DEP CORP, SC 14D1, 1998-07-20

DEP CORP
SC 14D1, 1998-07-20
PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1

TENDER OFFER STATEMENT

(PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)

AND

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934

DEP CORPORATION
(Name Of Subject Company)

HENKEL ACQUISITION CORP. II

HENKEL KGAA

(Bidders)
------------------------

COMMON STOCK, PAR VALUE $0.01 PER SHARE

(Title of Class of Securities)

23320240

(CUSIP Number of Class of Securities)
------------------------

MS. PETRA U. HAMMERLEIN
HENKEL KGAA
HENKELSTRAE 67
D-40191 DUSSELDORF
GERMANY
49-211-797-3362

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Bidder)
------------------------

COPY TO:

WILLIAM A. GROLL, ESQ.
CLEARY, GOTTLIEB, STEEN & HAMILTON
ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10006
(212) 225-2000

CALCULATION OF FILING FEE

<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$36,099,735 $7,220
</TABLE>

* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 6,876,140 shares of Common Stock, par value $0.01 per share,
of DEP Corporation at $5.25 net in cash per share, which represents all
shares reported to be outstanding at July 12, 1998.

** The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934 equals 1/50 of 1% of the
value of the shares to be purchased.

/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.

<TABLE>
<S> <C>
Amount Previously Paid: Filing Party:
N/A N/A
Form or Registration No.:
N/A Date File: N/A
</TABLE>

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<PAGE>
14D-1
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CUSIP NO. 23320240
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS

Henkel Acquisition Corp. II
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / / (b) / /
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3 SEC USE ONLY
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4 SOURCES OF FUNDS

AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) or 2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

2,161,460* Shares
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES / /
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):

31.4%
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10 TYPE OF REPORTING PERSON

CO
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CUSIP NO. 23320240
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS

Henkel KGaA
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / / (b) / /
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3 SEC USE ONLY
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4 SOURCES OF FUNDS

WC, OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) or 2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Federal Republic of Germany
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

2,161,460* Shares
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES / /
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):

31.4%
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10 TYPE OF REPORTING PERSON

CO
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* On July 13, 1998 Henkel KGaA ("Parent") and Henkel Acquisition Corp. II
("Purchaser") entered into Stockholder Option Agreements with three
stockholders (the "Option Grantors"). Pursuant to the Stockholder Option
Agreements, upon the terms and subject to the conditions therein, the Option
Grantors generally have agreed to tender, in accordance with the terms of
the tender offer described in this Statement, all of their 2,161,460 shares
of common stock, par value $0.01 per share, of DEP Corporation. In addition,
the Option Grantors have granted an irrevocable proxy with respect to such
shares to Parent and an irrevocable option, exercisable in limited
circumstances, with respect to such shares to Purchaser. These shares are
reflected in rows 7 and 9 above. The Stockholder Option Agreements are
described in more detail in Section 12 of the Offer to Purchase referred to
in this Statement.
<PAGE>
This Schedule 14D-1 Tender Offer Statement (which also constitutes a
Schedule 13D) (the "STATEMENT") relates to a tender offer by Henkel Acquisition
Corp. II, a Delaware corporation ("PURCHASER") and a wholly-owned subsidiary of
Henkel KGaA, a Kommanditgesellschaft auf Aktien (a partnership limited by
shares) organized under the laws of the Federal Republic of Germany ("PARENT"),
to purchase all outstanding shares of Common Stock, par value $0.01 per share,
of DEP Corporation, a Delaware corporation, for a purchase price of $5.25 per
share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated July 20, 1998
of Purchaser (the "OFFER TO PURCHASE") and in the related Letter of Transmittal
(collectively, the "OFFER"), and is intended to satisfy the reporting
requirements of Section 14(d) of the Securities Exchange Act of 1934, as
amended. Copies of the Offer to Purchase and the related Letter of Transmittal
are filed as Exhibits (a)(1) and (a)(2) hereto, respectively.

ITEM 1. SECURITY AND SUBJECT COMPANY.

(a) The name of the subject company is DEP Corporation, a Delaware
corporation (the "COMPANY"), which has its principal executive offices at 2101
East Via Arado, Rancho Dominguez, California 90220.

(b) The title of the securities which are the subject of the Offer is the
Company's Common Stock, $0.01 par value (the "SHARES"), at a price of $5.25 net
to the seller in cash per share. The offer is for all outstanding Shares. The
information set forth in the "Introduction" of the Offer to Purchase is
incorporated herein by reference.

(c) The information set forth in "Section 6. Price Range of the Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.

ITEM 2. IDENTITY AND BACKGROUND.

(a)-(d) and (g) This Schedule 14D-1 is being filed by Purchaser and Parent.
The information set forth in "Section 9. Certain Information Concerning
Purchaser and Parent" of the Offer to Purchase and in Annex I (Directors and
Executive Officers of Purchaser and Parent) to the Offer to Purchase ("ANNEX I")
is incorporated herein by reference.

(e)-(f) During the last five years, none of Purchaser, Parent or, to the
best knowledge of Purchaser and Parent, any executive officer or director of
Purchaser or Parent listed in Annex I (which is incorporated herein by
reference) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction as a result of which
such person was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, Federal
or state securities laws or finding any violation of such laws.

ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.

(a)-(b) The information set forth in the "Introduction," "Section 8. Certain
Information Concerning the Company," and "Section 11. Background of the
Transaction" of the Offer to Purchase is incorporated herein by reference.

ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a)-(b) The information set forth in "Section 10. Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.

(a)-(g) The information set forth in the "Introduction," "Section 7. Certain
Effects of the Transaction" and "Section 12. Purpose of the Offer; The Merger
Agreement; The Stockholder Option Agreements; The Company Option Agreement" of
the Offer to Purchase is incorporated herein by reference.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a)-(b) The information set forth in the "Introduction," "Section 11.
Background of the Transaction" and "Section 12. Purpose of the Offer; The Merger
Agreement; The Stockholder Option Agreements; The Company Option Agreement" of
the Offer to Purchase and in Annex I to the Offer to Purchase is incorporated
herein by reference.

ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.

The information set forth in the "Introduction," "Section 11. Background of
the Transaction" and "Section 12. Purpose of the Offer; The Merger Agreement;
The Stockholder Option Agreements; The Company Option Agreement" of the Offer to
Purchase is incorporated herein by reference.

ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The information set forth in the section entitled "Introduction" and
"Section 16. Certain Fees and Expenses" of the Offer to Purchase is incorporated
herein by reference.

ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.

The information set forth in "Section 9. Certain Information Concerning
Parent and Purchaser" of the Offer to Purchase is incorporated herein by
reference.

ITEM 10. ADDITIONAL INFORMATION.

(a) The information set forth in "Section 11. Background of the Transaction"
and "Section 12. Purpose of the Offer; The Merger Agreement; The Stockholder
Option Agreements; The Company Option Agreement" of the Offer to Purchase is
incorporated herein by reference.

(b)-(c) The information set forth in the "Introduction," "Section 12.
Purpose of the Offer; The Merger Agreement; The Stockholder Option Agreements;
The Company Option Agreement" and "Section 15. Certain Legal Matters" of the
Offer to Purchase is incorporated herein by reference.

(d) Not applicable.

(e) Not applicable.

(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.

<TABLE>
<S> <C>
(a)(1) Offer to Purchase.

(a)(2) Letter of Transmittal.

(a)(3) Notice of Guaranteed Delivery.

(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.

(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.

(a)(7) Text of Joint Press Release dated July 14, 1998, issued by Parent and the Company.

(a)(8) Text of Press Release dated July 20, 1998 issued by Purchaser.

(a)(9) Form of Summary Advertisement dated July 20, 1998.

(c)(1) Agreement and Plan of Merger, dated as of July 13, 1998, among Parent, Purchaser and
the Company.

(c)(2) Stockholder Option Agreement, dated July 13, 1998, among Parent, Purchaser and
Robert H. Berglass.

(c)(3) Stockholder Option Agreement, dated July 13, 1998, among Parent, Purchaser and
Robert H. Berglass, as Trustee of the Berglass Charitable Remainder Trust UDT
7/8/98.

(c)(4) Stockholder Option Agreement, dated July 13, 1998, among Parent, Purchaser and
Judith R. Berglass, as Trustee of the Berglass 1995 Irrevocable Trust UDT 6/27/95.

(c)(5) Stock Option Agreement, dated July 13, 1998, among Parent, Purchaser and the
Company.

(d) Not applicable.

(e) Not applicable.

(f) Not applicable.
</TABLE>
<PAGE>
SIGNATURE

After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.

Dated: July 20, 1998

HENKEL ACQUISITION CORP. II

By ________/s/ ERNEST G. SZOKE________
Name: Ernest G. Szoke

Title: President and Secretary

HENKEL KGaA

By _______/s/ CHRISTOPH KIRCHNER______
Name: Christoph Kirchner

Title: VP Affiliated Companies
Cosmetics

By ______/s/ PETRA U. HAMMERLEIN______
Name: Petra U. Hammerlein

Title: Senior Counsel
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
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<C> <S>

(a)(1) Offer to Purchase.

(a)(2) Letter of Transmittal.

(a)(3) Notice of Guaranteed Delivery.

(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.

(a)(7) Text of Joint Press Release dated July 14, 1998, issued by Parent and the Company.

(a)(8) Text of Press Release dated July 20, 1998 issued by Purchaser.

(a)(9) Form of Summary Advertisement dated July 20, 1998.

(c)(1) Agreement and Plan of Merger, dated as of July 13, 1998, among Parent, Purchaser and the Company.

(c)(2) Stockholder Option Agreement, dated July 13, 1998, among Parent, Purchaser and Robert H. Berglass.

(c)(3) Stockholder Option Agreement, dated July 13, 1998, among Parent, Purchaser and Robert H. Berglass,
as Trustee of the Berglass Charitable Remainder Trust UDT 7/8/98.

(c)(4) Stockholder Option Agreement, dated July 13, 1998, among Parent, Purchaser and Judith R. Berglass,
as Trustee of the Berglass 1995 Irrevocable Trust UDT 6/27/95.

(c)(5) Stock Option Agreement, dated July 13, 1998, among Parent, Purchaser and the Company.

(d) Not applicable.

(e) Not applicable.

(f) Not applicable.
</TABLE>

<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEP CORPORATION
AT
$5.25 NET PER SHARE
BY
HENKEL ACQUISITION CORP. II
A WHOLLY-OWNED SUBSIDIARY OF
HENKEL KGAA
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, AUGUST 14, 1998, UNLESS THE OFFER IS EXTENDED.

THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF
MERGER, DATED AS OF JULY 13, 1998 (THE "MERGER AGREEMENT"), AMONG HENKEL KGAA
("PARENT"), HENKEL ACQUISITION CORP. II ("PURCHASER") AND DEP CORPORATION (THE
"COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED
THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES OF COMMON STOCK ("SHARES") PURSUANT
THERETO.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES
THAT, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT AND ITS AFFILIATES
AND THE SHARES PURCHASER HAS THE IMMEDIATE RIGHT TO ACQUIRE PURSUANT TO THE
COMPANY OPTION AGREEMENT DESCRIBED BELOW, CONSTITUTES AT LEAST NINETY PERCENT
(90%) OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE
(THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14
HEREOF.

IF THE MINIMUM CONDITION IS NOT SATISFIED ON ANY EXPIRATION DATE OF THE
OFFER, BUT THERE SHALL HAVE BEEN VALIDLY TENDERED AND NOT WITHDRAWN AS OF SUCH
EXPIRATION DATE A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS,
PURCHASER SHALL EITHER (I) EXTEND THE OFFER FOR A PERIOD OR PERIODS NOT TO
EXCEED, IN THE AGGREGATE, TEN BUSINESS DAYS, OR (II) (A) AMEND THE OFFER TO
REDUCE THE NUMBER OF SHARES SOUGHT PURSUANT TO THE OFFER, AND THE NUMBER OF
SHARES NEEDED TO SATISFY THE MINIMUM CONDITION, TO THAT NUMBER OF SHARES WHICH,
WHEN ADDED TO THE SHARES THEN OWNED DIRECTLY OR INDIRECTLY BY PURCHASER, WOULD
EQUAL FORTY-NINE AND NINE-TENTHS PERCENT (49.9%) OF THE SHARES THEN OUTSTANDING
(THE "REVISED MINIMUM NUMBER"), (B) EXTEND THE OFFER FOR A PERIOD OF NOT LESS
THAN TEN BUSINESS DAYS FOLLOWING THE PUBLIC ANNOUNCEMENT OF SUCH AMENDMENT AND
(C) IF, AT THE EXPIRATION OF SUCH EXTENSION, A GREATER NUMBER OF SHARES IS
TENDERED INTO THE 49.9% OFFER AND NOT WITHDRAWN, PURCHASE, ON A PRO RATA BASIS,
THE REVISED MINIMUM NUMBER OF SHARES. SEE INTRODUCTION AND SECTIONS 1 AND 14
HEREOF.

PURCHASER HAS ENTERED INTO STOCKHOLDER OPTION AGREEMENTS WITH CERTAIN
STOCKHOLDERS, WHO TOGETHER OWN APPROXIMATELY 31.4% OF THE OUTSTANDING SHARES,
PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH STOCKHOLDERS HAVE AGREED TO VALIDLY
TENDER (AND NOT TO WITHDRAW) ALL SUCH SHARES PURSUANT TO THE OFFER, GRANTED
PARENT A PROXY WITH RESPECT TO THE VOTING OF SUCH SHARES IN FAVOR OF THE MERGER
AND GRANTED PURCHASER AN IRREVOCABLE OPTION TO PURCHASE ALL SUCH SHARES AT A
PRICE OF $5.25 PER SHARE EXERCISABLE UNDER CERTAIN CIRCUMSTANCES. PURCHASER HAS
ALSO ENTERED INTO A STOCK OPTION AGREEMENT WITH THE COMPANY, PURSUANT TO WHICH
THE COMPANY HAS GRANTED TO PURCHASER AN IRREVOCABLE OPTION (THE "TOP-UP
OPTION"), EXERCISABLE IF PURCHASER ACQUIRES AT LEAST 85% OF THE THEN OUTSTANDING
SHARES PURSUANT TO THE OFFER, TO PURCHASE THAT NUMBER OF SHARES THAT, WHEN ADDED
TO THE NUMBER OF SHARES OWNED BY PURCHASER, CONSTITUTES ONE SHARE MORE THAN 90%
OF THE COMPANY'S OUTSTANDING SHARES (ASSUMING ISSUANCE OF SHARES PURSUANT TO THE
TOP-UP OPTION). THE TOP-UP OPTION IS EXERCISABLE AT A PRICE OF $5.25 PER SHARE
UNDER CERTAIN CIRCUMSTANCES. SEE SECTION 12 HEREOF.
-------------------

THE DEALER MANAGER FOR THE OFFER IS:

[LOGO]
<PAGE>
Any stockholder desiring to tender all or a portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, have such stockholder's signature thereon guaranteed if
required by Instruction 1 or 5 of the Letter of Transmittal, mail or deliver it
and any other required documents to the Depositary and either deliver the
certificates for such Shares to the Depositary along with the Letter of
Transmittal or tender such Shares pursuant to the procedures for book-entry
transfer set forth in Section 3 hereof or (2) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.

Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, who cannot comply with
the procedure for book-entry transfer on a timely basis or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks and trust companies.

July 20, 1998
<PAGE>
To the Holders of Common Stock of
DEP Corporation:

INTRODUCTION

Henkel Acquisition Corp. II, a Delaware corporation ("PURCHASER") and a
wholly-owned subsidiary of Henkel KGaA, a Kommanditgesellschaft auf Aktien (a
partnership limited by shares) organized under the laws of the Federal Republic
of Germany ("PARENT"), hereby offers to purchase all outstanding shares of the
Common Stock, par value $0.01 per share (the "SHARES"), of DEP Corporation, a
Delaware corporation (the "COMPANY"), at a purchase price of $5.25 per Share
(the "OFFER PRICE"), net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, together with any supplements or
amendments thereto, collectively constitute the "OFFER"). Tendering stockholders
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. Purchaser or Parent will pay all
charges and expenses of Rhone Group LLC, as the dealer manager (in such
capacity, the "DEALER MANAGER"), Citibank, N.A., as the depositary (the
"DEPOSITARY"), and MacKenzie Partners, Inc., as the information agent (the
"INFORMATION AGENT"), incurred in connection with the Offer. See Section 16.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES
THAT, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT AND ITS AFFILIATES
AND THE SHARES PURCHASER HAS THE IMMEDIATE RIGHT TO ACQUIRE PURSUANT TO THE
COMPANY OPTION AGREEMENT (AS DEFINED BELOW), CONSTITUTES AT LEAST NINETY PERCENT
(90%) OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE
(THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 1 AND SECTION 14 HEREOF.

If the Minimum Condition is not satisfied on any scheduled expiration date
of the Offer, but there shall have been validly tendered and not withdrawn as of
such expiration date, a majority of the outstanding Shares on a fully diluted
basis, Purchaser shall either (i) extend the Offer in accordance with (and
subject to the limitations of) the Merger Agreement for a period or periods not
to exceed, in the aggregate, ten business days or (ii) (a) amend the Offer to
reduce the number of Shares sought pursuant to the Offer, and the number of
Shares needed to satisfy the Minimum Condition, to that number of Shares which,
when added to the Shares then owned directly or indirectly by Purchaser, would
equal forty-nine and nine-tenths percent (49.9%) of the Shares then outstanding
(the "REVISED MINIMUM NUMBER"), (b) extend the Offer for a period of not less
than ten business days following the public announcement of such amendment to
the Offer (the Offer, if and as so amended, being sometimes referred to as the
"49.9% OFFER"), and (c) if, at the expiration of such extension, a greater
number of Shares is tendered into the 49.9% Offer and not withdrawn, purchase,
on a PRO RATA basis, the Revised Minimum Number of Shares. See Section 1.

The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of July 13, 1998 (the "MERGER AGREEMENT"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by Purchaser and further provides that, following the completion of
the Offer and subject to the satisfaction or waiver of certain conditions,
Purchaser will be merged with and into the Company (the "MERGER"), with the
Company surviving the Merger as a wholly owned subsidiary of Parent with the
name "Schwarzkopf & DEP, Inc." (the "SURVIVING CORPORATION"). As a result of the
Merger, each outstanding Share (other than Shares held by Parent, Purchaser or
any subsidiary of Parent, Purchaser or the Company, Shares held in the treasury
of the Company and Shares held by stockholders who have properly exercised their
appraisal rights under Delaware law) will be converted at the effective time of
the Merger (the "EFFECTIVE TIME") into the right to receive in cash the price
per Share paid in the Offer without interest (the "MERGER CONSIDERATION"). For a
description of the Merger Agreement, see Section 12. Certain U.S. federal income
tax consequences of the sale of Shares pursuant to the Offer and the exchange of
Shares for cash pursuant to the Merger (whether as Merger Consideration or cash
amounts received pursuant to the exercise of appraisal rights) are described in
Section 5.
<PAGE>
Concurrently with the execution of the Merger Agreement, and as a condition
and inducement to Parent and Purchaser entering into the Merger Agreement,
Purchaser and Parent entered into stockholder option agreements dated July 13,
1998 (together, the "STOCKHOLDER OPTION AGREEMENTS"), with Robert H. Berglass,
The Berglass Charitable Remainder Trust UDT 7/8/98 and The Berglass 1995
Irrevocable Trust UDT 6/27/95 (each, an "OPTION GRANTOR"), the owners of an
aggregate of 2,161,460 Shares (representing approximately 31.4% of the
outstanding Shares). Pursuant to the Stockholder Option Agreements, the Option
Grantors have (i) agreed to validly tender (and not to withdraw) all such Option
Grantor's Shares in the Offer, (ii) granted Parent a proxy with respect to the
voting of such Shares in favor of the Merger upon the terms and subject to the
conditions set forth therein and (iii) granted Purchaser an irrevocable option
(collectively, the "STOCKHOLDER OPTIONS") to purchase all of each such Option
Grantor's Shares at a price of $5.25 per Share, subject to adjustment in certain
events. The Stockholder Options are exercisable, subject to certain conditions
set forth in the Stockholder Option Agreements, following termination of the
Offer or the Merger Agreement in certain circumstances generally relating to the
existence of a proposal by another person to acquire the Company. For a more
detailed description of the Stockholder Option Agreements, see Section 12.

As a condition and further inducement to Parent and Purchaser to enter into
the Merger Agreement, concurrently with the execution and delivery of the Merger
Agreement, Parent, Purchaser and the Company entered into a Stock Option
Agreement dated July 13, 1998 (the "COMPANY OPTION AGREEMENT"), pursuant to
which the Company has granted Purchaser an irrevocable option (the "TOP-UP
OPTION"), exercisable if Purchaser acquires at least 85% of the then outstanding
Shares pursuant to the Offer, to purchase that number of Shares equal to the
lowest number of Shares that, when added to the number of Shares owned by
Purchaser at the time of such exercise, shall constitute one Share more than 90%
of the outstanding Shares (assuming issuance of Shares pursuant to the Top-Up
Option) at a price equal to the $5.25 per Share; PROVIDED, HOWEVER, that the
Top-Up Option shall not be exercisable unless immediately after such exercise
Purchaser would own more than 90% of the Shares then outstanding. Purchaser may
exercise the Top-Up Option in whole but not in part at any one time after the
occurrence of a Top-Up Exercise Event (as defined in Section 12) and prior to
the occurrence of a Top-Up Termination Event (as defined in Section 12). See
Section 12.

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
ITS STOCKHOLDERS AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.

HOULIHAN LOKEY HOWARD & ZUKIN ("HOULIHAN LOKEY"), THE COMPANY'S INDEPENDENT
FINANCIAL ADVISOR, HAS ADVISED THE COMPANY'S BOARD OF DIRECTORS THAT, IN ITS
OPINION, THE CONSIDERATION TO BE RECEIVED BY THE PUBLIC STOCKHOLDERS OF THE
COMPANY IN CONNECTION WITH THE OFFER AND THE MERGER IS FAIR TO SUCH HOLDERS,
FROM A FINANCIAL POINT OF VIEW. A COPY OF THE OPINION OF HOULIHAN LOKEY IS
CONTAINED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 (THE "SCHEDULE 14D-9") FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION") IN CONNECTION WITH THE OFFER, A COPY OF WHICH (WITHOUT
CERTAIN EXHIBITS) IS BEING FURNISHED TO STOCKHOLDERS CONCURRENTLY HEREWITH.

The Company has represented pursuant to the Merger Agreement that, as of
July 10, 1998, 6,876,140 Shares were issued and outstanding and that as of that
date options to purchase 674,200 Shares were issued and outstanding. Parent,
Purchaser and their affiliates do not currently beneficially own any Shares or
rights to acquire Shares other than the rights to acquire Shares pursuant to the
Stockholder Option Agreements and the right to acquire Shares under the Company
Option Agreement under certain circumstances. Based on the foregoing and the
terms of the Company Option Agreement, and after giving effect to the assumed
exercise of all outstanding options, Purchaser believes the Minimum Condition
would be satisfied, assuming the exercise of the Top-Up Option, if 6,417,789
Shares are duly tendered and not withdrawn pursuant to the Offer.

The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by the
requisite vote of the stockholders of the Company

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<PAGE>
in accordance with applicable law. Under the Delaware General Corporation Law
(the "DGCL"), applicable to the Company and the Merger, a holder of at least 90%
of the outstanding shares of each class of stock of a corporation may cause the
merger of such corporation with such holder without the vote of the stockholders
of the corporation. The California General Corporation Law (the "CGCL") is not
generally applicable to companies incorporated in jurisdictions other than
California, such as the Company. However, Section 2115 of the CGCL purports to
make certain provisions of the CGCL applicable to corporations incorporated
outside of California that meet certain criteria. Parent and Purchaser believe
that Section 2115 of the CGCL should not operate so as to make such provisions
applicable to the Company and the Merger (see Section 15) and that only the
provisions of the DGCL should apply to the Merger. In any event, under the CGCL,
a holder of at least 90% of the outstanding shares of each class of stock of a
corporation also may cause the merger of such corporation with such holder
without the vote of the stockholders of the corporation. If the Minimum
Condition is satisfied, Purchaser will own at least 90% of the then outstanding
Shares. Thus, Parent and Purchaser believe that, under the DGCL and, even if it
were applicable, the CGCL, if the Minimum Condition is satisfied and Purchaser
acquires, pursuant to the Offer and the Company Option Agreement, at least 90%
of the Shares then outstanding, Purchaser will be able to approve the Merger
Agreement and the Merger and to effect the Merger pursuant to the "short-form"
merger provisions of Section 253 of the DGCL without prior notice to, or any
action by, any other stockholder. In such event, Purchaser intends to effect the
Merger promptly following the purchase of Shares pursuant to the Offer and the
Company Option Agreement.

If the Minimum Condition is not satisfied, a vote of the Company's
stockholders will be required under the DGCL and, if applicable, the CGCL to
approve the Merger. In that event, a significantly longer period of time will be
required to effect the Merger.

Under the DGCL, if Purchaser were to own a majority of the outstanding
Shares but less than 90%, Purchaser would be able, by vote of such shares at a
meeting of stockholders but without the affirmative vote of any other
stockholder of the Company, to approve the Merger Agreement and the Merger in
the event such a vote were required. However, in light of the provisions of the
CGCL described below, Purchaser might not be able to utilize this power.

If the CGCL were applicable to the Company and the Merger, the Merger could
not be accomplished for cash paid to the stockholders of the Company if Parent
or Purchaser owns, directly or indirectly, more than 50% but less than 90% of
the then outstanding Shares unless either all the stockholders consent or the
Commissioner of Corporations of the State of California approves, after a
hearing, the terms and conditions of the Merger and the fairness thereof. If
this provision of the CGCL were applicable to the Merger and if Purchaser
acquired a majority (but less than 90%) of the outstanding Shares, Purchaser
believes such application of California law could impair the ability of Parent,
Purchaser and the Company to effect the Merger. To avoid this possibility, the
Offer is structured so that, if sufficient shares are not validly tendered to
permit Purchaser to acquire, pursuant to the Offer and the Company Option
Agreement, at least 90% of the then outstanding Shares, Purchaser shall either
(i) extend the Offer in accordance with (and subject to the limitations of) the
Merger Agreement for a period or periods not to exceed, in the aggregate, ten
business days or (ii) amend the Offer to reduce the number of Shares sought
pursuant to the Offer, and the number of Shares needed to satisfy the Minimum
Condition, to the Revised Minimum Number of Shares and otherwise amend the Offer
so that it is the 49.9% Offer, subject to the terms and conditions described
herein. Purchaser would not, upon the satisfaction of all conditions and the
purchase of Shares pursuant to the 49.9% Offer, own more than 50% of the Shares
then outstanding. The Company, Purchaser and Parent believe that, in such event,
the affirmative vote of the holders of a majority of the Shares would be
sufficient to approve the Merger. At such time, the Company would solicit the
approval of the Merger and the Merger Agreement by a vote of the stockholders of
the Company. See Sections 12, 14 and 15.

Whether the Merger is effected pursuant to the "short-form" merger
provisions of applicable law, or pursuant to the provisions requiring a
stockholder vote, holders of Shares who have not sold their Shares

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<PAGE>
pursuant to the Offer (or otherwise) will have certain rights under the DGCL
(and, if applicable, the CGCL) to dissent and demand appraisal of, and payment
in cash of the fair value (as judicially determined) of, their Shares. The value
so determined could be more or less than the Offer Price and the Merger
Consideration. See Sections 12 and 14.

THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND THE SCHEDULE 14D-9
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BY STOCKHOLDERS
BEFORE THEY MAKE ANY DECISION WHETHER TO TENDER THEIR SHARES PURSUANT TO THE
OFFER.

1. TERMS OF THE OFFER

Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment, and pay for, all Shares validly
tendered and not properly withdrawn as provided in Section 4 prior to the
Expiration Date. As used herein, the term "EXPIRATION DATE" shall mean 12:00
midnight, New York City time, on Friday, August 14, 1998, unless and until
Purchaser shall, as described below, have extended the period of time during
which the Offer is open, in which event the term "EXPIRATION DATE" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire. Subject to the terms of the Merger Agreement (as described below),
Purchaser may from time to time extend the Expiration Date.

The Offer is subject to the conditions set forth in Section 14, including,
among other things, expiration or termination of all waiting periods imposed by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT") and the Minimum Condition being satisfied. See Sections 14 and 15.

Subject to the applicable rules and regulations of the Commission and the
Merger Agreement, Purchaser reserves the right (but will not be obligated) to
reduce the number of Shares needed to satisfy the Minimum Condition to the
Revised Minimum Number (as set forth above) or, at any time and from time to
time, to waive any other condition to the Offer in whole or in part in its sole
discretion. In addition, subject to the applicable rules and regulations of the
Commission, Purchaser expressly reserves the right at any time and from time to
time to modify or amend the terms of the Offer; PROVIDED that under the Merger
Agreement, Purchaser has agreed that it will not, without the prior written
consent of the Company, (1) decrease or change the form of consideration payable
in the Offer, (2) except as described above, decrease the number of Shares
sought pursuant to the Offer, (3) impose additional conditions to the Offer, (4)
change the conditions of the Offer (PROVIDED that Parent or Purchaser in its
sole discretion may waive any conditions to the Offer other than the Minimum
Condition) or (5) make any other change in the terms or conditions of the Offer
which is materially adverse to the holders of Shares.

If the conditions set forth in Section 14 are satisfied as of any scheduled
expiration date, Purchaser may extend the Offer for up to ten business days in
the aggregate, and may extend the Offer for a longer period with the prior
written consent of the Company or as required by law. In addition, subject to
the provisions of the Merger Agreement requiring Purchaser to amend the Offer so
that it is the 49.9% Offer discussed above, Purchaser and Parent have agreed
that if the conditions of the Offer are not satisfied or waived by Parent or
Purchaser as of any scheduled expiration date, Purchaser may extend the Offer
from time to time (but not beyond the date that is fifty business days from the
date of the Merger Agreement), and, in any event, upon the written request of
the Company will extend the Offer from time to time until the earlier of
consummation of the Offer or forty business days from the date of the Merger
Agreement (PROVIDED, that Purchaser shall not be obligated to make any such
extension if (i) it reasonably determines that all such conditions are not
likely to be satisfied by such date or (ii) it shall then have the right to
terminate the Merger Agreement, pursuant to its terms). As used in this Offer to
Purchase, "BUSINESS DAY" means any day other than a Saturday, Sunday or a U.S.
federal holiday, and consists of the time period from 12:01 a.m. through 12:00
Midnight, New York City time.

Subject to the limitations set forth in the Merger Agreement as described
above, Purchaser reserves the right (but will not be obligated), at any time or
from time to time in its sole discretion, to extend the

4
<PAGE>
period during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension. There can be no assurance that Purchaser will exercise its right to
extend the Offer.

Subject to the applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), relating to Purchaser's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer, and
to the provisions of the Merger Agreement, Purchaser expressly reserves the
right to delay acceptance for payment of or payment for any Shares, to extend
the Offer, or to terminate the Offer and not to accept for payment or pay for
any Shares not theretofore accepted for payment or paid for, upon the occurrence
of any of the conditions specified in paragraphs (a) through (j) of Section 14,
and at any time or from time to time, to amend the Offer or to waive any
conditions to the Offer in any respect consistent with the provisions of the
Merger Agreement described above, as such provisions may be amended from time to
time, in each case by giving oral or written notice of such delay, extension,
termination, amendment or waiver to the Depositary.

Any such extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer or
waiver of any conditions to the Offer will be followed, as promptly as
practicable, by public announcement thereof, such announcement in the case of an
extension to be issued not later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Without limiting the obligation of Purchaser under such rule or other applicable
law or the manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a press release to
the Dow Jones News Service and making any appropriate filing with the
Commission.

If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer (including a waiver of the Minimum Condition), Purchaser will disseminate
additional tender offer materials and extend the Offer if and to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which a tender offer must remain open following a material
change in the terms of the Offer or information concerning the Offer, other than
a change in the price or in the number of Shares sought, will depend on the
facts and circumstances then existing, including the relative materiality of the
changes. With respect to a change in the price or number of Shares sought, a
minimum of ten business days from the date of such change is generally required
under applicable Commission rules and regulations to permit adequate disclosure
to stockholders.

The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
stockholders. This Offer to Purchase, the related Letter of Transmittal and
certain other relevant materials will be mailed to record holders of Shares and
will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder lists or, if applicable, who are listed as participants in
a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.

2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES

Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment) and the terms and conditions of the Merger Agreement, Purchaser will
accept for payment, and pay for, all Shares validly tendered and not properly
withdrawn prior to the Expiration Date, promptly after the later to occur of (i)
the Expiration Date and (ii) subject to compliance with Rule 14e-1(c) under the
Exchange Act, the date of satisfaction or waiver of all of the conditions of the
Offer set forth in Section 14 (including expiration or termination of the
waiting period under the HSR Act) applicable to the acquisition of Shares
pursuant to the Offer. Any

5
<PAGE>
determination concerning the satisfaction of such terms and conditions is within
the sole discretion of Purchaser and such determination will be final and
binding on all tendering stockholders. See Section 14. Subject to compliance
with Rule 14e-1(c) under the Exchange Act and the terms and conditions of the
Merger Agreement, Purchaser expressly reserves the right, in its discretion, to
delay acceptance for payment of or payment for Shares in order to comply, in
whole or in part, with any applicable law or government regulation or any
condition contained herein. See Sections 14 and 15.

In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to such Shares), (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all required
signature guarantees or an Agent's Message, as defined below, in connection with
a book-entry transfer, and (iii) all other documents required by the Letter of
Transmittal. See Section 3. The term "AGENT'S MESSAGE" means a message,
transmitted by the Book-Entry Transfer Facility (as defined in Section 3) to,
and received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the participant in the Book-Entry Transfer Facility
tendering the Shares which are the subject of such Book-Entry Confirmation that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that Purchaser may enforce such agreement against such
participant.

For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
tendering stockholders whose Shares have theretofore been accepted for payment.
If, for any reason, acceptance for payment of any Shares tendered pursuant to
the Offer is delayed, or Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under Section 14, the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Shares, and such Shares may not be withdrawn, except to the
extent that the tendering stockholders are entitled to withdrawal rights as
described in Section 4 and as otherwise required by Rule 14e-1(c) under the
Exchange Act. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE BE PAID BY
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.

If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for such Shares
not purchased or tendered will be returned pursuant to the instructions of the
tendering stockholder without expense to the tendering stockholder (or, in the
case of Shares delivered by book-entry transfer into the Depositary's account at
the Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, such Shares will be credited to an account maintained at the Book-Entry
Transfer Facility) as promptly as practicable following the expiration,
termination or withdrawal of the Offer.

If, prior to the Expiration Date, Purchaser (in its sole discretion)
increases the consideration to be paid per Share pursuant to the Offer,
Purchaser will pay such increased consideration for all such Shares purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.

Purchaser reserves the right, at any time, to assign, in its sole
discretion, to one or more affiliates of Purchaser the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer. In
addition, pursuant to the Merger Agreement, Parent and Purchaser have the right
to assign any of their respective rights and obligations under the Merger
Agreement to any

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<PAGE>
affiliate of Parent or Purchaser, but no such assignment shall relieve Parent or
Purchaser of its obligations under the Offer. See Section 12.

3. PROCEDURE FOR TENDERING SHARES

VALID TENDERS. For Shares to be validly tendered pursuant to the Offer,
either (a) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry delivery of Shares and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, and either (i) certificates representing Shares must be
received by the Depositary at any such address on or prior to the Expiration
Date or (ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (b)
the tendering stockholder must comply with the guaranteed delivery procedures
set forth below. No alternative, conditional or contingent tenders will be
accepted.

BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "BOOK-ENTRY TRANSFER
FACILITY") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account at the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedure for such transfer. However, although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or an Agent's Message in
connection with a book-entry transfer) and any other required documents, must,
in any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above is referred to herein as the "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS (INCLUDING AN EXECUTED LETTER OF
TRANSMITTAL) TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.

SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agent's
Medallion Program, or by any other bank, broker, dealer, credit union, savings
association or other entity that is an "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act, (each of the foregoing
constituting an "ELIGIBLE INSTITUTION") unless the Shares tendered thereby are
tendered (i) by a registered holder (which term, for purposes of this Section,
includes any participant in any of the Book-Entry Transfer Facility systems
whose name appears on a security position listing as the owner of the Shares) of
Shares who has not completed either the box labeled "Special Delivery
Instructions" or the box labeled "Special Payment Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution. See Instruction
1 of the Letter of Transmittal. If a certificate representing Shares is
registered in the name of a person or persons other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not accepted for payment or not tendered are to be issued or returned to a
person other than the registered holder, then such certificate must be endorsed
or accompanied by appropriate stock powers, in each case signed exactly as the
name or names of the registered holder or holders appear on the certificates,
with the signatures on the certificates or stock powers guaranteed by an
Eligible Institution as described above and as provided in the Letter of
Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.

GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot

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<PAGE>
be completed on a timely basis or time will not permit all required documents to
reach the Depositary on or prior to the Expiration Date, such Shares may
nevertheless be tendered if all of the following guaranteed delivery procedures
are complied with:

(i) such tender is made by or through an Eligible Institution;

(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser herewith, is received by the
Depositary, as provided below, prior to the Expiration Date; and

(iii) the certificates for all tendered Shares in proper form for transfer,
or a Book-Entry Confirmation with respect to all tendered Shares, in either case
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any requested signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "TRADING DAY" is any day on which the Nasdaq Small Cap
Market operated by the National Association of Securities Dealers, Inc. (the
"NASD") is open for business.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include an endorsement
by an Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery.

THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF
DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.

Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of (i) certificates for (or a Book-Entry Confirmation
with respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message, and (iii) all other documents
required by the Letter of Transmittal.

BACKUP WITHHOLDING. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 8 to the
Letter of Transmittal.

DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares that are determined by it not to be in
proper form or the acceptance of or payment for which, in the

8
<PAGE>
opinion of Purchaser, may be unlawful. Purchaser also reserves the absolute
right to waive any defect or irregularity in any tender of Shares. Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of Purchaser, Parent,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.

APPOINTMENT AS PROXY. By executing a Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by Purchaser (and with respect to any and all other Shares
or other securities issued or issuable in respect of such Shares on or after the
date of the Offer). All such powers of attorney and proxies shall be considered
coupled with an interest in the tendered Shares. Such powers of attorney and
proxies shall be irrevocable and shall be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares (and any other Shares or other securities so issued in
respect of such purchased Shares) will be revoked, without further action, and
no subsequent powers of attorney and proxies may be given (and, if given, will
not be deemed effective) by such stockholder. The designees of Purchaser will be
empowered to exercise all voting and other rights of such stockholder with
respect to such Shares (and any other Shares or securities so issued in respect
of such accepted Shares) as they in their sole discretion may deem proper,
including, without limitation, in respect of any annual or special meeting of
the Company's stockholders, or any adjournment or postponement thereof, or in
connection with any action by written consent in lieu of any such meeting or
otherwise (including any such meeting or action by written consent to approve
the Merger). Purchaser reserves the absolute right to require that, in order for
Shares to be validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares, Purchaser must be able to exercise full voting and other
rights with respect to such Shares (and any other Shares or securities so issued
in respect of such accepted Shares), including voting at any meeting of
stockholders then scheduled or giving or withdrawing written consents as to
which the record date has passed.

BINDING AGREEMENT. The valid tender of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.

4. WITHDRAWAL RIGHTS

Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided herein, may also be withdrawn at
any time after September 17, 1998. If Purchaser extends the Offer, is delayed in
its purchase of or payment for Shares or is unable to purchase or pay for Shares
for any reason, then, without prejudice to the rights of Purchaser hereunder,
tendered Shares may be retained by the Depositary on behalf of Purchaser and may
not be withdrawn except to the extent that tendering stockholders are entitled
to withdrawal rights as set forth in this Section 4. The reservation by
Purchaser of the right to delay the acceptance or purchase of or payment for
Shares is subject to the provisions of Rule 14e-1(c) under the Exchange Act,
which requires Purchaser to pay the consideration offered or return Shares
deposited by or on behalf of stockholders promptly after the termination or
withdrawal of the Offer.

For a withdrawal of tendered Shares to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder,

9
<PAGE>
if different from that of the person who tendered such Shares. If certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then prior to the physical release of such certificates, the
tendering stockholder must also submit the serial numbers shown on such
certificates, and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of Shares tendered for
the account of an Eligible Institution). If Shares have been tendered pursuant
to the procedure for book-entry transfer set forth in Section 3, any notice of
withdrawal with respect to such Shares must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares.

All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding on all parties. No withdrawal of
Shares shall be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failing to give such notification.

Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will be deemed not to have been validly tendered for purposes of the Offer, but
may be retendered at any subsequent time prior to the Expiration Date by
following any of the procedures described in Section 3.

5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the principal U.S. federal income tax
consequences of the Offer and the Merger to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted into the right to receive
cash in the Merger (whether upon receipt of the Merger Consideration or upon
receipt of any cash amounts by dissenting stockholders pursuant to the exercise
of appraisal rights). The discussion applies only to holders of Shares in whose
hands Shares are capital assets, and may not apply to Shares received pursuant
to the exercise of employee stock options or otherwise as compensation, or to
holders of Shares who are not citizens or residents of the United States.

THE U.S. FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON PRESENT LAW. INDIVIDUAL
CIRCUMSTANCES MAY DIFFER; ACCORDINGLY, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.

The receipt of the Offer Price and the receipt of cash pursuant to the
Merger (whether as Merger Consideration or cash amounts received by dissenting
stockholders pursuant to the exercise of appraisal rights) will be a taxable
transaction for U.S. federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for U.S. federal income tax purposes, a holder of Shares will recognize
gain or loss equal to the difference between such holder's adjusted tax basis in
the Shares sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately for
each block of Shares (I.E., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss and will be long-term gain or loss if,
on the date of sale (or, if applicable, the date of the Merger), the Shares were
held for more than one year.

Payments in connection with the Offer or the Merger may be subject to backup
withholding at a 31% rate. Backup withholding generally applies if the
stockholder (a) fails to furnish such stockholder's social security number or
TIN, (b) furnishes an incorrect TIN, (c) fails properly to report interest or
dividends or (d) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is such
stockholder's correct number and that such stockholder is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax. Certain persons generally are exempt from backup withholding, including
corporations and financial institutions. Certain penalties apply for

10
<PAGE>
failure to furnish correct information and for failure to include the reportable
payments in income. Each stockholder should consult with such stockholder's own
tax advisor as to such stockholder's qualification for exemption from
withholding and the procedure for obtaining such exemption.

