Agreement and the Transactions up to a maximum
amount of $5,000,000, payable by wire transfer of same day funds. The Company's
payment shall be the sole and exclusive remedy of Buyer against the Company and
any of its Subsidiaries and their respective directors, officers, employees,
agents, advisors or other representatives with respect to the breach of any
covenant or agreement set forth in this Agreement. The Company acknowledges that
the agreements contained in this Section 11.5(b) are an integral part of the
Transactions, and that, without these agreements, Buyer and the Company would
not enter into this Agreement; accordingly, if the Company fails to promptly pay
the amount due pursuant to this Section 11.5(b), and, in order to obtain such
payment, the Buyer commences a suit which results in a judgment against the
Company for the fee, charges or expenses set forth in this Section 11.5(b), the
Company shall pay to the Buyer its reasonable costs and expenses (including
reasonable attorney's fees) in connection with such suit, together with interest
on the amount so owing at the prime lending rate of Citibank, N.A. in effect on
the date such payment was required to be made.

         11.6 Return of Information. If for any reason whatsoever this Agreement
is terminated, the Buyer shall promptly return to the Company all books,
Contracts, records and data room contents and other written information related
to the Business and all copies or summaries thereof furnished by the Company or
its Subsidiaries or any of their respective agents, employees, or
representatives (including all copies, if any, thereof), and shall not use or
disclose the information contained in such books and records or other documents
for any purpose or make such information available to any other entity or
person. The foregoing obligations of Buyer shall be in addition to Buyer's
obligations under the Confidentiality Agreements.



                                      -85-

<PAGE>



                                   ARTICLE XII

                            Miscellaneous and General

         12.1 Survival. Only this Article XII and Articles II, III, IV, V and IX
and Sections 8.6 (Equitable Assignment), 8.9 (Publicity), 8.10 (No Solicitation
and No Hiring), 8.14 (Sofibel S.A.R.L. Conversion) and 11.6 (Return of
Information) shall survive the Closing. Only this Article XII and the agreements
of Buyer and the Company contained in the last sentence of Section 8.2(a)
(Access) and in Sections 8.4 (Proxy Statement), 11.5 (Effect of Termination and
Abandonment) and 11.6 (Return of Information) and the Confidentiality Agreements
shall survive the termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
Closing or the termination of this Agreement.

         12.2 Expenses. (a) Except to the extent otherwise expressly provided
herein, whether or not the Transactions are consummated, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expense.

         (b) Notwithstanding the provisions of Section 12.2(a), in the event
that this Agreement is terminated pursuant to Section 11.4(d) or (e), then the
Company shall promptly, but in no event later than two days after the date of
such termination, pay all of the charges and expenses incurred by Buyer in
connection with this Agreement and the Transactions up to a maximum amount of
$2,500,000, payable by wire transfer of same day funds.

         (c) Notwithstanding the provisions of Section 12.2(a), in the event
that any of (i) the Merger Agreement is terminated pursuant to Section 8.3(b)
thereof or Section 8.4(a) or (b) thereof, or (ii) this Agreement is terminated
pursuant to Section 11.4(c)(ii) as a result of the termination of the Merger
Agreement pursuant to Section 8.3(a) of the Merger Agreement, or (iii) the Buyer
and its debt and equity financing sources have executed and delivered to the
Company the Closing Agreement stating that all conditions to the Closing (other
than the execution and delivery of the Closing Agreement by the other parties
thereto) have been or will be satisfied or waived by Buyer



                                      -86-

<PAGE>



(other than Section 10.1(c), which cannot be waived for this purpose) and this
Agreement is thereafter terminated pursuant to Section 11.3(c) or 11.4(c), then,
in any such case, the Company shall promptly, but in no event later than two
days after the date of such termination, pay all of the charges and expenses
incurred by Buyer in connection with this Agreement and the Transactions up to a
maximum amount of $5,000,000, payable by wire transfer of same day funds.

         (d) In the event that the Company shall reimburse Buyer's expenses
pursuant to any of the first sentence of Section 11.5(b), the second sentence of
Section 11.5(b), Section 12.2(b) or Section 12.2(c) (any of such four
provisions, a "Specified Provision"), payments made in respect of the
reimbursement of expenses pursuant to any Specified Provision will be credited
against any payment required to be made pursuant to any other Specified
Provision.

         12.3 Modification or Amendment. Subject to the provisions of applicable
Law, at any time prior to the Closing, the parties hereto may modify or amend
this Agreement, by written agreement executed and delivered by duly authorized
officers of Buyer and the Company.

         12.4 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Transactions are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable Law.

         12.5 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.

         12.6 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
AND ANY DISPUTES, CLAIMS OR CONTROVERSIES ARISING FROM OR RELATING TO THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF,
EXCEPT TO THE EXTENT THAT DELAWARE LAW IS REQUIRED TO BE APPLICABLE UNDER
APPLICABLE CHOICE OF LAW PRINCIPLES. The parties hereby irrevocably submit to
the jurisdiction of the courts of the State of New York and the Federal courts
of the United



                                      -87-

<PAGE>



States of America located in the County of New York, New York solely in respect
of the interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement (unless otherwise provided therein),
and in respect of the Transactions, and hereby waive, and agree not to assert,
as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all Claims shall be heard and determined
in such a New York State or Federal court. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such Claim by certified mail in the manner provided in
Section 12.7 or in such other manner as may be permitted by law shall be valid
and sufficient service thereof.

         (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.6.

         12.7 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail return receipt requested,
postage prepaid, by overnight courier, or by facsimile:



                                      -88-

<PAGE>



         if to Buyer

         Armkel, LLC
         c/o Kelso & Company
         320 Park Avenue, 24th Floor
         New York , NY 10022
         Attention: General Counsel
         fax: (212) 555-1212
         (with copies to:

         Church & Dwight Co., Inc.
         469 North Harrison Street
         Princeton, N.J. 08543
         Attention: General Counsel
         fax: (609) 555-1212

         Ronald Beard
         Gibson, Dunn & Crutcher LLP
         4 Park Plaza
         Irvine, CA 92614
         Tel:     (949) 451-4089
         Fax:     (949) 475-4730

         Steven P. Buffone
         Barbara L. Becker
         Gibson, Dunn & Crutcher LLP
         200 Park Avenue
         New York, NY 10166
         Tel:     (212) 351-4000
         Fax:     (212) 351-4035

         and

         Lou Kling
         Eileen T. Nugent
         Skadden, Arps, Slate, Meagher & Flom LLP
         Four Times Square
         New York, NY 10036
         Tel:     (212) 735-2770
         Fax:     (917) 777-2770)

         if to the Company at or prior to Closing

         1345 Avenue of the Americas
         New York, N.Y.
         Attention: Stephen R. Lang
         Fax: (212) 339-5074




                                      -89-

<PAGE>



         (with copies to James C. Morphy,
         Sullivan & Cromwell, 125 Broad Street, New York,
         New York 10004 (Facsimile 212-558-3588) and
         Matthew G. Hurd, Sullivan & Cromwell,
         1870 Embarcadero Road, Palo Alto, California 94303
         (Facsimile: 650-461-5700).)

         if to the Company at or after Closing

         C/o MedPointe Capital Partners, L.L.C.
         51 JFK Parkway
         First Floor, West
         Short Hills, N.J. 07078
         Attention: Tony Wild
         fax: (973) 218-2704

         (with a copy to William E. Curbow, Simpson Thacher
         & Bartlett, 425 Lexington Avenue, New York, New
         York 10017  (Facsimile:  (212) 455-2502).)


or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above. Notice shall be deemed given on
the date of actual delivery to the appropriate address. Delivery receipts and
records issued by postal authorities and overnight air couriers shall be
conclusive evidence of delivery dates for deliveries by such entities.

         12.8 Entire Agreement; NO OTHER REPRESENTATIONS. (a) This Agreement
(including the Ancillary Agreements and any other exhibits hereto), the
Disclosure Letter, the Confidentiality Agreements and any agreement between the
Company and Buyer making specific reference to this Section 12.8 constitute the
entire agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof.

         (b) EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN ARTICLES VI and VII IN THIS AGREEMENT, NEITHER THE
COMPANY NOR THE BUYER MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES (INCLUDING
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS), AND EACH HEREBY DISCLAIMS
ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTA-



                                      -90-

<PAGE>

TIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE
TRANSACTIONS, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE
OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT
TO ANY ONE OR MORE OF THE FOREGOING.

         12.9 Severability. It is the intention of the parties that the
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforce-
ability of the other provisions hereof. It is the intention of the parties that
if any provision of this Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

         12.10 Assignment. (a) Subject to Section 9.3(b), this Agreement shall
not be assignable by operation of law or otherwise and any assignment made in
contravention of this Section shall be null and void.

         (b) From and after Closing, in the event Buyer or the Company or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
in such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets relating to the Business, in the case of Buyer, and
relating to the business of the Company, in the case of the Company, to any
Person, then, and in each case, proper provision shall be made so that such
successors and assigns of Buyer or the Company, as the case may be, expressly
agree to assume and honor the obligations of Buyer or the Company, as
applicable, set forth in this Agreement. Notwithstanding anything herein to the
contrary, Buyer may assign all or any portion of its rights, obligations or
other interests under this Agreement to purchase one or more Transferred
Subsidiaries to one or more Subsidiaries of Buyer, provided that Buyer shall
remain obligated hereunder.



                                      -91-

<PAGE>



         12.11 No Third-Party Beneficiary Rights. Except with respect to
Sections 9.1(e), 9.1(f), 9.1(h)(i), 9.1(i)(ii), (iii) and (v), 9.1(j), 9.3(b)
and 9.3(c), this Agreement is not intended to confer upon any Person other than
the Parties any rights or remedies hereunder or in connection herewith.

         12.12 Bulk Transfers. The Parties waive compliance with the
requirements of the bulk sales laws of any jurisdiction in connection with the
Transactions.

         12.13 Further Assurances. Following the date of this Agreement, and
continuing during the period after the Closing, the Company and Buyer will use
reasonable best efforts to identify Excluded Assets and Excluded Liabilities
held by the Transferred Subsidiaries or by Buyer and its Affiliates and
Purchased Assets and Assumed Liabilities held by the Company and its Affiliates.
From time to time, whether at or after the Closing, (a) the Company will exe-
cute and deliver such further instruments of conveyance, transfer and assignment
and take such other action as Buyer may reasonably require to more effectively
convey and transfer to Buyer any of the Purchased Assets as contemplated
hereunder and to have the Company retain the Excluded Liabilities as
contemplated hereunder, and (b) Buyer will execute and deliver such further
instruments and take such other action as the Company may reasonably require to
more effectively assume the Assumed Liabilities as contemplated hereunder.

         12.14 Enforcement. The parties 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. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.



                                      -92-


<PAGE>



         IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their proper officers, duly authorized so to do all as of the date
of this Agreement.

                                      ARMKEL, LLC


                                      By: Church & Dwight Co., Inc.

                                          By: /s/ Robert A. Davies, III
                                              ---------------------------------
                                              Name: Robert A. Davies, III
                                              Title: Chief Executive Officer

                                      By:  Kelso & Company, L.P.

                                           By: Kelso & Companies, Inc.
                                               its general partner

                                           By: /s/ James J. Connors, II
                                               --------------------------------
                                               Name:  James J. Connors, II
                                               Title: V.P. & General Counsel


                                      CARTER-WALLACE, INC.


                                      By: /s/ Ralph Levine
                                          -------------------------------------
                                          Name: Ralph Levine
                                          Title: Chairman and Chief Executive
                                                    Officer







                                      -93-

<PAGE>



                                                                       EXHIBIT A

                                  Bill of Sale

                                      A-94



<PAGE>

                                                                   Exhibit 10(h)

February 2, 2001

Mr. Jon Finley
6393 Oxbow Bend
Chanhassen, MN 55317

Dear Jon,

The Board and Executive Management Team are excited about you joining the
Company. More importantly, we all are enthused about a long future with you as
President and COO, and CEO. I feel that working in partnership with you,
together we will be able to transform Church & Dwight. The enclosed documents
outline our offer for the position of President and Chief Operating Officer for
Church & Dwight Co., Inc. This letter and attachments, when signed by you,
represent our mutual agreement with respect to your employment with Church &
Dwight Co., Inc.

We would like you to start on or before April 1, 2001. I know you are concerned
about the prospects of moving your family and in the end not being promoted to
Chief Executive Officer. To help you make this transition given the uncertainty,
Church & Dwight is willing to take several important steps in order to mitigate
your concerns. Assuming the Board makes its final decision that you are to be
the Company's next CEO, our intention is to make that move at the Annual
Stockholders Meeting in May of 2002. The decision to transfer the CEO role to
you may be made earlier than May 2002. In order to address
 your concerns and
demonstrate our commitment, we will be:

      -     Communicating to Wall Street by September 15, 2001 of our decision
            to promote you to CEO. As CEO Elect, you will focus on completing
            the transition of authority from Bob Davies.

      -     Willing to incur significant financial penalty as part of the Terms
            of Employment Agreement. Church & Dwight Co., Inc. will pay the
            attached including 2.5 times your base salary and full target bonus
            (100% of base salary) in the event that after September 15, 2001
            Church & Dwight decides not to execute the agreed promotion to the
            CEO position by June 30, 2002 and you have separated from the
            Company.

      -     Church & Dwight also agrees to pay the attached including 1.5 times
            your annual base salary and a full target bonus (100% of base
            salary) in the event it is decided not to make you CEO Elect on or
            before September 15th 2001 resulting in your separation from the
            Company.


<PAGE>

                                                                      Jon Finley
                                                                February 2, 2001
                                                                          Page 2

      -     You will be a Director on the Church & Dwight Co., Inc. Board the
            first day you start employment

      On April 1st 2001, you will take responsibility for the Arm & Hammer
Consumer Products Business. Bob Davies's role will immediately move from leading
the A&H division to transitioning leadership of the division to you. Bob's
responsibility will be to:

      -     Manage the overall issues for the corporation, including your
            successful transition to CEO

      -     Introduce you to Wall Street, customers, partners, bankers and other
            outsiders

      -     Lead, with you and Zvi, the work required on major acquisitions

      -     Transfer to you, Bob's breadth of knowledge about the Company and
            the industries in which we compete

      -     Lead the Specialty Products Division until its transfer to you
            planned for October 1, 2001

      -     Bob Davies will work himself out of the day-to-day management of the
            Arm & Hammer business.

I am pleased to offer you this position and an attractive package of both direct
and indirect benefits. The terms of our employment offer are detailed within the
attached documents, which outline our proposed Employment Terms for this
position. The offer is contingent upon a satisfactory completion of a drug
screening.

I hope you see how clearly committed we are to preparing you to be a very
successful Chief Executive Officer of Church & Dwight Co., Inc. I look forward
to further discussing this opportunity with you at your earliest convenience.

Sincerely,

/s/ Steven P. Cugine         
-------------------------------
Steven P. Cugine
Vice President, Human Resources

SPC:tms
Enclosures

Agreed: /s/ Jon Finley
        -----------------------

Date:   2/15/01
        -----------------------


<PAGE>

                            Church & Dwight Co., Inc.

--------------------------------------------------------------------------------

                       Employment Agreement for Jon Finley

--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                Proposed Agreement
                                 --------------------------------------------------------------------------------------
<S>                              <C>
Position                         o    President and Chief Operating Officer of Church & Dwight Co., Inc.

Salary                           o    At commencement of employment base salary of $350,000 per annum
                                 o    On January 1, 2002 your base salary will be increased to $375,000

Annual Incentive                 o    Minimum:        0% of salary
                                 o    Target:       100% of salary
                                 o    Maximum:      200% of salary
                                 o    Paid On:     _____ Each year

Deferred sign-on Bonus           o    100,000 stock options at fair market value on grant date: 1st date of
                                      employment
                                      -   34,000 will vest when the stock price hits $25 per share
                                      -   33,000 will vest when the stock price hits $27.50 per share
                                      -   33,000 will vest when the stock price hits $30 per share
                                      -   The stock price must be equal to if not greater than the vesting price
                                          for at least twenty consecutive trading days for the options to vest
                                      -   If price targets are not satisfied, options will vest at the conclusion
                                          of three years, and will run for a ten year term
                                      -   If employment is terminated for any reason, options will vest on such
                                          termination. You will be required to exercise those options at the
                                          earlier to occur of 3 years from the date of termination, or the date at
                                          which the current market price for the stock is $10 greater than the
                                          option price. The stock price is defined as the highest price for twenty
                                          consecutive trading days.
Long-term Incentives             o    Participation in the 2001 Church & Dwight Co., Inc. Stock Option Grant which
                                      will provide 50,000 options at fair market value on grant date, vesting at
                                      conclusion of three years, and will run for a ten year term.
                                 o    Your 2002 stock option grant will be no less than 100,000 options at fair
                                      market value on grant date, vesting at conclusion of three years, and will
                                      run for a ten year term. Ongoing option grant amount will be determined based
                                      on the results of the Long-term Incentive competitive market study.

Benefits, etc.                   o    Participation in all company plans and programs (see plan documents-
                                      attached)
                                 o    Relocation expense reimbursement (see program documents-attached)

Termination without "Cause"      o    Base salary to date of termination 
by C&D, or for "Good Reason"     o    Base salary continuation for eighteen months 
by Executive unrelated to        o    Annual incentive at target (100% of base salary or $350,000)
CIC, Within Six Months of        o    Settlement of deferred compensation
Hire Date                        o    Continued health and life insurance for twenty-four months (or the company
                                      will pay the after-tax cost of securing similar benefits)
                                 o    Long-term Incentive options are governed by Grant Agreements and Plans, to
                                      the extent, not provided for herein
                                 o    Immediate vesting of benefits (including Company contributions) in Profit
</TABLE>



<PAGE>

                            Church & Dwight Co., Inc.

--------------------------------------------------------------------------------

                       Employment Agreement for Jon Finley

--------------------------------------------------------------------------------


<TABLE>
<S>                              <C>
                                      Sharing and Saving Plans
                                 o    Relocation expenses back to Minneapolis including all lease termination
                                      penalties or real estate expenses of local home sale

Termination without "Cause"      o    Base salary to date of termination 
by C&D, or for "Good Reason"     o    Base salary continuation for thirty months 
by Executive prior to CIC,       o    Annual incentive at target (100% of base salary) 
After Six Months of Hire         o    Settlement of deferred compensation
Date                             o    Continued health and life insurance for twenty-four months (or the company
                                      will pay the after-tax cost of securing similar benefits)
                                 o    Long-term incentive options are governed by Grant Agreements and Plans, to
                                      the extent not provided for herein
                                 o    Immediate vesting of benefits (including Company contributions) in Profit
                                      Sharing and Savings Plans
                                 o    Relocation expenses back to Minneapolis including all lease termination
                                      penalties or real estate expenses of local home sale

Termination Due to Death         o    Base salary to date of death
                                 o    Pro rata annual incentive at target
                                 o    Options continue to vest and are exercisable for three years (but no longer
                                      than the term)
                                 o    Options that vest based on stock price will vest at death regardless of the
                                      stock price
                                 o    Settlement of deferred compensation
                                 o    Immediate vesting of benefits (including Company contributions) in Profit
                                      Sharing and Savings Plans

Termination Due to Disability    o    Base salary through date of Disability
                                 o    60% of salary (policy to be purchased by
                                      Company for you) to earlier of age 65 or
                                      receipt of Deferred Compensation or Profit
                                      Sharing (see plan documents)
                                 o    Pro rata annual incentive for year of termination at target
                                 o    Retains employee status regarding benefits and deferral until earlier of age
                                      65 or receipt of Deferred Compensation or Profit Sharing (see plan documents)
                                      o If recovers from Disability and not offered previous positions, treated as
                                      terminated without "Cause"
                                 o    If offered previous position and refuses, without good cause, assuming timing
                                      is adjusted for the length of disability, treated as "Quit"
                                 o    Options continue to vest pursuant to the plan

Termination for Cause            o    Base salary through date of termination
                                 o    Settlement of deferred compensation
                                 o    Vested options exercisable for 30 days
                                 o    Forfeiture of unexercised options and other outstanding awards
                                 o    Subject to clawback of option profits other than Deferred Sign-On Bonus
                                      realized (a) within two years prior to or after termination if violation of
                                      restrictive covenants (including non-compete) which occurs after 
</TABLE>



<PAGE>

                            Church & Dwight Co., Inc.

--------------------------------------------------------------------------------

                       Employment Agreement for Jon Finley

--------------------------------------------------------------------------------


<TABLE>
<S>                              <C>
                                      termination, or (b) within two years prior to or after violation of restrictive
                                      covenants (including non-compete) occurs while employed.

Quit without Good Reason         o    Treated the same as a termination for "Cause"
                                 o    Subject to post-termination clawback if Executive violates restrictive covenants

Within Two Years Following       o    Base salary to date of termination 
CIC Termination without          o    2.0x sum of base salary plus target bonus 
"Cause" by C&D or for "Good      o    Pro rata annual incentive at target 
Reason" by Executive             o    Immediate vesting of all stock options
                                 o    Settlement of deferred compensation
                                 o    Immediate vesting of benefits (including Company contributions) in Profit
                                      Sharing and Savings Plans
                                 o    Continue medical, health and life insurance for 24 months (or the company
                                      will pay the after-tax cost of securing similar benefits)
</TABLE>



<TABLE>
<CAPTION>
                                                                       Definitions
                                 --------------------------------------------------------------------------------------
<S>                              <C>
Good Reason Within Six Months    o    Failure to make public by September 15th, 2001 our intention to promote you
                                      to Chief Executive Officer
                                 o    Decrease in salary or target annual incentive below 100%
                                 o    Material breach of this agreement by Company
                                 o    CIC, requiring relocation more than 35 miles from C&D headquarters
                                 o    Other good cause as set out below

Good Reason After Six Months     o    Failure by C&D to promote to Chief Executive Officer by June 30, 2002 unless
                                      executive agrees to an extension.
                                 o    Decrease in salary or target annual incentive below 100%
                                 o    Material breach of this agreement by Company
                                 o    CIC, requiring relocation more than 35 miles from C&D headquarters
                                 o    Other good cause as set out below

Change in Control                o    Any person acquires 50% or more of issued and outstanding voting equity
                                 o    Director composition change of 50% or more over any 24 month period
                                      (unapproved by 2/3's of "Incumbent Directors")
                                 o    Merger, consolidation, sale of all or substantially all assets or other
                                      transaction approved by shareholders unless 50% or more continuing ownership

Cause                            o    Termination due to dishonesty, fraud, insubordination, willful misconduct, or
                                      refusal to attempt to perform services (any reason other than illness or
                                      incapacity) or breach of the executives fiduciary responsibility
</TABLE>



<PAGE>

                            Church & Dwight Co., Inc.

--------------------------------------------------------------------------------

                       Employment Agreement for Jon Finley

--------------------------------------------------------------------------------


<TABLE>
<S>                              <C>
Competition                      o    Any business within a company or corporation which sells products that
                                      competes with the products sold by the Company or any subsidiary or division
                                      thereof and for which Executive would perform substantially similar
                                      employment functions to those performed at the Company
                                 o    Specific company list to be supplied by the Company

Executive's Obligations          o    Unlimited non-disclosure of confidential information, agreement terms and
                                      employee information
                                 o    Unlimited availability for litigation support with after-tax expense
                                      reimbursement
                                 o    Non-compete as specified for 24 months if terminated without "Cause"
                                 o    Non-compete as specified for 24 months if terminated for "Cause", and for the
                                      remaining Term of Employment if retired
                                 o    Non-solicitation of employees for 24 months
                                 o    Non-disparagement (Mutual)
                                 o    All company materials must be returned prior to final day of employment
                                 o    Subject to clawback of option profits if violation of restrictive covenants
                                      occurs while employed or within 24 months after termination date
                                 o    Injunctive relief

Dispute Resolution               o    Arbitration
                                 o    New Jersey courts/laws
                                 o    Your legal costs reimbursed unless action determined to be in bad faith or
                                      frivolous

Indemnification                  o    As provided in by-laws
                                 o    D&O coverage and total indemnification provided in by-laws for Officers and
                                      Directors. In addition, the company has purchased an insurance policy
                                      coverage of $25 million with company paying excess over coverage.

Other                            o    Executive to execute written release in exchange for all severance payments
</TABLE>




<PAGE>

                                                                   Exhibit 10(i)

                                                                  EXECUTION COPY

                        SUPPLEMENTAL EMPLOYMENT AGREEMENT

      This Supplemental Employment Agreement ("Supplemental Agreement"), made
this ________ day of September, 2001, between Church & Dwight Co., Inc., a
Delaware corporation (hereinafter "Employer"), having a principal place of
business at 469 North Harrison Street, Princeton, New Jersey 08543, and Jon L.
Finley (hereinafter the "Employee").

                                   WITNESSETH:

      WHEREAS, Employee was employed by Employer from April 1, 2001 to July 15,
2001; and

      WHEREAS, Employer and Employee entered into an Employment Agreement dated
as of April 1, 2001 (the "Employment Agreement"), which provides for, among
others, the terms and conditions applicable upon Employee's resignation from the
Employer, and

      WHEREAS, Employee tendered his resignation from his position with
Employer, as President and Chief Operating Officer, effective on July 15, 2001,
and

      WHEREAS, Employer has accepted such resignation, and

      WHEREAS, Employer and Employee are desirous of clarifying and
supplementing the terms and conditions of the Employment Agreement relating to
Employee's resignation from Employer, by entering into this Supplemental
Agreement.

      NOW, THEREFORE, in consideration of the mutual agreements and commitments

contained herein, the parties hereby agree as follows:

<PAGE>

      1. Employee's resignation from service with the Employer is effective on
July 15, 2001, (the "Resignation Date"). Consideration to be paid to Employee
shall be the same as that enumerated in the section of the Employment Agreement
designated as "Resignation for Good Reason within six-months", including the
following terms. Commencing on the Resignation Date and for a period of nineteen
(19) months thereafter, (July 16, 2001 through February 15, 2003) Employer
agrees to continue Employee's base salary (to be paid in accordance with
Employer's regular payroll) computed at Employee's current annual salary rate of
$350,000 per year, as consideration for and, together with all additional
consideration provided for herein and in the Employment Agreement, in full
settlement of any and all claims which Employee may have against Employer now or
in the future arising from Employee's employment relationship with Employer,
including, but not limited to, the terms and conditions of this Supplemental
Agreement or the Employment Agreement. In addition, and provided that Employee
does not obtain similar coverage from another source, during this nineteen-month
period of time, and for an additional period of five (5) months (February 15,
2003 through July 15, 2003), Employee will continue to be covered by Employer's
medical, dental and life insurance employee benefit plans, ("Employee Benefit
Plan Coverage"), which in no event will provide lesser coverage or higher
contributions than on the date of resignation, except that Employee will be
subject to changes made to such benefit plans which changes apply generally to
all Plan participants. Except as provided herein, or in the Employment
Agreement, participation by Employee in all other Employer benefit plans shall
terminate on the Resignation Date. Employee shall also be eligible for
continuation of health care coverage, if available, as provided in the
Consolidated Omnibus Reconciliation Act of 1985 ("COBRA"). In addition to all
other compensation provided for in this Paragraph 1, Employee shall receive
distribution of all vested accounts Employee has in Employer's savings plan,
profit sharing 


                                       2

<PAGE>

plan and deferred compensation plan, as provided for pursuant to each respective
plan, and/or in the Employment Agreement. Such distribution will be made in the
normal course of administration of such plans. Attached to this Agreement as
Exhibit A is a letter addressed to Employee from Employer's Human Resource
Department indicating the specific amounts vested in each respective plan.

      2. The parties acknowledge that any matching contributions earned by
Employee as a result of his contributions to Employer's savings plan would not
be vested, pursuant to the terms of that plan, and, therefore, could not be
distributed to Employee. Employer hereby agrees to pay to Employee, as soon as
practicable following execution of this Supplemental Agreement, an amount equal
to the value of the 86.807 shares of Employer's stock credited to Employee's
account on the date of distribution, less applicable payroll withholdings, as
additional compensation in lieu of such Employer match. The value of such shares
as of August 27, 2001 was $2,288.23.

      3. Notwithstanding the provisions of Employer's 1998 Stock Option Plan
("Plan"), the stock option award granted to Employee on April 1, 2001, with
rights to purchase 100,000 shares of Employer's stock, at a purchase price of
$22.715 per share, is 100% vested as of July 15, 2001. Employee agrees to
exercise such options at the earlier to occur of July 15, 2004 or the date at
which the then current market price for Employer's stock is $10 greater than the
option price for 20 consecutive trading days. Any options not so exercised will
be forfeited. All other stock options granted to Employee are hereby forfeited.


                                       3

<PAGE>

      4. The parties acknowledge that Employee is entitled to an incentive
compensation award for 2001 in the gross amount of $350,000. Such amount, less
applicable tax withholdings, shall be paid to Employee in a manner consistent
with Employer's Incentive Compensation Program, but in no event later than
February 15, 2002.

      5. Employer agrees to pay to Employee certain unpaid relocation expenses
incurred by Employee in connection with his commencement of employment. Employer
further agrees to provide Employee a gross-up payment with respect to any
non-tax-deductible relocation payment made to Employee, and included in
Employee's income. The gross-up payment shall be an amount sufficient to enable
Employee to have an adequate amount of after-tax dollars to pay his income taxes
on the non-tax-deductible relocation payments (the "Gross-up"). The total amount
to be paid, exclusive of any Gross-Up, is $9,839.77 as follows:


<TABLE>
<S>                                                                      <C>
         Minnesota House Payments - Interest

                       5/1/01 - 6/28/01                                  $2,835.54

         Minnesota House Payments - Property Tax

                       5/1/01 - 6/28/01                                  $2,004.23

         Miscellaneous Expense Allowance                                 $5,000.00
                                                                         ---------
                                                                         $9,839.77
</TABLE>


      Employee agrees to accept this payment in full settlement of all claims
relating to relocation costs in connection with Employee's commencement of
employment. Said amount shall be paid to Employee as soon as practicable
following execution of this Supplemental Agreement.


                                       4

<PAGE>

      6. Employer agrees to reimburse Employee for certain expenses incurred by
Employee in connection with his possible relocation from Princeton, New Jersey
to a new location of Employee's choice anywhere in the continental United
States, provided that such relocation occurs by July 15, 2002, and, further
provided, that Employee is not otherwise reimbursed for such expenses by a third
party. Such relocation reimbursements shall be subject to the Gross-up procedure
described in Section 5 above. Expenses subject to reimbursement are:

            (i)   actual cost of physical relocation of Employee, his family and
                  his personal possessions.

            (ii)  real estate commission on sale of Princeton residence.

            (iii) any other reasonable and customary real estate expenses in
                  connection with the sale of Employee's Princeton residence.

      7. In exchange for the consideration described above, and for other good
and valuable consideration, Employee:

            a. hereby releases and forever discharges Employer, its officers,
            directors, employees, successors, and assigns of and from any and
            all actions or causes of action, suits, claims, charges or
            complaints which Employee may have against Employer, for all claims,
            including but not limited to, claims alleging discrimination under
            the Age Discrimination in Employment Act (ADEA), as amended, or
            unfair employment practices of any type arising from Employee's
            employment with or resignation from Employer. The Employee does not
            waive


                                       5

<PAGE>

            any rights or claims that may arise after the effective date of this
            Supplemental Agreement. Moreover, Employee affirms that he will not
            cause, nor permit to be filed on his behalf, any charge, complaint
            or action before any court or administrative agency alleging
            discrimination or any unfair employment practice except that
            Employee may bring a claim under the ADEA to challenge this
            Supplemental Agreement; and

            b. agrees not to engage, directly or indirectly, for a period of
            nineteen months from the Resignation Date (July 16, 2001 through
            February 15, 2003), in any business activity, including but not
            limited to, participation as an employee, agent, consultant, owner,
            principal, investor, or the like, where such business activity
            competes directly or indirectly with the manufacture, marketing or
            sale of Employer's products. Notwithstanding anything to the
            contrary contained elsewhere in this paragraph or in this
            Supplemental Agreement, Employee may become affiliated with any
            organization he chooses including those organizations which contain
            Business Units which compete directly or indirectly with the
            manufacturing, marketing or sale of Employer's products; provided,
            however, that Employee shall not be affiliated in any manner, as
            described above, with such competing Business Unit. For purposes of
            this Section 7(b), "Business Unit(s)" shall be defined as any
            business group, department, division or the like, engaged in the
            manufacturing, marketing or sale of laundry products, toothpastes or
            dentifrices, mouthwash, or oral care gums.

            c. Notwithstanding the provisions of Section 7(b) above, should
            Employee engage directly or indirectly in a competing activity
            otherwise prohibited by the


                                       6

<PAGE>

            provisions of Section 7(b), then, in that event, Employer's
            obligation to provide continuation of Employee's base salary and
            medical, dental and life insurance benefits, as provided in Section
            1 above, shall cease effective as of the date of commencement of
            such activity. Any base salary paid to Employee for periods prior to
            such effective date shall be retained by Employee. Any base salary
            paid to Employee for periods following such effective date shall be
            returned to Employer by Employee immediately after such effective
            date.

      8. Employee hereby resigns his position as a member of Employer's Board of
Directors, effective on the Resignation Date.

      9. The parties acknowledge that Employee has returned to Employer any
property of Employer that was in the possession of Employee.

      10. Both parties agree to hold confidential and not disclose to any third
party, except Employee's immediate family, and legal, accounting and financial
advisors, the terms of this Supplemental Agreement, or the Employment Agreement.

      11. The parties mutually agree that each will not deprecate, disparage or
otherwise comment adversely upon the other to any person or entity; provided,
however, that this provision shall not prohibit either party from responding to
questions asked of him or a representative of Employer at a deposition, trial or
other legal or administrative proceedings; and, further provided, that should
either party be called upon to participate in any such activity, the party so
called upon will give the other party as much advance notice of such
participation 


                                       7

<PAGE>

as is reasonable under the circumstances, to enable such other party to take any
legally permissible action such other party may deem appropriate to seek to
enjoin such participation. Employer and Employee have reached agreement on a
statement of reference to be provided in response to third party inquiries
regarding Employee's tenure with Employer. Such statement is attached hereto as
Exhibit B. Employer further agrees that all such third party inquiries shall be
referred to Employer's Vice President Human Resources for response. Employer
further agrees to instruct its appropriate employees regarding the proper
handling of such third party inquiries.

      12. Employee shall have no less than twenty-one (21) days to consider this
Supplemental Agreement before execution. This Supplemental Agreement may be
revoked by Employee at any time up to seven (7) days immediately following the
execution of this Supplemental Agreement by both parties by delivering written
notification of such revocation to Employer's General Counsel. This Supplemental
Agreement shall not become effective or enforceable until such revocation period
has expired.

      13. Employee represents and warrants that, during the course of his
employment with Employer, he conducted himself in a manner consistent with the
"Guidelines for Personal Business Conduct", as disseminated to employees from
time to time, and that all acts he performed were within the scope of his
employment with Employer.

      14. This written agreement, together with the Employment Agreement,
contain the entire agreement with respect to the subject matter of this
Supplemental Agreement between the parties, provided, however, that if there is
any conflict between the provisions of this 


                                       8

<PAGE>

Supplemental Agreement and the Employment Agreement, then, in that event, the
provisions of this Supplemental Agreement shall control. The parties acknowledge
and agree that neither of them has made any representation with respect to the
subject matter of this Supplemental Agreement or any representations inducing
the execution and delivery hereof, except such representations as are
specifically set forth herein and each of the parties hereto acknowledge that he
or it has relied on his or its own judgment in entering into same. The parties
hereto further acknowledge that any statements or representations that may have
been made heretofore by either of them to the other are void and of no effect
and that neither of them has relied thereon in connection with his or its
dealings with the other. Employee is advised to seek the advice of legal counsel
prior to entering into this Supplemental Agreement, and acknowledges that
Employer has afforded him ample time and opportunity to do so, at his own
expense.

      15. The parties mutually agree that if there is a material breach or
intended material breach by either party to this Supplemental Agreement, the
Employment Agreement, or of the Confidential Information and Inventions
Agreement dated April 1, 2001 (Exhibit C attached hereto and made a part
hereof), the non-breaching party's remedies at law will be inadequate and said
party shall be entitled to seek redress by court proceedings in the form of an
injunction restraining the breaching party and/or providing for specific
performance without any bond or other security being required. Nothing herein
shall be construed as preventing the non-breaching party from pursuing, or
seeking any damages at law or in equity which it may have, and the non-breaching
party shall, in any event, be entitled upon any such material breach to
terminate this Supplemental Agreement, or the Employment Agreement.


                                       9

<PAGE>

      16. The parties hereby agree that Employee shall be entitled to avail
himself of the indemnity protections afforded officers of Employer as provided
in Article IX of Employer's By-Laws, a copy of which is attached hereto as
Exhibit D and incorporated herein.

      17. All disputes relating to employment of Employee, including disputes
relating to the Employment Agreement or this Supplemental Agreement, shall be
resolved through arbitration and in accordance with the rules of the American
Arbitration Association for employment disputes except as modified herein.
Notice of demand for arbitration shall be filed in writing with the other party
and the American Arbitration Association. The arbitration decision shall be
binding and conclusive provided that the decision is consistent with the laws of
the State of New Jersey and the factual decision(s) is not against the weight of
the evidence. Both parties shall have a right to appeal the arbitrator's
decision in accordance with the aforesaid standard. The award rendered by the
arbitrator shall be final, and judgment may be entered upon it in accordance
with the applicable law in New Jersey and as limited by the right of appeal
described herein.

      If either party should require relief in the form of a temporary
restraining order, a preliminary injunction or other emergency order, the party
may proceed directly to court without the need to seek relief by way of
arbitration initially.

      18. The parties hereto agree that it is their intention that this
agreement is to be construed in accordance with the laws of the State of New
Jersey, and agree to submit any formal court proceeding to the applicable court
of the State of New Jersey.


                                       10

<PAGE>

      19. This Agreement shall be binding on and inure to the benefit of the
respective parties hereto, their successors and assigns.

      IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the date and year first above written. CHURCH & DWIGHT CO., INC.


                                  /s/ Steven P. Cugine                   10/5/01
                                  ----------------------------------------------
                                  Steven P. Cugine                          Date
                                  Vice President Human Resources




                                  /s/ Jon L. Finley                      10/3/01
                                  ----------------------------------------------
                                  Jon L. Finley                             Date


                                       11


<PAGE>

                                                                   Exhibit 10(j)

January 3, 2002

Joseph A. Sipia, Jr.
1620 Thistlewood Drive
Washington Crossing, PA 18977

Dear Joe:

The executive management team is excited about the prospect of you joining the
company. We are just as enthused about your long-term future with Church &
Dwight Co., Inc. This letter will confirm our offer for the position of
President and Chief Operating Officer, Specialty Products Division; reporting
directly to Robert Davies, Chief Executive Officer.

We are offering an attractive package of both direct and indirect benefits. Some
of the major highlights of our employment offer are detailed below:

o     Your starting base salary will be $10,416.67 semi-monthly ($250,000
      annually).

o     You will participate in the Church & Dwight Incentive Compensation program
      that pays out a target of 55% of base salary with a range of 0 to 200% of
      target depending on performance.

o     You will be enrolled in the company's Stock Option plan. Options are
      annually distributed in the May time-frame. You will receive stock options
      equal in number to those received by other employees at your level. Your
      two grants, which you will receive shortly after your first day of
      employment, will be for 17,300 and 7,700 options and you will have an
      exercise
 price equal to the average of the high and low on your start date
      (details surrounding these grants are outlined in the attached term
      sheets.).

o     Vacation Entitlement -You will receive 20 vacation days and 2 personal
      days in 2002.

o     You will participate in Church & Dwight's comprehensive health, welfare
      and retirement programs. In order to help offset the reduction in your
      existing retirement plan, we are prepared to offer the following:

      -     An additional 10% of cash compensation to the annual profit sharing
            program
      -     Increase your stock option base multiple from 1.8 to 2.1, which at
            today's price would equal an additional 2,900 stock options


<PAGE>

                                                            Joseph A. Sipia, Jr.
                                                                 January 3, 2002
                                                                     Page 2 of 2

o     Your anticipated start date will be February 1, 2002.

Kathy McAleer of the Human Resources Department will be contacting you to
schedule a full benefits orientation shortly after your start date. In the
interim, the attached "Summary of Benefits" should provide a helpful outline of
our benefits programs. Your benefits become active on the first day of the month
following 30 days of active employment.

This offer is contingent upon the satisfactory completion of a drug screening,
as well as verification of your eligibility to work in the United States (I-9).
Call Martin Hayes (609-279-7313) to setup an appointment for your drug
screening. Please do not hesitate to contact me with regard to the specifics of
this offer and/or related benefit programs.

Sincerely,


/s/Steven P. Cugine

Steven P. Cugine
Vice President, Human Resources


Accepted by: /s/ Joseph A. Sipia, Jr.     1/8/02
             -----------------------------------
             Joseph A. Sipia, Jr            Date

Enclosures


<PAGE>

                            Church & Dwight Co., Inc.

--------------------------------------------------------------------------------

                    Employment Terms for Joseph A. Sipia, Jr.


<TABLE>
<CAPTION>
                                                                  Agreement
                           ----------------------------------------------------------------------------------------
<S>                        <C>
Position                   o        President & Chief Operating Officer, Specialty Products Division

Salary                     o        At commencement of employment base salary of $250,000 per annum

Annual Incentive           o        Minimum:              0% of salary
                           o        Target:              55% of salary
                           o        Maximum:            110% of salary

Long-term Incentives       o        An initial grant of 17,300 Church & Dwight Co., Inc. stock options at fair
                                    market value on grant date, vesting in their entirety upon conclusion of three
                                    years, and exercisable over a ten-year term
                           o        Ongoing option grant amount will be determined based on the existing Long-term
                                    Incentive Plan; eligible to participate in May 2002 option grant

Benefits, etc.             o        Participation in all company plans and programs (see plan documents-attached)
                           o        Additional benefits
                                    -     An additional 10% of cash compensation (base and bonus) paid in cash to
                                          the annual profit sharing program
                                    -     Increase your stock option multiple of base salary from 1.8x to 2.1x at
                                          face value ("Incremental Grant"), which, at CHD's current market price
                                          would equal approximately 2,900 additional stock options
                                    -     At age 61, Incremental Grant eliminated and the profit sharing premium is
                                          reduced to 7% at age 62, 4% at age 63 and to 0% at age 64 and beyond
                                    -     A special grant of 7,700 CHD stock options ("Special Grant") at fair
                                          market value on grant date
                                    -     Incremental Grant and Special Grant to be granted with vesting and
                                          exercise rights for up to three years post-retirement or termination by
                                          the Company without Cause or by Executive for Good Reason. Grant
                                          agreements and applicable plans govern all other options held by
                                          Executive

Termination without        o        Employment is at will
"Cause" by C&D, or for     o        Base salary to date of termination
"Good Reason" by           o        Base salary and annual incentive (at target)
Executive                           Payable monthly pursuant to following schedule ("payment Continuation Period"):
                                    -     1st 12 months = 3x base and target annual incentive
                                    -     2nd 12 months = 2.5x base and target annual incentive
                                    -     3rd 12 months = 2x base and target annual incentive
                                    -     4th 12 months = 1.5x base and target annual incentive
                                    -     5th and ongoing = 1x base and target annual incentive
                           o        Payout subject to 50% mitigation (dollar-for-dollar) for any income received by
                                    Executive during Payment Continuation Period
</TABLE>



<PAGE>

                            Church & Dwight Co., Inc.