6. PRICE RANGE OF THE SHARES; DIVIDENDS

According to the Company's Annual Report on Form 10-K for the year ended
July 31, 1997 (the "COMPANY 10-K"), the Shares commenced trading on the Nasdaq
Small Cap Market tier of The Nasdaq Stock Market ("NASDAQ") on November 4, 1996
and currently trade under the symbol "DEPCC". Prior to that time, the Company
had two classes of common stock, Class A Common and Class B Common, which were
traded on the Nasdaq National Market System. Pursuant to the Plan or
Reorganization in the Company's Chapter 11 bankruptcy proceedings, on November
4, 1996, the Class A Common and the Class B Common were reclassified into a
single class and began trading as the Shares. According to the Company 10-K, the
Company's Quarterly Report on Form 10-Q for the quarter ended April 30, 1998
(the "COMPANY 10-Q") and information supplied to Purchaser by the Company, the
Company has not paid any cash dividends on the Shares (or, prior to November 4,
1996, on the Class A Common or Class B Common). The following table sets forth,
for the periods indicated, the high and low sales prices per Share (or, prior to
November 4, 1996, on the Class A Common or Class B Common) on Nasdaq, as
reported in published financial sources.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C> <C>
FISCAL YEAR ENDED JULY 31, 1996:

First Quarter (Class A)................................................................ $ 2 5/8 $ 1 7/16
(Class B)................................................................ $ 2 5/8 $ 1 1/2
Second Quarter (Class A)................................................................ $ 1 9/16 $ 1
(Class B)................................................................ $ 2 1/8 $ 1
Third Quarter (Class A)................................................................ $ 1 7/8 $ 9/16
(Class B)................................................................ $ 1 15/16 $ 1/2
Fourth Quarter (Class A)................................................................ $ 2 1/4 $ 7/8
(Class B)................................................................ $ 2 11/16

FISCAL YEAR ENDED JULY 31, 1997:

First Quarter (Class A)................................................................ $ 2 3/8 $ 1 1/4
(Class B)................................................................ $ 2 3/8 $ 1 1/4
Second Quarter............................................................................... $ 2 3/4 $ 1 5/8
Third Quarter................................................................................ $ 2 $ 1 1/8
Fourth Quarter............................................................................... $ 1 15/16 $ 1 1/4

FISCAL YEAR ENDED JULY 31, 1998:
First Quarter................................................................................ $ 2 1/16 $ 1
Second Quarter............................................................................... $ 2 3/16 $ 1 5/16
Third Quarter................................................................................ $ 3 3/4 $ 1 11/16
Fourth Quarter (through July 17, 1998)....................................................... $ 5 1/8 $ 1 25/32
</TABLE>

On July 10, 1998, the last full trading day before the execution of the
Merger Agreement, the closing price per share on Nasdaq was $2.94. On July 13,
1998, the last full trading day before the public announcement of the execution
of the Merger Agreement and Purchaser's intention to make the Offer, the closing
price per Share on Nasdaq was $4.00. On July 17, 1998, the last full trading day
before the commencement of the Offer, the closing price per Share on Nasdaq was
$5.03. STOCKHOLDERS ARE ENCOURAGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.

11
<PAGE>
7. CERTAIN EFFECTS OF THE TRANSACTION

The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares,
which could adversely affect the liquidity and market value of the remaining
Shares held by the public. According to the Company 10-K, as of October 8, 1997,
there were 167 recordholders of Common Stock and more than 300 beneficial
holders whose shares are held of record by nominees.

The extent of the public market for the Shares and, according to the
published guidelines of Nasdaq, the continued trading of the Shares on Nasdaq
after the purchase of Shares pursuant to the Offer, will depend upon the number
of holders of Shares remaining at such time, the interest in maintaining a
market in such Shares on the part of securities firms, the possible termination
of registration of such Shares under the Exchange Act, as described below, and
other factors. Depending on the number of Shares acquired pursuant to the Offer,
price quotations for the Shares may no longer meet the requirements for
continued trading on Nasdaq and the Shares may, therefore, be delisted from
Nasdaq. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, trading of the Shares on Nasdaq is discontinued, the liquidity of and
market for the Shares could be adversely affected. Purchaser cannot predict with
certainty whether or to what extent the reduction in the number of Shares that
might otherwise trade publicly would result in the suspension of trading of the
Shares on Nasdaq or would have an adverse or beneficial effect on the market
price for or marketability of the Shares or whether it would cause future prices
to be greater or less than the Offer Price.

The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange or quoted on Nasdaq and there are fewer than 300 record holders of the
Shares. Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) of the Exchange Act, the requirement of furnishing a proxy statement in
connection with stockholders' meetings pursuant to Section 14(a) or 14(c) of the
Exchange Act, and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Company. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended.

It is the present intention of Purchaser to seek to cause the Company to
make an application for the termination of the registration of the Shares under
the Exchange Act as soon as possible after the purchase of all validly tendered
Shares in the Offer if the requirements for termination of registration are met.
If registration of the Shares is not terminated prior to the Merger, the
registration of the Shares under the Exchange Act will be terminated following
consummation of the Merger. See Section 12.

12
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY

Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources including, but not limited to, the Company 10-K and the Company
10-Q. Although neither Parent nor Purchaser has any knowledge that any
statements contained herein based on such documents and records are untrue,
neither Parent nor Purchaser takes any responsibility for the accuracy or
completeness of the information concerning the Company, furnished by the Company
or contained in such documents and records, or for any failure by the Company to
disclose events that may have occurred and may affect the significance or
accuracy of any such information.

The Company was reincorporated in Delaware in December 1987 after its
initial incorporation in California in 1956. Its executive offices are located
at 2101 East Via Arado, Rancho Dominguez, California 90220. The Company is
engaged in developing, formulating, manufacturing, marketing and distributing a
wide range of trademarked personal care products. The Company also engages in
contract packaging and private label activities, in which it manufactures a
large variety of personal care products for third parties.

Set forth below is a summary of certain selected financial information with
respect to the Company for the nine months ended April 30, 1998 and April 30,
1997, and for the years ended July 31, 1997 and July 31, 1996. The April 30,
1998 and April 30, 1997 information was excerpted from the Company 10-Q. The
July 31, 1997 and July 31, 1996 information was excerpted from the Company 10-K.
More comprehensive financial information is included in the Company 10-Q and the
Company 10-K and the following summary is qualified in its entirety by reference
to such reports and the financial statements and other financial information
(including any related notes) contained therein. The Company 10-Q and the
Company 10-K may be inspected and copies may be obtained in the manner set forth
below.

DEP CORPORATION

SELECTED CONSOLIDATED CONDENSED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
APRIL 30, JULY 31,
-------------------- ----------------------
1998 1997 1997 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Income Statement Data:
Net Sales........................................................ $ 80,337 $ 85,693 $ 115,034 $ 119,088
Net Income (loss)................................................ 1,961 (2,612) (438) (7,958)
Earnings (loss) Per Share........................................ 0.28 (0.39) (.07) (1.27)
Balance Sheet Data:
Total Assets..................................................... 73,054 86,058 84,690 89,838
Total Liabilities................................................ 67,027 84,112 80,589 86,556
Stockholders' Equity............................................. 6,027 1,946 4,101 3,282
</TABLE>

The Company is subject to the information and reporting requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options and other matters, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the Commission's public
reference facilities at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and also should be available for inspection and copying at prescribed
rates at the regional offices of the Commission located at the Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661 and 7 World Trade Center,
13th Floor, New York, NY 10048. Copies of such

13
<PAGE>
material may also be obtained by mail at prescribed rates, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
material may be obtained electronically by visiting the Commission's web site on
the internet at http://www.sec.gov. The information also should be available for
inspection at the offices of Nasdaq at 1735 K Street, N.W., Washington, D.C.
20006.

Prior to entering into the Merger Agreement, Parent and Purchaser conducted
a due diligence review of the Company and in connection with such review,
received certain non-public information from the Company. The non-public
information included, among other things, financial estimates (the "ESTIMATES"),
prepared in early May, 1998, of operating results for the fiscal year ending
July 31, 1998. The Company has advised Parent and Purchaser that the Estimates
were prepared by the Company's management based on numerous assumptions,
including among others, projections of revenue, gross profit, operating
expenses, depreciation and amortization, taxes, capital expenditures and working
capital requirements. No assurances can be given with respect to any such
assumptions. The Estimates contain (among other things) the following financial
estimates for the year ending July 31, 1998: gross sales of approximately $116.0
million, net sales of approximately $111.5 million, pre-tax profit of
approximately $3.0 million, and net income of approximately $3.0 million (based
on an estimate of no income taxes for the period). None of the assumptions in
the Estimates give effect to the Offer, the Merger or financing thereof or the
operations of the Company after consummation of such transactions.

THE COMPANY HAS ADVISED PURCHASER THAT IT DOES NOT AS A MATTER OF COURSE
DISCLOSE ESTIMATES OR PROJECTIONS AS TO FUTURE REVENUES OR EARNINGS, AND THE
ESTIMATES WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH
PUBLISHED GUIDELINES OF THE COMMISSION OR THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS FOR PROJECTIONS. THE ESTIMATES HAVE NOT BEEN EXAMINED,
REVIEWED OR COMPILED BY THE COMPANY'S INDEPENDENT AUDITORS, AND ACCORDINGLY THEY
HAVE NOT EXPRESSED AN OPINION OR ANY OTHER ASSURANCE ON THEM. THE FORECASTED
INFORMATION IS INCLUDED HEREIN SOLELY BECAUSE SUCH INFORMATION WAS FURNISHED TO
PARENT AND PURCHASER OR ITS FINANCIAL ADVISORS. ACCORDINGLY, THE INCLUSION OF
THE ESTIMATES IN THIS OFFER SHOULD NOT BE REGARDED AS AN INDICATION THAT PARENT
OR PURCHASER OR THE COMPANY OR THEIR RESPECTIVE FINANCIAL ADVISORS OR THEIR
RESPECTIVE OFFICERS AND DIRECTORS CONSIDER SUCH INFORMATION TO BE ACCURATE OR
RELIABLE, AND NONE OF SUCH PERSONS ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY
THEREOF. THE ESTIMATES WERE PREPARED FOR INTERNAL USE AND ARE SUBJECTIVE IN MANY
RESPECTS AND THUS SUSCEPTIBLE TO VARIOUS INTERPRETATIONS AND PERIODIC REVISION
BASED UPON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENT. IN ADDITION, BECAUSE THE
ESTIMATES AND ASSUMPTIONS UNDERLYING THE ESTIMATES ARE INHERENTLY SUBJECT TO
SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, WHICH ARE
DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND ARE BEYOND THE CONTROL OF THE
COMPANY, PARENT AND PURCHASER, THERE CAN BE NO ASSURANCE THAT THE ESTIMATES WILL
BE REALIZED OR THAT THE COMPANY'S FUTURE RESULTS WILL NOT VARY MATERIALLY FROM
THE ESTIMATES.

9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT

Purchaser is a Delaware corporation with its principal executive offices
located at 2200 Renaissance Boulevard, Suite 200, Gulph Mills, PA 19406.
Purchaser was organized to acquire the Company and has not conducted any
unrelated activities since its organization. All of Purchaser's outstanding
stock is owned by Parent. Parent is a Kommanditgesellschaft auf Aktien (a
partnership limited by shares) organized under the laws of the Federal Republic
of Germany with its principal executive offices located at Henkelstrae 67, D-
40191 Dusseldorf, Germany. Parent is, itself or through affiliates, a worldwide
specialist in applied chemistry, consisting of more than 330 companies operating
in over 60 countries. Parent is the largest global producer of oleochemical
products based on renewable raw materials. It also holds global market
leadership positions in adhesives and surface technologies. Parent's
detergents/household cleansers and cosmetics/toiletries business sectors hold
market leading positions in Europe.

The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Purchaser and Parent is set forth in Annex I hereto and
incorporated herein by reference.

14
<PAGE>
Parent currently furnishes the Commission with certain public reports and
documents required by foreign law or otherwise under Rule 12g3-2(b) under the
Exchange Act. Such reports and communications are available for inspection and
copying at the public reference facilities maintained by the Commission located
at 450 Fifth Street, N.W., Washington, D.C. 20549. Purchaser is not subject to
the informational reporting requirements of the Exchange Act, and, accordingly,
does not file reports or other information with the Commission relating to its
business, financial condition or other matters.

Set forth below is a summary of certain selected financial information with
respect to Parent for the three months ended March 31, 1998 and March 31, 1997,
and for the years ended December 31, 1997 and 1996.

Parent's selected consolidated financial data included herein were prepared,
for the first time in 1997, in conformity with the standards issued by the
International Accounting Standards Committee (IASC), London, subject to the
requirements of German company law regulations. Balance sheet figures as of
December 31, 1996 have been adjusted accordingly. The statement of income for
1996 has been restated to improve comparability. Parent has not determined its
financial position or results of operations for any period under United States
generally accepted accounting principles ("U.S. GAAP"). A summary of the
differences between IAS accounting principles and U.S. GAAP is set forth below
under "-- Summary of Certain Differences Between IAS Accounting and U.S. GAAP."
Purchaser, however, believes that the differences are not material to a decision
by a holder of Shares whether to sell, tender or hold any Shares because any
such differences would not affect the ability of Purchaser to pay for Shares to
be acquired pursuant to the Offer and to repay any funds which have been
borrowed for such purpose. The selected consolidated financial data is stated in
DEUTSCHE MARK. On July 17, 1998, THE WALL STREET JOURNAL reported that, as of
July 16, 1998, one U.S. dollar equaled 1.786 DEUTSCHE MARK.

HENKEL KGAA
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------------- --------------------------
1998 1997 1997 1996(1)
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Income Statement Data:
Sales.................................................... DM 5,295 DM4,708 DM20,065 DM16,301
Net Earnings............................................. 180 149 1,127 555
Earnings Per Share (according to DVFA/SG)................ * * 5.35 4.00
Balance Sheet Data:
Total Assets............................................. 18,467 ** 17,417 14,300
Total Liabilities........................................ 12,862 ** 11,854 9,561
Stockholders' Equity..................................... 5,605 ** 5,563 4,739
</TABLE>

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

(1) 1996 information has been restated in line with the accounting treatment
for 1997 (consolidated financial statements in conformity with
International Accounting Standards--IAS).

* Earnings per share are not calculated for unaudited quarterly results and
are, therefore, not available.

** Until 1998, Balance Sheet Data was not prepared for unaudited quarterly
periods and, accordingly, such information is not available.

SUMMARY OF CERTAIN DIFFERENCES BETWEEN IAS ACCOUNTING AND U.S. GAAP

The following represents, in the opinion of management of Parent, the
differences that would affect the determination of consolidated net income and
stockholders' equity of Parent for the periods for which the consolidated
financial statements have been presented herein.

15
<PAGE>
GOODWILL AND BUSINESS ACQUISITIONS. In accordance with German GAAP, the
difference between the purchase price and fair value of net assets acquired as
part of a business combination (goodwill) may be charged directly to partners'
equity--which had been practiced until 1992--or capitalized and amortized
through the statements of operations over its useful life, which has been
practiced since 1993 with an amortization period of 15 years. This treatment is
in conformity with IAS 22 (revised 1993). Under U.S. GAAP, goodwill must be
capitalized and amortized through the statement of operations over its useful
life not to exceed 40 years.

FIXED TANGIBLE ASSETS. As of December 31, 1996/January 1, 1997, as part of
Parent's conversion to IAS, Parent has restated its fixed tangible assets based
on estimated useful lives standardized throughout the group, by applying the
straight-line method. The accumulated depreciation brought forward at January 1,
1997 has been adjusted accordingly. Under U.S. GAAP, tangible fixed assets are
depreciated either on a straight-line or accelerated basis through the statement
of operations over their expected useful life. Such differences would generally
result in an entity reporting a lower net book value for tangible fixed assets
under German GAAP than under U.S. GAAP.

CAPITALIZATION OF INTEREST. Under IAS, only under limited circumstances is
the capitalization of interest on capital expenditures permitted but not
mandatory. Parent recognized any interest as an expense. Under U.S. GAAP,
interest incurred as part of the cost of constructing fixed assets is required
to be capitalized and amortized over the life of the assets.

FOREIGN CURRENCY. To comply with the German Commercial Code, unrealized
exchange gains on receivables and payables stated in foreign currency are
eliminated and not retained as stipulated in IAS 21. Under U.S. GAAP, assets and
liabilities denominated in a foreign currency are recorded at balance sheet
rates with any resulting gain or loss recognized in the income statement.

10. SOURCE AND AMOUNT OF FUNDS

The total amount of funds required by Purchaser to purchase all outstanding
Shares pursuant to the Offer and to pay related fees and expenses in connection
with the Offer, the Merger, the Company Option and the Stockholder Option
Agreements, is estimated to be approximately $39 million. Purchaser expects to
obtain the necessary funds from Parent from existing cash reserves and from the
proceeds of the sale of commercial paper. Parent has sufficient financial
resources to satisfy its and Purchaser's obligations under the Offer and the
Merger Agreement. The Offer is not conditioned upon any financing arrangements.

11. BACKGROUND OF THE TRANSACTION

In November 1997, Parent and the Company commenced discussions regarding the
possible acquisition of the Company by Parent. The parties executed a
confidentiality agreement and the Company provided Parent with certain
financial, corporate and other information concerning the Company. Executives of
the Company met several times with representatives of Parent, but no firm
proposal was made. In December 1997, Parent informed the Company that for
internal reasons it had decided not to pursue a transaction with the Company at
that time.

Parent has been advised that in early January 1998, the Company approached
one of its debt holders about a possible equity investment in the Company by
such debt holder and the concurrent retirement of portions of the Company's
debt. Company executives initiated discussions with such holder and in early
March 1998, received an offer to purchase 40% of the Company's equity at $3.00
per share (the "MARCH 1998 OFFER"). After a review of the terms of such proposal
at a regular meeting of the Board of Directors of the Company (the "BOARD") on
March 23, 1998, the Board determined that it would be in the best interests of
the Company to retain the services of Houlihan Lokey to evaluate such offer and
to consider other strategic alternatives of the Company.

The Company was unable to reach a definitive agreement regarding the March
1998 Offer, but with the advice and assistance of Houlihan Lokey, executives of
the Company continued to pursue discussions

16
<PAGE>
with other entities regarding potential equity investments or debt
restructurings. These discussions continued through May 1998, but no transaction
resulted from such discussions.

In early May 1998, Robert Berglass, the Company's Chairman and President,
contacted Parent regarding a possible transaction between the Company and
Parent. A representative of Parent visited the Company's offices on May 7, 1998
and met with Company executives. At such meeting, Mr. Berglass proposed an
equity investment in the Company by Parent of approximately 20% of the
outstanding equity. The representative of Parent indicated that Parent was now
interested in pursuing a transaction with the Company, but that Parent generally
preferred a purchase of all of the Company's outstanding stock.

From June 4 through June 6, 1998, discussions between the Company and Parent
continued in Los Angeles, with representatives from their respective advisors,
Houlihan Lokey and Rhone Group LLC, in attendance. At these meetings, the
framework of a potential transaction involving the acquisition of the Company by
Parent was outlined. Parent indicated that any transaction would need to include
the grant of an option to Parent to purchase stock owned by Mr. Berglass and
certain family trusts of Mr. Berglass in the event the transaction was not
consummated in certain circumstances. Both parties expressed a willingness to
continue negotiations in hopes of reaching agreement. During the week of June 9,
1998, the Company's management held informal telephonic discussions with its
outside directors regarding the recent developments in the discussions with
Parent.

On June 15, a meeting of the Board was held at which time Mr. Berglass
advised the Board of the possibility of a transaction with Parent. After a
discussion, including advice from Houlihan Lokey, the Board unanimously
determined that negotiations with respect to such a transaction should continue.
From June 17 through June 19, 1998, Parent undertook a due diligence
investigation of the Company and also commenced preparation of documentation
with respect to the transaction. Parent thereafter delivered initial drafts of
the definitive documents to the Company.

On June 30 and July 1, 1998, Mr. Berglass met with executives of Parent in
Germany to continue negotiations regarding the terms of the transaction. At
these meetings, Parent reiterated its insistence that the transaction include an
option to purchase the stock owned by Berglass and certain Berglass family
trusts if the proposed Merger Agreement were terminated.

On July 2, 1998, the Board held another telephonic meeting. At the meeting,
the Board, together with the Company's outside legal counsel and a
representative from Houlihan Lokey, reviewed the terms and conditions of the
Offer and the Merger as set forth in drafts of the Merger Agreement, the
Stockholder Option Agreements and related documents. The Board heard
presentations by its outside legal counsel with respect to the terms of the
proposed transaction and the Board's fiduciary obligations under Delaware law.
The Board also heard a presentation by the representative of Houlihan Lokey with
respect to the financial terms of the proposed Offer and Merger. The Board, by
unanimous vote, authorized Mr. Berglass to continue negotiations on the
transaction documents.

From July 3 through July 12, 1998, negotiations and document preparation
continued. On July 10, 1998, the Board held a meeting to discuss the status of
the negotiations. At this meeting, the Company's outside counsel and special
Delaware counsel advised the Board regarding its fiduciary duties under
applicable law and a representative of Houlihan Lokey delivered its oral opinion
to the Board that the consideration to be received by the public stockholders of
the Company in connection with the Offer and the Merger was fair to such holders
from a financial point of view. Based upon such presentations, the Board
unanimously voted to authorize Mr. Berglass to finalize the documentation for
the transaction. The transaction documents were finalized on July 12 following a
conference call among the Company, Parent and their respective counsel and
financial advisors.

On July 13, 1998, the Board held a telephonic meeting to discuss the results
of the July 12 negotiations and to approve the final documents. The Board
received Houlihan Lokey's written opinion that the consideration to be received
by the public stockholders of the Company in connection with the Offer and the
Merger is fair to such holders from a financial point of view. Based on such
opinion and on the presentations delivered to it at the July 2 and July 10
meetings, the Board unanimously approved the Offer

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and the Merger. The transaction was publicly announced on the morning of July
14, 1998 and on July 20, 1998, Parent commenced the Offer.

12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER OPTION
AGREEMENTS;
THE COMPANY OPTION AGREEMENT

GENERAL

The purpose of the Offer, the Stockholder Option Agreements and the Company
Option Agreement is to enable Purchaser to acquire, in one or more transactions,
control of, and the entire equity interest in, the Company. The purpose of the
Merger is for Purchaser to acquire all Shares not purchased pursuant to the
Offer and the Company Option Agreement. The acquisition of the entire equity
interest in the Company is structured as a cash tender offer followed by a
merger in order to provide a prompt and orderly transfer of ownership of the
Company from the public stockholders to Purchaser.

If the Minimum Condition is satisfied, Purchaser will own at least 90% of
the then outstanding Shares and will be able to approve the Merger Agreement and
the Merger and to effect the Merger pursuant to the "short-form" merger
provisions of Section 253 of the DGCL (and, even if it were applicable, the
CGCL) without prior notice to, or any action by, any other stockholder of the
Company. On the other hand, if the Minimum Condition is not satisfied and the
Offer, amended so as to be the 49.9% Offer, is consummated with Purchaser not
owning more than 50% of the Shares then outstanding, the Company, Purchaser and
Parent believe that the affirmative vote of holders of a majority of the Shares
at a special stockholders' meeting called for such purpose would be sufficient
to approve the Merger. See Introduction and Section 15.

Upon consummation of the Merger, the Company will become a wholly-owned
subsidiary of Parent. The Offer is being made pursuant to the Merger Agreement.

THE MERGER AGREEMENT. The following is a summary of the material terms of
the Merger Agreement. This summary is not a complete description of the terms
and conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Tender Offer Statement on
Schedule 14D-1 (the "SCHEDULE 14D-1") filed in connection with the Offer. The
Schedule 14D-1 (including the Merger Agreement and other exhibits) may be
examined, and copies thereof may be obtained, as set forth in Section 8.

THE OFFER. The Merger Agreement provides for the commencement of the Offer,
in connection with which Parent or Purchaser has expressly reserved the right to
waive conditions of the Offer (except as set forth below with respect to the
Minimum Condition), in whole or in part, at any time and from time to time in
their sole discretion. Purchaser has agreed that it will not, without the prior
written consent of the Company, (i) decrease or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought pursuant to the
Offer (except any amendment so that the Offer is the 49.9% Offer), (iii) impose
additional conditions of the Offer, (iv) change the conditions of the Offer
(PROVIDED that Parent or Purchaser in its sole discretion may waive any
conditions to the Offer other than the Minimum Condition) or (v) make any other
change in the terms or conditions of the Offer which is materially adverse to
the holders of the Shares. The obligation of Purchaser to consummate the Offer
and to accept for payment and to pay for any Shares tendered pursuant to the
Offer will be subject only to the conditions set forth in Section 14.

If the conditions set forth in Section 14 are satisfied as of any scheduled
expiration date of the Offer, Purchaser may extend the Offer for up to ten
business days in the aggregate, and may extend the Offer for a longer period
with the prior written consent of the Company or as required by law.

If the conditions set forth in Section 14 are not satisfied or, to the
extent permitted by the Merger Agreement, waived by Parent or Purchaser as of
any scheduled expiration date, Purchaser may extend the Offer from time to time
(but not beyond the date that is fifty business days from the date of the Merger

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Agreement) and, in any event, upon the written request of the Company, Purchaser
will extend the Offer from time to time until the earlier of the consummation of
the Offer or forty business days from the date of the Merger Agreement
(PROVIDED, that Purchaser shall not be obligated to make any such extension if
(i) it reasonably determines that all such conditions are not likely to be
satisfied by such date or (ii) it shall then have the right to terminate the
Merger Agreement, pursuant to its terms).

BOARD REPRESENTATION. Promptly upon the purchase of Shares by Purchaser
pursuant to the Offer, and from time to time thereafter, Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as will give Purchaser
representation on the Board of Directors of the Company equal to the product of
the number of directors on the Board of Directors of the Company (determined
after giving effect to the directors elected pursuant to this provision) and the
percentage that such number of Shares so purchased bears to the number of Shares
outstanding, and the Company shall, upon request by Purchaser, promptly increase
the size of the Board of Directors of the Company or use its best efforts to
secure the resignations of such number of directors as is necessary to provide
Parent with such level of representation and shall cause Parent's designees to
be so elected; PROVIDED, HOWEVER, that Purchaser shall be entitled to designate
a number of directors equal to or greater than 50% of the total number of
directors only if Purchaser then owns 90% or more of the Shares then
outstanding. The Company will also use its best efforts to cause persons
designated by Purchaser to constitute the same percentage as is on the entire
Board of Directors of the Company to be on (i) each committee of the Board of
Directors of the Company and (ii) each Board of Directors and each committee
thereof of each subsidiary of the Company. The Company's obligations to appoint
designees to its Board of Directors shall be subject to Section 14(f) of the
Exchange Act. At the request of Purchaser, the Company shall take all actions
necessary to effect any such election or appointment of Purchaser's designees,
including mailing to its stockholders the information required by Section 14(f)
of the Exchange Act and Rule 14f-l promulgated thereunder which, unless
Purchaser otherwise elects, shall be so mailed together with the Schedule 14D-9.
In light of the provisions of the Merger Agreement described above requiring, as
a condition to Purchaser's designees comprising a majority of the Board of
Directors, that Purchaser then own 90% or more of the Shares, Purchaser has
determined to elect not to require such information in the mailing of the
Schedule 14D-9. If it becomes necessary to disseminate such information,
Purchaser and Parent will supply to the Company all information with respect to
themselves and their respective officers, directors and affiliates required by
such Section and Rule.

Notwithstanding the foregoing, neither Parent nor Purchaser will take any
action to prevent at least two persons who are directors of the Company on the
date hereof from remaining as directors of the Company ("CONTINUING DIRECTORS")
until the Effective Time (as defined herein). Following the election or
appointment of Purchaser's designees pursuant to the preceding paragraph and
prior to the Effective Time, and so long as there shall be at least one
Continuing Director, such designees shall abstain from acting upon, and the
approval of a majority of the Continuing Directors shall be required, and
sufficient, to authorize any resolution with respect to any termination of the
Merger Agreement by the Company, any amendment of the Merger Agreement requiring
action by the Board of Directors of the Company, any extension of time for the
performance of any of the obligations or other acts of Parent or Purchaser under
the Merger Agreement, any waiver of compliance with any of the agreements or
conditions under the Merger Agreement for the benefit of the Company and any
action to seek to enforce any obligation of Parent or Purchaser under the Merger
Agreement. If at any time the Continuing Directors reasonably deem it necessary
to consult independent legal counsel in connection with their duties as
Continuing Directors or actions to be taken by the Company, the Continuing
Directors may retain such counsel for such purpose and the Company has agreed
that it will pay the reasonable expenses incurred in connection therewith.

THE MERGER. The Merger Agreement provides that upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the relevant
provisions of the DGCL, Purchaser shall be merged with and into the Company as
soon as practicable following the satisfaction or waiver, if

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<PAGE>
permissible, of the conditions to the Merger. The Company shall be the Surviving
Corporation and shall continue its existence under the laws of Delaware, and the
Certificate of Incorporation and the Bylaws of Purchaser as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation (except the name of the
Surviving Corporation shall be Schwarzkopf & DEP, Inc.). The directors of
Purchaser immediately prior to the Effective Time and the officers of the
Company immediately prior to the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation until their death,
permanent disability, resignation or removal or until their respective
successors are duly elected and qualified. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Purchaser or any subsidiary of Parent, Purchaser or the Company or held in the
treasury of the Company, all of which shall be canceled, and other than
Dissenting Shares, as defined herein) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive in cash the Merger Consideration, upon the surrender of the certificate
representing such Shares. The parties to the Merger Agreement shall cause the
Merger to be consummated by filing with the Secretary of State of the State of
Delaware a duly executed and verified certificate of merger, as required by the
DGCL. The Merger will become effective upon such filing or at such time
thereafter as is provided under applicable law.

TERMINATION OF STOCK OPTIONS AND STOCK OPTION PLANS. At the Effective Time
(or at such earlier time as Purchaser shall designate, which time may be
immediately prior to the acceptance of Shares pursuant to the Offer), each
holder of a then outstanding option to purchase Shares, whether or not then
exercisable shall, in settlement thereof, be entitled to receive from the
Surviving Corporation for each Share subject to such option, in lieu of such
Share, an amount (subject to any applicable withholding tax as specified in
Section 5 or as may apply to payments made in connection with the performance of
services) in cash equal to the difference between the Merger Consideration and
the per share exercise or purchase price of such option to the extent such
difference is a positive number (the "OPTION CONSIDERATION"). Upon receipt of
the Option Consideration, the option shall be canceled. In the Merger Agreement,
the Company has agreed to take, or cause to be taken, all action necessary, to
ensure that the Company's stock option plans shall terminate as of the Effective
Time. The Company's stock option plans shall terminate as of the Effective Time
and any and all rights under any provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any Subsidiary thereof shall be canceled
as of the Effective Time.

STOCKHOLDER MEETING; RECOMMENDATION TO STOCKHOLDERS. Unless the Merger is
consummated in accordance with the "short-form" merger provisions under the
DGCL, and subject to applicable law, the Company, acting through its Board of
Directors, shall, in accordance with applicable law, duly call, give notice of,
convene and hold a special meeting of its stockholders (the "SPECIAL MEETING")
as soon as practicable following the consummation of the Offer for the purpose
of adopting the agreement and plan of merger set forth in the Merger Agreement,
and subject to the fiduciary duties of its Board of Directors under applicable
law as determined in good faith by the Board of Directors, following the receipt
of advice of outside legal counsel, include in the Proxy Statement the
recommendation of its Board of Directors that stockholders of the Company vote
in favor of the adoption of the plan of Merger set forth in the Merger
Agreement. Parent and Purchaser have agreed that, at the Special Meeting, all of
the Shares acquired pursuant to the Offer or otherwise by Parent or Purchaser or
any of their affiliates will be voted in favor of the Merger.

If Purchaser or any other direct or indirect subsidiary of Parent shall
acquire at least 90 percent of the outstanding shares of each class of capital
stock of the Company, each of Parent, Purchaser and the Company shall take all
necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after the consummation of the Offer, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.

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<PAGE>
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and good standing, capital structure, subsidiaries, corporate
authorization, absence of changes, Commission filings, consents and approvals,
no defaults under of other agreements, investment banking fees, employee
benefits, labor relations, litigation, taxes, compliance with applicable laws,
environmental matters, intellectual property, real property, insurance, material
contracts, related party transactions, liens and other matters.

Purchaser and Parent have also made certain representations and warranties
with respect to corporate existence and good standing, corporate authorization,
Commission filings, consents and approvals, no violations of other agreements
and other matters.

CONDUCT OF BUSINESS AND OTHER COVENANTS PENDING THE MERGER. The Company has
agreed that, except as expressly contemplated by the Merger Agreement, during
the period from the date of the Merger Agreement to the date on which a majority
of the Company's directors are designees of Parent or Purchaser, the Company
will conduct, and will cause each of its subsidiaries to conduct, its operations
according to its ordinary and usual course of business and consistent with past
practice and the Company will use, and will cause each of its subsidiaries to
use, its best efforts to preserve intact its business organization, to keep
available the services of its current officers and employees and to preserve the
goodwill of, and maintain satisfactory relationships with, those having business
relationships with the Company and its subsidiaries. The Company has agreed to
promptly advise Parent and Purchaser in writing of any change in the Company's
or any of its subsidiaries' condition (financial or otherwise), properties,
customer or supplier relationships, assets, liabilities, business prospects or
results of operations which may reasonably be likely to have a Material Adverse
Effect (as defined in the Merger Agreement).

In addition, without limiting the generality of the foregoing and except as
otherwise expressly provided in or contemplated by the Merger Agreement, during
the period specified in the first sentence of the preceding paragraph, the
Company has agreed that, without the prior written consent of Parent, it will
not (and will not permit any of its subsidiaries to): (i) issue, sell, grant
options or rights to purchase, pledge, or authorize or propose the issuance,
sale, grant of options or rights to purchase or pledge of (A) any securities of
the Company or any of its subsidiaries, or grant or accelerate any right to
convert or exchange any securities of the Company or any of its subsidiaries,
other than Shares issuable upon exercise of the options or warrants outstanding
on the date hereof or (B) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date of the Merger Agreement; (ii)
otherwise acquire or redeem, directly or indirectly, or amend any of the
securities of the Company or any of its subsidiaries; (iii) split, combine or
reclassify its capital stock or declare, set aside, make or pay any dividend or
distribution (whether in cash, stock or property) on any shares of capital stock
of the Company or any of its subsidiaries (other than cash dividends paid to the
Company by its wholly-owned subsidiaries with regard to their capital stock);
(iv) (1) make or offer to make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or other
disposition of assets or securities, in each case involving the payment or
receipt of consideration of $100,000 or more, except for purchases of inventory
made in the ordinary course of business and consistent with past practice, or
(2) enter into or amend any or amend a Material Contract (as defined in the
Merger Agreement) or grant any release or relinquishment of any rights under any
material contract; (v) incur or assume any long-term debt or short-term debt
except for short-term debt incurred under the Company's existing Revolving
Credit Facility in the ordinary course of business consistent with past
practice; (vi) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person except wholly-owned subsidiaries of the Company; (vii) make any
loans, advances or capital contributions to, or investments in, any other person
(other than wholly-owned subsidiaries of the Company); (viii) change any of the
accounting principles or practices used by it; (ix) make any tax election or
settle or compromise any material U.S. federal, state or local income tax
liability; (x) propose or adopt any amendments to its Certificate of
Incorporation or Bylaws (or similar documents); (xi) grant any stock-related,
performance or

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similar awards or bonuses; (xii) forgive any loans to employees, officers or
directors or any of their respective affiliates or associates; (xiii) enter into
any new, or amend any existing, employment, severance, consulting or salary
continuation agreements with any officers, directors or employees, or grant any
increases in the compensation or benefits to officers, directors and employees
other than normal increases to persons who are not officers or directors in the
ordinary course of business consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company; (xiv) make any deposits or contributions of cash or
other property to fund or in any other way secure the payment of compensation or
benefits under the Company's employee benefit plans or agreements subject to
such plans other than in the ordinary course of business consistent with past
practice; (xv) enter into, amend, or extend any collective bargaining or other
labor agreement; (xvi) adopt, amend or terminate any employee benefit plan or
any other bonus, severance, insurance pension or other arrangement; (xvii)
settle or agree to settle any suit, action, claim, proceeding or investigation
(including any suit, action, claim, proceeding or investigation relating to the
Merger Agreement or the transactions contemplated thereby) or pay, discharge or
satisfy or agree to pay, discharge or satisfy any claim, liability or obligation
(absolute or accrued, asserted or unasserted, contingent or otherwise) other
than the payment, discharge or satisfaction of liabilities reflected or reserved
against in full in the financial statements as at April 30, 1998 or incurred in
the ordinary course of business subsequent to April 30, 1998; or (xviii) agree
in writing or otherwise to take any of the foregoing actions or any action which
would make any representation or warranty in the Merger Agreement untrue or
incorrect as of the date when made or as of a future date or would result in any
of the conditions of the Offer (as set forth in Section 14 hereof) not being
satisfied.

NO SOLICITATION. The Company has agreed that it will not and will not
permit any of its subsidiaries or their respective officers, directors,
employees, representatives (including its investment bankers or attorneys),
agents or affiliates to, directly or indirectly, solicit, encourage, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries to, or otherwise assist or
facilitate, any corporation, partnership, person or other entity or group (other
than Parent or Purchaser or any affiliate or associate of Parent or Purchaser)
concerning any Acquisition Transaction (as defined in the Merger Agreement) or
potential Acquisition Transaction; PROVIDED, HOWEVER, that nothing contained in
the Merger Agreement will prohibit the Board of Directors of the Company from
furnishing information to or entering into discussions or negotiations with any
person or entity that makes an unsolicited bona fide proposal to engage in an
Acquisition Transaction that the Board of Directors of the Company determines in
good faith represents a financially superior transaction for the stockholders of
the Company when compared to the Offer and the Merger if, and only to the extent
that, the Board of Directors determines in good faith, following the receipt of
advice of outside legal counsel, that failure to take any such action is
reasonably likely to be a breach by the Board of Directors of its fiduciary
duties to the stockholders of the Company under applicable law; and PROVIDED
FURTHER, HOWEVER, that nothing contained in the Merger Agreement will prohibit
the Company or its Board of Directors from taking and disclosing to the
Company's stockholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
The Company has agreed that it will promptly notify Parent and Purchaser if any
such information is requested from it or any such negotiations or discussions
are sought to be initiated with the Company and will promptly communicate to
Parent and Purchaser the terms of any proposal or inquiry and the identity of
the party making such proposal or inquiry which it may receive in respect of any
such transaction including in the case of written proposals or inquiries,
furnishing Parent and Purchaser with a copy of any such written proposal or
inquiry (and all amendments and supplements thereto). Except as is required in
the exercise of the fiduciary duties of the Board of Directors of the Company as
determined in good faith, following the receipt of advice of outside legal
counsel, the Company has agreed that it will, and will cause its Subsidiaries,
affiliates and their respective officers, directors, employees, representatives
and agents to, immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any parties other than Parent,
Purchaser or any of their

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<PAGE>
respective affiliates or associates conducted heretofore with respect to any
Acquisition Transaction. Except as is required in the exercise of the fiduciary
duties of the Board of Directors of the Company as determined in good faith,
following the receipt of advice of outside legal counsel, the Company has agreed
not to release any third party from any confidentiality or standstill agreement
to which the Company is a party without Parent's prior written consent and to
take all steps deemed necessary or appropriate by Parent to enforce to the
fullest extent possible all such agreements.

FEES AND EXPENSES. The Merger Agreement provides that all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
expenses, except that under certain circumstances described in "Termination"
below, the Company may be required to pay a termination fee.

CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, where permissible, prior to the proposed Effective Time, of the
following conditions: (a) unless the Merger is consummated pursuant to the
"short-form" merger provisions of the DGCL, the Merger Agreement shall have been
adopted by the affirmative vote of the stockholders of the Company required by
and in accordance with applicable law; (b) all necessary waiting periods under
the HSR Act applicable to the Merger shall have expired or been terminated; (c)
no statute, rule, regulation, executive order, judgment, decree or injunction
shall have been enacted, entered, issued, promulgated or enforced by any court
or governmental authority against Parent, Purchaser or the Company and be in
effect that prohibits or restricts the consummation of the Merger or makes such
consummation illegal or otherwise materially restricts Parent's or Purchaser's
exercise of full rights to own and operate the Company (each party agreeing to
use all reasonable efforts to have such prohibition lifted); and (d) Purchaser
shall have accepted for purchase and paid for the Shares tendered pursuant to
the Offer; PROVIDED, HOWEVER, that this condition will be deemed satisfied if
Purchaser shall have failed to purchase Shares pursuant to the Offer in
violation of the terms of the Merger Agreement.

The obligations of Purchaser and Parent to effect the Merger are further
subject to the satisfaction or waiver, where permissible, on or prior to the
proposed Effective Time of the following conditions: (a) the Company shall have
performed and complied in all material respects with all agreements and
obligations and conditions required by the Merger Agreement to be performed or
complied with by it on or prior to the Effective Time; (b) the representations
and warranties of the Company contained in the Merger Agreement that are
qualified as to materiality shall be true and correct and those not so qualified
shall be true and correct in all material respects in each case on the date of
the Merger Agreement and at and on the proposed Effective Time; and (c) the
Company shall have furnished such certificates of its officers to evidence
compliance with the conditions described in the preceding paragraph as may be
reasonably requested by Purchaser.

The obligations of the Company to effect the Merger are further subject to
the satisfaction or waiver, where permissible, on or prior to the proposed
Effective Time of the following conditions: (a) Parent and Purchaser shall have
performed and complied in all material respects with all agreements and
obligations required by the Merger Agreement to be performed or complied with by
them on or prior to the proposed Effective Time; (b) the representations and
warranties of Purchaser and Parent qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in all material
respects; and (c) Parent or Purchaser shall have delivered to the Company an
officer's certification that each of the preceding conditions have been
satisfied.

For a description of the conditions of the Offer, see Section 14.

TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time notwithstanding approval thereof by the stockholders of
the Company, but prior to the Effective Time: (a) by mutual written consent of
the Boards of Directors of Company and Parent; (b) by Parent or the Company, if
the Effective Time shall not have occurred on or before December 31, 1998
(provided that

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this right to terminate the Merger Agreement will not be available to any party
whose failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date); (c) by Parent or the Company, if any court of competent
jurisdiction in the United States or Canada or other United States or Canadian
governmental body shall have issued an order, decree or ruling, or taken any
other action restraining, enjoining or otherwise prohibiting any of the
transactions contemplated by the Merger Agreement or the Stock Option Agreements
and such order, decree, ruling or other action shall have become final and
non-appealable; (d) (i) by the Company, if Purchaser fails to commence the Offer
as provided in Section 1 and (ii) by Parent, if the Offer expires or is
terminated on account of the failure of a condition specified in Section 14
without any Shares being purchased thereunder; (e) by Parent, if (i) the Board
of Directors or any committee thereof of the Company withdraws or modifies or
amends in a manner adverse to Parent or Purchaser its authorization, approval or
recommendation of the Offer or the Merger or this Merger Agreement or shall have
resolved to do any of the foregoing or shall have failed to have reiterated its
recommendation within five business days of any written request by Parent or
Purchaser therefor or (ii) the Company or any of its Subsidiaries (or the Board
of Directors or any committee thereof of the Company) shall have approved,
recommended, authorized, publicly announced its intention to enter into or filed
a Schedule 14D-9 not opposing any Acquisition Transaction with a party other
than Parent, Purchaser or any of their affiliates, or shall have resolved to do
any of the foregoing; (f) by Parent or the Company, if the other party (or, in
the case of termination by the Company, if Purchaser) shall have breached or
failed to comply in any material respect with any of its obligations, covenants
or agreements under the Merger Agreement, or any of the representations and
warranties of the Company set forth in the Merger Agreement which is qualified
as to materiality, shall not be true and correct, or any such representation or
warranty that is not so qualified, shall not be true and correct in any material
respect when made or at any time prior to the Effective Time as if made at and
as such time; (g) by Parent, if at any time prior to the purchase by Purchaser
of all of the Shares subject to the Stockholder Options, the Stockholder Option
Agreements shall not be in full force and effect, or the Option Grantors shall
have breached in any material respect any representation, warranty or covenant
contained in the Stockholder Option Agreements; or (h) by the Company, to allow
the Company to enter into an agreement in respect of an Acquisition Transaction
that the Board of Directors of the Company shall have determined represents a
financially superior transaction for the stockholders of the Company when
compared to the Offer and the Merger if, and only to the extent that, the Board
of Directors shall have determined in good faith, following the receipt of
advice of outside legal counsel, that failure to take any such action would be a
breach by the Board of Directors of its fiduciary duties to the stockholders of
the Company under applicable law; PROVIDED, THAT, prior to any such termination,
the Company notifies Parent promptly of its intention to terminate the Merger
Agreement and enter into an agreement with respect to an Acquisition Transaction
and gives Parent an opportunity to match the terms of such agreement, which
notice shall include the terms of such Acquisition Transaction and shall be
given at least five business days prior to the termination of the Merger
Agreement; PROVIDED, FURTHER, that such termination shall not be effective
unless the Company contemporaneously pays Parent the fee described herein. In
the event of termination, the Merger shall be abandoned and only liabilities
arising prior to termination shall survive termination, except that (i)
obligations under the Merger Agreement to keep information confidential, (ii)
the termination fee provision and (iii) any provisions of the Merger Agreement
relating to the Company Option Agreement or the Stockholder Option Agreements,
shall survive termination.

In the event that the Merger Agreement is terminated (i) pursuant to clauses
(e) or (h) of the prior paragraph or (ii) pursuant to any other provision of the
prior paragraph (regardless of whether such termination is by Parent or the
Company unless such termination results solely from a material breach by Parent
or Purchaser of their respective obligations under the Merger Agreement) and (in
the case of clause (ii) only) either (y) prior to such termination a Trigger
Event (as defined below) has occurred or (z) prior to such termination a written
proposal shall have been made relating to an Acquisition Event and

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within twelve months from the date of such expiration an Acquisition Event has
occurred, then the Company shall pay to Parent a fee of $2,500,000 (the
"TERMINATION FEE").

As used herein, "ACQUISITION EVENT" means the consummation of any (i)
Acquisition Transaction or (ii) series of transactions that results in any
person, entity or "group" (other than the Option Grantors and their affiliates
and other than Parent, Purchaser or any of their affiliates) acquiring more than
50% of the outstanding Shares or assets of the Company in each case including
through any open market purchases, merger, consolidation, recapitalization,
reorganization or other business combination.

As used herein, "TRIGGER EVENT" means the occurrence of any of the following
events: (i) the Company or any of its Subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have recommended, approved,
authorized, proposed, filed a Schedule 14D-9 not opposing, or publicly announced
its intention to enter into, any Acquisition Transaction (other than with
Parent, Purchaser or any of its affiliates), or shall have resolved to do any of
the foregoing; (ii) the Board of Directors or any committee thereof of the
Company shall have withdrawn or modified or amended in any manner adverse to
Parent or Purchaser its authorization, approval or recommendation to the
stockholders of the Company with respect to the Offer, the Merger or the Merger
Agreement, or shall have resolved to do any of the foregoing or shall have
failed to have reiterated its recommendation within five business days of any
written request by Parent or Purchaser therefor; or (iii) any person, entity or
"group" (as that term is used in Section 13(d)(e) of the Exchange Act) (other
than the Option Grantors and their affiliates and other than Parent, Purchaser
or any of their affiliates and other than persons, entities or groups that are
permitted to report their ownership of Shares with the SEC on Schedule 13G)
shall have become the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of 20% of the then outstanding Shares.

INDEMNIFICATION AND INSURANCE. Purchaser and Parent have agreed that all
rights to indemnification existing in favor of the present or former directors,
officers and employees of the Company or any of its subsidiaries (the
"INDEMNIFIED PARTIES") as provided in indemnification agreements with the
Company, the Company's Certificate of Incorporation or Bylaws, or the articles
of organization, bylaws or similar documents of any of the Company's
subsidiaries as in effect as of the date of the Merger Agreement with respect to
matters occurring prior to the Effective Time including, without limitation,
matters based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Merger Agreement or the transactions contemplated thereby,
shall survive the Merger and shall continue in full force and effect for a
period of not less than the statutes of limitations applicable to such matters.
In addition, the Parent agrees to cause the Surviving Corporation to comply
fully with its indemnification obligations.

To the extent that the preceding paragraph does not indemnify and hold
harmless an Indemnified Party, for a period of four years from and after the
Effective Time, the Surviving Corporation and Parent have agreed to indemnify,
defend and hold harmless the Indemnified Parties against all losses, claims,
damages, costs, expenses (including reasonable attorneys' fees and expenses),
liabilities or judgments of or in connection with any threatened or actual
claim, action, suit, proceeding or investigation (an "ACTION") arising out of or
pertaining to such individuals' services, prior to the Effective Time, as
directors, officers or employees of the Company or any of its Subsidiaries or as
trustees or fiduciaries of any plan for the benefit of employees of the Company
or as (at the request of the Company) directors, officers or employees of
another corporation or other enterprise (including, without limitation, matters
based in whole or in part on, or arising in whole or in part out of, or
pertaining to the Merger Agreement or the transactions contemplated thereby), in
each case to the full extent permitted by applicable law.

The Surviving Corporation will cause to be maintained in effect for a period
of four years after the Effective Time (or, if the statute of limitations with
respect to such claims is extended, for an additional period, not to exceed two
years, equal to the length of such extension), in respect of acts or omissions
occurring prior to the Effective Time (but only in respect thereof), policies of
directors' and officers' liability insurance covering the persons currently
covered by the Company's existing directors' and officers'

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liability insurance policies and providing substantially similar coverage to
such existing policies; PROVIDED, HOWEVER, that the Surviving Corporation will
not be required to maintain directors' and officers' liability insurance
policies to the extent that the aggregate annual cost of maintaining such
policies exceeds $265,000 (the "CAP"); and PROVIDED FURTHER that, if equivalent
coverage cannot be obtained, or can be obtained only by paying an annual premium
in excess of the Cap, the Surviving Corporation shall only be required to obtain
as much coverage as can be obtained by paying an annual premium equal to the
Cap.

In the event an Action is brought against any Indemnified Parties for which
indemnification may be sought in accordance with the provisions of the Merger
Agreement, (i) such Indemnified Parties shall notify the Company (or, after the
Effective Time, the Surviving Corporation and Parent) in writing promptly after
such Indemnified Party receives notice of such Action and shall deliver to the
Company (or, after the Effective Time, the Surviving Corporation and Parent) the
undertaking contemplated by Section 145(e) of the DGCL, (ii) the Company (or,
after the Effective Time, the Surviving Corporation or Parent) shall be entitled
to assume the defense thereof and, after notice from the Company (or the
Surviving Corporation or Parent, as applicable) to the Indemnified Parties that
it so chooses, the Company (or the Surviving Corporation or Parent, as
applicable) shall not be liable to the Indemnified Parties for any legal fees or
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof (PROVIDED, HOWEVER, that if (x) the Company (or the Surviving
Corporation and Parent, as applicable) does not elect to assume the defense
thereof, (y) the Company (or the Surviving Corporation and Parent, as
applicable) otherwise authorizes the Indemnified Party to retain counsel for the
defense thereof or (z) the assumption of the defense thereof by the Company (or
the Surviving Corporation or Parent, as applicable) would present counsel
selected by the Company (or the Surviving Corporation or Parent, as applicable)
with a conflict of interest or if such counsel's representation of the
Indemnified Parties would otherwise be inappropriate under the applicable
standards of professional conduct, then the Company (or the Surviving
Corporation and Parent, as applicable) will pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, and reasonably acceptable to
Parent), and (iii) the Company (or the Surviving Corporation and Parent, as
applicable) will cooperate in the defense of any such matter; PROVIDED, HOWEVER,
that none of the Company, the Surviving Corporation or Parent shall be liable
for any settlement effected without its prior written consent (which consent
shall not be unreasonably withheld), and PROVIDED FURTHER that the Company (or
the Surviving Corporation and Parent, as applicable) shall not be obligated
pursuant hereby to pay the fees and expenses of more than one counsel for all
Indemnified Parties in any single Action, except to the extent that, in the
reasonable opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such Action.

AMENDMENT. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the Boards of Directors of the
Company, Parent and Purchaser (subject in the case of the Company to the last
paragraph of "--Board Representation" herein) at any time before or after
adoption of the Merger Agreement by the stockholders of the Company but, after
any such stockholder approval, no amendment shall be made which decreases the
Merger Consideration or which adversely affects the rights of the Company's
stockholders hereunder without the approval of such stockholders. The Merger
Agreement may not be amended except by an instrument in writing signed on behalf
of all of the parties.

OTHER AGREEMENTS. Each party has agreed to use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement. However, nothing in the Merger Agreement (other than as
expressly provided in Section 1) shall obligate Parent or Purchaser to keep the
Offer open beyond the expiration date set forth in the Offer, and none of
Parent, Purchaser or any of their subsidiaries or affiliates is obligated (i) to
limit or not to exercise any rights of ownership of any securities (including
the Shares), or to divest, dispose of or hold separate any securities or all or
a portion of their respective businesses, assets or properties or of the
business, assets or properties of the Company or any of its subsidiaries or (ii)
to limit the ability of such

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entities (A) to conduct their respective businesses or own such assets or
properties or to conduct the businesses or own the properties or assets of the
Company and its subsidiaries or (B) to control their respective businesses or
operations or the businesses or operations of the Company and its subsidiaries.
In addition, among other things, (x) each of the Company, Parent and Purchaser
has agreed to use its reasonable best efforts to make promptly any required
submissions under the HSR Act which the Company and Parent and Purchaser
determine should be made, in each case, with respect to the Offer, the Merger
Agreement, the Company Option Agreement or the Stockholder Option Agreements and
(y) Parent, Purchaser and the Company have each agreed to cooperate with one
another (i) in promptly determining whether any filings are required to be or
should be made or consents, approvals, permits or authorizations are required to
be or should be obtained under any other federal, state or foreign law or
regulation or whether any consents, approvals or waivers are required to be or
should be obtained from other parties to loan agreements or other contracts or
instruments material to the Company's business in connection with the
consummation of the transactions contemplated by the Merger Agreement, and (ii)
in promptly making any such filings, furnishing information required in
connection therewith and seeking to obtain timely any such consents, permits,
authorizations, approvals or waivers and (z) the Company has agreed that it will
use its reasonable best efforts promptly to grant such approvals and to take or
cause to be taken such actions as are necessary to eliminate or minimize the
effects on the transactions contemplated hereby of any antitakeover statute,
regulation or charter provision that is or shall become applicable to the
transactions contemplated hereby (except, in the case of any such approval or
action by the Board of Directors of the Company, to the extent that the Board of
Directors determines in good faith, following the receipt of advice of outside
legal counsel, that granting such approval or taking such action is reasonably
likely to be a breach by the Board of Directors of its fiduciary duties to the
stockholders of the Company under applicable law).

TIMING. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Parent has agreed to cause
the Merger to be consummated on the terms and subject to the conditions set
forth above, there can be no assurance as to the timing of the Merger.

STOCKHOLDER OPTION AGREEMENTS

The following is a summary of the material terms of each of the Stockholder
Option Agreements. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The Stock
Option Agreements may be examined, and copies thereof may be obtained, as set
forth in Section 8.

TENDER OF SHARES. The Option Grantors have agreed to validly tender and not
to withdraw pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer, the Option
Grantors' Shares. The Option Grantors together beneficially own 2,161,460
Shares, constituting approximately 31.4% of the outstanding Shares.

VOTING OF SHARES. At any meeting of the stockholders of the Company,
however called, or in connection with any written consent of stockholders of the
Company, the Option Grantors have agreed to vote (or cause to be voted) all the
Shares held of record or beneficially owned by the Option Grantors (and in the
case of Shares not held of record by the Option Grantors, subject to the Option
Grantors' voting direction) (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement, the Company Option Agreement
and approval of the terms of each and each of the other actions contemplated
under such agreements and any actions required in furtherance thereof and (ii)
against any proposal relating to an Acquisition Transaction and against any
action or agreement that would impede, frustrate, prevent or nullify the
Stockholder Option Agreements or result in a breach in respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the

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Merger Agreement or the Company Option Agreement or which would result in any of
the conditions set forth in Section 14 not being fulfilled.

OPTION. To induce Parent and Purchaser to enter into the Merger Agreement,
the Option Grantors have granted Purchaser the Stockholder Options to purchase
the Option Grantors' Shares at the Offer Price, subject to increase as set forth
below (the "PURCHASE PRICE"). The Stockholder Options may be exercised, in whole
but not in part, by written notice to the Option Grantor, for a period of ten
(10) business days (the "10 DAY PERIOD") following termination of the Merger
Agreement or termination of the Offer, whichever shall first occur; PROVIDED
that, prior to such termination, either (i) a Trigger Event shall have occurred
or (ii) (A) the Company shall have received a written proposal from any person
other than Parent, Purchaser or any affiliate of Parent or Purchaser for an
Acquisition Transaction, which proposal shall not have expired or been
withdrawn, (B) the Merger Agreement shall have been terminated by Parent
pursuant to the rights described under paragraphs (b), (d)(ii), (f) or (g) of
"--The Merger Agreement--Termination" herein and (C) at the time of such
termination the Minimum Condition shall not have been satisfied. Notwithstanding
the foregoing, the Stockholder Options may not be exercised until: (i) all
waiting periods under the HSR Act, required for the purchase of the Option
Grantors' Shares upon such exercise shall have expired or been waived and any
other conditions under the other Antitrust Laws shall have been satisfied and
(ii) there shall not be in effect any preliminary injunction or other order
issued by any Governmental Entity prohibiting the exercise of the Stockholder
Options; provided that if (i) all HSR Act waiting periods shall not have expired
or been terminated or (ii) there shall be in effect any such injunction or
order, in each case on the expiration of the 10 Day Period, the 10 Day Period
shall be extended until five (5) business days after the later of (A) the date
of expiration or termination of all HSR Act waiting periods, and (B) the date of
removal or lifting of such injunction or order.

In the event the Option Grantors' Shares are acquired by Purchaser pursuant
to the exercise of the Stockholder Options (the "ACQUIRED SECURITIES") and,
either before or at any time within the one-year period following such
acquisition, Parent, Purchaser or any affiliate of Parent or Purchaser shall
acquire Common Stock (other than from the Company) at a price in excess of the
Purchase Price, then the Purchase Price shall be increased to such higher price.
If the purchase of the Acquired Securities has been completed at the time of
such increase, the Option Grantor will be entitled to receive, and Purchaser
will promptly (and in no event more than 48 hours following such increase) pay
to the Option Grantor, by wire transfer of same day funds to such account as the
Option Grantor shall designate, the amount of the increase.

In the event the Option Grantors' Shares are acquired by Purchaser pursuant
to the exercise of the Stockholder Options, the Option Grantors will be entitled
to receive, and Purchaser will promptly (and in no event more than 48 hours
following such Sale) pay to the Option Grantor, upon any subsequent disposition,
transfer or sale to an unaffiliated third party ("SALE") of all or any portion
of the Acquired Securities within the one-year period following such
acquisition, an amount per share in cash equal to the excess, if any, of the net
proceeds received per share in the Sale over the Purchase Price. Any such
payment shall be made by wire transfer of same day funds to such account as the
Option Grantor shall designate.

RESTRICTIONS ON TRANSFER. Except as contemplated by the Stockholder Option
Agreements and the Merger Agreement, the Option Grantors shall not (i) offer to
transfer (which term includes, without limitation, any sale, tender, gift,
pledge (other than a pledge which does not impair such Option Grantor's ability
to perform under the Stockholder Option Agreements), assignment or other
disposition), transfer or consent to any transfer of, any or all of their Shares
or any interest therein, (ii) enter into any contract, option or other agreement
or understanding with respect to any transfer of any or all of their Shares or
any interest therein, (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to their Shares, (iv) deposit their
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to their Shares or (v) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations under the
Stockholder Option Agreements or the

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transactions contemplated thereby or by the Merger Agreement or the Company
Option Agreement (including, without limitation, any action that would cause the
Merger to be subject to Section 1101 of the CGCL).

NO SOLICITATION. Each of the Option Grantors has agreed, in the capacity as
a stockholder of the Company, that neither the Option Grantor nor any
affiliates, representatives or agents shall (and, if the Option Grantor is a
corporation, partnership, trust or other entity, the Option Grantor shall cause
its officers, directors, partners, and employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
Purchaser or any of their respective affiliates or representatives) concerning
any proposal relating to an Acquisition Transaction. The Option Grantors have
agreed to immediately cease any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any proposal relating to
an Acquisition Transaction. The Option Grantors have agreed to communicate to
Parent, to the same extent as required by the Company as described above, the
terms, and other information concerning, any proposal, discussion, negotiation
or inquiry and the identity of the party making such proposal or inquiry which
an Option Grantor may receive in respect of any such Acquisition Transaction.

COMPANY OPTION AGREEMENT

TOP-UP OPTION. The Company has also granted to Purchaser the Top-Up Option
to purchase that number of Shares (the "TOP-UP OPTION SHARES") equal to the
lowest number of Shares that, when added to the number of Shares owned by
Purchaser at the time of such exercise, shall constitute one share more than 90%
of the Shares then outstanding (assuming issuance of the Top-Up Option Shares)
at a price equal to $5.25 per share (the "OPTION PRICE"); PROVIDED, HOWEVER,
that the Top-Up Option shall not be exercisable unless immediately after such
exercise Purchaser would own more than 90% of the Shares then outstanding.

Purchaser may exercise the Top-Up Option, in whole but not in part, at any
one time after the occurrence of a Top-Up Exercise Event (as defined below) and
prior to the occurrence of a Top-Up Termination Event (as defined below).

A "TOP-UP EXERCISE EVENT" will occur upon Purchaser's acceptance for payment
pursuant to the Offer of Shares constituting more than 85% but less than 90% of
the Shares then outstanding. A "TOP-UP TERMINATION EVENT" means (i) the
Effective Time, (ii) the date which is 10 business days after the occurrence of
the Top-Up Exercise Event (or such later date on which the closing of a purchase
of Shares pursuant to the Company Option Agreement may be consummated), or (iii)
the termination of the Merger Agreement.

CONFIDENTIALITY AGREEMENT

Pursuant to an agreement dated as of November 3, 1997 (the "CONFIDENTIALITY
AGREEMENT") between the Company and Parent, the Company has supplied Parent with
certain non-public, confidential and proprietary information about the Company.
Parent has agreed in the Confidentiality Agreement that it, together with its
directors, officers, employees, agents and representatives, will keep
confidential all such information supplied by the Company and that it will not,
without the prior written consent of the Board of Directors of the Company,
until November 3, 1999, acquire or offer to acquire any securities or assets of
the Company or enter into or propose to enter into any business combination
involving the Company. In the Merger Agreement, the Company has represented and
warranted that the making of any offer and proposal and the taking of any other
action by Parent or Purchaser in connection with the Merger Agreement, the
Company Option Agreement and the Stockholder Option Agreements and the
transactions contemplated hereby and thereby have been consented to by the Board
of Directors of the Company in accordance with the terms and provisions of the
Confidentiality Agreement.

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APPRAISAL RIGHTS

No appraisal rights are available to holders of Shares in connection with
the Offer. However, if the Merger is consummated, holders of Shares will have
certain rights under Section 262 of the DGCL (and may have similar rights under
the CGCL) to dissent and demand appraisal of, and payment in cash for the fair
value of, their Shares. Such rights, if the statutory procedures are complied
with, could lead to a judicial determination of the fair value (excluding any
element of value arising from accomplishment or expectation of the Merger)
required to be paid in cash to such dissenting holders for their Shares. Any
such judicial determination of the fair value of Shares could be based upon
considerations other than or in addition to the Offer Price and the market value
of the Shares, including asset values and the investment value of the Shares.
The value so determined could be more or less than the Offer Price and the
Merger Consideration.

If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses such stockholder's right to
appraisal, as provided in the DGCL, the Shares of such holder will be converted
into the Merger Consideration in accordance with the Merger Agreement. A
stockholder may withdraw such stockholder's demand for appraisal by delivery to
Purchaser of a written withdrawal of such stockholder's demand for appraisal and
acceptance of the Merger.

FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL (OR, IF
APPLICABLE, THE CGCL) FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF
SUCH RIGHTS.

PLANS FOR THE COMPANY

As soon as practicable following the consummation of the Offer, Purchaser
intends to effect the Merger. It is expected that, initially following the Offer
and the Merger, the business and operations of the Company will, except as set
forth in this Offer to Purchase, be continued by the Company substantially as
they are currently being conducted, and that the Company's current management,
under the direction of the Board of Directors of the Surviving Corporation, will
continue to manage the Company. Following consummation of the Merger, however,
Parent intends to conduct a review of the Company and its assets, its corporate
structure, operations, properties, management and personnel and consider what,
if any, changes would be desirable in light of the circumstances which then
exist. Such changes could include the acquisition or disposition of assets or
other changes in the Company's capitalization, dividend policy, corporate
structure, business, certificate of incorporation, by-laws, board of directors
or management.

"GOING PRIVATE" TRANSACTIONS. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger. However, Rule
13e-3 would be inapplicable if (i) the Shares are deregistered under the
Exchange Act prior to the Merger or other business combination or (ii) the
Merger or other business combination is consummated within one year after the
purchase of the Shares pursuant to the Offer and the amount paid per Share in
the Merger or other business combination is at least equal to the amount paid
per Share in the Offer. If applicable, Rule 13e-3 requires, among other things,
that certain financial information concerning the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
the consummation of the transaction.

Except as noted in this Offer to Purchase, Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of a material amount of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's capitalization, dividend
policy, corporate structure, business or composition of its management.

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<PAGE>
13. DIVIDENDS AND DISTRIBUTIONS

If, on or after the date of the Merger Agreement, the Company should (a)
issue, sell or pledge, grant options or rights to purchase, pledge, or authorize
or propose the issuance, sale, grant of options or rights to purchase or pledge
of (i) any securities of the Company or any of its subsidiaries (including the
Shares), or grant or accelerate any right to convert or exchange any securities
of the Company or any of its subsidiaries, other than Shares issuable upon
exercise of the options or warrants outstanding on the date hereof, or (ii) any
other securities in respect of, in lieu of or in substitution for Shares
outstanding on the date hereof; (b) split, combine or reclassify its capital
stock; or (c) acquire or redeem, directly or indirectly, any of its outstanding
securities (including the Shares), then subject to the provisions of Section 14,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate to the terms of the Offer, including, without limitation, the number
or type of securities offered to be purchased.

If, on or after the date of the Merger Agreement, the Company should (a)
declare, set aside, make or pay any dividend or distribution (whether in cash,
stock or property) on the Shares, (b) issue or grant options or rights to
purchase any securities of the Company or any of its subsidiaries (including the
Shares), or grant or accelerate any right to convert or exchange any securities
of the Company or any of its subsidiaries, other than Shares issuable upon
exercise of the options or warrants outstanding on the date hereof, or (c) issue
or grant options or rights to purchase any other securities in respect of, in
lieu of or in substitution for Shares outstanding on the date hereof, payable or
distributable to stockholders of record on a date prior to the transfer of the
Shares purchased pursuant to the Offer to Purchase, then, subject to the
provisions of Section 14, (i) the Offer Price may, in the sole discretion of
Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (ii) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders (A) will be received and
held by the tendering stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (B) at the direction of Purchaser, will be
exercised for the benefit of Purchaser, in which case the proceeds of such
exercise will promptly be remitted to Purchaser. Pending such remittance and
subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer Price or deduct from the Offer Price
the amount or value thereof, as determined by Purchaser in its sole discretion.

Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing herein shall constitute a waiver by Purchaser or Parent of any of their
rights under the Merger Agreement or a limitation of remedies available to
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.

14. CERTAIN CONDITIONS OF THE OFFER

Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, purchase or pay for any Shares tendered until
the expiration of any applicable waiting period for the Offer and the
Stockholder Options granted pursuant to the Stockholder Option Agreements under
the HSR Act, and Parent may terminate or, subject to the terms and conditions of
the Merger Agreement, amend the Offer as to any Shares not then accepted for
payment, shall not be required to accept for payment or pay for any Shares, or
may delay the acceptance for payment of Shares tendered, if (i) at the
expiration of the Offer, the number of Shares validly tendered and not
withdrawn, together with the Shares beneficially owned by Parent and its
affiliates or which Parent and its affiliates have the right to acquire pursuant
to the Company Option Agreement, shall not constitute at least 90% of the
outstanding Shares on a fully diluted basis, provided, however, that the Minimum
Condition may be required to be amended in accordance with the Merger Agreement
as set forth in Section 1 herein, or (ii) at any time on or after the date of
the Merger Agreement, and prior to the acceptance for payment of Shares, any of
the following events shall occur or exist:

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(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction, proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer, the
Stockholder Options, the Top-Up Option or the Merger, that would or is
reasonably likely to (i) make the acceptance for payment of, or payment for
or purchase of some or all of the Shares pursuant to the Offer, the
Stockholder Options or the Top-Up Option illegal, or otherwise restrict or
prohibit the consummation of the Offer, the Stockholder Options, the Top-Up
Option or the Merger, (ii) result in a significant delay in or restrict the
ability of Purchaser to accept for payment, pay for or purchase some or all
of the Shares pursuant to the Offer, the Stockholder Options or the Top-Up
Option or to effect the Merger, (iii) render Purchaser unable to accept for
payment or pay for or purchase some or all of the Shares pursuant to the
Offer, the Stockholder Options or the Top-Up Option, (iv) impose material
limitations on the ability of Parent, Purchaser or any of their respective
subsidiaries or affiliates to acquire or hold, transfer or dispose of, or
effectively to exercise all rights of ownership of, some or all of the
Shares including the right to vote the Shares purchased by it pursuant to
the Offer, the Stockholder Options or the Top-Up Option on all matters
properly presented to the stockholders of the Company, (v) require the
divestiture by Parent, Purchaser or any of their respective subsidiaries or
affiliates of any Shares, or require Parent, Purchaser, the Company, or any
of their respective subsidiaries or affiliates to dispose of or hold
separate all or any material portion of their respective businesses, assets
or properties or impose any material limitations on the ability of any of
such entities to conduct their respective businesses or own such assets,
properties or Shares or on the ability of Parent or Purchaser to conduct the
business of the Company and its subsidiaries and own the assets and
properties of the Company and its subsidiaries, or (vi) impose any material
limitations on the ability of Parent, Purchaser or any of their respective
subsidiaries or affiliates effectively to control the business or operations
of the Company, Parent, Purchaser, or any of their respective subsidiaries
or affiliates.

(b) there shall have been instituted or pending any action, proceeding
or counterclaim by or before any governmental, administrative or regulatory
agency or instrumentality or before any court, arbitration tribunal or any
other tribunal, domestic or foreign, challenging the making of the Offer or
the acquisition by Purchaser of the Shares pursuant to the Offer or the
Stockholder Options or the Top-Up Option or the consummation of the Merger,
or seeking to obtain any material damages, or seeking to, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (viii) of paragraph (a) above;

(c) any of the Stockholder Option Agreements shall not be in full force
and effect or any of the Option Grantors shall have breached in any material
respect any representation, warranty or covenant contained therein;

(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange in the United States, including the NASDAQ stock market, or the
Frankfurt Stock Exchange, for a period of more than one full trading day,
(ii) the declaration of any banking moratorium or any suspension of payments
in respect of banks in the United States or Germany, (iii) the commencement
of a war, armed hostilities or any other international or national calamity
involving the United States or Germany, or (iv) in the case of any of the
foregoing existing at the time of the execution of the Merger Agreement, a
material acceleration or worsening thereof;

(e) any Person, entity or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Parent or the Option Grantors
or any of their respective affiliates (and other than persons, entities or
groups that are permitted to report their ownership of Shares with the SEC
on Schedule 13G) shall have become the beneficial owner (as that term is
used in Rule 13d-3 under the Exchange Act) of more than 20% of the
outstanding Shares;

32
<PAGE>
(f) the Company or any of its subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have approved, recommended,
authorized, proposed, filed a Schedule 14D-9 not opposing, or publicly
announced its intention to enter into, any Acquisition Transaction (other
than with the Parent, Purchaser or any of their affiliates) or shall have
resolved to do any of the foregoing;

(g) there shall have occurred any change, condition, event or
development in the business, condition (financial or otherwise), assets,
liabilities, results of operations or prospects of the Company or any of its
subsidiaries that is, or is reasonably likely to be, materially adverse to
the Company and its subsidiaries taken as a whole or that materially impairs
the ability of the parties to consummate the Offer or the Merger;

(h) the Company shall have breached or failed to comply in any material
respect with any of its obligations, covenants, or agreements under the
Merger Agreement or the Company Option Agreement or any representation or
warranty of the Company contained in the Merger Agreement, that is qualified
as to materiality, shall not be true and correct, or any such representation
or warranty that is not so qualified, shall not be true and correct in any
material respect, in each case either as of when made or at any time
thereafter;

(i) the Merger Agreement shall have been terminated pursuant to its
terms or shall have been amended pursuant to its terms to provide for such
termination or amendment of the Offer; or

(j) the Board of Directors or any committee thereof of the Company shall
have modified or amended in any manner adverse to Parent or Purchaser or
shall have withdrawn its authorization, approval or recommendation of the
Offer, the Merger or the Merger Agreement, or shall have resolved to do any
of the foregoing or shall have failed to have reiterated its recommendation
within five business days of any written request by Parent or Purchaser
therefor;

which, in the good faith judgment of Parent or Purchaser, in any case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser or any of their affiliates permitted by the Merger Agreement) giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with acceptance for payment or payment for Shares.

The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted regardless of the circumstances (including any action or
inaction by Parent or Purchaser or any of their affiliates permitted by the
Merger Agreement giving rise to any such condition) or waived by Parent or
Purchaser in whole or in part at any time or from time to time in its discretion
subject to the terms and conditions of the Merger Agreement; PROVIDED, HOWEVER,
that the Minimum Condition may not be waived without the Company's consent. The
failure of Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by Parent or Purchaser concerning the events described
above will be final and binding on all parties.

15. CERTAIN LEGAL MATTERS

Except as described in this Section 15, neither Purchaser nor Parent is
aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by Purchaser's acquisition of Shares as contemplated herein
or of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
herein. Should any such approval or other action be required, Purchaser
currently contemplates that such approval or other action will be sought, except
as described below under "State Takeover Laws." While, except as otherwise
expressly described in this Section 15, Purchaser does not presently intend to
delay the acceptance for payment of or payment for Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without

33
<PAGE>
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of if
such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, Purchaser could
decline to accept for payment or pay for any Shares tendered. See Section 14 for
certain conditions of the Offer.

STATE TAKEOVER LAWS. Section 203 of the DGCL limits the ability of a
Delaware corporation to engage in business combinations with "interested
stockholders" (defined as any beneficial owner of 15% or more of the outstanding
voting stock of the corporation) unless, among other things, the corporation's
board of directors has given its prior approval to either the business
combination or the transaction which resulted in the stockholder becoming an
"interested stockholder." The Company has represented in the Merger Agreement
that it properly approved, among other things, the Offer, the Stockholder Option
Agreements, the Company Option Agreement and the Merger for purposes of Section
203 of the DGCL. Accordingly, the restrictions of Section 203 do not apply to
the transactions contemplated by the Offer and the Merger Agreement.

Section 2115 of the CGCL purports to subject certain corporations with
specified minimum contacts in California to certain provisions of the CGCL even
if that corporation is organized under the laws of a different state. For the
reasons discussed below, Parent and Purchaser believe that Section 2115 of the
CGCL should not operate so as to make such provisions applicable to the Company
and the Merger. As described under "Introduction," if the CGCL were applicable
to the Company and the Merger and if Purchaser acquired a majority (but less
than 90%) of the outstanding Shares, Purchaser believes such application of
California law could impair the ability of Parent, Purchaser and the Company to
effect the Merger. To avoid this risk, the Offer is structured so that, if
sufficient shares are not validly tendered to permit Purchaser to acquire,
pursuant to the Offer and the Company Option Agreement, at least 90% of the then
outstanding Shares, Purchaser shall either (i) extend the Offer in accordance
with (and subject to the limitations of) the Merger Agreement for a period or
periods not to exceed, in the aggregate, ten business days or (ii) amend the
Offer to reduce the number of Shares sought pursuant to the Offer, and the
number of Shares needed to satisfy the Minimum Condition, to the Revised Minimum
Number of Shares. Purchaser would not, upon the satisfaction of all conditions
and the purchase of Shares pursuant to the 49.9% Offer, own more than 50% of the
Shares then outstanding. The Company, Purchaser and Parent believe that, in such
event, the Merger could be approved by the affirmative vote of the holders of a
majority of the Shares at a special meeting called for that purpose.

A number of states throughout the United States have enacted takeover
statutes that purport, in varying degrees, to be applicable to attempts to
acquire securities of corporations that are incorporated or have assets,
stockholders, executive offices or places of business in such states. In EDGAR
V. MITE CORP., the Supreme Court of the United States held that the Illinois
Business Takeover Act, which involved state securities laws that made the
takeover of certain corporations more difficult, imposed a substantial burden on
interstate commerce and therefore was unconstitutional. In CTS CORP. V. DYNAMICS
CORP. OF AMERICA, however, the Supreme Court of the United States held that a
state may, as a matter of corporate law and, in particular, those laws
concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, PROVIDED that such laws were applicable
only under certain conditions. The state law before the Supreme Court was by its
terms applicable only to corporations that had a substantial number of
shareholders in the state and were incorporated there. Subsequently, in TLX
ACQUISITION CORP. V. TELEX CORP., a Federal district court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they applied to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in TYSON FOODS, INC. V.
MCREYNOLDS, a Federal district court in Tennessee ruled that four Tennessee
takeover statues were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit. In

34
<PAGE>
December 1988, a Federal district court in Florida held, in GRAND METROPOLITAN
PLC V. BUTTERWORTH, that the provisions of the Florida Affiliated Transactions
Act and Florida Control Share Acquisition Act were unconstitutional as applied
to corporations incorporated outside of Florida.

Except as set forth above, based on information supplied by the Company,
Purchaser does not believe that any other state takeover statutes apply (or
purport to apply) to the Offer or the Merger. Other than obtaining the approvals
necessary to remove the restrictions of Section 203 of the DGCL and structuring
the Offer (as discussed above) to avoid certain restrictions of the CGCL
Purchaser has not currently complied with any state takeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer, the Company
Option Agreement, the Stockholder Option Agreements or the Merger and nothing in
this Offer to Purchase or any action taken in connection with the Offer, the
Company Option Agreement, the Stockholder Option Agreements or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute (including the restrictions of the CGCL) is applicable to the Offer, the
Company Option Agreement, the Stockholder Option Agreements or the Merger and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, the Company Option Agreement, the Stockholder Option
Agreements or the Merger, Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state authorities,
and Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In
such case, Purchaser may not be obligated to accept for payment or pay for any
Shares tendered pursuant to the Offer.

ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar-day waiting period following the filing by Parent as the
"ultimate parent entity" of Purchaser of a Notification and Report Form with
respect to the Offer, unless Parent receives a request for additional
information or documentary material from the Antitrust Division of the
Department of Justice (the "ANTITRUST DIVISION") or the Federal Trade Commission
(the "FTC") or unless early termination of the waiting period is granted.
Parent's filing under the HSR Act will also be made with respect to Purchaser's
acquisition of Shares under the Stockholder Option Agreements. Parent is
expected to make its filing with the Antitrust Division and the FTC on or about
July 20, 1998. If, within the initial 15-day waiting period, either the
Antitrust Division or the FTC requests additional information or documentary
material from Parent, the waiting period will be extended and would expire at
11:59 P.M., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. If the acquisition of Shares is delayed pursuant
to a request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the Offer may, at the discretion
of Purchaser, be extended and, in any event, the purchase of or any payment for
Shares will be deferred until ten days following the date the request is
complied with by Parent, unless the waiting period is sooner terminated by the
FTC and the Antitrust Division. Unless the Offer is extended, any extension of
the waiting period will not give rise to any additional withdrawal rights. See
Section 4. Although the Company is required to file certain information and
documentary material with the FTC and the Antitrust Division in connection with
the Offer, neither the Company's failure to make such filings nor a request from
the FTC or the Antitrust Division for additional information or documentary
material made to the Company will extend the waiting period.

In practice, complying with a request for additional information or
documentary material can take a significant amount of time. In addition, if the
Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.

35
<PAGE>
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Purchaser or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under the antitrust laws under certain circumstances. There can be
no assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, of the result thereof. If any such action by
the FTC, the Antitrust Division or any other person should be threatened or
commenced, Purchaser may extend, terminate or amend the Offer. See Section 14
for certain conditions of the Offer. Parent and Purchaser believe that
consummation of the Offer would not violate any antitrust laws; there can be no
assurance, however, that a challenge to the Offer on antitrust grounds will not
be made or, if a challenge is made, what the result will be.

Although the parties to the Merger Agreement are required to remove or
satisfy, if reasonably practicable, any objections to the validity or legality
of the Merger, Parent is not required to satisfy any legal requirement that it
divest or hold separate any assets or business operations of Parent or the
Company.

EXON-FLORIO PROVISION. Section 721 of the Defense Production Act of 1950,
as amended (the "EXON-FLORIO PROVISION") applies to acquisitions by or with
foreign persons which could result in foreign control of persons engaged in
interstate commerce in the United States. The Exon-Florio Provision empowers the
President of the United States to prohibit or suspend mergers, acquisitions or
takeovers by or with foreign persons if the President finds, after
investigation, credible evidence that the foreign person might take action that
threatens to impair the national security of the United States and that other
provisions of existing law do not provide adequate and appropriate authority to
protect the national security. The President has designated The Committee on
Foreign Investment in the United States ("CFIUS") as the agency authorized under
the Exon-Florio Provision to receive notices and other information, to determine
whether investigations should be undertaken and to make investigations. CFIUS is
comprised of representatives of the Departments of Treasury, State, Commerce,
Defense and Justice, the Office of Management and Budget, the United States
Trade Representative's Office and the Council of Economic Advisors. Any
determination by CFIUS that an investigation is called for must be made within
30 days after its acceptance of written notification concerning a proposed
transaction. In the event that CFIUS determines to undertake an investigation,
such investigation must be completed within 45 days after such determination.
Upon completion or termination of any such investigation, the Committee must
report to the President and present its recommendation. The President then has
15 days in which to suspend or prohibit the proposed transaction or to seek
other appropriate relief.

Based upon information made available to Parent by the Company as of the
date of the Offer, Parent believes that the purchase of the Shares does not
raise any national security issues and, as a result, Parent does not currently
intend to deliver any notification to CFIUS. If notice of a proposed acquisition
is not submitted to CFIUS, the transaction remains indefinitely subject to
review by the President under the Exon-Florio Provision. If CFIUS asserts that
the Offer or Merger raises any national security issues, Purchaser will not be
obligated to accept for payment or pay for any Shares tendered pursuant to the
Offer. See Section 14.

16. CERTAIN FEES AND EXPENSES

Rhone Group LLC is acting as Dealer Manager in connection with the Offer and
is acting as exclusive financial advisor to Parent with respect to the proposed
acquisition of the Company. Parent has paid Rhone Group LLC for its services a
financial advisory fee of $250,000 and, upon consummation of the Offer, Parent
has agreed to pay Rhone Group LLC an additional fee of $750,000. Parent has also
agreed to

36
<PAGE>
reimburse Rhone Group LLC for all of its reasonable out-of-pocket expenses. In
addition, Parent has agreed to indemnify Rhone Group LLC and certain related
persons against certain liabilities and expenses in connection with its
services, including certain liabilities under the U.S. federal securities laws.

Purchaser has retained MacKenzie Partners, Inc. to act as the Information
Agent and Citibank, N.A. to act as the Depositary, in connection with the Offer.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the U.S. federal securities laws.

Except as set forth above, neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies will be reimbursed by Purchaser for customary mailing and handling
expenses incurred by them in forwarding the offering materials to their
customers.

17. MISCELLANEOUS

Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with such state statute. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Rhone Group LLC, the
Dealer Manager, or by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.

Purchaser and Parent have filed with the Commission the Schedule 14D-1
(including exhibits) pursuant to Rule 14d-3, under the Exchange Act, containing
certain additional information with respect to the Offer and may file amendments
thereto. The Company has filed with the Commission the Schedule 14D-9 (including
exhibits) containing the Company's recommendation with respect to the Offer and
other information required to be disseminated to stockholders of the Company
pursuant to Rule 14d-9. Such Statements and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the Commission in the manner set forth in Section 8 (except that they will
not be available at the regional offices of the Commission).

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

HENKEL ACQUISITION CORP. II

July 20, 1998

37
<PAGE>
ANNEX I

DIRECTORS AND EXECUTIVE OFFICERS OF
PURCHASER AND PARENT

A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER

The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of position with
Purchaser and each director and executive officer of Purchaser.

<TABLE>
<CAPTION>
POSITION WITH HCI AND PRESENT
NAME AND ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>

Dr. Christoph Kirchner Dr. Kirchner is Director Affiliated Companies Cosmetics
Henkelstrae 67 of Parent;
D-40191 Dusseldorf Chairman of the Board of Purchaser.
Germany (citizen of Germany)

Ms. Petra U. Hammerlein Ms. Hammerlein is a Senior Counsel at Parent;
Henkelstrae 67 she is also a Director of Purchaser.
D-40191 Dusseldorf (citizen of Germany)
Germany

Mr. John E. Knudson Mr. Knudson is the Vice President-Finance
2200 Renaissance Boulevard and Chief Financial Officer of Henkel
Gulph Mills, PA 19406 Corporation, and has held those positions since
1987. He is also Vice President and Treasurer
of Purchaser.
(citizen of U.S.)

Mr. Ernest G. Szoke Mr. Szoke is the Vice President and Chief
2200 Renaissance Boulevard Legal Officer of Henkel Corporation, and has
Gulph Mills, PA 19406 held those positions since 1986. He is also
President and Secretary of Purchaser.
(citizen of U.S.)
</TABLE>

A-1
<PAGE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT

The following table sets forth the name, business address (except as noted),
position with Parent and present principal occupation of each director,
executive officer and controlling person of Parent. Each individual listed below
is a citizen of Germany, except Mr. de Keersmaecker, who is a citizen of
Belgium, and Dr. Morwind, who is a citizen of the Republic of Austria.

<TABLE>
<CAPTION>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>

SUPERVISORY BOARD:

Mr. Albrecht Woeste Mr. Woeste is the owner, President and
Sontumerstrae 71 Managing Director of R. Woeste GmbH & Co.
D-42551 Velbert KG, a manufacturing company, and has held
Germany those positions since before 1991. Since 1990,
he has also been Chairman of the Supevisory
Board and Chairman of the Shareholders'
Committee of Parent.

Dr. Ulrich Cartellieri Dr. Cartellieri is a member of the Board of
Konigsalles 45/51 Management of Deutsche Bank AG, and has
40191 Dusseldorf held that position since 1981.
Germany

Mr. Hans Dietrichs Mr. Dietrichs is a member of the Works Council of Parent
Ziegeleistrae and has held that position since April 1990. He has been
39307 Genthin a member of the Supervisory Board since May 1998.
Germany

Mrs. Ursula Fairchild Mrs. Fairchild has been a photographer since
6126 Avenida Cresta before 1993.
La Jolla, California 92307
United States

Mr. Bernd Hinz Mr. Hinz has been a member of the Works Council of
Rheinstrae 48 Parent sicne 1994. He has been a member of the
51371 Leverkusen Supervisory Board sicne May 1998.
Germany

Mr. Dieter Jansen Mr. Jansen has been a member of the Works Council of the
Bahnhofstrae 25 Parent since 1975. He has been a member of the
41472 Neuss Supervisory Board since May 1998.
Germany

Mr. Benedikt-Joachim Freiherr von Herman Mr. von Herman has been a Forester since
Obere Dorfstrae 1 before 1992.
88489 Wain
Germany

Prof. Dr. h.c. Neribert Meffert Professor Meffert has been a Professor at the
Universtccbatsstrae 14-16 University of Munster since 1968 and
48143 Munster Director of the Insitute for Marketing since
Germany 1968.
</TABLE>

A-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>

SUPERVISORY BOARD (CONTINUED):
Mr. Hans Mehnert Mr. Mehnert is a member of the Works
Henkelstrae 67 Council of Parent, and has held that position
40191 Dusseldorf since 1972.
Germany

Prof. Dr. Heinz Riesenhuber Prof. Dr. Riesenhuber was the German Secretary of
Bundesforschungsminister a.D. Science and Technology between 1982 and 1993. He has
Nochtigallenwag 6 been a member of Parliament since 1976.
65929 Frankfurt
Germany

Mr. Heinrich Thorbecke Mr. Thorbecke is the owner and Managing Director of Bank
Wolfgangweg 17 Thorbecke in Geneva, Switzerland.
CH-9014 St. Gallen
Germany

Mr. Michael Vassilidias Mr. Vassilidias has been employed as a
Hauptvorstand Chemical Engineer at IG Bergbau since
Alte Dohrenerstrae 84 November 1986.
30173 Hannover
Germany

Mr. Bernhard Walter Mr. Walter has been Chairman of the Board of Managing
60301 Frankfurt Directors of Dresdner Bank
Germany AG since 1998

Mr. Jurgen Walter Mr. Walter is an officer of IG Chemie-Papier-
Konigsworther Platz 6 Keramik (Industrial union of employees in the
30167 Hannover chemical industry) and is a member of the
Germany Governing Board of IG Chemie-Papier-
Keramik, and has held such positions since
1970 and 1982, respectively.

Dr. Anneliese Wilsch-Irrgang Dr. Wilsch-Irrgang is the Chairman of the Management
Flotowstrae 2a Personnel Representatives of Parent and has been
40593 Dusseldorf employed as a dentist since November 1985.
Germany

Mr. Winfried Zander Mr. Zander was a Vice Chairman of the Works
Henkelstrae 67 Council of Parent, and has held that position
40191 Dusseldorf from June, 1994 until May 1998. Since then, he has been
Germany the Chairman of the Works Council and Vice Chairman of
the Supervisory Board. He has been a member of the Works
Council of Parent since 1984.
</TABLE>

A-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
BOARD OF MANAGEMENT:

Dr. Hans-Dietrich Winkhaus Dr. Winkhaus is the President and Chief
Henkelstrae 67 Executive Officer of Parent, and has held those
40191 Dusseldorf positions since 1992. Prior to 1992, Dr.
Germany Winkhaus served as Executive Vice President/
Deputy to the Chief Executive Officer of
Parent.

Mr. Guido de Keersmaecker Mr. De Keersmaecker is the Executive Vice
Henkelstrae 67 President-Adhesives of Parent, and has held
40191 Dusseldorf that position since May, 1993. He was the
Germany President directeur general of Henkel France
S.A. from 1991-1993.

Dr. Jochen Krautter Dr. Krautter is the Executive Vice President-
Henkelstrae 67 Metal Chemicals of Parent, and has held that
40191 Dusseldorf position since 1992. He was the Managing
Germany Director of Henkel Belgium from 1991-1992.
He was also a Director of Loctite Corporation until
1985.

Dr. Ulrich Lehner Dr. Lehner is the Chief Financial Officer of
Henkelstrae 67 Parent, and has held that position since April,
40191 Dusseldorf 1995. From 1994 through March, 1995, he
Germany was a Vice President of Parent. He was the
President, Henkel Asia Pacific, from 1991-
1993.

Dr. Klaus Morwind Dr. Morwind is Executive Vice President-
Henkelstrae 67 Detergents/Cleaning Products of
40191 Dusseldorf Parent, and has held that position since 1991.
Germany

Dr. Roland Schulz Dr. Schulz is Executive Vice President-Human
Henkelstrae 67 Resources of Parent, and has held that position
40191 Dusseldorf since January 1991.
Germany

Prof. Dr. Uwe Specht Prof. Dr. Specht is the Executive Vice
Henkelstrae 67 President-Cosmetics/Toiletries of Parent,
40191 Dusseldorf and has held that position since 1990.
Germany

Dr. Harald Wulff Dr. Wulff is an Executive Vice President of
Henkelstrae 67 Parent, and has held that position since June 1,
40191 Dusseldorf 1996. He served as President and Chief
Germany Executive Officer of Henkel Corporation from
1988 until June 1, 1996.
</TABLE>

A-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
SHAREHOLDERS' COMMITTEE:

Mr. Albrecht Woeste Mr. Woeste is the owner, President and
Henkelstrae 67 Managing Director of R. Woeste GmbH & Co.
40191 Dusseldorf KG, a manufacturing company, and has held
Germany those positions since before 1991. Since 1990,
he has also been Chairman of the Supervisory
Board and Chairman of the Shareholders'
Committee of Parent.

Mr. Ulrich Hartman Mr. Hartman is the President and Chief Executive Officer
Bennigsenplatz 1 of Veba AG and has held these positions since 1993.
40474 Dusseldorf
Germany

Chrisoph Henkel Mr. Henkel is an independent entrepreneur and
Henkelstrae 67 business executive. He has been a Director of
40191 Dusseldorf Parent since 1989. From 1991-1992, Mr.
Germany Henkel served as Vice President, Special
Projects of Henkel Corporation. He has been a
Director of Loctite Corporation since 1994. Mr. Henkel
has been Vice-Chairman of the Shareholders' Committee
since 1994.

Mr. Walter Huneke Mr. Huneke is a private investor and has been
Hohe Str.33 a real estate developer and owner of a paper
40213 Dusseldorf business since before 1991. He has been a
Germany member of the Shareholders' Committee of
Parent since 1978.

Dr. Jurgen Manchot Dr. Manchot is the Vice Chairman of the
Henkelstrae 67 Shareholders' Committee of Parent, and has
40191 Dusseldorf held that position since 1976. Dr. Manchot
Germany was a Director of Loctite Corporation from
December, 1985 until April, 1996.

Dipl. Kfm. Helmut O. Maucher Mr. Maucher is the Chairman of the Board
55 Avenue Nestle of Nestle S.A., and has held this position since 1990.
CH-1800 Vevey From 1990 until 1998, he was also the Chief Executive
Switzerland Officer of Nestle S.A.

Dr. Christa Plichta Dr. Plichta has been a physician in private
Chemin Colladon 22 practice since before 1992.
CH-1209 Geneve
Switzerland

Dr. Wolfgang Roller Dr. Roller was the Chairman of the Supervisory
Jccburgen-Ponto-Platz 1 Board of Dresdner Bank AG, and has held
60301 Frankfurt Am Main that position from 1993 until 1997. From 1971 to 1993,
Germany he was a Member and Speaker (1985) of the Board of
Managing Directors of Dresdner Bank AG.
</TABLE>

A-5
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>

SHAREHOLDERS' COMMITTEE: (CONTINUED):
Professor Dr. Dr. Helmut Sihler Prof. Dr. Sihler is a member of the
Henkelstrae 67 Shareholders' Committee of Parent, and has
40191 Dusseldorf held such position since 1992. He served as
Germany President and Chief Executive Officer of
Parent from 1980 to 1992. Prof. Dr. Sihler has
also served as, among other positions, Chairman of the
Supervisory Board of Deutsche Telekom AG since July
1996; and Chairman of the Supervisory Board of
Dr.Ing.h.c. F. Porsche AG since March 1993.
</TABLE>

A-6
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal, certificates for Shares and any other required documents should
be sent or delivered by each stockholder of the Company or his or her broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of its addresses set forth below.

THE DEPOSITARY FOR THE OFFER IS:

CITIBANK, N.A.

<TABLE>
<S> <C> <C>
BY HAND: BY MAIL: BY OVERNIGHT COURIER:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window c/o Citicorp Data Distribution, c/o Citicorp Data Distribution,
111 Wall Street, 5th Floor Inc. Inc.
New York, New York 10043 P.O. Box 7072 404 Sette Drive
Paramus, New Jersey 07653 Paramus, New Jersey 07652
</TABLE>

FACSIMILE FOR ELIGIBLE INSTITUTIONS: (201) 262-3240
TO CONFIRM FAX ONLY: (800) 422-2077

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at the telephone numbers and addresses below.
Additional copies of this Offer to Purchase, the Letter of Transmittal and other
tender offer material may be obtained from the Information Agent. You may also
contact your broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Offer.

THE INFORMATION AGENT FOR THE OFFER IS:

abcdef
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)

CALL TOLL-FREE: (800) 322-2885

THE DEALER MANAGER FOR THE OFFER IS:

[LOGO]

1330 Avenue of the Americas
New York, New York 10019
(212) 841-1275 (Call Collect)

<PAGE>
LETTER OF TRANSMITTAL

TO TENDER SHARES OF COMMON STOCK

DEP CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 20, 1998

HENKEL ACQUISITION CORP. II
A WHOLLY-OWNED SUBSIDIARY OF

HENKEL KGAA
-------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, AUGUST 14, 1998,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

THE DEPOSITARY FOR THE OFFER IS:
CITIBANK, N.A.

FACSIMILE FOR ELIGIBLE INSTITUTIONS: (201) 262-3240
TO CONFIRM FAX ONLY: (800) 422-2077
</TABLE>

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.

THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

This Letter of Transmittal is to be completed by stockholders of DEP
Corporation (the "COMPANY") either if certificates ("SHARE CERTIFICATES")
evidencing Shares (as defined below) are to be forwarded herewith or if delivery
of Shares is to be made by book-entry transfer to the account of Citibank, N.A.
(the "DEPOSITARY") at The Depository Trust Company (the "BOOK-ENTRY TRANSFER
FACILITY") pursuant to the book-entry transfer procedures described in Section 3
of the Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.

Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other documents required hereby
to the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase) or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis and who wish to tender their Shares must do so
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. See Instruction 2.

THE INFORMATION AGENT FOR THE OFFER IS:
abcdef
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)

CALL TOLL FREE: (800) 322-2885

THE DEALER MANAGER FOR THE OFFER IS:

[LOGO]
1330 Avenue of the Americas
New York, New York 10019
(212) 841-1275 (call collect)
<PAGE>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________

/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED SHARE(S) TENDERED (ATTACH
HOLDER(S) (PLEASE FILL IN, IF BLANK) ADDITIONAL SCHEDULE, IF NECESSARY)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------

<CAPTION>
TOTAL NUMBER OF
SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------

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

-------------------------------------------------------
TOTAL SHARES
</TABLE>

* Need not be completed by stockholders making delivery of Shares by
book-entry transfer.

** Unless otherwise indicated, it will be assumed that all Shares evidenced by
any certificate delivered to the Depositary are being tendered. See
Instruction 4.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.

PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.

Ladies and Gentlemen:

The undersigned hereby tenders to Henkel Acquisition Corp. II, a Delaware
corporation ("PURCHASER"), the above-described shares of Common Stock, par value
$0.01 per share (the "SHARES"), of DEP Corporation, a Delaware corporation (the
"COMPANY"), pursuant to Purchaser's offer to purchase all outstanding Shares,
and all benefits that may inure to holders thereof, for a purchase price of
$5.25 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
July 20, 1998 (the "OFFER TO PURCHASE"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, as they may be amended
from time to time, together constitute the "OFFER"). The undersigned understands
that Purchaser reserves the right to transfer or assign, in whole at any time or
in part from time to time, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve Purchaser of its obligations
under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Capitalized terms not defined herein shall have
the meanings attributed to them in the Offer to Purchase.

Subject to, and effective upon, acceptance for payment of, the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares on or after July 13, 1998
(collectively, "DISTRIBUTIONS")), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (a) deliver Share Certificates evidencing such Shares and all Distributions,
or transfer ownership of such Shares and all Distributions on the account books
maintained by the Book-Entry Transfer Facility, together, in either case, with
all accompanying evidence of transfer and authenticity, to or upon the order of
Purchaser, (b) present such Shares and all Distributions for transfer on the
Company's books and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares and all Distributions, all in accordance
with the terms of the Offer.

By executing this Letter of Transmittal, the undersigned irrevocably
appoints Ms. Petra Hammerlein and Mr. Ernest G. Szoke, and each of them, as
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to the
Shares tendered by the undersigned and accepted for payment by Purchaser (and
any and all Distributions). All such powers of attorney and proxies shall be
considered coupled with an interest in the tendered Shares (and Distributions).
This appointment will be effective if, when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior powers of attorney and proxies given by the
undersigned with respect to such Shares and Distributions will, without further
action, be revoked, and no subsequent powers of attorney or proxies may be given
(and if given will be deemed not to be effective). The individuals named above
as attorneys-in-fact and proxies will, with respect to the Shares and
Distributions for which the appointment is effective, be empowered to exercise
all voting and other rights of the undersigned as they in their sole discretion
may deem proper at any annual, special, adjourned or postponed meeting of the
Company's stockholders, by written consent or otherwise. The undersigned
understands that Purchaser reserves the right to require that, in order for
Shares or Distributions to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser must be able to
exercise full voting rights with respect to such Shares and Distributions.
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions and that when the same are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price,
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.

No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns and trustees in
bankruptcy or other legal representatives of the undersigned. Except as stated
in the Offer to Purchase, this tender is irrevocable.

The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer, including, without limitation, the undersigned's representation and
warranty that the undersigned owns the Shares being tendered. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.

Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions," please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased, by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not accept for payment any of the Shares tendered
hereby.
<PAGE>
- --------------------------------------------------------------------------------
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 10.
Number of Shares represented by the lost or destroyed
certificates: ________
- --------------------------------------------------------------------------------

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

SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)

To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be issued in the name of someone other than the undersigned
or if Shares tendered by book-entry transfer which are not purchased are to
be returned by credit to an account maintained at the Book-Entry Transfer
Facility other than that designated above.

Issue: / / Check / / Share Certificate (s) to:
Name: ______________________________________________________________________
(Print)
Address: ___________________________________________________________________
___________________________________________________________________________
(Include Zip Code)
___________________________________________________________________________
(Taxpayer Identification or Social Security Number)

/ / Credit unpurchased Shares tendered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:

/ / The Depository Trust Company
___________________________________________________________________________
(Account Number)

(See Substitute Form W-9)

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

SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)

To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to the
undersigned at an address other than that shown under "Description of Shares
Tendered."

Deliver: / / Check / / Share Certificate (s) to:

Name: ______________________________________________________________________
(Print)

Address: ___________________________________________________________________
___________________________________________________________________________
(Include Zip Code)

- ------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal if (a) this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of these instructions, includes
any participant in the Book-Entry Transfer Facility's systems whose name appears
on a security position listing as the owner of Shares) of the Shares tendered
herewith and such registered holder(s) has not completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" above or (b) such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program or by any other "Eligible Guarantor
Institution" as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (an "ELIGIBLE INSTITUTION"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5. If Share Certificates are registered in
the name of a person other than the signer of this Letter of Transmittal, or if
payment is to be made or Share Certificates not accepted for payment are to be
returned to a person other than the registered holder of the Share Certificates
surrendered, the tendered Share Certificate(s) must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name or
name(s) of the registered holders or owners appear on the Share Certificate(s),
with the signatures on such Share Certificate(s) or stock powers guaranteed as
aforesaid. See Instruction 5.

2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in the section entitled "Procedure for Tendering Shares" of
the Offer to Purchase. Share Certificates evidencing all tendered Shares, or
confirmation of a book-entry transfer of such Shares (a "BOOK-ENTRY
CONFIRMATION"), if such procedure is available, into the Depositary's account at
the Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3 of the Offer to Purchase, together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message, as defined below) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in the Offer to Purchase).
If Share Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery. Stockholders whose Share Certificates are not immediately
available, who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis may tender
their Shares pursuant to the guaranteed delivery procedure described in Section
3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be
made by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser herewith, must be received by the Depositary prior to the Expiration
Date; and (iii) the Share Certificates, in proper form for transfer, or a
confirmation of a book-entry transfer of such Shares, if such procedure is
available, into the Depositary's account at the Book-Entry Transfer Facility,
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message), and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three trading days after the date of execution of the Notice
of Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase.
A "trading day" is any day on which the Nasdaq Small Cap Market is open for
business. The term "AGENT'S MESSAGE" means a message, transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of this Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.

No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.

3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.

4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share Certificates delivered
to the Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions," as soon as practicable after the expiration or termination of the
Offer. All Shares evidenced by Share Certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.

5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without any alteration, enlargement or change
whatsoever.

If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal. If any of the Shares tendered
hereby are registered in the names of different holders, it will be necessary to
complete, sign and submit as many separate Letters of Transmittal as there are
different registrations of such Shares.
<PAGE>
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of
a person other than the registered holder(s), in which case the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appears(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.

If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.

6. STOCK TRANSFER TAXES. Except as provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price of any Shares purchased is to be made to, or if Share
Certificates evidencing Shares not tendered or not purchased are to be issued in
the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered owner(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
satisfactory evidence to Purchaser of the payment of such taxes or exemption
therefrom is submitted.

EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES EVIDENCING THE
SHARES TENDERED HEREBY.

7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered," the appropriate boxes on this Letter
of Transmittal must be completed. Stockholders delivering Shares tendered hereby
by book-entry transfer may request that Shares not purchased be credited to such
account maintained at the Book-Entry Transfer Facility as such stockholder may
designate in the box entitled "Special Payment Instructions." If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated herein as
the account from which such Shares were delivered. See Instruction 1.
<PAGE>
8. SUBSTITUTE FORM W-9. Each tendering stockholder (or other payee) is
required to provide the Depositary with a correct Taxpayer Identification Number
("TIN") and certain other information on the Substitute Form W-9, which is
provided under "Important Tax Information" below, and to certify whether such
stockholder (or other payee) is subject to backup withholding of federal income
tax. If a tendering stockholder has been notified by the Internal Revenue
Service that such stockholder is subject to backup withholding, such stockholder
must cross out item (2) of the certification box of the Substitute Form W-9,
unless such stockholder has since been notified by the Internal Revenue Service
that such stockholder is no longer subject to backup withholding. Failure to
provide the information on the Substitute Form W-9 may subject the tendering
stockholder (or other payee) to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such stockholder. If
the tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute Form
W-9, sign and date the Substitute Form W-9, and complete the additional
Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% on all payments thereafter to such
stockholder (or other payee) until a TIN is provided to the Depositary.

9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent or the Dealer Manager at their
respective addresses or telephone numbers set forth herein. Additional copies of
the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed
Delivery and the Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.

10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares so lost, destroyed or stolen. The Depositary will, in turn, notify the
Company's transfer agent, who will initiate lost stock proceedings. This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost, destroyed or stolen certificates have been followed.

11. WAIVER OF CONDITIONS. The Conditions of the Offer may be waived by
Purchaser, in whole or in part, at any time in its sole discretion in the case
of any Shares tendered.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE
GUARANTEES, OR AN AGENT'S MESSAGE (TOGETHER WITH SHARE CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).

IMPORTANT TAX INFORMATION

Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 above. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
or other payee may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder or other payee
with respect to Shares purchased pursuant to the Offer may be subject to backup
withholding.

Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.

If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder or other payee. Backup withholding is not
an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.

PURPOSE OF SUBSTITUTE FORM W-9

To prevent backup withholding on payments that are made to a stockholder or
other payee with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN (or the TIN of any other payee) by completing the form above certifying that
the TIN provided on Substitute Form W-9 is correct (or that such stockholder is
awaiting a TIN), and that (i) such stockholder is exempt from backup
withholding, (ii) such stockholder has not been notified by the Internal Revenue
Service that such stockholder is subject to backup withholding as a result of a
failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified such stockholder that such stockholder is no longer subject
to backup withholding.

WHAT NUMBER TO GIVE THE DEPOSITARY

The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering Stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, sign and date the Substitute Form W-9, and complete the
additional Certificate of Awaiting Taxpayer Identification Number. If "Applied
For" is written in Part I and the Depositary is not provided with a TIN by the
time of payment, the Depositary will withhold 31% of all payments to such
stockholder until a properly certified TIN is provided to the Depositary.
<PAGE>
- --------------------------------------------------------------------------------

IMPORTANT
STOCKHOLDERS: SIGN HERE
(Also Please Complete Substitute Form W-9 Included Herein)

X: _________________________________________________________________________

X: _________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)

Dated: ______________, 199__

(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on Share Certificates or, if tendered by a participant in a Book-Entry
Transfer Facility by the participant exactly as such participant's name
appears on a security position listing as the owner of the Shares or by a
person(s) authorized to become the registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please provide the
following information. See Instruction 5.)

Name(s): ___________________________________________________________________

____________________________________________________________________________
(PLEASE PRINT)

Capacity (full title): _____________________________________________________

Address: ___________________________________________________________________

____________________________________________________________________________
(INCLUDE ZIP CODE)

Area Code and Telephone No.: _______________________________________________

Taxpayer Identification or Social Security No.: ____________________________

GUARANTEE OF SIGNATURE(S)
(If required--See Instructions 1 and 5)

Authorized Signature: ______________________________________________________

Name (Please Print): _______________________________________________________

Name of Firm: ______________________________________________________________

Address: ___________________________________________________________________

____________________________________________________________________________
(INCLUDE ZIP CODE)

Area Code and Telephone Number: ____________________________________________

Dated: ______________, 199__

FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION
GUARANTEE IN SPACE BELOW.

- --------------------------------------------------------------------------------
<PAGE>

<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CITIBANK, N.A.

- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification Number -- Social Security Number OR Employee
Identification Number
FORM W-9 For all accounts, enter taxpayer identification
DEPARTMENT OF THE TREASURY number in the box at right. (For most
INTERNAL REVENUE SERVICE individuals, this is your social security
number. If you do not have a number, see (If awaiting TIN write
PAYER'S REQUEST FOR TAXPAYER OBTAINING A NUMBER in the enclosed GUIDELINES). "Applied For")
IDENTIFICATION NUMBER (TIN) Certify by signing and dating below.
NOTE: If the account is in more than one name,
see chart in the enclosed GUIDELINES to
determine which number to give the Payer.
- -------------------------------------------------------------------------------------------------------------------------
PART II -- For Payees exempt from backup withholding, see the enclosed GUIDELINES and
complete as instructed therein.
- -------------------------------------------------------------------------------------------------------------------------
PART III -- CERTIFICATION -- Under penalties of perjury, I certify that:

(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued
to me); and

(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b) I have not been
notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.

CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you received another notification from the IRS
that you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the
enclosed GUIDELINES).

Signature Date
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART I OF THIS SUBSTITUTE FROM W-9

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, notwithstanding the information I provided in Part III of the
Substitute Form W-9 (and the fact that I have completed this Certificate of
Awaiting Taxpayer Identification Number), all reportable payments made to me
thereafter will be subject to a 31% backup withholding tax until I provide a
properly certified taxpayer identification number.

<TABLE>
<S> <C>
Signature Date
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.

<PAGE>
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
FOR
TENDER OF SHARES OF COMMON STOCK
OF
DEP CORPORATION
TO
HENKEL ACQUISITION CORP. II
A WHOLLY-OWNED SUBSIDIARY OF
HENKEL KGAA

This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if (i) certificates ("SHARE
CERTIFICATES") evidencing shares of Common Stock, par value $0.01 per share (the
"SHARES"), of DEP Corporation, a Delaware corporation (the "COMPANY"), are not
immediately available, (ii) time will not permit all required documents to reach
Citibank, N.A. (the "DEPOSITARY") prior to the Expiration Date (as defined in
the Offer to Purchase (as defined below)) or (iii) the procedures for book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand or overnight courier or transmitted by
facsimile transmission or mailed to the Depositary. See Section 3 of the Offer
to Purchase. All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Offer to Purchase.

TO: CITIBANK, N.A.

<TABLE>
<S> <C> <C>
BY HAND: BY MAIL: BY OVERNIGHT COURIER:

Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window c/o Citicorp Data Distribution, c/o Citicorp Data Distribution,
111 Wall Street, 5th Inc. Inc.
Floor P.O. Box 7072 404 Sette Drive
New York, New York 10043 Paramus, New Jersey 07653 Paramus, New Jersey 07652
</TABLE>

FACSIMILE FOR ELIGIBLE INSTITUTIONS: (201) 262-3240
TO CONFIRM FAX ONLY: (800) 422-2077

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.

THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
(AS DEFINED IN THE OFFER TO PURCHASE) UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.

The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal (or, in
the case of book-entry transfers, an Agent's Message) and certificates for
Shares to the Depositary within the time period shown herein. Failure to do so
could result in a financial loss to such Eligible Institution.
<PAGE>
Ladies and Gentlemen:

The undersigned hereby tenders to Henkel Acquisition Corp. II, a Delaware
corporation ("PURCHASER"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated July 20, 1998 (the "OFFER TO PURCHASE"),
and the related Letter of Transmittal (which, together with any amendments or
supplements thereof, collectively constitute the "OFFER"), receipt of which is
hereby acknowledged, the number of Shares specified below pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.

<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
Certificate Nos. (if applicable):
(Please Type or Print)
Check box if Shares will be delivered by Address(es):
book-entry transfer:
/ / The Depository Trust Company (Include Zip Code)
Account Number: Area Code and Tel. No.:
Signature(s):
Dated:
</TABLE>

THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)

The undersigned, an Eligible Institution (as defined in the Offer to
Purchase), hereby guarantees to deliver to the Depositary the certificates
evidencing the Shares tendered hereby, in proper form for transfer, or
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to
such Shares, in either case together with delivery of a Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message (as defined in the
Offer to Purchase), and any other documents required by the Letter of
Transmittal, all within three trading days after the date of execution of this
Notice of Guaranteed Delivery. A "trading day" is any day on which the Nasdaq
Small Cap Market is open for business.

<TABLE>
<S> <C>
Name of Firm: (Authorized Signature)
Address: Name:
(Please Print or Type)
Title:
(Include Zip Code)
Area Code and Tel. No.: Date:
</TABLE>

NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT ONLY TOGETHER WITH YOUR LETTER OF
TRANSMITTAL.

<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEP CORPORATION
AT
$5.25 NET PER SHARE
BY
HENKEL ACQUISITION CORP. II
A WHOLLY-OWNED SUBSIDIARY OF
HENKEL KGAA

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, AUGUST 14, 1998, UNLESS THE OFFER IS EXTENDED.

July 20, 1998

To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:

We have been appointed by Henkel Acquisition Corp. II, a Delaware
corporation ("PURCHASER") and a wholly-owned subsidiary of Henkel KGaA, a
Kommanditgesellschaft auf Aktien (a partnership limited by shares) organized
under the laws of the Federal Republic of Germany ("PARENT"), to act as Dealer
Manager in connection with Purchaser's offer to purchase for cash all
outstanding shares of Common Stock, $0.01 par value (the "SHARES"), of DEP
Corporation, a Delaware corporation (the "COMPANY"), at $5.25 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated July 20, 1998 (the "OFFER TO PURCHASE"), and in the
related Letter of Transmittal (which, together with any supplements or
amendments thereto, collectively constitute the "OFFER") enclosed herewith.

Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares in your name or in the name of your nominee.

Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:

1. The Offer to Purchase.

2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.

3. A letter to stockholders of the Company from Robert H. Berglass,
Chairman and President, of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to the
stockholders of the Company.

4. The Notice of Guaranteed Delivery to be used to accept the Offer if
neither of the two procedures for tendering Shares set forth in Section 3 of
the Offer to Purchase can be completed on a timely basis.

5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.

6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.

7. A return envelope addressed to Citibank, N.A., the Depositary.
<PAGE>
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, AUGUST 14, 1998, UNLESS THE OFFER
IS EXTENDED.

Please note the following:

1. The tender price is $5.25 per Share, net to the seller in cash.

2. The Offer is being made for all outstanding Shares. The Offer is being
made pursuant to an Agreement and Plan of Merger, dated as of July 13, 1998 (the
"MERGER AGREEMENT"), among Parent, Purchaser and the Company. The Merger
Agreement provides, among other things, for the making of the Offer by Purchaser
and further provides that, following the Offer and subject to the satisfaction
or waiver of certain conditions, Purchaser will be merged with and into the
Company (the "MERGER"), with the Company surviving the Merger as a wholly owned
subsidiary of Parent. As a result of the Merger, each outstanding Share (other
than Shares held by Parent, Purchaser or any subsidiary of Parent, Purchaser or
the Company, Shares held in the treasury of the Company and Shares held by
stockholders who have properly exercised their appraisal rights under Delaware
law) will be converted at the effective time of the Merger into the right to
receive $5.25 in cash, without interest.

3. Concurrently with the execution of the Merger Agreement, Purchaser and
Parent entered into stockholder option agreements dated as of July 13, 1998
(together, the "STOCKHOLDER OPTION AGREEMENTS"), with Robert H. Berglass, The
Berglass Charitable Remainder Trust UDT 7/8/98, and The Berglass 1995
Irrevocable Trust UDT 6/27/95 (the "OPTION GRANTORS"), the owners of an
aggregate of 2,161,460 Shares (representing approximately 31.4% of the
outstanding Shares) (the "OPTION SHARES"). Pursuant to the Stockholder Option
Agreements, the Option Grantors have (i) agreed to validly tender (and not to
withdraw) all such Option Grantor's Shares in the Offer, (ii) granted Parent a
proxy with respect to the voting of such Shares in favor of the Merger upon the
terms and subject to the conditions set forth therein and (iii) granted
Purchaser an irrevocable option (collectively, the "STOCKHOLDER OPTIONS") to
purchase all of such Option Grantor's Shares at a price of $5.25 per Share,
subject to adjustment in certain events. The Stockholder Options are
exercisable, subject to certain conditions set forth in the Stockholder Option
Agreements, following termination of the Offer or the Merger Agreement in
certain circumstances generally relating to the existence of a proposal by
another person to acquire the Company. See Section 12 of the Offer to Purchase.

4. Concurrently with the execution of the Merger Agreement, Parent,
Purchaser and the Company entered into a stock option agreement, dated July 13,
1998 (the "COMPANY OPTION AGREEMENT") pursuant to which the Company has granted
Purchaser an irrevocable option (the "TOP-UP OPTION"), exercisable if Purchaser
acquires at least 85% of the then outstanding Shares pursuant to the Offer, to
purchase that number of Shares equal to the lowest number of Shares that, when
added to the number of Shares owned by Purchaser at the time of such exercise,
shall constitute one Share more than 90% of the outstanding Shares (assuming
issuance of Shares pursuant to the Top-Up Option) at a price equal to the $5.25
per Share. Purchaser may exercise the Top-Up Option in whole but not in part at
any one time after the occurrence of a Top-Up Exercise Event (as defined in the
Offer to Purchase) and prior to the occurrence of a Top-Up Termination Event (as
defined in the Offer to Purchase). See Section 12 of the Offer to Purchase.

5. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES
THAT, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT AND ITS AFFILIATES
AND THE SHARES PURCHASER HAS THE IMMEDIATE RIGHT TO ACQUIRE PURSUANT TO THE TOP-
UP OPTION DESCRIBED ABOVE, CONSTITUTES AT LEAST NINETY PERCENT (90%) OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
CONTAINED IN THE OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14 OF
THE OFFER TO PURCHASE.

2
<PAGE>
6. If the Minimum Condition is not satisfied on any expiration date of the
Offer, but there shall have been validly tendered and not withdrawn as of such
expiration date a majority of the outstanding Shares on a fully diluted basis,
Purchaser shall either (i) extend the Offer for a period or periods not to
exceed, in the aggregate, ten business days, or (ii) (a) amend the Offer to
reduce the number of Shares sought pursuant to the Offer, and the number of
Shares needed to satisfy the Minimum Condition, to that number of Shares which,
when added to the Shares then owned directly or indirectly by Purchaser, would
equal forty-nine and nine-tenths percent (49.9%) of the Shares then outstanding
(the "REVISED MINIMUM NUMBER"), (b) extend the Offer for a period of not less
than ten business days following the public announcement of such amendment and
(c) if, at the expiration of such extension, a greater number of Shares is
tendered into the 49.9% offer and not withdrawn, purchase, on a PRO RATA basis,
the Revised Minimum Number of Shares. See Introduction and Section 1 of the
Offer to Purchase.

7. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
ITS STOCKHOLDERS AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.

8. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Friday, August 14, 1998, unless the Offer is extended.

9. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes with respect to the transfer and sale of Shares to
it or its order pursuant to the Offer. However, any tendering stockholder or
other payee who fails to complete and sign the Substitute Form W-9 that is
included in the Letter of Transmittal may be subject to a required backup
federal income tax withholding of 31% of the gross proceeds payable to such
holder or other payee pursuant to the Offer. See Sections 3 and 5 of the Offer
to Purchase.

10. In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares (or a timely Book-Entry Confirmation (as defined in Section 3 of the
Offer to Purchase) with respect to such Shares), (ii) the Letter of Transmittal
(or a manually signed facsimile thereof) properly completed and duly executed,
with all required signature guarantees or an Agent's Message (as defined in
Section 2 of the Offer to Purchase), and (iii) all other documents required by
the Letter of Transmittal.

In order to take advantage of the Offer, (i) a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message and any other required
documents should be sent to the Depositary and (ii) certificates representing
the tendered Shares or a timely Book-Entry Confirmation should be delivered to
the Depositary in accordance with the instructions set forth in the Letter of
Transmittal and the Offer to Purchase.

If holders of the Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures specified in Section 3
of the Offer to Purchase.

Purchaser will not pay any fees or commission to any broker, dealer or other
person for soliciting tenders of Shares pursuant to the Offer (other than the
Dealer Manager, the Depositary and the Information Agent, as described in the
Offer to Purchase). Purchaser will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or will cause to be paid
any transfer taxes payable on the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.

3
<PAGE>
Any Inquiries you may have with respect to the Offer should be addressed to
MACKENZIE PARTNERS, INC., THE INFORMATION AGENT FOR THE OFFER, AT 156 FIFTH
AVENUE, NEW YORK, NEW YORK 10010, (800) 322-2885, or the Dealer Manager, RHONE
GROUP LLC, 1330 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019, (212) 841-1275
(CALL COLLECT).

Requests for additional copies of the enclosed materials may be directed to
the Information Agent at the above address and telephone number.

Very truly yours,

[LOGO]

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

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEPOSITARY,
THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY STATEMENT
OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.

<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEP CORPORATION
AT
$5.25 NET PER SHARE

BY
HENKEL ACQUISITION CORP. II
A WHOLLY-OWNED SUBSIDIARY
OF
HENKEL KGAA

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, AUGUST 14, 1998, UNLESS THE OFFER IS EXTENDED.

July 20, 1998

To Our Clients:

Enclosed for your consideration are the Offer to Purchase, dated July 20,
1998 (the "OFFER TO PURCHASE"), and the related Letter of Transmittal (which
together constitute the "OFFER") relating to the offer by Henkel Acquisition
Corp. II, a Delaware corporation ("PURCHASER") and a wholly-owned subsidiary of
Henkel KGaA, a Kommanditgesellschaft auf Aktien (a partnership limited by
shares) organized under the laws of the Federal Republic of Germany ("PARENT"),
to purchase all outstanding shares of Common Stock, par value $0.01 per share
(the "SHARES"), of DEP Corporation, a Delaware corporation (the "COMPANY"), at a
purchase price of $5.25 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase and in the related Letter of Transmittal enclosed herewith. Also
enclosed is the Letter to Stockholders of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with Securities
and Exchange Commission by the Company.

WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.

Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.

Please note the following:

1. The tender price is $5.25 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.

2. The Offer is being made for all outstanding Shares.
<PAGE>
3. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED
THAT THE OFFER AND THE MERGER (AS DEFINED BELOW) ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.

4. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of July 13, 1998 (the "MERGER AGREEMENT"), among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, for the
making of the Offer by Purchaser and further provides that, following the
Offer and subject to the satisfaction or waiver of certain conditions,
Purchaser will be merged with and into the Company (the "MERGER"), with the
Company surviving the Merger as a wholly owned subsidiary of Parent. As a
result of the Merger, each outstanding Share (other than Shares held by
Parent, Purchaser or any subsidiary of Parent, Purchaser or the Company,
Shares held in the treasury of the Company and Shares held by stockholders
who have properly exercised their appraisal rights under Delaware law) will
be converted at the effective time of the Merger into the right to receive
$5.25 in cash, without interest.

5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn at the expiration of the Offer that
number of Shares that, when added to the Shares beneficially owned by Parent
and its affiliates and the Shares Purchaser has the immediate right to
acquire pursuant to the Company Option Agreement (as defined in the Offer to
Purchase), constitutes at least ninety percent (90%) of the outstanding
Shares on a fully diluted basis on the date of purchase (the "MINIMUM
CONDITION"). The Offer is also subject to certain other conditions. See
Section 1 and Section 14 of the Offer to Purchase.

6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer.

7. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, August 14, 1998, unless the Offer is extended.

8. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by Citibank, N.A. (the "DEPOSITARY")
of (a) certificates evidencing such Shares or timely confirmation of the
book-entry transfer of such Shares into the account maintained by the
Depositary at The Depository Trust Company, pursuant to the procedures set
forth in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly
executed, with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase), in connection with a book-entry delivery,
and (c) any other documents required by the Letter of Transmittal.

If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form contained in this letter. If you authorize the tender
of your Shares, all such Shares will be tendered unless otherwise specified on
the instruction form. An envelope to return your instructions to us is enclosed.
Your instructions should be forwarded to us in ample time to permit us to submit
a tender on your behalf prior to the expiration of the Offer.

The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
in any such jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on behalf of Purchaser by Rhone Group LLC, the Dealer Manager for the
Offer, or one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction.

2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEP CORPORATION
BY
HENKEL ACQUISITION CORP. II
A WHOLLY-OWNED SUBSIDIARY
OF
HENKEL KGAA

The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated July 20, 1998 (the "OFFER TO PURCHASE"), and the related Letter
of Transmittal (which together with the Offer to Purchase constitute the
"OFFER") in connection with the offer by Henkel Acquisition Corp. II, a Delaware
corporation ("PURCHASER") and a wholly-owned subsidiary of Henkel KGaA, a
Kommanditgesellschaft auf Aktien (a partnership limited by shares) organized
under the laws of the Federal Republic of Germany, to purchase all outstanding
shares of Common Stock, par value $0.01 per share (the "SHARES"), of DEP
Corporation, a Delaware corporation, at a purchase price of $5.25 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase.

This will instruct you to tender to Purchaser the number of Shares indicated
below (or if no number is indicated below, all Shares) which are held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.

Number of Shares to be Tendered: ________________ Shares*

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

SIGN BELOW

Account Number:__________________________ Signature(s)_________________________

Dated: ___________________________________________________________________, 1998

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

PLEASE TYPE OR PRINT NAME(S)

- --------------------------------------------------------------------------------
PLEASE TYPE OR PRINT ADDRESS(ES) HERE

- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER

- --------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
- ------------------------------

* Unless otherwise indicated, it will be assumed that you instruct us to
tender all Shares held by us for your account.

<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.

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

<TABLE>
<CAPTION>
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<C> <S> <C>
- -------------------------------------------------------

1. Individual The individual

2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)

3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)

4. a. The usual revocable The grantor-trustee(1)
savings trust (grantor
is also trustee)

b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under state law

5. Sole proprietorship The owner(3)
</TABLE>

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

<TABLE>
<CAPTION>
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<C> <S> <C>
-------------------------------------------------------

6. A valid trust, estate, The legal entity(4)
or pension trust

7. Corporate The corporation

8. Association, club, The organization
religious, charitable,
educational or other
tax-exempt organization

9. Partnership The partnership

10. A broker or registered The broker or nominee
nominee

11. Account with the The public entity
Department of Agricul-
ture in the name of a
public entity (such as a
state or local govern-
ment, school district,
or prison) that receives
agricultural program
payments

</TABLE>

_______________________________________ _______________________________________

(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.

(2) Circle the minor's name and furnish the minor's social security number.

(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number (if you have one).

(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)

NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
OBTAINING A NUMBER

If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number, or Form
SS-4, Application for an Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply for
a number. United States resident aliens who cannot obtain a social security
number must apply for an ITIN (Individual Taxpayer Identification Number) on
Form W-7.

PAYEES EXEMPT FROM BACKUP WITHHOLDING

Payees specifically exempted from backup withholding on payments of interest,
dividends and with respect to broker transactions include the following:

- A corporation.

- A financial institution.

- An organization exempt from tax under section 501(a), or an individual
retirement plan.

- The United States or any agency or instrumentality thereof.

- A state, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.

- A foreign government, or any a political subdivision, agency or
instrumentality thereof.

- An international organization or any agency or instrumentality thereof.

- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.

- A real estate investment trust.

- A common trust fund operated by a bank under section 584(a).

- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947.

- An entity registered at all times under the Investment Company Act of
1940.