--------------------------------------------------------------------------------

                    Employment Terms for Joseph A. Sipia, Jr.


<TABLE>
<S>                        <C>
                           o        Settlement of deferred compensation arrangements
                           o        Continued health and life insurance for 12 months (or the Company will, at its
                                    option, pay the after-tax cost of securing similar benefits), subject to full
                                    offset upon Executive receiving benefits coverage from subsequent employer
                           o        Long-term Incentive options are governed by individual grant agreements and
                                    applicable plans, to the extent not provided for herein
                           o        Immediate vesting of benefits (including Company contributions) in Profit
                                    Sharing and Saving Plans
                           o        Ability to continue vesting and exercise Incremental Grant and Special Grant
                                    for up to three years (designed to help offset the decline in pension benefits
                                    payable from prior employer)

Termination                o        Base salary to date of death
Due to Death               o        Pro rata annual incentive for year of termination at target
                           o        All options held by Executive will continue to vest and remain exercisable for
                                    up to three years by Executive's designated heirs or estate (but no longer than
                                    the remaining term)
                           o        Settlement of deferred compensation arrangements
                           o        Immediate vesting of benefits (including Company contributions) in Profit
                                    Sharing and Savings Plans
Termination Due to         o        Base salary through date of Disability
Disability                 o        Pro rata annual incentive for year of termination at target
                           o        Retains employee status regarding benefits and deferral until earlier of age 65
                                    or receipt of Deferred Compensation or Profit Sharing (see plan documents)
                           o        If recovers from Disability and not offered previous positions, treated as
                                    termination without "Cause"
                           o        If offered previous position and refuses without Good Reason, treated as "Quit"
                           o        Incremental Grant and Special Grant continue to vest and remain exercisable for
                                    up to three years (but no longer than remaining term); other options continue
                                    to vest and be exercised pursuant to the grant agreement and applicable plan

Termination for Cause      o        Base salary through date of termination
                           o        Settlement of deferred compensation arrangements
                           o        Vested options exercisable for 30 days
                           o        Forfeiture of unexercised options and other outstanding awards

Quit without Good Reason   o        Treated the same as a termination for "Cause"

Executive's Obligations    o        Unlimited non-disclosure of "confidential information", employment terms and
                                    employee information
                           o        Non-compete as specified for 24 months if terminated without "Cause", may be
                                    waived by Company upon written request by Executive and not unreasonably
                                    withheld by Company
                           o        Non-compete as specified for 24 months if terminated for "Cause"
                           o        Non-solicitation of CHD employees for 24 months
                           o        Non-disparagement (mutual)
</TABLE>



                                       -2-

<PAGE>

                            Church & Dwight Co., Inc.

--------------------------------------------------------------------------------

                    Employment Terms for Joseph A. Sipia, Jr.


<TABLE>
<S>                        <C>
                           o        All company materials must be returned prior to final day of employment
                           o        Injunctive relief in addition to other available remedies at law

Dispute Resolution         o        Mandatory arbitration
                           o        New Jersey courts/laws
                           o        Your legal costs reimbursed unless action determined to be in bad faith or frivolous

Indemnification            o        As provided in the Company's by-laws
                                    -     D&O coverage and total indemnification provided in by-laws for Officers
                                          and Directors

Other                      o        Executive to execute written release in form and substance satisfactory to the
                                    Company in exchange for all severance payments
</TABLE>



<TABLE>
<CAPTION>
                                                                    Definitions
                           ----------------------------------------------------------------------------------------------
<S>                        <C>
Good Reason                o        Decrease in base salary or target annual incentive below 55%
                           o        Any required relocation more than 35 miles from CHD headquarters (or then
                                    current work location)
                           o        After a change in control has occurred, any demotion in title
                           o        Material breach of this agreement by Company after receipt of written notice
                                    from Executive and which remains uncured for 15-day period o Executive must act
                                    within 60 days of event giving rise to Good Reason

Change in Control          o        Any person, group or entity acquires 50% or more of CHD's issued and
                                    outstanding voting equity
                           o        Director composition change of 50% or more over any 24-month period (unapproved
                                    by 2/3's of "Incumbent Directors")
                           o        Merger, consolidation, sale of all or substantially all assets or other
                                    transaction approved by shareholders unless 50% or more continuing ownership
                           o        Sale or spin-off of the Specialty Products Division from Church & Dwight Co.,
                                    Inc.
                           o        The terms of employment specified herein shall survive a Change in Control.

Cause                      o        Termination due to Executive's dishonesty, fraud, willful misconduct, or
                                    failure to substantially perform services (for any reason other than illness or
                                    incapacity) or breach of Executive's fiduciary responsibilities to the Company

Competition                o        Any business within a company or corporation which sells any product that
                                    competes with the products sold by the Company or any subsidiary or division
                                    thereof and for which Executive would perform substantially similar employment
                                    functions to those performed at CHD

Confidential Information   o        All information concerning the business of CHD or any subsidiary or division
                                    thereof relating to any of their products, product development, trade secrets,
                                    customers, suppliers, finances, and business plans and strategies other than
                                    information which properly becomes part of the public domain
</TABLE>



                                       -3-


<PAGE>
                                                                   Exhibit 10(k)

February 26, 2002

Mr. Bradley Casper
8265 Hopewell Rd.
Cincinnati, Ohio 45242

Dear Brad:

The executive management team is excited about the prospect of you joining the
company. We are just as excited about your long-term future with ARMKEL, LLC.,
and Church & Dwight, Co., Inc. This letter will confirm our offer for the
position of President, Personal Products Division, reporting directly to Robert
Davies, Chief Executive Officer.

As discussed, we are offering an attractive package of both direct and indirect
benefits. While more specific information can be found in the attached
Employment Agreement, below you will find some of the major highlights of our
employment offer:

o     Your starting base salary will be $13,333.33 semi-monthly ($320,000
      annually).

o     Vacation Entitlement - You will receive eighteen days vacation and two
      personal days in 2002. For 2003 you will receive four weeks vacation and
      two personal days.

o     As a President, you will participate in the Church & Dwight Incentive
      Compensation Program with a target bonus of 55% (range of 0 - 110%) of
      base salary earned during the year. Your first award will be due in
      February 2003, and will be pro-rated based on time worked during 2002.

o     You will participate in
 the Company's Stock Option plan. Details of your
      participation are included on the attached Employment Agreement.

o     You will be eligible to receive relocation assistance to cover the costs
      of your move to this area. More details are available in the attached
      relocation policy. Please call me if you have further questions.

o     You will participate in our comprehensive health, welfare and retirement
      programs. Kathy McAleer of the HR Department will be contacting you to
      schedule a full benefits orientation shortly after your start date. In the
      interim, the attached "Summary of Benefits" should


<PAGE>

                                                              Mr. Bradley Casper
                                                               February 26, 2002
                                                                          Page 2

provide a helpful outline of our benefits programs.

This offer is contingent upon the satisfactory completion of reference checking
and drug screening, as well as verification of your eligibility to work in the
United States (I-9). Please sign one copy of this letter, complete the enclosed
documents and return them to the Human Resources Department as soon as possible.

The Human Resources Department will arrange for a drug-screening test at a
facility located in your area. Please contact Martin Hayes in the Human
Resources Department at 609-279-7313 to schedule a pre-employment drug
screening. Martin will need your date of birth as well as social security number
in order to arrange for this screening.

Brad, I look forward to your joining Church & Dwight Co., Inc. and ARMKEL, LLC
and believe you will have a successful, rewarding career with us. I am
particularly enthusiastic about you and the powerful things that we will be able
to accomplish together.

Please do not hesitate to contact me at 609-683-7414 with regard to the
specifics of this offer and/or related benefit programs.

Sincerely,

/s/ Steven P. Cugine 
____________________
Steven P. Cugine
Vice President, Human Resources


Accepted By: /s/ Bradley A. Casper           3/11/02
             ---------------------------------------
             Bradley Casper                     Date

Enclosures


<PAGE>


<TABLE>
<CAPTION>
                                                                     Agreement
                           ----------------------------------------------------------------------------------------------

                           ----------------------------------------------------------------------------------------------
<S>                        <C>
Position                   o        President, Personal Products Division
                           o        President, ARMKEL Domestic

Salary                     o        At commencement of employment, base salary of $320,000 per annum
                           o        Sign-on bonus of $40,000 to be paid within the first 30 days of employment

Annual Incentive           o        Minimum:              0% of salary
                           o        Target:              55% of salary
                           o        Maximum:            110% of salary

                           o        For 2002, the annual incentive payable to Executive will be no less than
                                    $176,000

Long-term Incentives       o        An initial grant of 20,000 Church & Dwight Co., Inc. ("C&D") stock options at
                                    fair market value on the grant date, vesting in their entirety upon conclusion
                                    of three years, and exercisable over a ten-year term
                           o        Ongoing option grant amount will be determined based on CHD's existing
                                    Long-Term Incentive Plan; eligible to participate in CHD's May 2002 option
                                    grant and receive no less than 9,500 options at then fair market value on the
                                    grant date 
                           o        Immediate participation in the ARMKEL Long-Term Incentive program (see
                                    attachment for details)

Benefits, etc.             o        Participation in all Company plans and programs (see plan documents-attached)
                                    on similar terms and conditions as the Company's other senior executives

Termination without        o        Employment is at will
"Cause" by C&D, or for     o        Base salary to date of termination
"Good Reason" by           o        1.5x Base salary and annual incentive (at target), payable in 18 equal monthly
Executive                           installments
                           o        Settlement of deferred compensation arrangements
                           o        Continued health and life insurance for 12 months (or the Company will, at its
                                    option, pay the after-tax cost of securing similar benefits), subject to full
                                    offset upon Executive receiving benefits coverage from subsequent employer
                           o        Immediate vesting of benefits (including Company contributions) in Profit
                                    Sharing and Saving Plans
                           o        If termination occurs within the first three years of Executive's employment
                                    then all unvested options will immediately vest and become exercisable. These
                                    vested options will be exercisable for 30 days after the date of termination
                           o        If termination of Executive's employment occurs prior to the sale of Kelso and
                                    Co.'s interest in ARMKEL ("Kelso Interest"), then Executive will retain a
                                    vested prorated portion of the ARMKEL Long Term Incentive benefit, if any. The
                                    calculation for determining the prorated benefit is the number of full months
                                    Executive is employed with the Company divided by 36. This vested prorated
                                    benefit will be paid to Executive within a reasonable time period after any
                                    sale of the Kelso Interest
                           o        Outplacement assistance for up to one year
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
                                                                     Agreement
                           ----------------------------------------------------------------------------------------------
<S>                        <C>
Termination Due to Death   o        Base salary to date of death
                           o        Pro rata annual incentive for year of termination at target
                           o        Settlement of deferred compensation arrangements
                           o        Immediate vesting of benefits (including Company contributions) in Profit
                                    Sharing and Savings Plans
                           o        Options vest and may be exercised pursuant to terms of the grant agreement and
                                    applicable plan

Termination Due to         o        Base salary through date of Disability
Disability                 o        Pro rata annual incentive for year of termination at target
                           o        Retains employee status regarding benefits and deferral until earlier of age 65
                                    or receipt of Deferred Compensation or Profit Sharing (see plan documents)
                           o        If recovers from Disability and not offered previous positions, treated as
                                    termination without "Cause"
                           o        If offered previous position and refuses without Good Reason, treated as "Quit"
                           o        Options vest and may be exercised pursuant to the terms of the grant agreement
                                    and applicable plan

Termination for Cause      o        Base salary through date of termination
                           o        Settlement of deferred compensation arrangements
                           o        Vested options exercisable for 30 days
                           o        Forfeiture of unexercised options and other outstanding awards

Quit without Good Reason   o        Treated the same as a termination for "Cause"

Executive's Obligations    o        Unlimited non-disclosure of "confidential information", employment terms and
                                    employee information
                           o        Non-compete as specified for 24 months if terminated without "Cause", may be
                                    waived by Company upon written request by Executive and not unreasonably
                                    withheld by Company
                           o        Non-compete as specified for 24 months if terminated for "Cause"
                           o        Non-solicitation of CHD employees for 24 months
                           o        Non-disparagement (mutual)
                           o        All company materials must be returned prior to final day of employment
                           o        Injunctive relief in addition to other available remedies at law

Dispute Resolution         o        Mandatory arbitration
                           o        New Jersey courts/laws
                           o        Executive's legal costs reimbursed unless action determined to be in bad faith
                                    or frivolous

Indemnification            o        As provided in the Company's by-laws
                                    -   D&O coverage and total indemnification provided in by-laws for Officers and
                                        Directors

Other                      o        Executive to execute written release in form and substance satisfactory to the
                                    Company in exchange for all severance payments
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
                                                                    Definitions
                           ----------------------------------------------------------------------------------------------
<S>                        <C>
Good Reason                o        Decrease in base salary or target annual incentive below 55%
                           o        Any required relocation more than 35 miles from CHD headquarters (or then
                                    current work location)
                           o        After a Change in Control has occurred, any demotion in your title
                           o        Material breach of this agreement by Company after receipt of written notice
                                    from Executive and which remains uncured for 15-day period
                           o        Executive must act within 60 days of event giving rise to Good Reason

Change in Control          o        Any person, group or entity acquires 50% or more of CHD's issued and
                                    outstanding voting equity
                           o        Director composition change of 50% or more over any 24-month period (unapproved
                                    by 2/3's of "Incumbent Directors")
                           o        Merger, consolidation, sale of all or substantially all assets or other
                                    transaction approved by shareholders unless 50% or more continuing ownership
                           o        The terms of employment specified herein shall survive a Change in Control

Cause                      o        Termination due to Executive's dishonesty, fraud, willful misconduct, or
                                    failure to substantially perform services (for any reason other than illness or
                                    incapacity) or breach of Executive's fiduciary responsibilities to the Company

Competition                o        Executive prohibited from employment with any business within a company or
                                    corporation which sells any products (i) which represent (in the aggregate) 20%
                                    or more of such business' revenues and (ii) which compete with any products
                                    sold by the Company or any subsidiary or division thereof for which Executive
                                    was directly employed, and (iii) for which Executive would perform
                                    substantially similar employment functions to those performed at CHD

Confidential Information   o        All information concerning the business of CHD or any subsidiary or division
                                    thereof relating to any of their products, product development, trade secrets,
                                    customers, suppliers, finances, and business plans and strategies other than
                                    information which properly becomes part of the public domain

Disability                 o        Executive qualifies as disabled under the C&D Long Term Disability or other
                                    applicable plan, program or policy
</TABLE>



<PAGE>
                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
                 EXHIBIT 11 - Computation of Earnings Per Share
                     (In thousands except per share amounts)


<TABLE>
<CAPTION>
                                                               2001           2000            1999
                                                            --------------------------------------
<S>                                                         <C>            <C>             <C>    
BASIC:
      Net Income                                            $46,984        $33,559         $45,357

Weighted average shares outstanding                          38,879         38,321          38,792

Basic earnings per share                                      $1.21          $0.88           $1.17

DILUTED:
      Net Income                                            $46,984        $33,559         $45,357

Weighted average shares outstanding                          38,879         38,321          38,792
      Incremental shares under stock option plans             1,940          1,612           2,251
                                                            --------------------------------------
Adjusted weighted average shares outstanding                 40,819         39,933          41,043
                                                            --------------------------------------

Diluted earnings per share                                    $1.15          $0.84           $1.11
</TABLE>



                                       15





<PAGE>

                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
                                   EXHIBIT 21
                       LIST OF THE COMPANY'S SUBSIDIARIES


1)    Church & Dwight Ltd./Ltee
      Incorporated in Canada

2)    C & D Chemical Products, Inc.
      Incorporated in the State of Delaware,
      D/B/A Armand Products Company, a Partnership

3)    Brotherton Speciality Products Ltd.
      Incorporated in the United Kingdom

4)    Quimica Geral do Nordeste S.A. (QGN)
      Incorporated in Brazil (85% Interest)

5)    Biovance Technologies, Inc.
      Incorporated in the state of Delaware

      The Company's remaining subsidiaries, if considered in the aggregate as a
single subsidiary, would not constitute a significant subsidiary as of December
31, 2001.


                                       16





<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements No.
33-60149, 33-60147, 33-24553, 33-6150 and 33-44881 on Form S-8 of our reports
dated March 11, 2002 included in the Annual Report on Form 10-K of Church &
Dwight Co., Inc. for the year ended December 31, 2001.

Deloitte & Touche LLP
Parsippany, New Jersey
March 11, 2002


                                       17




<PAGE>

EXHIBIT 99

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


      Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) discusses the Company's performance for 2001 and compares it
to previous years. This MD&A is an integral part of the Annual Report and should
be read in conjunction with all other sections.

2001 Compared to 2000

   Net Sales

     Net sales increased by $285.1 million or 35.8% to $1080.9 million, compared
to $795.7 million in the previous year. The majority of this increase was due to
growth in the Consumer Products business.

     Consumer Products were up 43.2% primarily due to the addition of the Xtra
Laundry Detergent and Nice'N Fluffy Fabric Softener brands as part of the USA
Detergents acquisition earlier in 2001, and the addition of the Arrid
Anti-Perspirant and Lambert Kay Pet Care businesses as part of the
Carter-Wallace acquisition in the fourth quarter. Excluding these acquisitions,
sales of existing consumer products were about 3% above last year, with higher
sales of deodorizing and laundry products more than offsetting lower oral care
and cleaning products sales.

     Specialty Products increased 6.9% reflecting higher sales of animal
nutrition products and the higher sales of QGN, the Company's 85% owned
Brazilian subsidiary.

   Operating Costs

     The Company's gross margin decreased to 37.1% from 43.4% in the prior year.
The acquisition of the lower margin USA Detergents brands has affected the
Company's overall margin structure and accounts for most of the more than six
point reduction in gross margin since last year. However, these brands, which
are sold on an "everyday low price" basis, require lower marketing and sales
support, which largely offsets the effect of the lower gross margin. To a lesser
extent, gross margin was also adversely impacted by lower personal care brand
sales, higher off-invoice allowances and start-up costs associated with new
brands.

     Advertising, consumer and trade promotion expenses increased $17.3 million
to $196.0 million. This increase is mainly due to the addition of the brands
acquired from USA Detergents and Carter-Wallace mentioned earlier in this
report.

     Selling, general and administrative expenses increased $19.1 million. Major
factors contributing to this increase included higher personnel costs, which
included a $3.5 million increase in the deferred compensation expense, from a
$1.0 million gain in 2000 to a $2.5 million charge in 2001, as well as the
ongoing and transitional costs resulting from the aforementioned acquisitions.
Other factors contributing to this increase included goodwill and intangible
amortization costs related to the USA Detergents acquisition, and a higher bad
debt reserve.

     During the third quarter of 2000, as a step in implementing the ARMUS joint
venture, the Company announced that it would close its Syracuse plant in early
2001, and recorded a pre-tax charge of $21.9 million. In 2001, the Company
recorded a $.7 million recovery of expected costs from the plant closure.

   Other Income and Expenses

     The decrease in equity in earnings of affiliates is due mostly to the
inclusion of a $10 million net loss in the fourth quarter from the Company's new
affiliate, Armkel LLC.

     On September 28, the Company completed the acquisition of the consumer
products business of Carter-Wallace in a partnership with the private equity
group, Kelso & Company. As part of this transaction, The Company purchased
outright the Arrid Anti-Perspirant business in the United States and Canada and
the Lambert Kay pet care business. Armkel LLC, a 50/50 joint venture with Kelso,
purchased the remainder of Carter-Wallace's domestic and international consumer
products business, including Trojan condoms, Nair depilatories and First
Response pregnancy kits. Armkel reported fourth quarter sales of $95.4 million
and a net loss of $15.6 million. The major reason for this loss was an
accounting charge related to a step-up in the value of opening inventories in
accordance with purchase accounting principles. As these inventories are sold,
the step-up is charged to current operations. The total step-up was
approximately $23.3 million, of which $13.7 million was charged in the fourth
quarter and the balance will be charged in 2002. Other factors contributing to
the loss included integration costs, and a build-up in trade inventories
immediately prior to the acquisition, which shifted sales and profit from the
fourth quarter to the predecessor company.

      Under the partnership agreement with Kelso, the Company is allocated 50%
of all losses up to $10 million, and 100% of such losses above that level. As a
result, the Company recorded a loss of $10 million on its investment in Armkel.


                                       1

<PAGE>

     This Armkel loss was partially offset by equity in earnings of affiliates
from the Armand Products Company, and by an increase in profitability from the
ArmaKleen Company. The ArmaKleen Company is a 50/50 joint venture with the
Safety-Kleen Company, the latter of which filed for chapter 11 during the second
quarter of 2000. This caused the ArmaKleen Company to record a $1.4 million
charge, half of which resulted in a reduction in our profitability during 2000.
Should the Safety-Kleen Company be unable to emerge from Chapter 11, the results
of operations and financial position of the ArmaKleen Company would be adversely
affected.