- A foreign central bank of issue.

Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:

- Payments to nonresident aliens subject to withholding under section 1441.

- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident alien partner.

- Payments of patronage dividends not paid in money.

- Payments made by certain foreign organizations.

- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the American
Society of Corporate Secretaries, Inc., Nominee List.

Payments of interest not generally subject to backup withholding include the
following:

- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.

- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).

- Payments described in section 6049(b)(5) to nonresident aliens.

- Payments on tax-free covenant bonds under section 1451.

- Payments made by certain foreign organizations.

- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the American
Society of Corporate Secretaries, Inc., Nominee List.

Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding.

FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.

PENALTIES

(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.

(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.

(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE

<PAGE>
DEP CORPORATION
NEWS RELEASE

FOR IMMEDIATE RELEASE

<TABLE>
<S> <C> <C>
DEP Corporation International Michael Rolf Fischer
2101 East Via Arado Contact: Corporate Communications
Rancho Dominquez, CA 90220 Phone: 011-49-211-797-4191

U.S. Contact: D. Lee Johnson
DEP Corporation
Phone: 310/604-0777

Ann Julsen
Sitrick and Company
Phone: 310/788-2850
</TABLE>

HENKEL TO ACQUIRE DEP CORPORATION/USA
HENKEL TO ENTER THE U.S. COSMETICS MARKET

DUSSELDORF/LOS ANGELES--JULY 14, 1998--Henkel KGaA, Dusseldorf, Germany and
DEP Corporation (NASDAQ SMALLCAP MARKET: DEPCCM), Los Angeles, California, USA
announced today that they had entered into a merger agreement for U.S. $93
million providing for Henkel's acquisition of DEP, which includes debt of
approximately U.S. $53 million.

In accordance with the merger agreement, a subsidiary of Henkel will make a
cash tender offer to purchase all of DEP's approximately 6.9 million outstanding
shares of common stock for U.S. $5.25 per share, which offer is expected to
commence by July 20, 1998. Any shares not purchased in the tender offer will be
acquired in a second-step merger for U.S. $5.25 per share in cash.

Berglass family stockholders owning an aggregate of approximately one-third
of DEP's common stock have agreed to tender their shares into Henkel's tender
offer and to grant Henkel an irrevocable option to buy their shares, exercisable
in certain circumstances.

DEP Corporation is engaged in developing, formulating, manufacturing,
marketing and distributing a wide range of trademarked personal care products.
With its 12 main brands including the market leading hair styling lines of L.A.
Looks and DEP are sold in more than 100,000 outlets throughout the United
States. For the year ended July 31, 1997, DEP Corporation realized sales of U.S.
$115 million and employed 300 people.

Robert Berglass, President and CEO of DEP Corporation, commented on the
transaction: "We are delighted with the merger of Henkel and DEP Corporation.
Henkel's proficiency and experience in international marketing, coupled with
DEP's marketing expertise and brand recognition in the United States, will
establish the combined entities as an important presence in this personal care
products marketplace. Henkel also offers an exciting pipeline of innovative
products and adds the financial resources of an international group that are
necessary to remain competitive in this industry. We believe that the merger
will prove beneficial to the future growth and success of DEP, its employees and
customers."

Henkel was founded in 1876 and is headquartered in Dusseldorf, Germany. The
Henkel Group is a worldwide specialist in applied chemistry, consisting of more
than 330 companies operating in over 60 countries. Henkel is the largest global
producer of oleochemical products based on renewable raw

1
<PAGE>
materials. It also holds global market leadership positions in adhesives and
surface technologies. The detergents/household cleansers and
cosmetics/toiletries divisions have market leader positions in Europe. Key
segments of the cosmetics/toiletries division include hair care and body care
products. The Henkel Group realized sales of DM 20.1 billion (approximately U.S.
$11.2 billion) in 1997.

Prof. Dr. Uwe Specht, Executive Vice President Cosmetics/Toiletries of
Henkel KGaA, Dusseldorf noted: "We are pleased to have reached this agreement
with DEP. With this acquisition, Henkel is entering the U.S. cosmetics market.
We are confident of developing and strengthening DEP's market position in the
United States, based on the success of our already successful brands and product
concepts in Europe and other parts of the world. The acquisition of DEP is a
significant milestone in our drive to strengthen Henkel's position in the
international cosmetics market."

<PAGE>
EXHIBIT 99(a)(8)

HENKEL COMMENCES TENDER OFFER FOR DEP

Dusseldorf, July 20, 1998--Henkel Acquisition Corp. II, a wholly-owned
subsidiary of Henkel KGaA, commenced today the previously announced cash tender
offer for all outstanding shares of common stock of DEP Corporation at $5.25 per
share.

The tender offer is being made pursuant to the previously announced Merger
Agreement among Henkel KGaA, Henkel Acquisition Corp. II and DEP Corporation. In
the second-step merger, the remaining DEP shares will be converted into $5.25 in
cash.

The tender offer is conditioned upon, among other things, there being
validly tendered and not withdrawn at the expiration of the tender offer that
number of shares that, when added to the shares Henkel Acquisition Corp. II has
the immediate right to acquire pursuant to an option agreement entered into with
DEP, constitutes at least 90% of the outstanding shares on a fully-diluted basis
on the date of purchase.

The tender offer and withdrawal rights are scheduled to expire at 12:00
midnight, New York City time, on Friday, August 14, 1998, unless extended.

Rhone Group LLC is acting as Dealer Manager for the tender offer. MacKenzie
Partners, Inc. is the Information Agent.

Contact:

Michael Rolf Fischer, Henkel KGaA, Corporate Communications
Phone: +49-211-797-4191/Fax: +49-211-798-4040

Dan Burch, MacKenzie Partners, Inc.
Phone: 212-929-5748/Fax: 212-929-0308

<PAGE>
Exhibit 99(a)(9)
================================================================================
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated
July 20, 1998, and the related Letter of Transmittal and is being
made to all holders of Shares. The Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders
of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
In any jurisdiction where the securities,
blue sky or other laws require the Offer
to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer
Manager or one or more registered
brokers or dealers licensed under
the laws of such jurisdiction.

NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEP CORPORATION
AT
$5.25 NET PER SHARE
BY
HENKEL ACQUISITION CORP. II
A WHOLLY-OWNED SUBSIDIARY OF
HENKEL KGAA

Henkel Acquisition Corp. II, a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Henkel KGaA, a Kommanditgesellschaft auf Aktien (a
partnership limited by shares) organized under the laws of the Federal Republic
of Germany ("Parent"), is offering to purchase all outstanding shares of Common
Stock, par value $0.01 per share (the "Shares"), of DEP Corporation, a Delaware
corporation (the "Company"), for a purchase price of $5.25 per share (the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").

- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, AUGUST 14, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger, dated as of July 13, 1998 (the "Merger Agreement"), among Parent,
Purchaser and the Company. The Merger Agreement provides, among other things,
that, following the Offer and subject to the satisfaction or waiver of certain
conditions, Purchaser will be merged with and into the Company (the "Merger"),
with the Company surviving the Merger as a wholly-owned subsidiary of Parent
with the name "Schwarzkopf & DEP, Inc." As a result of the Merger, each
outstanding Share (other than Shares held by Parent, Purchaser or any subsidiary
of Parent, Purchaser or the Company, Shares held in the treasury of the Company
and Shares held by stockholders who have properly exercised their appraisal
rights under Delaware law) will be converted at the effective time of the Merger
into the right to receive in cash the price per Share paid in the Offer without
interest.

The Board of Directors of the Company unanimously has determined that the
Offer and the Merger are fair to, and in the best interests of, the Company and
its stockholders, has approved the Merger Agreement and the transactions
contemplated thereby and recommends that the Company's stockholders accept the
Offer and tender their Shares pursuant to the Offer.

Purchaser has entered into Stockholder Option Agreements with certain
stockholders, who together own approximately 31.4% of the outstanding Shares,
pursuant to which, among other things, such stockholders have agreed to validly
tender (and not to withdraw) all such Shares pursuant to the Offer, granted
Parent a proxy with respect to the voting of such Shares in favor of the Merger
and granted Purchaser an irrevocable option to purchase all such Shares at a
price of $5.25 per share exercisable under certain circumstances. Purchaser has
also entered into a Stock Option Agreement with the Company, pursuant to which
the Company has granted to Purchaser an irrevocable option, exercisable if
Purchaser acquires at least 85% of the then outstanding Shares pursuant to the
Offer, to purchase that number of Shares that, when added to the number of
Shares owned by Purchaser, constitutes one share more than 90% of the Company s
outstanding Shares. The Company option is exercisable at a price of $5.25 per
Share under certain circumstances. See Section 12 of the Offer to Purchase.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES
THAT, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT AND ITS AFFILIATES
AND THE SHARES PURCHASER HAS THE IMMEDIATE RIGHT TO ACQUIRE PURSUANT TO THE
COMPANY OPTION DESCRIBED ABOVE, CONSTITUTES AT LEAST NINETY PERCENT (90%) OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
CONTAINED IN THE OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14 OF
THE OFFER TO PURCHASE.

In the event that the Minimum Condition is not satisfied on any scheduled
Expiration Date of the Offer, but there shall have been validly tendered and not
withdrawn as of such Expiration Date a majority of the outstanding Shares on a
fully diluted basis, Purchaser shall either (i) extend the Offer for a period or
periods not to exceed, in the aggregate, ten business days, or (ii) (a) amend
the Offer to reduce the number of Shares sought pursuant to the Offer, and the
number of Shares needed to satisfy the Minimum Condition, to that number of
Shares which when added to the Shares then owned directly or indirectly by
Purchaser would equal forty-nine and nine-tenths percent (49.9%) of the Shares
then outstanding (the "Revised Minimum Number"), (b) extend the Offer for a
period of not less than ten business days following the public announcement of
such amendment and (c) if at the expiration of such extension a greater number
of Shares is tendered into the 49.9% offer and not withdrawn, purchase, on a pro
rata basis, the Revised Minimum Number of Shares. See Section 1 and 14 of the
Offer to Purchase.

For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser s
acceptance for payment of such Shares for payment. In all cases, payment for
Shares purchased pursuant to the Offer will be made by deposit of the Offer
Price therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates evidencing such Shares (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to such Shares),
(b) a Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with all required signature guarantees, or, in
connection with a book-entry transfer, an Agent s Message (as defined in the
Offer to Purchase), and (c) all other documents required by the Letter of
Transmittal. Under no circumstances will interest on the Offer Price be paid by
Purchaser, regardless of any extension of the Offer or any delay in making such
payment.

The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, August 14, 1998, unless and until Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
Expiration Date shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire. Subject to the terms of the Merger
Agreement, Purchaser may from time to time extend the Expiration Date. If the
conditions set forth in Section 14 of the Offer to Purchase are satisfied as of
any scheduled Expiration Date, Purchaser may extend the Offer for up to ten
business days in the aggregate, and may extend the Offer for a longer period
with the prior written consent of the Company or as required by law. In
addition, subject to the provisions of the Merger Agreement requiring Purchaser
to reduce the number of shares needed to satisfy the Minimum Condition to the
Revised Minimum Number, if the conditions set forth in Section 14 of the Offer
to Purchase are not satisfied or waived by Parent or Purchaser as of any
scheduled Expiration Date. Purchaser may extend the Offer from time to time (but
not beyond the date that is fifty business days from the date of the Merger
Agreement), and, in any event, upon the written request of the Company will
extend the Offer from time to time until the earlier of consummation of the
Offer or forty business days from the date of the Merger Agreement (provided,
that Purchaser will not be obligated to make any such extension if (i) it
reasonably determines that all such conditions are not likely to be satisfied by
such date or (ii) it then has the right to terminate the Merger Agreement,
pursuant to its terms). There can be no assurance that Purchaser will exercise
its right to extend the Offer.

Subject to the applicable rules and regulations of the Securities and
Exchange Commission, including Rule 14e-1(c) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), relating to Purchaser s obligation to
pay for or return tendered Shares promptly after the termination or withdrawal
of the Offer, and to the provisions of the Merger Agreement, Purchaser expressly
reserves the right to delay acceptance for payment of or payment for any Shares,
to extend the Offer, or to terminate the Offer and not to accept for payment or
pay for any Shares not theretofore accepted for payment or paid for, upon the
occurrence of any of the conditions specified in Section 14 of the Offer to
Purchase, and at any time or from time to time, to amend the Offer or to waive
any conditions to the Offer in any respect consistent with the provisions of the
Merger Agreement described above, as such provisions may be amended from time to
time, in each case by giving oral or written notice of such delay, extension,
termination, amendment or waiver to the Depositary.

Any such extension, delay, termination, amendment or waiver will be
followed, as promptly as practicable, by public announcement. In the case of an
extension, Rule 14e-1(d) under the Exchange Act requires that the announcement
be issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. If Purchaser
extends the Offer or if Purchaser is delayed in its acceptance for payment of or
payment for Shares or is unable to purchase or pay for Shares for any reason,
then, without prejudice to Purchaser s rights under the Offer, tendered Shares
may be retained by the Depositary on behalf of Purchaser, and such Shares may
not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights.

Except as otherwise provided in the Offer to Purchase, tenders of Shares
made pursuant to the Offer will be irrevocable. Shares tendered pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by Purchaser pursuant to the Offer, may also be
withdrawn at any time after September 17, 1998. For a withdrawal to be
effective, a written or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover of the Offer to Purchase and must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of the Shares to be withdrawn, if different
from the name of the person who tendered the Shares. If certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
tendering stockholder must also submit the serial numbers shown on such
certificates to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in the Offer to Purchase), the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered for the account of an Eligible Institution). If
Shares have been tendered pursuant to the procedures for book-entry transfer as
set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
(as defined in the Offer to Purchase) to be credited with the withdrawn Shares.
Any Shares properly withdrawn will be deemed not to have been validly tendered
for purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in the Section
3 of the Offer to Purchase. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by Purchaser in its
sole discretion, whose determination will be final and binding.

The Company is providing Purchaser with the Company s stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares in accordance with the Exchange Act. The Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares, and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder lists, or, if applicable, who are listed as
participants in a clearing agency s security position listing, for subsequent
transmittal to beneficial owners of Shares.

The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the
Exchange Act is contained in the Offer to Purchase and is incorporated herein by
reference.

THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent, and copies will be furnished promptly at
Purchaser s expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer. No fees or
commissions will be payable to brokers, dealers or other persons other than the
Dealer Manager and the Information Agent for soliciting tenders of Shares
pursuant to the Offer.

The Information Agent for the Offer is:

[LOGO OF MACKENZIE PARTNERS INC.]

156 Fifth Avenue
New York, New York 10010
(800) 322-2885 (toll free)
(212) 929-5500 (Call Collect)

The Dealer Manager for the Offer is:

R H O N E G R O U P L L C

1330 Avenue of the Americas
New York, New York 10019
(212) 841-1275 (Call Collect)

July 20, 1998
================================================================================

<PAGE>
AGREEMENT AND PLAN OF MERGER

AMONG

HENKEL KGaA

HENKEL ACQUISITION CORP. II

AND

DEP CORPORATION

Dated as of July 13, 1998

<PAGE>

TABLE OF CONTENTS

ARTICLE I
THE OFFER

<TABLE>

<S> <C>
SECTION 1.01 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02 Company Actions. . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.03 Stockholder Lists. . . . . . . . . . . . . . . . . . . . 4
SECTION 1.04 Directors. . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II
THE MERGER

SECTION 2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02 Consummation of the Merger . . . . . . . . . . . . . . . 5
SECTION 2.03 Effects of the Merger. . . . . . . . . . . . . . . . . . 5
SECTION 2.04 Certificate of Incorporation and Bylaws. . . . . . . . . 6
SECTION 2.05 Directors and Officers . . . . . . . . . . . . . . . . . 6
SECTION 2.06 Conversion of Shares . . . . . . . . . . . . . . . . . . 6
SECTION 2.07 Conversion of Common Stock of Sub. . . . . . . . . . . . 6
SECTION 2.08 Stockholders' Meeting. . . . . . . . . . . . . . . . . . 6
SECTION 2.09 Merger Without Meeting of Stockholders . . . . . . . . . 6
SECTION 2.10 Withholding Taxes. . . . . . . . . . . . . . . . . . . . 7

ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS

SECTION 3.01 Dissenting Shares. . . . . . . . . . . . . . . . . . . . 7
SECTION 3.02 Payment for Shares . . . . . . . . . . . . . . . . . . . 7
SECTION 3.03 Closing of the Company's Transfer Books. . . . . . . . . 8
SECTION 3.04 Existing Stock Options . . . . . . . . . . . . . . . . . 8

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

SECTION 4.01 Organization and Qualification . . . . . . . . . . . . . 9
SECTION 4.02 Capitalization . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.03 Authority for this Agreement . . . . . . . . . . . . . . 11
SECTION 4.04 Absence of Certain Changes . . . . . . . . . . . . . . . 11
SECTION 4.05 Reports. . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.06 Schedule 14D-9; Offer Documents and Proxy Statement. . . 13
SECTION 4.07 Consents and Approvals; No Violation . . . . . . . . . . 14
SECTION 4.08 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.09 Employee Benefit Matters . . . . . . . . . . . . . . . . 15
SECTION 4.10 Litigation, etc. . . . . . . . . . . . . . . . . . . . . 17

<PAGE>

<S> <C>
SECTION 4.11 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.12 Compliance with Law. . . . . . . . . . . . . . . . . . . 20
SECTION 4.13 Environmental Matters. . . . . . . . . . . . . . . . . . 20
SECTION 4.14 Intellectual Property. . . . . . . . . . . . . . . . . . 22
SECTION 4.15 Real Property. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.16 Material Contracts . . . . . . . . . . . . . . . . . . . 25
SECTION 4.17 Related Party Transactions . . . . . . . . . . . . . . . 25
SECTION 4.18 Liens . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.19 Restriction of State Takeover Statutes Inapplicable. . . 26
SECTION 4.20 Required Vote of Company Stockholders. . . . . . . . . . 26

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

SECTION 5.01 Organization and Qualification . . . . . . . . . . . . . 26
SECTION 5.02 Authority Relative to this Agreement . . . . . . . . . . 26
SECTION 5.03 Offer Documents; Proxy Statement . . . . . . . . . . . . 26
SECTION 5.04 Consents and Approvals; No Violation . . . . . . . . . . 27
SECTION 5.05 Operations of Sub. . . . . . . . . . . . . . . . . . . . 28
SECTION 5.06 Financing. . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.07 Current Ownership. . . . . . . . . . . . . . . . . . . . 28

ARTICLE VI
COVENANTS

SECTION 6.01 Conduct of Business of the Company . . . . . . . . . . . 28
SECTION 6.02 No Solicitation. . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.03 Access to Information. . . . . . . . . . . . . . . . . . 31
SECTION 6.04 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 31
SECTION 6.05 Indemnification and Insurance. . . . . . . . . . . . . . 33
SECTION 6.06 Employee Matters . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.07 State Takeover Statutes. . . . . . . . . . . . . . . . . 35
SECTION 6.08 Proxy Statement. . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.09 Notification of Certain Matters. . . . . . . . . . . . . 36
SECTION 6.10 Subsequent Filings . . . . . . . . . . . . . . . . . . . 36
SECTION 6.11 Termination Fee; Expenses. . . . . . . . . . . . . . . . 36
SECTION 6.12 Exercise of Stockholder Options. . . . . . . . . . . . . 38

ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER

SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.02 Conditions to the Obligations of Parent and Sub to
Effect the Merger. . . . . . . . . . . . . . . . . . . . 38
SECTION 7.03 Conditions to the Obligations of the Company to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . 39

<PAGE>

ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER

<S> <C>
SECTION 8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.02 Effect of Termination. . . . . . . . . . . . . . . . . . 41
SECTION 8.03 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.04 Extension; Waiver. . . . . . . . . . . . . . . . . . . . 41

ARTICLE IX
MISCELLANEOUS

SECTION 9.01 Survival of Representations and Warranties . . . . . . . 41
SECTION 9.02 Entire Agreement; Assignment . . . . . . . . . . . . . . 42
SECTION 9.03 Enforcement of the Agreement . . . . . . . . . . . . . . 42
SECTION 9.04 Validity . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.05 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.06 Governing Law. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.07 Descriptive Headings . . . . . . . . . . . . . . . . . . 43
SECTION 9.08 Parties in Interest. . . . . . . . . . . . . . . . . . . 43
SECTION 9.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.10 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 44
SECTION 9.11 Certain Definitions. . . . . . . . . . . . . . . . . . . 44
SECTION 9.12 Press Releases . . . . . . . . . . . . . . . . . . . . . 45

EXHIBIT A - CONDITIONS TO THE OFFER. . . . . . . . . . . . . . . . . . A-1

</TABLE>

iii

<PAGE>

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of July 13, 1998
among Henkel KGaA, a Kommanditgesellschaft auf Aktien (a partnership limited by
shares), organized under the laws of the Federal Republic of Germany ("PARENT),
Henkel Acquisition Corp. II, a Delaware corporation and a wholly-owned
subsidiary of Parent ("SUB"), and DEP Corporation, a Delaware corporation (the
"COMPANY").

RECITALS

WHEREAS, the Board of Directors or similar governing body of each of
Parent, Sub and the Company has determined that it is in the best interests of
their respective companies and their respective stockholders for Parent to
acquire the Company upon the terms and subject to the conditions set forth
herein;

WHEREAS, the Board of Directors of the Company has unanimously adopted
resolutions approving the acquisition of the Company by Parent, this Agreement
and the transactions contemplated hereby and by the Company Option Agreement (as
defined below) and the Stockholder Option Agreements (as defined below), and has
agreed to recommend that the Company's stockholders approve the agreement of
merger (as such term is used in Section 251 of the Delaware General Corporation
Law (the "DGCL")) contained in this Agreement and the transactions contemplated
hereby and tender their Shares (as hereinafter defined) in the Offer (as
hereinafter defined);

WHEREAS, concurrently with the execution hereof and in order to induce
Parent and Sub to enter into this Agreement, Parent, Sub and the Company are
entering into a Stock Option Agreement (the "COMPANY OPTION AGREEMENT"),
pursuant to which the Company is granting Sub an option (the "COMPANY OPTION")
to purchase newly issued Shares under certain circumstances;

WHEREAS, concurrently with the execution hereof and in order to induce
Parent and Sub to enter into this Agreement, Parent and Sub are entering into
Stockholder Option Agreements (the "STOCKHOLDER OPTION AGREEMENTS") with each of
Robert H. Berglass, Robert H. Berglass, as Trustee of the Berglass Charitable
Remainder Trust UDT 7/8/98, and Judith R. Berglass, as Trustee of the Berglass
1995 Irrevocable Trust UDT 6/27/95 (each, an "OPTION GRANTOR") under which each
Option Grantor is, among other things, agreeing to tender all of such Option
Grantor's Shares in the Offer and granting Parent an irrevocable option
(collectively, the "STOCKHOLDER OPTIONS" and, together with the Company Option,
the "OPTIONS") to purchase all of such Option Grantor's Shares upon the terms
and conditions specified therein; and

WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;

NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

<PAGE>

ARTICLE I

THE OFFER

SECTION 1.01 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 hereof and that none of the
events set forth in clause (2) of Exhibit A hereto shall have occurred or be
existing, Parent shall cause Sub promptly (but in no event later than five
business days following the public announcement of the terms of this Agreement)
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT")) an offer to purchase all outstanding
shares of common stock of the Company, par value $.01 per share (the "SHARES"),
at a price of $5.25 per Share, net to the seller in cash (the "OFFER"). Subject
to the satisfaction of the Offer Conditions (as defined below) and the terms and
conditions of this Agreement, Sub shall, and Parent shall cause Sub to, accept
for payment and pay for Shares validly tendered and not withdrawn pursuant to
the Offer as soon as practicable under applicable law. The obligation of Sub to
consummate the Offer and to accept for payment and to pay for any Shares
tendered pursuant thereto shall be subject to only those conditions set forth in
Exhibit A hereto (the "OFFER CONDITIONS"), which may be asserted by Parent or
Sub regardless of the circumstances giving rise to any such condition, or
(except as set forth below with respect to the Minimum Condition (as defined in
Exhibit A)) waived by Parent or Sub, in whole or in part, at any time and from
time to time in their sole discretion. The Company agrees that no Shares held
by the Company or any of its Subsidiaries (as defined in Section 9.11 hereof)
will be tendered to Sub pursuant to the Offer. Sub will not, without the prior
written consent of the Company, (i) decrease or change the form of the
consideration payable in the Offer, (ii) decrease the number of Shares sought
pursuant to the Offer (except as otherwise set forth in Section 1.01(c) hereof),
(iii) impose additional conditions to the Offer, (iv) change the conditions to
the Offer (provided, that Parent or Sub in their sole discretion may waive any
of the conditions to the Offer other than the Minimum Condition) or (v) make any
other change in the terms or conditions of the Offer which is materially adverse
to the holders of the Shares. If the conditions set forth in Exhibit A are
satisfied as of any scheduled expiration date of the Offer, Sub may extend the
Offer for up to ten business days in the aggregate, and may extend the Offer for
a longer period with the prior written consent of the Company or as required by
law. If the conditions set forth in Exhibit A are not satisfied or, to the
extent permitted by this Agreement, waived by Parent or Sub as of any scheduled
expiration date, Sub may extend the Offer from time to time (but not beyond the
date that is fifty business days from the date hereof) and, in any event, upon
the written request of the Company, Sub will extend the Offer from time to time
until the earlier of the consummation of the Offer or forty business days from
the date hereof (provided, that Sub shall not be obligated to make any such
extension if (i) it reasonably determines that all such conditions are not
likely to be satisfied by such date or (ii) it shall then have the right to
terminate this Agreement, pursuant to its terms).

(b) On the date of commencement of the Offer, Parent and Sub shall file or
cause to be filed with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "SCHEDULE 14D-1") with respect to the Offer which
shall contain the offer to purchase and related letter of

2
<PAGE>

transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "OFFER DOCUMENTS"). The Company and its counsel shall be given
a reasonable opportunity to review and comment on the Offer Documents prior
to their filing with the SEC. Parent and Sub agree to provide the Company
with, and to consult with the Company regarding, any comments that may be
received from the SEC or its staff with respect to the Offer Documents
promptly after receipt thereof.

(c) In the event that the Minimum Condition is not satisfied on any
scheduled expiration date of the Offer but there shall have been validly
tendered and not withdrawn as of such expiration date a majority of the
outstanding Shares on a fully diluted basis, Sub shall either (i) extend the
Offer in accordance with, and subject to, the last sentence of Section 1.01(a)
hereof for a period or periods not to exceed, in the aggregate, ten business
days or (ii)(A) amend the Offer to reduce the number of Shares sought pursuant
to the Offer, and the number of Shares needed to satisfy the Minimum Condition,
to that number of Shares which, when added to the Shares then owned directly or
indirectly by Sub, would equal forty-nine and nine-tenths percent (49.9%) of the
Shares then outstanding (the "REVISED MINIMUM NUMBER"), (B) extend the Offer for
a period of not less than ten business days following the public announcement of
such amendment to the Offer (the Offer, as so amended, being sometimes referred
to as the "49.9% OFFER") and (C) if, at the expiration of such extension, a
greater number of Shares is tendered into the 49.9% Offer and not withdrawn,
purchase, on a pro rata basis, the Revised Minimum Number of Shares.

SECTION 1.02 COMPANY ACTIONS. (a) The Company hereby consents to the
Offer and represents and warrants that (i) the making of any offer and proposal
and the taking of any other action by Parent or Sub in connection with this
Agreement, the Company Option Agreement and the Stockholder Option Agreements
and the transactions contemplated hereby and thereby have been consented to by
the Board of Directors of the Company in accordance with the terms and
provisions of the Confidentiality Agreement, dated November 3, 1997, between
Parent and the Company (the "CONFIDENTIALITY AGREEMENT"), (ii) its Board of
Directors (at meetings duly called and held) has unanimously (w) determined that
the Offer and the Merger (as hereinafter defined) are fair to and in the best
interests of the Company and the stockholders of the Company, (x) resolved to
recommend acceptance of the Offer and approval and adoption of the agreement of
merger (as such term is used in Section 251 of the DGCL) contained in this
Agreement by such stockholders of the Company; PROVIDED, HOWEVER, that such
recommendation may be withdrawn, modified or amended if the Company's Board of
Directors determines in good faith, following the receipt of advice of outside
legal counsel, that it is required to do so in the exercise of its fiduciary
obligations under applicable law, (y) taken all necessary steps to render the
restrictions of Section 203 of the DGCL inapplicable to the Merger, the Company
Option Agreement, the Stockholder Option Agreements and the acquisition of
Shares pursuant to the Offer and the Options and (z) resolved to elect, to the
extent permitted by law, not to be subject to any "moratorium," "control share
acquisition," "business combination," "fair price" or other form of antitakeover
laws and regulations (collectively, "TAKEOVER LAWS") of any jurisdiction that
may purport to be applicable to this Agreement, the Company Option Agreement, or
the Stockholder Option Agreements and (iii) Houlihan Lokey Howard & Zukin
("HOULIHAN"), the Company's independent financial advisor, has advised the
Company's Board

3
<PAGE>

of Directors that, in its opinion, the consideration to be paid in the Offer
and the Merger to the Company's stockholders is fair, from a financial point
of view, to such stockholders.

(b) Upon commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-9") containing, subject to
the fiduciary duties of its Board of Directors to the stockholders of the
Company under applicable law, as determined in good faith following the receipt
of advice of outside legal counsel, the recommendations of its Board of
Directors described in Section 1.02(a) and hereby consents to the inclusion of
such recommendations in the Offer Documents and to the inclusion of a copy of
the Schedule 14D-9 with the Offer Documents mailed or furnished to the Company's
stockholders. Parent, Sub and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its filing with
the SEC. The Company agrees to provide Parent and Sub with, and to consult with
Parent and Sub regarding, any comments that may be received from the SEC or its
staff with respect to the Schedule 14D-9 promptly after receipt thereof.

SECTION 1.03 STOCKHOLDER LISTS. In connection with the Offer, the Company
shall promptly furnish Parent and Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of the latest practicable date
and shall furnish Parent and Sub with such information and assistance (including
periodic updates of such information) as Parent or Sub or their agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the Shares.

SECTION 1.04 DIRECTORS. (a) Promptly upon the purchase of Shares by Sub
pursuant to the Offer and the Options, and from time to time thereafter, Sub
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as will give Sub
representation on the Board of Directors of the Company equal to the product of
the number of directors on the Board of Directors of the Company (determined
after giving effect to the directors elected pursuant to this Section) and the
percentage that such number of Shares so purchased bears to the number of Shares
outstanding, and the Company shall, upon request by Sub, promptly increase the
size of the Board of Directors of the Company or use its best efforts to secure
the resignations of such number of directors as is necessary to provide Sub with
such level of representation and shall cause Sub's designees to be so elected;
PROVIDED, HOWEVER, that Sub shall be entitled to designate a number of directors
equal to or greater than 50% of the total number of directors, only if Sub then
owns 90% of more of the Shares then outstanding. The Company will also use its
best efforts to cause persons designated by Sub to constitute the same
percentage as is on the entire Board of Directors of the Company to be on (i)
each committee of the Board of Directors of the Company and (ii) each Board of
Directors and each committee thereof of each Subsidiary of the Company. The
Company's obligations to appoint designees to its Board of Directors shall be
subject to Section 14(f) of the Exchange Act. At the request of Sub, the
Company shall take all actions necessary to effect any such election or
appointment of Sub's designees, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-l
promulgated thereunder which, unless Sub otherwise elects, shall be so mailed
together with the

4
<PAGE>

Schedule 14D-9. Parent and Sub will supply to the Company all information
with respect to themselves and their respective officers, directors and
affiliates required by such Section and Rule.

(b) Notwithstanding anything set forth in Section 1.04(a), neither Parent
nor Sub shall take any action to prevent at least two persons who are directors
of the Company on the date hereof from remaining as directors of the Company
("CONTINUING DIRECTORS") until the Effective Time (as hereinafter defined).
Following the election or appointment of Sub's designees pursuant to Section
1.04(a) and prior to the Effective Time, and so long as there shall be at least
one Continuing Director, such designees shall abstain fom acting upon, and the
approval of a majority of the Continuing Directors shall be required, and
sufficient, to authorize any resolution with respect to any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors of the Company, any extension of time for the performance
of any of the obligations or other acts of Parent or Sub under this Agreement,
any waiver of compliance with any of the agreements or conditions under this
Agreement for the benefit of the Company and any action to seek to enforce any
obligation of Parent or Sub under this Agreement. If at any time the Continuing
Directors reasonably deem it necessary to consult independent legal counsel in
connection with their duties as Continuing Directors or actions to be taken by
the Company, the Continuing Directors may retain such counsel for such purpose
and the Company shall pay the reasonable expenses incurred in connection
therewith.

ARTICLE II

THE MERGER

SECTION 2.01 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL, Sub shall be
merged with and into the Company (the "MERGER") as soon as practicable following
the satisfaction or waiver, if permissible, of the conditions set forth in
Article VII hereof. The Company shall be the surviving corporation in the
Merger (the "SURVIVING CORPORATION") under the name "Schwarzkopf & DEP, Inc."
and shall continue its existence under the laws of Delaware. In connection with
the Merger, the separate corporate existence of Sub shall cease.

SECTION 2.02 CONSUMMATION OF THE MERGER. Subject to the provisions of this
Agreement, the Company shall cause the Merger to be consummated by filing with
the Secretary of State of the State of Delaware a duly executed and verified
certificate of merger, as required by the DGCL (the "CERTIFICATE OF MERGER"),
and Sub and the Company shall take all such other and further actions as may be
required by law to make the Merger effective. Prior to the filing referred to
in this Section, a closing (the "CLOSING") will be held at the offices of
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York (or
such other place as the parties may agree) for the purpose of confirming all the
foregoing. The time the Merger becomes effective in accordance with applicable
law is referred to as the "EFFECTIVE TIME."

SECTION 2.03 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth herein and in the applicable provisions of the DGCL.

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SECTION 2.04 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation and the Bylaws of Sub, in each case as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation and Bylaws of
the Surviving Corporation; PROVIDED, HOWEVER, that Article I of the Certificate
of Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "ARTICLE I. The name of the Corporation is Schwarzkopf &
DEP, Inc."

SECTION 2.05 DIRECTORS AND OFFICERS. The directors of Sub immediately
prior to the Effective Time and the officers of the Company immediately prior to
the Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation until their death, permanent disability, resignation or
removal or until their respective successors are duly elected and qualified.

SECTION 2.06 CONVERSION OF SHARES. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent, Sub
or any Subsidiary of Parent, Sub or the Company or held in the treasury of the
Company, all of which shall be canceled, and other than Dissenting Shares, as
defined in Section 3.01 hereof) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to receive
in cash an amount per Share equal to $5.25 (or such greater amount as may be
paid pursuant to the Offer), without interest (the "MERGER CONSIDERATION"), upon
the surrender of the certificate representing such Shares as provided in Section
3.02.

SECTION 2.07 CONVERSION OF COMMON STOCK OF SUB. Each share of common
stock, $.01 par value, of Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one share of common stock of
the Surviving Corporation.

SECTION 2.08 STOCKHOLDERS' MEETING. Unless the Merger is consummated in
accordance with Section 253 of the DGCL as contemplated by Section 2.09, and
subject to applicable law, the Company, acting through its Board of Directors,
shall, in accordance with applicable law, duly call, give notice of, convene and
hold a special meeting (the "SPECIAL MEETING") of its stockholders as soon as
practicable following the consummation of the Offer for the purpose of adopting
the agreement of merger (within the meaning of Section 251 of the DGCL) set
forth in this Agreement; and, subject to the fiduciary duties of its Board of
Directors under applicable law as determined in good faith by the Board of
Directors, following the receipt of advice of outside legal counsel, include in
the Proxy Statement (as hereinafter defined) the recommendation of its Board of
Directors that stockholders of the Company vote in favor of the adoption of the
plan of merger set forth in this Agreement. Parent and Sub each agree that, at
the Special Meeting, all of the Shares acquired pursuant to the Offer, the
Options or otherwise by Parent or Sub or any of their affiliates will be voted
in favor of the Merger.

SECTION 2.09 MERGER WITHOUT MEETING OF STOCKHOLDERS. If Sub, or any other
direct or indirect Subsidiary of Parent, shall acquire at least 90 percent of
the outstanding shares of each class of capital stock of the Company, each of
Parent, Sub and the Company shall take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable

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after the consummation of the Offer, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.

SECTION 2.10 WITHHOLDING TAXES. Parent and Sub shall be entitled to
deduct and withhold from the consideration otherwise payable to a holder of
Shares pursuant to the Offer or the Merger such amounts as are required to be
withheld under the Internal Revenue Code of 1986, as amended (the "CODE"), or
any applicable provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or Sub, such withheld amounts shall be treated
for all purposes of this Agreement and the Offer as having been paid to the
holder of the Shares in respect of which such deduction and withholding was made
by Parent or Sub.

ARTICLE III

DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS

SECTION 3.01 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders who did not vote in favor
of the Merger and who meet all of the requirements of, and who comply with, all
of the relevant provisions of Section 262 of the DGCL (the "DISSENTING SHARES")
shall not be converted into the right to receive (and the certificates for such
Dissenting Shares shall not be exchangeable for) the Merger Consideration,
unless and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal under the DGCL. If any
such holder shall have failed to perfect or shall have effectively withdrawn or
lost such right to appraisal, such holder's Shares shall thereupon be converted
into the right to receive (and the certificates that immediately prior to the
Effective Time represented such Dissenting Shares shall be exchangeable for), as
of the Effective Time, the Merger Consideration without any interest thereon.
The Company shall give Parent (i) prompt notice of any written demands for
appraisal of any Shares, attempted withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company relating to
stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
capital stock of the Company, offer to settle or settle any demands or approve
any withdrawal of any such demands.

SECTION 3.02 PAYMENT FOR SHARES. (a) Prior to the Effective Time, Parent
will cause Sub to make available to a bank or trust company designated by Parent
(the "PAYING AGENT") sufficient funds to make the payments pursuant to
Section 2.06 hereof on a timely basis to holders (other than Parent, Sub or the
Company or any of their respective Subsidiaries) of Shares that are issued and
outstanding immediately prior to the Effective Time (such amounts being
hereinafter referred to as the "PAYMENT FUND"). The Paying Agent shall,
pursuant to irrevocable instructions, make the payments provided for in the
preceding sentence out of the Payment Fund. The Payment Fund shall not be used
for any other purpose, except as provided in this Agreement.

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(b) As soon as practicable after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each record holder, as of
the Effective Time, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Shares (the "CERTIFICATES"),
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and instructions for
use in effecting the surrender of the Certificate and receiving payment
therefor. Following surrender to the Paying Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be paid in exchange therefor cash in an amount (subject to any applicable
withholding tax as specified in Section 2.10 hereof) equal to the product of the
number of Shares formerly represented by such Certificate multiplied by the
Merger Consideration, and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. From and after the Effective Time and until
surrendered in accordance with the provisions of this Section 3.02, each
Certificate (other than Certificates that immediately prior to the Effective
Time represented Shares owned by Parent, Sub or the Company, or any of their
respective Subsidiaries, and certificates representing Dissenting Shares) shall
represent for all purposes solely the right to receive, in accordance with the
terms hereof, the Merger Consideration in cash multiplied by the number of
Shares evidenced by such Certificate, without any interest thereon.

(c) Any portion of the Payment Fund (including the proceeds of any
investments thereof) that remains unclaimed by the former stockholders of the
Company for one year after the Effective Time shall be repaid to the Surviving
Corporation. Any former stockholders of the Company who have not complied with
Section 3.01 hereof prior to the end of such one-year period shall thereafter
look only to the Surviving Corporation (subject to abandoned property, escheat
or other similar laws) but only as general creditors thereof for payment of
their claim for the Merger Consideration, without any interest thereon. Neither
Parent nor the Surviving Corporation shall be liable to any holder of Shares for
any monies delivered from the Payment Fund or otherwise to a public official
pursuant to any applicable abandoned property, escheat or similar law.

SECTION 3.03 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
Shares shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged for
cash as provided in this Article III, subject to applicable law in the case of
Dissenting Shares.

SECTION 3.04 EXISTING STOCK OPTIONS. At the Effective Time (or at such
earlier time as Sub shall designate, which time may be immediately prior to the
acceptance of Shares pursuant to the Offer), each holder of a then outstanding
option to purchase Shares, whether or

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not then exercisable (an "EXISTING STOCK OPTION"), which theretofore has been
granted under the Company's 1992 Stock Option Plan, the 1983 Stock Option
Plan, the 1988 Directors and Officers Stock Option Plan and the 1993 Stock
Target Ownership Plan (collectively, the "STOCK OPTION PLANS") shall, in
settlement thereof, be entitled to receive from the Surviving Corporation for
each Share subject to such Existing Stock Option, in lieu of such Share, an
amount (subject to any applicable withholding tax as specified in Section
2.10 hereof or as may apply to payments made in connection with the
performance of services) in cash equal to the difference between the Merger
Consideration and the per share exercise or purchase price of such Existing
Stock Option, to the extent such difference is a positive number (such amount
being hereinafter referred to as the "OPTION CONSIDERATION"). Upon receipt
of the Option Consideration, the Existing Stock Option shall be canceled.
The surrender of an Existing Stock Option to the Company in exchange for the
Option Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Existing Stock Option. Except
as otherwise agreed to by the parties, the Stock Option Plans shall terminate
as of the Effective Time and any and all rights under any provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any
Subsidiary thereof shall be canceled as of the Effective Time.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

The Company represents and warrants to Parent and Sub as follows:

SECTION 4.01 ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries is a duly organized and validly existing corporation in good
standing under the laws of its jurisdiction of incorporation, with all corporate
power and authority to own its properties and conduct its business as currently
conducted and is duly qualified and in good standing as a foreign corporation
authorized to do business in each of the jurisdictions in which the character of
the properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing, in the aggregate, would not have a
Material Adverse Effect (as defined in Section 9.11 hereof). The Company has
heretofore delivered to Parent and Sub accurate and complete copies of the
Certificate of Incorporation and Bylaws (or similar governing documents) as
currently in effect of the Company and its Subsidiaries. All of the outstanding
shares of capital stock of each of the Company's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all of such shares
owned by the Company or another of its Subsidiaries are owned free and clear of
all liens, claims or encumbrances. Neither the Company nor any of its
Subsidiaries, directly or indirectly, owns any interest in any corporation,
partnership, joint venture or other business association or entity, other than
in the Company's Subsidiaries.

SECTION 4.02 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of Fifteen Million (15,000,000) Shares and Three Million
(3,000,000) shares of preferred stock, par value $.01 per share (the "PREFERRED
STOCK"). As of the close of business on

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<PAGE>

the day immediately preceding the date hereof: 6,876,140 Shares were issued
and outstanding; no shares of Preferred Stock were issued and outstanding;
231,000 Shares were held in the Company's treasury; and there were
outstanding, Existing Stock Options to purchase an aggregate of 674,200
Shares under the Stock Option Plans, respectively (copies of which have
previously been made available to Parent and Sub), and there are no stock
appreciation rights or limited stock appreciation rights granted under the
Stock Option Plans or otherwise outstanding. Since such date, the Company
(i) has not issued any Shares other than upon the exercise of Existing Stock
Options outstanding on such date, (ii) has not granted any options, warrants
or rights or entered into other agreements or commitments to purchase Shares
(under the Stock Option Plans or otherwise) and (iii) has not split, combined
or reclassified any of its shares of capital stock. All of the outstanding
Shares have been duly authorized and validly issued and are fully paid and
nonassessable and are free of preemptive rights. Section 4.02(a) of the
disclosure letter, dated the date hereof, delivered by the Company to Parent
and Sub prior to the execution of this Agreement setting forth certain
information with respect to certain matters referred to in this Agreement
(the "DISCLOSURE LETTER"), contains a true, accurate and complete list, as of
the date hereof, of the name of each Existing Stock Option holder, the number
of outstanding Existing Stock Options held by such holder, the grant date of
each such Existing Stock Option, the number of Shares such holder is entitled
to receive upon the exercise of each Existing Stock Option and the
corresponding exercise price. Except as set forth in this Section 4.02(a),
there are no outstanding (i) shares of capital stock or other voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities or ownership
interests in the Company, (iii) options, warrants, rights or other agreements
or commitments to acquire from the Company, or obligations of the Company to
issue, any capital stock, voting securities or other ownership interests in
(or securities convertible into or exchangeable for capital stock or voting
securities or other ownership interests in) the Company, (iv) obligations of
the Company to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security or other similar agreement or commitment
relating to any capital stock, voting securities or other ownership interests
in the Company (the items in clauses (i), (ii), (iii) and (iv) being referred
to collectively as "COMPANY SECURITIES") and (v) obligations by the Company
or any of its subsidiaries to make any payments based on the price or value
of the Shares. There are no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities and there are no performance awards outstanding under the Stock
Option Plans or any other outstanding stock related awards. There are no
voting trusts or other agreements or understandings to which the Company or
any of its Subsidiaries is a party with respect to the voting of capital
stock of the Company or any of its Subsidiaries.

(b) The Company is, directly or indirectly, the record and beneficial
owner of all the outstanding shares of capital stock of each of its
Subsidiaries, free and clear of any lien, mortgage, pledge, charge, security
interest or encumbrance of any kind, and there are no irrevocable proxies with
respect to any such shares. Except for shares directly or indirectly owned by
the Company, there are no outstanding (i) shares or other securities of the
Company or any of its Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
Subsidiary of the Company, (ii) options, warrants, rights or other agreements or
commitments to acquire from the Company or any of its Subsidiaries (or

<PAGE>

obligations of the Company or any of its Subsidiaries to issue) any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities or
ownership interests in, any of its Subsidiaries, (iii) obligations of the
Company or any of its Subsidiaries to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock, voting securities
or other ownership interests in any of the Company's Subsidiaries (the items in
clauses (i), (ii) and (iii) being referred to collectively as "SUBSIDIARY
SECURITIES"), or (iv) obligations of the Company or any of its Subsidiaries to
make any payment based on the value of any shares of any Subsidiary. There are
no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.

SECTION 4.03 AUTHORITY FOR THIS AGREEMENT. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated, other than the approval and adoption of the
agreement of merger (as such term is used in Section 251 of the DGCL) contained
in this Agreement by the holders of a majority of the outstanding Shares prior
to the consummation of the Merger (unless the Merger is consummated pursuant to
Section 253 of the DGCL). This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (whether considered in a proceeding in equity or at law).

SECTION 4.04 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC
Reports (as defined in Section 4.05) filed with the SEC prior to the date hereof
or in Section 4.04 of the Disclosure Letter, since July 31, 1997, (i) the
Company and its Subsidiaries have not suffered any Material Adverse Effect or
any change, condition, event or development that could reasonably be expected to
have a Material Adverse Effect, (ii) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, except in connection with the negotiation and execution and
delivery of this Agreement, and (iii) there has not been (a) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
Shares or any repurchase, redemption or other acquisition by the Company or any
of its Subsidiaries of any outstanding shares of capital stock or other
securities in, or other ownership interests in, the Company or any of its
Subsidiaries; (b) any entry into any employment agreement or severance
compensation agreement with, or any increase in the rate or terms (including any
acceleration of the right to receive payment), of compensation payable or to
become payable by the Company or any of its Subsidiaries to, their respective
directors, officers or employees, except increases to employees who are not
officers or directors occurring in the ordinary course of business in accordance
with its customary past practices; (c) any increase in the rate or terms
(including any acceleration of the right to receive payment) of any Plan (as

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<PAGE>

hereinafter defined) or any other bonus, severance, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with any such
directors, officers or employees; (d) any action by the Company which, if taken
after the date hereof, would constitute a breach of any of the clauses of
Section 6.01 hereof; (e) any change by the Company in accounting methods,
principles or practices except as required by changes in United States generally
accepted accounting principles; (f) any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
Subsidiary, which employees were not then subject to a collective bargaining
agreement or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees; (g) any revaluation by the Company or any
of its Subsidiaries of any of their respective assets, including write-downs of
inventory or of accounts receivable other than in the ordinary course of
business consistent with past practice; or (h) any entry into any agreement,
commitment or transaction by the Company which is material to the Company and
its Subsidiaries taken as a whole other than in the ordinary course of business
consistent with past practice.

SECTION 4.05 REPORTS. (a) Since January 1, 1996, the Company has timely
filed with the SEC all forms, reports and documents required to be filed by it
pursuant to the federal securities laws and the rules and regulations of the
SEC thereunder, all of which have complied as of their respective filing dates
in all material respects with all applicable requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder. True and
correct copies of such filings made by the Company with the SEC (the "SEC
REPORTS"), whether or not required under applicable laws, rules and regulations
and including any registration statement filed by the Company under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), have been made
available to Parent and Sub. None of the SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, at the
time filed, contained any untrue statement of a material fact or omitted to
state a 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.

(b) The audited and unaudited consolidated financial statements of the
Company included (or incorporated by reference) in the SEC Reports or contained
in filings subsequent to the date hereof have been or will have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company as of their
respective dates, and the consolidated income, stockholders equity, results of
operations and changes in consolidated financial position or cash flows for the
periods presented therein (subject to, in the case of any unaudited interim
financial statements, normal year-end adjustments).

(c) The Company will furnish to Parent and Sub a copy of any press release
to be issued by the Company containing the consolidated financial position of
the Company as of July 31, 1998 and the consolidated statements of income,
statements of stockholders equity, results of operations and changes in
consolidated financial position or cash flow for the fourth fiscal quarter and
the fiscal year ending on July 31, 1998. Any such press release will be issued
no later than October 15, 1998. The financial information and results to be
contained in such

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<PAGE>

press release will be prepared by management from the books and records of
the Company, will have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto) and fairly present the
information set forth therein.

(d) Except as reflected or reserved against or disclosed in the financial
statements of the Company included in the SEC Reports or as otherwise disclosed
in the SEC Reports, and except as incurred in the ordinary course of business
consistent with past practice since July 31, 1997, neither the Company nor any
of its Subsidiaries has any liabilities of any nature, whether accrued,
absolute, fixed, contingent or otherwise, whether due or to become due and
whether required to be recorded or reflected on a balance sheet under United
States generally accepted accounting principles. Since July 31, 1997, neither
the Company nor any of its Subsidiaries has incurred any liabilities other than
liabilities that (i) have been incurred in the ordinary course of business
consistent with past practice and (ii) have not had and are not reasonably
likely to have a Material Adverse Effect.

SECTION 4.06 SCHEDULE 14D-9; OFFER DOCUMENTS AND PROXY STATEMENT. (a)
None of the information relating to the Company or any of its Subsidiaries
supplied or to be supplied by or on behalf of the Company or any affiliate of
the Company for inclusion in the Offer Documents and any other schedule or
document required to be filed with the SEC in connection with the Offer and the
Merger will, at the times such documents are filed with the SEC and are mailed
to stockholders of the Company, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, or to correct any statement made in any communication with
respect to the Offer previously filed with the SEC or disseminated to the
stockholders of the Company. The Schedule 14D-9 will not, at the time the
Schedule 14D-9 is filed with the SEC and at all times prior to the purchase of
Shares by Sub pursuant to the Offer, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty
is made by the Company with respect to information supplied in writing by
Parent, Sub or an affiliate of Parent or Sub expressly for inclusion therein.
The Schedule 14D-9 will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations of the SEC
thereunder.

(b) The Proxy Statement (as hereinafter defined), and any other schedule
or document required to be filed by the Company in connection with the Merger,
will not, at the time the Proxy Statement is first mailed and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, or to correct any statement made in any earlier communication with
respect to the solicitation of any proxy or approval for the Merger in
connection with which the Proxy Statement shall be mailed, except that no
representation or warranty is made by the Company with respect to information
supplied in writing by Parent, Sub or an affiliate of Parent or Sub expressly
for inclusion therein. The Proxy Statement will comply as to form in all

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<PAGE>

material respects with the provisions of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder. The letter to stockholders,
notice of meeting, proxy statement and form of proxy, or the information
statement, as the case may be, that may be provided to stockholders of the
Company in connection with the Merger (including any amendments or supplements),
and any schedules required to be filed with the SEC in connection therewith, as
from time to time amended or supplemented, are collectively referred to as the
"PROXY STATEMENT."

(c) The written statements, memoranda, certificates, schedules, lists or
other written information (including financial information) that were prepared
by the Company or its Subsidiaries, or under the supervision or control thereof,
and that were heretofore or are hereafter provided by or on behalf of the
Company or its Subsidiaries to Parent or Sub or any of their representatives,
pursuant to the terms hereof or otherwise in connection with the transactions
contemplated hereby, taken as a whole (including, without limitation, as any
such document may have been, or may be, amended, modified or supplemented by any
subsequent document), have been and will be true and correct in all material
respects and do not and will not contain any materially misleading statement or
omit to state any material fact necessary to make the statements therein, taken
as a whole and in light of the circumstances under which they were made, not
misleading.

SECTION 4.07 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective Certificate of Incorporation or Bylaws (or
other similar governing documents) of the Company or any of its Subsidiaries,
(ii) require any consent, approval, authorization or permit of, or filing with
or notification to, any foreign, federal, state or local government or
subdivision thereof, or governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or body (a
"GOVERNMENTAL ENTITY") except as may be required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the Exchange Act
and the DGCL, (iii) require any consent, waiver or approval or result in a
default (or give rise to any right of termination, cancellation, modification or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement, contract, indenture or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective assets may be bound except
as disclosed in Section 4.07(iii) of the Disclosure Letter, (iv) result in the
creation or imposition of any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind on any material asset of the Company or any of its
Subsidiaries, or (v) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or any of its Subsidiaries or by which
any of their respective assets are bound, except, in the case of clause (ii),
(iii), (iv) and (v), for any such consent the absence of which, or lien or
violation the creation of which, would not, individually or in the aggregate,
have a Material Adverse Effect.

SECTION 4.08 BROKERS. No person or entity (other than Houlihan, a true
and complete copy of whose engagement letter as in effect has been furnished to
Parent and Sub) is entitled to receive any brokerage, finder's or other fee or
commission in connection with this

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<PAGE>

Agreement or the transactions contemplated hereby based upon agreements made
by or on behalf of the Company, any of its Subsidiaries or any of their
respective officers, directors or employees.

SECTION 4.09 EMPLOYEE BENEFIT MATTERS. (a) Except as set forth in
Section 4.09(a) of the Disclosure Letter, neither the Company nor any of its
Subsidiaries maintains or contributes to, or has any obligation to contribute to
or has any liability (including a liability arising out of an indemnification,
guarantee, hold harmless or similar agreement) with respect to any "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or any other material plan, program,
arrangement, agreement or commitment which is an employment, consulting,
severance, termination, change in control or deferred compensation agreement, or
an executive compensation, incentive bonus or other bonus, profit-sharing,
savings, stock option, stock purchase, stock appreciation rights or severance
pay plan, program, arrangement, agreement or commitment (individually, a "PLAN,"
or collectively, the "PLANS"). Each such Plan is identified in Section 4.09(a)
of the Disclosure Letter to the extent applicable, as one or more of the
following: an "employee pension plan" (as defined in Section 3(2) of ERISA) or
an "employee welfare plan" (as defined in Section 3(1) of ERISA). No Plan is a
"defined benefit plan" (as defined in Section 414 of the Code) or a
"multiemployer plan" (as defined in Section 3(37) of ERISA). No Plan is subject
to Section 302 of ERISA, Section 412 of the Code or Title IV of ERISA.

(b) Neither the Company nor any of its Subsidiaries is subject to any
actual or contingent liability under Title IV of ERISA, Section 302 of ERISA,
Section 412 or 4971 of the Code or any similar provision of foreign law or
regulation, whether in respect of any employer benefit plan maintained by the
Company or any of its Subsidiaries or by any other employer or person or
otherwise.

(c) No event has occurred, and no circumstance exists, in connection with
which the Company, any of its Subsidiaries or any Plan, directly or indirectly,
could be subject to any material liability under ERISA, the Code or any other
law, regulation or governmental order applicable to any Plan, including Section
406, 409, 502(i) or 502(1) of ERISA, or Part 6 of Title I of ERISA, or Section
4971, 4972, 4975, 4976, 4977 or 4980B of the Code, or under any agreement,
instrument, statute, rule of law or regulation pursuant to or under which the
Company or any of its Subsidiaries has agreed to indemnify or is required to
indemnify any person against liability incurred under, or for a violation or
failure to satisfy the requirements of, any such statute, regulation or order.

(d) Except as set forth in Section 4.09(d) of the Disclosure Letter, with
respect to each Plan, (i) all payments due from the Company or any of its
Subsidiaries to date have been timely made and all amounts properly accrued to
date or as of the Effective Time as liabilities of the Company or any of its
Subsidiaries which have not been paid have been and will be properly recorded on
the books of the Company; (ii) each such Plan which is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and intended to qualify
under Section 401 of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to such qualification, its related
trust has been determined to be exempt from taxation

15
<PAGE>

under Section 501(a) of the Code, and to the best of the Company's knowledge,
nothing has occurred since the date of such letter that has or is likely to
adversely affect such qualification or exemption; (iii) there are no actions,
suits or claims pending (other than routine claims for benefits) or, to the
knowledge of the Company, threatened with respect to such Plan or against the
assets of such Plan and (iv) the Company has complied with, and such Plan
conforms in form and operation to, all applicable laws and regulations,
including ERISA and the Code, in all material respects.

(e) Except as set forth in Section 4.09(e) of the Disclosure Letter, no
deduction for federal income tax purposes has been or is expected by the Company
to be disallowed for remuneration paid by the Company or any of its Subsidiaries
by reason of Section 162(m) of the Code including by reason of the transactions
contemplated hereby.

(f) No Plan is under audit or is subject of an investigation by the
Internal Revenue Service, the U.S. Department of Labor or any other Governmental
Entity.

(g) Except as set forth in Section 4.09(g) of the Disclosure Letter, the
transactions contemplated by this Agreement will not result in the payment or
series of payments by the Company or any of its Subsidiaries to any person of an
"excess parachute payment" within the meaning of Section 280G of the Code, or
any other payment which is not deductible for federal income tax purposes under
the Code.

(h) Except as set forth in Section 4.09(h) of the Disclosure Letter, the
consummation of the transactions contemplated by this Agreement (alone or
together with any other event) will not (i) entitle any person to any benefit
under any Plan or (ii) accelerate the time of payment or vesting, or increase
the amount, of any compensation due to any person under any Plan.

(i) Except as disclosed in the financial statements referred to in Section
4.05(b) above or in Section 4.09(i) of the Disclosure Letter, neither the
Company nor any of its Subsidiaries has any liability with respect to an
obligation to provide benefits, including death or medical benefits (whether or
not insured) with respect to any person beyond their retirement or other
termination of service other than (i) coverage mandated by Part 6 of Title I of
ERISA Section 4980B of the Code or state law, (ii) retirement or death benefits
under any employee pension plan, (iii) disability benefits under any employee
welfare plan that have been fully provided for by insurance or otherwise, (iv)
deferred compensation benefits accrued as liabilities on the books of the
Company, or (v) benefits in the nature of severance pay.

(j) The Company has made available to Parent and Sub, with respect to each
Plan for which the following exists:

(i) a copy of the annual report, if required under ERISA, with
respect to such Plan for the last two years, together with a copy of the
financial statements for each such Plan for the last two years if required
by ERISA;

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<PAGE>

(ii) a copy of the Summary Plan Description, together with each
Summary of Material Modifications, required under ERISA with respect to
such Plan, and, unless the Plan is embodied entirely in an insurance policy
to which the Company or any of its Subsidiaries is a party, a true and
complete copy of such Plan;

(iii) if the Plan is funded through a trust or any third party
funding vehicle (other than an insurance policy), a copy of the trust or
other funding agreement and the latest financial statements thereof; and

(iv) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan that is intended to be a
"qualified plan" under Section 401 of the Code.

(k) With respect to each Plan for which financial statements are required
by ERISA, there has been no material adverse change in the financial status of
such Plan since the date of the most recent such statements made available to
Parent and Sub.

(l) With respect to each Plan that is funded wholly or partially through
an insurance policy, all premiums required to have been paid to date under the
insurance policy have been paid, all premiums required to be paid under the
insurance policy through the Effective Time will have been paid on or before the
Effective Time and, as of the Effective Time, there will be no material
liability of the Company or any of its Subsidiaries under any such insurance
policy or ancillary agreement with respect to such insurance policy in the
nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Effective Time.

(m) Neither the Company nor any of its Subsidiaries has any announced plan
or commitment to create any additional Plans or to amend or modify any existing
Plan.

(n) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreements and, to the best knowledge of the Company,
there are no labor unions or other organizations representing, purporting to
represent or attempting to represent, any employee of the Company or any of its
Subsidiaries.

(o) Neither the Company nor any of its Subsidiaries has violated any
provision of federal or state law or any governmental rule or regulation, or any
order, ruling, decree, judgment or arbitration award of any court, arbitrator or
any Governmental Entity regarding the terms and conditions of employment of
employees, former employees or prospective employees or other labor related
matters, including laws, rules, regulations, orders, rulings, decrees, judgments
and awards relating to wages, hours, civil rights, discrimination, fair labor
standards and occupational health and safety, wrongful discharge or violation of
the personal rights of employees, former employees or prospective employees
which, taken alone or together with any other such violation or violations,
could reasonably be expected to have a Material Adverse Effect.

SECTION 4.10 LITIGATION, ETC. (a) Except as disclosed in Section 4.10 of
the Disclosure Letter, there is no claim, action, suit, proceeding or
governmental investigation

17
<PAGE>

pending or, to the knowledge of the Company, threatened against or relating
to the Company or any of its Subsidiaries that involve a claim against the
Company or any of its Subsidiaries in excess of $100,000 or that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or that in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the Offer or the Merger or any of the other
transactions contemplated hereby. Neither the Company nor any Subsidiary of
the Company is subject to any outstanding order, writ, injunction or decree
that, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.

(b) The Company's Second Amended Plan of Reorganization (the "PLAN OF
REORGANIZATION") which became effective on November 4, 1996, has not been
modified, revoked or withdrawn since November 4, 1996; an order has been entered
confirming such Plan of Reorganization; and such order is a "Final Order," as
such term is defined in the Plan of Reorganization, in full force and effect.

SECTION 4.11 TAX MATTERS.(a) All material returns and reports relating to
Taxes (as defined in Section 9.11 hereof) (including income taxes, withholding
taxes and estimated taxes) required to be filed with respect to each of the
Company and its Subsidiaries or any of their income, properties or operations as
of the date hereof have been duly filed in a timely manner (taking into account
all extensions of due dates). All information provided in such returns,
declarations and reports is true, correct and complete in all material respects.
The Company and its Subsidiaries, as relevant, have paid, or set up reserves in
accordance with United States generally accepted accounting principles on their
books for, all material Taxes attributable to each of the Company and its
Subsidiaries that were due and payable without regard to whether such taxes have
been assessed. The Company has made available to Parent and Sub complete and
accurate copies of the portions applicable to each of the Company and its
Subsidiaries of all income and franchise Tax returns, and any amendments
thereto, filed by or on behalf of the Company or any of its Subsidiaries or any
member of a group of corporations including the Company or any of its
Subsidiaries for the taxable years ending 1992 through 1997.

(b) Adequate provisions in accordance with United States generally
accepted accounting principles appropriately and consistently applied to each of
the Company and its Subsidiaries have been made in the consolidated financial
statements included in the SEC Reports for the payment of all Taxes for which
each of the Company and its Subsidiaries may be liable for the periods covered
thereby that were not yet due and payable as of the dates thereof, regardless of
whether the liability for such Taxes is disputed.

(c) Except as set forth in Section 4.11(c) of the Disclosure Letter, all
federal, state, local and foreign Tax returns of the Company and its
Subsidiaries have been audited and settled, or are closed to assessment, for all
years through 1997. Except as set forth in Section 4.11(c) of the Disclosure
Letter, there is no claim or assessment pending, or, to the best of the
Company's or any of its Subsidiaries' knowledge, threatened against the Company
or any of its Subsidiaries for any alleged material deficiency in Taxes, and
none of the Company or

18
<PAGE>

any of its Subsidiaries knows of any audit or investigation with respect to
any liability of the Company or any of its Subsidiaries for Taxes. Except as
set forth in Section 4.11 (c) of the Disclosure Letter, there are no
agreements in effect to extend the period of limitations for the assessment
or collection of any Tax for which the Company or any of its Subsidiaries may
be liable.

(d) The Company and each of its Subsidiaries have withheld (and timely
paid to the appropriate Governmental Entity) all material amounts for all
periods through the date hereof in compliance with all Tax withholding
provisions of applicable federal, state, local and foreign laws.

(e) Except as set forth in Section 4.11(e) of the Disclosure Letter, there
are no liens for Taxes upon any property or assets of the Company or any
Subsidiary except liens for Taxes not yet due or the validity of which is being
contested in good faith by appropriate proceedings.

(f) Any difference between (i) the adjusted bases and remaining useful
lives (for federal income tax purposes) of the tangible and intangible
properties of the Company and its Subsidiaries on the books and records of the
Company and its Subsidiaries dated as of April 30, 1998, and (ii) the adjusted
bases and remaining useful lives (for federal income tax purposes) for such
properties on the books and records of the Company and its Subsidiaries on the
day prior to the date hereof, will not constitute a Material Adverse Effect.

(g) Except as set forth on Section 4.11(g) of the Disclosure Letter, none
of the Company or any of its Subsidiaries have (A) applied for or received a tax
ruling (other than a determination with respect to a qualified employee benefit
plan), (B) entered into any closing agreement under Section 7121 of the Code,
(or any similar provision of state, local or foreign law), (C) filed any
election or caused any deemed election under Section 338 of the Code or (D)
granted a power of attorney to any person regarding any Tax matter of the
Company or any of its Subsidiaries.

(h) No Tax is required to be withheld pursuant to Section 1445 of the Code
as a result of any transfers contemplated by this Agreement.

(i) No consent has been filed relating to the Company or any of its
Subsidiaries pursuant to Section 341(f) of the Code.

(j) There is no contract, agreement or intercompany account system in
existence under which the Company or any of its Subsidiaries has, or may at any
time in the future have, an obligation to contribute to the payment of any
portion of a Tax (or pay any amount calculated with reference to any portion of
a Tax) of any group of corporations of which the Company or any of its
Subsidiaries is or was a part.

(k) Each of the Company and its Subsidiaries has disclosed on its federal
income Tax returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code.

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<PAGE>

(l) None of the assets owned by the Company or any of its Subsidiaries
is property that is required to be treated as owned by any other person
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, as in effect immediately prior to the enactment of the Tax Reform
Act of 1986, or is "tax-exempt use property" within the meaning of Section
168(h) of the Code.

SECTION 4.12 COMPLIANCE WITH LAW. Neither the Company nor any of its
Subsidiaries is in conflict with, in default with respect to or in violation of,
(i) any statute, law, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries, or any property or asset of the Company or any of its
Subsidiaries, is bound or affected, in the case of each of (i) and (ii), except
for any such conflicts, defaults or violations that in the aggregate have not
had and are not reasonably expected to have a Material Adverse Effect. The
Company and its Subsidiaries have all material permits, licenses,
authorizations, consents, approvals and franchises from Governmental Entities
required to conduct their businesses as currently conducted (the "COMPANY
PERMITS"), except for such permits, licenses, authorizations, consents,
approvals and franchises the absence of which, individually or in the aggregate,
have not had and are not reasonably expected to have a Material Adverse Effect.
The Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply in the aggregate has not had and
is not reasonably expected to have a Material Adverse Effect.

SECTION 4.13 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section
4.13(a) of the Disclosure Letter, to the best knowledge of the Company:

(i)the Company and each of its Subsidiaries have been at all times and
are in substantial compliance with all applicable Environmental Laws (as
hereinafter defined);

(ii)there are no past or present events, conditions, circumstances,
activities, practices, incidents or actions (including proposed changes in
any Company Permit) that are reasonably likely to substantially interfere
with the continued operation of the business of the Company and of its
Subsidiaries in the manner now conducted or to give rise to any liability
under Environmental Laws that could reasonably be expected to have a
Material Adverse Effect;

(iii)no real property or facility currently or formerly owned, used,
operated, leased, managed or controlled by the Company, each of its
Subsidiaries or any predecessor in interest, is listed on the National
Priorities List or the Comprehensive Environmental Response, Compensation,
and Liability Information System ("CERCLIS"), both promulgated under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), or on any comparable state or local list
established pursuant to any Environmental Law;

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<PAGE>

(iv) neither the Company, any of its Subsidiaries nor any predecessor in
interest has received any written notification of potential or actual
liability or request for information under CERCLA or any comparable
foreign, state or local law;

(v) there is no civil, criminal or administrative action, suit, demand,
hearing, notice of violation or deficiency, investigation, proceeding,
notice, demand letter, decree, judgment, complaint, agreement, claim or
citation pending or threatened against the Company or any of its
Subsidiaries under any Environmental Law, except where such liability or
action, suit, demand, hearing, notice of violation or deficiency,
investigation, proceeding, demand letter, decree, judgment, complaint,
agreement, claim or citation would not, individually or in the aggregate,
have a Material Adverse Effect and, also would not adversely affect the
ability to continue to operate each facility in the manner in which it is
currently operating;

(vi) no Hazardous Material (as hereinafter defined) has been at any time
or is on the date hereof treated, recycled, or disposed of at, in, on or
under any facility or real property owned, operated, leased, managed or
controlled by the Company or any of its Subsidiaries, except in compliance
with applicable Environmental Laws, and none of the Company or any of its
Subsidiaries currently require or previously required interim status or a
hazardous waste permit for the treatment, storage or disposal of hazardous
waste pursuant to the Resource Conservation and Recovery Act, as amended,
or pursuant to any comparable foreign or state hazardous waste statute or
regulation; and

(vii) there has been no Release (as hereinafter defined) at, in, on or
under any facility or real property owned, operated, leased, managed or
controlled by the Company or any of its Subsidiaries that would,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.

(b) The Company has given Parent and Sub access to all records and files
in its possession at both its corporate headquarters and its facilities
currently owned, operated, leased, managed, used or controlled by the Company,
or any of its Subsidiaries, including all reports, studies, analyses, tests or
monitoring results, pertaining to the existence of Hazardous Material or any
other environmental concerns relating to facilities or real property owned,
operated, leased, managed, used or controlled by the Company or any of its
Subsidiaries or concerning compliance with or liability under any Environmental
Laws.

(c) For purposes of this Section 4.13, the definition of the Company shall
include all of the Company's former Subsidiaries.

(d) All disclosures, notifications, registrations, and filings required to
have been made under applicable Environmental Law with respect to the
transactions contemplated by this Agreement have been timely made.

(e) For purposes of this Agreement, "ENVIRONMENTAL LAW" means any law,
statute, ordinance, code, rule, regulation, requirement, order, writ,
injunction, decree, demand, judgment, ruling, decision, determination, award or
binding agreement, issued or entered into by any

21
<PAGE>

Governmental Entity, relating to: (i) pollution, contamination, cleanup,
preservation, protection or reclamation of the environment (including any
ambient, workplace or indoor air, surface water, drinking water, groundwater,
land surface, subsurface strata, river sediment, plant or animal life,
natural resources, workplace and real property and the physical buildings,
structures, improvement and fixtures thereon); (ii) worker health or safety,
including the exposure of employees and other persons to any Hazardous
Material; (iii) any Release or threatened Release, including investigation,
study, assessment, testing, monitoring, containment, removal, remediation,
cleanup and abatement of such Release or threatened Release; and (iv) the
management of any Hazardous Material, including the manufacture, generation,
formulation, processing, labeling, distribution, introduction into commerce,
registration, use, treatment, handling, storage, disposal, transportation,
re-use, recycling or reclamation of any Hazardous Material.

(f) For purposes of this Agreement, "HAZARDOUS MATERIAL" means any
pollutant, contaminant, constituent, chemical, mixture, raw material,
intermediate, product or by-product, petroleum or any fraction thereof,
asbestos or asbestos-containing-material, polychlorinated biphenyls, urea
formaldehyde foam insulation, or industrial, solid, toxic, radioactive,
infectious, disease-causing or hazardous substance, material, waste or agent,
including all substances, materials, products or wastes which are identified
or regulated under any Environmental Law.

(g) For purposes of this Agreement, "RELEASE" means any spill, discharge,
leak, emission, injection, escape, dumping, leaching, dispersal, emanation,
migration or release of any kind whatsoever of any Hazardous Material at, in,
on, into or onto the environment, including the movement of any Hazardous
Material through or in the environment, the abandonment or discard of barrels,
containers, tanks or other receptacles containing or previously containing any
Hazardous Material.

SECTION 4.14 INTELLECTUAL PROPERTY. (a) Section 4.14(a) of the
Disclosure Letter sets forth a true, correct and complete list of all
Intellectual Property (as hereinafter defined) (other than Intellectual Property
included in clauses (vi), (vii) and (ix) of Section 4.14(d)) owned or held by
the Company or any of its Subsidiaries (or otherwise used in the business of the
Company and its Subsidiaries) on the date hereof and identifies all license
agreements (including all amendments or supplements thereto or continuing
thereunder) in effect on the date hereof pursuant to which any such Intellectual
Property is licensed to or by the Company or its Subsidiaries, in each case,
which are or have been material to the Company and its Subsidiaries taken as a
whole.

(b) Except as otherwise set forth in Section 4.14(b) of the Disclosure
Letter or in the license agreements referred to in the immediately preceding
paragraph (a), (i) the Company and its Subsidiaries at the Effective Time will
be the sole and exclusive owners or holders of all such Intellectual Property
free and clear of any royalty or other payment obligation, lien or charge, (ii)
all such Intellectual Property is fully assignable, without conditions,
limitations or restrictions of any kind, (iii) there are no agreements which
restrict or limit the use by the Company or its Subsidiaries of the Intellectual
Property and (iv) record title to all Intellectual Property owned or held by the
Company or its Subsidiaries or otherwise used in the business of the Company or
its Subsidiaries is registered (or a registration application for which has been

22
<PAGE>

submitted) in the name of the Company or any of its Subsidiaries in the
respective patent, trademark and copyright offices of countries indicated in
Section 4.14(a) of the Disclosure Letter.

(i) (w) such Intellectual Property is valid and enforceable in those
countries in which the Company or its Subsidiaries are currently using such
Intellectual Property, (x) such Intellectual Property does not infringe on
any patents, trademarks, copyrights or any other intellectual property or
proprietary rights of any person or entity in any country, (y) all
maintenance taxes, annuities and renewal fees have been paid and all other
necessary actions to maintain such Intellectual Property have been taken
through the date hereof and will continue to be paid or taken by the
Company through the Effective Time and (z) there exists no impediment which
would impair the Company's rights to conduct its business or the business
of its Subsidiaries after the Effective Time pursuant to such Intellectual
Property;

(ii) the Company and its Subsidiaries have taken all reasonable and
appropriate steps to protect the Intellectual Property and, where
applicable, to preserve the confidentiality of the Intellectual Property;

(iii) during the two-year period immediately preceding the date of this
Agreement, neither the Company nor any of its Subsidiaries has received any
written notice of claim that any of such Intellectual Property has expired,
is not valid or enforceable in any country or that it infringes upon or
conflicts with any patent, trademark, service mark, copyright or trade name
of any third party, and no such claim or controversy, whenever filed or
threatened, currently exists;

(iv) during the two-year period immediately preceding the date of this
Agreement, neither the Company nor any of its Subsidiaries has given any
notice of infringement to any third party with respect to any of such
Intellectual Property or has become aware of facts or circumstances
evidencing the infringement by any third party of any of such Intellectual
Property, and no claim or controversy with respect as any such alleged
infringement currently exists; and

(v) certificates of registration and renewal, letter patents and
copyright registration certificates and all other instruments evidencing
ownership of such Intellectual Property are in the possession of the
Company or its Subsidiaries.

(d) The term "INTELLECTUAL PROPERTY" shall mean:

(i) all trademarks, service marks, trademark registrations, service mark
registrations, trade names and applications for registration of trademarks
and service marks;

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<PAGE>

(ii) all licenses which create rights in or to the trademark, service
mark or trade name properties described in clause (i) above;

(iii) all copyrights, copyright registrations and applications for
registration of copyrights;

(iv) all renewals, modifications and extensions of any items referred to
in clauses (i) through (iii) above;

(v) all patents, design patents and utility patents, all applications
for grant of any such patents pending as of the date hereof or as of the
Effective Time or filed within five years prior to the date hereof, and all
reissues, divisions, continuations-in-part and extensions thereof;

(vi) all technical documentation, trade secrets, designs, inventions,
processes, formulae, know-how, operating manuals and guides, plans, new
product development, technical and marketing surveys, material
specifications, product specifications, invention records, research
records, inspection processes, equipment lists, engineering reports and
drawing, architectural or engineering plans, know-how agreements and other
know-how;

(vii) all marketing and licensing records, sales literature, customer
lists, trade lists, sales forces and distributor networks lists,
advertising and promotional materials;

(viii) all rights arising under, and rights to develop, use and sell
under, any of the foregoing and all licenses with respect thereto; and

(ix) all rights and incidents of interest in and to all noncompetition
or confidentiality agreements.

SECTION 4.15 REAL PROPERTY. (a) Section 4.15(a) of the Disclosure Letter
sets forth a true, correct and complete list of all of the real property owned
in fee by the Company and its Subsidiaries. Each of the Company and its
Subsidiaries has good and marketable title to each parcel of real property owned
by it free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance sheet
of the Company dated as of April 30, 1998 and included in the SEC Reports, (ii)
Taxes and general and special assessments not in default and payable without
penalty and interest, and (iii) other liens, mortgages, pledges, encumbrances
and security interests which do not materially interfere with the Company's or
such Subsidiary's use and enjoyment of such real property or materially detract
from or diminish the value thereof.

(b) Section 4.15(b) of the Disclosure Letter sets forth a true, correct
and complete list of all leases, subleases and other agreements under which
the Company or any of its Subsidiaries uses or occupies or has the right to
use or occupy, now or in the future, any real property (the "REAL PROPERTY
LEASES"). The Company has heretofore made available to Parent and Sub true,
correct and complete copies of all Real Property Leases (including all
modifications, amendments, supplements, waivers and side letters thereto).
Each Real Property

24
<PAGE>

Lease is valid, binding and in full force and effect, all rent and other sums
and charges payable by the Company and its Subsidiaries as tenants thereunder
are current, and no termination event or condition or uncured default of a
material nature on the part of the Company or any such Subsidiary exists
under any Real Property Lease. Each of the Company and its Subsidiaries has
a good and valid leasehold interest in each parcel of real property leased by
it free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance
sheet of the Company dated as of April 30, 1998, (ii) Taxes and general and
special assessments not in default and payable without penalty and interest,
and (iii) other liens, mortgages, pledges, encumbrances and security
interests which do not materially interfere with the Company's use and
enjoyment of such real property or materially detract from or diminish the
value thereof.

SECTION 4.16 MATERIAL CONTRACTS. The Company has filed with the SEC, or
disclosed under Section 4.16 of the Disclosure Letter a true, correct and
complete list of all Material Contracts (as hereinafter defined), and made
available to Parent and Sub, true, correct and complete copies of all Material
Contracts. For purposes of this Agreement, "MATERIAL CONTRACTS" shall mean all
contracts, agreements, commitments, arrangements, leases (including with respect
to personal property), policies, and other instruments to which the Company or
any of its Subsidiaries is a party or by which the Company, any of its
Subsidiaries or any of their respective assets is bound which (a) involves or
could involve aggregate payments of more than $250,000 (but not including any
such contract if it may be canceled on less than twelve months' notice and
without liability, penalty or premium), (b) is with any of the Company's
officers, directors or affiliates, or (c) is or could reasonably be expected to
be material to the Company and its Subsidiaries taken as a whole. Neither the
Company nor any of its Subsidiaries is, or has received any written notice or
has any knowledge that any other party is, in default in any respect under any
Material Contract, and to the best knowledge of the Company, there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a material default. The Company has not made any claims
or sought indemnification as to any matter relating to any Material Contract.
Except as set forth in Section 6.11, no valid claim against the Company or its
Subsidiaries exists for payment of any "topping," "profit-participation,"
"termination," "break-up" or "bust-up" fee or any similar compensation or
payment arrangement as a result of the transactions contemplated hereby.

SECTION 4.17 RELATED PARTY TRANSACTIONS. No director, officer, partner,
employee, affiliate or associate of the Company or any of its Subsidiaries (i)
has borrowed any monies from or has outstanding any indebtedness or other
similar obligations to the Company or any of its Subsidiaries; (ii) owns any
direct or indirect interest of any kind (other than the ownership of less than
5% of the stock of a publicly traded company) in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any person or entity which is (x) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company of any of its
Subsidiaries, (y) engaged in a business related to the business of the Company
or any of its Subsidiaries or (z) participated in any transaction to which the
Company or any of its Subsidiaries is a party; or (iii) is otherwise a party to
any contract, arrangement or understanding

25
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with the Company or any of its Subsidiaries, other than contracts listed in
Section 4.09 of the Disclosure Letter.

SECTION 4.18 LIENS. Except as set forth in Section 4.18 of the Disclosure
Letter or as disclosed or permitted pursuant to Sections 4.11, 4.14 and 4.15
hereof and other than liens, mortgages, security interests, pledges and
encumbrances which do not materially interfere with the Company's use and
enjoyment of its property or materially diminish or detract from the value
thereof, neither the Company nor any of its Subsidiaries has granted, created or
suffered to exist with respect to any of its assets, any mortgage, pledge,
charge, hypothecation, collateral, assignment, lien (statutory or otherwise),
encumbrance or security agreement of any kind or nature whatsoever.

SECTION 4.19 RESTRICTIONS OF STATE TAKEOVER STATUTES INAPPLICABLE. As of
the date hereof and at all times on or prior to the Effective Time, the
restrictions of Section 203 of the DGCL shall be inapplicable to the Offer, the
Merger, the Company Option Agreement, the Stockholder Option Agreements and the
transactions contemplated by this Agreement, the Company Option Agreement and
the Stockholder Option Agreements.

SECTION 4.20 REQUIRED VOTE OF COMPANY STOCKHOLDERS. Unless the Merger is
consummated in accordance with Section 253 of the DGCL as contemplated by
Section 2.09 if Parent owns, directly or indirectly, no more than the Revised
Minimum Number of Shares, the only vote of the stockholders of the Company
required to adopt the plan of merger contained in this Agreement and approve the
Merger is the affirmative vote of the holders of not less than a majority of the
outstanding Shares. If Parent owns, directly or indirectly, no more than the
Revised Minimum Number of Shares, no other vote of the stockholders of the
Company is required by law, the Certificate of Incorporation or Bylaws of the
Company as currently in effect or otherwise to adopt the plan of merger
contained in this Agreement and approve the Merger. Sub will have full voting
power with respect to any Shares purchased pursuant to the Offer or the Options.

ARTICLE V

REPRESENTATIONS AND
WARRANTIES OF PARENT AND SUB

Parent and Sub represent and warrant to the Company as follows:

SECTION 5.01 ORGANIZATION AND QUALIFICATION. Each of Parent and Sub is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with all requisite corporate power and
authority to own its properties and conduct its business as currently conducted.
All of the issued and outstanding capital stock of Sub is owned directly or
indirectly by Parent.

SECTION 5.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Sub
has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this

26
<PAGE>

Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate proceedings on
the part of Parent and Sub. This Agreement has been duly and validly
executed and delivered by Parent and Sub and, assuming this Agreement
constitutes the legal, valid and binding obligation of the Company, this
Agreement constitutes a legal, valid and binding agreement of each of Parent
and Sub, enforceable against each of Parent and Sub in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to
general principles of equity (whether considered in a proceeding in equity or
at law).

SECTION 5.03 OFFER DOCUMENTS; PROXY STATEMENT. (a) None of the Offer
Documents will, at the times such documents are filed with the SEC and are
mailed to the stockholders of the Company, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied in
writing by the Company or an affiliate of the Company expressly for inclusion
therein. The Offer Documents will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations of the SEC
thereunder.

(b) None of the information supplied by Parent, Sub or any affiliate of
Parent or Sub specifically for inclusion in the Proxy Statement or the Schedule
14D-9 will, at the date of filing with the SEC, and, in the case of the Proxy
Statement, at the time the Proxy Statement is mailed and at the time of the
Special Meeting, 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.

SECTION 5.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by each of Parent or Sub nor the consummation of
the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective Certificates of Incorporation or
Bylaws (or other similar governing documents) of Parent or Sub, (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (A) as may be required under the HSR Act,
the Exchange Act, the DGCL and the "takeover" or "blue sky" laws of various
states, or (B) where the failure to obtain such consent, approval, authorization
or permit, or to make such filing or notification, would not, individually or in
the aggregate, have a material adverse effect on the ability of Parent or Sub to
consummate the transactions contemplated hereby, (iii) require any consent,
waiver or approval or result in a default (or give rise to any right of
termination, cancellation, modification or acceleration) under any of the terms,
conditions or provisions of any note, license, agreement, contract, indenture or
other instrument or obligation to which Parent or Sub or any of their respective
Subsidiaries is a party or by which Parent or any of its Subsidiaries or any of
their respective assets may be bound, except for such defaults (or rights of
termination, cancellation, modification or acceleration) as to which requisite
waivers or consents have been obtained or which would not in the aggregate have
a material adverse effect on the ability of Parent or Sub to consummate the
transactions contemplated hereby, or (iv) violate any

27
<PAGE>

order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, Sub or any of their respective Subsidiaries or by which any of their
respective assets are bound, except for violations which would not,
individually or in the aggregate, have a material adverse effect on the
ability of Parent or Sub to consummate the transactions contemplated hereby.