     Investment income was relatively unchanged from the prior year.

     Interest expense increased approximately $6.7 million as a result of the
debt incurred to finance the USA Detergents acquisition at the end of May, and
the Carter-Wallace acquisition at the end of September.

     Minority interest expense is primarily the 35% of the earnings generated by
the ARMUS joint venture through the month of May that accrued to USA Detergents.

   Taxation

     The effective tax rate for 2001 was 36.4%, compared to 35.3% in the
previous year. The higher effective rate in 2001 is primarily due to the impact
of a relatively lower level of tax depletion deductions and other tax credits on
higher pre-tax income.

   Net Income and Earnings Per Share

     The Company's net income for 2001 was $47.0 million, equivalent to diluted
earnings of $1.15 per share, compared to $33.6 million or $.84 per share in
2000.

2000 Compared to 1999

   Net Sales

     Net sales increased by $55.5 million or 7.5% to $795.7 million, compared to
$740.2 million in the previous year. The majority of this increase was due to
growth in the Consumer Products business.

     These net sales had been impacted by the Company adopting EITF 00-10,
"Accounting for Shipping and Handling Fees and Costs" which resulted in an
increase in net sales and cost of sales for the full year 2000 and 1999 of $9.9
million and $10.1 million, respectively. The EITF, however, did not affect net
income for either period.

     Consumer Products were up 8.0% led by the addition of the CLEAN SHOWER and
SCRUB FREE brands acquired in late 1999, and strong growth in cat litters and
liquid laundry detergent. These sales gains were partially offset by lower
deodorant and gum sales. The prior year's results reflected a 4.8% increase from
strong growth in ARM & HAMMER SUPER SCOOP Cat litter, increased sales for the
first full year of ARM & HAMMER ADVANCE WHITE toothpaste, partially offset by
lower sales of ARM & HAMMER DENTAL CARE Gum.

     Specialty Products were up 5.5% due largely to the first full year
consolidation of QGN, the Company's majority owned Brazilian subsidiary. Last
year's sales increased 15.7% due to the partial year consolidation of QGN and
strong sales of animal nutrition products that were partially offset by the
de-consolidation of the Specialty Cleaners business, which is accounted for on
the equity method in 1999 following the formation of the ArmaKleen Company as a
50% owned affiliate.

   Operating Costs

     The Company's gross margin decreased to 43.4% from 44.0% in the prior year.
Major favorable factors included cost efficiencies obtained through the
consolidation of personal care product manufacturing following the Greenville
plant shutdown in 1999; the elimination of co-packers to meet higher than
expected order requirements in 1999; and more direct plant shipments which
reduced overall distribution costs. This favorable margin improvement, however,
was more than offset by approximately $ 2 million of additional depreciation and
inventory and equipment relocation costs associated with the Syracuse plant
shutdown following the announcement of the formation of the ARMUS joint venture
with USA Detergents; higher raw and packaging materials for consumer products;
and, a less favorable product mix.

     Advertising, consumer and trade promotion expenses increased $2.5 million
to $178.6 million. Higher advertising of deodorizing products, particularly for
cat litter, together with higher trade promotion expenses associated with the
bathroom cleaners acquired late in 1999, were partially offset by lower consumer
promotion expenses.


                                       2

<PAGE>

     Selling, general and administrative expenses increased $5.7 million. Major
factors contributing to this
 increase included higher personnel and outside
service costs in support of new business initiatives, the latter of which
primarily involved higher information systems work in preparation for electronic
commerce capabilities; the full year amortization of intangibles relating to the
bathroom cleaners acquisitions, and the full year inclusion of the Brazilian
subsidiary. These increases were partially offset by lower selling expenses as
the Company combined its sales force with USA Detergents as a first step in
making ARMUS operational, supported by a single national broker organization,
and a lower deferred compensation liability.

     During the third quarter of 2000, as a step in implementing the ARMUS joint
venture, the Company announced that it would close its Syracuse plant in early
2001, and record a pre-tax charge of $21.9 million.

   Other Income and Expenses

     The decrease in equity in earnings of affiliates was due to lower
competitive pricing on higher unit volume of Armand Products which combined with
higher costs, resulted in a $2 million reduction in our profitability. The
remaining decrease was mostly attributable to the ArmaKleen Company, a 50/50
joint venture with the Safety-Kleen Company, which filed for chapter 11 during
the second quarter of 2000. This caused the ArmaKleen Company to record a $1.4
million charge, half of which resulted in a reduction in our profitability.
Should the Safety-Kleen Company be unable to emerge from Chapter 11, the results
of operations and financial position of the ArmaKleen Company would be adversely
affected.

     Investment income increased mostly due to the receipt of interest on an
outstanding note receivable, which was collected mid-year.

     Although the Company substantially reduced its outstanding debt position
during the year, following the bathroom cleaners acquisition in late 1999,
higher average outstanding debt coupled with higher interest rates in 2000
resulted in an increase in interest expense.

   Taxation

     The effective tax rate for 2000 was 35.3%, compared to 37.2% in the
previous year. The lower effective rate in 2000 was primarily due to a lower
effective state rate and lower taxes related to foreign activity.

   Net Income and Earnings Per Share

     The Company's net income for 2000 was $33.6 million, equivalent to diluted
earnings of $.84 per share, compared to $45.4 million or $1.11 per share in
1999.

Liquidity and Capital Resources

     The Company had outstanding long-term debt of $406.6 million, and cash less
short-term debt of $40.9 million, for a net debt position of $365.7 million at
December 31, 2001. This compares to $9.4 million at December 31, 2000.

     The Company financed its investment in Armkel, the acquisition of USA
Detergents and the Anti-perspirant and Pet Care businesses from Carter-Wallace
with a $510 million credit facility consisting of $410 million in 5 and 6 year
term loans, all of which were drawn at closing and a $100 million revolving
credit facility which remains fully un-drawn. The term loans pay interest at 200
and 250 basis points over LIBOR, depending on the ratio of EBITDA to total debt.
Financial covenants include a leverage ratio and an interest coverage ratio,
which if not met, could result in an event of default and trigger the early
termination of the credit facility, if not remedied within a certain period of
time. EBITDA, as defined by the Company's loan agreement, which includes an
add-back of certain acquisition related costs, was approximately $129 million.
The leverage ratio, per the loan agreement, therefore, was 3.2 versus the
agreement's maximum 4.0, and the interest coverage ratio was 5.0 versus the
agreement's minimum of 4.0.

     In 2001, operating cash flow was $41.6 million. Major factors contributing
to the cash flow from operating activities included higher operating earnings
before non-cash charges for depreciation and amortization, and the
aforementioned impact from the loss in earnings of affiliates. Operating cash
flow was used to meet an increase in working capital needs to support the higher
sales stemming from the two acquisitions during the year, and to fund the
related transitional activities. Operating cash together with net proceeds from
long-term borrowings, were used to consummate the two acquisitions made in the
year, and to finance the Company's investment in Armkel. To a lesser extent
available cash was used to finance additions to property, plant and equipment,
to make investments in notes receivable, and to pay cash dividends.


                                       3

<PAGE>

     Commitments as of December 31, 2001. The table below summarizes the
Company's material contractual obligations and commitments as of December 31,
2001.


<TABLE>
<CAPTION>
                                                                             Payments Due By Period
                                                                             ----------------------
                                                                             (Thousands of dollars)
                                                        ----------------------------------------------------------------

                                                                                       2003 to       2006 to       After
                                                            Total         2002          2005          2007         2007
                                                            ----          ----          ----          ----         ----
<S>                                                     <C>            <C>           <C>          <C>          <C>
Principal payments on borrowings:
--------------------------------
     Long-term debt
         Syndicated Financing Loans...............      $ 410,000      $   7,675     $  83,550    $ 318,775    $      --
         Various Debt from Brazilian Banks........          3,384          3,220           164           --           --
         Industrial Revenue Bonds.................          4,760            685         2,055        1,370          650

Other commitments:
-----------------
     Operating Leases Obligations.................      $ 106,039      $  30,252     $  44,545    $   7,389    $  23,853
     Letters of Credit............................          2,583          2,583
     Guarantees...................................          1,828          1,828
     Surety/Performance bonds.....................          1,069          1,069
     Raw Materials................................          6,399          6,399
     Joint Venture Agreement......................        111,750             --            --           --      111,750
                                                        ---------      ---------     ---------    ---------    ---------
Total ............................................      $ 647,812      $  53,711     $ 130,314    $ 327,534    $ 136,253
                                                        =========      =========     =========    =========    =========
</TABLE>


      The Company generally relies on operating cash flows supplemented by
borrowings to meet its financing requirements. Our diverse product offerings,
strong brand names and market positions have provided a stable base of cash
flow. Our diverse product line is marketed through multiple distribution
channels, reducing our dependence on any one category or type of customer.
Similar to other basic consumer products, we believe that consumers purchase our
products largely independent of economic cycles. However, the Company's ability
to meet its financial obligations depends on successful financial and operating
performance. The Company cannot guarantee that its business strategy will
succeed or that it will achieve the anticipated financial results. The Company's
financial and operational performance depends upon a number of factors, many of
which are beyond its control. These factors include:

      o     Competitive conditions in our segments of the consumer products
            industry;

      o     Operating difficulties, operating costs or pricing pressures we may
            experience;

      o     Passage of legislation or other regulatory developments that affects
            us adversely; and

      o     Delays in implementing any strategic projects we may have.

      The Company cannot give assurance that it will generate sufficient cash
flow from operations or that it will be able to obtain sufficient funding to
satisfy all its obligations, including those noted above. If the Company is
unable to pay its obligations, it will be required to pursue one or more
alternative strategies, such as selling assets, refinancing or restructuring
indebtedness or raising additional equity capital. However, the Company cannot
give assurance that any alternative strategies will be feasible or prove
adequate.

      The Company has a total debt-to-capital ratio of approximately 60%. At
December 31, 2001 the Company had $100 million of additional domestic borrowing
capacity available through its revolving credit agreement. Capital expenditures
in 2002 are expected to be moderately higher than the level of the prior year.
Management believes that operating cash flow, coupled with the Company's access
to credit markets, will be sufficient to meet the anticipated cash requirements
for the coming year.

      In 2000, operating cash flow was an exceptionally strong $102.8 million.
Major factors contributing to the cash flow from operating activities included
higher operating earnings before non-cash charges for depreciation and
amortization, and the non-cash write-off costs associated with the Syracuse
plant shutdown. Operating cash flow was further enhanced by a reduction of
working capital in a year where sales increased by 7.5%. Operating cash flow was
used for financing activities to reduce outstanding debt, purchase approximately
1.2 million shares of treasury stock, and pay cash dividends. Operating cash
flow was also used to invest in USA Detergents common stock, and to fund capital
expenditures.

Armkel

      The Armkel venture was initially financed with $229 million in equity
contributions, of which approximately $112 million was contributed by the
Company, and an additional $445 million of debt.


                                       4

<PAGE>

     Armkel LLC had outstanding long-term debt of $440 million, and cash less
short-term and related party debt of $37 million, for a net debt position of
$403 million at year-end. In addition, Armkel had unused revolving credit bank
lines of $85 million. Any debt on Armkel's balance sheet is without recourse to
the Company.

     Under the terms of its joint venture agreement with Kelso, the Company has
a call option to acquire Kelso's interest in Armkel in three to five years after
the closing, at fair market value subject to a floor and a cap. If the Company
does not exercise its call option, then Kelso may request the Company to
purchase its interest. If the Company elects not to purchase Kelso's interest,
then Kelso's and the Company's equity in the joint venture may be offered to a
third party. If such a sale should occur, depending on the proceeds received,
the Company may be required to make a payment to Kelso up to an amount of
approximately $112 million. Kelso also may elect to have the Company purchase
its interest for $112 million. This amount is not payable until the eighth year
from the formation of the venture. Finally, Kelso may require the Company to
purchase its interest upon a change in control as defined in the joint venture
agreement. The venture's Board has equal representation from both the Company
and Kelso.

                                   OTHER ITEMS

Market Risk

   Concentration of Risk

     As part of the USA Detergents merger agreement, the Company divested USA
Detergents non-laundry business and other non-core assets to former USA
Detergents executives under the new company name of USA Metro, Inc. ("USAM"),
subsequently renamed USA Detergents.

     The Company has a concentration of risk with USAM at December 31, 2001 in
the form of trade accounts receivable of $3.4 million, a 20% equity interest in
USAM of $0.2 million and a note receivable for other assets of $2.0
million-payments start with the beginning of the third year. This note has a
carrying value of approximately $1.4 million using an effective interest rate of
17%.

   Should USAM be unable to meet these obligations, the impact would have an
adverse effect on the Company's Consolidated Statement of Income.

   Interest Rate Risk

      The Company's primary domestic borrowing facility is made up of a $ 510
million credit agreement of which $410 million was utilized as of December 31,
2001; and $100 million of a revolving credit agreement all of which was un-drawn
at December 31, 2001. The weighted average interest rate on these borrowings at
December 31, 2001, excluding deferred financing costs and commitment fees, was
approximately 5.5% including hedges. The Company entered into interest rate swap
agreements to reduce the impact in interest rates on this debt, as required by
the credit agreement. The swap agreements are contracts to exchange floating
rate for fixed interest rate payments periodically over the life of the
agreements without the exchange of the underlying notional amounts. As of
December 31, 2001, the Company entered into agreements for a notional amount of
$200 million, swapping debt with a one- month and three- month LIBOR rate for a
fixed rate that averages 6.4 %. As a result, the swap agreements eliminate the
variability of interest expense for that portion of the Company's debt. A drop
of 10% in interest rates would result in a $.9 million payment under the swap
agreement in excess of what would have been paid based on the variable rate.
Under these circumstances, this payment would be entirely offset by a nearly
equal amount of reduced interest expense on the $210 million of variable debt
not hedged. However, a 10% increase in interest rates would result in a $.9
million increase in interest expense on the debt not hedged.

     The Company's domestic operations and its Brazilian subsidiary have short
and long term debts that are floating rate obligations. If the floating rate was
to change by 10% from the December 31, 2001 level, annual interest expense
associated with the floating rate debt would be immaterial.

   Foreign Currency

     The Company is subject to exposure from fluctuations in foreign currency
exchange rates, primarily U.S. Dollar/British Pound, U.S. Dollar/Japanese Yen,
U.S. Dollar/Canadian Dollar and U.S. Dollar/Brazilian Real.

     The Company, from time to time, enters into forward exchange contracts to
hedge anticipated but not yet committed sales denominated in the Canadian
dollar, the British pound and the Japanese Yen. The terms of these contracts are
for periods of under 12 months. The purpose of the Company's foreign currency
hedging activities is to protect the Company from the risk that the eventual
dollar net cash inflows from the sale of products to foreign customers will be
adversely affected by changes in exchange rates. The Company did not have any
forward exchange contracts outstanding at December 31, 2001, and the amount
outstanding at


                                       5

<PAGE>

December 31, 2000 was immaterial. At December 31, 2000, the Company had an
immaterial unrealized gain. Had there been a 10% change in the value of the
underlying foreign currency at December 31, 2000, the effect on these contracts
would still have been immaterial.

     The Company is also subject to translation exposure of the Company's
foreign subsidiary's financial statements. A hypothetical 10% change in the
exchange rates for the U.S. Dollar to the Canadian Dollar, the British Pound and
the Brazilian Real from those at December 31,2001 and 2000, would result in an
annual currency translation gain or loss of approximately $.4 million in 2001
and $.3 million in 2000.

   Related Party Transactions

     The Company believes that substantial synergies can be achieved by
combining certain of its operations with those of Armkel, particularly in the
areas of sales, manufacturing and distribution, and most service functions.
Armkel will retain its core marketing, research & development, and financial
planning capabilities, and will continue to manufacture condoms, but will
purchase virtually all the support services it requires for it U.S. domestic
business from the Company under a management services agreement, which has a
term of five years with possible renewal. As a first step, the Company merged
the two sales organizations during the fourth quarter of 2001. In early 2002,
the Company plans to begin transferring production of antiperspirants and
depilatories from the former Carter-Wallace plant at Cranbury, NJ, to the
Company's plant at Lakewood, NJ, which is a more efficient producer of
antiperspirants and other personal care products. This process will take six to
nine months and should be completed in third quarter 2002. During early 2002,
the Company will also integrate the planning and purchasing, accounting and
management information systems, and other service functions.

     During 2001, the Company invoiced Armkel $2.1 million for administrative
services, and purchased $8.4 million of deodorant anti-perspirant inventory
produced by Armkel at its cost. Armkel invoiced the Company $1.4 million of
transition administrative services. The Company has an open receivable from
Armkel at December 31, 2001 of approximately $12.0 million that primarily
related to cash collected by Armkel on behalf of the Company for open accounts
receivable, partially offset by amounts owed for inventory.

     As noted in the Concentration of Risk section of this review, the Company
divested USA Detergents non-laundry business and other non-core assets to former
USA Detergents executives concurrent with the merger agreement. The Company has
a 20% ownership interest in the newly formed company USAM. The Company supplies
USAM with certain laundry and cleaning products it produces to meet the needs of
the markets USAM is in at cost plus a mark-up. Alternatively, USAM provides for
the supply of cleaners and other products manufactured by USAM to the Company
for re-sale under a similar pricing agreement. In addition, the Company leases
manufacturing and office space to USAM under a separate agreement, which is
believed to be at arms- length.

     During 2001, the Company purchased $4.6 million of candle and cleaner
product inventory from USAM, and sold $20.0 million of laundry and cleaning
products to USAM. Furthermore, the Company billed USAM $.4 million for leased
space. For open amounts receivable at December 31, 2001, see Concentration of
Risk section of this review.

   Significant Accounting Policies

     Our significant accounting policies are more fully described in Note 1 to
our consolidated financial statements. Certain of our accounting policies
require the application of significant judgment by management in selecting the
appropriate assumptions for calculating financial estimates. By their nature,
these judgments are subject to an inherent degree of uncertainty. These
judgments are based on our historical experience, our observance of trends in
the industry, information provided by our customers and information available
from other outside sources, as appropriate. Our significant accounting policies
include:

  Promotional and Sales Returns Reserves.

     The reserves for consumer and trade promotion liabilities, and sales
returns are established based on our best estimate of the amounts necessary to
settle future and existing claims on products sold as of the balance sheet date.
We use historical trend experience and coupon redemption provider input in
arriving at coupon reserve requirements, and we use forecasted appropriations,
customer and sales organization inputs, and historical trend analysis in
arriving at the reserves required for other promotional reserves and sales
returns. While we believe that our promotional reserves are adequate and that
the judgment applied is appropriate, such amounts estimated to be due and
payable could differ materially from what will actually transpire in the future.


                                       6

<PAGE>

   Valuation of Long-lived Assets and Investments.

      We periodically review the carrying value of our long-lived assets and
investments for continued impairment. This review is based upon our projections
of anticipated future cash flows. While we believe that our estimates of future
cash flows are reasonable, different assumptions regarding such cash flows could
materially affect our evaluations.

   Recent Accounting Pronouncements

      The EITF issued EITF 00-14, "Accounting for Certain Sales Incentives".
This issue addresses the income statement classification for offers by a vendor
directly to end consumers that are exercisable after a single exchange
transaction in the form of coupons, rebate offers, or free products or services
disbursed on the same date as the underlying exchange transaction. The issue
requires the cost of these items to be accounted for as a reduction of revenues,
not included as a marketing expense as the Company did previously. This
reclassification is expected to reduce sales by approximately 2% annually. The
EITF will be effective January 1, 2002 and there is no net income impact.

      The EITF also issued EITF No. 00-25, "Vendor Income Statement
Characterization of Consideration from a Vendor to a Retailer". This issue
outlines required accounting treatment of certain sales incentives, including
slotting or placement fees, cooperative advertising arrangements, buydowns and
other allowances. The Company currently records such costs as marketing
expenses. EITF 00-25 will require the Company to report the paid consideration
expense as a reduction of sales, rather than marketing expense. The Company is
required to implement EITF 00-25 for the quarter beginning January 1, 2002. The
Company estimates this reclassification to be approximately 9% to 10% of sales
but in any case, implementation will not have an effect on net income.

      During the first quarter of 2001, the Company adopted Statement of
Financial Accounting Standards ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." Under this statement, all derivatives,
whether designated as hedging instruments or not, are required to be recorded on
the balance sheet at fair value. Furthermore, changes in fair value of
derivative instruments not designated as hedging instruments are recognized in
earnings in the current period.

      In July 2001, the FASB issued SFAS No. 141, "Business Combinations" which
establishes new standards for accounting and reporting requirements for business
combinations and will require that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method will be prohibited. The Company adopted this
statement for transactions that occurred after June 30, 2001. Management does
not believe that SFAS No. 141 will have a material impact on the Company's
consolidated financial statements.

      In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which supersedes APB Opinion No. 17, "Intangible Assets". Under its
changes, SFAS No. 142 establishes new standards for goodwill acquired in a
business combination and eliminates amortization of goodwill and instead sets
forth methods to periodically evaluate goodwill for impairment. The Company
adopted this statement upon its effective date. If effective for all
acquisitions made prior to June 30, 2001, there would have been a reduction of
amortization expense of approximately $4.0 million in 2001.

      In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The Company is currently
assessing but has not yet determined the impact of SFAS No. 143 on its financial
position and results of operations. The effective date for the Company is
January 1, 2003.

      In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This statement supersedes FASB Statement No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and the
accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a business (as previously defined in that
Opinion). This statement also amends ARB No. 51, "Consolidated Financial
Statements", to eliminate the exception to consolidation for a subsidiary for
which control is likely to be temporary. The Company is in the process of
evaluating the impact of the SFAS No. 144. The adoption of this Statement is not
expected to have a material impact on the Company's consolidated financial
statements.


                                       7

<PAGE>


   Competitive Environment

     The Company operates in highly competitive consumer-product markets, in
which cost efficiency and innovation are critical to success.

     Most of the Company's laundry and household cleaning products are sold as
value brands, which makes their cost position most important. To stay
competitive in this category, the Company announced in 2000 that it was forming
a joint venture with USA Detergents, which combined both laundry detergent
businesses. The new venture, named Armus LLC, encompassed Church & Dwight's ARM
& HAMMER Powder and Liquid Laundry Detergents and USA Detergents' XTRA Powder
and Liquid Detergents and NICE `N FLUFFY Liquid Fabric Softener brands. The
Armus joint venture became operational on January 1, 2001, and was dissolved
when the Company purchased USA Detergents outright on May 25, 2001. This
combination increased the Company's laundry product sales to over $400 million a
year, making it the third largest entity in the $7 billion U.S. laundry
detergent business. The Company expects the synergies from the combination to
potentially reach an annual rate of $15 million a year once the integration is
completed. In 2002, the Company expects to gain the full-year benefit of the
manufacturing, distribution and back office integration programs completed in
the back half of the previous year. In addition, about mid-year 2002, the
Company plans to implement a series of packaging and formulation changes
designed to more fully integrate the two product lines. Based on this activity,
the Company expects to significantly increase the contribution from the laundry
business in 2002, and to be operating at or above its target synergy levels by
year-end.

     The Company has been successful in recent years in entering the oral care
and personal care and deodorizing businesses using the unique strengths of its
ARM & HAMMER trademark and baking soda technology. These are highly innovative
markets, characterized by a continuous flow of new products and line extensions,
and requiring heavy advertising and promotion.

     In the toothpaste category, after two years of leading its category in
growth, driven by the success of ARM & HAMMER ADVANCE WHITE toothpaste, the
Company's share dropped in 2001 mainly as a result of competitive new products
and aggressive spending by other manufacturers in the category.

     In the personal care category, several new products and line extensions in
oral care were expanded during the final quarter of the year, in particular ARM
& HAMMER Advance Breath Care, a line of oral deodorization products including
mouthwash, mints and toothpaste. Because of the continued sell-in of these
products, along with the re-launch of its deodorant anti-perspirant with the
introduction of ARM & HAMMER UltraMax Deodorant Anti-Perspirant, the Company
anticipates marketing spending levels will remain high in 2002.

     Early in 2002, the Company began transferring production of Arrid and
Lady's Choice deodorant anti-perspirants from the former Carter-Wallace plant at
Cranbury, New Jersey, to the more efficient Company plant at Lakewood, New
Jersey. The Company expects to complete this process, as well as the full
integration of the supply chain and other systems, during the third quarter of
2002.

     In the final quarter of 2000, the Company introduced a line extension in
the deodorizing area: ARM & HAMMER Shaker Baking Soda, and in early 2001, ARM &
HAMMER Vacuum Free Foam Carpet Deodorizer, a companion product to ARM & HAMMER
Carpet & Room Deodorizer. The latter of these introductions enabled the Company
to lead the category growth in carpet deodorizers. In the final quarter of 2001,
the Company introduced another deodorizing line extension: ARM & HAMMER Crystal
Blend, a scoopable cat litter with silica gel crystals and baking soda for
superior deodorization These introductions usually involve heavy marketing costs
in the year of launch, and the eventual success of these line extensions will
not be known for some time.

     In the Specialty Products business, competition within the two major
product categories, sodium bicarbonate and potassium carbonate, remained intense
in 2001. Sodium bicarbonate sales have been impacted for several years by a
nahcolite-based sodium bicarbonate manufacturer, which has been operating at the
lower end of the business and is making an effort to enter the higher end.
Furthermore, late in 2000, another major competitor, which is an affiliate of an
energy services company entered the sodium bicarbonate market using a new
nahcolite manufacturing technology process. To strengthen its competitive
position, the Company has completed the modernization of its Green River
facility to provide better availability of specialized grades, and has increased
its production capacity at Old Fort. The Company is also increasing its R & D
spending on health care, food processing and other high-end applications, as
well as alternative products to compete with the lower end of the market. As for
potassium carbonate, the Company expects imports of video glass and production
from foreign suppliers to affect U.S. demand in 2002 as it did in 2001.

     During the year, the Company continued to pursue opportunities to build a
specialized industrial cleaning business using our aqueous-based technology. In
early 1999, the Company extended its alliance with Safety-Kleen Corp. to build a
specialty cleaning products business based on our technology and their sales and
distribution organization. The second year of this alliance was impacted by
Safety-Kleen's financial difficulties leading to a Chapter 11 filing in June of
2000, and a major reorganization implemented


                                       8

<PAGE>

during the second half of that year. While this opportunity has demonstrated
more stability in 2001 and continues to hold great promise, the outcome will not
be known for some time.

   Cautionary Note on Forward-Looking Statements

     This report contains forward-looking statements relating, among others, to
financial objectives, sales growth and cost improvement programs. These
statements, including the statements above as to the impact of the USAD and
Carter-Wallace acquisition on sales and earnings, represent the intentions,
plans, expectations and beliefs of Church & Dwight, and are subject to risks,
uncertainties and other factors, many of which are outside the Company's
control. These factors, which include the ability of Church & Dwight to
successfully integrate the operations of the consumer products business of
Carter-Wallace into the Armkel joint venture and Church & Dwight, and
assumptions as to market growth and consumer demand (including the effect of
recent political and economic events on consumer purchases), and the outcome of
contingencies, including litigation, environmental remediation and the
divestiture of assets, could cause actual results to differ materially from such
forward-looking statements. With regard to new product introductions, there is
particular uncertainty related to trade, competitive and consumer reactions. For
a description of additional cautionary statements, see Church & Dwight's
quarterly and annual reports filed with the SEC, as well as Carter-Wallace's
historical SEC reports.


<TABLE>
<CAPTION>
                                                                   2001                                 2000
                                                                   ----                                 ----
Common Stock Price Range and Dividends                Low          High       Dividend        Low       High     Dividend
--------------------------------------                ---          ----       --------        ---       ----     --------
<S>                                               <C>           <C>          <C>          <C>        <C>          <C>
1st Quarter.................................      $    19.56    $   24.99    $    0.07    $   14.69  $   27.75    $  0.07
2nd Quarter.................................           21.73        27.00         0.07        16.00      20.88       0.07
3rd Quarter.................................           23.54        28.44        0.075        15.63      19.63       0.07
4th Quarter.................................           24.35        27.18        0.075        17.00      23.56       0.07
                                                  ----------    ---------    ---------    ---------  ---------    -------
Full Year...................................      $    19.56    $   28.44    $    0.29    $   14.69  $   27.75    $  0.28
                                                  ==========    =========    =========    =========  =========    =======
</TABLE>


Based on composite trades reported by the New York Stock Exchange.

Approximate number of holders of Church & Dwight's Common Stock as of December
31, 2001: 10,000.


                                       9

<PAGE>


                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                                                            Year ended December 31,
                                                                                            -----------------------
(Dollars in thousands, except per share data)                                    2001                  2000                 1999
                                                                                 ----                  ----                 ----
<S>                                                                           <C>                  <C>                  <C>
Net Sales ...........................................................         $ 1,080,864          $   795,725          $   740,181
Cost of sales .......................................................             680,211              450,321              414,486
                                                                              -----------          -----------          -----------
Gross Profit ........................................................             400,653              345,404              325,695
Advertising, consumer and trade promotion expenses ..................             195,960              178,614              176,123
Selling, general and administrative expenses ........................             111,832               92,718               87,047
Impairment and other items ..........................................                (660)              21,911                6,617
Gain on sale of mineral rights ......................................                  --                   --              (11,772)
                                                                              -----------          -----------          -----------
Income from Operations ..............................................              93,521               52,161               67,680
Equity in earnings (loss) of affiliates .............................              (6,195)               3,011                6,366
Investment earnings .................................................               2,224                2,032                1,216
Other income (expense) ..............................................                (269)                (187)                 201
Interest expense ....................................................             (11,537)              (4,856)              (2,760)
                                                                              -----------          -----------          -----------
Income before minority interest and taxes ...........................              77,744               52,161               72,703
Minority interest ...................................................               3,889                  287                  525
                                                                              -----------          -----------          -----------
Income before taxes .................................................              73,855               51,874               72,178
Income taxes ........................................................              26,871               18,315               26,821
                                                                              -----------          -----------          -----------
Net Income ..........................................................         $    46,984          $    33,559          $    45,357
                                                                              ===========          ===========          ===========
Weighted average shares outstanding (in thousands)--
     Basic ..........................................................              38,879               38,321               38,792
Weighted average shares outstanding (in thousands)--
     Diluted ........................................................              40,819               39,933               41,043
                                                                              ===========          ===========          ===========
Net Income Per Share--Basic .........................................         $      1.21          $       .88          $      1.17
Net Income Per Share--Diluted .......................................         $      1.15          $       .84          $      1.11
                                                                              ===========          ===========          ===========
</TABLE>


                 See Notes to Consolidated Financial Statements.


                                       10

<PAGE>

                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                      December 31,
                                                                                      ------------
(Dollars in thousands, except share data)                                         2001             2000
                                                                                  ----             ----
<S>                                                                            <C>              <C>
Assets

Current Assets
Cash and cash equivalents ...............................................      $  52,446        $  21,573
Short-term investments ..................................................             --            2,990
Accounts receivable, less allowances of $3,666 and $2,052 ...............        106,291           64,958
Inventories .............................................................        101,214           55,165
Deferred income taxes ...................................................         19,849           11,679
Note receivable and current portion of long-term note receivable ........          5,803               --
Prepaid expenses ........................................................          7,604            4,136
                                                                               ---------        ---------
Total Current Assets ....................................................        293,207          160,501
                                                                               ---------        ---------
Property, Plant and Equipment (Net) .....................................        231,449          168,570
Notes Receivable ........................................................         11,951               --

Equity Investment in Affiliates .........................................        115,121           19,416
Long-term Supply Contracts ..............................................          7,695            8,152
Tradenames ..............................................................        136,934           29,699
Goodwill ................................................................        127,320           53,140
Other Assets ............................................................         25,408           16,154
                                                                               ---------        ---------
Total Assets ............................................................      $ 949,085        $ 455,632
                                                                               =========        =========

Liabilities and Stockholders' Equity

Current Liabilities
Short-term borrowings ...................................................      $   3,220        $  13,178
Accounts payable and accrued expenses ...................................        176,176          129,268
Current portion of long-term debt .......................................          8,360              685
Income taxes payable ....................................................          8,260            6,007
                                                                               ---------        ---------
Total Current Liabilities ...............................................        196,016          149,138
                                                                               ---------        ---------
Long-term Debt ..........................................................        406,564           20,136
Deferred Income Taxes ...................................................         27,032           17,852
Deferred and Other Long-term Liabilities ................................         19,164           15,009
Nonpension Postretirement and Postemployment Benefits ...................         15,880           15,392
Minority Interest .......................................................          2,126            3,455
Commitments and Contingencies
Stockholders' Equity
Preferred Stock-$1.00 par value
     Authorized 2,500,000 shares, none issued ...........................             --               --
Common Stock-$1.00 par value
     Authorized 100,000,000 shares, issued 46,660,988 shares ............         46,661           46,661
Additional paid-in capital ..............................................         28,414           22,514
Retained earnings .......................................................        312,409          276,700
Accumulated other comprehensive (loss) ..................................         (9,728)          (9,389)
                                                                               ---------        ---------
                                                                                 377,756          336,486
Common stock in treasury, at cost:
     7,518,105 shares in 2001 and 8,283,086 shares in 2000 ..............        (95,453)        (101,836)
                                                                               ---------        ---------
Total Stockholders' Equity ..............................................        282,303          234,650
                                                                               =========        =========
Total Liabilities and Stockholders' Equity ..............................      $ 949,085        $ 455,632
                                                                               =========        =========
</TABLE>


                 See Notes to Consolidated Financial Statements.


                                       11

<PAGE>

                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOW


<TABLE>
<CAPTION>
                                                                                                     Year ended December 31,
                                                                                                     -----------------------
(Dollars in thousands)                                                                          2001           2000           1999
                                                                                                ----           ----           ----
<S>                                                                                         <C>            <C>            <C>
Cash Flow From Operating Activities
Net Income ............................................................................     $  46,984      $  33,559      $  45,357
Adjustments to reconcile net income to net cash provided by operating activities:
     Depreciation, depletion and amortization .........................................        27,843         23,454         19,256
     Disposal of assets ...............................................................            --         15,266          5,490
     (Equity) loss in earnings of affiliates ..........................................         6,195         (3,011)        (6,366)
     Deferred income taxes ............................................................         7,295         (4,067)         1,888
     Gain on sale of mineral rights ...................................................            --             --        (11,772)
     Other ............................................................................            93           (151)           403
Change in assets and liabilities:
     (Increase) decrease in accounts receivable .......................................       (25,518)          (923)         2,661
     (Increase) decrease in inventories ...............................................       (14,544)        17,110         (5,601)
     (Increase) in prepaid expenses ...................................................        (2,161)          (618)        (1,235)
     (Decrease) increase in accounts payable ..........................................       (12,232)        20,377          4,513
     Increase in income taxes payable .................................................         5,669            291          3,426
     Increase in other liabilities ....................................................         2,021          1,472          6,025
                                                                                            ---------      ---------      ---------
Net Cash Provided by Operating Activities .............................................        41,645        102,759         64,045
Cash Flow From Investing Activities
Decrease (increase) in short-term investments .........................................         2,990          1,009         (1,958)
Additions to property, plant and equipment ............................................       (34,086)       (21,825)       (33,112)
Purchase of USA Detergent common stock ................................................      (100,707)       (10,384)            --
Distributions from affiliates .........................................................         6,350          4,132          3,354
Investment in affiliates, net of cash acquired ........................................      (108,250)          (360)        (9,544)
Purchase of other assets ..............................................................        (2,568)        (2,321)        (4,404)
Proceeds from notes receivable ........................................................         3,087          3,000          6,869
Other .................................................................................        (1,019)          (442)            --
Proceeds from sale of mineral rights ..................................................            --             --         16,762
Proceeds from sale of fixed assets ....................................................         2,530             --             --
Purchase of new product lines .........................................................      (129,105)            --        (54,826)
Investment in notes receivable ........................................................       (16,380)            --             --
                                                                                            ---------      ---------      ---------
Net Cash Used in Investing Activities .................................................      (377,158)       (27,191)       (76,859)
Cash Flow From Financing Activities
(Repayments) proceeds from short-term borrowing .......................................       (10,792)       (12,166)         5,349
(Repayments) of long-term borrowings ..................................................      (171,114)       (37,831)            --
Proceeds from stock options exercised .................................................         9,168          7,465          6,679
Purchase of treasury stock ............................................................            --        (20,484)        (9,116)
Payment of cash dividends .............................................................       (11,275)       (10,744)       (10,090)
Deferred financing costs ..............................................................        (9,601)            --             --
Proceeds from long-term borrowing .....................................................       560,000             --         23,568
                                                                                            ---------      ---------      ---------
Net Cash Provided by (Used in) Financing Activities ...................................       366,386        (73,760)        16,390
Net Change in Cash and Cash Equivalents ...............................................        30,873          1,808          3,576
Cash and Cash Equivalents at Beginning of Year ........................................        21,573         19,765         16,189
                                                                                            ---------      ---------      ---------
Cash and Cash Equivalents at End of Year ..............................................     $  52,446      $  21,573      $  19,765
                                                                                            =========      ---------      ---------
Cash paid during the year for:
     Interest (net of amounts capitalized) ............................................     $   9,948      $   4,838      $   2,831
     Income taxes .....................................................................        15,292         22,404         21,524

Acquisitions in which liabilities were assumed are as follows:

Fair value of assets ..................................................................     $ 293,402      $      --      $  22,699
Cash paid for stock and product lines .................................................      (229,812)            --         (9,034)
                                                                                            ---------      ---------      ---------
Liabilities assumed ...................................................................     $  63,590      $      --      $  13,665
                                                                                            =========      =========      =========
</TABLE>


                 See Notes to Consolidated Financial Statements.


                                       12

<PAGE>

                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December 31, 2001, 2000, and 1999


<TABLE>
<CAPTION>
                                               Number of Share                                  Amounts
                                             -------------------      -----------------------------------------------------------
                                                                                                                    Accumulated
                                                                                             Additional                 Other
                                             Common     Treasury      Common     Treasury     Paid-In    Retained   Comprehensive
                                             Stock       Stock        Stock       Stock       Capital    Earnings   Income (Loss)
                                             -----       -----        -----       -----       -------    --------   -------------
(In thousands)
<S>                                           <C>         <C>       <C>         <C>          <C>         <C>          <C>
January 1, 1999 ........................      46,661      (8,039)   $  46,661   $ (82,281)   $  13,171   $ 218,618    $    (782)
Net Income .............................          --          --           --          --           --      45,357           --
Translation adjustments ................          --          --           --          --           --          --       (3,817)

Comprehensive Income ...................

Cash dividends .........................          --          --           --          --           --     (10,090)          --
Stock option plan transactions including
   related income tax benefit ..........          --         649           --       4,311        5,028          --           --
Purchase of treasury stock .............          --        (424)          --      (9,116)          --          --           --
Other stock issuances ..................          --           9           --          65          157          --           --
                                           ---------   ---------    ---------   ---------    ---------   ---------    ---------
December 31, 1999 ......................      46,661      (7,805)      46,661     (87,021)      18,356     253,885       (4,599)
Net Income .............................          --          --           --          --           --      33,559           --
Translation adjustments ................          --          --           --          --           --          --       (1,599)
Available for sale securities ..........          --          --           --          --           --          --       (3,191)

Comprehensive Income ...................

Cash dividends .........................          --          --           --          --           --     (10,744)          --
Stock option plan transactions including
   related income tax benefit ..........          --         702           --       5,629        4,081          --           --
Purchase of treasury stock .............          --      (1,185)          --     (20,484)          --          --           --
Other stock issuances ..................          --           5           --          40           77          --           --
Repayment of shareholder loan ..........          --          --           --          --           --          --           --
                                           ---------   ---------    ---------   ---------    ---------   ---------    ---------
December 31, 2000 ......................      46,661      (8,283)      46,661    (101,836)      22,514     276,700       (9,389)
Net Income .............................          --          --           --          --           --      46,984           --
Translation adjustments ................          --          --           --          --           --          --       (2,163)
Available for sale securities ..........          --          --           --          --           --          --        3,191
Interest rate swap agreements ..........          --          --           --          --           --          --       (1,367)

Comprehensive Income ...................

Cash dividends .........................          --          --           --          --           --     (11,275)          --
Stock option plan transactions including
   related income tax benefit ..........          --         757           --       6,311        5,769          --           --
Other stock issuances ..................          --           8           --          72          131          --           --
                                           ---------   ---------    ---------   ---------    ---------   ---------    ---------
December 31, 2001 ......................      46,661      (7,518)   $  46,661   $ (95,453)   $  28,414   $ 312,409    $  (9,728)
                                           =========   =========    =========   =========    =========   =========    =========

<CAPTION>
                                                   Amounts
                                           ------------------------

                                              Due
                                              From    Comprehensive
                                           Shareholder    Income
                                           -----------    ------
(In thousands)
<S>                                        <C>             <C>
January 1, 1999 ........................   $    (549)
Net Income .............................          --       45,357
Translation adjustments ................          --       (3,817)
                                                        ---------
Comprehensive Income ...................                   41,540
                                                        =========
Cash dividends .........................          --
Stock option plan transactions including
   related income tax benefit ..........          --
Purchase of treasury stock .............          --
Other stock issuances ..................          --
                                           ---------
December 31, 1999 ......................        (549)
Net Income .............................          --       33,559
Translation adjustments ................          --       (1,599)
Available for sale securities ..........          --       (3,191)
                                                        ---------
Comprehensive Income ...................                   28,769
                                                        =========
Cash dividends .........................          --
Stock option plan transactions including
   related income tax benefit ..........          --
Purchase of treasury stock .............          --
Other stock issuances ..................          --
Repayment of shareholder loan ..........         549
                                           ---------
December 31, 2000 ......................           0
Net Income .............................          --       46,984
Translation adjustments ................          --       (2,163)
Available for sale securities ..........          --        3,191
Interest rate swap agreements ..........                   (1,367)
                                                        ---------
Comprehensive Income ...................                   46,645
                                                        =========
Cash dividends .........................          --
Stock option plan transactions including
   related income tax benefit ..........          --
Other stock issuances ..................          --
                                           ---------
December 31, 2001 ......................   $       0
                                           =========
</TABLE>


                 See Notes to Consolidated Financial Statements.


                                       13

<PAGE>

                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  accounting policies


   Business

     The Company's principal business is the manufacture and sale of sodium
carbonate-based products. It sells its products, primarily under the ARM &
HAMMER trademark, to consumers through supermarkets, drug stores and mass
merchandisers; and to industrial customers and distributors. In 2001, Consumer
Products represented approximately 84% and Specialty Products 16% of the
Company's net sales. The Company does approximately 90% of its business in the
United States.

   Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of
the Company and its majority-owned subsidiaries. The Company's 50% interest in
its Armand Products Company joint venture, the ArmaKleen Company joint venture
and Armkel LLC have been accounted for under the equity method of accounting.
During 2001, the Company increased its ownership of QGN, its Brazilian
subsidiary from 75% to approximately 85%. The Brazilian subsidiary has been
consolidated since May 1999 and was previously accounted for under the equity
method. All material intercompany transactions and profits have been eliminated
in consolidation.

   Use of Estimates

     The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenue and expenses during the reporting
period. Actual results could differ materially from those estimates.

   Promotional and Sales Returns Reserves.

     The reserves for consumer and trade promotion liabilities, and sales
returns are established based on our best estimate of the amounts necessary to
settle future and existing claims on products sold as of the balance sheet date.
We use historical trend experience and coupon redemption provider input in
arriving at coupon reserve requirements, and we use forecasted appropriations,
customer and sales organization inputs, and historical trend analysis in
arriving at the reserves required for other promotional reserves and sales
returns. While we believe that our promotional reserves are adequate and that
the judgment applied is appropriate, such amounts estimated to be due and
payable could differ materially from what will actually transpire in the future.

   Impairment of Long-lived Assets

     Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. In such situations, long-lived assets are considered impaired when
estimated future cash flows (undiscounted and without interest charges)
resulting from the use of the asset and its eventual disposition are less than
the asset's carrying amount. While we believe that our estimates of future cash
flows are reasonable, different assumptions regarding such cash flows could
materially affect our evaluations.

   Foreign Currency Translation

     Financial statements of foreign subsidiaries are translated into U.S.
dollars in accordance with SFAS No. 52. Gains and losses are recorded in Other
Comprehensive Income. Gains and losses on foreign currency transactions were
recorded in the Consolidated Statement of Income and were not material.

   Cash Equivalents

     Cash equivalents consist of highly liquid short-term investments, which
mature within three months of purchase.


                                       14

<PAGE>


   Inventories

     Inventories are valued at the lower of cost or market. Approximately 50%
and 89% of the inventory at December 31, 2001 and 2000, respectively, were
valued using the last-in, first-out (LIFO) method. The remaining inventory was
valued using the first-in, first-out (FIFO) method.

   Property, Plant and Equipment

     Property, plant and equipment and additions thereto are stated at cost.
Depreciation and amortization are provided by the straight-line method over the
estimated useful lives of the respective assets.

   Software

     Starting in 1998, the Company accounted for software in accordance with
Statement of Position (SOP) 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." The SOP requires companies to
capitalize certain costs of developing computer software. Amortization is
provided by the straight-line method over the estimated useful lives of the
software.

    Long-Term Supply Contracts

     Long-term supply contracts represent advance payments under multi-year
contracts with suppliers of raw materials and finished goods inventory. Such
advance payments are applied over the lives of the contracts using the
straight-line method.

   Derivatives

     Derivatives designated as hedges are either (1) a hedge of the fair value
of a recognized asset or liability ("fair value" hedge), or (2) a hedge of the
variability of cash flows to be received or paid related to a recognized asset
or liability ("cash flow" hedge).

     o    Changes in the fair value of derivatives that are designated and
          qualify as fair value hedges, along with the gain or loss on the
          hedged asset or liability that is attributable to the hedged risk, are
          recorded in current period earnings.

     o    Changes in the fair value of derivatives that are designated and
          qualify as cash flow hedges are recorded in Other comprehensive loss
          until earnings are affected by the variability of cash flows of the
          hedged asset or liability. Any ineffectiveness related to these hedges
          are recorded directly in earnings.

   Goodwill and Tradenames

     The Company adopted SFAS No. 142 "Goodwill and Other Intangible Assets"
upon its effective date. Goodwill recorded prior to November 1, 1970 was not
being amortized, as management believed there had been no diminution in carrying
value. Goodwill and tradenames, recorded as part of the Brillo and related brand
acquisitions, the investment in QGN, the bathroom cleaner product lines acquired
in 1999 and the USAD acquisition was being amortized over 20-30 years using the
straight-line method. The Goodwill and tradenames acquired as part of the
anti-perspirant and pet care acquisition was not amortized based on the
provisions of SFAS 142. Starting in 2002, all Goodwill and indefinite lived
tradenames will not be amortized.

   Selected Operating Expenses

     Research & development costs in the amount of $21,803,000 in 2001,
$19,363,000 in 2000 and $17,921,000 in 1999, were charged to operations as
incurred.

   Earnings Per Share

     Basic EPS is calculated based on income available to common shareholders
and the weighted-average number of shares outstanding during the reported
period. Diluted EPS includes additional dilution from potential common stock
issuable pursuant to the exercise of stock options outstanding. Antidilutive
stock options, in the amounts of 129,000, 547,000 and 21,000 for 2001, 2000 and
1999, have been excluded. In 1999, the Company announced a 2 for 1 stock split.
Financial information contained elsewhere in these financial statements has been
adjusted to reflect the impact of the stock split.

   Income Taxes

     The Company recognizes deferred income taxes under the liability method;
accordingly, deferred income taxes are provided to reflect the future
consequences of differences between the tax bases of assets and liabilities and
their reported amounts in the financial statements.


                                       15

<PAGE>

   Recent Accounting Pronouncements

     The EITF issued EITF 00-14, "Accounting for Certain Sales Incentives". This
issue addresses the income statement classification for offers by a vendor
directly to end consumers that are exercisable after a single exchange
transaction in the form of coupons, rebate offers, or free products or services
disbursed on the same date as the underlying exchange transaction. The issue
requires the cost of these items to be accounted for as a reduction of revenues,
not included as a marketing expense as the Company did previously. This
reclassification is expected to reduce sales by approximately 2% annually. The
EITF will be effective January 1, 2002 and there is no net income impact.

     The EITF also issued EITF No. 00-25, "Vendor Income Statement
Characterization of Consideration from a Vendor to a Retailer". This issue
outlines required accounting treatment of certain sales incentives, including
slotting or placement fees, cooperative advertising arrangements, buydowns and
other allowances. The Company currently records such costs as marketing
expenses. EITF 00-25 will require the Company to report the paid consideration
expense as a reduction of sales, rather than marketing expense. The Company is
required to implement EITF 00-25 for the quarter beginning January 1, 2002. The
Company estimates this reclassification to be approximately 9% to 10% of sales
but in any case, implementation will not have an effect on net income.

     During the first quarter of 2001, the Company adopted Statement of
Financial Accounting Standards ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." Under this statement, all derivatives,
whether designated as hedging instruments or not, are required to be recorded on
the balance sheet at fair value. Furthermore, changes in fair value of
derivative instruments not designated as hedging instruments are recognized in
earnings in the current period.

     In July 2001, the FASB issued SFAS No. 141, "Business Combinations" which
establishes new standards for accounting and reporting requirements for business
combinations and will require that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method will be prohibited. The Company adopted this
statement for transactions that occurred after June 30, 2001. Management does
not believe that SFAS No. 141 will have a material impact on the Company's
consolidated financial statements.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which supersedes APB Opinion No. 17, "Intangible Assets". Under its
changes, SFAS No. 142 establishes new standards for goodwill acquired in a
business combination and eliminates amortization of goodwill and instead sets
forth methods to periodically evaluate goodwill for impairment. The Company
adopted this statement upon its effective date. If effective for all
acquisitions made prior to June 30, 2001, there would have been a reduction of
amortization expense of approximately $4.0 million in 2001.

     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The Company is currently
assessing but has not yet determined the impact of SFAS No. 143 on its financial
position and results of operations. The effective date for the Company is
January 1, 2003.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This statement supersedes FASB Statement No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and the
accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a business (as previously defined in that
Opinion). This statement also amends ARB No. 51, "Consolidated Financial
Statements", to eliminate the exception to consolidation for a subsidiary for
which control is likely to be temporary. The Company is in the process of
evaluating the impact of the SFAS No. 144. The adoption of this Statement is not
expected to have a material impact on the Company's consolidated financial
statements.

   Reclassification

     Certain prior year amounts have been reclassified in order to conform with
the current year presentation.


                                       16

<PAGE>

2.  fair value of financial instruments and risk management

     The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 2001 and 2000. Financial
Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments," defines the fair value of a financial instrument as the amount at
which the instrument could be exchanged in a current transaction between willing
parties.


<TABLE>
<CAPTION>
                                                                                       2001                        2000
                                                                                       ----                        ----

                                                                              Carrying        Fair        Carrying        Fair
     (In thousands)                                                            Amount        Value         Amount        Value
                                                                               ------        -----         ------        -----
<S>                                                                          <C>           <C>           <C>           <C>
     Financial Assets:
         Short-term investments .......................................      $     --      $     --      $  2,990      $  2,990
         Note receivable and current portion of note receivable .......         5,803         5,803            --            --
     Long-term notes receivable .......................................        11,951        11,789            --            --
     Financial Liabilities:
         Short-term borrowings ........................................         3,220         3,220        13,178        13,178
         Current portion of long-term debt ............................         8,360         8,360           685           685
     Long-term debt ...................................................       406,564       406,564        20,136        20,136
     Interest rate swap contracts .....................................         2,192         2,192            --            --
</TABLE>


     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments reflected in the Consolidated Balance
Sheets:

   Short-term Investments

     The cost of the investments (trading securities) can be specifically
identified and its fair value is based upon quoted market prices at the
reporting date. At December 31, 2000 both the cost and market value of the
investments approximated each other.

   Notes Receivable

     The cost of notes receivable are initially recorded at their face value and
are then discounted using an interest factor management believes appropriate for
the credit risk involved at the date of acquisition. The market value of the
notes receivable reflects what management believes is the appropriate interest
factor at December 31, 2001, based on similar risks in the market.

   Short-term Borrowings

     The amounts of unsecured lines of credit equal fair value because of short
maturities and variable interest rates.

   Long-term Debt and Current Portion of Long-term Debt

     The Company estimates that based upon the Company's financial position and
the variable interest rate, the carrying value approximates fair value.

   Interest Rate Swap Contracts

     The fair values are estimated amounts the Company would receive or pay to
terminate the agreements at the balance sheet date, taking into account current
interest rates.

   Foreign Currency

     The Company is subject to exposure from fluctuations in foreign currency
exchange rates, primarily U.S. Dollar/British Pound, U.S. Dollar/Japanese Yen,
U.S. Dollar/Canadian Dollar and U.S. Dollar/Brazilian Real.

     The Company, from time to time, enters into forward exchange contracts to
hedge anticipated but not yet committed sales denominated in the Canadian
dollar, the British pound and the Japanese Yen. The terms of these contracts are
for periods of under 12 months. The purpose of the Company's foreign currency
hedging activities is to protect the Company from the risk that the eventual
dollar net cash inflows from the sale of products to foreign customers will be
adversely affected by changes in exchange rates. The Company did not have any
forward exchange contracts outstanding at December 31,


                                       17

<PAGE>

2001, and the amount outstanding at December 31, 2000 was immaterial. At
December 31, 2000, the Company had an immaterial unrealized gain.

   Interest Rate Risk

     The Company's primary domestic borrowing facility is made up of a $ 510
million credit agreement of which $410 million was utilized as of December 31,
2001; and $100 million of a revolving credit agreement all of which was un-drawn
at December 31, 2001. The weighted average interest rate on these borrowings at
December 31, 2001, excluding deferred financing costs and commitment fees, was
approximately 5.5% including hedges. The Company entered into interest rate swap
agreements to reduce the impact in interest rates on this debt as required by
the credit agreement. The swap agreements are contracts to exchange floating
rate for fixed interest rate payments periodically over the life of the
agreements without the exchange of the underlying notional amounts. As of
December 31, 2001, the Company entered into agreements for a notional amount of
$200 million, swapping debt with a one-month and three-month LIBOR rate for a
fixed rate that averages 6.4 %.

3.   inventories

     Inventories are summarized as follows:


<TABLE>
<CAPTION>
          (In thousands)                                                             2001           2000
                                                                                     ----           ----
<S>                                                                                <C>            <C>
          Raw materials and supplies .........................................     $ 28,869       $ 18,696
          Work in process ....................................................          651             25
          Finished goods .....................................................       71,694         36,444
                                                                                   --------       --------
                                                                                   $101,214       $ 55,165
                                                                                   ========       ========
</TABLE>


     Inventories valued on the LIFO method totaled $49,944,000 and $49,226,000
at December 31, 2001 and 2000, respectively, and would have been approximately
$2,759,000 and $2,922,000 higher, respectively, had they been valued using the
first-in, first-out (FIFO) method.

4.  property, plant and equipment

     Property, plant and equipment consist of the following:


<TABLE>
<CAPTION>
          (In thousands)                                                             2001           2000
                                                                                     ----           ----
<S>                                                                                <C>            <C>
          Land ...............................................................     $  6,503       $  5,546
          Buildings and improvements .........................................       92,577         78,781
          Machinery and equipment ............................................      253,749        214,926
          Office equipment and other assets ..................................       25,037         15,664
          Software ...........................................................        5,652          5,355
          Mineral rights .....................................................          257            304
          Construction in progress ...........................................       17,593          6,463
                                                                                   --------       --------
                                                                                    401,368        327,039
          Less accumulated depreciation, depletion and amortization ..........      169,919        158,469
                                                                                   --------       --------
          Net property, plant and equipment ..................................     $231,449       $168,570
                                                                                   ========       ========
</TABLE>


     Depreciation, depletion and amortization of property, plant and equipment
amounted to $18,968,000, $18,469,000 and $16,594,000 in 2001, 2000 and 1999,
respectively. Interest charges in the amount of $432,000, $284,000 and $421,000
were capitalized in connection with construction projects in 2001, 2000 and
1999, respectively.

5.  acquisitions

     a. In 1997, the Company acquired a 40% interest in QGN. The investment,
     costing approximately $10.4 million, was financed internally and included
     goodwill of approximately $3.3 million. The Company exercised its option to
     increase its interest to 75% during the second quarter of 1999. The
     additional 35% ownership cost approximately $9.1 million and included
     goodwill of approximately $4.8 million. During the second quarter of 2001,
     the Company increased its ownership position to approximately 85% at a cost
     of $2.6 million of which $1.7 million was allocated to Goodwill. Pro forma
     comparative results of operations are not presented because they are not
     materially different from the Company's reported results of operations.


                                       18

<PAGE>

b. During the fourth quarter of 1999, the Company entered the bathroom cleaner
category with the acquisition of two major brands, CLEAN SHOWER and SCRUB FREE.
As part of the Scrub Free transaction, the Company also acquired the DELICARE
fine fabric wash brand. The combined purchase price of both transactions was
approximately $54.8 million, was financed by the use of the Company's lines of
credit and included goodwill and other intangibles of approximately $50.2
million.

c. USAD Acquisition and Non-Core Business Divestiture

     On May 25, 2001, the Company and USA Detergents, Inc. ("USAD") closed on
its previously announced merger agreement under which the Company acquired USAD,
its partner in the previously announced ARMUS LLC joint venture, for $7 per
share in an all-cash transaction. The acquisition is accounted for under the
purchase method. Results of operations are included in the accompanying
financial statements from May 25, 2001.

     The Company and USAD formed the ARMUS joint venture to combine their
laundry products businesses in June 2000. Under its terms, the Company had
management control of the venture and an option to buy USAD's interest in five
years.

     The venture became operational on January 1, 2001, and was dissolved when
the Company purchased USAD outright.

     As part of the ARMUS venture, the Company had already acquired 2.1 million
shares or 15% of USAD's stock for $15 million or $7 a share. The acquisition
agreement extended the same offer price to USAD's remaining stockholders. The
Company estimates the total transaction cost, including the assumption of debt,
and the initial stock purchase, to be approximately $125 million after disposal
of unwanted assets. The Company financed the acquisition with a short term
bridge loan, which subsequently was refinanced as part of the Carter-Wallace
acquisition.

     The Company divested USAD's non-laundry business, which accounted for less
than 20% of USAD's sales in 2000, and other non-core assets to former USAD
executives.

     The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition:


<TABLE>
<CAPTION>
     (in thousands)
<S>                                                       <C>
     Current assets ................................      $  14,795
     Property, plant and equipment .................         46,591
     Tradenames ....................................         57,890
     Goodwill ......................................         42,438
     Other long-term assets ........................          9,424
                                                          ---------
     Total assets acquired .........................        171,138
     Current liabilities ...........................        (54,836)
     Long-term debt ................................         (5,425)
                                                          ---------
     Net assets acquired ...........................      $ 110,877
                                                          =========
</TABLE>


     The Goodwill and tradenames were amortized until December 31, 2001, using
the straight-line method over 30 years.

     As noted, the Company divested USAD's non-laundry business and other
non-core assets to former USAD executives concurrent with the merger agreement.
The Company has a 20% ownership interest in the newly formed company and
contributed $200,000. The new company, USA Metro, Inc. (USAM), purchased
inventory and other assets for a total of $5,087,000, in the form of two notes
receivable. The inventory note of $3,087,000 was secured by a lien on the
inventory. The note was due on December 31, 2001 and bore interest at 8% for the
first ninety days and 10% thereafter. It was paid on time. The note for all the
other assets of $2,000,000 has a maturity of five years and bear interest at 8%
for the first two years, 9% for the third year, 10% for the fourth year and 11%
for the fifth year and is carried at approximately $1,400,000 using an effective
interest rate of 17%.

     There shall be interest only payments for the first two years. Commencing
with the start of the third year the principal and accrued interest shall be
paid monthly based upon a five-year amortization. The unpaid principal and
accrued interest as of the maturity date shall be payable in a lump sum at such
time. In the event the unpaid principal and interest is not paid as of the
maturity date, the interest rate shall increase by 300 basis points. In the case
of default by USAM that is not remedied as provided in the note, the Company may
convert the note to additional ownership in USAM.


                                       19

<PAGE>

d.   Carter-Wallace Acquisition

     On September 28, 2001, the Company acquired the consumer products business
of Carter-Wallace, Inc. in a partnership with the private equity group, Kelso &
Company, for a total negotiated price of approximately $739 million, including
the assumption of certain debt plus transaction costs. Under the terms of its
agreements with Carter-Wallace and Kelso, the Company acquired Carter-Wallace's
U.S. anti-perspirant and pet care businesses outright for a negotiated price of
approximately $128 million; and Armkel, LLC, a 50/50 joint venture between the
Company and Kelso, acquired the rest of Carter-Wallace's domestic and
international consumer products business for a negotiated price of approximately
$611 million. The Company accounts for its interest in Armkel on the equity
method. (See note 6)

     The reason the Company made the acquisition was to increase its personal
care product lines and to improve the cost structure of these products.

     The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed (related to the anti-perspirant and pet care
businesses acquired directly by the Company) at the date of acquisition:


<TABLE>
<CAPTION>
     (in thousands)
<S>                                                                  <C>
     Current assets .........................................        $  41,668
     Property, plant and equipment ..........................            5,795
     Tradenames .............................................           52,153
     Goodwill ...............................................           38,838
                                                                     ---------
     Total assets acquired ..................................          138,454
     Current liabilities ....................................           (9,349)
                                                                     ---------
     Net assets acquired ....................................        $ 129,105
                                                                     =========
</TABLE>


     The results of operations are included in the accompanying financial
statements from September 28, 2001.

     An appraisal is currently in process and the purchase price allocation will
be modified based on its results. Goodwill and tradenames are not being
amortized, based on the provisions of SFAS 142 "Goodwill and Other Intangible
Assets." All the Goodwill is expected to be deductible for tax purposes and will
be included in the consumer products segment.

e.   Pro forma results - unaudited

     The following pro forma 2000 and 2001 income statements reflect the impact
as though the Company purchased USAD, its share of Armkel and the
anti-perspirant and pet care businesses as of the beginning of the period
indicated. Pro forma adjustments include the elimination of intercompany sales,
inventory set-up adjustments, additional interest expense, depreciation and
amortization charges and the related income tax impact.


<TABLE>
<CAPTION>
      (Dollars in thousands, except per share data)

                                               2001                                      2000
                                     -------------------------                -------------------------
                                     Historical      Pro forma                Historical      Pro forma
                                        CHD           Results                    CHD           Results
                                        ---           -------                    ---           -------
<S>                                  <C>              <C>                       <C>           <C>
Net Sales                            $1,080.9         $1,188.9                  $795.7        $1,167.8
Income from Operations                   93.5             82.8                    52.2            51.1
Equity Income                            (6.2)            12.2                     3.0             9.8
Net Income                               47.0             43.5                    33.6            21.2

EPS - Basic                             $1.21            $1.12                    $.88            $.55
EPS - Diluted                           $1.15            $1.07                    $.84            $.53
</TABLE>


f. Early in 2002, the Company acquired Biovance Technologies, Inc., a small
Oskaloosa, Iowa-based producer of specialty feed ingredients, which complement
our existing range of animal nutrition products. The purchase price paid in 2002
was $8.0 million and included the assumption of debt. Additional payments will
be required based on future operating performance.


                                       20

<PAGE>


6.   Armkel equity investment

     The following table summarizes financial information for Armkel LLC. The
Company account for its 50% interest under the equity method.


<TABLE>
<CAPTION>
          (in thousands)                                                             2001
                                                                                     ----
<S>                                                                               <C>
          Income statement data:
          Net sales ....................................................          $  95,417
          Gross profit .................................................             38,625
          Net income (loss) ............................................            (15,648)
          Equity in affiliate (loss) ...................................            (10,009)

          Balance sheet data:
          Current assets ...............................................          $ 225,104
          Noncurrent assets ............................................            587,489
          Short-term debt ..............................................              5,671
          Current liabilities (excluding short-term debt) ..............            135,057
          Long-term debt ...............................................            439,750
          Other long-term liabilities ..................................             28,711
          Partners' equity .............................................            203,404
</TABLE>


     The venture's Board has equal representation from the Company and Kelso.