SECTION 5.05 OPERATIONS OF SUB. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted and will conduct its operations only as
contemplated hereby.

SECTION 5.06 FINANCING. Parent has sufficient funds available to
consummate the transactions contemplated by this Agreement and to pay all fees
and expenses related to the transactions contemplated by this Agreement.

SECTION 5.07 CURRENT OWNERSHIP. Immediately prior to the execution and
delivery of this Agreement, the Company Option Agreement and the Stockholder
Option Agreements, neither Parent nor Sub was an "interested stockholder" of the
Company, as such term is defined in Section 203(c)(5) of the DGCL.

ARTICLE VI

COVENANTS

SECTION 6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the date on which a majority of the Company's directors are
designees of Parent or Sub, the Company will conduct and will cause each of its
Subsidiaries to conduct its operations according to its ordinary and usual
course of business and consistent with past practice, and the Company will use
and will cause each of its Subsidiaries to use its best efforts to preserve
intact its business organization, to keep available the services of its current
officers and employees and to preserve the goodwill of and maintain satisfactory
relationships with those persons and entities having business relationships with
the Company and its Subsidiaries, and the Company will promptly advise Parent
and Sub in writing of any material change in the Company's or any of its
Subsidiaries' condition (financial or otherwise), properties, customer or
supplier relationships, assets, liabilities, business prospects or results of
operations. Without limiting the generality of the foregoing and except as
otherwise expressly provided in or contemplated by this Agreement or as set
forth in the Disclosure Letter, during the period specified in the preceding
sentence, without the prior written consent of Parent, the Company will not and
will not permit any of its Subsidiaries to:

(i) issue, sell, grant options or rights to purchase, pledge, or
authorize or propose the issuance, sale, grant of options or rights to
purchase or pledge of (A) any Company Securities (including any Existing
Stock Option) or Subsidiary Securities, or grant or accelerate any right to
convert or exchange any Company Securities or Subsidiary Securities, other
than Shares issuable upon exercise of the Existing Stock Options
outstanding on the date hereof or (B) any other securities in respect of,
in lieu of or in substitution for Shares outstanding on the date hereof;

28
<PAGE>

(ii) otherwise acquire or redeem, directly or indirectly, or amend any
Company Securities or Subsidiary Securities;

(iii) split, combine or reclassify its capital stock or declare, set
aside, make or pay any dividend or distribution (whether in cash, stock or
property) on any shares of its capital stock (other than cash dividends
paid to the Company by its wholly-owned Subsidiaries with regard to their
capital stock);

(iv) except as set forth in Section 4.16 of the Disclosure Letter,
(A) make or offer to make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, in each case involving the
payment or receipt of consideration of $100,000 or more, except for
purchases of inventory made in the ordinary course of business and
consistent with past practice, or (B) enter into or amend any Material
Contract or grant any release or relinquishment of any rights under any
Material Contract;

(v) incur or assume any long-term debt or short-term debt except for
debt incurred under the Company's existing Revolving Credit Facility in the
ordinary course of business consistent with past practice;

(vi) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except wholly-owned Subsidiaries of the Company;

(vii) make any loans, advances or capital contributions to, or
investments in, any other person (other than wholly-owned Subsidiaries of
the Company);

(viii) change any of the accounting principles or practices used by it;

(ix) make any Tax election or settle or compromise any material federal,
state or local income Tax liability;

(x) propose or adopt any amendments to its Certificate of Incorporation
or Bylaws (or similar documents);

(xi) except as set forth in Section 6.01 of the Disclosure Letter, grant
any stock-related, performance or similar awards or bonuses;

(xii) forgive any loans to employees, officers or directors or any of
their respective affiliates or associates;

(xiii) except as set forth in Section 6.01 of the Disclosure Letter,
enter into any new, or amend any existing, employment, severance,
consulting or salary continuation agreements with any officers, directors
or employees, or grant any increases in the compensation or benefits to
officers, directors and employees (other than normal increases to persons
who are not officers or directors in the ordinary course of business

29
<PAGE>

consistent with past practices and that, in the aggregate, do not result in
a material increase in benefits or compensation expense of the Company);

(xiv) make any deposits or contributions of cash or other property to
fund or in any other way secure the payment of compensation or benefits
under the Plans or agreements subject to the Plans, other than in the
ordinary course of business consistent with past practice;

(xv) enter into, amend, or extend any collective bargaining or other
labor agreement;

(xvi) except as set forth in Section 6.01 of the Disclosure Letter,
adopt, amend or terminate any Plan or any other bonus, severance, insurance
pension or other employee benefit plan or arrangement;

(xvii) settle or agree to settle any suit, action, claim, proceeding or
investigation (including any suit, action, claim, proceeding or
investigation relating to this Agreement or the transactions contemplated
hereby) or pay, discharge or satisfy or agree to pay, discharge or satisfy
any claim, liability or obligation (absolute or accrued, asserted or
unasserted, contingent or otherwise) other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in full in the
financial statements as at April 30, 1998 or incurred in the ordinary
course of business subsequent to April 30, 1998; or

(xviii) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in
this Agreement untrue or incorrect as of the date when made or as of a
future date or would result in any of the conditions set forth in Exhibit A
not being satisfied.

SECTION 6.02 NO SOLICITATION. The Company shall not, and shall not permit
any of its Subsidiaries and their respective officers, directors, employees,
representatives (including its investment bankers or attorneys), agents or
affiliates to, directly or indirectly, encourage, solicit, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries to, or otherwise assist or
facilitate, any corporation, partnership, person or other entity or group (other
than Parent or Sub or any affiliate or associate of Parent or Sub) concerning
any Acquisition Transaction (as defined in Section 6.11 herein) or potential
Acquisition Transaction; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prohibit the Board of Directors of the Company from furnishing
information to or entering into discussions or negotiations with any person or
entity that makes an unsolicited bona fide proposal to engage in an Acquisition
Transaction that the Board of Directors of the Company determines in good faith
represents a financially superior transaction for the stockholders of the
Company when compared to the Offer and the Merger if, and only to the extent
that, the Board of Directors determines in good faith, following the receipt of
advice of outside legal counsel, that failure to take any such action is
reasonably likely to be a breach by the Board of Directors of its fiduciary
duties to the stockholders of the Company under applicable law; and PROVIDED
FURTHER, HOWEVER, that nothing contained in this Agreement shall prohibit the
Company or its Board of

<PAGE>

Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender offer by a third party pursuant to Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act. The Company will promptly
notify Parent and Sub if any such information is requested from it or any
such negotiations or discussions are sought to be initiated with the Company
and will promptly communicate to Parent and Sub the terms of any proposal or
inquiry and the identity of the party making such proposal or inquiry which
it may receive in respect of any such transaction, including, in the case of
written proposals or inquiries, furnishing Parent and Sub with a copy of such
written proposal or inquiry (and all amendments and supplements thereto).
Subject to the first sentence of this Section 6.02, the Company will and will
cause its Subsidiaries, affiliates and their respective officers, directors,
employees, representatives and agents to immediately cease and cause to be
terminated any existing activities, discussions, or negotiations with any
parties other than Parent, Sub or any of their respective affiliates or
associates conducted heretofore with respect to any Acquisition Transaction.
Except as is required in the exercise of the fiduciary duties of the Board of
Directors of the Company as determined in good faith, following the receipt
of advice of outside legal counsel, the Company agrees not to release any
third party from any confidentiality or standstill agreement to which the
Company is a party without Parent's prior written consent and to take all
steps deemed necessary or appropriate by Parent to enforce to the fullest
extent possible all such agreements.

SECTION 6.03 ACCESS TO INFORMATION. (a) From and after the date of this
Agreement, the Company will (i) give Parent and Sub and their authorized
accountants, investment bankers, counsel and other representatives complete
access (during regular business hours upon reasonable notice) to all employees,
plants, offices, warehouses and other facilities and to all books, contracts,
commitments and records (including Tax returns) of the Company and its
Subsidiaries and cause the Company's and its Subsidiaries' independent public
accountants to provide access to their work papers and such other information as
Parent or Sub may reasonably request, (ii) permit Parent and Sub to make such
inspections as they may require, (iii) cause its officers and those of its
Subsidiaries to furnish Parent and Sub with such financial and operating data
and other information with respect to the business, properties and personnel of
the Company and its Subsidiaries as Parent or Sub may from time to time request
and (iv) furnish promptly to Parent and Sub a copy of each report, schedule and
other document filed or received by the Company during such period pursuant to
the requirements of the federal or state securities laws.

(b) Non-public information obtained by Parent or Sub pursuant to Section
6.03(a) shall be subject to the provisions of the Confidentiality Agreement, the
terms of which are incorporated herein by reference.

SECTION 6.04 REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions herein provided for, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that nothing in this Agreement (other than as expressly
provided for in Section 1.01) shall obligate Parent or Sub to keep the Offer
open beyond the expiration date set

<PAGE>

forth in the Offer (as it may be extended from time to time) and nothing in
this Agreement shall obligate Parent, Sub or any of their respective
Subsidiaries or affiliates to agree (i) to limit in any manner whatsoever or
not to exercise any rights of ownership of any securities (including the
Shares), or to divest, dispose of or hold separate any securities or all or a
portion of their respective businesses, assets or properties or of the
business, assets or properties of the Company or any of its Subsidiaries or
(ii) to limit in any manner whatsoever the ability of such entities (A) to
conduct their respective businesses or own such assets or properties or to
conduct the businesses or own the properties or assets of the Company and its
Subsidiaries or (B) to control their respective businesses or operations or
the businesses or operations of the Company and its Subsidiaries. In
connection with and without limiting the foregoing, (x) each of the Company,
Parent and Sub shall use its reasonable best efforts to make promptly any
required submissions under the HSR Act which the Company and Parent and Sub
determines should be made, in each case, with respect to the Offer, the
Merger, the Company Option Agreement or the Stockholder Option Agreements and
the transactions contemplated by this Agreement, the Company Option Agreement
and the Stockholder Option Agreements, (y) Parent, Sub and the Company shall
cooperate with one another (i) in promptly determining whether any filings
are required to be or should be made or consents, approvals, permits or
authorizations are required to be or should be obtained under any other
federal, state or foreign law or regulation or whether any consents,
approvals or waivers are required to be or should be obtained from other
parties to loan agreements or other contracts or instruments material to the
Company's business in connection with the consummation of the transactions
contemplated by this Agreement, and (ii) in promptly making any such filings,
furnishing information required in connection therewith and seeking to obtain
timely any such consents, permits, authorizations, approvals or waivers and
(z) the Company will use its reasonable best efforts promptly to grant such
approvals and to take or cause to be taken such actions as are necessary to
eliminate or minimize the effects on the transactions contemplated hereby of
any antitakeover statute, regulation or charter provision that is or shall
become applicable to the transactions contemplated hereby (except, in the
case of any such approval or action by the Board of Directors of the Company,
to the extent that the Board of Directors determines in good faith, following
the receipt of advice of outside legal counsel, that granting such approval
or taking such action is reasonably likely to be a breach by the Board of
Directors of its fiduciary duties to the stockholders of the Company under
applicable law). Without limiting the foregoing, the Company shall use its
best efforts to obtain prior to the consummation of the Offer the consents,
approvals and waivers listed in Section 4.07 of the Disclosure Letter, but,
without Parent's consent, shall not agree to amend any material terms of any
agreements referenced to herein, or pay or agree to pay any amount or other
consideration in order to obtain any such approvals or waivers. In case at
any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and directors of each party to this Agreement shall take all such necessary
action.

(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is commenced, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their reasonable best efforts to defend vigorously against it and respond
thereto.

<PAGE>

SECTION 6.05 INDEMNIFICATION AND INSURANCE. (a) Parent and Sub agree
that all rights to indemnification existing in favor of the present or former
directors, officers and employees of the Company or any of its Subsidiaries (the
"INDEMNIFIED PARTIES") as provided in indemnification agreements with the
Company, the Company's Certificate of Incorporation or Bylaws, or the articles
of organization, bylaws or similar documents of any of the Company's
Subsidiaries as in effect as of the date hereof with respect to matters
occurring prior to the Effective Time, including, without limitation, matters
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby, shall
survive the Merger and shall continue in full force and effect for a period of
not less than the statutes of limitations applicable to such matters, and Parent
agrees to cause the Surviving Corporation to comply fully with its obligations
hereunder and thereunder.

(b) To the extent paragraph (a) shall not serve to indemnify and hold
harmless an Indemnified Party, for a period of four years from and after the
Effective Time, the Surviving Corporation and Parent shall indemnify, defend and
hold harmless the Indemnified Parties against all losses, claims, damages,
costs, expenses (including reasonable attorneys' fees and expenses), liabilities
or judgments of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation (an "ACTION") arising out of or pertaining to
such individuals' services, prior to the Effective Time, as directors, officers
or employees of the Company or any of its Subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees of the Company or as (at
the request of the Company) directors, officers or employees of another
corporation or other enterprise (including, without limitation, matters based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby), in each case to the
full extent permitted by applicable law.

(c) The Surviving Corporation will cause to be maintained in effect for a
period of four years after the Effective Time (or, if the statute of limitations
with respect to such claims is extended, for an additional period, not to exceed
two years, equal to the length of such extension), in respect of acts or
omissions occurring prior to the Effective Time (but only in respect thereof),
policies of directors' and officers' liability insurance covering the persons
currently covered by the Company's existing directors' and officers' liability
insurance policies and providing substantially similar coverage to such existing
policies; PROVIDED, HOWEVER, that the Surviving Corporation will not be required
in order to maintain such directors' and officers' liability insurance policies
to pay an annual premium in excess of $265,000 (the "CAP"); and PROVIDED FURTHER
that, if equivalent coverage cannot be obtained, or can be obtained only by
paying an annual premium in excess of the Cap, the Surviving Corporation shall
only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Cap.

(d) In the event any Action is brought against any Indemnified Parties for
which indemnification may be sought in accordance with this Section 6.05, (i)
such Indemnified Parties shall notify the Company (or, after the Effective Time,
the Surviving Corporation and Parent) in writing promptly after such Indemnified
Party receives notice of such Action and shall deliver to the Company (or, after
the Effective Time, the Surviving Corporation and Parent) the undertaking
contemplated by Section 145(e) of the DGCL, (ii) the Company (or, after the
Effective Time, the Surviving Corporation or Parent) shall be entitled to assume
the defense

<PAGE>

thereof and, after notice from the Company (or the Surviving Corporation or
Parent, as applicable) to the Indemnified Parties that it so chooses, the
Company (or the Surviving Corporation and Parent, as applicable) shall not be
liable to the Indemnified Parties for any legal fees or expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof
(PROVIDED, HOWEVER, that if (x) the Company (or the Surviving Corporation and
Parent, as applicable) does not elect to assume the defense thereof, (y) the
Company (or the Surviving Corporation and Parent, as applicable) otherwise
authorizes the Indemnified Party to retain counsel for the defense thereof or
(z) the assumption of the defense thereof by the Company (or the Surviving
Corporation or Parent, as applicable) would present counsel selected by the
Company (or the Surviving Corporation or Parent, as applicable) with a
conflict of interest or if such counsel's representation of the Indemnified
Parties would otherwise be inappropriate under the applicable standards of
professional conduct, then the Company (or the Surviving Corporation and
Parent, as applicable) will pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, and reasonably acceptable to Parent),
and (iii) the Company (or the Surviving Corporation and Parent, as
applicable) will cooperate in the defense of any such matter; PROVIDED,
HOWEVER, that none of the Company, the Surviving Corporation or Parent shall
be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld), and PROVIDED FURTHER that
the Company (or the Surviving Corporation and Parent, as applicable) shall
not be obligated pursuant to this Section 6.05 to pay the fees and expenses
of more than one counsel for all Indemnified Parties in any single Action,
except to the extent that, in the reasonable opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such Action.

(e) This Section 6.05 shall survive the consummation of the Merger and is
intended to benefit, and shall be enforceable by any person or entity entitled
to be indemnified hereunder (whether or not parties to this Agreement). The
Company (or the Surviving Corporation and Parent, as applicable) shall pay the
reasonable expenses, including reasonable attorneys' fees, that may be incurred
by any Indemnified Parties in enforcing rights to which such Indemnified Parties
are entitled under the provisions of this Section 6.05.

SECTION 6.06 EMPLOYEE MATTERS. (a) Prior to the Effective Time, except
as set forth below, the Company will, and will cause its Subsidiaries to, and
from and after the Effective Time subject to paragraph (b) below, Parent will,
and will cause the Surviving Corporation to, honor, in accordance with their
terms all existing Plans and employment and severance agreements between the
Company or any of its Subsidiaries and any officer, director or employee of the
Company or any of its Subsidiaries specified in Section 6.06(a) of the
Disclosure Letter. Nothing in this Section 6.06(a) shall be deemed to prevent
or limit in any way the amendment or termination of any such Plan or agreement
in accordance with its terms by the Company or, after the Effective Time, the
Surviving Corporation.

(b) Parent currently intends to cause the Surviving Corporation and its
Subsidiaries, until the first anniversary of the Effective Time, to provide
pension and welfare benefits to their employees (considered as a group)
(excluding employees covered by collective bargaining agreements and excluding
benefits that are contingent on a change in control or that are based on the
value of, or require the issuance of, securities), which benefits will be in the

<PAGE>

aggregate no less favorable than those currently provided by the Company and its
Subsidiaries in the aggregate to such employees. Nothing in this Section
6.06(b) shall be deemed to constitute an amendment of any employee benefit plan,
program or arrangement or to prevent the Surviving Corporation or any of its
Subsidiaries from making any change in any plan, program or arrangement,
including any change required by law or deemed necessary or appropriate to
comply with applicable law or regulation.

(c) The Company shall take, or cause to be taken, all action necessary, as
promptly hereafter as reasonably practicable, to amend any plan, other than the
Stock Option Plans, maintained by the Company or any of its Subsidiaries to
eliminate, effective immediately prior to the Effective Time, all provisions for
the purchase of Shares directly from the Company or any of its Subsidiaries or
securities of any Subsidiary.

(d) Without limiting the foregoing paragraph (c), the Company shall take,
or cause to be taken, all action necessary, to ensure that the Stock Option
Plans shall terminate as of the Effective Time.

(e) Parent will, and will cause the Surviving Corporation to, cause
service rendered by employees of the Company and its Subsidiaries prior to
the Effective Time to be taken into account for vesting and eligibility
purposes under employee benefit plans of Parent, the Surviving Corporation
and its Subsidiaries, to the same extent as such service was taken into
account under the corresponding plans of the Company and its Subsidiaries for
those purposes. Employees of the Company and its Subsidiaries will not be
subject to any pre-existing condition limitation under any health plan of
Parent, the Surviving Corporation or its Subsidiaries for any condition for
which they would have been entitled to coverage under the corresponding plan
of the Company or its Subsidiaries in which they participated prior to the
Effective Time. Parent will, and will cause the Surviving Corporation and
its Subsidiaries, to give such employees credit under such plans for
co-payments made and deductibles satisfied prior to the Effective Time.

(f) No later than two business days prior to its distribution, the Company
and its Subsidiaries shall provide Parent and Sub with a copy of any
communication intended to be made to any of their respective employees relating
to the transactions contemplated hereby, and will provide an opportunity for
Parent and Sub to make reasonable revisions thereto.

(g) Prior to the date hereof, the Company has entered into employment
agreements, each in form and substance satisfactory to Parent, with Robert
Berglass and Grant W. Johnson, which employment agreements shall replace and
supersede the existing employment and severance agreements between the Company
and such officers.

SECTION 6.07 TAKEOVER LAWS. The Company shall, upon the request of Parent
or Sub, take all reasonable steps to exclude the applicability of, or to assist
in any challenge by Parent or Sub to the validity, or applicability to the
Offer, the Merger or any other transaction contemplated by this Agreement, the
Company Option Agreement or the Stockholder Option Agreements, of, any Takeover
Laws.

<PAGE>

SECTION 6.08 PROXY STATEMENT. Unless the Merger is consummated in
accordance with Section 253 of the DGCL as contemplated by Section 2.09, the
Company shall prepare and file with the SEC, subject to the prior review and
approval of Parent and Sub (which approval shall not be unreasonably withheld),
as soon as practicable after the consummation of the Offer, a preliminary proxy
or information statement (the "PRELIMINARY PROXY STATEMENT") relating to the
Merger as required by the Exchange Act and the rules and regulations of the SEC
thereunder, with respect to the transactions contemplated hereby. The Company
shall obtain and furnish the information required to be included in the
Preliminary Proxy Statement, shall provide Parent and Sub with, and consult with
Parent and Sub regarding, any comments that may be received from the SEC or its
staff with respect thereto, shall, subject to the prior review and approval of
Parent and Sub (which approval shall not be unreasonably withheld), respond
promptly to any such comments made by the SEC or its staff with respect to the
Preliminary Proxy Statement, shall cause the Proxy Statement to be mailed to the
Company's stockholders at the earliest practicable date and shall use its best
efforts to obtain the necessary approval of the Merger by its stockholders.

SECTION 6.09 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Sub, and Parent or Sub, as the case may be, shall
give prompt notice to the Company, of the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which is likely (i) to cause any
representation or warranty of such party contained in this Agreement
(disregarding any materiality limitation contained therein) to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii) to
result in any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied hereunder
(including the conditions set forth in Exhibit A); PROVIDED, HOWEVER, that the
delivery of any notice pursuant to this Section 6.09 shall not limit or
otherwise affect the remedies available hereunder to any of the parties
receiving such notice.

SECTION 6.10 SUBSEQUENT FILINGS. Until the Effective Time, the Company
will timely file with the SEC each form, report and document required to be
filed by the Company under the Exchange Act and will promptly deliver to Parent
and Sub copies of each such report filed with the SEC. As of their respective
dates, none of such reports shall 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 therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of the Company included in such reports
shall be prepared in accordance with generally accepted accounting principles in
the United States applied on a consistent basis (except as may be indicated in
the notes thereto) and shall fairly present the financial position of the
Company as at the dates thereof and the results of their operations and changes
in financial position for the periods then ended (subject to, in the case of any
unaudited interim financial statements, normal year-end adjustments).

SECTION 6.11 TERMINATION FEE; EXPENSES. (a) In the event that this
Agreement is terminated (i) pursuant to Sections 8.01(e) or 8.01(h) or
(ii) pursuant to any other provision of Section 8.01 (regardless of whether such
termination is by Parent or the Company, unless such termination results solely
from a material breach by Parent or Sub of their respective obligations

<PAGE>

hereunder) and (in the case of clause (ii) only) either (y) prior to such
termination a Trigger Event (as such term is defined in Section 6.11(b)) has
occurred or (z) prior to such termination a written proposal shall have been
made relating to an Acquisition Event (as such term is defined in Section
6.11(c)) and within twelve months from the date of such termination an
Acquisition Event shall have occurred, then the Company shall pay to Parent a
fee of $2,500,000 (the "TERMINATION FEE"). Such fee shall be payable in
immediately available funds at the time of termination if such fee becomes
payable pursuant to clause (i) or clause (ii)(y) above, or on the second
business day following the occurrence of the Acquisition Event if such fee
becomes payable in the circumstances described in clause (ii)(z) above.
Notwithstanding the foregoing, the Termination Fee shall cease to be payable
immediately following any exercise or repurchase of the Company Option in
accordance with its terms.

(b) As used herein, "TRIGGER EVENT" shall mean the occurrence of any of
the following events:

(i) The Company or any of its Subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have recommended, approved,
authorized, proposed, filed a Schedule 14D-9 not opposing, or publicly
announced its intention to enter into, any Acquisition Transaction (other
than with Parent, Sub or any of its affiliates), or shall have resolved to
do any of the foregoing. For purposes of this Agreement "ACQUISITION
TRANSACTION" shall mean any tender offer or exchange offer, any merger,
consolidation, liquidation, dissolution, recapitalization, reorganization
or other business combination, any acquisition, sale or other disposition
of a material amount of assets or securities or any other similar
transaction involving the Company, its securities or any of its material
Subsidiaries or divisions;

(ii) the Board of Directors or any committee thereof of the Company
shall have withdrawn or modified or amended in any manner adverse to Parent
or Sub its authorization, approval or recommendation to the stockholders of
the Company with respect to the Offer, the Merger or this Agreement, or
shall have resolved to do any of the foregoing or shall have failed to have
reiterated its recommendation within five business days of any written
request by Parent or Sub therefor; or

(iii) any person, entity or "group" (as that term is used in Section
13(d)(e) of the Exchange Act) (other than the Option Grantors and their
affiliates and other than Parent, Sub or any of their affiliates and other
than persons, entities or groups that are permitted to report their
ownership of Shares with the SEC on Schedule 13G) shall have become the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange
Act) of 20% of the then outstanding Shares.

(c) As used herein, "ACQUISITION EVENT" shall mean the consummation of any
(i) Acquisition Transaction or (ii) series of transactions that results in any
person, entity or "group" (other than the Option Grantors and their affiliates
and other than Parent, Sub or any of their affiliates) acquiring more than 50%
of the outstanding Shares or assets of the Company (in each

<PAGE>

case including through any open market purchases, merger, consolidation,
recapitalization reorganization or other business combination).

SECTION 6.12 EXERCISE OF STOCKHOLDER OPTIONS. Parent and Sub hereby agree
that, in the event that Parent or Sub (or any affiliate of Parent or Sub)
exercises any of the Stockholder Options and purchases Shares thereunder, as
promptly as practicable thereafter, Parent will propose to the Company a merger,
on terms and subject to conditions substantially the same as those provided in
this Agreement, between Sub or another of its wholly-owned Subsidiaries and the
Company pursuant to which the stockholders of the Company (other than Parent,
Sub or any Subsidiary of Parent, Sub or the Company) will receive an amount of
cash consideration per Share equal to the Merger Consideration (or such higher
amount as is payable for Shares under any of the Stockholder Option Agreements),
and will take such actions as may be necessary or appropriate in order to effect
such merger at the earliest practicable time.

ARTICLE VII

CONDITIONS TO CONSUMMATION OF THE MERGER

SECTION 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the proposed Effective Time,
of the following conditions:

(a) unless the Merger is consummated pursuant to Section 253 of the
DGCL as contemplated by Section 2.09, the agreement of merger (as such term
is used in Section 251 of the DGCL) contained in this Agreement shall have
been adopted by the affirmative vote of the stockholders of the Company
required by and in accordance with applicable law;

(b) all necessary waiting periods under the HSR Act applicable to the
Merger shall have expired or been terminated;

(c) no statute, rule, regulation, executive order, judgment, decree
or injunction shall have been enacted, entered, issued, promulgated or
enforced by any court or Governmental Entity against Parent, Sub or the
Company and be in effect that prohibits the consummation of the Merger or
makes such consummation illegal (each party agreeing to use all reasonable
efforts to have such prohibition lifted); and

(d) Sub shall have accepted for purchase and paid for the Shares
tendered pursuant to the Offer; PROVIDED, HOWEVER, that this condition will
be deemed satisfied if Sub shall have failed to purchase Shares tendered
pursuant to the Offer in violation of the terms of this Agreement.

SECTION 7.02 CONDITIONS TO THE OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger are further
subject to the satisfaction or waiver, where permissible, on or prior to the
proposed Effective Time of the following conditions:

<PAGE>

(a) the Company shall have performed and complied in all material
respects with all agreements and obligations and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time and the representations and warranties of the Company
contained herein that are qualified as to materiality shall be true and
correct, and the representations and warranties of the Company that are not
so qualified shall be true and correct in all material respects, in each
case on the date of this Agreement and at and as of the proposed Effective
Time as though such representations and warranties were made at and as of
such time; and

(b) the Company shall have furnished such certificates of its
officers to evidence compliance with the conditions set forth in
Section 7.02(a) hereof as may be reasonably requested by Sub.

SECTION 7.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligations of the Company to effect the Merger are further subject
to the satisfaction or waiver, where permissible, on or prior to the proposed
Effective Time of the following conditions:

(a) Parent and Sub shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to
be performed or complied with by them on or prior to the proposed Effective
Time and the representations and warranties of Parent and Sub contained
herein that are qualified as to materiality shall be true and correct, and
the representations and warranties of Parent and Sub that are not so
qualified shall be true and correct in all material respects, in each case
on the date of this Agreement and at and as of the proposed Effective Time
as though such representations and warranties were made at and as of such
time; and

(b) Parent and Sub shall have furnished such certificates of its
officers to evidence compliance with the conditions set forth in Section
7.03(a) hereof as may be reasonably requested by the Company.

ARTICLE VIII

TERMINATION; AMENDMENT; WAIVER

SECTION 8.01 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time notwithstanding approval thereof by the
stockholders of the Company, but prior to the Effective Time:

(a) by mutual written consent of the Boards of Directors of the
Company and Parent;

(b) by (i) Parent or (ii) the Company, in either case, if the
Effective Time shall not have occurred on or before December 31, 1998
(provided that the right to terminate this Agreement under this
Section 8.01(b) shall not be available to any party whose

<PAGE>

failure to fulfill any obligation under this Agreement has been the cause
of, or resulted, in the failure of the Effective Time to occur on or before
such date);

(c) by Parent or the Company, if any court of competent jurisdiction
or other Governmental Entity shall have issued an order, decree or ruling,
or taken any other action restraining, enjoining or otherwise prohibiting
any of the transactions contemplated by this Agreement, the Company Option
Agreement or the Stockholder Option Agreements and such order, decree,
ruling or other action shall have become final and non-appealable;

(d) (i) by the Company, if Sub fails to commence the Offer as
provided in Section 1.01 or fails to purchase validly tendered Shares in
violation of the terms of the Offer or this Agreement and (ii) by Parent,
if the Offer expires or is terminated or withdrawn on account of the
failure of a condition specified in Exhibit A hereto without any Shares
being purchased thereunder;

(e) by Parent, if (i) the Board of Directors or any committee thereof
of the Company withdraws or modifies or amends in a manner adverse to
Parent or Sub its authorization, approval or recommendation of the Offer or
the Merger or this Agreement or shall have resolved to do any of the
foregoing or shall have failed to have reiterated its recommendation within
five business days of any written request by Parent or Sub therefor or
(ii) the Company or any of its Subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have approved, recommended,
authorized, publicly announced its intention to enter into or filed a
Schedule 14D-9 not opposing any Acquisition Transaction with a party other
than Parent, Sub or any of their affiliates, or shall have resolved to do
any of the foregoing;

(f) by Parent or the Company, if the other party (or, in the case of
termination by the Company, if Sub) shall have breached or failed to comply
in any material respect with any of its obligations, covenants or
agreements under this Agreement, or any of the representations and
warranties of the other party set forth in this Agreement which is
qualified as to materiality, shall not be true and correct, or any such
representation or warranty that is not so qualified, shall not be true and
correct in any material respect, in each case when made or at any time
prior to the Effective Time as if made at and as of such time;

(g) by Parent, if at any time prior to the purchase by Sub of all of
the Shares subject to the Stockholder Options, the Stockholder Option
Agreements shall not be in full force and effect or the Option Grantors
shall have breached in any material respect any representation, warranty or
covenant contained in the Stockholder Option Agreements; or

(h) by the Company, to allow the Company to enter into an agreement
in respect of an Acquisition Transaction that the Board of Directors of the
Company shall have determined represents a financially superior transaction
for the stockholders of the Company when compared to the Offer and the
Merger if, and only to the extent that, the

<PAGE>

Board of Directors shall have determined in good faith, following the
receipt of advice of outside legal counsel, that failure to take any
such action would be a breach by the Board of Directors of its fiduciary
duties to the stockholders of the Company under applicable law;
PROVIDED, THAT, prior to any such termination, the Company notifies
Parent promptly of its intention to terminate this Agreement and enter
into an agreement with respect to an Acquisition Transaction and gives
Parent an opportunity to match the terms of such agreement, which notice
shall include the terms of such Acquisition Transaction and shall be
given at least five business days prior to the termination of this
Agreement; PROVIDED, FURTHER, that such termination shall not be
effective unless the Company contemporaneously pays Parent the fee
described in Section 6.11 hereof.

SECTION 8.02 EFFECT OF TERMINATION. If this Agreement is terminated and
the Merger is abandoned pursuant to Section 8.01 hereof, this Agreement, except
for the provisions of Sections 6.03(b), 6.11, 6.12, 8.02, 9.10 and 9.12 hereof
and except to the extent provisions of this Agreement relate to the Company
Option Agreement or the Stockholder Option Agreements, shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders. Nothing in this Section 8.02 shall relieve
any party to this Agreement of liability for willful breach of this Agreement.

SECTION 8.03 AMENDMENT. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Sub, subject in the case of the Company to
Section 1.04(b), at any time before or after adoption of this Agreement by the
stockholders of the Company but, after any such stockholder approval, no
amendment shall be made which decreases the Merger Consideration or which
adversely affects the rights of the Company's stockholders hereunder without the
approval of the stockholders of the Company. This Agreement may not be amended
except by an instrument in writing signed on behalf of all of the parties.

SECTION 8.04 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent and Sub, subject in the case of the Company to
Section 1.04(b), may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any other
applicable party or in any document, certificate or writing delivered pursuant
hereto by any other applicable party or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time.

41
<PAGE>

SECTION 9.02 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together with
the Disclosure Letter, the Company Option Agreement and the Confidentiality
Agreement, constitutes the entire agreement between the parties with respect to
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to
subject matter hereof. The Agreement shall not be assigned by operation of law
or otherwise; PROVIDED, HOWEVER, that Parent or Sub may assign any of their
respective rights and obligations to any affiliate of Parent or Sub, as the case
may be, but no such assignment shall relieve Parent or Sub, as the case may be,
of its obligations hereunder. It is understood and agreed that either Sub or
any affiliates of Sub may purchase Shares under the Offer.

SECTION 9.03 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any federal or state
court located in the State of New York (as to which the parties agree to submit
to jurisdiction for the purposes of such action), this being in addition to any
other remedy to which they are entitled at law or in equity.

SECTION 9.04 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.

SECTION 9.05 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile transmission with confirmation
of receipt, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:

if to Parent or Sub:

Henkel KGaA
Henkelstrasse 67
D-40191 Dusseldorf
Germany
Facsimile: (49) 211 798 2470
Attention: Petra U. Hammerlein

with a copy to:

Henkel Acquisition Corp. II
c/o Henkel Corporation
The Triad
2200 Renaissance Boulevard - Suite 200
Gulph Mills, PA 19406

42
<PAGE>

Facsimile: (610) 270 8219
Attention: Ernest G. Szoke

and to:

Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Facsimile: 212-225-3999
Attention: William A. Groll, Esq.

if to the Company:

DEP Corporation
2101 East Via Arado
Rancho Dominguez, CA 90220
Facsimile: (310) 537 2524
Attention: Robert H. Berglass

with a copy to:

Latham & Watkins
633 West Fifth Street, Ste. 4000
Los Angeles, CA 90071
Facsimile: 213-891-8763
Attention: Paul D. Tosetti, Esq.

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).

SECTION 9.06 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.

SECTION 9.07 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

SECTION 9.08 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Section 6.05 (which is intended to be for the benefit of the persons
referred to therein, and may be enforced by any such persons).

43
<PAGE>

SECTION 9.09 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

SECTION 9.10 FEES AND EXPENSES. Whether or not the Offer or the Merger is
consummated, all fees, costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses, except as contemplated by Section 6.11 hereof.

SECTION 9.11 CERTAIN DEFINITIONS. (a) The term "SUBSIDIARY" shall mean,
when used with reference to an entity, any other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions, or a
majority of the outstanding voting securities of which, are owned directly or
indirectly by such entity.

(b) "MATERIAL ADVERSE EFFECT" shall mean any change, condition, event,
fact, circumstance or development (i) constituting or having a material and
adverse effect (or any change, condition, event, fact circumstance or
development which is reasonably likely to have any material and adverse effect)
on any of the condition (financial or otherwise), business, properties, assets,
liabilities, results of operations or prospects of the Company and its
Subsidiaries taken as a whole, or (ii) that materially impairs, or is reasonably
likely to materially impair, the ability of the parties to consummate the
transactions contemplated by this Agreement.

(c) "TAX" shall mean all taxes, charges, fees, levies, imposts, duties,
and other assessments, including any income, alternative minimum or add-on tax,
estimated, gross income, gross receipts, sales, use, transfer, transactions,
intangibles, ad valorem, value-added, franchise, registration, title, license,
capital, paid-up capital, profits, withholding, employee withholding, payroll,
worker's compensation, unemployment insurance, social security, employment,
excise (including the federal communications excise tax under Section 4251 of
the Code), severance, stamp, transfer occupation, premium, recording, real
property, personal property, federal highway use, commercial rent, environmental
(including taxes under Section 59A of the Code) or windfall profit tax, custom,
duty or other tax, fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties, related liabilities, fines or
additions to tax that may become payable in respect thereof imposed by any
country, any state, county, provincial or local government or subdivision or
agency thereof.

(d) The term "including" shall be deemed to be followed by the phrase
"without limitation."

(e) The term "hereby" shall be deemed to refer to this Agreement in its
entirety, rather than to any Article, Section, or other portion of this
Agreement.

(f) The term "the transactions contemplated hereby" shall include the
making and consummation of the Offer, the execution of the Company Option
Agreement and the Stockholder Option Agreements and the exercise by Parent and
Sub of the Options and the

44
<PAGE>

acquisition of shares pursuant thereto and the exercise by Parent or Sub of
any other rights thereunder, and consummation of the Merger.

(g) The term "affiliate" shall have the meaning given to such term in Rule
12b-2 under the Exchange Act.

(h) The term "associate" shall have the meaning given to such term in Rule
12b-2 under the Exchange Act.

(i) The term "best knowledge of the Company" or similar expression shall
mean the knowledge of the senior management of the Company, including the
knowledge that would have been obtained through inquiry of senior managers with
overall responsibility for the relevant matters, whether or not such inquiry has
actually been made.

SECTION 9.12 PRESS RELEASES. Parent, Sub and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement except, upon advice of counsel, as required by law or by obligations
pursuant to any listing agreement with any relevant national securities
exchange.

45
<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.

HENKEL KGaA

By: /s/ Uwe Specht
-------------------------
Name: Dr. Uwe Specht
Title: Executive Vice President

By: /s/ Petra Hammerlein
-------------------------
Name: Dr. Perta Hammerlein
Title: Senior Counsel

HENKEL ACQUISITION CORP. II

By: /s/ John E. Knudson
-------------------------
Name: John E. Knudson
Title: Vice President and Treasurer

DEP CORPORATION

By: /s/ Robert H. Berglass
-------------------------
Name: Robert H. Berglass
Title: Chairman and President

46
<PAGE>

EXHIBIT A

CONDITIONS TO THE OFFER

Capitalized terms used in this Exhibit A and not otherwise
defined herein shall have the meanings assigned to them in the Agreement to
which it is attached (the "MERGER AGREEMENT").

Notwithstanding any other provision of the Offer, Sub shall
not be required to accept for payment, purchase or pay for any Shares
tendered until the expiration of any applicable waiting period for the Offer
and the options granted pursuant to the Company Option Agreement and the
Stockholder Option Agreements (the "OPTIONS") under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and Sub may
terminate or, subject to the terms and conditions of the Merger Agreement,
amend the Offer as to any Shares not then accepted for payment, shall not be
required to accept for payment, purchase or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act,
pay for any Shares, or may delay the acceptance for payment of or, subject to
the restriction referred to above, the payment for Shares tendered, if (1) at
the expiration of the Offer, the number of Shares validly tendered and not
withdrawn, together with the Shares beneficially owned by Parent and its
affiliates or which Parent and its affiliates have the immediate right to
acquire pursuant to the Stockholder Option Agreements and the Company Option
Agreement, shall not constitute at least 90% of the outstanding Shares on a
fully diluted basis (the "MINIMUM CONDITION"); PROVIDED, HOWEVER, that the
Minimum Condition may be required to be amended in accordance with Section
1.01(c) of the Merger Agreement, or (2) at any time on or after the date of
the Merger Agreement and prior to the acceptance for payment of Shares, any
of the following events shall occur or exist:

(a) there shall have been any action taken, or any
statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, proposed, sought, promulgated,
enacted, entered, enforced, issued, amended or deemed
applicable to Parent, Sub, the Company, any other affiliate of
Parent or the Company, the Offer, the Options or the Merger,
that would or is reasonably likely, directly or indirectly, to
(i) make the acceptance for payment of, or payment for or
purchase of some or all of the Shares pursuant to the Offer or
the Options illegal, or otherwise restrict or prohibit the
consummation of the Offer, the Options or the Merger, (ii)
result in a significant delay in or restrict the ability of
Sub to accept for payment, pay for or purchase some or all of
the Shares pursuant to the Offer or the Options or to effect
the Merger, (iii) render Sub unable to accept for payment or
pay for or purchase some or all of the Shares pursuant to the
Offer or the Options, (iv) impose material limitations on the
ability of Parent, Sub or any of their respective Subsidiaries
or affiliates to acquire or hold, transfer or dispose of, or
effectively to exercise all rights of ownership of, some or
all of the Shares including the right to vote the Shares
purchased by it pursuant to the Offer or the Options on all
matters properly presented to the stockholders of the Company,
(v) require the divestiture by Parent, Sub or any of their
respective Subsidiaries or affiliates of any Shares, or
require

A-1
<PAGE>

Sub, Parent, the Company, or any of their respective
Subsidiaries or affiliates to dispose of or hold separate all
or any material portion of their respective businesses, assets
or properties or impose any material limitations on the
ability of any of such entities to conduct their respective
businesses or own such assets, properties or Shares or on the
ability of Parent or Sub to conduct the business of the
Company and its Subsidiaries and own the assets and properties
of the Company and its Subsidiaries or (vi) impose any
material limitations on the ability of Parent, Sub or any of
their respective Subsidiaries or affiliates effectively to
control the business or operations of the Company, Parent,
Sub, or any of their respective Subsidiaries or affiliates;

(b) there shall have been instituted or pending any
action, proceeding or counterclaim by or before any
governmental, administrative or regulatory agency or
instrumentality or before any court, arbitration tribunal or
any other tribunal, domestic or foreign, challenging the
making of the Offer or the acquisition by Sub of the Shares
pursuant to the Offer or the Options or the consummation of
the Merger, or seeking to obtain any material damages, or
seeking to, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (vi) of
paragraph (a) above;

(c) any of the Stockholder Option Agreements shall not
be in full force and effect or any of the Option Grantors
shall have breached in any material respect any
representation, warranty or covenant contained therein;

(d) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on any
national securities exchange in the United States, including
the NASDAQ stock market, or the Frankfurt Stock Exchange for a
period of more than one full trading day, (ii) the declaration
of any banking moratorium or any suspension of payments in
respect of banks in the United States or Germany, (iii) the
commencement of a war, armed hostilities or any other
international or national calamity involving the United States
or Germany, or (iv) in the case of any of the foregoing
existing at the time of the execution of the Merger Agreement,
a material acceleration or worsening thereof;

(e) any Person, entity or "group" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than Parent,
Sub or the Option Grantors or any of their respective
affiliates (and other than persons, entities or groups that
are permitted to report their ownership of Shares with the SEC
on Schedule 13G) shall have become the beneficial owner (as
that term is used in Rule 13d-3 under the Exchange Act) of
more than 20% of the outstanding Shares;

(f) the Company or any of its Subsidiaries (or the Board
of Directors or any committee thereof of the Company) shall
have approved, recommended, authorized, filed a Schedule 14D-9
not opposing, or publicly announced its intention to enter
into, any Acquisition Transaction (other than with Parent, Sub
or any of their affiliates);

(g) there shall have occurred any change, condition,
event or development in the business, condition (financial or
otherwise), assets, liabilities, results of operations or

A-2

<PAGE>

prospects of the Company or any of its Subsidiaries that is
materially adverse to the Company and its Subsidiaries taken
as a whole or that materially impairs the ability of the
parties to consummate the Offer or the Merger;

(h) the Company shall have breached or failed to comply
in any material respect with any of its obligations,
covenants, or agreements under the Merger Agreement or the
Company Option Agreement or any representation or warranty of
the Company contained in the Merger Agreement that is
qualified as to materiality shall not be true and correct, or
any such representation or warranty that is not so qualified
shall not be true and correct in any material respect, in each
case either as of when made or at and as of any time
thereafter;

(i) the Merger Agreement shall have been terminated
pursuant to its terms or shall have been amended pursuant to
its terms to provide for such termination or amendment of the
Offer; or

(j) the Board of Directors or any committee thereof of
the Company shall have modified or amended in any manner
adverse to Parent or Sub or shall have withdrawn its
authorization, approval or recommendation of the Offer, the
Merger or the Merger Agreement, or shall have resolved to do
any of the foregoing or shall have failed to have reiterated
its recommendation within five business days of any written
request by Parent or Sub therefor;

which, in the good faith judgment of Parent or Sub, in any case, and
regardless of the circumstances (including any action or inaction by Parent
or Sub or any of their affiliates permitted by the Merger Agreement) giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with acceptance for payment or payment for Shares.