     The Armkel venture is financed with $229 million in initial equity
contributions from the Company and Kelso and an additional $445 million in debt.
Armkel entered into a syndicated bank credit facility and also issued senior
subordinated notes to finance its investment in the acquisition of
Carter-Wallace. The long-term $305 credit facility consists of $220 million in 6
and 7-year term loans, all of which were drawn at closing and an $85 million
revolving credit facility, which remained fully undrawn at December 31, 2001.
Armkel issued $225 million of 9.5% senior debt notes due in eight years with
interest paid semi-annually, therefore, Armkel had $445 million of total debt
utilized as of December 31, 2001. The weighted average interest rate on the
credit facility borrowings at December 31, 2001, excluding deferred financing
costs and commitment fees, was approximately 5.5% including hedges. Any debt on
Armkel's balance sheet is without recourse to the Company.

     Under the partnership agreement with Kelso, the Company is allocated 50% of
all book and tax profits. If there are losses, the Company is allocated 50% of
all book and tax losses up to $10 million and 100% of such losses above that
level for the period starting September 29, 2001, the date of the acquisition.
As a result, the Company recorded a loss of approximately $10.0 million on its
investment in Armkel.

     The Company believes that substantial synergies can be achieved by
combining certain of its operations with those of Armkel, particularly in the
areas of sales, manufacturing and distribution, and most service functions.
Armkel will retain its core marketing, research & development, and financial
planning capabilities, and will continue to manufacture condoms, but will
purchase virtually all the support services it requires for its U.S. domestic
business from the Company under a management services agreement, which has a
term of five years with possible renewal. As a first step, the Company merged
the two sales organizations during the fourth quarter of 2001. In early 2002,
the Company plans to begin transferring production of antiperspirants and
depilatories from the former Carter-Wallace plant at Cranbury, NJ, to the
Company's plant at Lakewood, NJ, which is a more efficient producer of
antiperspirants and other personal care products. This process will take six to
nine months and should be completed in third quarter 2002. During early 2002,
the Company will also integrate the planning and purchasing, accounting and
management information systems, and other service functions.

     During 2001, the Company invoiced Armkel $2.1 million for administrative
services, and purchased $8.4 million of deodorant antiperspirant inventory
produced by Armkel at its cost. Armkel invoiced the Company $1.4 million of
transition administrative services. The Company has an open receivable from
Armkel at December 31, 2001 of approximately $12.0 million that primarily
related to cash collected by Armkel on behalf of the Company for open accounts
receivable, partially offset by amounts owed for inventory.

          Under the terms of its joint venture agreement with Kelso, the Company
has a call option to acquire Kelso's interest in Armkel in three to five years
after the closing, at fair market value as defined in the joint venture
agreement subject to a floor and cap. If the Company does not exercise its call
option, then Kelso may request the Company to purchase its interest. If the
Company elects not to purchase Kelso's interest, then Kelso's and the Company's
equity in the joint venture may be offered to a third party. If a third party
sale should occur, depending on the proceeds received, the Company may be
required to make a payment to Kelso up to an amount of approximately $112
million. Kelso also may elect to have the


                                       21

<PAGE>

Company purchase its interest for $112 million. This amount is not payable until
the eighth year from the formation of the venture. Finally, Kelso may require
the Company to purchase its interest upon a change in control as defined in the
joint venture agreement.

     Simultaneous with this transaction, Carter-Wallace and its pharmaceutical
business merged into a newly formed company set up by pharmaceutical industry
executives and backed by two well-known private equity firms. While the Company
and Armkel are not affiliated with the pharmaceutical venture, Armkel has agreed
to provide certain transitional services to help this venture with the start-up
of its operations at Carter-Wallace's main Cranbury, New Jersey, facility.

7.   accounts payable and accrued expenses

     Accounts payable and accrued expenses consist of the following:


<TABLE>
<CAPTION>
         (In thousands)                                               2001            2000
                                                                      ----            ----
<S>                                                                <C>            <C>
         Trade accounts payable...............................     $  97,238      $  52,452
         Accrued marketing and promotion costs................        50,148         50,121
         Accrued wages and related costs......................        12,645         10,305
         Accrued pension and profit-sharing...................         7,450          6,881
         Other accrued current liabilities....................         8,695          9,509
                                                                   ---------      ---------
                                                                   $ 176,176      $ 129,268
                                                                   =========      =========
</TABLE>


8.   short-term borrowings and long-term debt

     The Company entered into a syndicated bank loan to finance its investment
in Armkel, the acquisition of USA Detergents and the Anti-perspirant and Pet
Care business from Carter Wallace. The Company extinguished all the short-term
unsecured lines of credit as a result of last year's acquisitions. This
long-term $510 million credit facility consists of $410 million in 5 and 6-year
term loans and a $100 million revolving credit facility, which remained fully
undrawn. The weighted average interest rate on these borrowings at December 31,
2001 and 2000 exclusive of deferred financing costs and commitment fees were
approximately 5.5% and 6.6%, respectively, including hedges.

     In addition, the Company's Brazilian subsidiary has lines of credit which
allow it to borrow in its local currency. This amounts to $8 million, of which
approximately $3 million was utilized as of December 31, 2001 and 2000,
respectively. The weighted average interest rate on these borrowings at December
31, 2001 and 2000 was approximately 9.0% and 15.0%, respectively.

     Long-term debt and current portion of long-term debt consist of the
following:


<TABLE>
<CAPTION>
     (In thousands)                                                                   2001            2000
                                                                                      ----            ----
<S>                                                                                <C>            <C>
     Syndicated Financing Loan due September 30, 2006.......................       $ 125,000      $      --
        Amount due 2002     $   6,250.......................................
        Amount due 2003     $  12,500.......................................
        Amount due 2004     $  25,000.......................................
        Amount due 2005     $  37,500.......................................
        Amount due 2006     $  43,750.......................................
     Syndicated Financing Loan due September 30, 2007.......................         285,000             --
        Amount due 2002     $   1,425.......................................
        Amount due 2003     $   2,850.......................................
        Amount due 2004     $   2,850.......................................
        Amount due 2005     $   2,850.......................................
        Amount due 2006     $  30,637.......................................
        Thereafter          $ 244,388.......................................
     Three-year Unsecured Revolving Credit Loan due December 29, 2002.......              --         24,000
     Various Debt from Brazilian Banks
        $3,220 due in 2002, $135 in 2003 and $29 in 2004....................           3,384          4,554
     Industrial Revenue Refunding Bond
        Due in installments of $685 from 2002-2007 and $650 in 2008.........           4,760          5,445
                                                                                   ---------      ---------
        Total debt..........................................................         418,144         33,999
        Less: current maturities............................................          11,580         13,863
                                                                                   ---------      ---------
        Net long-term debt..................................................       $ 406,564      $  20,136
                                                                                   =========      =========
</TABLE>



                                       22

<PAGE>

The principal payments required to be made are as follows:


<TABLE>
<CAPTION>
     (In thousands)
<S>                                                                <C>
         2002................................................      $  11,580
         2003................................................         16,170
         2004................................................         28,564
         2005................................................         41,035
         2006................................................         75,072
         2007 and subsequent.................................        245,723
                                                                   ---------
                                                                   $ 418,144
                                                                   =========
</TABLE>


     The Company entered into interest rate swap agreements, which are
considered derivatives, to reduce the impact of changes in interest rates on its
floating rate debt as required by the credit agreement. The swap agreements are
contracts to exchange floating interest payments for fixed interest payments
periodically over the life of the agreements without the exchange of the
underlying notional amounts. As of December 31, 2000, the Company had swap
agreements with a notional amount of $20 million, and as of December 31, 2001,
the Company had swap agreements in the amount of $200 million, swapping debt
with either a one or a three-month libor rate for a fixed interest rate. These
swaps, of which $20 million expire in May 2002 with the remaining $180 million
declining at various points in time and expiring February 2004, were recorded as
a liability in the amount of $2.2 million. These instruments are designated as
cash flow hedges as of December 31, 2001 and any changes in value are recorded
in other comprehensive income. The majority of the balance of the $2.2 million
loss included in other comprehensive loss related to cash flow hedges that are
expected to be reclassified to earnings over the next 12 months.

     The Industrial Revenue Refunding Bond carries a variable rate of interest
determined weekly, based upon current market conditions for short-term
tax-exempt financing. The average rate of interest charged in 2001 and in 2000
was 3.9% and 4.0%, respectively.

     QGN's long-term debt is at various interest rates that are determined by
several inflationary indexes in Brazil.

     The term loans pay interest at 200 and 250 basis points over LIBOR,
depending on the ratio of EBITDA to total debt. Financial covenants include
EBITDA to total debt and interest coverage, which if not met, could result in an
event of default and trigger the early termination of the credit facility, if
not remedied within a certain period of time. All assets of the Company are
pledged as collateral.

9.   income taxes

     The components of income before taxes are as follows:


<TABLE>
<CAPTION>
                                                                          2001           2000            1999
                                                                          ----           ----            ----
         (In thousands)
<S>                                                                    <C>            <C>             <C>
         Domestic.............................................         $  68,255      $  47,675       $  66,740
         Foreign..............................................             5,600          4,199           5,438
                                                                       ---------      ---------       ---------
         Total................................................         $  73,855      $  51,874       $  72,178
                                                                       =========      =========       =========
</TABLE>


     The following table summarizes the provision for U.S. federal, state and
foreign income taxes:


<TABLE>
<CAPTION>
                                                                          2001           2000            1999
                                                                          ----           ----            ----
         (In thousands)
<S>                                                                    <C>            <C>             <C>
         Current:
              U.S. federal....................................         $  16,222      $  18,734       $  19,395
              State...........................................             2,037          2,918           3,531
              Foreign.........................................             1,317            730           2,007
                                                                       ---------      ---------       ---------
                                                                       $  19,576      $  22,382       $  24,933
                                                                       =========      =========       =========
         Deferred:
              U.S. federal....................................         $   6,033      $  (3,801)      $   1,552
              State...........................................               663         (1,047)            358
              Foreign.........................................               599            781             (22)
                                                                       ---------      ---------       ---------
                                                                       $   7,295      $  (4,067)      $   1,888
                                                                       ---------      ---------       ---------
         Total provision......................................         $  26,871      $  18,315       $  26,821
                                                                       =========      =========       =========
</TABLE>



                                       23

<PAGE>

Deferred tax liabilities/(assets) consist of the following at December 31:


<TABLE>
<CAPTION>
         (In thousands)                                                               2001             2000
                                                                                      ----             ----
<S>                                                                               <C>              <C>
         Current deferred tax assets:
              Marketing expenses, principally coupons........................     $   (6,121)      $   (5,382)
              Reserves and other liabilities.................................         (5,015)          (2,676)
              Accounts receivable............................................         (5,708)          (3,380)
              Net operating loss.............................................         (1,700)              --
              Capitalization of inventory costs..............................           (802)            (387)
              Other..........................................................           (503)             146
                                                                                  -----------      ----------
              Total current deferred tax assets..............................        (19,849)         (11,679)
                                                                                  -----------      ----------
              Nonpension postretirement and postemployment benefits..........         (6,120)          (5,787)
              Capitalization of items expensed...............................         (5,697)          (5,307)
              Reserves and other liabilities.................................         (3,175)          (6,927)
              Investment valuation difference................................           (824)          (1,923)
              Loss carryfoward of foreign subsidiary(1)......................         (4,401)          (3,248)
              Foreign exchange translation adjustment........................         (3,143)          (2,330)
              Valuation allowance............................................          7,544            5,578
              Depreciation and amortization..................................         44,895           36,828
              Net operating loss carryforward................................         (5,563)              --
              Difference between book and tax loses of equity investment.....          3,014               --
              Other..........................................................            502              968
                                                                                  ----------       ----------
              Net noncurrent deferred tax liabilities........................         27,032           17,852
                                                                                  ----------       ----------
         Net deferred tax liability..........................................     $    7,183       $    6,173
                                                                                  ==========       ==========
</TABLE>


     The difference between tax expense and the "expected" tax which would
result from the use of the federal statutory rate is as follows:


<TABLE>
<CAPTION>
         (In thousands)                                                            2001           2000           1999
                                                                                   ----           ----           ----
<S>                                                                              <C>            <C>            <C>
         Statutory rate ....................................................           35%            35%            35%
         Tax which would result from use of the federal statutory rate .....     $ 25,849       $ 18,156       $ 25,262
         Depletion .........................................................         (416)          (398)          (466)
         Research & development credit .....................................         (300)          (350)          (200)
         State and local income tax, net of federal effect .................        1,765          1,216          2,528
         Varying tax rates of foreign affiliates ...........................         (169)           (87)          (103)
         Other .............................................................          142           (222)          (200)
                                                                                 --------       --------       --------
                                                                                    1,022            159          1,559
                                                                                 --------       --------       --------
         Recorded tax expense ..............................................     $ 26,871       $ 18,315       $ 26,821
                                                                                 --------       --------       --------
         Effective tax rate ................................................         36.4%          35.3%          37.2%
                                                                                 ========       ========       ========
</TABLE>


----------
(1)  The loss carryfoward existed at the date of acquisition. Any recognition of
     this benefit will be an adjustment to Goodwill.

     The net operating loss carryforwards for federal, foreign and state
amounted to $20.8, $16.3 and $11.2 million, respectively. These NOL's expire on
various dates through December 31, 2020.

10.  pension and nonpension postretirement benefits

     The Company has defined benefit pension plans covering certain hourly
employees. Pension benefits to retired employees are based upon their length of
service and a percentage of qualifying compensation during the final years of
employment. The Company's funding policy, is consistent with federal funding
requirements.

     The Company maintains unfunded plans, which provide medical benefits for
eligible domestic retirees and their dependents. The Company accounts for these
benefits in accordance with Statement of Financial Accounting Standards No. 106
(SFAS 106), "Employers' Accounting for Postretirement Benefits Other than
Pensions." This standard requires the cost of such benefits to be recognized
during the employee's active working career.


                                       24

<PAGE>

     The following table provides information on the status of the plans at
December 31:


<TABLE>
<CAPTION>
                                                                                                                Nonpension
                                                                                                              Postretirement
                                                                             Pension Plans                     Benefit Plans
                                                                             -------------                     -------------
(In thousands)                                                            2001            2000             2001             2000
                                                                          ----            ----             ----             ----
<S>                                                                    <C>              <C>              <C>              <C>
Change in Benefit Obligation:
     Benefit obligation at beginning of year ...................       $ 18,317         $ 14,676         $ 10,217         $  9,654
     Service cost ..............................................            426              433              436              397
     Interest cost .............................................          1,268            1,090              734              682
     Plan amendments ...........................................             --            2,172(1)            --               --
     Actuarial (gain) loss .....................................            (79)             704              (22)             (66)
     Benefits paid .............................................         (2,405)            (758)            (319)            (450)
                                                                       --------         --------         --------         --------
Benefit obligation at end of year ..............................       $ 17,527         $ 18,317         $ 11,046         $ 10,217
                                                                       ========         ========         ========         ========
Change in Plan Assets:
     Fair value of plan assets at beginning of year ............       $ 18,930         $ 20,311         $     --         $     --
     Actual return on plan assets (net of expenses) ............         (1,571)            (688)              --               --
     Employer contributions ....................................             65               65              319              450
     Benefits paid .............................................         (2,405)            (758)            (319)            (450)
                                                                       --------         --------         --------         --------
Fair value of plan assets at end of year .......................       $ 15,019         $ 18,930         $     --         $     --
                                                                       ========         ========         ========         ========
Reconciliation of the Funded Status:
     Funded status .............................................       $ (2,508)        $    614         $(11,046)        $(10,217)
     Unrecognized prior service cost (benefit) .................             29              147             (619)            (950)
     Unrecognized actuarial gain ...............................            747           (2,627)          (3,073)          (3,209)
     Loss due to currency fluctuations .........................             76               52               --               --
                                                                       --------         --------         --------         --------
Net amount recognized at end of year ...........................       $ (1,656)        $ (1,814)        $(14,738)        $(14,376)
                                                                       ========         ========         ========         ========
</TABLE>


     Amounts recognized in the statement of financial position consist of:


<TABLE>
<CAPTION>
(In thousands)                                                            2001            2000             2001             2000
                                                                          ----            ----             ----             ----
<S>                                                                    <C>              <C>              <C>              <C>
     Prepaid benefit cost ......................................       $  1,120         $    977         $     --         $     --
     Accrued benefit liability .................................         (2,776)          (2,791)         (14,738)         (14,376)
                                                                       --------         --------         --------         --------
Net amount recognized at end of year ...........................       $ (1,656)        $ (1,814)         (14,738)        $(14,376)
                                                                       ========         ========         ========         ========

Weighted-average assumptions as of December 31:
Discount rate ..................................................           7.25%            7.25%            7.25%            7.25%
Rate of compensation increase ..................................           5.00%            5.00%              --               --
Expected return on plan assets .................................           9.25%            9.25%              --               --
</TABLE>


     Net Pension and Net Postretirement Benefit Costs consisted of the following
components:


<TABLE>
<CAPTION>
                                                                     Pension Costs                       Postretirement Costs
                                                                     -------------                       --------------------
(In thousands)                                               2001         2000         1999         2001         2000         1999
                                                             ----         ----         ----         ----         ----         ----
<S>                                                        <C>          <C>          <C>          <C>          <C>          <C>
Components of Net Periodic Benefit Cost:
     Service cost ....................................     $   426      $   433      $   440      $   436      $   397      $   477
     Interest cost ...................................       1,268        1,090        1,008          734          682          647
     Expected return on plan assets ..................      (1,713)      (1,843)      (1,433)          --           --           --
     Amortization of transition obligation ...........          --            3            4           --           --           --
     Amortization of prior service cost ..............          29           30           29         (105)        (105)        (105)
     Recognized actuarial (gain) or loss .............        (130)        (334)         (27)        (158)        (212)        (144)
     FAS 88 expense ..................................          --           --           --         (226)          --           --
                                                           -------      -------      -------      -------      -------      -------
      Net periodic benefit cost (income) .............     $  (120)     $  (621)(1)  $    21      $   681      $   762      $   875
                                                           =======      =======      =======      =======      =======      =======
</TABLE>


----------

(1)  The benefit obligation for the plan amendment referred to in the table on
     the previous page relates to the offering to Syracuse plant employees a
     cash balance benefit in connection with the Syracuse plant shutdown in
     2000. Accordingly, the related expense of $2,172 thousand is included in
     Impairment and other items in the accompanying statement of income. See
     note 13.


                                       25

<PAGE>

     The pension plan assets primarily consist of equity mutual funds, fixed
income funds and a guaranteed investment contract fund. The accumulated
postretirement benefit obligation has been determined by application of the
provisions of the Company's medical plans including established maximums and
sharing of costs, relevant actuarial assumptions and health-care cost trend
rates projected at 8.0% in 2001, and ranging to 5.0% in 2007. The Company has a
maximum annual benefit based on years of service for those over 65 years of age.


<TABLE>
<CAPTION>
          (In thousands)                                                         2001        2000
                                                                                 ----        ----
<S>                                                                             <C>         <C>
          Effect of 1% increase in health-care cost trend rates on:
          Postretirement benefit obligation .................................   $  739      $  708
          Total of service cost and interest cost component .................       93          85
          Effect of 1% decrease in health-care cost trend rates on:
          Postretirement benefit obligation .................................     (657)       (627)
          Total of service cost and interest cost component .................      (82)        (74)
</TABLE>


     The Company also maintains a defined contribution profit-sharing plan for
salaried and certain hourly employees. Contributions to the profit-sharing plan
charged to earnings amounted to $3,099,000, $3,628,000 and $4,481,000 in 2001,
2000 and 1999, respectively.

     The Company also has an employee savings plan. The Company matches 50% of
each employee's contribution up to a maximum of 6% of the employee's earnings.
The Company's matching contributions to the savings plan were $1,675,000,
$1,342,000 and $1,327,000 in 2001, 2000 and 1999, respectively.

11.  stock option plans

     The Company has options outstanding under three plans. Under the 1983 Stock
Option Plan and the 1994 Incentive Stock Option Plan, the Company may grant
options to key management employees. The Stock Option Plan for Directors
authorizes the granting of options to non-employee directors. Options
outstanding under the plans are issued at market value, vest and are exercisable
on the third anniversary of the date of grant, and must be exercised within ten
years of the date of grant. A total of 7,000,000 shares of the Company's common
stock is authorized for issuance for the exercise of stock options.

     Stock option transactions for the three years ended December 31, 2001 were
as follows:


<TABLE>
<CAPTION>
                                                                                  Number
                                                                                    of          Weighted Avg.
                                                                                  Shares       Exercise Price
                                                                                  ------       --------------
<S>                                                                              <C>                  <C>
         Outstanding at January 1, 1999...................................       5,036,410            11.52
              Grants......................................................         579,000            20.94
              Exercised...................................................         649,116            10.29
              Cancelled...................................................          83,500            12.84
                                                                               -----------      -----------
         Outstanding at December 31, 1999.................................       4,882,794            12.78
              Grants......................................................         783,850            17.23
              Exercised...................................................         701,847            10.64
              Cancelled...................................................          24,900            16.95
                                                                               -----------      -----------
         Outstanding at December 31, 2000.................................       4,939,897            13.69
              Grants......................................................         835,576            24.15
              Exercised...................................................         756,591            12.11
              Cancelled...................................................         112,825            21.98
                                                                               -----------      -----------
         Outstanding at December 31, 2001.................................       4,906,057            15.55
</TABLE>


     At December 31, 2001, 2000 and 1999, 3,001,131 options, 2,985,147 options
and 3,499,380 options were exercisable, respectively.