The foregoing conditions are for the sole benefit of Parent
and Sub and may be asserted regardless of the circumstances (including any
action or inaction by Parent or Sub or any of their affiliates permitted by
the Merger Agreement giving rise to any such condition) or waived by Parent
or Sub in whole or in part at any time or from time to time in its discretion
subject to the terms and conditions of the Merger Agreement; PROVIDED,
HOWEVER, that the Minimum Condition may not be waived without the Company's
consent. The failure of Parent or Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by Parent or Sub concerning the events
described above will be final and binding on all parties.

A-3

<PAGE>

STOCKHOLDER OPTION AGREEMENT

AGREEMENT, dated July 13, 1998, among Henkel KGaA, a
Kommanditgesellschaft auf Aktien (a partnership limited by shares), organized
under the laws of the Federal Republic of Germany ("PARENT"), Henkel
Acquisition Corp. II, a Delaware corporation and a wholly-owned subsidiary of
Parent ("PURCHASER"), and Robert H. Berglass ("STOCKHOLDER").

W I T N E S S E T H :

WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Purchaser and DEP Corporation, a Delaware corporation (the
"COMPANY"), are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "MERGER
AGREEMENT"), which provides, among other things, for the acquisition of the
Company by Parent by means of a cash tender offer (the "OFFER") by Purchaser
for all outstanding shares of Common Stock (as defined in Section 1 hereof)
and for the subsequent merger of Purchaser with and into the Company (the
"MERGER"), all on the terms and subject to the conditions set forth in the
Merger Agreement; and

WHEREAS, in accordance with the Merger Agreement, as soon as
practicable (and not later than five business days) after the announcement of
the execution of the Merger Agreement, Purchaser shall commence the Offer at
the Offer Price (as defined in Section 1 hereof); and

WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent and Purchaser have required that Stockholder agree,
and Stockholder agrees, to enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

(a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to
any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person (as hereinafter defined) shall include securities
Beneficially Owned by all other Persons with whom such Person would
constitute a "group" within the meaning of Section 13(d)(3) of the Exchange
Act.

(b) "COMMON STOCK" shall mean the shares of Common Stock, par
value $0.01 per share, of the Company.

<PAGE>

(c) "OFFER PRICE" shall mean cash in the amount of $5.25 per share
of Common Stock or, if greater, the price per share paid by Purchaser in the
Offer.

(d) "PERSON" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(e) Capitalized terms used and not defined herein shall have the
respective meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

(a) In order to induce Parent and Purchaser to enter into the
Merger Agreement, Stockholder hereby agrees to validly tender (or cause the
record owner of such shares to validly tender), and not to withdraw, pursuant
to and in accordance with the terms of the Offer, not later than the fifth
business day after commencement of the Offer pursuant to Section 1.01 of the
Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Common Stock set forth opposite Stockholder's name on Schedule I hereto
(the "EXISTING SECURITIES" and, together with any shares of Common Stock
acquired by Stockholder (whether beneficially or of record) after the date
hereof and prior to the termination of this Agreement by means of purchase,
dividend, distribution, exercise of options or other rights to acquire Common
Stock or in any other way, the "SECURITIES"), all of which are Beneficially
Owned by Stockholder. If Stockholder acquires Securities after the date
hereof, Stockholder shall tender (or cause the record holder to tender) such
Securities on or before such fifth business day or, if later, on or before
the second business day after such acquisition. Stockholder hereby
acknowledges and agrees that Parent's and Purchaser's obligation to accept
for payment, purchase and pay for the Securities in the Offer, including the
Securities Beneficially Owned by Stockholder, is subject to the terms and
conditions of the Offer.

(b) Stockholder hereby permits Parent and Purchaser to publish and
disclose in the Offer Documents and, if approval of the Merger by the
Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC) Stockholder's
identity and ownership of the Securities and the nature of Stockholder's
commitments, arrangements and understandings under this Agreement; provided
that Stockholder shall have a right to review and comment on such disclosure
a reasonable time before it is publicly disclosed.

3. OPTION.

(a) In order to induce Parent and Purchaser to enter into the
Merger Agreement, Stockholder hereby grants to Purchaser an irrevocable
option (a "SECURITIES OPTION") to purchase the Securities (the "OPTION
SECURITIES") at the Offer Price, subject to increase as set forth below (the
"PURCHASE PRICE"). The Securities Option may be exercised, in whole but not
in part, by written notice to Stockholder (as set forth below), for a period
of ten (10) business days (the "10 DAY PERIOD") following termination of the
Merger Agreement or termination of the Offer, whichever shall first occur;
PROVIDED that, prior to such termination, either (i) a Trigger Event shall
have occurred or (ii) (A) the Company shall have received a written proposal
from any

2
<PAGE>

person other than Parent, Purchaser or any affiliate of Parent or Purchaser
for an Acquisition Transaction, which proposal shall not have expired or been
withdrawn, (B) the Merger Agreement shall have been terminated by Parent
pursuant to Section 8.01(b), 8.01(d)(ii), 8.01(f) or 8.01(g) and (C) at the
time of such termination the Minimum Condition shall not have been satisfied.
Notwithstanding the foregoing, the Securities Option may not be exercised
until: (i) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), required for the
purchase of the Securities upon such exercise shall have expired or been
waived and any other conditions under the other Antitrust Laws shall have
been satisfied and (ii) there shall not be in effect any preliminary
injunction or other order issued by any Governmental Entity prohibiting the
exercise of the Securities Option pursuant to this Agreement; provided that
if (i) all HSR Act waiting periods shall not have expired or been terminated
or (ii) there shall be in effect any such injunction or order, in each case
on the expiration of the 10 Day Period, the 10 Day Period shall be extended
until five (5) business days after the later of (A) the date of expiration or
termination of all HSR Act waiting periods, and (B) the date of removal or
lifting of such injunction or order.

(b) In the event that Purchaser wishes to exercise the Securities
Option, Purchaser shall send a written notice (the "NOTICE") to Stockholder
identifying the date (not less than two (2) nor more than five (5) business
days from the date of the Notice) for the closing of such purchase, which
closing shall be held at the executive offices of the Company (or such other
place as the parties may agree). At the closing, Stockholder shall deliver
to Purchaser appropriate and effective instruments of transfer of the Option
Securities, against payment to Stockholder of the Purchase Price, in same day
funds, by wire transfer to such account as Stockholder shall designate.

(c) In the event the Option Securities are acquired by Purchaser
pursuant to the exercise of the Securities Option (the "ACQUIRED SECURITIES")
and, either before or at any time within the one-year period following such
acquisition, Parent, Purchaser or any affiliate of Parent or Purchaser shall
acquire Common Stock (other than from the Company) at a price in excess of
the Purchase Price, then the Purchase Price hereunder shall be increased to
such higher price. If the purchase of the Acquired Securities has been
completed at the time of such increase, Stockholder shall be entitled to
receive, and Purchaser shall promptly (and in no event more than 48 hours
following such increase) pay to Stockholder, by wire transfer of same day
funds to such account as Stockholder shall designate, the amount of the
increase.

(d) In the event the Option Securities are acquired by Purchaser
pursuant to the exercise of the Securities Option, Stockholder shall be
entitled to receive, and Purchaser shall promptly (and in no event more than
48 hours following such Sale) pay to Stockholder, upon any subsequent
disposition, transfer or sale to an unaffiliated third party ("SALE") of all
or any portion of the Acquired Securities within the one-year period
following such acquisition, an amount per share in cash equal to the excess,
if any, of the net proceeds received per share in the Sale over the Purchase
Price. Any such payment shall be made by wire transfer of same day funds to
such account as Stockholder shall designate.

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<PAGE>

4. ADDITIONAL AGREEMENTS.

(a) VOTING AGREEMENT. Stockholder shall, at any meeting of the
stockholders of the Company, however called, or in connection with any
written consent of the stockholders of the Company, vote (or cause to be
voted) all Securities then held of record or Beneficially Owned by
Stockholder (and, in the case of Securities not held of record by
Stockholder, subject to Stockholder's voting direction), (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the Company Option Agreement and the approval of the terms of each thereof
and each of the other actions contemplated by the Merger Agreement, the
Company Option Agreement and this Agreement and any actions required in
furtherance thereof and hereof; and (ii) against any proposal relating to an
Acquisition Transaction and against any action or agreement that would
impede, frustrate, prevent or nullify this Agreement, or result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or the
Company Option Agreement or which would result in any of the conditions set
forth in Exhibit A to the Merger Agreement or set forth in Article VII of the
Merger Agreement not being fulfilled.

(b) NO INCONSISTENT ARRANGEMENTS. Stockholder hereby covenants
and agrees that, except as contemplated by this Agreement and the Merger
Agreement, Stockholder shall not (i) offer to transfer (which term shall
include, without limitation, any sale, tender, gift, pledge (other than a
pledge which does not impair Stockholder's ability to perform under this
Agreement), assignment or other disposition), transfer or consent to any
transfer of, any or all of the Securities or any interest therein, (ii) enter
into any contract, option or other agreement or understanding with respect to
any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization or consent in or
with respect to the Securities, (iv) deposit the Securities into a voting
trust or enter into a voting agreement or arrangement with respect to the
Securities or (v) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement or the Company
Option Agreement (including, without limitation, any action that would cause
the Merger to be subject to Section 1101 of the CGCL).

(i) Stockholder hereby irrevocably grants to, and appoints,
Parent and Petra Hammerlein and Ernest G. Szoke, or either of them, in
their respective capacities as officers or representatives of Parent,
and any individual who shall hereafter succeed to any such office or
representation of Parent, and each of them individually, Stockholder's
proxy and attorney-in-fact (with full power of substitution), for and
in the name, place and stead of Stockholder, to vote the Securities,
or grant a consent or approval in respect of the Securities, in favor
of the various transactions contemplated by the Merger Agreement and
the Company Option Agreement and against any proposal relating to an
Acquisition Transaction.

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<PAGE>

(ii) Stockholder represents that any proxies heretofore given in
respect of Stockholder's Securities are not irrevocable, and that any
such proxies are hereby revoked.

(iii) Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 4(c) is given in connection with the execution
of the Merger Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of Stockholder under this
Agreement. Stockholder hereby further affirms that the irrevocable
proxy is coupled with an interest and may under no circumstances be
revoked. Stockholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of Section 212 of the
DGCL. A legend reflecting the foregoing irrevocable proxy shall be
placed on the certificate or certificate representing the Securities.

(d) NO SOLICITATION. Stockholder hereby agrees, in the capacity
as a stockholder of the Company, that neither Stockholder nor any affiliates,
representatives or agents shall (and, if Stockholder is a corporation,
partnership, trust or other entity, Stockholder shall cause its officers,
directors, partners, and employees, representatives and agents, including,
but not limited to, investment bankers, attorneys and accountants, not to),
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
Purchaser or any of their respective affiliates or representatives)
concerning any proposal relating to an Acquisition Transaction. Stockholder
will immediately cease any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any proposal relating
to an Acquisition Transaction. Stockholder will immediately communicate to
Parent, to the same extent as is required by the Company pursuant to Section
6.02 of the Merger Agreement, the terms, and other information concerning,
any proposal, discussion, negotiation or inquiry and the identity of the
party making such proposal or inquiry which Stockholder may receive in
respect of any such Acquisition Transaction. Any action taken by the Company
or any member of the Board of Directors of the Company, including any action
taken by Stockholder in Stockholder's capacity as a Director or officer of
the Company, in accordance with Section 6.02 of the Merger Agreement shall be
deemed not to violate this Section 4(d).

(e) REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to
consummate and make effective the transactions contemplated by this
Agreement. Each party shall promptly consult with the other and provide any
necessary information and material with respect to all filings made by such
party with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.

(f) WAIVER OF APPRAISAL RIGHTS. Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that Stockholder may
have.

5
<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
hereby represents and warrants to Parent and Purchaser as follows:

(a) OWNERSHIP OF SECURITIES. Stockholder is the record and
Beneficial Owner of the Existing Securities, as set forth on Schedule I. On
the date hereof, the Existing Securities constitute all of the Securities
owned of record or Beneficially Owned by Stockholder. Stockholder has sole
voting power and sole power to issue instructions with respect to the matters
set forth in Sections 2, 3 and 4 hereof, sole power of disposition, sole
power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case with respect to all of the
Existing Securities with no limitations, qualifications or restrictions on
such rights, subject to applicable securities laws and the terms of this
Agreement.

(b) POWER; BINDING AGREEMENT. Stockholder has the power and
authority to enter into and perform all of Stockholder's obligations under
this Agreement. This Agreement has been duly and validly executed and
delivered by Stockholder and constitutes a valid and binding agreement of
Stockholder, enforceable against Stockholder in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general principles of
equity. There is no beneficiary or holder of a voting trust certificate or
other interest of any trust of which Stockholder is a trustee, or any party
to any other agreement or arrangement, whose consent is required for the
execution and delivery of this Agreement or the consummation by Stockholder
of the transactions contemplated hereby.

(c) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution and
delivery of this Agreement by Stockholder, the consummation by Stockholder of
the transactions contemplated hereby and the compliance by Stockholder with
the provisions hereof and (ii) none of the execution and delivery of this
Agreement by Stockholder, the consummation by Stockholder of the transactions
contemplated hereby or compliance by Stockholder with any of the provisions
hereof, except in cases in which any conflict, breach, default or violation
described below would not interfere with the ability of Stockholder to
perform Stockholder's obligations hereunder, shall (A) conflict with or
result in any breach of any organizational documents applicable to
Stockholder, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration)
under, any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of
any kind, including, without limitation, any voting agreement, proxy
arrangement, pledge agreement, shareholders agreement or voting trust, to
which Stockholder is a party or by which Stockholder or any of its properties
or assets may be bound, or (C) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to Stockholder or any
of Stockholder's properties or assets.

(d) NO LIENS. Except as permitted by this Agreement, the Existing
Securities and the certificates representing such securities are now, and at all
times during the term hereof will

6
<PAGE>

be, held by Stockholder, or by a nominee or custodian for the benefit of
Stockholder, free and clear of all liens, proxies, voting trusts or
agreements, understandings or arrangements or any other rights whatsoever,
except for any such liens or proxies arising hereunder.

(e) NO FINDER'S FEES. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf
of Stockholder.

(f) RELIANCE BY PARENT. Stockholder understands and acknowledges
that Parent is entering into, and causing Purchaser to enter into, the Merger
Agreement in reliance upon Stockholder's execution and delivery of, and
representations and warranties contained in, this Agreement.

6. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Each
of Parent and Purchaser hereby represents and warrants to Stockholder as
follows:

(a) POWER; BINDING AGREEMENT. Parent and Purchaser each has the
corporate power and authority to enter into and perform all of its
obligations under this Agreement. This Agreement has been duly and validly
executed and delivered by each of Parent and Purchaser and constitutes a
valid and binding agreement of each of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with its terms, except
that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general principles of
equity.

(b) NO CONFLICTS. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act, (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution of this Agreement by each of Parent and
Purchaser, the consummation by each of Parent and Purchaser of the
transactions contemplated hereby and the compliance by Parent and Purchaser
with the provisions hereof and (ii) none of the execution and delivery of
this Agreement by each of Parent and Purchaser, the consummation by each of
Parent and Purchaser of the transactions contemplated hereby or compliance by
each of Parent and Purchaser with any of the provisions hereof, except in
cases in which any conflict, breach, default or violation described below
would not interfere with the ability of Parent or Purchaser to perform their
respective obligations hereunder, shall (A) conflict with or result in any
breach of any organizational documents applicable to either of Parent or
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration)
under, any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of
any kind to which either of Parent or Purchaser is a party or by which either
of Parent or Purchaser or any of their properties or assets may be bound, or
(C) violate any order, writ, injunction, decree, judgment, order, statute,
rule or regulation applicable to either of Parent or Purchaser or any of
their properties or assets.

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<PAGE>

7. FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further lawful action
as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.

8. STOP TRANSFER. Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such
transfer is made in compliance with this Agreement. In the event of a stock
dividend or distribution, or any change in the Common Stock by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares
or the like, the term "SECURITIES" shall refer to and include the Securities
as well as all such stock dividends and distributions and any shares into
which or for which any and all of the Securities may be changed or exchanged.

9. INDEMNIFICATION. For a period of four years from and after the
Effective Time, Parent shall indemnify Stockholder and hold Stockholder
harmless against any loss, cost or expense (including without limitation
reasonable attorneys' fees) in the event of any claim against Stockholder
relating to the actions of Stockholder, as stockholder, in connection with
the Merger Agreement, this Agreement and any of the transactions contemplated
thereby; PROVIDED that Stockholder shall have first sought indemnification
from the Company pursuant to insurance, the Company's charter or by-laws and
any indemnification agreement or other arrangement between the Company and
Stockholder; PROVIDED FURTHER, HOWEVER, that the obligations of Parent
hereunder shall be limited to the excess, if any, of Stockholder's loss, cost
or expense over the sum of (x) amounts actually recovered from the Company in
accordance with the preceding proviso plus (y) an aggregate amount for
Stockholder and all other stockholders executing agreements substantially the
same as this Agreement in connection with the Merger Agreement of $100,000.
In the event of any claim for which indemnification is provided herein,
Stockholder shall promptly notify Parent, PROVIDED that the failure to give
such notice shall not relieve Parent from its obligations hereunder except
if, and to the extent that, it suffers actual prejudice thereby. Parent
shall have the right to undertake, with counsel of its choice (subject to the
reasonable approval of Stockholder and which counsel may be counsel to
Parent), the defense of such claim. Stockholder shall have the right to
employ its own counsel to participate (but not to control the defense) in any
such action, but the fees and expenses of such counsel shall be at the sole
expense of Stockholder unless (i) Parent or the Company shall have failed to
employ counsel to assume the defense of such claim within a reasonable time
after receiving notice thereof, or (ii) a conflict of interest shall prevent
the same counsel from representing Parent or the Company and the Stockholder.
Parent shall not be liable hereunder for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld).

10. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Securities shall terminate upon the earliest of
(a) the Effective Time, (b) the first anniversary of the date hereof, (c) the
termination of the Merger Agreement pursuant to Section 8.01(a), 8.01(c) or
8.01(d)(i) or, by the Company, pursuant to Section 8.01(f) thereof and (d)
the expiration of the 10 Day Period.

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<PAGE>

11. NO LIMITATION. Nothing in this Agreement shall be construed
to prohibit Stockholder, or any officer or affiliate of Stockholder who is or
has designated a member of the Board of Directors of the Company, from taking
any action solely in his or her capacity as a member of the Board of
Directors of the Company or from exercising his or her fiduciary duties as a
member of such Board of Directors.

12. MISCELLANEOUS.

(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement and
Company Option Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.

(b) BINDING AGREEMENT. This Agreement and the obligations
hereunder shall attach to the Securities and shall be binding upon the
parties and any person or entity to which legal or beneficial ownership of
the Securities shall pass, whether by operation of law or otherwise,
including, without limitation, Stockholder's administrators or successors.
Notwithstanding any transfer of Securities, the transferor shall remain
liable for the performance of all obligations of the transferor under this
Agreement.

(c) ASSIGNMENT. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of Stockholder or
Parent and Purchaser, as the case may be, provided that Parent or Purchaser
may assign, in its respective sole discretion, its rights and obligations
hereunder to any direct or indirect subsidiary of Parent, but no such
assignment shall relieve Parent or Purchaser of its obligations hereunder if
such assignee does not perform such obligations.

(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except
upon the execution and delivery of a written agreement executed by the
parties hereto.

(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or facsimile
transmission (with a confirmation copy sent for next day delivery via courier
service, such as Federal Express), or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:

If to Stockholder:

Robert H. Berglass
c/o DEP Corporation
2101 East Via Arado
Rancho Dominguez, CA 90220
Telephone No.: (310) 764-2207
Facsimile No.: (310) 537-2524

9
<PAGE>

Copy to:

Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Andrew E. Bogen, Esq.
Telephone No.: (213) 229-7159
Facsimile No.: (213) 229-7520

If to Parent or Purchaser:

Henkel KGaA
Henkelstrasse 67
D-40191 Dusseldorf
Germany
Attention: Petra U. Hammerlein
Telephone No.: (49) 211-797-3362
Facsimile No.: (49) 211-798-2470

Copy to:

Henkel Acquisition Corp. II
c/o Henkel Corporation
The Triad
2200 Renaissance Boulevard - Suite 200
Gulph Mills, PA 19406
Attention: Ernest G. Szoke
Telephone No.: (610) 270-8124
Facsimile No.: (610) 270-8219

and to:

Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: William A. Groll, Esq.
Telephone No.: (212) 225-2000
Facsimile No.: (212) 225-3999

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

(f) SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction such

10
<PAGE>

invalidity, illegality or unenforceability will not affect any other
provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein. Notwithstanding anything to the contrary
contained in this Agreement, neither Parent nor Purchaser shall be deemed to
be the owner, nor shall Parent or Purchaser have the power to vote for the
election of directors, with respect to some or all of the Securities for
purposes of the CGCL until the purchase of, and payment for, such Securities
is actually consummated. The rights of Parent and Purchaser hereunder shall
be limited as provided in the preceding sentence.

(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore in
the event of any such breach the aggrieved party shall be entitled to the
remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity.

(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

(i) NO WAIVER. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a
waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by or confer any
rights upon, any person or entity who or which is not a party hereto.

(k) GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect
to the principles of conflicts of law thereof.

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.

(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.

11
<PAGE>

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same agreement.

(o) EXPENSES. Except as otherwise provide herein, neither Parent
and Purchaser, on the one hand, nor Stockholder, on the other hand, shall be
required to pay the expenses incurred by the other party in connection with
this Agreement.

12
<PAGE>

IN WITNESS WHEREOF, Parent, Purchaser and Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.

HENKEL KGaA

By: /s/ Uwe Specht
------------------------------------
Name: Dr. Uwe Specht
Title: Executive Vice President

By: /s/ Petra Hammerlein
------------------------------------
Name: Dr. Petra Hammerlein
Title: Senior Counsel

HENKEL ACQUISITION CORP. II

By: /s/ John E. Knudson
------------------------------------
Name: John E. Knudson
Title: Vice President and Treasurer

ROBERT H. BERGLASS

/s/ Robert H. Berglass
---------------------------------------

13
<PAGE>

SCHEDULE I
<TABLE>

NAME OF NUMBER OF SHARES OF COMMON STOCK
STOCKHOLDER BENEFICIALLY OWNED
- ------------------------------------------------------------------------------
<S> <C>
Robert H. Berglass 999,555
</TABLE>

<PAGE>
STOCKHOLDER OPTION AGREEMENT

AGREEMENT, dated July 13, 1998, among Henkel KGaA, a
Kommanditgesellschaft auf Aktien (a partnership limited by shares), organized
under the laws of the Federal Republic of Germany ("PARENT"), Henkel Acquisition
Corp. II, a Delaware corporation and a wholly-owned subsidiary of Parent
("PURCHASER"), and Robert H. Berglass, as Trustee of the Berglass Charitable
Remainder Trust UDT 7/8/98 ("STOCKHOLDER").

W I T N E S S E T H :

WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Purchaser and DEP Corporation, a Delaware corporation (the
"COMPANY"), are entering into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "MERGER AGREEMENT"), which
provides, among other things, for the acquisition of the Company by Parent by
means of a cash tender offer (the "OFFER") by Purchaser for all outstanding
shares of Common Stock (as defined in Section 1 hereof) and for the subsequent
merger of Purchaser with and into the Company (the "MERGER"), all on the terms
and subject to the conditions set forth in the Merger Agreement; and

WHEREAS, in accordance with the Merger Agreement, as soon as
practicable (and not later than five business days) after the announcement of
the execution of the Merger Agreement, Purchaser shall commence the Offer at the
Offer Price (as defined in Section 1 hereof); and

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Purchaser have required that Stockholder agree, and
Stockholder agrees, to enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

(a) "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to
any securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person (as hereinafter defined) shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "group" within the
meaning of Section 13(d)(3) of the Exchange Act.

(b) "COMMON STOCK" shall mean the shares of Common Stock, par value
$0.01 per share, of the Company.

<PAGE>

(c) "OFFER PRICE" shall mean cash in the amount of $5.25 per share of
Common Stock or, if greater, the price per share paid by Purchaser in the Offer.

(d) "PERSON" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.

(e) Capitalized terms used and not defined herein shall have the
respective meanings ascribed to them in the Merger Agreement.

2. TENDER OF SHARES.

(a) In order to induce Parent and Purchaser to enter into the Merger
Agreement, Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and in
accordance with the terms of the Offer, not later than the fifth business day
after commencement of the Offer pursuant to Section 1.01 of the Merger Agreement
and Rule 14d-2 under the Exchange Act, the number of shares of Common Stock set
forth opposite Stockholder's name on Schedule I hereto (the "EXISTING
SECURITIES" and, together with any shares of Common Stock acquired by
Stockholder (whether beneficially or of record) after the date hereof and prior
to the termination of this Agreement by means of purchase, dividend,
distribution, exercise of options or other rights to acquire Common Stock or in
any other way, the "SECURITIES"), all of which are Beneficially Owned by
Stockholder. If Stockholder acquires Securities after the date hereof,
Stockholder shall tender (or cause the record holder to tender) such Securities
on or before such fifth business day or, if later, on or before the second
business day after such acquisition. Stockholder hereby acknowledges and agrees
that Parent's and Purchaser's obligation to accept for payment, purchase and pay
for the Securities in the Offer, including the Securities Beneficially Owned by
Stockholder, is subject to the terms and conditions of the Offer.

(b) Stockholder hereby permits Parent and Purchaser to publish and
disclose in the Offer Documents and, if approval of the Merger by the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) Stockholder's identity and
ownership of the Securities and the nature of Stockholder's commitments,
arrangements and understandings under this Agreement; provided that Stockholder
shall have a right to review and comment on such disclosure a reasonable time
before it is publicly disclosed.

3. OPTION.

(a) In order to induce Parent and Purchaser to enter into the Merger
Agreement, Stockholder hereby grants to Purchaser an irrevocable option (a
"SECURITIES OPTION") to purchase the Securities (the "OPTION SECURITIES") at the
Offer Price, subject to increase as set forth below (the "PURCHASE PRICE"). The
Securities Option may be exercised, in whole but not in part, by written notice
to Stockholder (as set forth below), for a period of ten (10) business days (the
"10 DAY PERIOD") following termination of the Merger Agreement or termination of
the Offer, whichever shall first occur; PROVIDED that, prior to such
termination, either (i) a Trigger Event shall have occurred or (ii) (A) the
Company shall have received a written proposal from any

2
<PAGE>

(b) In the event that Purchaser wishes to exercise the Securities
Option, Purchaser shall send a written notice (the "NOTICE") to Stockholder
identifying the date (not less than two (2) nor more than five (5) business days
from the date of the Notice) for the closing of such purchase, which closing
shall be held at the executive offices of the Company (or such other place as
the parties may agree). At the closing, Stockholder shall deliver to Purchaser
appropriate and effective instruments of transfer of the Option Securities,
against payment to Stockholder of the Purchase Price, in same day funds, by wire
transfer to such account as Stockholder shall designate.

(c) In the event the Option Securities are acquired by Purchaser
pursuant to the exercise of the Securities Option (the "ACQUIRED SECURITIES")
and, either before or at any time within the one-year period following such
acquisition, Parent, Purchaser or any affiliate of Parent or Purchaser shall
acquire Common Stock (other than from the Company) at a price in excess of the
Purchase Price, then the Purchase Price hereunder shall be increased to such
higher price. If the purchase of the Acquired Securities has been completed at
the time of such increase, Stockholder shall be entitled to receive, and
Purchaser shall promptly (and in no event more than 48 hours following such
increase) pay to Stockholder, by wire transfer of same day funds to such account
as Stockholder shall designate, the amount of the increase.

(d) In the event the Option Securities are acquired by Purchaser
pursuant to the exercise of the Securities Option, Stockholder shall be entitled
to receive, and Purchaser shall promptly (and in no event more than 48 hours
following such Sale) pay to Stockholder, upon any subsequent disposition,
transfer or sale to an unaffiliated third party ("SALE") of all or any portion
of the Acquired Securities within the one-year period following such
acquisition, an amount per share in cash equal to the excess, if any, of the net
proceeds received per share in the Sale over the Purchase Price. Any such
payment shall be made by wire transfer of same day funds to such account as
Stockholder shall designate.

3
<PAGE>

4. ADDITIONAL AGREEMENTS.

(a) VOTING AGREEMENT. Stockholder shall, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, vote (or cause to be voted) all
Securities then held of record or Beneficially Owned by Stockholder (and, in the
case of Securities not held of record by Stockholder, subject to Stockholder's
voting direction), (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the Company Option Agreement and the
approval of the terms of each thereof and each of the other actions contemplated
by the Merger Agreement, the Company Option Agreement and this Agreement and any
actions required in furtherance thereof and hereof; and (ii) against any
proposal relating to an Acquisition Transaction and against any action or
agreement that would impede, frustrate, prevent or nullify this Agreement, or
result in a breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
the Company Option Agreement or which would result in any of the conditions set
forth in Exhibit A to the Merger Agreement or set forth in Article VII of the
Merger Agreement not being fulfilled.

(b) NO INCONSISTENT ARRANGEMENTS. Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
Stockholder shall not (i) offer to transfer (which term shall include, without
limitation, any sale, tender, gift, pledge (other than a pledge which does not
impair Stockholder's ability to perform under this Agreement), assignment or
other disposition), transfer or consent to any transfer of, any or all of the
Securities or any interest therein, (ii) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or all of
the Securities or any interest therein, (iii) grant any proxy, power-of-attorney
or other authorization or consent in or with respect to the Securities, (iv)
deposit the Securities into a voting trust or enter into a voting agreement or
arrangement with respect to the Securities or (v) take any other action that
would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement or the Company Option Agreement (including, without limitation, any
action that would cause the Merger to be subject to Section 1101 of the CGCL).

4
<PAGE>

(ii) Stockholder represents that any proxies heretofore given in
respect of Stockholder's Securities are not irrevocable, and that any
such proxies are hereby revoked.

(d) NO SOLICITATION. Stockholder hereby agrees, in the capacity as a
stockholder of the Company, that neither Stockholder nor any affiliates,
representatives or agents shall (and, if Stockholder is a corporation,
partnership, trust or other entity, Stockholder shall cause its officers,
directors, partners, and employees, representatives and agents, including, but
not limited to, investment bankers, attorneys and accountants, not to), directly
or indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, Purchaser or any of their
respective affiliates or representatives) concerning any proposal relating to an
Acquisition Transaction. Stockholder will immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any proposal relating to an Acquisition Transaction.
Stockholder will immediately communicate to Parent, to the same extent as is
required by the Company pursuant to Section 6.02 of the Merger Agreement, the
terms, and other information concerning, any proposal, discussion, negotiation
or inquiry and the identity of the party making such proposal or inquiry which
Stockholder may receive in respect of any such Acquisition Transaction. Any
action taken by the Company or any member of the Board of Directors of the
Company, including any action taken by Stockholder in Stockholder's capacity as
a Director or officer of the Company, in accordance with Section 6.02 of the
Merger Agreement shall be deemed not to violate this Section 4(d).

(e) REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement. Each party
shall promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.

(f) WAIVER OF APPRAISAL RIGHTS. Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that Stockholder may have.

5
<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby
represents and warrants to Parent and Purchaser as follows:

(a) OWNERSHIP OF SECURITIES. Stockholder is the record and
Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the
date hereof, the Existing Securities constitute all of the Securities owned of
record or Beneficially Owned by Stockholder. Stockholder has sole voting power
and sole power to issue instructions with respect to the matters set forth in
Sections 2, 3 and 4 hereof, sole power of disposition, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Securities with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.

(b) POWER; BINDING AGREEMENT. Stockholder has the power and
authority to enter into and perform all of Stockholder's obligations under this
Agreement. This Agreement has been duly and validly executed and delivered by
Stockholder and constitutes a valid and binding agreement of Stockholder,
enforceable against Stockholder in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which Stockholder is a trustee, or any party to any other agreement or
arrangement, whose consent is required for the execution and delivery of this
Agreement or the consummation by Stockholder of the transactions contemplated
hereby.

(c) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution and delivery
of this Agreement by Stockholder, the consummation by Stockholder of the
transactions contemplated hereby and the compliance by Stockholder with the
provisions hereof and (ii) none of the execution and delivery of this Agreement
by Stockholder, the consummation by Stockholder of the transactions contemplated
hereby or compliance by Stockholder with any of the provisions hereof, except in
cases in which any conflict, breach, default or violation described below would
not interfere with the ability of Stockholder to perform Stockholder's
obligations hereunder, shall (A) conflict with or result in any breach of any
organizational documents applicable to Stockholder, (B) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
modification or acceleration) under, any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind, including, without limitation, any voting agreement,
proxy arrangement, pledge agreement, shareholders agreement or voting trust, to
which Stockholder is a party or by which Stockholder or any of its properties or
assets may be bound, or (C) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to Stockholder or any of
Stockholder's properties or assets.

(d) NO LIENS. Except as permitted by this Agreement, the Existing
Securities and the certificates representing such securities are now, and at all
times during the term hereof will

6
<PAGE>

(e) NO FINDER'S FEES. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Stockholder.

6. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Each of
Parent and Purchaser hereby represents and warrants to Stockholder as follows:

(a) POWER; BINDING AGREEMENT. Parent and Purchaser each has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. This Agreement has been duly and validly executed and
delivered by each of Parent and Purchaser and constitutes a valid and binding
agreement of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.

(b) NO CONFLICTS. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act, (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution of this Agreement by each of Parent and Purchaser,
the consummation by each of Parent and Purchaser of the transactions
contemplated hereby and the compliance by Parent and Purchaser with the
provisions hereof and (ii) none of the execution and delivery of this Agreement
by each of Parent and Purchaser, the consummation by each of Parent and
Purchaser of the transactions contemplated hereby or compliance by each of
Parent and Purchaser with any of the provisions hereof, except in cases in which
any conflict, breach, default or violation described below would not interfere
with the ability of Parent or Purchaser to perform their respective obligations
hereunder, shall (A) conflict with or result in any breach of any organizational
documents applicable to either of Parent or Purchaser, (B) result in a violation
or breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
modification or acceleration) under, any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which either of Parent or Purchaser is a party or by
which either of Parent or Purchaser or any of their properties or assets may be
bound, or (C) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to either of Parent or Purchaser or any
of their properties or assets.

7
<PAGE>

7. FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.

8. STOP TRANSFER. Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "SECURITIES" shall refer to and include the Securities as well as all such
stock dividends and distributions and any shares into which or for which any and
all of the Securities may be changed or exchanged.

9. INDEMNIFICATION. For a period of four years from and after the
Effective Time, Parent shall indemnify Stockholder and hold Stockholder harmless
against any loss, cost or expense (including without limitation reasonable
attorneys' fees) in the event of any claim against Stockholder relating to the
actions of Stockholder, as stockholder, in connection with the Merger Agreement,
this Agreement and any of the transactions contemplated thereby; PROVIDED that
Stockholder shall have first sought indemnification from the Company pursuant to
insurance, the Company's charter or by-laws and any indemnification agreement or
other arrangement between the Company and Stockholder; PROVIDED FURTHER,
HOWEVER, that the obligations of Parent hereunder shall be limited to the
excess, if any, of Stockholder's loss, cost or expense over the sum of (x)
amounts actually recovered from the Company in accordance with the preceding
proviso plus (y) an aggregate amount for Stockholder and all other stockholders
executing agreements substantially the same as this Agreement in connection with
the Merger Agreement of $100,000. In the event of any claim for which
indemnification is provided herein, Stockholder shall promptly notify Parent,
PROVIDED that the failure to give such notice shall not relieve Parent from its
obligations hereunder except if, and to the extent that, it suffers actual
prejudice thereby. Parent shall have the right to undertake, with counsel of
its choice (subject to the reasonable approval of Stockholder and which counsel
may be counsel to Parent), the defense of such claim. Stockholder shall have
the right to employ its own counsel to participate (but not to control the
defense) in any such action, but the fees and expenses of such counsel shall be
at the sole expense of Stockholder unless (i) Parent or the Company shall have
failed to employ counsel to assume the defense of such claim within a reasonable
time after receiving notice thereof, or (ii) a conflict of interest shall
prevent the same counsel from representing Parent or the Company and the
Stockholder. Parent shall not be liable hereunder for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld).

10. TERMINATION. The covenants, agreements and proxy contained
herein with respect to the Securities shall terminate upon the earliest of (a)
the Effective Time, (b) the first anniversary of the date hereof, (c) the
termination of the Merger Agreement pursuant to Section 8.01(a), 8.01(c) or
8.01(d)(i) or, by the Company, pursuant to Section 8.01(f) thereof and (d) the
expiration of the 10 Day Period.

8
<PAGE>

11. NO LIMITATION. Nothing in this Agreement shall be construed to
prohibit Stockholder, or any officer or affiliate of Stockholder who is or has
designated a member of the Board of Directors of the Company, from taking any
action solely in his or her capacity as a member of the Board of Directors of
the Company or from exercising his or her fiduciary duties as a member of such
Board of Directors.

12. MISCELLANEOUS.

(b) BINDING AGREEMENT. This Agreement and the obligations hereunder
shall attach to the Securities and shall be binding upon the parties and any
person or entity to which legal or beneficial ownership of the Securities shall
pass, whether by operation of law or otherwise, including, without limitation,
Stockholder's administrators or successors. Notwithstanding any transfer of
Securities, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.

(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of Stockholder or Parent and
Purchaser, as the case may be, provided that Parent or Purchaser may assign, in
its respective sole discretion, its rights and obligations hereunder to any
direct or indirect subsidiary of Parent, but no such assignment shall relieve
Parent or Purchaser of its obligations hereunder if such assignee does not
perform such obligations.

(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.

If to Stockholder:

Robert H. Berglass
c/o DEP Corporation
2101 East Via Arado
Rancho Dominguez, CA 90220
Telephone No.: (310) 764-2207
Facsimile No.: (310) 537-2524

9
<PAGE>

Copy to:

Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Andrew E. Bogen, Esq.
Telephone No.: (213) 229-7159
Facsimile No.: (213) 229-7520

If to Parent or Purchaser:

Henkel KGaA
Henkelstrasse 67
D-40191 Dusseldorf
Germany
Attention: Petra U. Hammerlein
Telephone No.: (49) 211-797-3362
Facsimile No.: (49) 211-798-2470

Copy to:

and to:

Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: William A. Groll, Esq.
Telephone No.: (212) 225-2000
Facsimile No.: (212) 225-3999

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

(f) SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such

10
<PAGE>

invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Purchaser shall be deemed to be the owner, nor
shall Parent or Purchaser have the power to vote for the election of directors,
with respect to some or all of the Securities for purposes of the CGCL until the
purchase of, and payment for, such Securities is actually consummated. The
rights of Parent and Purchaser hereunder shall be limited as provided in the
preceding sentence.

(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.

(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.

(i) NO WAIVER. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.

(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by or confer any rights
upon, any person or entity who or which is not a party hereto.

(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.

(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.

(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

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<PAGE>

(n) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same agreement.

(o) EXPENSES. Except as otherwise provide herein, neither Parent and
Purchaser, on the one hand, nor Stockholder, on the other hand, shall be
required to pay the expenses incurred by the other party in connection with this
Agreement.

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<PAGE>

IN WITNESS WHEREOF, Parent, Purchaser and Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.

HENKEL KGaA

By: /s/ Uwe Specht
------------------------------------
Name: Dr. Uwe Specht
Title: Executive Vice President

By: /s/ Petra Hammerlein
------------------------------------
Name: Dr. Petra Hammerlein
Title: Senior Counsel

HENKEL ACQUISITION CORP. II

By: /s/ John E. Knudson
------------------------------------
Name: John E. Knudson
Title: Vice President and Treasurer

ROBERT H. BERGLASS, AS TRUSTEE OF
THE BERGLASS CHARITABLE
REMAINDER TRUST UDT 7/8/98

By: /s/ Robert H. Berglass
-----------------------------------
Name: Robert H. Berglass
Title: Trustee

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<PAGE>

SCHEDULE I
<TABLE>
<CAPTION>

NAME OF
STOCKHOLDER NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED
- ----------------------------------------------------------------------------
<S> <C>
Robert H.
Berglass, as 761,905
Trustee of the
Berglass
Charitable
Remainder Trust
UDT 7/8/98

</TABLE>

<PAGE>
STOCKHOLDER OPTION AGREEMENT

AGREEMENT, dated July 13, 1998, among Henkel KGaA, a
Kommanditgesellschaft auf Aktien (a partnership limited by shares), organized
under the laws of the Federal Republic of Germany ("PARENT"), Henkel Acquisition
Corp. II, a Delaware corporation and a wholly-owned subsidiary of Parent
("PURCHASER"), and Judith R. Berglass, as Trustee of the Berglass 1995
Irrevocable Trust UDT 6/27/95 ("STOCKHOLDER").