                                       26

<PAGE>

     The table below summarizes information relating to options outstanding and
exercisable at December 31, 2001.


<TABLE>
<CAPTION>
                                               Options Outstanding                                Options Exercisable
                                               -------------------                                -------------------
                                                    Weighted                                                     Weighted
                                                     Average           Weighted Avg.                             Average
           Exercise               Options           Exercise             Remaining             Options           Exercise
            Prices              Outstanding           Price           Contractual Life       Exercisable          Price
            ------              -----------           -----           ----------------       -----------          -----
<S>                              <C>               <C>                      <C>                <C>            <C>
        $7.50-$10.00               360,985               8.76               3.0                  360,985           8.76
       $10.01-$12.50             1,364,371              10.78               3.8                1,364,371          10.78
       $12.51-$15.00               976,600              13.57               4.9                  968,375          13.57
       $15.01-$17.50               842,500              16.88               6.5                  192,600          16.07
       $17.51-$25.00             1,283,950              22.51               7.6                  104,800          22.63
       $25.01-$35.00                77,651              26.42               9.2                   10,000          27.81
                               -----------         ----------               ---             ------------      ---------
                                 4,906,057         $    15.55               5.5                3,001,131      $   12.24
</TABLE>


     The fair-value of options granted in 2001, 2000 and 1999 is $6,540,014,
$5,626,000, and $4,447,000, respectively and the weighted average fair-value per
share of options granted in 2001, 2000 and 1999 is $7.83, $7.18 and $7.68,
respectively.

     The fair-value of options granted in 2001, 2000 and 1999 is estimated on
the date the options are granted based on the Black Scholes option-pricing model
with the following weighted-average assumptions:


<TABLE>
<CAPTION>
                                                            2001              2000              1999
                                                            ----              ----              ----
<S>                                                      <C>               <C>               <C>
      Risk-free interest rate.......................        5.1%              6.6%              6.0%
      Expected life.................................     6.5 years         6.0 years         6.0 years
      Expected volatility...........................        25.0%            38.8%             30.0%
      Dividend yield................................        1.2%              1.6%              1.2%
</TABLE>


     The Company accounts for costs of stock-based compensation in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," rather than the fair-value based method in Statement of Financial
Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based
Compensation." No compensation cost has been recognized for the Company's stock
option plans. Had compensation cost been determined based on the fair values of
the stock options at the date of grant in accordance with SFAS 123, the Company
would have recognized additional compensation expense, net of taxes, of
$2,670,000, $2,577,000 and $2,037,000 for 2001, 2000 and 1999, respectively. The
Company's pro forma net income and pro forma net income per share for 2001, 2000
and 1999 would have been as follows:


<TABLE>
<CAPTION>
     (In thousands, except for per share data)                2001           2000            1999
                                                              ----           ----            ----
<S>                                                       <C>            <C>             <C>
     Net Income
     As reported.....................................     $  46,984      $  33,559       $  45,357
     Pro forma.......................................        44,314         30,982          43,320
     Net Income per Share: basic
     As reported.....................................     $    1.21      $     .88       $    1.17
     Pro forma.......................................          1.14            .81            1.12
     Net Income per Share: diluted
     As reported.....................................     $    1.15      $     .84       $    1.11
     Pro forma.......................................          1.09            .78            1.06
</TABLE>


12.  gain on the sale of mineral rights

     The Company sold most of its trona mineral leases in Wyoming for
approximately $22.5 million to Solvay Minerals, Inc., resulting in a gain of
approximately $11.8 million. The terms of the note recorded as part of the sale
included annual payments beginning on January 5, 1999 and concluding on January
5, 2011. The Company received its initial payment of $3.0 million and assigned
and sold the note for the present value of the remaining payments net of
expenses for approximately $13.8 million. During 2001, as part of the Company's
debt refinancing, the Company purchased the note for $11.4 million from the
original assignee.

13.  impairment and other items

     During 2000, the Company recorded a pre-tax charge of $21.9 million
relating to three major elements: a $14.3 million write-down of the Company's
Syracuse N.Y. manufacturing facility, a $2.1 million charge for potential
carrying and site clearance costs, and a $5.5 million severance charge
(including $2.2 million pension plan amendment) related to both the Syracuse


                                       27

<PAGE>

shutdown and the sales force reorganization. The Company also incurred
depreciation and other charges of $1.8 million in 2000 and $1.4 million in 2001
relating to a plant and warehouses that were shutdown. This brings the total
one-time cost to approximately $25 million. The cash portion of this one-time
cost, however, was less than $5 million after tax.

     During 1999, the Company recorded a pre-tax charge of $6.6 million for
impairment and certain other items relating to a planned plant shutdown which
included the rationalization of both toothpaste and powder laundry detergent
production.

     In 2001, the Company recorded pre-tax income of $.7 million primarily
related to the sale of fixed assets located in the Syracuse plant.

     Components of the outstanding reserve balance included in accounts payable
and accrued expenses consist of the following:


<TABLE>
<CAPTION>
                                                       Reserve at     Adjustments      Reserves at
                                                     Dec. 31, 2000     Payments       Dec. 31, 2001
                                                     -------------     --------       -------------
<S>                                                    <C>             <C>              <C>
         Severance and other charges.................  $   5,239       $ (4,477)(1)     $     762
         Fixed asset write-down and demolition.......      2,129           (943)            1,186
                                                       ---------       ---------        ---------
                                                       $   7,368       $ (5,420)        $   1.948
                                                       =========       =========        =========
</TABLE>


     The severance charge in 2000 was for approximately 140 people and 74 people
in 1999.

     As of December 31, 2001, there was no liability related to the 1999
impairment charge.

     (1)  The $2.2 million pension plan amendment reserve was reclassified and
          is included in Deferred and Long-term Liabilities in the Company's
          balance sheet. (See note 10)

14.  common stock voting rights and rights agreement

     Effective February 19, 1986, the Company's Restated Certificate of
Incorporation was amended to provide that every share of Company common stock is
entitled to four votes per share if it has been beneficially owned continuously
by the same holder (1) for a period of 48 consecutive months preceding the
record date for the Stockholders' Meeting; or (2) since February 19, 1986. All
other shares carry one vote. (Specific provisions for the determination of
beneficial ownership and the voting of rights of the Company's common stock are
contained in the Company's Notice of Annual Meeting of Stockholders and Proxy
Statement-unaudited).

     On August 27, 1999, the Board of Directors adopted a Shareholder Rights
Plan (the Plan) that essentially reinstates a Shareholder Rights Plan originally
enacted in 1989, which had terminated. In connection with the adoption of the
Plan, the Board declared a dividend of one preferred share purchase right for
each outstanding share of Company Common Stock. Each right, which is not
presently exerciseable, entitles the holder to purchase one one-hundredth of a
share of Junior Participating Preferred Stock at an exercise price of $200.00.
In the event that any person acquires 20% or more of the outstanding shares of
Common Stock, each holder of a right (other than the acquiring person or group)
will be entitled to receive, upon payment of the exercise price, that number of
shares of Common Stock having a market value equal to two times the exercise
price. In order to retain flexibility and the ability to maximize shareholder
value in the event of unknown future transactions, the Board of Directors
retains the power to redeem the rights for a set amount.

     The rights were issued on September 13, 1999, payable to shareholders of
record at the close of business on that date. The rights will expire on
September 13, 2009.

15.  commitments and contingencies

          a. Rent expense amounted to $5,048,000 in 2001, $2,794,000 in 2000 and
     $2,715,000 in 1999. The Company is obligated for minimum annual rentals
     under non-cancelable long-term operating leases as follows:


<TABLE>
<CAPTION>
         (In thousands)
<S>                                                                <C>
              2002............................................     $   30,252
              2003............................................         29,592
              2004............................................          7,643
              2005............................................          7,310
              2006............................................          7,389
              2007 and thereafter.............................         23,853
                                                                   ----------
         Total future minimum lease commitments...............     $  106,039
                                                                   ==========
</TABLE>



                                       28

<PAGE>

          b. In December 1981, the Company formed a partnership with a supplier
     of raw materials which mines and processes sodium mineral deposits owned by
     each of the two companies in Wyoming. The partnership supplies the Company
     with the majority of its sodium raw material requirements. This agreement
     terminates upon two years' written notice by either company.

          c. The Company has a raw material purchase commitment for an animal
     feed additive of $6.4 million for 2002.

          d. Certain former shareholders of Carter-Wallace have brought legal
     action against the company that purchased the pharmaceutical business of
     Carter-Wallace regarding the fairness of the consideration these
     shareholders received. Pursuant to various indemnification agreements,
     Armkel could be liable for damages up to $12 million, and the Company could
     be liable directly to Armkel for an amount up to $2 million.

          The Company believes that the consideration offered was fair to the
     former Carter-Wallace shareholders, and it cannot predict with certainty
     the outcome of this litigation.

          e. The Company, in the ordinary course of its business, is the subject
     of, or party to, various pending or threatened legal actions. The Company
     believes that any ultimate liability arising from these actions will not
     have a material adverse effect on its financial position or results of
     operation.

16.  segments

   Segment Information

     The Company has two operating segments: Consumer Products and Specialty
Products. The Consumer Products segment comprises packaged goods primarily sold
to retailers. The Specialty Products segment includes chemicals sold primarily
to industrial and agricultural markets.

    Measurement of Segment Results and Assets

     The accounting policies of the segments are generally the same as those
described in the summary of significant accounting policies with the exception
of:

          a. The Companies' portion of the Armand Products and ArmaKleen joint
     ventures are consolidated into the Specialty Products segment results.
     Accordingly, they are not accounted for by the equity method.

          b. The administrative costs of the production planning and logistics
     functions are included in segment SG&A expenses, but are elements of cost
     of goods sold in the Company's Consolidated Statement of Income.

     The Company evaluates performance based on operating profit. There are no
intersegment sales.

   Factors used to Identify Segments

     The Company's segments are strategic business units with distinct
differences in product application and customer base. They are managed by
separate sales and marketing organizations.


<TABLE>
<CAPTION>
                                  Unconsolidated
                                  --------------                                                    (3)
                              Consumer       Specialty      Subtotal     Affiliates   Corporate  Adjustments     Total
                              --------       ---------      --------     ----------   ---------  -----------     -----
<S>                           <C>            <C>          <C>            <C>               <C>     <C>       <C>
Net Sales
2001                          $908,067       $196,010     $1,104,077     $(23,213)         --         --     $1,080,864
2000                           634,119        186,637        820,756      (25,031)         --         --        795,725
1999                           586,944        179,719        766,663      (26,482)         --         --        740,181

Gross Profit
2001                           358,679         58,212        416,891       (6,933)         --     (9,305)       400,653
2000                           302,555         55,907        358,462       (7,807)         --     (5,251)       345,404
1999                           285,036         57,346        342,382      (10,175)         --     (6,512)       325,695

Advertising, Consumer and Trade Promotion Expenses
2001                           193,109          3,098        196,207         (247)         --         --        195,960
2000                           175,829          3,108        178,937         (323)         --         --        178,614
1999                           173,856          2,647        176,503         (380)         --         --        176,123
</TABLE>



                                       29

<PAGE>


<TABLE>
<S>                            <C>            <C>            <C>           <C>         <C>       <C>           <C>
Selling, General and Administrative Expenses
2001                            95,054         29,429        124,483       (3,346)         --     (9,305)       111,832
2000                            73,974         28,181        102,155       (4,186)         --     (5,251)        92,718
1999                            69,628         27,311         96,939       (3,380)         --     (6,512)        87,047

Operating Profit
2001                            70,517         26,118         96,635       (3,774)         --        660         93,521
2000                            52,753         24,252         77,005       (2,933)         --    (21,911)        52,161
1999                            41,554         27,254         68,808       (6,283)         --      5,155         67,680

Identifiable Assets(1) (2)
2001                           720,066        142,565        862,631           --      86,454         --        949,085
2000                           282,678        143,112        425,790           --      29,842         --        455,632
1999                           309,366        139,831        449,197           --      27,109         --        476,306

Capital Expenditures
2001                            21,955         12,131         34,086           --          --         --         34,086
2000                            13,744          8,081         21,825           --          --         --         21,825
1999                            23,526          9,586         33,112           --          --         --         33,112

Depreciation, Depletion and Amortization(4)
2001                            19,757          6,768         26,525           --       1,318         --         27,843
2000                            16,371          7,083         23,454           --          --         --         23,454
1999                            12,988          6,268         19,256           --          --         --         19,256
</TABLE>


----------
(1)  The Specialty Products segment's identifiable assets include equity of
     investments in affiliates in the amounts of $16,880,000, $19,416,000 and
     $20,177,000 for 2001, 2000 and 1999, respectively. The Consumer Products
     segment's identifiable assets include equity of investment in affiliate of
     $98,241,000 in 2001.

(2)  Corporate assets include excess cash, investments, notes receivable,
     deferred financing costs and deferred income taxes not used for segment
     operating needs.

(3)  Adjustments reflect reclassification of production planning and logistics
     administrative costs between gross profit and SG&A expenses, in 1999 the
     gain on sale of mineral reserves and the impairment and other items
     charges, and in 2000 and 2001 the Syracuse shutdown and other charges.

(4)  Corporate depreciation, depletion and amortization relate to amortization
     of deferred financing costs.

     Product line net sales data is as follows:


<TABLE>
<CAPTION>
                 Laundry and   Oral and   Deodorizing
                  Household    Personal       and        Specialty       Animal     Specialty  Unconsolidated
                  Cleaners       Care       Cleaners     Chemicals     Nutrition     Cleaners    Affiliates       Total
                  --------       ----       --------     ---------     ---------     --------    ----------       -----
<S>               <C>          <C>          <C>           <C>            <C>          <C>        <C>           <C>
     2001         $458,010     $170,778     $279,279      $111,539       $76,081      $8,390     $(23,213)     $1,080,864
     2000          229,507      155,782      248,830       110,671        67,880       8,086      (25,031)        795,725
     1999          223,104      159,782      204,058       105,499        64,423       9,797      (26,482)        740,181
</TABLE>


Geographic Information

     Approximately 90% of net sales in 2001, 88% in 2000 and 89% in 1999 were to
customers in the United States, and approximately 92% of long-lived assets in
2001, 88% in 2000 and 89% in 1999 were located in the U.S.

Customers

     A group of three Consumer Products customers accounted for approximately
20% of consolidated net sales in 2001, including a single customer which
accounted for approximately 13%. A group of three customers accounted for
approximately 21% of consolidated net sales in 2000 including a single customer
which accounted for approximately 13%. This group accounted for 20% in 1999.


                                       30

<PAGE>

17.  unaudited quarterly financial information

     The unaudited quarterly results of operations are prepared in conformity
with generally accepted accounting principles and reflect all adjustments that
are, in the opinion of management, necessary for a fair presentation of the
results of operations for the periods presented. Adjustments are of a normal,
recurring nature, except as discussed in Notes 12 and 13.


<TABLE>
<CAPTION>
                                                        First        Second         Third         Fourth           Full
(in thousands, except for per share data)              Quarter       Quarter       Quarter        Quarter          Year
                                                       -------       -------       -------        -------          ----
<S>                                                   <C>           <C>           <C>            <C>            <C>
2001
Net sales .......................................     $ 256,527     $ 257,095     $ 270,627      $ 296,615      $1,080,864
Gross profit ....................................        94,098        96,999       104,103        105,453         400,653
Income from operations ..........................        20,952        22,505        25,835         24,229          93,521
Equity in earnings (loss) of affiliates .........         1,032         1,151           886         (9,264)         (6,195)
Net income ......................................        12,147        13,478        15,246          6,113          46,984
Net income per share--basic .....................     $     .32     $     .35     $     .39      $     .16      $     1.21
Net income per share--diluted ...................     $     .30     $     .33     $     .37      $     .15      $     1.15

2000
Net sales .......................................     $ 193,939     $ 202,415     $ 202,451      $ 196,920      $  795,725
Gross profit ....................................        84,477        89,842        90,144         80,941         345,404
Income (loss) from operations ...................        18,664        19,341        (1,694)        15,850          52,161
Equity in earnings of affiliates ................           854           324           855            978           3,011
Net income (loss) ...............................        11,732        12,375        (1,236)        10,688          33,559
Net income (loss) per share--basic ..............     $     .30     $     .32     $    (.03)     $     .28      $      .88
Net income (loss) per share--diluted ............     $     .29     $     .31     $    (.03)     $     .27      $      .84

1999
Net sales .......................................     $ 177,116     $ 189,029     $ 188,521      $ 185,515      $  740,181
Gross profit ....................................        77,118        83,912        84,974         79,691         325,695
Income from operations ..........................        17,974        14,976        17,563         17,167          67,680
Equity in earnings of affiliates ................         2,020         1,929         1,372          1,045           6,366
Net income ......................................        12,365        10,456        11,379         11,157          45,357
Net income per share--basic .....................     $     .32     $     .27     $     .29      $     .29      $     1.17
Net income per share--diluted ...................     $     .30     $     .26     $     .28      $     .27      $     1.11
</TABLE>



                                       31

<PAGE>



                          INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of
Church & Dwight Co., Inc.
Princeton, New Jersey

     We have audited the accompanying consolidated balance sheets of Church &
Dwight Co., Inc., and subsidiaries (the Company) as of December 31, 2001 and
2000, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at December 31,
2001 and 2000, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Parsippany, New Jersey
March 11, 2002



                                       32

<PAGE>


                   CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
                          ELEVEN-YEAR FINANCIAL REVIEW

                  (Dollars in millions, except per share data)


<TABLE>
<CAPTION>
                             2001      2000     1999     1998     1997     1996     1995     1994     1993     1992     1991
                             ----      ----     ----     ----     ----     ----     ----     ----     ----     ----     ----
<S>                        <C>        <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Operating Results
Net sales:
Consumer Products .......  $ 908.1    634.1    586.9    560.2    459.0    417.6    380.6    393.0    410.4    409.3    386.1
Specialty Products ......    172.8    161.6    153.3    132.5    124.6    119.0    114.4    106.4    104.9     94.7     87.1
Total ...................  1,080.9    795.7    740.2    692.7    583.6    536.6    495.0    499.4    515.3    504.0    473.2
Marketing ...............  $ 196.0    178.6    176.1    182.2    148.3    136.3    120.0    131.3    126.3    123.0     94.9
Research &
  development ...........  $  21.8     19.4     17.9     16.4     15.8     17.8     18.5     20.6     21.2     17.8     13.4
Income from operations ..  $  93.5     52.2     67.7     42.5     30.6     27.3      8.4      1.5     35.6     37.7     34.0
% of sales ..............      8.7%     6.6%     9.1%     6.1%     5.2%     5.1%     1.7%      .3%     6.9%     7.5%     7.2%
Net income ..............  $  47.0     33.6     45.4     30.3     24.5     21.2     10.2      6.1     26.3     29.5     26.5
Net income per
  share--basic ..........  $  1.21      .88     1.17      .78      .63      .55      .26      .16      .65      .73      .65
Net income per
  share--diluted ........  $  1.15      .84     1.11      .76      .61      .54      .26      .16      .64      .71      .65
Financial Position
Total assets ............  $ 949.1    455.6    476.3    391.4    351.0    308.0    293.2    294.5    281.7    261.0    244.3
Total debt ..............    418.1     34.0     84.4     48.8     39.5      7.5     12.5     32.5      9.6      7.7      7.8
Stockholders' equity ....    282.3    234.7    226.7    194.8    179.3    165.3    153.7    153.9    169.4    159.1    139.2
Total debt as a % of
  total capitalization ..       60%      13%      27%      20%      18%       4%       8%      17%       5%       5%       5%
Other Data
Average common shares
  outstanding-basic
  (In thousands) ........   38,879   38,321   38,792   38,734   38,922   39,068   39,134   39,412   40,446   40,676   39,662
Return on average
  stockholders' equity ..     18.2%    14.5%    21.5%    16.2%    14.2%    13.3%     6.6%     3.8%    16.0%    19.8%    20.5%
Return on average
  capital ...............     11.2%    12.7%    17.0%    13.8%    12.8%    12.7%     6.2%     3.6%    15.3%    19.0%    18.5%
Cash dividends paid .....  $  11.3     10.7     10.1      9.3      9.0      8.6      8.6      8.7      8.5      7.7      6.7
Cash dividends paid
  per common share ......  $   .29      .28      .26      .24      .23      .22      .22      .22      .21      .19      .17
Stockholders' equity per
  common share ..........  $  7.26     6.12     5.84     5.05     4.62     4.25     3.94     3.94     4.22     3.91     3.43
Additions to property,
  plant and equipment ...  $  34.1     21.8     33.1     27.1      9.9      7.1     19.7     28.4     28.8     12.5     19.3
Depreciation and
  amortization ..........  $  27.8     23.5     19.3     16.5     14.2     13.6     13.1     11.7     10.6      9.8      9.5
Employees at year-end ...    2,099    1,439    1,324    1,127    1,137      937      941    1,028    1,096    1,092    1,081
Statistics per employee:*
(In thousands)
  Sales .................  $   568      650      643      615      513      573      526      486      470      462      438
</TABLE>


----------
*2001, 2000 and 1999 results reflect sales for U.S. operations only.


                                       33